May 19, 1999

Mr. Chairman and Members of the Subcommittee, I appreciate the opportunity to appear before you today to provide an overview of the Minerals Management Service’s (MMS) Royalty Management Program and a status report on the Department of the Interior’s efforts to revise its regulations for valuing crude oil. It has been almost three years since MMS last testified before this Subcommittee on the issue. During that time, I believe we have made great strides in our attempt to publish a final rulemaking, but our efforts are not yet finished. My intent today is to highlight the Department’s progress and efforts thus far and to discuss where we go from here. However, prior to discussing further details of the Department’s efforts to revise the crude oil regulations, let me begin with a brief overview of current efforts of the MMS.

Background

The Department’s MMS was created 17 years ago: (1) to manage the Nation’s Outer Continental Shelf (OCS) mineral resources in an environmentally sound and safe manner; and (2) to collect, verify and distribute mineral revenues from Federal (both onshore and offshore ) and Indian lands. In that role, the agency collects, accounts for, and disburses over $4 billion in revenues each year from Federal offshore mineral leases and from onshore leases on Federal and Indian lands. These revenues are distributed and disbursed to 38 States, 41 Indian Tribes, 20,000 Indian mineral royalty owners, and to U.S. Treasury accounts. Of the $4 billion, about $1.6 billion annually is collected in oil royalties.

The Federal government has been systematically collecting revenues associated with mineral production on Federal onshore lands since 1920 and from offshore lands since 1953. However, it was not until 1982, with the establishment of MMS and the enactment of the Federal Oil and Gas Royalty Management Act (FOGRMA), that a comprehensive system was put into place for properly collecting , accounting for, distributing, and valuing these revenues. Since 1982, MMS has worked to develop systems, policies, and procedures to respond to the mandates of FOGRMA as well as the expectations of its constituencies and numerous oversight organizations. In 1996, FOGRMA was substantively amended by the Federal Oil and Gas Royalty Simplification and Fairness Act (RSFA). The proper implementation of these two Acts forms the core of the RMP mission. In particular, RSFA significantly changed many historical RMP operating assumptions and revenue processing methods.

From an economic standpoint, in FY 2000, MMS will account for an estimated $4.0 billion in Federal receipts, including $2.8 billion from OCS receipts and $1.2 billion from onshore receipts. From a taxpayer’s perspective, this will convert to:

• $1.9 billion deposited to the General Fund of the treasury to help pay for Federal programs and reduce the Federal debt;

• $611 million in mineral revenue payments made to onshore States;

• $106 million in shared natural gas and oil receipts with coastal States;

• $150 million to Indian Tribes and individual Indian mineral owners;

• $897 million transferred to the Land Water Conservation Fund; and

• $497 million credited to the Reclamation Fund.

For most producing Indian mineral leases, MMS collects rents and monthly royalties due under the terms of the leases and notifies the Office of Trust Funds Management (OTFM - part of the Office of the Special Trustee) daily of the total amounts collected for tribal and allotted leases. Tribal amounts are identified separategly, while individual amounts are provided initially in lump sum. (In addition, some rents and royalties from coal leases are paid directly to tribes by the lessee.) It is OTFM’s responsibility to invest the totals passed on by MMS into interest-bearing accounts. Twice each month, MMS sends the Bureau of Indian Affairs a data file that breaks the amounts collected for individuals down by lease numbers. The MMS system is based on lease numbers and therefore we have no information relating to tribal or allotted accounts. These accounts are managed collaboratively by OTFM and BIA who make the acutal disbursements to the account holders.

As a steward of public and Indian lands, MMS ensures that revenues collected are disbursed and shared by several entities. In order to share these revenues, we must first make sure we are properly organized and are using the most appropriate methodologies to collect revenues from oil and gas produced on Federal lands. Revising our crude oil regulations is crucial to our efforts to properly collect royalties for distribution to the appropriate Federal accounts and to the States.

California Federal Crude Oil Underpayments

A lot has happened in our Federal oil valuation rulemaking initiative since we last met with you in June 1996. In September 1996, the Committee issued a report recommending that, among other recommendations, DOI begin expanded efforts to collect royalty underpayments in California. But before delving into that let me give you a brief recap of the Department’s efforts on oil valuation.

As we reported to you in June 1996, MMS began studying the California crude oil market in 1986 in an effort to determine whether royalties from Federal leases had been properly valued. Based on information available at that time, MMS concluded that posted prices fairly represented crude oil values for royalty payment purposes, and the issue was not pursued further.

By 1991 however, following the Ninth Circuit's reversal of the District Court's summary judgment order, six of the companies involved in the Long Beach litigation (ARCO, Shell, Chevron, Mobil, Texaco, and Unocal) reached settlements to end court actions alleging undervaluation on State and City leases as well as other issues relating to pipelines. A seventh defendant, Exxon, went to trial. On January 31, 1995, the Ninth Circuit upheld the U.S. District Court for the Central District of California ruling in favor of Exxon in a law suit covering 1971 to 1977. Another appeal covering a later time period is still pending.

Because of the settlements completed in 1991 between the State of California, the City of Long Beach, and the six companies (ARCO, Shell, Chevron, Mobil, Texaco, and Unocal), the Department began reassessing its 1986 findings and decided further analysis was warranted. In June 1994, MMS formed an interagency task force with the State of California and some of the agencies that had reviewed the matter previously -- Department of Energy, Department of Justice (DOJ), and the Department of Commerce -- to gain information for determining whether the major oil companies wrongfully undervalued crude oil from Federal leases. After a failed attempt to obtain records from the Internal Revenue Service, MMS requested help from California in obtaining access to the documents in the second Long Beach case. While these documents were not initially available to MMS, as they were sealed by the court, the team was able to gain access to the materials by signing a confidentiality agreement with the companies involved in that litigation.

Those documents, which reflected activities that occurred between 1980 and 1989, showed that

California crude oil pricing practices required closer scrutiny. The task force recommended that a

special audit be performed to determine if Federal lessees in California received revenues above

posted prices that should be subject to royalties. This proposed special audit would differ from

conventional audits because it would look beyond intracompany transactions that occurred at posted prices to determine whether any additional revenues may have been received by an affiliate in a later transaction. In May 1996, the interagency team reported that:

The team concludes that companies often receive gross proceeds higher than oil company posted prices for crude oil produced in California. Since the team was informed by MMS and California auditors that most Federal royalty payments were based on postings, it follows that royalties have been underpaid.

Further, all of the taskforce members unanimously recommended that:

The oil companies undervalued crude oil produced from Federal leases onshore and offshore in California; MMS should concentrate collection efforts on those ten companies producing at least 90 percent of Federal crude oil in California; MMS should compute royalties owed based on premiums paid on arm’s-length contracts for oil produced from the same field or area for periods starting with the effective date of MMS’s most recent valuation regulations, March 1, 1988; and MMS should modify its oil royalty valuation regulations to place less emphasis on posted prices.

On July 18, 1996, MMS announced its plan of action to pursue and collect underpayments of royalties on Federal crude oil produced in and offshore California from 1980 forward. MMS stated that it would focus its efforts on the 20 largest payors who together accounted for nearly 97 percent of California’s Federal production, and that it would issue its first orders and bills within a few months and conclude its reviews and billing efforts within a year after all data were received. Simultaneously, MMS issued letters to the 20 companies. To date, MMS has also issued subpoenas to companies that have not responded to MMS’s requests for data necessary to complete the reviews.

The first order and bill was issued on September 5, 1996, for post-1988 production. On October 18, 1996, MMS issued additional orders and bills to 10 of the 20 companies that refine the crude oil they produce. The orders and bills issued to these integrated companies pertain to underpayments for the period October 1983 through February 1988. Detailed audits of integrated company records for that period were not required because the royalty value of the oil would be based on Alaska North Slope (ANS) prices which are readily available, not on individual sales contracts. On December 20, 1996, MMS issued bills to these same companies for the period January 1980 through August 1983, using ANS prices as the valuation basis.

As a result of the efforts in California, bills have been issued for a total royalty underpayment of $277 million. All bills have been appealed and two complaints have been filed in the Northern District of Oklahoma. The court has ruled that a six year Statute of Limitations bars MMS from enforcing the orders for periods prior to 1988. MMS appealed the decision.

Also as a result of findings of the interagency task force, in June 1996, MMS issued valuation guidance for auditing crude oil production nationwide. These guidelines explicitly provided that premiums received by lessees represent proceeds subject to royalty. The guidelines were provided to all MMS audit offices and States and Tribes with MMS delegated audit authority. Audit personnel were instructed to hold open all audit periods to ensure access to those records necessary to determine whether lessees paid royalties on less than arm’s-length gross proceeds.

In addition to California, MMS developed a National Crude Oil Strategy and began pursuing similar oil valuation issues in other States and the Gulf of Mexico. In August 1996, MMS began auditing the other States and the Gulf of Mexico producing regions. The National Strategy targeted about 125 companies, which produce about 86% of the crude from Federal lands. However, unlike the California effort, it focuses on the more current periods but is not necessarily limited to only the most recent 6-year period.

Based on further recommendations of the task force and the Committee, MMS agreed that a revision of its regulations was necessary. These regulations, which were drafted in the mid-1980's and published in 1988, rely heavily on posted prices. These regulations remain in effect today and are used by the industry to calculate royalty payments on Federal production.

In addressing this matter, it is important to understand the nature of posted prices and the problems posed by using this measure to ascertain market value for Federal oil and gas. Posted prices are set by the marketing or refining arms of oil companies as a price at which they generally will be willing to buy crude oil. Posted prices are not an obligation to buy, but merely serve as a reference point or starting point for negotiating a market price on the open market. Frequently, premiums are paid above posted prices in non-affiliated transactions. Based on our analyses of company transactions, we know that these premiums can range from $0.25 per barrel to $2.00 per barrel. However, when the producing arms of large integrated oil companies (the lessee) transfers oil in house to their marketing or refining arms, they typically pay royalties on their posted price. In other words, some oil companies have been selling oil at one price and paying royalties on a lower price. This is unfair to the American taxpayer, and it violates the basic principle of our regulations that royalty must be paid on no less than gross proceeds received from the sale of production.

Investigations by an assortment of concerned parties have confirmed the inadequacy of posted prices as a basis for valuing production for royalty purposes. A number of States (i.e. Alaska, California, New Mexico, Texas, and Louisiana) have brought suit against several major oil companies primarily for basing royalties, severance taxes, and other payments on posted prices that are below market value, and have received settlements ranging from tens of millions to billions of dollars. Some of these settlements included agreements by the companies to pay future royalties and taxes based on index prices. At least seven class actions against the industry have been filed on behalf of private landowners over the past two years. One of these was settled for several million dollars. In addition, these problems with posted prices have been confirmed in many arenas through audit findings.

 In February 1998, the DOJ announced it would intervene in qui tam suits against four major oil companies accused of undervaluing oil production from Federal leases. To date, DOJ has intervened against seven large oil companies. Recently, the DOJ with MMS negotiated a settlement with Mobil for crude oil underpayments. Of the $45 million collected, $6 million applied to California production for 1980-1997. The State received $1.8 million.

Federal Crude Oil Rulemaking Process

As you know, in December 1995, MMS began an extensive effort to revise its regulations on valuing oil produced from onshore and offshore leases at the recommendation of the interagency taskforce. Since 1995, the agency has gone to great lengths to work with our constituencies in this rulemaking process. MMS published in 1995 an Advanced Notice of Proposed Rulemaking and asked whether MMS’s regulations needed to move from reliance on posted prices and be more market oriented. We also requested ideas on alternative valuation methods. Finally, we asked for comments on how the rulemaking process should be conducted, such as using a negotiated rulemaking process.

MMS received comments from States indicating that postings no longer reflected market value and that some form of index pricing would be appropriate. The States recommended in their comments that MMS move quickly to publish an interim final rule based on index pricing. On the other hand, industry generally supported retention of posted prices and declined to participate in a negotiated rulemaking process because of their involvement in ongoing litigation with State and private royalty owners over similar issues. At the same time, the Department decided to proceed with its rulemaking process.

In 1997, the Department published two proposals, and each time, extended the comment period to accommodate industry’s requests. We also held 9 public workshops and meetings. In 1998, the Department published two more proposals and held 5 more public workshops and meetings. During the summer of 1998, Members of Congress requested that the Department meet with them and industry representatives to discuss the rule. During these open comment periods the Department received over 4,000 pages of comments from interested parties. Industry opposed many aspects of the proposed rule but no longer supported reliance directly on posted prices as a basis for valuing non-arm’s-length transactions.

As we have attempted to finalize the crude oil rulemaking, we have been halted twice by Congress through riders attached to appropriation bills. Just prior to publishing a final Federal oil rulemaking, a prohibition was added to a FY 1998 Emergency Supplemental Appropriations Act (P.L. 105-174) that barred MMS from implementing crude oil rulemaking until the end of FY 1998. This prohibition was extended by the FY 1999 Omnibus Appropriations Act ( P.L. 105-277) until June 1, 1999, or until a negotiated agreement is reached. However, that date may be extended since the Appropriations Conferees have agreed to include a prohibition until October 1, 1999, in the FY 1999 Emergency Supplemental Appropriations bill.

Four years after we began the process, we are continuing to seek comments on the rulemaking. On March 12 of this year, in response to requests from many Members of Congress and parties interested in moving the process forward to publish a final rule, the Department reopened the comment period on the Federal oil rulemaking for 30 days to seek new, not previously considered ideas. During the comment period, the Department held three workshops in Houston, Texas; Albuquerque, New Mexico; and Washington, D.C.

During these workshops, MMS informed all interested parties on its current views of the proposed Federal rule. We also provided details and rationale on the draft final rule in a letter to Senator Breaux and other Members of Congress in August 1998 which explained the direction of the Department’s final Federal oil valuation rulemaking. The following four key issues dominated the three workshops: (1) valuation for non-arm’s-length transactions; (2) valuation for arm’s-length transactions; (3) advance determinations of valuation methods; and (4) transportation allowances. As a result of the workshops, all parties had an opportunity for further dialogue, and we believe that all parties have a better understanding of the issues and the Federal rulemaking effort. The minutes of the workshops are posted on MMS’s Internet website--

http://www.mms.rmp.gov. In response to industry requests, MMS extended the comment period two weeks until April 27, to allow commenters time to submit comments following the recent workshops.

We have exerted an extraordinary effort to include our constituents in developing a crude oil valuation rulemaking. Throughout the process we have been guided by several basic principles-- (1) provide certainty to all involved; (2) simplify royalty valuation; (3) reduce the need for audit; (4) minimize royalty disputes; and (5) provide maximum flexibility to adapt to changing market conditions; and (6) assure that the taxpayers of this nation get a fair return for their oil and gas resources.

In this effort, we have acted within our full authority under applicable statues and lease terms to develop and issue proposed regulations for valuing Federal and Indian oil. Section 32 of the Mineral Leasing Act of 1920 (MLA), 30 U.S.C. 189, authorizes the Secretary to prescribe rules and regulations that are necessary to carry out the requirments of the MLA relating to leasing of onshore Federal lands, including the provision that royalties be not less than 12 ½ per centum in amount or value of the production removed or sold from the lease. The Outer Continental Shelf Lands Act of August 7, 1953, has similar provisions relating to the OCS at 43 U.S.C. 1334. Finally, most Federal oil leases provide that the Secretary shall establish the value of production.

As you are aware, the oil industry is opposed to our Federal proposed rulemaking. However, we continue to believe that the rule would not affect the independent companies that sell oil at arm’s length. This group makes up about 95 percent of the producers who pay Federal royalties.

 Because about two-thirds of Federal oil is produced and refined by large, integrated companies, these companies would be primarily affected by the revised regulations. We estimate that the large, integrated companies would owe an additional $66 million dollars in Federal royalties each year.

The States, on the other hand, support the use of index pricing and our proposed Federal rule. In fact, the States of New Mexico, Wyoming, Alaska and Louisiana specifically commended our efforts to develop Federal oil regulations that are fair to all parties in a difficult and litigious environment.

Our goal continues to be issuing a new oil valuation rule that brings "value" certainty to the oil industry. More importantly, it is the right thing to do for the millions of Americans who own the Federal lands and associated oil resources. They are entitled to a fair return on their resources, and our ability to finalize this rule quickly will guarantee that.

I have attached a copy of our Federal oil valuation chronology to illustrate the origin and efforts exerted by MMS on this rule. In addition to finalizing our crude oil regulations, we have also been involved in other efforts that are complementary of the oil rules, and I will address these issues later in my testimony.

Next Steps

As a result of MMS opening the comment period and holding three recent workshops, the Department decided to extend the comment period to April 27, 1999. Now that the comment pierod has closed, the Department will thoroughly consider all ideas discussed at the workshops and all comments it received. MMS held constructive dialogue at the workshops with all parties. Suggestions were made by industry, as well as States and public interests groups. This allowed all parties to better understand each other’s positions on our rulemaking efforts. We had the opportunity to ask questions and discuss some concerns all had with certain portions of the proposals offered. MMS will consider all of the ideas presented carefully.

Indian Crude Oil Rulemaking

MMS is also in the process of developing separate oil valuation regulations for Indian leases. MMS published a proposed rule for Indian oil on February 12, 1998. MMS is preparing a supplementary proposed rule to improve some elements based on changes to the similar Federal crude oil rule proposal. The supplementary proposed rule should be published soon with a 30-day comment period. There is a moratorium on publishing a final rule before June 1, 1999, and as part of the Supplemental Appropriations process, the Appropriations Conferees have agreed to include a provision to extend the moratorium until October 1, 1999.

Reengineering Efforts

In addition to updating our oil regulations, we have also been working on changing the way we do our business as this Committee recognized and recommended in 1996. We realize that an outward focus on dynamic market conditions is needed in today’s RMP processes, priorities, and systems. MMS is currently shifting to a market-focused business environment by reengineering the Royalty Management Program. Royalty management reengineering is MMS’s number one priority for the new millennium. In the early stages of the RMP reengineering initiative, MMS established a reengineering team to fully examine and review the program’s current business practices. The team issued a report, in November 1998, "Road Map to the 21st Century," outlining the path MMS should take to replace its current business practices. The report revealed that a comprehensive overhaul is necessary because of new legislative mandates, changing energy markets, the need for more cost-effective operations, and outdated computer systems. The future RMP will be process centered, focused on outcomes, less costly, and, hopefully, viewed as the best by others in the 21st century. The implementation of this effort is largely internal and currently underway. It is expected to be fully implemented and operational by the year 2003.

Two goals have been established to "stretch" MMS to achieve results that are impossible under current operating processes. These stretch goals are:

• To ensure that royalty recipients will have access to their revenues within 24 hours of the time MMS receives it. Today, it generally takes 30 days to make revenues available; and

• To ensure royalty compliance within three years as opposed to six years.

To test the latter process, MMS established teams to conduct three operational models-- oil and gas leases in the Gulf of Mexico, oil and gas leases in the Unitah Basin of Utah/Colorado, and solid mineral leases in Utah, Wyoming, Colorado, and Montana. A sub-group within the solids team will focus on geothermal issues. These pilots have been operational beginning with the offshore model since early February of this year.

As part of furthering the reengineering initiative, MMS has put into place several partnerships with our customers in order to actively involve them in defining future business processes, refining reporting requirements, and developing the best information technology solutions for the future. Amoco, Texaco, Coastal, Devon, and Chevron are participating in the operational models for fluid minerals; the States of Utah, Colorado, and the Ute Tribe will participate in the similar onshore model; industry representatives on the solids operational model team are BHP, Cyprus-Amax, Kennecott Energy Company, PacifiCorp, Peabody Group, and Westmoreland Resources Inc. They join Colorado, Montana, Utah, Wyoming and the Navajo Nation and Crow Tribe.

 Our second stretch goal is to complete lease royalty compliance within three years or less. Therefore, beginning in Fiscal Year 1999, MMS will utilize a new audit strategy that will concentrate on a property rather than company basis. This strategy will emphasize the use of special teams to audit specific producing properties and other targets such as collection and distribution terminals, gas plants, and crude oil refineries. Future audits will be highly integrated, with the compliance processes being tested and developed by the reengineering operational model teams. The new strategy provides for full audit coverage of OCS royalties on a property basis, 80 percent coverage of onshore and tribal royalties, and reserves significant resources for a continued high level of coverage of individual Indian mineral revenues. These audit goals will be integrated into the reengineering environment by the year 2003.

Royalty In-Kind (RIK)

An important complement to reengineering, MMS is continuing to pilot programs to test taking Federal royalties in kind (RIK). MMS has long been a supporter and developer of novel approaches to royalty management, such as exercising its right to take the Federal Government’s royalty share in kind. In fact, MMS conducted an RIK gas pilot in 1995 and completed an RIK Feasibility Study in 1997. Although the results of 1995 were mixed, our interest in pursuing RIK continues. The 1997 RIK Feasibility Study concluded that, if implemented correctly, RIK in some areas could be workable, revenue positive, and administratively more efficient for all parties.

MMS has established a task force to implement three new RIK pilot programs. These pilots are: (1) oil production in Wyoming; (2) 8(g) natural gas production offshore Texas; and (3) natural gas production in the Gulf of Mexico. By using pilots, MMS can test and develop RIK programs without placing over $4 billion in royalty collections at significant risk. While we are enthusiastic about the prospects of these programs to provide administrative relief, given our past results, we believe a cautious approach is merited to develop a program that is workable for the Federal government without jeopardizing revenues.

The preliminary results from the pilot in Wyoming through two bidding cycles, suggest that we have been successful in increasing our royalty revenue. It has also shown that RIK cannot work everywhere. RIK will not work for small stripper well properties where oil is trucked to market.

The natural gas pilot in the 8(g) zone offshore so far has demonstrated it is feasible to move Federal production to Federal agencies for direct use by the government. This can help lower Federal energy costs. But again, this is sensitive to specific conditions, and we cannot presume it will work in all places.

The natural gas pilot in the Gulf of Mexico is still under development, and is slated for start-up in the Fall of this year. The pilot will move RIK natural gas on a grand scale with as much as 800 million cubic feet a day.

Though not part of the RIK pilots, MMS is also working with the Department of Energy to transfer 28 million barrels of royalty oil in the Gulf of Mexico to the Strategic Petroleum Reserve. This project is off to a good start -- we’ve reached agreements with four companies to deliver about 40,000 barrels per day into the Strategic Petroleum Reserve (SPR) facilities over the next three months. This summer, we will start a competitive process to exchange royalty oil for oil delivered to the SPR, increasing the program to up to 100,000 barrels per day.

Finally, MMS has renegotiated the existing contracts with the companies purchasing crude oil under the small refiner program. Instead of billing on the basis of the posted prices reported by lessees of Federal lands, the prices that MMS uses to sell are now based on the spot market prices adjusted for the quality of the crude oil at the lease. Through the use of market based pricing, MMS has significantly increased its revenues, compared with the use of posted prices.

Conclusion

Mr. Chairman, I hope I have captured the extensive progress and activity MMS has been involved with over the past four years to ensure implementation of a final oil regulation as well as other activities to make sure that royalties are properly accounted for. The American public is entitled to a fair return on the production of the resources extracted from Federal land. We do not believe that further moratoria on publication of the rule are conducive to a satisfactory result on this issue but rather think the Congress should allow the rulemaking process to proceed. Again, we commit that we will carefully consider all of the comments we have received on the rule before publishing a final rule and will seek the best result for the Nation, considering our statutory mandates and the goal of receiving a fair return for the public. This concludes my written testimony. However, I will be pleased to answer any questions you or Members may have regarding MMS’s proposed Federal oil valuation rule or any other issues that I raised during my testimony.

Federal Oil Valuation Chronology

Date	Event
Mid 1980's	City of Long Beach/California sue six major oil companies for underpaying royalties.
Early 1990's	City and State settle with five of the companies for about $350 million total.
June 1994	MMS formed interagency task force to investigate allegations of Federal oil undervaluation in California.
December 1995	Task force presents interim report to the Department. MMS issues Advance Notice of Proposed Rulemaking for Federal oil
May 1996	Task force presents final report to the Department.
June 1996	MMS forms team to develop new proposed oil valuation regulations and issues new valuation guidance to auditors.
July 1996	MMS issues engagement letters to the 20 major companies producing Federal oil in California.
August 1996	MMS begins National Crude Oil Strategy audits.
Fall 1996	MMS begins issuing bills to the companies in California. Total billing assessments by February 1998 amount to $257 million.
January 24, 1997	MMS proposes new Federal oil valuation rule (NYMEX and ANS).
April 1997	MMS holds two public meetings on proposed rule.
July 3, 1997	In response to public comments, MMS publishes supplementary proposed Federal oil valuation rule (expanded use of arm’s-length contracts).
September 1997	Again in response to public comments, MMS reopens comment period and lists additional alternatives for consideration.
October 1997	MMS holds 7 public workshops on alternatives valuation methods.
February 6, 1998	After receiving 2,600 pages of comments and input at the workshops, MMS publishes second supplemental proposed rule (ANS for CA, benchmarks for Rockies, and spot elsewhere).
February	Five public hearings held to get comments on latest proposal.
March 1998
March 24, 1998	MMS extended the comment period to April 7, 1998.
May 1, 1998	President signed the FY 1998 Supplemental Appropriations Act (P.L. 105-174) that includes language bill to delaying publication of the final oil valuation rule until October 1, 1998.
June 3, 1998	MMS sends report to Congress on status of the rulemaking.
June 11, 1998	Senate Subcommittee on Energy and Natural Resources held a hearing with the Department, the public, and representatives of the industry to hear concerns about publishing the oil rule.
Late June	Senate Committee on Appropriations approved language that would extend the delay of publishing a final rule until October 1, 1999.
July 8, 1998	MMS reopened the comment period from July 9, 1998, to July 31, 1998.
July 9 & 22, 1998	Senate Energy Subcommittee holds meetings with industry and DOI to discuss further industry concerns.
July 16, 1998	MMS publishes another supplemental proposed rule to address industry concerns.
July 21, 1998	Maloney and Miller hold meeting to involve other interest groups.
July 28, 1998	Senate staffers meet with DOI to discuss rule changes that would address industry concerns.
August 11, 1998	Assistant Secretary sends first letter to key Senators regarding direction of final rule.
August 31, 1998	Assistant Secretary sends second letter to key Senators containing outline of final rule direction.
September 1, 1998	MMS sends second report to Congress on status of rulemaking.
October 8, 1998	President signs FY 1999 Omnibus Appropriations Act (P.L. 105-277) extending moratorium on rule until June 1, 1999.
March 12, 1999	Secretary Babbitt announces another reopening of comment period for 30 days, until April 12. In addition, three workshops scheduled during this time.
March 23, 1999	Senate approved FY 1999 Emergency Supplemental Appropriations bill with a rider attached that would prohibit MMS from publishing a final rule October 1, 1999.
March 24	Workshops held in Houston, Texas, Albuquerque, New Mexico and
April 7, 1999	Washington, D.C.
April 12, 1999	MMS extends comment period until April 27, 1999.
May 19,1999	Subcommittee on Government Management, Information and Technology holds hearing on oil rule with Department.