Fluid Mineral Leases and Leasing Process, 47562-47648 [2023-14287]
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Parts 3000, 3100, 3110, 3120,
3130, 3140, 3150, 3160, 3170, and 3180
[BLM_HQ_FRN_MO4500172196]
RIN 1004–AE80
Fluid Mineral Leases and Leasing
Process
Bureau of Land Management,
Interior.
ACTION: Proposed rule.
AGENCY:
The Bureau of Land
Management (BLM) is proposing to
revise the BLM’s oil and gas leasing
regulations. Among other things, the
proposed rule would reflect provisions
of the Inflation Reduction Act
pertaining to royalty rates, rentals, and
minimum bids, and would update the
bonding requirements for leasing,
development, and production. The
proposed rule would also improve the
BLM’s leasing process to ensure proper
stewardship of public lands and
resources and would revise some
operating requirements.
DATES: Send your comments on this
proposed rule to the BLM on or before
September 22, 2023. The BLM is not
obligated to consider any comments
received after this date in making its
decision on the final rule.
Information Collection Requirements:
This proposed rule includes revised and
new information-collection
requirements that must be approved by
the Office of Management and Budget
(OMB). If you wish to comment on the
information-collection requirements,
please note that those comments should
be sent directly to OMB. OMB is
required to make a decision concerning
the collection of information contained
in this proposed rule between 30 and 60
days after publication of this document
in the Federal Register. Therefore, a
comment to the OMB on the proposed
information-collection revisions is best
assured of being given full consideration
if the OMB receives it by September 19,
2023.
ADDRESSES: Mail, personal, or
messenger delivery: U.S. Department of
the Interior, Director (630), Bureau of
Land Management, 1849 C St. NW,
Room 5646, Washington, DC 20240,
Attention: 1004–AE80. Federal
eRulemaking Portal: https://
www.regulations.gov. In the Search-box,
enter ‘‘RIN 1004–AE80’’ and click the
‘‘Search’’ button. Follow the
instructions at this website.
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SUMMARY:
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For Comments on Information—
Collection Activities
Information-Collection Requirements:
Written comments and suggestions on
the information-collection requirements
should be submitted by the date
specified earlier in DATES to https://
www.reginfo.gov/public/do/PRAMain.
Find this specific information-collection
by selecting ‘‘Currently under Review—
Open for Public Comments’’ or by using
the search function.
If you submit comments on these
information-collection burdens, you
should provide the BLM with a copy at
one of the addresses shown earlier in
this section so that we can summarize
all written comments and address them
in the final rulemaking. Please indicate
‘‘Attention: Paperwork Reduction Act
Comments (RIN 1004–AE80).’’
Comments not pertaining to the
proposed rule’s information-collection
burdens should not be submitted to
OMB. The BLM is not obligated to
consider or include in the
Administrative Record for the final rule
any comments that are improperly
directed to OMB.
FOR FURTHER INFORMATION CONTACT:
Peter Cowan, Senior Mineral Leasing
Specialist, telephone: (720) 838–1641 or
email: picowan@blm.gov, for
information regarding the substance of
this proposed rule or Matt Warren,
Acting Division Chief for the Division of
Fluid Minerals, telephone: (505) 216–
8832, or email: mwarren@blm.gov, for
information about the BLM’s fluid
minerals program. For questions relating
to regulatory process issues, contact
Faith Bremner at email: fbremner@
blm.gov. Individuals in the United
States who are deaf, blind, hard of
hearing, or have a speech disability may
dial 711 (TTY, TDD, or TeleBraille) to
access telecommunications relay
services for contacting Mr. Warren.
Individuals outside the United States
should use the relay services offered
within their country to make
international calls to the point-ofcontact in the United States.
SUPPLEMENTARY INFORMATION:
I. List of Acronyms
II. Executive Summary
III. Public Comment Procedures
IV. Background
V. Discussion of the Proposed Rule
VI. Overview of Modifications
VII. Procedural Matters
I. List of Acronyms
ANWR = Arctic National Wildlife Refuge
BLM = Bureau of Land Management
CA = Communitization Agreement
CD = Certificate of Deposit
CFIUS = Committee on Foreign Investment in
the United States
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CFR = Code of Federal Regulations
DOI = Department of the Interior
E.O. = Executive Order
EOI = Expression of Interest
EPAct = Energy Policy Act of 2005
FLPMA = Federal Land Policy and
Management Act
FOOGLRA = Federal Onshore Oil and Gas
Leasing Reform Act of 1987
GAO = Government Accountability Office
IBLA = Interior Board of Land Appeals
IIJA = Infrastructure Investment and Jobs Act
of 2021
IRA = Inflation Reduction Act of 2022
LOC = Letter of Credit
MLA = Mineral Leasing Act of 1920, as
amended (MLA is also referred to as ‘‘Act’’
in the regulations.)
MLAAL = Mineral Leasing Act for Acquired
Lands of 1947, as amended
MLRS = Mineral and Land Records System
NEPA = National Environmental Policy Act
NFLSS = National Fluids Lease Sale System
NPR–A = National Petroleum Reserve—
Alaska
OIG = Office of the Inspector General
OMB = Office of Management and Budget
ONRR = Office of Natural Resources Revenue
OPM = Office of Personnel Management
PRA = Paperwork Reduction Act
RIA = Regulatory Impact Analysis
ROW = Right-of-way
SBA = Small Business Administration
SO = Secretarial Order
SME = Subject matter expert
U.S.C. = United States Code
USFS = United States Forest Service
II. Executive Summary
This proposed rule aims to enhance
the administration of oil and gas-related
activities on America’s public lands and
reflects provisions in recently enacted
laws that modify aspects of the Federal
onshore oil and gas program.
Specifically, the proposed rule would
implement changes pertaining to royalty
rates, rentals, and minimum bids for
BLM-issued oil and gas leases and
would update the bonding requirements
for leasing, development, and
production. The BLM has not
comprehensively updated the Federal
onshore oil and gas program’s regulatory
framework since 1988. As a result, many
of the program’s regulatory
requirements are outdated, do not
adequately protect the fiscal interests of
the American public, and do not
promote leasing practices that are
consistent with diligent development
requirements and multiple-use and
sustained-yield principles. This
proposed rule seeks to update the
existing regulations accordingly.
The Secretary of the Interior manages
a Federal onshore oil and gas program
pursuant to the requirements of various
statutes, including the Federal Land
Policy and Management Act of 1976, as
amended (43 U.S.C. 1701 et seq.)
(FLPMA), the Mineral Leasing Act of
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
1920, as amended (30 U.S.C. 181 et seq.)
(MLA), and the Mineral Leasing Act for
Acquired Lands of 1947, as amended
(30 U.S.C. 351 et seq.) (MLAAL), as well
as the recently enacted Inflation
Reduction Act (IRA) of 2022 and
Infrastructure Investment and Jobs Act
(IIJA) of 2021. Under FLPMA, the BLM
manages approximately 245 million
acres of public lands and approximately
700 million acres of federally owned
subsurface minerals ‘‘on the basis of
multiple use and sustained yield,’’
which requires the BLM to achieve ‘‘a
combination of balanced and diverse
resource uses that takes into account the
long-term needs of future generations
for renewable and non-renewable
resources.’’ The BLM is required to
avoid ‘‘permanent impairment of the
productivity of the land and the quality
of the environment with consideration
being given to the relative values of the
resources and not necessarily to the
combination of uses that will give the
greatest economic return or the greatest
unit output.’’ Oil and gas-related
activities are one of the multiple land
uses that FLPMA authorizes and which
the BLM administers in accordance with
the MLA and MLAAL. Both of those
Acts govern the leasing of public lands
to explore for and develop petroleum,
natural gas, coal, and other
hydrocarbons, amongst other mineral
deposits.
Over the past 2 years, Congress has
modified certain aspects of the Federal
onshore oil and gas program through the
IRA and IIJA. In the IRA, Congress
updated the onshore oil and gas
program’s fiscal terms and established a
new leasing scheme for Federal lands.
In the IIJA, Congress directed the BLM
to proactively ‘‘reduce the inventory of
idled wells on Federal land.’’ Idled
wells can cause a wide range of impacts
on public lands, waters, wildlife, and
nearby communities. There are
currently thousands of idled wells on
Federal lands, many of which have not
produced oil or gas in years. The BLM
intends to address the IRA and IIJA in
this rulemaking.
Prior to the enactment of the IRA and
IIJA, the Government Accountability
Office (GAO) and the Department of the
Interior’s (DOI) Office of the Inspector
General (OIG) reviewed and audited the
BLM’s Federal onshore oil and gas
program to identify problematic areas in
this program and recommended actions
to address them. As part of the GAO’s
and OIG’s respective audits, they
highlighted weaknesses in the onshore
program’s fiscal framework and
recommended that the BLM take steps
to ensure that the American public
receives a fair return from oil and gas
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activities on public lands. The DOI and
the BLM concurred with these
recommendations in the Report on the
Federal Oil and Gas Leasing Program
issued in November 2021. Accordingly,
the BLM is proposing to adjust its oil
and gas bonding requirements,
including by increasing minimum bond
amounts for the first time in decades.
The BLM believes that doing so, along
with other proposed changes, would
help ensure that reclamation costs
reside primarily with oil and gas
lessees, operating rights owners, and
operators and not the American public.
In the same vein, the BLM is proposing
to adjust its cost recovery mechanisms
so that project applicants provide a
more appropriate share of up-front
costs. Finally, the BLM is proposing
several changes to encourage diligent
development of leased lands and to
direct leasing to areas with fewer
multiple-use conflicts and a greater
likelihood of achieving responsible
development.
III. Public Comment Procedures
If you wish to comment on this
proposed rule, you may submit your
comments to the BLM by mail, personal
or messenger delivery, or through
https://www.regulations.gov (see the
ADDRESSES section). Please make your
comments on the proposed rule as
specific as possible, confine them to
issues pertinent to the proposed rule,
explain the reason for any changes you
recommend, and include any
supporting documentation. Where
possible, your comments should
reference the specific section or
paragraph of the proposal that you are
addressing. The BLM is not obligated to
consider or include in the
Administrative Record for the final rule
any comments received after the close of
the comment period (see DATES) or
comments delivered to an address other
than those listed previously (see
ADDRESSES). Comments, including
names and street addresses of
respondents, will be available for public
review at the address listed under
‘‘ADDRESSES: Mail, personal or
messenger delivery’’ during regular
hours (7:45 a.m. to 4:15 p.m. Eastern
Time), Monday through Friday, except
holidays. Before including your address,
telephone number, email address, or
other personal identifying information
in your comment, be advised that your
entire comment—including your
personal identifying information—may
be made publicly available at any time.
While you can ask us in your comment
to withhold from public review your
personal identifying information, we
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cannot guarantee that we will be able to
do so.
As explained later, this proposed rule
includes revisions to information
collection requirements that must be
approved by the OMB. If you wish to
comment on the revised information
collection requirements in this proposed
rule, please note that such comments
must be sent directly to the OMB in the
manner described in the ADDRESSES
section. The OMB is required to make
a decision concerning the collection of
information contained in this proposed
rule between 30 and 60 days after
publication of this document in the
Federal Register. Therefore, a comment
to the OMB on the proposed
information collection revisions is best
assured of being given full consideration
if the OMB receives it by September 19,
2023.
IV. Background
The BLM is undertaking this
rulemaking for two primary reasons: (1)
to reflect provisions in recently enacted
laws that modify aspects of the Federal
onshore oil and gas program; and (2) to
enhance the administration of the
onshore program, consistent with the
BLM’s multiple-use and sustained-yield
mission. As documented in a DOI report
released in November 2021,1 and in
numerous reports from the GAO and
DOI’s OIG,2 the onshore program,
historically, has failed to provide the
Federal Government with a fair return;
exposed the Federal Government to
significant reclamation-related
liabilities; lacked adequate cost recovery
mechanisms; and encouraged
speculative leasing and wasteful
development practices. Through this
rulemaking, the BLM intends to adopt
new procedures and requirements to
address those issues.
The Secretary of the Interior manages
Federal oil and gas resources pursuant
to the MLA, MLAAL, and other statutes
pertaining to specific categories of
lands. The MLA and MLAAL prescribe
1 DOI, ‘‘Report on the Federal Oil and Gas Leasing
Program’’ (Nov. 2021).
2 See, e.g., OIG, ‘‘Inspector General’s Statement
Summarizing the Major Management and
Performance Challenges Facing the U.S. Department
of the Interior’’ (Nov. 2022); GAO, ‘‘OIL AND GAS
LEASING—BLM Should Update Its Guidance and
Review Its Fees’’ (Nov. 2021); GAO, ‘‘OIL AND
GAS—Onshore Competitive and Noncompetitive
Lease Revenues’’ (Nov. 2020); GAO, ‘‘FEDERAL
ENERGY DEVELOPMENT—Challenges to Ensuring
a Fair Return for Federal Energy Resources’’ (Sept.
2019); GAO, ‘‘OIL AND GAS—Bureau of Land
Management Should Address Risk from Insufficient
Bonds to Reclaim Wells’’ (Sept. 2019); GAO, ‘‘OIL
AND GAS LEASE MANAGEMENT—BLM Could
Improve Oversight of Lease Suspensions with Better
Data and Monitoring Procedures’’ (June 2018); OIG,
‘‘Bureau of Land Management’s Idle Well Program’’
(Jan. 2018).
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
the minimum bid amounts, minimum
rental rates, and minimum percentage of
royalty reserved to the United States
under onshore oil and gas leases on
most Federal lands. The BLM is the
agency within DOI responsible for
regulating onshore leasing activities for
federally managed lands and the
subsurface mineral estate. The BLM
regulations governing onshore oil and
gas leasing activities are set out in 43
CFR parts 3000 and 3100. Aside from
updating certain application fees for
consistency, the BLM is not proposing
in this rule to revise the regulations at
43 CFR part 3130, which govern oil and
gas activity in the National Petroleum
Reserve—Alaska.
In 1976, FLPMA established
particular land and resource
management authorities for the BLM,
emphasizing multiple use, sustained
yield, and environmental protection as
the guiding principles for public land
management. FLPMA directs the BLM
to manage some areas for conservation,
to consider the best use of public lands
in a broader context than just economic
return, and to take action necessary to
prevent unnecessary or undue
degradation of the lands.
Today, Federal onshore oil and gas
production accounts for approximately
10 percent of domestically produced oil
and 8 percent of domestically produced
natural gas. As of the end of Fiscal Year
(FY) 2022, the BLM managed 34,409
Federal oil and gas leases covering 23.7
million acres with nearly 89,350 wells
that are capable of production. Of the
more than 23 million onshore acres
under lease today, over 11 million
(approximately 48 percent) of those
acres are non-producing.
A. Addressing Recently Enacted Laws
Concerning the Federal Onshore Oil and
Gas Program
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Over the past 2 years, Congress has
enacted two laws—the IRA (Pub. L.
117–169) and the IIJA (Pub. L. 117–
58)—that modify the Federal onshore oil
and gas program’s statutory framework.
Through this rulemaking, the BLM will
incorporate the provisions that are
contained in these Acts into its oil and
gas regulations.
1. Inflation Reduction Act
In August 2022, Congress passed the
IRA, two sections of which the BLM
intends to implement, in part, through
this rulemaking: (1) Section 50262—
Mineral Leasing Act Modernization; and
(2) Section 50265—Ensuring Energy
Security.
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Section 50262—Mineral Leasing Act
Modernization
In IRA section 50262, Congress
modernized the onshore oil and gas
program’s fiscal terms. Over the past
decade, the GAO and OIG have
repeatedly raised concerns about the
fiscal soundness of the onshore
program.3 Furthermore, in 2011, the
GAO added the ‘‘Management of
Federal Oil and Gas Resources’’ to its
list of ‘‘high-risk’’ Federal programs
after determining that DOI ‘‘does not
have reasonable assurance that it is
collecting its share of revenue from oil
and gas produced on Federal lands.’’ 4
‘‘High-risk’’ programs are ‘‘vulnerable to
waste, fraud, abuse, or mismanagement,
or in need of transformation.’’ GAO
reaffirmed this ‘‘high-risk’’
determination in 2021 and specifically
recommended that DOI ‘‘needs to
commit to developing policies that
consistently lead towards improvements
in . . . ensuring the government
receives a fair return.’’ 5
The IRA addressed some of the GAO
and OIG’s concerns by increasing the
onshore program’s statutory royalty rate,
minimum rental rates, and minimum
lease bid, and establishing a new fee on
expressions of interest (EOI). The BLM
proposes to incorporate these statutory
changes into its oil and gas regulations.
Section 50265—Ensuring Energy
Security
In section 50265 of the IRA, Congress
enacted new oil and gas leasing terms
for Federal lands. Under these terms,
the BLM ‘‘may not issue a right-of-way
for wind or solar energy development
on Federal land’’ unless it has: (1) held
an onshore oil and gas lease sale during
the 120-day period ending on the date
of the issuance of the right-of-way; and
(2) ‘‘the sum total of acres offered for
lease in onshore lease sales during the
1-year period ending on the date of the
issuance of the right-of-way . . . is not
less than the lesser of . . . 2,000,000
acres[ ] and 50 percent of the acreage for
which expressions of interest have been
submitted for lease sales during that
period. . . .’’
3 See, e.g., OIG, ‘‘Inspector General’s Statement
Summarizing the Major Management and
Performance Challenges Facing the U.S. Department
of the Interior’’ (Nov. 2022); GAO, ‘‘FEDERAL
ENERGY DEVELOMPENT—Challenges to Ensuring
a Fair Return for Federal Energy Resources’’ (Sept.
2019).
4 GAO, ‘‘HIGH-RISK SERIES—An Update’’ (Feb.
2011).
5 GAO, ‘‘HIGH-RISK SERIES—Dedicated
Leadership Needed to Address Limited Progress in
Most High-Risk Areas’’ (Mar. 2021).
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2. Infrastructure Investment and Jobs
Act
In November 2021, Congress passed
the IIJA, which amended section 349 of
the Energy Policy Act of 2005 (EPAct)
(Pub. L. 109–58). Section 349 of EPAct
directs the BLM to ‘‘establish a program
. . . to remediate, reclaim, and close
orphaned, abandoned, or idled oil and
gas wells located on land administered
by the land management agencies
within the Department of the Interior
and the Department of Agriculture.’’
Section 349 defines an ‘‘idled well’’ as
‘‘a well . . . [that] has been
nonoperational for at least 7 years’’ and
has ‘‘no anticipated beneficial use.’’
Since EPAct’s passage in 2005, the
BLM has gained additional information,
experience, and insights into its efforts
to inventory and manage idled wells. In
2018, the OIG issued a report finding
that ‘‘[i]dle wells pose notable financial
risk to the U.S. Government and the
taxpayer, as idle wells can fall into
disrepair creating environmental, safety,
and public health hazards. In addition,
idle wells pose a risk of becoming
orphaned, thus creating an undue
financial burden on the taxpayer to pay
for plugging and reclaiming. Idle wells
have the potential to cost taxpayers
millions of dollars if not properly
reviewed and managed.’’ 6 The OIG also
identified ‘‘various program
management issues,’’ including a ‘‘lack
of an accurate inventory of idle wells’’
and ‘‘unreliable data in managing idle
wells,’’ ‘‘that have contributed to BLM’s
inability to reduce its idle well
numbers.’’ To address these issues, the
OIG recommended that the BLM
strengthen its procedures for monitoring
and tracking idled wells.
The GAO also addressed the idled
well program in a pair of reports issued
in May 2018 and September 2019.7 In
these reports, the GAO stated that the
BLM has ‘‘few policy tools to manage
shut-in wells,’’ which represent a ‘‘large
portion’’ of wells that become idled and
orphaned.8 The GAO also identified
nearly 2,300 idled wells ‘‘at increased
risk of becoming orphaned because they
have not produced since June 2008 and
have not been reclaimed.’’ The bonds
for ‘‘a majority of these at-risk wells’’
were ‘‘too low to cover’’ their
anticipated reclamation costs, which,
6 OIG, ‘‘Bureau of Land Management’s Idle Well
Program’’ (Jan. 2018).
7 GAO, ‘‘OIL AND GAS—Bureau of Land
Management Should Address Risk from Insufficient
Bonds to Reclaim Wells’’ (Sept. 2019); GAO, ‘‘OIL
AND GAS WELLS—Bureau of Land Management
Needs to Improve Its Data and Oversight of Its
Potential Liabilities’’ (May 2018).
8 See § 3160.0–5 for a proposed definition of shutin well.
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according to the GAO, may exceed $330
million.
In the IIJA, Congress provided the
BLM with additional direction
concerning the idled well program.
Specifically, the IIJA requires the BLM
to ‘‘periodically review’’ and proactively
‘‘reduce the inventory of idled wells on
Federal land.’’ The IIJA also reduces the
nonoperational period after which a
well is considered idled from 7 to 4
years. In light of these statutory
directives, as well as the
recommendations from the OIG and
GAO, the BLM is proposing to adopt
additional requirements for operators of
nonoperational wells (specifically, shutin and temporarily abandoned wells).
The BLM believes that these
requirements would help the BLM
reduce its inventory of idled wells
through improved identification,
tracking, and proactive management.
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B. Enhancing the Administration and
Functioning of the Federal Onshore Oil
and Gas Program
In addition to addressing recent
Congressional directives, the BLM is
undertaking this rulemaking for the
purpose of adopting new procedures
and requirements that would enhance
the administration of the Federal
onshore oil and gas program, consistent
with the BLM’s multiple use and
sustained yield mission. The BLM has
not updated its oil and gas regulations
comprehensively since 1988 and
believes that changes are needed to
reduce taxpayer exposure to
reclamation-related liabilities; provide
adequate cost recovery mechanisms;
direct oil and gas leasing to appropriate
locations; and encourage diligent
development by parties that are
responsible and qualified to conduct
such development.
1. Reducing Taxpayer Exposure to
Reclamation-Related Liabilities
The MLA requires the BLM to
‘‘establish such standards as may be
necessary to ensure that an adequate
bond, surety, or other financial
arrangement will be established prior to
the commencement of surfacedisturbing activities on any lease, to
ensure the complete and timely
reclamation of the lease tract, and the
restoration of any lands or surface
waters adversely affected by lease
operations after the abandonment or
cessation of oil and gas operations on
the lease’’ (see 30 U.S.C. 226(g)). The
MLA further requires the BLM to
include in oil and gas leases ‘‘such
provisions as [it] deem[s] necessary . . .
for the protection of the interests of the
United States . . . and for the
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safeguarding of the public welfare’’ (see
30 U.S.C. 187). To comply with these
statutory requirements, the BLM is
proposing to update its bonding
framework for the first time in over 60
years and adopt additional changes to
limit the reclamation-related liabilities
of the Federal Government.
The BLM’s current minimum bond
amounts are outdated, expose the
Federal Government to significant
financial risks in the event of
bankruptcies, and delay ‘‘complete and
timely’’ reclamation and restoration of
lease tracts, which can cause or
exacerbate a range of environmental
issues, including methane leaks, surface
and groundwater contamination,
interference with agricultural activities,
and degraded wildlife habitat.9 The
BLM has not increased its minimum
bond amounts, which are currently
$10,000 for individual lease bonds,
$25,000 for statewide bonds, and
$150,000 for nationwide bonds, since
1951 (statewide and nationwide bonds)
and 1960 (individual lease bonds).
Accounting for inflation, the 2022
equivalents of those bond amounts are
$100,105, $281,399, and $1,688,394
respectively. (See https://
www.usinflationcalculator.com/).
Consequently, the BLM’s current
bonding requirements ‘‘may not create
an incentive for operators to promptly
reclaim wells after operations cease
because it costs more to reclaim the
wells than the operator could collect
from its bond.’’ 9 According to the
BLM’s internal estimates, plugging costs
alone typically range from $35,000 to
$200,000 per well.
In addition to increasing minimum
bond amounts, the BLM is proposing
other measures to protect taxpayers
from reclamation-related liabilities.
These include enhanced oversight of
idled wells, as discussed previously.
The BLM also intends to streamline the
process for adding noncompliant
entities to its list of entities and their
officers that may not receive new leases
under section 17(g) of the MLA, 30
U.S.C. 226(g).
2. Providing Adequate Cost Recovery
Mechanisms
As explained in greater detail in the
Discussion of the Proposed Rule, the
BLM is proposing to revise the onshore
program’s cost recovery mechanisms.
The BLM is doing so to ensure that the
program’s application fees reflect actual
processing costs. In 2021, the GAO
released a report on the BLM’s fee
9 GAO, ‘‘OIL AND GAS—Bureau of Land
Management Should Address Risk from Insufficient
Bonds to Reclaim Wells’’ (Sept. 2019).
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structure for the onshore oil and gas
program, which stated that the ‘‘BLM
does not have assurance that its current
application fees reflect changes in
conditions because its biennial fee
review does not examine all the costs
BLM intended to recover through its
application fees.’’ 10 The BLM concurred
with that finding, and, in conjunction
with this rulemaking, evaluated those
costs, which informed the proposed
adjustments to the onshore program’s
application fees.
3. Directing Oil and Gas Leasing to
Appropriate Locations
To assist with the consideration and
selection of lease sale parcels, the BLM
intends to incorporate preference
criteria into its oil and gas regulations.
Historically, the BLM has not employed
nationwide criteria to inform its
selection of sale parcels. The BLM has
invested a considerable amount of time
and resources on evaluating parcels that
the public does not purchase and that
lessees do not develop. Between 2013
and 2022, the BLM offered
approximately 40.3 million acres and
leased approximately 9.5 million acres
from competitive lease sales.11 Even
when parcels sell at or above the
minimum bid, they are rarely developed
or generate royalties for the Federal
Government. The GAO found that only
about 7 percent of the leases reviewed
produced oil and gas in the primary
term of the lease.12 The BLM believes
that by directing Federal oil and gas
leasing towards areas that are more
likely to produce, it can appropriately
utilize the BLM’s time and resources.
When new technology becomes
available, the BLM would reevaluate
development potential in light of that
technology, which could change the
identified areas that are more likely to
produce.
The lack of preference criteria to aid
in the selection of sale parcels also leads
to conflict when leases are offered in
areas with sensitive cultural, wildlife,
and recreation resources. By directing
leasing toward areas that do not have
such resources, the BLM believes it can
proactively avoid some of these
conflicts. Additionally, the BLM
believes that this approach would
provide stakeholders with greater
certainty, as it would be understood at
the outset of the leasing process that the
10 GAO, ‘‘OIL AND GAS LEASING—BLM Should
Update Its Guidance and Review Its Fees’’ (Nov.
2021).
11 BLM Public Lands Statistics, Table 11,
available at https://www.blm.gov/programs-energyand-minerals-oil-and-gas-oil-and-gas-statistics.
12 GAO, ‘‘OIL AND GAS—Onshore Competitive
and Noncompetitive Lease Revenues’’ (Nov. 2020).
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preference criteria would guide the
BLM’s decision-making.
While the proposed rule text sets out
a number of criteria to aid the BLM in
selecting parcels for potential inclusion
in lease sales, the analysis of the
impacts of leasing these parcels would
also address the potential impacts of
direct, indirect, and cumulative
greenhouse gas emissions from leasing
in accordance with the National
Environmental Policy Act (NEPA) and
applicable legal precedent. While the
preference criteria will also affect the
environmental consequences of
proposed leasing, the BLM requests
comment on whether the preference
criteria or other portions of this
proposed rule should be expanded, or
new provisions added, to discuss
analysis of greenhouse gas emissions
and related decision-making based on
the analysis.
4. Encouraging Diligent Development of
Federal Oil and Gas Leased Resources
The BLM has added provisions to the
proposed rule that would incentivize
diligent development of leased
resources by responsible and qualified
parties. When oil and gas leases are not
diligently developed, as required by the
MLA and expressly stated in the BLM’s
oil and gas lease form,13 there can be
significant opportunity costs. For
example, the BLM expends time and
resources processing and administering
lease suspensions and drilling permit
extensions that often do not lead to
development.14 Additionally, leases that
are not diligently developed can limit
the BLM’s ability to manage public
lands for other uses and resources and
fulfill its multiple-use and sustainedyield missions. For these reasons, the
BLM is proposing to limit the use of
lease suspensions and drilling permit
extensions, and, prior to issuing or
approving the transfer of leases,
strengthen its oversight of whether the
potential transferees are responsible and
qualified to pursue development.
V. Discussion of the Proposed Rule
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A. Summary
The proposed modifications to parts
3000, 3100, 3110, 3120, 3130, 3140,
3150, 3160, 3170, and 3180 are
described in detail in the following
section-by-section discussion. In
13 BLM Form 3100–11, ‘‘Offer to Lease and Lease
for Oil and Gas,’’ available at https://www.blm.gov/
sites/blm.gov/files/uploads/Services_NationalOperations-Center_Eforms_Fluid-and-SolidMinerals_3100-011.pdf.
14 GAO, ‘‘OIL AND GAS LEASE
MANAGEMENT—BLM Could Improve Oversight of
Lease Suspensions with Better Data and Monitoring
Procedures’’ (June 2018).
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addition, minor non-substantive
changes, which do not warrant detailed
discussion, are also proposed
throughout the rule. For example, the
rule proposes to change ‘‘the Bureau’’ to
‘‘the BLM,’’ change ‘‘Service’’ to
‘‘ONRR,’’ spell out single-digit numbers,
and change the question-and-answer
formatting to be consistent with other
regulations that appear in the CFR.
Throughout the proposed rule, the
existing term ‘‘shall’’ has been replaced
with the words ‘‘must,’’ ‘‘will,’’ or
‘‘may,’’ as appropriate, to reduce
confusion. The proposed rule would
update all time frames to specify either
business or calendar days in order to
reduce confusion.
In addition, all sections in the parts
that are being revised and replaced
would be redesignated to remove the
hyphens from the existing section
numbers to comply with the Office of
the Federal Register’s updated style
requirements. For example, § 3000.0–5
would be redesignated to § 3000.5.
Removing the hyphens would require
the BLM to redesignate some of the
existing section numbers with decimals
by adding more place values to them,
which would allow the BLM to
subsequently delineate the different
sections. For example, § 3000.1 would
be redesignated as § 3000.10, § 3000.2
would be redesignated as § 3000.20, and
so on. This redesignation would be
carried throughout the proposed rule,
even in sections that are not otherwise
being updated. Finally, the BLM would
remove the regulatory section numbers
for headings that have no text associated
them. These are referred to as
‘‘undesignated center headings’’ and
serve as section guideposts in the
regulations.
Each section of each subpart, and
each provision within those sections, is
separate and severable from the other
sections and provisions. If any provision
of this rule is stayed or determined to
be invalid or unenforceable, that
provision shall be severable from the
rest of the rule and not affect any
remaining provisions. The remaining
provisions would remain in force. This
rule should be construed to continue to
give the maximum effect to each
provision as permitted by law.
B. Section-by-Section Discussion
The following discussion addresses
the proposed changes to the existing
regulations. If a provision is not
specifically discussed in this section-bysection analysis, then the provision
would be essentially the same as the
existing regulation, except for the minor
non-substantive changes discussed
previously.
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1. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3000
The proposed rule would add a new
section to the existing subpart 3000
regulations and revise five section
headings. The goal of the revisions is to
replace the existing question-andanswer formats and use more commonly
used terms, consistent with other
changes made throughout this rule.
Section 3000.5
Definitions
The BLM is proposing to alphabetize
the definitions in this section.
The proposed rule would add a
definition for ‘‘acreage for which
expressions of interest have been
submitted’’ to refer to acreage that is
identified in an expression of interest
received by BLM, that has not been
proposed for leasing in any pending sale
or other expression of interest pending
BLM disposition, and for which BLM
may lawfully issue an oil and gas lease.
This definition and the below definition
of ‘‘acres offered for lease’’ are intended
to clarify the means by which BLM will
internally track its leasing progress for
purposes of the Inflation Reduction Act,
as further specified in new § 3120.42.
The proposed rule would add a
definition for ‘‘acres offered for lease’’ to
mean all acres that BLM has offered for
oil and gas lease, regardless of whether
those acres are acreage for which
expressions of interest have been
submitted.
The proposed rule would update the
definition for ‘‘Act’’ to include the
acronym MLA for the Mineral Leasing
Act of 1920, as this acronym would
appear in the proposed regulatory text.
The proposed rule would replace the
term ‘‘Service’’ in this section with
‘‘ONRR’’ because the relevant functions
of the prior Minerals Management
Service (also referred to throughout the
existing regulations as ‘‘Service’’) are
now performed by the ONRR. The
proposed rule would likewise change
the term ‘‘Service’’ to ‘‘ONRR’’ wherever
it appears in the parts 3000 and 3100
regulations.
The proposed rule would add a
definition for ‘‘Person’’ to unify the
terms ‘‘person’’ and ‘‘entity.’’ The
proposed definition would define
‘‘person’’ to mean any individual or
entity, such as a partnership,
association, State, political subdivision
of a State or territory, or a private,
public, or municipal corporation.
The proposed rule would modify the
existing definition for ‘‘Proper BLM
office’’ to remove the reference to the
BLM Alaska State Office. The definition
of this term would continue to refer the
reader to § 1821.10, which contains the
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location information for all BLM state
offices.
A new definition for ‘‘Properly filed’’
would be added to proposed § 3000.5 to
correspond to the use of the term in
§ 3000.60. The new definition would
describe ‘‘Properly filed’’ as a document
or form submitted to the appropriate
office with all necessary information
and payments, as provided in 43 CFR
subpart 1822.
The proposed rule would modify the
existing definition for ‘‘Surface
managing agency’’ to ensure that the
definition includes other agencies
within the DOI with which the BLM
must coordinate, in addition to non-DOI
agencies that have management
responsibility for the surface resources
that overlay federally owned minerals.
The revised definition would replace
the phrase ‘‘any Federal agency outside
of the Department of the Interior with
jurisdiction over the surface overlying
federally owned minerals’’ with ‘‘any
Federal agency, other than the BLM,
having management responsibility for
the surface resources that overlay
federally owned minerals.’’
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Section 3000.20 False Statements
The purpose of this section is to
inform the public that submitting false
or fraudulent statements to the agency is
a crime punishable by imprisonment or
a fine, or both. The proposed rule would
remove the references to specific
imprisonment times and fine amounts
for violations provided in 18 U.S.C.
1001. The purpose of this change is to
ensure that this regulation does not
become inaccurate or obsolete if the
penalty provisions in 18 U.S.C. 1001 are
updated. The penalties are already
referenced at 18 U.S.C. 1001, which is
cited in the BLM’s regulation.
Section 3000.40 Appeals
A BLM decision is subject to appeal
to the Interior Board of Land Appeals
(IBLA) in accordance with the
regulations contained in 43 CFR part 4,
when a decision accomplishes,
authorizes, or prohibits some action. See
International Petroleum, 190 IBLA 130,
134–35 (2017). The BLM will identify
the applicable authority under which it
made its decision. Actions under certain
sections of BLM’s oil and gas leasing
regulations, for example the BLM’s
filing fees, are not subject to appeal,
because such actions are authorized
pursuant to a previous notice-andcomment process. The proposed rule
would add a reference to § 3000.120 to
clarify that point, consistent with
existing language found under
§ 3000.12(b), which states the amount of
a fixed fee is not an agency decision
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subject to appeal under § 3000.40 and
part 4. The BLM also proposes to also
add a reference to proposed § 3000.130,
which includes a similar paragraph
stating the financial terms for new
leases are not subject to appeal. The
proposed rule would update an existing
CFR reference from § 3101.7–3(b) to
§ 3101.53(b). This change reflects the
proposed redesignation changes to the
process for oil and gas lease issuances
under § 3101. The proposed rule would
remove a reference to § 3120.1–3, as the
title and language in that section are
proposed to change from ‘‘protests and
appeals’’ to ‘‘protest’’ only. (See the
discussion on the proposed § 3120 later
in this preamble.)
Section 3000.50 Limitations On Time
To Institute Suit To Challenge a
Decision of the Secretary
The proposed rule would update the
word ‘‘contesting’’ in this section to the
more commonly used term
‘‘challenging’’ to provide clarity.
Section 3000.60 Filing of Documents
This section describes how to file
documents with the BLM. The proposed
rule would update this section to enable
the BLM to accept electronically filed
documents. The provision would still
allow the use of hard-copy mailing
services. In addition, this section would
update the reference to § 1821.2 to the
correct citation of subpart 1822.
Section 3000.90 Enforcement Actions
Under 30 U.S.C. 195
This section explains that the U.S.
Department of Justice is the agency
responsible for enforcement actions
described in section 41 of the MLA. The
proposed rule would update the title
and language in this section to cite 30
U.S.C. 195. The U.S. Code reference is
more informative than the current
reference to ‘‘provisions of section 41 of
the Act.’’ The proposed rule would add
language from 30 U.S.C. 195 to make
this provision more informative.
Section 3000.100 Fees in General
The proposed rule would rename this
section from ‘‘What do I need to know
about fees in general?’’ to ‘‘Fees in
general.’’
Section 3000.110 Processing Fees on a
Case-by-Case Basis
The proposed rule would rename this
section from ‘‘When and how does BLM
charge me processing fees on a case-bycase basis?’’ to ‘‘Processing fees on a
case-by-case basis.’’ In addition, the
BLM proposes to add ‘‘and in
accordance with all other applicable
laws and regulations’’ into paragraph
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47567
(b)(1) to avoid implying that an
applicant may prepare or assist in the
preparation of certain NEPA documents
that, under CEQ regulations, are to be
prepared solely by the applicable
agency.
Section 3000.120 Fee Schedule for
Fixed Fees
Consistent with the IRA, the BLM has
implemented a nonrefundable filing fee
of $5 per acre, or fraction thereof, for
EOIs. This fee is not considered a costrecovery fee, and the monies collected
are transferred to the Treasury as
miscellaneous receipts (see 30 U.S.C.
191).
The proposed rule would update the
existing fee for name changes, corporate
mergers, or transfers to heirs and
devisees to include corporate
dissolutions and sheriff’s deeds. The
BLM accepts corporate dissolutions and
sheriff’s deeds to recognize the change
in the ownership of interest in a lease
per existing policy at H–3106–1,
Transfers by Assignment, Sublease or
Otherwise. The BLM processes these
types of changes in the same manner as
name changes, corporate mergers or
transfers to heirs and devisees. Thus,
these changes should also require a
fixed filing fee.
The BLM is also proposing to adjust
the existing oil and gas filing fees for
competitive lease applications, leasing
under rights-of ways, class I lease
reinstatements, and geophysical
exploration permits. When these fees
were initially set in 2005, the BLM
explained that it reserved the right to
amend the fees in future rulemakings to
reflect new data or other evidence that
the fees did not accurately reflect
reasonable costs (70 FR 41532 (July 19,
2005)). The GAO has since found that
the BLM has not reviewed its
application fees in response to changing
conditions. See GAO–22–103968, Oil
and Gas Leasing: BLM Should Update
Its Guidance and Review Its Fees. The
BLM concurred with GAO’s findings
because the cost to the BLM of its oil
and gas leasing process has changed
since 2005. For example, the BLM
moved to online auctions in 2016, and
it no longer expends resources on
holding auctions because the winning
bidders pay the auction company
directly for auction expenses.
Previously, a portion of the competitive
leasing application fees was intended to
recover the BLM’s costs for holding inperson auctions. Conversely, the BLM
proposes to include the cost related to
complying with the NEPA in the filing
fee for a competitive lease application;
that causes an increase to the filing fee.
To reflect the cost changes, the BLM is
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proposing to amend the fee for the
following document filings or actions:
competitive leasing application fee,
leasing under rights-of ways, class I
lease reinstatements, and geophysical
exploration permits.
The BLM is proposing to include new
fixed filing fees for the following
Federal oil and gas actions to reimburse
the BLM for its reasonable processing
costs: designation of successor operator;
unit agreement applications; subsurface
storage agreement applications; unit
agreement expansion applications; and
formal lease nominations. The BLM
considered proposing new fixed filing
fees for Federal communitization
agreements (CA), Federal participating
area applications, and royalty rate
reduction applications, but it ultimately
declined to propose these fees due to
the low value and the public benefit
related to these items. Royalty rate
reductions occur at the end of a lease’s
life and allow the operator to continue
producing from the property based on
reduced royalties. This gives the
American public the benefit of
additional production and Federal
revenue without additional surface
disturbance or environmental impact.
The BLM considered both case-bycase and fixed filing fees for the new
fees proposed in this rule. Historically,
the BLM has determined costs on a caseby-case basis for types of documents
where the costs may differ significantly
Document/action
Current processing steps
Formal lease nomination * .....................
Competitive lease application ................
Leasing under right-of-way ....................
Lease consolidation ...............................
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Assignment and transfer of record title
or operating rights.
Overriding royalty transfer, payment out
of production.
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in each case. In this proposal, the BLM
has opted to institute fixed filing fees for
designation of successor operator; unit
agreement applications; subsurface
storage agreement applications; unit
agreement expansion applications; and
a formal lease nomination fee because
charging processing costs on a case-bycase basis would be time consuming
and would not be the most efficient use
of BLM resources. Collecting cost data
on a case-by-case basis for each
document to be processed adds to the
processing costs. The BLM decided that,
for the oil and gas documents at issue,
it would likely be more efficient and
sufficiently reliable to set a fixed fee
based on average costs and indexed to
inflation. In addition, applicants benefit
from knowing fees in advance.
To determine the new oil and gas
fixed filing fees, the BLM followed the
same method it used in 2005 to set the
current fixed fees: using a weighted
average rather than a simple average to
determine the processing cost for each
type of document. This method gives
greater weight to the processing cost
data from state offices with a heavy
workload and, thus, more expertise in
processing a particular type of
document. The BLM’s fluid minerals
program identified the processing steps
and then asked the state office subject
matter experts (SMEs) to identify the
appropriate job position, salary level,
and time required for particular steps
specified by the BLM handbooks. The
fluid minerals program considered
changes to the processing of each type
of document since the handbooks were
last updated. The BLM then calculated
a direct cost for each process and
adjusted to 2021 salary rates without a
locality factor. The BLM’s fluid minerals
program spot-checked the data and sent
each state office a summary of the cost
data that the office had previously
submitted for these types of documents,
along with the BLM-wide weighted
average cost for each. State offices were
asked to review the cost data and report
whether that data, adjusted to current
filing fee amounts, remained reasonable.
They were also asked to re-estimate
costs if the state office found the reexamined adjusted cost data to be
inaccurate. A re-examination verified
that the BLM’s data continued to be
valid and ensured that figures, which
varied significantly among offices, had
not been submitted in error.
Processing Steps for the Fixed Fees
The BLM reviewed the changes in
processing steps due to changes in the
law, regulations, and policy to
determine how processing the different
fixed fee applications have changed
since the BLM established the fixed
filing fee in 2005. The following table
summarizes the results of this review.
Added processing steps
Removed processing steps
Validating data received; Sorting parcels (developing parcel configuration/
acreage); Preparing stipulations; Preparing sale notices.
Preparing sale notices; Noting land sta- Adjudicating high bids; Conducting entus records; Preparing and convironmental reviews.
ducting sale auctions; Preparing
lease decisions; Entering and transmitting data updates.
Receiving, validating, and entering
Adjudicating the application and predata; Examining land status; Sorting
paring the notice/invitation to bid;
parcels (developing parcel configuraConducting environmental review.
tion/acreage); Preparing stipulations;
Preparing sale notices; Noting land
status records; Preparing and conducting sale auctions; Preparing
lease decisions; Entering and transmitting data updates.
Receiving, validating, and entering
data; Examining requests, lease term
conditions, and production; Preparing
new leases and decisions; Entering
and transmitting updates.
Receiving, validating, and entering
data; Examining assignment and
transfer forms; Reviewing leases and
bonds; Approving, entering, and
transmitting updates.
Receiving, validating, and entering data.
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Sorting parcels (developing parcel configuration/acreage); Preparing sale
notices; Preparing and conducting
sale auctions; Entering data updates.
Sorting parcels (developing parcel configuration/acreage); Preparing sale
notices; Preparing and conducting
sale auctions; Entering data updates.
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Document/action
Current processing steps
Name change, corporate merger, sheriff’s deed, corporate dissolution, or
transfer to heir/devisee.
Receiving, validating, and entering
data; Examining requests; Determining successors-in-interest or
other special requirements; Reviewing leases and bonds; Preparing decisions; Entering and transmitting updates.
Receiving, validating, and entering
data; Examining eligibility; Preparing
decisions; Entering and transmitting
updates.
Nominal filing fee for Alaska only .........
Lease reinstatement, Class I .................
Geophysical exploration permit application.
Final application for Federal unit approval, Federal unit agreement expansion, Federal subsurface gas storage application *.
Designation of successor operator for
Federal agreements *.
Added processing steps
47569
Removed processing steps
Conducting environmental review.
For all states—Receiving, validating,
and entering data; Examining land
status; Conducting environmental review; Preparing notices/decisions;
Entering data updates.
Receiving, validating, and entering
data; Technical review; Determine
commitment status; Preparing notices/decisions; Entering data updates.
Receiving, validating, and entering
data; Technical review; Preparing notices/decisions; Entering and transmitting data updates.
* New proposed fixed filing fee.
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The fixed fee for lease renewals
would be removed, as there are no
longer any leases eligible for renewal.
Under the MLA, any lease renewal
issued on or after November 15, 1990,
‘‘continue[s] for twenty years and so
long thereafter as oil and gas is
produced in paying quantities.’’ 30
U.S.C. 188(f)(3). If a lease renewed on or
after November 15, 1990, fails to
produce oil and gas in paying quantities
at the end of its renewal term, the lease
expires with no further option of
renewal.
The current $500 fee for Class II lease
reinstatements is located at existing 43
CFR 3108.2–3(b)(3)(vi). The BLM
considered moving the existing fee to 43
CFR 3000.120 for inclusion alongside
the fixed filing fees, increasing the fee
to reflect the processing costs, and then
adjusting the fee annually for inflation.
However, the MLA, at 30 U.S.C. 188(e),
specifically states for Class II lease
reinstatements that ‘‘[t]he lessee of a
reinstated lease shall reimburse the
Secretary for the administrative costs of
reinstating the lease, but not to exceed
$500.’’ Accordingly, the BLM proposes
to leave the administrative fee of $500
in its current location at 43 CFR
3108.23(b)(3)(vi).
FLPMA Factors and Processing Fees
Section 304(b) of FLPMA lists six
factors, commonly known as the
‘‘FLPMA reasonableness factors,’’ that
the BLM must consider when deciding
the amount of a reasonable processing
fee. Those factors are:
(1) The BLM’s actual costs to process
a document not including management
overhead, i.e., the processing time spent
by the BLM State Directors, Deputy
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State Directors, and other management
staff. Actual costs include (but are not
limited to) time spent at the state and
field office levels by SMEs who work on
a specific authorization, such as a lease,
and funds spent on environmental
reviews, technical reviews, and
analyses.
(2) The monetary value, or objective
worth, of the right or privilege that the
applicant seeks.
(3) The efficiency with which the
BLM processes a document, i.e.,
minimizing of waste by carefully
managing agency expenses and time.
(4) Whether any of the BLM’s
processing costs, for actions such as
studies or data collection, benefit the
general public or the Federal
Government, rather than just the
applicant alone.
(5) Whether the project provides any
significantly tangible improvement,
such as a road, or other direct service to
the public. Occasionally, a negative
factor, such as an adverse impact on
wildlife, habitats, or surface drainage,
may prevent an improvement from
qualifying as a public service. Data
collection that the BLM requires of an
applicant for monitoring an activity is
not a public service.
(6) Other relevant factors.
The BLM considered each of the
FLPMA reasonableness factors for each
type of document for which the BLM is
proposing to adjust the existing fee or
add a new fixed fee. The BLM first
estimated the actual cost to process a
type of document. When estimating the
processing costs, the BLM determined a
range based on the range of costs
provided by the BLM State Offices. The
BLM then considered each of the other
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FLPMA factors to determine if they
warranted setting the fee at less than
actual cost. If so, the BLM then
considered whether any of the
remaining factors acted as an enhancing
factor that would mitigate against
setting the fee at less than actual cost.
Lastly, the BLM decided the amount of
the fee, which cannot be more than the
processing cost. For all of the fees in
this proposal, this method resulted in
fees set at the lower end of the BLM’s
processing cost.
Actual Costs
Actual costs are the sum of both direct
and indirect costs. Direct costs include
such things as labor, material, and
equipment. The BLM estimated the
direct costs by reaching out to each BLM
state office and requesting an estimate of
the processing time for each application
based on the steps detailed in the
previous table. Then using the average
hourly wage, the BLM calculated the
direct cost for the BLM to process the
application. Indirect costs include items
such as rent and overhead, excluding
State Director and management
overhead. For an example of how the
BLM would determine the sum of direct
and indirect costs, assume the measured
direct cost of processing a document is
$200. To estimate the indirect cost for
processing that document, the BLM uses
a ratio that it calculates annually.
Annually, the BLM calculates the
indirect cost rate, which is assessed on
these fixed filing fees. Indirect costs are
the overhead costs, which remain after
direct costs have been computed, and
may include utilities,
telecommunications, information
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technology, space rental, and other
administrative support functions.
Currently that ratio is 10 to 2, or 20
percent, meaning for every $10 of direct
costs there would be $2 of indirect
costs. The BLM would estimate the
indirect cost using the ratio and direct
cost figures. In this example, since the
direct cost was $200 and the ratio is 10
to 2, the indirect cost is $40. The BLM
then would add the direct and indirect
cost figures to arrive at the actual cost
figure of $240 to process the document.
This method is generally accepted in the
private and public sectors.
Monetary Value of the Right or Privilege
Historically, the BLM concluded that
its processing costs to prepare parcels
for lease sale benefit three classes of
beneficiaries: the party who requests
that the parcel be included in the sale,
all parties who bid on the parcel, and
the successful bidder. The party who
requests that a parcel be included in a
lease sale benefits by influencing the
selection of parcels offered. The BLM
considered this benefit to be greatly
outweighed by the benefit to the
successful bidder who ultimately
obtains the lease and can develop the
minerals on the parcel. Similarly, while
all bidders receive the benefit of being
considered for a lease, the BLM
considered this benefit to be greatly
outweighed by the benefits to the
successful bidder who obtains the lease.
With respect to the new proposed fees
for agreements, the operator benefits
through economic gain if and when
drilling activity occurs and through
development of the lease. In addition,
any benefit to the general public that
would accrue from increased oil and gas
availability or lower prices is
considered too speculative and indirect
to warrant consideration.
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Monetary Value to the Applicant
The BLM did not attempt to calculate
the monetary benefit to each applicant
because those values are not always
knowable to the BLM, and it would be
inefficient to attempt to calculate them
for each application or submission.
Monetary Value of the Right or Privilege
Granted
To gauge the monetary value, the
BLM considered the monetary value of
similar rights or privileges granted to
applicants historically. The BLM
reviewed each type of document and
compared the proposed filing fee for a
given type of document with our
professional judgment of the historical
values of similar rights or privileges the
BLM has granted. In each case, the BLM
believes the value of the right or
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privilege is so much greater than the
processing cost that a fee based on the
average actual cost would not
significantly affect the applicant’s
proposed action. This is not surprising
considering that the costs pertain to
documents related to the commercial
development of minerals. The BLM did
not reduce any fees because of this
factor.
Monetary Value Change
The BLM bases its decision about the
monetary value of the benefit to the
applicant on the value at the time the
applicant submits its application. All
leases have relatively large monetary
value before exploration compared with
the proposed fees. The basic value of the
opportunity provided by a lease to
explore for minerals is shown by the
willingness of applicants to pay large
sums before exploration for bonus bids,
for lease transfers, and for exploration
activities such as drilling. Because the
monetary value of the right sought in a
lease is much greater than the cost of
processing the lease, the BLM considers
it reasonable to charge a fee equal to
processing costs for all lease
applications.
The Efficiency Factor
The BLM’s fluid minerals program
asked the state office’s SMEs to provide
a minimum, maximum, and average
time spent on each application process.
Some SMEs stated that their estimated
range depended on the experience of the
staff. The estimates from less
experienced staff increased the amounts
for the average and the high estimate for
processing costs. In addition, some state
offices receive fewer applications than
compared with other state offices. This
can increase the processing time spent
for researching and processing
applications when they are not
frequently received in a particular
office. Therefore, the BLM chose to use
the lowest estimate for time spent on
processing applications to create the
weighted average so that applicants are
not penalized for understaffed offices or
offices with fewer seasoned employees.
The BLM ensured that the field offices
efficiently process the documents for
which fees are charged. For all of the
new and existing fees, the BLM based
the processing procedures on
standardized steps as outlined in the
BLM Handbooks and Instruction
Memoranda in order to eliminate
duplication and extraneous procedures.
The BLM developed these detailed and
measurable processing steps to be
efficient.
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The Public Benefit Factor
Possible public benefits from the BLM
processing activities, such as studies or
data collection, are also difficult to
measure. For example, studies related to
document processing often provide
information about an area’s natural
resources. This is sometimes a public
benefit, but the value of the information,
or whether there will be a benefit at all,
is not predictable. The BLM concluded
that document processing for types of
fixed fee documents in this rulemaking
does not usually produce studies or data
that significantly benefits the public. In
addition, the BLM determined that for
each type of document in this
rulemaking, the monetary value to the
applicant outweighs the possible benefit
of such studies to the public. The BLM
analysts used their knowledge of the
historical values of such cases to make
these determinations. The BLM has,
therefore, decided that this factor does
not warrant setting any fee in this
rulemaking at less than its actual
processing cost.
The Public Service Factor
A project’s service to the public
concerns whether the applicant’s project
itself, as opposed to the BLM’s
processing of the related documents,
provides some significant direct service
or benefit to the general public. FLPMA
refers to this as public service. Examples
include improvements, such as roads,
trails, or recreation facilities.
Occasionally, a negative factor, such as
an adverse impact on wildlife, habitats,
or surface drainage, may prevent the
BLM from regarding an improvement as
a public service.
The BLM reviewed exploration data
shared with the government to consider
whether it constitutes a public service.
Applicants for geophysical exploration
for the oil and gas program in Alaska are
required to share with the government
the mineral resource data they derive
from exploration. However, that
information likely would not be made
public. Moreover, if the information is
valuable for mineral development, the
BLM expects the findings would result
in oil and gas leases in that area. In that
case, the monetary value of the
information to the permittee would
outweigh its value to the public. The
BLM considered that even information
that is not valuable to the permit holder
for mineral development might still
provide some geological or geophysical
information of value to the government,
which the BLM could sometimes use for
some types of resource management,
such as land classifications. However,
because there is very little information
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obtained in this way and because its use
is unpredictable, the potential benefits
of the information to the public are too
small to warrant an adjustment to the
proposed fee. Finally, the operator may
consider geophysical information
indicating low-development potential
valuable because the identification of
low-development potential helps the
operator avoid unprofitable
development; therefore, the value to the
operator outweighs any public benefit.
The projects with a proposed fixed fee
do not generally provide a public
service. Large projects could include
road construction, but such roads are
rarely open to the public or built to
public safety standards. In addition,
they eventually must be removed.
Consequently, for fixed fee documents,
the likelihood of providing such a
public service is too remote and
speculative to warrant charging a fee
less than actual costs.
Other Factors
The BLM did not find other factors
that made it reasonable to adjust fees in
this proposed rulemaking.
New Proposed Oil and Gas Fixed Fees
TABLE 1—CATEGORY: FIXED FEES
[Note that fees will be adjusted annually for inflation according to the IPD–GDP and posted on the BLM’s website. Revised fees are effective
each October 1]
Document/action
Existing fee
Proposed fee
Oil and Gas (parts 3100, 3110, 3120, 3130, 3150, 3160 and 3180)
Formal lease nomination .........................................................................................................................................
Expression of Interest fee per acre, or fraction thereof ..........................................................................................
Competitive lease application ..................................................................................................................................
Leasing under right-of-way ......................................................................................................................................
Leases consolidation ...............................................................................................................................................
Assignment and transfer of record title or operating rights .....................................................................................
Overriding royalty transfer, payment out of production ...........................................................................................
Name change, corporate merger, sheriff’s deed, corporate dissolution, or transfer to heir/devisee .....................
Lease reinstatement, Class I ...................................................................................................................................
Geophysical exploration permit application—all states ...........................................................................................
Renewal of exploration permit—Alaska ..................................................................................................................
Final application for Federal unit agreement approval, Federal unit agreement expansion, Federal subsurface
gas storage application ........................................................................................................................................
Designation of successor operator for Federal agreements ...................................................................................
$0
0
185
475
525
105
15
250
90
a 30
30
$125
5
3,100
660
525
105
15
250
1,260
b 1,150
30
0
0
1,200
120
a Alaska
b All
only.
states.
We have rounded estimated fees
down or up to the nearest $5.00, for ease
of payment and administration. This is
consistent with general business
practices.
lotter on DSK11XQN23PROD with PROPOSALS2
Annual Inflation Adjustments
The BLM is also proposing to cease
publishing the annual fee adjustments
in the Federal Register and the CFR.
The BLM would instead post the
updated table on the BLM’s web page
with the historical fees posted in the
same location. Revised fees would be
effective each year on October 1. The
BLM is requesting comments on this
process change.
Annual inflation adjustments would
be calculated based on the percentage
change in the Implicit Price Deflator for
Gross Domestic Product (IPD–GDP) for
the 1-year period between the fourth
quarters of the previous 2 years,
consistent with the 2005 Cost Recovery
Rule. For example, the FY 2022 fees
were set based on the change in the
IPD–GDP from the fourth quarter of
2020 to the fourth quarter of 2021. The
BLM would then multiply the current
fee amounts by that multiplier to obtain
the adjusted fee amounts. The resulting
amounts would be rounded to the
nearest $5 at the end of the calculation
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process for ease of payment and
administration. This is consistent with
general business practices.
Existing Applications
The BLM would not charge a new
fixed fee under this rule for processing
a document that the BLM received
before the effective date of the rule.
Documents submitted before the
effective date of the final rule will be
processed with the appropriate fees
under the regulations existing as of the
submittal date.
Section 3000.130
Leases
Fiscal Terms of New
The BLM is proposing a new
provision consisting of a table outlining
the fiscal terms for new leases. Under
the existing regulations, various
subparts describe the base rental rate for
leases. Likewise, various subparts
describe the minimum bonus bids for
competitive leases. In this rule, the BLM
proposes to conform its regulations to
the IRA by increasing the minimum bids
and base rental rates. The BLM proposes
to identify these rates in a new section
and table so the rates can be regularly
adjusted for inflation. The IRA
precludes the adjustment of these fiscal
terms until after August 16, 2032. Each
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of the various sections would now refer
to this new section, rather than
itemizing the relevant fees. The BLM
proposes to include a paragraph (b) to
state that these rates are not subject to
appeal, since these base rates would be
applied through the publication of a
final rule in the Federal Register.
Consistent with 43 CFR 3000.120, the
BLM is also proposing to no longer
publish the annual fee adjustments in
the Federal Register and the CFR. The
BLM would instead post the updated
table on the BLM’s website before
October 1 of each year. Revised fees
would be effective each year on October
1. The BLM is requesting comments on
this process change.
Annual inflation adjustments would
be calculated based on the percentage
change in the Implicit Price Deflator for
Gross Domestic Product (IPD–GDP) for
the 1-year period between the fourth
quarters of the previous 2 years,
consistent with the 2005 Cost Recovery
Rule. For example, the FY 2022 fees
were set based on the change in the
IPD–GDP from the fourth quarter of
2020 to the fourth quarter of 2021. The
BLM would then multiply the current
fee amounts by that multiplier to obtain
the adjusted fee amounts. The resulting
amounts would be rounded to the
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nearest $5 at the end of the calculation
process for ease of payment and
administration. This is consistent with
general business practices.
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2. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3100
The proposed rule does not make any
revisions to the section headings in the
existing subpart 3100 regulations.
Section 3100.3 Authority
The purpose of this section is to
describe lands that are subject to
leasing. The proposed changes to this
section were made to provide clarity
and to conform the regulations to
various other laws. This proposed
section would remove the reference to
the National Petroleum Reserve—Alaska
(NPR–A) from the exceptions listed
under both Public Domain and
Acquired lands to reduce confusion.
The NPR–A is appropriately listed
under 43 CFR 3100.3(c) and would
remain as lands that are subject to
leasing under the Department of the
Interior Appropriations Act, FY 1981
(42 U.S.C. 6508). These lands are subject
to leasing under the regulations found
under 43 CFR part 3130.
The proposed rule updates the
exceptions for lands within the National
Wilderness Preservation System to cite
to 16 U.S.C. 1133. The proposed
reference to the United States Code is
more informative than the current
reference to ‘‘section 4(d)(3) of the
Wilderness Act.’’
This proposed section would also add
lands within Wild and Scenic Rivers to
the exceptions listed under both Public
Domain and Acquired lands. Subject to
valid existing rights, the Wild and
Scenic Rivers Act (16 U.S.C. 1280)
withdraws from leasing lands within
designated Wild and Scenic Rivers that
constitute the bed or bank or are
situated within one-quarter mile of the
bank of any river designated a wild
river.
This proposed rule would move the
reference to lands within wildlife
refuges in existing 43 CFR 3101.5–1 to
the exceptions listed under both Public
Domain and Acquired lands in the
proposed redesignated 43 CFR 3100.3.
This change would not impose new
requirements. The proposed rule would
remove the reference to noncompetitive
lease offers, consistent with changes
made by the IRA.
Currently, existing 43 CFR 3101.6
states that lands within Recreation and
Public Purposes leases and patents are
subject to lease under 43 CFR part 3100.
The proposed rule would move that
statement to § 3100.3(h) because it
belongs in the list of authorities. It
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would not result in any substantive
regulatory change.
Finally, this proposed section would
add a reference to the Fish and Wildlife
Coordinating Act (16 U.S.C. 661) in
paragraphs (j)(1) through (3) dealing
with coordination lands and refuges in
Alaska. These references are currently
found in the existing 43 CFR 3101.5–
2(a), § 3101.5–2(b), and § 3101.5–3, but
are more appropriately listed under the
authority for leasing. These are not new
requirements.
Section 3100.5 Definitions
The purpose of this section is to
provide definitions of terms used
through subpart 3100. The proposed
rule would alphabetize the definitions
and remove embedded definitions, so
the terms are defined separately.
The proposed rule would update the
definition for the term ‘‘bid’’ to include
a specific definition corresponding to
the term’s use in 43 CFR 3109 as, in the
BLM’s experience, this has caused
confusion in the past. For leases or
compensatory royalty agreements issued
under 43 CFR 3109, the term ‘‘bid’’
would mean an amount or percent of
royalty or compensatory royalty that the
owner or lessee must pay for the
extraction of the oil and gas underlying
the ROW, which is different from the
bonus bids received on competitive
leases.
The proposed rule would add a
definition for ‘‘competitive auction,’’
which would mean an in-person or
internet-based bidding process where
leases are offered to the highest bidder.
The addition of this term would help
the BLM to streamline the regulations
by obviating the need to use the longer
phrase ‘‘oral or internet-based auction’’
throughout the regulations.
The proposed rule would add a new
definition for the term ‘‘exception’’
which would mean a limited
exemption, for a particular site within
the leasehold, to a stipulation. The
addition of this term would help to
provide clarity in the regulations. The
term is used in 43 CFR subpart 3101 and
is further discussed later.
The proposed rule would add a new
definition for the term ‘‘modification’’
which would mean a change to the
provisions of a lease stipulation for
some or all sites within the leasehold
and either temporarily or for the term of
the lease. The term is used in 43 CFR
subpart 3101 and is further discussed
later. The addition of this term would
allow the BLM to incorporate existing
policy into its regulations and help to
provide clarity in the regulations.
The proposed rule would add a new
definition for the term ‘‘oil and gas
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agreement’’ which would mean an
agreement between lessees and the BLM
to govern the development and
allocation of production for existing
leases, including, but not limited to,
CAs, unit agreements, secondary
recovery agreements, and gas storage
agreements. The BLM would add this
term to identify regulations that apply to
multiple types of agreements. The term
is used in the proposed rule in 43 CFR
subpart 3105 and is further discussed
later.
The proposed rule would update the
definition for ‘‘operating right (working
interest)’’ to include the holder’s
obligations under the lease. The
amended rule would state, ‘‘Operating
rights include the obligation to comply
with the terms of the original lease, as
it applies to the area or horizons for the
interest acquired, including the
responsibility to plug and abandon all
wells that are no longer capable of
producing, reclaim the lease site, and
remedy environmental problems.’’ The
update to this term would provide
clarity in the regulations.
The proposed rule would update the
definition for the ‘‘primary term of all
other leases’’ to state that it means the
initial term of the lease, which is set at
10 years. The change in this definition
updates the outdated reference to 5-year
terms for competitive leases used prior
to FOOGLRA.
The proposed rule would update the
definition for ‘‘record title’’ to include
the lessee’s obligations under the lease.
The lessee’s interest, which is also
referred to as the record title, includes
the obligations to perform and bear
ultimate responsibility to adhere to
lease terms, including requirements
relating to well operations and
abandonment. The update to this term
would provide clarity in the regulations.
The proposed rule would add a new
definition for ‘‘qualified bidder’’ to
mean any person in compliance with
the laws and regulations governing a
bid. The addition of this term would
provide clarity in the regulations.
The proposed rule would add a new
definition for ‘‘qualified lessee’’ to mean
any person that is compliant with the
laws and regulations governing the BLM
issued leases held by that person. The
addition of this term would provide
clarity in the regulations.
The proposed rule would add a new
definition for ‘‘responsible bidder’’ to
mean any person who has not defaulted
on winning bids, is capable of fulfilling
the requirements of onshore BLM oil
and gas leases, and does not have a
history of noncompliance with
applicable statutes and regulations or
the terms of a BLM-issued oil and gas
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lease. The term ‘‘responsible bidder’’
would not include persons who bid
with no intention of paying a winning
bid or persons who default on a winning
bid. The addition of this term would
provide clarity in the regulations.
The proposed rule would add a new
definition for ‘‘responsible lessee’’ to
mean any person who has not defaulted
on previous winning bids, is capable of
fulfilling the requirements of onshore
Federal oil and gas leases, and does not
have a history of noncompliance with
applicable statutes or the terms of a
BLM-issued oil and gas lease. The
addition of this term would provide
clarity in the regulations.
The proposed rule would add a new
definition for the term ‘‘waiver’’ which
would mean a permanent exemption
from a lease stipulation. The term is
used in subpart 3101 and is further
discussed later. The addition of this
term would allow the BLM to
incorporate existing policy into its
regulations and help to provide clarity
in the regulations.
Finally, the BLM split out the
definitions for ‘‘assignment’’ and
‘‘sublease’’ from the current definition
of ‘‘transfer’’ in the existing regulations.
This will assist the public in finding the
applicable definition as well as
highlight the differences between an
assignment and a sublease.
lotter on DSK11XQN23PROD with PROPOSALS2
Section 3100.9 Information Collection
The current regulation lists out-ofdate OMB control numbers for
information collection requirements.
The proposed rule would update those
control numbers and restructure the
format of this section to include the
authority for and purpose of the section,
including a table that lists the current
OMB control numbers.
Section 3100.31 Enforceability
The proposed rule would streamline
the section on options. The MLA
expressly authorizes and restricts
options to acquire an interest in a lease.
See 30 U.S.C. 184(d). While the BLM
has not previously received option
statements from the industry, the BLM
cannot prohibit options and will
continue to accept option statements for
the record if they are submitted to the
BLM. Under the ‘‘Enforceability’’
section (43 CFR 3100.31(a)), the BLM
would remove the phrase ‘‘without the
approval of the Secretary.’’ That would
eliminate the discretion to authorize
options for a period of more than 3
years. Paragraph (b)(3) would be revised
for clarity to change the reference to
‘‘the number of acres covered by the
option and of the interests and
obligations of the parties to the option,
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including the date and expiration date
of the option’’ to read ‘‘the number of
acres and the type and percentage of
interest to be conveyed and retained by
the parties to the option, including the
expiration date of the option.’’
Section 3100.40 Public Availability of
Information
The proposed rule would not make
any substantive changes to this section;
however, the BLM is considering adding
language that would provide notice that
names and addresses of the nominator,
lessee, operating rights holders, and
operators would be made public
through the BLM’s automated system.
The BLM’s lease and agreement case
files are already public records, and any
change to this section would merely
reflect the BLM’s current practice.
3. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3101
The proposed rule would remove 10
sections in the existing subpart 3101 as
outlined in Section VI of this preamble
titled Overview of Modifications. The
removal of these sections would cause
some of the sections to be redesignated
accordingly. The purpose of this
removing and redesignating is to
achieve consistency and ease of
reference throughout subpart 3101, as
sections were consolidated and
reorganized.
Section 3101.12 Surface Use Rights
This section was promulgated in 1988
to clarify the BLM’s authority to use the
terms and conditions of the standard
lease form to control site-specific
environmental impacts on leaseholds, as
opposed to lease-specific protective
measures, addressed in lease
stipulations, to mitigate impacts to
specific resources values identified on
leased lands. The standard lease form
authorizes the BLM to require
‘‘reasonable measures’’ to the extent that
such measures would be consistent with
the lessee’s rights. However, this revised
section would more clearly outline the
measures that the BLM may require to
promote development practices that are
consistent with multiple use and
sustained yield and the terms of the
BLM’s oil and gas leases.
Specifically, this section would be
updated to state that the authorized
officer may require and detail
reasonable measures to avoid, minimize,
or mitigate adverse impacts to other
resource values, land uses or users,
federally recognized Tribes, and
underserved communities. Such
reasonable measures may include, but
are not limited to, relocation or
modification to siting or design of
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facilities, timing of operations,
specification of interim and final
reclamation measures, and specification
of rates of development and production
in the public interest. These measures
are consistent with the BLM’s standard
lease form, which has been in effect
since October 2008 and which states
that the BLM ‘‘reserves [the] right to
specify rates of development and
production in the public interest. . . .’’
Additionally, the MLA authorizes the
BLM to adopt ‘‘such other provisions as
[it] may deem necessary . . . for the
protection of the interests of the United
States . . . and for the safeguarding of
the public welfare.’’ 30 U.S.C. 187. The
BLM may also manage the manner of
development under this section, which
may include waste prevention
measures, containment of fluids, and
monitoring both water and air quality in
the project area. As set out in E.O.
14035, ‘‘[t]he term ‘underserved
communities’ refers to populations
sharing a particular characteristic, as
well as geographic communities, who
have been systematically denied a full
opportunity to participate in aspects of
economic, social, and civic life.’’ E.O.
14008 provides additional guidance on
securing environmental justice by
requiring agencies to ‘‘[develop]
programs, policies, and activities to
address the disproportionately high and
adverse human health, environmental,
climate-related and other cumulative
impacts on disadvantaged communities,
as well as the accompanying economic
challenges of such impacts.’’ For the
purposes of E.O. 14008, the Council on
Environmental Quality has provided
interim guidance on the definition of
community to ‘‘mean either a group of
individuals living in geographic
proximity to one another, or a
geographically dispersed set of
individuals (such as migrant workers or
Native Americans), where either type of
group experiences common
conditions.’’ 15 These underserved
communities can be impacted as a result
of greater vulnerability to environmental
hazards, lack of opportunity for public
participation, or other factors. Increased
vulnerability may be attributable to an
accumulation of negative or lack of
positive environmental, health,
economic, or social conditions within
these populations or places. The term
describes situations where multiple
factors, including both environmental
and socio-economic stressors, may act
cumulatively to affect health and the
environment and contribute to
15 M–21–28, July 20, 2021, https://
www.whitehouse.gov/wp-content/uploads/2021/07/
M-21-28.pdf.
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persistent environmental health
disparities.
Due to the advances in horizontal and
directional drilling, and in an effort to
strike the best multiple use balance, the
BLM proposes to update the following
language: ‘‘At a minimum, measures
shall be deemed consistent with lease
rights granted, provided that they do
not: require relocation of proposed
operations by more than 200 meters;
require that operations be sited off the
leasehold; or prohibit new surfacedisturbing operations for a period in
excess of 60 days in any lease year.’’
The proposed language would state,
‘‘Modifications that are consistent with
lease rights include, but are not limited
to: requiring relocation of proposed
operations by more than 800 meters and
prohibiting new surface disturbing
operations for a period of 90 days in any
lease year.’’ With the changes in
technology allowing 3-mile laterals and
1⁄2-mile directional wells, the BLM
considers 800 meters (approximately 1⁄2
mile) to be a reasonable floor for moving
operations due to resource concerns.
The BLM proposes updating the floor to
account for changes in technology.
The BLM also proposes these changes
because the existing provision has been
misconstrued as limiting BLM’s
authority to require relocation only up
to 200 meters. The IBLA has upheld the
BLM’s authority to move operations and
confirmed that the siting and timing
parameters in the current regulations are
minimums. The BLM has the authority
to impose measures higher than those in
the regulations as long as they
‘‘constitute [ ] reasonable measure[s] to
minimize adverse impacts under 43 CFR
3101.1–2.’’ Yates Petroleum, 176 IBLA
144, 156 (2008). The BLM is requesting
comments on the proposed distance
standard for reasonable measures.
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Section 3101.13 Stipulations and
Information Notices
The proposed rule would split the
existing content of this section into two
paragraphs for clarity and would add a
new paragraph (a) to state that, when
developing stipulations, the BLM would
consider the sensitivity and importance
of potentially affected resources and any
uncertainty concerning the present or
future condition of those resources. The
BLM is proposing this change to more
explicitly recognize its mandate to
manage the Federal lands for multiple
use and to provide for the protection of
the resources on those lands. When
evaluating stipulations to be included in
a lease, the BLM will assess whether a
resource is adequately protected by
stipulation without regard to the
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restrictiveness of the stipulation on
operations.
The proposed rule also would update
the existing content of this section
(paragraph (b)) to reflect the IRA’s
elimination of the noncompetitive
leasing process. Paragraph (b) refers to
lease stipulations, and paragraph (c)
refers to lease information notices. No
other substantive changes have been
made to the language that now
constitutes these two paragraphs. In
addition, the BLM proposes to move the
language and requirements from the
existing regulation found at § 3101.5–4
(which refers to stipulations applied to
leases for lands managed by the Fish
and Wildlife Service) to a new
paragraph (d) under this section to
consolidate all stipulation requirements
in one section.
Section 3101.14 Modification, Waiver,
or Exception
The proposed rule would update the
title of this section from ‘‘Modification
or waiver of lease terms and
stipulations’’ to ‘‘Modification, waiver,
or exception.’’ The first paragraph in
this section describes the standards the
BLM will use when evaluating
modifications, waivers, or exceptions. It
states that a public review period will
be required when a change to a lease
term or stipulation is substantial or
involves a major concern to the public.
In paragraph (a), the proposed rule
proposes to add the existing
modification, waiver, or exception
policy for lease stipulations into the
regulations based on Instruction
Memorandum Number 2022–003,
Documentation and Tracking
Requirements for Waivers, Exceptions,
and Modifications for Fluid Minerals
Exploration and Development
Activities. Unlike the existing policy,
the BLM is proposing to remove the
provision that allows the BLM to grant
modifications, waivers, or exceptions
(MWEs) to lease stipulations if the
authorized officer determines that the
‘‘proposed operations would not cause
unacceptable impacts.’’ This very
subjective standard has been overused
at times and has led to unnecessary
adverse environmental impacts in some
instances. The BLM would consider a
change to the lease terms to be
substantial if the change would have an
important, considerable, consequential,
major, or meaningful effect on the
environment that was not previously
considered, thus requiring public
notification (30-day public review) of a
lease term or stipulation.
In paragraphs (b) and (c), the
proposed rule would split an existing
provision in the regulations related to
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modifications of stipulations into two
provisions, one of which would address
modifications made before lease
issuance and the other of which would
address modifications made after lease
issuance. This regulatory change reflects
decisions of the IBLA, which have
stated that if a lease is issued without
prior notice of an additional stipulation,
the stipulation is not binding on the
potential lessee and is without effect in
the absence of the potential lessee’s
acceptance of the stipulation. See Emery
Energy, Inc, 64 IBLA 175 (1982). For
modifications to stipulations prior to
lease issuance, the BLM proposes to add
language clarifying that the potential
lessee must be given an opportunity to
accept the additional or modified
stipulation. If the potential lessee does
not accept the additional or modified
stipulation, the BLM may reject the bid
and include the lands in the next Notice
of Competitive Lease Sale. If the
modification in stipulation(s) increases
the value of the parcel, the BLM,
following current policy, will reject the
bid and include the lands in the next
Notice of Competitive Lease Sale. For
example, if the lease is currently subject
to a no-surface-occupancy stipulation,
and the BLM determines a controlledsurface-use stipulation is appropriate
instead, this could increase the value of
the lease. After lease issuance, if the
BLM adds or modifies a stipulation
without notice to the lessee, the
additional or modified stipulation is not
binding on the lessee and is without
effect in the absence of the lessee’s
acceptance of the stipulation. When a
stipulation is required by the relevant
Resource Management Plan and the
BLM inadvertently omits it, a lessee’s
failure to sign and accept modifications
to the stipulations when requested by
the authorized officer may subject the
lease to cancellation.
Section 3101.22 Acquired Lands
For clarity, the BLM proposes to
repeat the language found in the
existing 43 CFR 3101.2–1(a) for public
domain lands to describe the same
acreage limitations that also apply to
acquired lands.
Section 3101.23 Excepted Acreage
The proposed rule would update the
existing 43 CFR 3101.2–3(a)(1) to
change the language from ‘‘unit or
cooperative plan or communitization
agreement’’ to read ‘‘oil and gas
agreement.’’ Under this proposed rule,
unit agreements and CAs would no
longer be referred to as cooperative
plans and, as discussed earlier in this
preamble, a new definition would be
added to define ‘‘oil and gas
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agreements,’’ which includes unit
agreements and CAs. In addition, the
BLM has noticed that the phrase
‘‘operating, drilling, or development
contract’’ in the existing 43 CFR 3101.2–
3(a)(3) has often been confused with
approved Applications for Permit to
Drill. A reference to 43 CFR 3105.30
would be added to this section to clarify
the phrase since ‘‘operating, drilling, or
development contract’’ has a specific
regulatory meaning.
Section 3101.25 Computation
The proposed rule would remove as
outdated all language referencing an
entity’s ownership in a company,
parties to a contract, and acreage held in
common by the same persons. In 1982,
the BLM eliminated the requirement to
submit documents related to
qualifications and now requires entities
to certify their compliance with law on
the lease or assignment application,
subject to the criminal sanctions in 18
U.S.C. 1001 (see 47 FR 8544, February
28, 1982). Accordingly, the BLM no
longer keeps documents related to
qualifications and does not collect
information on stock ownership,
company or corporate structures
(resolutions or company formation
documents), or ownership in a
company.
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Section 3101.2–6 Showing Required
As explained in the previous section,
the BLM eliminated qualification
statements in 1982. The proposed rule
would remove this section in its
entirety, as it is outdated and no longer
necessary. The BLM can run reports
through its Mineral and Lands Record
System to obtain the data confirming
compliance with acreage limitations.
When an entity exceeds its acreage
limitation, the BLM provides the
company with a list of the entity’s leases
for a particular State and provides the
entity with an appropriate timeframe to
identify inconsistencies or to relinquish,
transfer, or otherwise divest sufficient
interests before the BLM takes
appropriate action to cancel the entity’s
excessive leases or interests.
Section 3101.30 Leases Within Unit
Areas, Joinder Evidence Required
It is the policy of the BLM not to
include lands that are partly within and
partly outside the boundary of an oil
and gas agreement in any one parcel
listed in a Notice of Competitive Lease
Sale. The proposed rule would remove
43 CFR 3101.3–2, ‘‘Separate Leases to
Issue,’’ in its entirety due to the
elimination of noncompetitive offers
from the IRA. Incorporating this change,
the heading of 43 CFR 3101.30 would
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now read, ‘‘Leases within unit areas,
joinder evidence required.’’ In the
remaining language regarding joinder
evidence, the BLM proposes to change
the term ‘‘operator’’ to ‘‘lessee’’ because
this section is referring to the time of
lease issuance.
refers to lands subject to leasing, to the
Authority for leasing section (43 CFR
3100.3(i)) for ease of reference.
Section 3101.40
The proposed rule would redesignate
this section from 43 CFR 3101.7 to 43
CFR 3101.50 because of the
consolidation and reorganization of
neighboring sections.
Terminated Leases
The proposed rule would remove the
existing 43 CFR 3101.4, ‘‘Lands Covered
by Application to Close Lands to
Mineral Leasing’’ in its entirety, since
this section only applies to
noncompetitive leases, which the IRA
eliminated. Section 3101.40 would now
be referred to as ‘‘Terminated leases.’’
The BLM proposes to move the content
of the existing regulations at 43 CFR
3108.2–2(d) and 43 CFR 3108.2–3(c) to
this section to consolidate the
requirements for issuing a lease for
previously leased lands that have
terminated.
Section 3101.5–1 Wildlife Refuge
Lands (Existing Rule)
The BLM proposes to move the
content of this existing section to the
Authority for leasing section (43 CFR
3100.3), for ease of reference. The BLM
proposes to move paragraph (a) and the
first sentence of paragraph (b), which
refer to lands subject to leasing, to the
Authority for leasing section at 43 CFR
3100.3(b)(2)(xiv). The BLM proposes to
move the remaining language in
paragraph (b) to 43 CFR 3101.52(d), to
consolidate it with the regulations
addressing consent from other Federal
agencies.
Section 3101.5–2
(Existing Rule)
Coordination Lands
The BLM proposes to move the
content of this existing section to the
Authority for leasing section (43 CFR
3100.03) for ease of reference.
Section 3101.53
(Existing Rule)
Alaska Wildlife Areas
The BLM proposes to move the
content of this existing section to the
Authority for leasing section (43 CFR
3100.3(k)) for ease of reference.
Section 3101.5–4
(Existing Rule)
Stipulations
The BLM proposes to move the
content of this existing section, which
refers to stipulations prescribed by the
Fish and Wildlife Service, to the general
stipulations section (43 CFR 3101.13)
for ease of reference.
Section 3101.6 Recreation and Public
Purposes Lands (Existing Rule)
The BLM proposes to move the
content of this existing section, which
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Section 3101.50 Federal Lands
Administered by an Agency Outside of
the Department of the Interior
Section 3101.51
General Requirements
The proposed rule would consolidate
the three paragraphs under this existing
section into one paragraph. Currently,
there are separate paragraphs for (a)
Acquired lands, (b) Public Domain
lands, and (c) National Forest System
lands. The new paragraph would
provide that all lands will be leased
only with the consent of the surface
managing agency and that the surface
management agency will report to the
BLM whether it consents to leasing with
stipulations, or, alternately, withholds
consent or objects to leasing. On
acquired lands, National Forest System
lands, and public lands reserved for the
use of the Department of Defense, the
consent of the surface management
agency is statutorily required prior to
offering the lands for oil and gas lease.
The surface management agency has the
authority to refuse to consent to lease.
Pursuant to longstanding BLM policy,
public domain lands withdrawn or
reserved for the use of another agency
will be leased only after consultation
with the surface management agency or
upon recommendation for leasing by the
surface management agency. The BLM
deems a surface management agency’s
recommendation to not lease to have the
same effect as the agency withholding
consent or objecting to leasing.
Regardless of whether the lands are
acquired or public domain lands, the
BLM will not lease lands when a surface
management agency objects to leasing or
withholds its consent. Consolidating
these paragraphs would reduce any
confusion. When an agency has given its
consent to leasing, the BLM
incorporates all the stipulations
provided by the agency for a lease
parcel. The BLM may add its own
stipulations to the lease parcel. The
Secretary of the Interior has the final
authority and discretion to decide to
offer and issue a lease. Therefore,
although an agency agrees that the lands
may be leased, the BLM has the
authority, on behalf of the Secretary, to
not issue a lease for all or a portion of
the lands.
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Section 3101.52 Action by the Bureau
of Land Management
The proposed rule would update
paragraph (b) to remove the phrase ‘‘and
shall reject any lease offer,’’ because the
IRA, by eliminating noncompetitive
leasing, eliminated such offers. For ease
of reference, the proposed rule would
add a paragraph (d) from language now
found at 43 CFR 3101.5–1(b), which
references the consent required for
lands managed by the Fish and Wildlife
Service. The proposed rule would also
remove from paragraph (d) the phrase
‘‘on a form approved by the director,’’
as there is no such standard form for
stipulations.
4. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3102
The proposed rule would revise one
section heading in the existing subpart
3102. The purpose of this revision is to
replace outdated terminology.
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Section 3102.20
Non-U.S. Citizens
The BLM proposes to rename the
section on ‘‘aliens’’ and to replace this
outdated, derogatory terminology with
the phrase ‘‘non-U.S. citizens’’ in both
the heading of the section and the
language used in the paragraph. The
BLM proposes to add a new paragraph
(b) due to a final rule from the Office of
Investment Security, Department of the
Treasury, implementing the provisions
relating to real estate transactions in
section 721 of the Defense Production
Act of 1950, as amended by the Foreign
Investment Risk Review Modernization
Act of 2018. That final rule was
published at 85 FR 3158 (Jan. 17, 2020)
and codified at 31 CFR part 802. The
rule sets forth the process relating to the
national security review by the
Committee on Foreign Investment in the
United States (CFIUS) of certain
transactions, referred to in the rule as
‘‘covered real estate transactions,’’ that
involve the purchase or lease (including
an assignment or other transfer) by, or
concession to, a foreign person of
certain real estate in the United States.
Covered real estate transactions may
include certain transactions involving
the Federal mineral estate. The CFIUS
looks not only at the entities that are
lessees, but also to any (legal) person
with the ability to exercise control, as
defined by the regulations of the
Department of Treasury’s implementing
regulations, over the lessee. The CFIUS
review could result in the modification,
suspension, or prohibition of the
acquisition of a lease or interest therein.
Accordingly, the BLM recommends that
each potential bidder, lessee, or other
interest holder review the regulations at
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31 CFR part 802 before bidding on or
acquiring an interest in a Federal oil and
gas lease.
Section 3102.40 Signatures
The BLM proposes to add a new
introductory paragraph to clarify that
this section applies to signatures on all
applications and forms. When
applicants submit a form or application
to the BLM, they are certifying their
acceptance of lease terms and
stipulations, as well as their compliance
with the regulations under subpart
3100. The BLM may, in its discretion,
accept electronic signatures and
submissions. Paragraph (a) would be
updated to include that when copies of
the BLM-approved forms are submitted
to the BLM, they must be exact
reproductions without additions,
omissions, or other changes. The
existing paragraph (b), referring to
assignments and transfers, would be
removed from this section since this
language is already covered in the
existing 43 CFR 3106.4–1. The existing
paragraph (d), which refers to
qualification numbers, would be
removed as obsolete: the BLM discarded
qualification statements in favor of selfcertifications in 1982.
Section 3102.51 Compliance
The proposed rule would revise the
introductory paragraph to more clearly
define the qualifications to hold interest
in a lease. The BLM proposes to update
paragraph (a) to change the term ‘‘alien
stockholders’’ to ‘‘non-U.S. citizens who
own stock’’ for consistency with the
changes described earlier. Paragraph (d)
would be updated to remove the
sentence, ‘‘The term entity is defined at
43 CFR 3400.0–5(rr) of this title,’’
because the proposed rule would add a
new definition for ‘‘person,’’ which
would include ‘‘entities’’ as explained
earlier in 43 CFR 3000.5. Paragraphs (d),
(e), and (f) would be updated to include
the appropriate references to the United
States Code, which are more meaningful
than ‘‘sections 2(a)(2)(A) of the Act,’’
‘‘section 41 of the Act,’’ ‘‘section 17(g)
of the Act,’’ and ‘‘section 30A of the
Act.’’
In addition, the BLM proposes to
revise paragraph (f) to emphasize that
reclamation obligations reside primarily
with oil and gas lessees, operating rights
owners, and operators and not the
American public and to ensure that
those who are in non-compliance with
section 17(g) of the MLA are not
qualified to hold a lease. The BLM
reviewed the timeframe it takes to add
a person to the list of persons in
noncompliance with MLA section 17(g).
Under the current policy, it takes a
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minimum of 100 days from the date
when the BLM first issues an incident
of noncompliance (INC), or 130 days
from the date when the BLM first issues
a written order, due to the time it takes
to complete each enforcement action.
The timeframe to complete each
enforcement action is generally as
follows:
• Written Order (30 days)
• First INC (30 days)
• Second INC (30 days)
• Impose civil penalties (40 days)
Therefore, the BLM proposes to
modify paragraph (f) and specify that
noncompliance with MLA section 17(g)
begins when a person has failed to
comply with their reclamation
obligations in the time specified by
notice from the BLM, not, as under the
current regulations, when the
authorized officer has imposed a civil
penalty or collected a bond, whichever
is first. The new language would more
closely track the language of the MLA at
30 U.S.C. 226(g) and would recognize
the changes that were made in 2016 to
43 CFR 3163.1 and 3163.2 (81 FR 81609,
Nov. 17, 2016) regarding notice of
noncompliance. This language clearly
states that a person’s failure to timely
comply with a notice of noncompliance
with reclamation requirements or other
standards would trigger the
noncompliance with section 17(g); it
would not rely on a specific follow-up
action (assessment, civil penalty, or
bond collection) by the BLM. This
would allow the BLM flexibility in how
it responds to a person’s failure to
comply, while clearly stating when
noncompliance with section 17(g)
begins.
With the regulations matching the
law, the BLM would expect to quickly
identify persons in noncompliance and
prevent these persons from acquiring
future Federal leases. The BLM would
add a person to the list of persons in
noncompliance with MLA section 17(g)
after the abatement date has passed for
the first enforcement action, either a
written order or the first INC. This
would result in a person being added to
the 17(g) list in a minimum of 30 days,
instead of the current minimum of 100
or 130 days.
Finally, the BLM proposes to add a
new paragraph (h) to state that, in
accordance with 2 CFR parts 180 and
1400, compliance means that the lessee,
potential lessee, and all parties
described at the beginning of the section
are not excluded or disqualified from
participating in a transaction covered by
Federal non-procurement debarment
and suspension, unless the DOI
explicitly approves an exception for a
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transaction pursuant to the regulations
in those parts.
Section 3102.52 Certification of
Compliance
The BLM proposes to update the last
sentence of this paragraph to remove the
phrase ‘‘an offer,’’ because the IRA, by
eliminating noncompetitive leasing,
eliminated such offers.
5. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3103
The proposed rule would revise one
section heading and remove two others
in the existing 43 CFR subpart 3103
regulations, necessitating redesignating
throughout the subpart.
Section 3103.11 Form of Remittance
The BLM proposes to update the
existing paragraph by changing the
reference from the Minerals
Management Service to the successor
agency, the ONRR.
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Section 3103.12 Where Remittance Is
Submitted
The proposed rule would rename this
section from ‘‘Where submitted’’ to
‘‘Where remittance is submitted.’’ The
BLM proposes to update paragraph
(a)(1) to clarify that the processing fees
for various applications would be found
in the fee schedule in 43 CFR 3000.120.
The BLM proposes to update paragraph
(a)(2) to replace the ONRR’s mailing
address and direct rental payments to
the ONRR’s online rental payment
system to conform to ONRR’s
regulations at 30 CFR 1218.51. The BLM
proposes to update paragraph (b) to
replace the phrase ‘‘communitized
leases in producing well units’’ with the
more commonly used language of
‘‘communitized leases in producing
spacing units.’’ In addition, the BLM
proposes to remove the phrase ‘‘and
easements for directional drilling,’’ as
this is an outdated reference, and the
BLM has never issued easements for
directional drilling.
Section 3103.21 Rental Requirements
The proposed rule would update
paragraph (a) to remove the phrases ‘‘or
competitive nomination’’ and ‘‘List of
Lands Available for Competitive
Nominations or’’ consistent with the
changes made to 43 CFR part 3120. The
proposed rule would also remove the
reference to noncompetitive lease offers,
the phrase ‘‘if known, and, if not
known, shall be based on 40 acres for
each smallest legal subdivision,’’ as well
as the last two sentences in their
entirety, because the IRA ended
noncompetitive leasing. The proposed
rule would update paragraph (b) in this
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section to remove the phrase ‘‘List of
Lands Available for Competitive
Nominations or a’’ due to modifications
made to 43 CFR part 3120 to make
nominations nonbinding.
Diligent Development
The BLM is considering adding a new
requirement for diligent development
obligations under Federal oil and gas
leases and is particularly interested in
receiving comments on this topic. As
stated in the DOI’s Report on the
Federal Oil and Gas Leasing Program,
dated November 2021, noncompetitive
leases are frequently less developed
than competitive leases. Similarly, the
GAO reported (see GAO 22–103968 and
GAO 21–138) that competitive leases
with higher bonus bids were more likely
to produce than competitive leases with
lower bonus bids or noncompetitive
leases. Accordingly, the BLM is
considering adding a section to further
promote development of leases by
specifying the steps that must be taken
to meet diligent development
obligations. For example, the lessee
would meet the diligent development
obligation if, at the end of the fifth year
of the lease term, the lessee: (a) has
established actual production in paying
quantities on the lease; (b) has
established allocated production in
paying quantities on the lease; (c) has
filed a complete Application for Permit
to Drill; (d) has extended the lease term
by committing it to an oil and gas
agreement, 43 CFR 3107.30; (e) has filed
a Notice of Intent to undertake
geophysical exploration. The BLM
reviewed existing leases and the
development milestones on those leases
and determined that 56 percent of the
current leases have met the proposed
diligent development obligation under
one of the options set out here prior to
the fifth lease year.
In addition, the BLM is considering
requiring the lessee to provide notice to
the BLM of how and when the lessee
met the diligent development
obligation, and a provision increasing
the rent if the lessee has not satisfied the
diligent development obligation by the
end of the fifth lease year. Under this
provision, the lease would be subject to
a supplemental escalating rental rate of
an additional $1 per acre, or fraction
thereof, for each lease year between the
sixth and tenth lease years until the
diligent development obligation is met.
The BLM solicits comments as to
whether the increased rental rates
prescribed by the IRA may render a
diligent development obligation
unnecessary.
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Section 3103.22
Payments
47577
Annual Rental
This section provides information on
the royalty rate for existing and future
leases. The proposed rule would revise
the phrase ‘‘timely payment’’ in the
introductory paragraph to ‘‘payment on
or before the lease anniversary date’’ to
more clearly specify what constitutes a
timely payment. The proposed rule
would update paragraph (a) to simply
state that the annual rental for all leases
is as stated in the lease.
To implement the IRA, for all new oil
and gas leases issued in the next 10
years, rentals are set at $3 per acre, or
fraction thereof, for lease years 1 and 2;
$5 per acre, or fraction thereof, for years
3 through 8; and $15 per acre, or
fraction thereof, thereafter. After 10
years following the enactment of the
IRA, those rental rates become
minimums and are subject to increase.
Paragraph (b) reflects that following the
commencement of production, the
rental requirement converts to a
minimum royalty in lieu of rental. The
minimum royalty is ‘‘not less than the
rental which otherwise would be
required for that lease year’’ when
production begins in paying quantities.
(See § 3103.32(a)(2)).
The proposed rule would revise
paragraph (b) because the existing
paragraph (b) is obsolete. The proposed
rule would eliminate the existing
introductory paragraph (b). The
proposed rule would remove the
existing paragraph (d) because, due to
the IRA’s amendment of the MLA,
reinstatements will no longer be
available for noncompetitive leases
issued for public domain lands. The
proposed paragraph (c) would now state
the annual rental for a reinstated lease
is located in 43 CFR 3000.130. As
required by the IRA, the rental rate for
reinstated competitive leases is $20 per
acre, or fraction thereof. The proposed
rule would redesignate the existing
paragraph (f) to paragraph (d) to state
that each succeeding time a specific
lease is reinstated, the rental rate will
increase by an additional $10 per acre,
or fraction thereof, as required by the
IRA.
Section 3103.31
Royalty on Production
All updates to this section would
implement provisions of the IRA. The
proposed rule would update paragraph
(a)(1) to state that leases issued before
the passage of the IRA will have a rate
as prescribed in the lease or applicable
regulations at the time of lease issuance.
In paragraph (a)(2), the proposed rule
would increase the royalty rates for
leases issued on or after the effective
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date of the IRA and for the next 10 years
to 16.67 percent. Paragraph (a)(3) would
be updated to state that for leases issued
after the 10-year period following the
passage of the IRA, the royalty rate will
be not less than 16.67 percent. The
proposed paragraph (a)(4) would state
that ROW leases issued under subpart
3109 would have a minimum royalty
rate of 16.67 percent.
The proposed paragraph (a)(5) would
be updated to state that for reinstated
leases, the royalty rate is the rate used
for royalty determination that applies to
new leases at the time of the
reinstatement plus 4 percentage points,
plus an additional 2 percentage points
for each succeeding reinstatement. In no
case will the reinstated lease have
royalties at a rate less than 20 percent.
The IRA amended the MLA to state that
competitive leases may be reinstated
under a condition that ‘‘a requirement
for future royalties at a rate of not less
than 20 percent computed on a sliding
scale based upon the average production
per well per day, at a rate which shall
be not less than 4 percentage points
greater than the competitive royalty
schedule then in force [i.e., at the time
of the lease] and used for royalty
determination for competitive leases
issued pursuant to such section, as
determined by the Secretary.’’ (30 U.S.C.
188(e)(3)). To implement this provision
of the IRA, the reinstatement of a
terminated lease with a royalty rate of
12.5 percent would be conditioned on a
reinstated royalty rate of not less than
20 percent. Leases issued after the
enactment of the IRA that carry a royalty
rate of 16.67 percent royalty would be
conditioned on a reinstated royalty rate
of not less than 4 percentage points
greater than the competitive royalty
schedule in force at the time of the
lease, or 20.67 percent. The current
regulation increases the royalty rate 2
percentage points for each succeeding
reinstatement. This language would
remain in the regulation.
Section 3103.32 Minimum Royalties
The proposed rule would revise the
exception clause in paragraph (a) by
changing ‘‘except that on unitized
leases’’ to ‘‘except on unitized leases
that lack production.’’ This change
clarifies the intended exception without
suggesting that rental should be paid on
the leased area outside the participating
area, even when the producing well for
the participating area is located on the
leasehold. In general, once oil and/or
gas is discovered in paying quantities on
the lands committed to a unit, all lands
included in the participating area are
charged a minimum royalty per acre per
year in lieu of rental. Rental for those
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portions of unitized leases that are not
within such participating areas continue
at the rental rate established in the
lease. That is, the portion of a lease
inside the participating area will pay
minimum royalty and the portion
outside the participating area is subject
to rental. However, if there is actual
production on a unitized lease, then
minimum royalty should apply to the
entire lease (i.e., both portions within
and outside the participating area). The
proposed changes clarify that for leases
partly inside and partly outside the
participating area and containing a
producing well (or a well that was once
capable of production in paying
quantities), the entire lease is obligated
to pay minimum royalty.
Paragraph (a)(2) would be updated to
change ‘‘competitive leases issued from
successful bids placed at oral or
internet-based auctions conducted after
December 22, 1987’’ to read
‘‘competitive leases issued after
December 22, 1987.’’ The extra language
was necessary to implement changes
from FOOGLRA in 1987, but it no
longer applies, since the BLM does not
have pending competitive lease
applications that date back to 1987.
Paragraph (d) would be updated to
remove the reference to 43 CFR 3108.2–
4, since the section for Class III
reinstatements would be eliminated, as
further described in the discussion of
subpart 3108.
The proposed rule would add a new
paragraph (e) to state that if the royalty
paid during any year aggregates to less
than the minimum royalty, then the
lessee must pay the difference at the end
of the lease year. This is not a new
requirement or a change in the BLM’s
policy; it is only added to clarify the
pre-existing requirement.
Section 3103.41 Royalty Reductions
The proposed rule would revise
paragraph (a) to change the phrase
‘‘successfully operated’’ to ‘‘produced in
paying quantities,’’ which has a clearly
understood meaning within the oil and
gas industry. This change is to clarify
the prerequisite for obtaining this relief
as the previous term ‘‘successfully
operated’’ is not a term that is easily
defined.
The BLM considered additional
changes to this section due to the GAO’s
report entitled, ‘‘Federal Oil and Gas
Revenue: Actions Needed to Improve
BLM’s Royalty Relief Policy’’ GAO–21–
169T. In this report, the GAO found that
the BLM’s decisions to grant royalty
relief during the COVID–19 pandemic
were not made efficiently and equitably
across the states. The BLM considered
using the Bureau of Ocean Energy
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Management (BOEM) regulations and
policy on royalty rate reductions. The
BOEM has multiple authorities to
provide royalty relief. The BOEM
regulations include the authority to
grant royalty relief for deep water leases
and for development and expansion
projects (see 30 CFR 203.60 to 203.80),
drilling ultra-deep wells on leases not
subject to deep water royalty relief (see
30 CFR 203.30 to 203.36), drilling deep
gas wells on leases not subject to deep
water royalty relief (see 30 CFR 203.40
to 203.49), and end-of-life leases (see 30
CFR 203.50 to 203.56). The BLM
provides royalty relief only for a lease’s
end-of-life (equivalent to the BOEM’s
regulations at 30 CFR 203.50 through
203.56). After reviewing BOEM’s
authority, the BLM concluded that the
BOEM’s regulations were based on
specific legal authorities that the BLM
does not have. Therefore, the BLM is not
proposing any changes to this section at
this time. The existing regulations
require evaluation of royalty reduction
applications on a lease-by-lease basis,
require applicants to provide a detailed
statement with ‘‘all facts tending to
show whether the wells can be
successfully operated upon the fixed
royalty or rental,’’ and generally provide
for royalty rate reductions. The BLM is
committed to adhering to those rules
and will ensure that they are
consistently and faithfully applied to
future royalty relief applications.
The BLM solicits feedback to improve
the royalty rate reduction section.
Revised regulations could provide
explicit criteria on royalty rate
reductions, which could include setting
a limit on the lower end of a royalty rate
reduction, implementing a calculation
to decide if the BLM should approve a
royalty rate reduction, implementing an
automatic lifting provision similar to
BOEM (see 30 CFR 203.55), or making
it explicit that a royalty rate reduction
would transfer to the new lessee when
a lease is assigned.
Sections 3103.4–2 Stripper Well
Royalty Reductions and 3103.4–3
Heavy Oil Royalty Reductions
The proposed rule would eliminate
both of these sections in their entirety
because they are obsolete. Both sections
were revised on October 6, 2010 (75 FR
61624), to eliminate these types of
royalty relief. However, these provisions
were retained in the final rule because,
while these types of royalty relief were
no longer available for current
production, prior production subject to
this relief continued to be subject to
audits. In addition, the 7-year statute of
limitations period during which ONRR
could pursue a demand for royalty
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continued to apply. Since that statute of
limitations period has passed for all
production that qualified for relief
under these sections, they are no longer
necessary and are being removed.
Section 3103.42 Suspension of
Operations and/or Production
This section of the existing
regulations implements the provisions
of 30 U.S.C. 226(i) and 209 for
suspending oil and gas leases. The
proposed rule would redesignate this
section from 43 CFR 3103.4–4 to 43 CFR
3103.42 as discussed at the beginning of
the preamble. The proposed rule would
change the language in paragraph (b) to
clarify that the term of a suspended
lease will be adjusted to account for the
time of suspension, i.e., by calculating
the running of the primary term without
including the time during which the
lease was suspended. In the BLM’s
experience, the language in the current
regulations—providing that the primary
term of a lease will be ‘‘extended by
adding the period of the suspension’’—
has been incorrectly interpreted to mean
that the length of the suspension is
added to the lease term when the
suspension is lifted. For example,
consider a lease issued for a primary
term of 10 years. In the ninth year, a
suspension is granted. The suspension
lasts for 2 years. When the suspension
is lifted, the time remaining on the
primary term is the 1 year that was left
prior to the suspension. The 2 years of
the suspension are not added to the
primary term.
Paragraph (d) would be clarified to
state that if there is any production sold
or removed during the month the
suspension is granted, the lessee must
pay royalty on that production.
Paragraph (d) would also be split into
three sections due to the length of the
paragraph and for clarity. The other two
sections would become new paragraphs
(e) and (f), and the remaining
paragraphs would be redesignated.
Redesignated paragraph (g) would
update the term ‘‘terminating a
suspension’’ to ‘‘lifting a suspension,’’
since ‘‘termination’’ is a term of art that
refers to a lease ending through
operation of law when the rental is not
paid.
The proposed rule would update
redesignated paragraph (h) to change the
language from ‘‘unit or cooperative
plan’’ to read ‘‘agreement’’ to conform to
the definitional change made earlier in
this proposed rule.
6. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3104
The BLM proposes to revise its oil
and gas bonding requirements in several
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respects. The BLM proposes to increase
minimum bond amounts for the first
time since 1951 (statewide and
nationwide bonds) and 1960 (lease
bonds). In addition, the proposed rule
would add one section, § 3104.90, into
the existing subpart 3104 regulations to
address when lessees must come into
compliance with the new bond amounts
and would revise two section headings
in the existing subpart 3104 to more
accurately reflect the contents of those
sections. The proposed rule would also
remove nationwide and unit operator’s
bonds and add surface owner protection
bonds. The BLM believes these
proposed changes, particularly the
increased bond amounts and the
elimination of nationwide bonding,
would help ensure that reclamation
responsibilities reside primarily with oil
and gas lessees and operators and not
the American public.
The MLA authorizes the Secretary to
establish standards ‘‘as may be
necessary to ensure that an adequate
bond, surety, or other financial
arrangement will be established prior to
the commencement of surfacedisturbing activities on any lease, to
ensure the complete and timely
reclamation of the lease tract, and the
restoration of any lands or surface
waters adversely affected by lease
operations after the abandonment or
cessation of oil and gas operations on
the lease.’’ (30 U.S.C. 226(g)). The
existing regulations at § 3104.1
implement this authority and require
that, prior to surface-disturbing
activities related to drilling operations,
the lessee, sublessee, or operator submit
a surety or personal bond. The purpose
of the bond is to ensure the ‘‘complete
and timely plugging of the well(s),
reclamation of the lease area(s), and the
restoration of any lands or surface
waters adversely affected by lease
operations after the abandonment or
cessation of oil and gas operations.’’ (43
CFR 3104.1(a)). The regulations at
§§ 3104.2 through 3104.4 currently set
forth four different bond types:
Æ Lease/Individual Bonds, which
provide coverage for one lease and must
be in an amount of not less than
$10,000;
Æ Statewide Bonds, which cover all
leases and operations in one State and
must be in an amount of not less than
$25,000;
Æ Nationwide Bonds, which cover all
leases and operations nationwide and
must be in an amount of not less than
$150,000; and
Æ Unit Operator’s Bonds, which may
be used in lieu of individual lease,
statewide, or nationwide bonds for
operations conducted on leases
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committed to an approved unit
agreement.
Existing regulations set a minimum
amount for these types of bonds. The
BLM has not increased its minimum
bond amounts since 1951 (statewide
and nationwide bonds) and 1960
(individual lease bonds). In September
of 2019, the GAO issued a report
recommending that the BLM address
risks from insufficient bonding (GAO–
19–615). The GAO found the bonds held
by the BLM were insufficient to prevent
wells from becoming orphan wells and
thereby shifting the costs to plug and
abandon and reclaim these wells onto
the taxpayer. Specifically, GAO found
that 84 percent of the bonds reviewed
were not sufficient to cover the costs to
reclaim the wells covered by the bonds.
Further, GAO determined the bond
amounts, which were usually set at the
regulatory minimum, ‘‘does not account
for variables such as the number of
wells [the bonds] cover or other
characteristics that affect reclamation
costs, such as well depth.’’
Currently, the BLM uses Instruction
Memorandum 2019–014, Oil and Gas
Bond Adequacy Reviews, to review
existing Federal bond amounts and
request increases to the bond amount
based on the potential risk or liability
posed by the operators. Similar policy
has been in place for the past decade,
see Instruction Memorandums 2013–
151, 2010–161, 2008–122, and 2006–
206. The BLM is proposing to increase
the minimum bond amounts to reflect
inflation and the minimum coverage
that would be required for operations on
Federal land, based on the BLM’s
estimate of current plugging and
reclamation costs. The proposed
minimum bond amounts would provide
sufficient protection to allow an
operator to begin drilling; however, the
BLM would still need to review bond
amounts periodically to determine
whether the bond amount should be
increased based upon the risk of default
posed by the operator or the risk to the
environment posed by the operations. In
the past 2 fiscal years, the BLM has
spent $2.7 million annually on
orphaned wells. Without an increase in
the bond amounts, the BLM expects to
continue to incur similar annual costs to
address orphaned wells. Because of
inflation, the lack of increased bond
amounts for almost 40 years, and the
increased number of orphaned wells
resulting from insufficient funds
available under current bonds and
associated costs ultimately borne by the
American taxpayer, the revisions to the
bond amounts proposed here are
justified.
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In addition to the proposed rule, the
BLM also considered two alternatives:
adjusting the bond only for inflation
(alternative 2) and requiring a full
liability bond (alternative 3). The
second alternative, only adjusting the
bond amount for inflation, would
increase the lease/individual bond to
$100,000 and the statewide bond to
$300,000. The third alternative
considered adjusting the bond to cover
the full plugging and reclamation cost of
all Federal onshore operations covered
by the bond. In this alternative, the BLM
would allow the operator to use either
a statewide bond or an individual bond;
however, the operator would be
required to submit a bond rider for each
additional well drilled to ensure the
bond amount covers the full cost for
plugging and reclamation for all wells
covered by the bond. In this instance,
the BLM estimated an average lease/
individual bond of $994,000 would
cover 14 wells and an average statewide
bond of $4,686,000 would cover 66
wells. The BLM concluded that
implementing the third alternative
would require increased staffing at the
field and state offices to manage
increased workload surrounding the
additional bond riders. In addition, it is
expected that the BLM’s application for
permit to drill processing time would
slow down due to waiting for additional
bond riders.
Although the BLM analyzed the
second and third alternatives in the
economic analysis, the BLM did not
propose either of these alternatives in
the proposed rule. The BLM is
requesting commenters to provide
information on additional alternatives
for bonding that the BLM might
consider.
Additionally, the BLM is requesting
comments on whether it should propose
to adjust the minimum bond amounts
by inflation. Currently, the BLM is not
proposing this in the rule; however, the
BLM would prefer to have a method to
adjust minimum bond amounts by
inflation factors. Please provide
comments on if and how the BLM
should adjust minimum bond amounts
in the future.
Finally, the BLM also proposes to
remove the nationwide and unit
operator bond types to reduce the cost
and burden on the American public for
administering these types of bonds. For
nationwide bonds, the state office that is
administering a nationwide bond must
coordinate with not only the field
offices within the state, but also every
other state office. With the proposed
elimination of nationwide bonds, the
BLM would not need to coordinate with
all the other state offices for a bond
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adequacy review. In addition, the BLM
state office could more easily ensure
that the field offices within the State
have completed the required bond
reviews. As a result, the BLM would be
able to better tailor the bond amounts to
the local conditions and State-specific
requirements when reviewing a bond for
adequacy. The BLM also would be able
to review statewide bond amounts and
ensure that the bond amount is adjusted
before an operator defaults, thus
reducing the financial burden on the
American taxpayer. Overall, the
elimination of nationwide bonding in
favor of the proposed increase in the
amount of the statewide and lease bonds
would allow the agency to ensure
improved bonding, with an appropriate
focus on specific areas and fields, which
should reduce the burden to the
taxpayer if an operator fails to complete
proper plugging and abandonment.
Section 3104.10 Bond Obligations
To enhance the administration of oil
and gas bonding on America’s public
lands, the BLM is proposing to remove
paragraphs (c)(1) and (5), which allow
certificates of deposits (CDs) and letters
of credit (LOCs) to secure a personal
bond. The BLM is proposing to remove
CDs because they are difficult to
manage: the face of these instruments do
not include the BLM’s required
language that Secretarial approval is
required prior to redemption of the CD
by any party. The BLM is proposing to
remove LOCs because the BLM has
found it is difficult for banks to include
the BLM’s requirements in LOCs. Under
the proposed rule, any existing personal
bond that is secured by a CD or a LOC
need not change the security until the
bond is replaced. However, the BLM
would not accept CDs or LOCs as
security for a new personal bond after
the final rule takes effect. Finally, the
BLM requests comments with any
supporting information on whether the
final regulation should provide for any
other types of approved financial
arrangements and the types of financial
arrangements that the BLM should
consider.
Section 3104.20 Lease Bond
The proposed rule would change the
specifications regarding who must post
a bond to state that the operator must be
covered by a bond in its name as
principal or obligor. The existing
regulations authorize a lessee, owner of
operating rights (sublease), or operator
to post a lease bond. The proposed
change would not result in any
administrative changes for the BLM,
because under the existing regulations,
when a lessee or an operating rights
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owner posts the bond for the operator,
the bond must include the operator as
principal. The proposed language is
intended to simplify these provisions by
requiring an operator to have a bond in
its own name and removing the
requirement for lessees and sublessees
to ensure their bonds cover the operator.
The BLM recognizes that lessees and
owners of operating rights (sublessees)
have certain obligations and are
ultimately responsible for operations on
their lease, as required by 43 CFR
3106.76, and additional bonding may be
required by the authorized officer when,
for example, an operator is
noncompliant.
The proposed rule would increase the
minimum lease bond amount to be not
less than $150,000. The existing lease
bond amount of $10,000, established in
1960, no longer provides an adequate
incentive for companies to meet their
reclamation obligations, nor does it
cover the potential costs to reclaim a
well should this obligation not be met.
This current bond requirement increases
the risk that taxpayers will cover the
cost of reclaiming wells in the event the
operator refuses to do so or declares
bankruptcy. According to a GAO report
entitled, Federal Energy Development,
Challenges to Ensuring a Fair Return for
Federal Energy Resources, GAO–19–
718T, ‘‘weaknesses with bonds for coal
mining and for oil and gas development
pose a financial risk to the Federal
Government as laws, regulations, or
agency practices have not been adjusted
to reflect current economic
circumstances.’’
To determine the appropriate
minimum lease bond amount, the BLM
reviewed its existing lease bonds and
the number of wells tied to the lease
bonds. The BLM currently manages 933
lease bonds; however, only 369 lease
bonds cover existing wells or liability.
The lease bonds that do not cover any
existing liability are usually put in place
for a well that has not yet been drilled
or where the principal forgot to request
termination of the bond after
transferring or plugging and abandoning
its prior oil and gas liability. For the
lease bonds with existing wells, each
lease bond, on average, covers 14 wells;
however, lease bonds cover a median
number of one well per bond. In
addition, the lease bonds covering
existing wells average $26,000 per bond.
For background, the BLM calculated the
average by adding up all the lease bond
amounts and dividing this total by the
number of lease bonds. The BLM
calculated the median by taking the
middle value, i.e., the value for which
half of the lease bonds are larger and
half are smaller. Thus, half of the lease
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bonds with existing liability cover one
well per bond. The cost to plug one well
and reclaim the surface, however, can
vary significantly based on the depth of
the well. The proposed rule would
require the minimum bond amount to
be sufficient to reclaim two wells to
account for the uncertainty surrounding
the depth of wells and the large
variability in reclamation costs for
orphaned wells. The BLM would
conduct bond adequacy reviews on all
bonds and increase the required bond
amount based upon the risk of the
operations. This review would include
several risk factors regarding the wells
covered by the bond and the operator’s
compliance history.
Between 1960 and 2022, the
cumulative inflation rate, as measured
by the U.S. Consumer Price Index was
901 percent and, accordingly, the 2022
equivalent of $10,000 (the 1960 lease
bond amount) would be $100,105
(https://
www.usinflationcalculator.com). After
reviewing the costs to plug orphaned
wells, the BLM determined the cost to
plug a well and reclaim the surface
ranges from $35,000 to $200,000, with
an average cost of $71,000. Considering
that the median number of wells is one
well per lease bonds, the BLM is
proposing to set the new minimum lease
bond amount at $150,000 (rounded up
from $142,000), which would cover the
estimated plugging and reclamation
costs for two wells. The BLM is
proposing to round the bond amount up
to the nearest $50,000 for ease of
payment and administration. Through
the BLM’s current policy for bond
adequacy reviews, the BLM will
increase the lease bond amount for
operators with more than two wells tied
to the bond. The proposed minimum
lease bond amount would provide
sufficient coverage for an operator
starting operations with a lease bond.
Based upon a review of the lease bond
and related operations, the BLM
determined that the minimum lease
bond amount should be not less than
$150,000. In addition, the minimum
lease bond amount of $150,000 matches
the amounts proposed in Congress by
Senator Michael Bennet (S. 2177) and
Representative Teresa Leger Fernandez
(H.R. 2415). The BLM believes this
update would help ensure that
reclamation responsibilities reside
primarily with oil and gas lessees and
operators and not the American public.
The BLM requests comments with any
supporting information on whether the
final regulation should provide a higher
or lower amount for lease bonds.
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Section 3104.30 Statewide Bonds
The proposed rule would rename this
section from ‘‘Statewide and nationwide
bonds’’ to ‘‘Statewide Bonds’’ as BLM
proposes to remove nationwide bonds.
The proposed rule increases the
statewide bond amount to not less than
$500,000, covering all leases and
operations in any one State to reflect
current economic circumstances. The
BLM established the previous statewide
bond amount of $25,000 in 1951. As
stated earlier, insufficient bonding
levels provide an inadequate incentive
for companies to meet their reclamation
obligations and do not provide
sufficient funding in the event a
company fails or refuses to meet its
obligations, thereby ultimately shifting
the reclamation obligations on the
taxpayer.
To determine the appropriate
minimum statewide bond amount, the
BLM reviewed its existing statewide
bonds, and the number of wells tied to
the statewide bonds. The BLM currently
manages 1,815 statewide bonds;
however, only 1,007 statewide bonds
cover existing wells. For the statewide
bonds with wells, each statewide bond,
on average, covers 66 wells; however,
the statewide bonds cover a median
number of seven wells per bond. The
larger number of wells covered provides
the BLM more time to conduct a bond
adequacy review and increase bond
amounts if needed. In addition, the
statewide bonds covering existing wells
averaged $387,000 per bond. For
background, the BLM calculated the
average by adding up all the statewide
bond amounts and dividing this total by
the number of statewide bonds. The
BLM calculated the median by taking
the middle value, i.e., the value for
which half of the statewide bonds are
larger and half are smaller. Since half of
the statewide bonds, with existing
liability, cover seven wells per bond, the
proposed rule would require the
minimum bond amount to cover seven
wells, the median number of wells.
Unlike bonds for individual leases
where the BLM is proposing to cover
more than the median number of wells,
for statewide bonds, the larger number
of wells covered (7) reduces the
uncertainty related to depth of
individual wells and the variability of
reclamation costs. It also gives the BLM
more time to conduct a bond adequacy
review and increase bond amounts if
needed. The BLM would conduct bond
adequacy reviews on all bonds and
increase the required bond amount
based upon the risk of the operations.
This review would include the number
of wells covered by the bond.
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Between 1951 and 2022, the
cumulative inflation rate, as measured
by the U.S. Consumer Price Index was
1,040 percent and, accordingly, the 2022
equivalent of $25,000 (the 1951
statewide bond amount) would be
$284,914 (https://
www.usinflationcalculator.com). After
researching the BLM’s data on orphaned
wells, the cost to plug a well and to
reclaim the surface ranged from $35,000
to $200,000, with an average cost of
$71,000. Considering that the median
number of wells is seven wells per
statewide bond, the BLM opted to have
the minimum statewide bond cover
seven wells, which resulted in a
statewide bond of $500,000, rounded
from $497,000. The BLM rounded the
bond to the nearest $50,000 for ease of
payment and administration. Through
the BLM’s current policy for bond
adequacy reviews, the BLM will
increase the statewide bond amount for
operators with more than seven wells
tied to the bond. The new minimum
statewide bond amount would provide
sufficient coverage for an operator
starting operations with a statewide
bond.
Based upon a review of the statewide
bond and related operations, the BLM
determined that the minimum statewide
bond amount should be not less than
$500,000. In addition, the minimum
statewide bond amount of $500,000
matches the amounts proposed in
congress by Senator Michael Bennet (S.
2177) and Representative Teresa Leger
Fernandez (H.R. 2415). The BLM
believes this update would help ensure
that end-of-life liabilities reside
primarily with oil and gas lessees and
operators and not the American public.
The BLM requests comments with any
supporting information on whether the
final regulation should provide a higher
or lower amount for statewide bonds.
Finally, the proposed rule would
rescind the use of nationwide bonds,
which call upon the BLM to manage
nationwide risks and liabilities and are
therefore administratively inefficient.
The elimination of nationwide bonding
in favor of the proposed increase in the
amount of the statewide and lease bonds
described earlier would allow the
agency to ensure improved bonding,
with an appropriate focus on specific
areas and fields, which should reduce
the burden to the taxpayer if an operator
fails to complete proper plugging and
abandonment.
For more background, the BLM
reviewed its existing nationwide bonds,
and the number of wells tied to the
nationwide bonds. The BLM currently
manages 241 nationwide bonds;
however, only 129 nationwide bonds
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cover existing wells or liability. For the
nationwide bonds with wells, each
nationwide bond, on average, covers
295 wells; however, the nationwide
bonds cover a median number of 35
wells per bond. The nationwide bonds
covering existing wells averaged
$198,000 per bond. Compared to
statewide bonds, nationwide bonds
cover more wells and averaged lower
amounts per bond. The BLM believes
the increased administrative burden
related to managing nationwide bonds
has caused nationwide bonds to lag
behind statewide bonds for bond
increases and reviews. Overall, the BLM
believes the elimination of nationwide
bonds would result in prompt
adjustments to bond amounts with
changing circumstances of the bonded
parties’ operations. The BLM seeks
public comment on the appropriate
minimum amount for a nationwide
bond, if it opts to retain the nationwide
bonding provision.
Section 3104.4 Unit Operator’s Bond
The proposed rule would eliminate
unit operator bonds in their entirety, as
currently found in 43 CFR 3104.4.
Currently, these bonds are treated like
statewide bonds and may be used in
lieu of individual lease, statewide, or
nationwide bonds for operations
conducted on leases committed to an
approved unit agreement. The language
for the unit operator bond can be found
at 43 CFR 3186.2. The BLM has less
than 20 active unit operator’s bonds
nationwide. The BLM’s review of bonds
shows that the forms predating June
1987 did not clearly cover the principal
in the capacity of a unit operator where
the operator does not hold an interest in
the lease. Prior to June 1987, the BLM
required the principal or obligor to
provide a rider to a statewide or
nationwide bond extending the bond’s
coverage to include all obligations of the
principal or obligor under the terms and
conditions of unit agreements. The
current bond forms do not have this
deficiency as they contain the
statement, ‘‘WHEREAS the principal
and surety agree(s) that with notice to
the surety the coverage of this bond, in
addition to the present holding(s) of
and/or authorization(s) granted to the
principal, shall extend to and include:
[. . .] Any activity subsequent hereto of
the principal as operator under a
lease(s) issued pursuant to the Acts
cited in this bond.’’ Today, unit operator
bonds are usually submitted to the BLM
when a unit agreement includes lands
located in more than one State as it
costs less to post a single unit operator
bond for $25,000 rather than posting
two statewide bonds for $50,000 or a
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nationwide bond for $150,000. This was
not BLM’s intention for the unit
operator bond in 1987 when the bond
forms were updated. Therefore,
eliminating and replacing the unit
operator’s bond, which is already
treated and managed like statewide
bonds, would bring efficiencies to the
program.
Section 3104.40 Surface Owner
Protection Bond
The proposed rule would add a
provision related to surface owner
protection bonds to consolidate all of
the bonding provisions in one place.
The BLM promulgated the current
requirements for surface owner
protection bonds through Onshore
Order 1 in 2007. The BLM recently
codified these requirements in 43 CFR
subpart 3171. In this proposed rule, the
BLM would incorporate the existing
bonding requirements set out in
Onshore Order 1. It also would add a
new requirement that the surface owner
protection bond must be filed on the
BLM approved form and specify that the
type of bond can either be a personal or
surety bond. The BLM requests
supporting documentation and
comments on whether the final rule
should change the minimum bond
amount for surface owner protection
bonds.
Section 3104.60 Where Filed and
Number of Copies
The proposed rule would remove the
last sentence in this paragraph, which
states that nationwide bonds may be
filed in any BLM state office. As noted
previously, this rule would eliminate
nationwide bonds.
Section 3104.70 Default
The proposed rule would divide the
current paragraph (b) into three
paragraphs for clarity. Paragraph (b)(1)
would state that all the leases covered
by the bond may be subject to
cancellation if the principal fails to
comply with the paragraph (b)
requirements. The BLM proposes to add
information on failure to comply by
referencing section 17 of the MLA and
the DOI’s suspension and debarment
program to ensure the bonded principal
understands the risks that incur for a
default under the bond. The rule
proposes to add paragraphs (b)(2) and
(3). Paragraph (b)(2) would state that the
bonded party may be prevented from
acquiring any new lease or interest
when the entity is in violation of section
17 of the MLA; it references the
provisions for qualifications to hold a
lease at 43 CFR 3102.51(f). Paragraph
(b)(3) would state that the bonded party
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may be referred to the DOI’s Suspension
and Debarment Program under 2 CFR
part 1400 to determine if the person will
be suspended or debarred from doing
business with the Federal Government
for failure to comply with the paragraph
(b) requirements.
Section 3104.90 Bonds Held Prior to
[EFFECTIVE DATE OF THE FINAL
RULE]
The proposed rule would add a new
section entitled ‘‘Bonds Held Prior to
[EFFECTIVE DATE OF THE FINAL
RULE]’’ to manage the elimination of
existing nationwide and unit bonds.
Paragraph (a) would state that the
current unit operator bonds accepted by
the BLM prior to the effective date of the
final rule must be replaced by a
statewide bond within 2 years from the
effective date of the final rule. The BLM
would no longer accept new unit
operator bonds. Paragraph (b) would
provide a phase-in period within which
bonds held prior to the final rule must
meet the increased minimum bond
amounts. The phase-in period for
individual, state, and nationwide bonds
would be 1, 2, and 3 years, respectively
(for nationwide bonds, the phase-in
period refers to the time in which
nationwide bonds must be converted
into state bonds).
The phase-in period should be as
short as possible to account for the large
number of inadequate bonds and the
associated taxpayer exposure. The BLM
opted for a 3-year phased approach
based on the workload related to
reviewing and accepting new bonds or
bond riders. This approach would
spread out the workload of replacing
bonds over a 3-year period and allow
the BLM to process the bond increases
without requiring additional
adjudication staff to manage the
increased workload. The BLM opted to
start with individual bonds as these are
usually smaller operations with an
increased risk of bankruptcies. The BLM
requests supporting documentation and
comments on whether the final
regulation should change the priority
order for the phase-in period.
7. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3105
The proposed rule would add one
section and remove five sections in
existing 43 CFR subpart 3105. The
proposed rule would revise one section
heading in the existing 43 CFR subpart
3105 to remove an unnecessary
reference to drilling agreements.
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Section 3105.10
Agreement
Cooperative or Unit
The proposed rule would add a new
paragraph (b) to this section to require
that all applications to form a unit
agreement, a unit expansion, or a
designation of a successor operator
include the new processing fee found in
the fee schedule in 43 CFR 3000.120 of
this chapter.
Communitization Agreements
This section of the regulations covers
the BLM’s management and approval of
communitization agreements, which are
oil and gas agreements covering one or
more Federal leases that cannot be
independently developed due to wellspacing or well development programs.
The CA allows the lessees to
cooperatively develop such tracts. The
proposed rule would rename this
section from ‘‘Communitization or
Drilling Agreements’’ to
‘‘Communitization Agreements.’’ The
proposed rule would eliminate ‘‘drilling
agreements’’ in this section, since the
BLM has determined that such
agreements are rarely if ever used.
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Section 3105.21
Where Filed
The proposed rule would remove the
triplicate filing requirement in
paragraph (a) as the BLM believes this
requirement is no longer needed given
electronic filing. The proposed rule
would replace the language in current
paragraph (b) with a list of three items
that an application for a CA must
include. Paragraph (b)(1) would require
that all applications to form a CA must
include a statement as to whether the
proposed CA deviates from the BLM’s
current model CA form and a
certification that the applicant received
the required signatures. Paragraph (b)(2)
would require an Exhibit A to display
a map of the area covered by the
agreement and the separate agreement
tracts, and paragraph (b)(3) would
require the filing of an Exhibit B
displaying the separate tracts and
ownership. The new paragraph (c)
would state that all applications to form
a CA should be submitted at least 90
calendar days prior to first production
to ensure accurate reporting to the
ONRR. Finally, the new paragraph (d)
would require operators to file the
designation of successor operator with
the filing fee in the fee schedule at 43
CFR 3000.120.
Section 3105.22
Purpose
The proposed rule would remove the
unnecessary reference to drilling
agreements.
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Section 3105.23 Requirements
The proposed rule would remove the
unnecessary reference to drilling
agreements.
Section 3105.24 Communitization
Agreement Terms
The proposed rule would add a new
section to outline CA terms to provide
clarity. The new paragraph in this
section would provide that these
agreements would remain in effect for a
period of 2 years from the effective date
of the CA or approval date, whichever
is later, and as long thereafter as
communitized substances may be
produced in paying quantities, or as
otherwise specified in the agreement.
Section 3105.31 Where Filed
The proposed rule would remove the
requirement for five copies of an
operating, drilling, or development
contract to be submitted when these
contracts are submitted to the BLM for
approval as the BLM believes this
requirement is no longer necessary
because of electronic filing.
Section 3105.4 Combination for Joint
Operations or for Transportation of Oil
The proposed rule would eliminate
the section on the combination for joint
operations or for transportation of oil.
These provisions are not used by the
BLM or operators and are therefore
obsolete. A ROW for pipelines may be
granted, as provided in 43 CFR part
2880, without retaining the duplicative
language under this subpart. A ROW
grant is an authorization to use a
specific piece of public land for a
certain project, such as a road, pipeline,
transmission line, or communication
site. A more complete explanation of the
BLM ROW program is found in Title 43
CFR parts 2800 and 2880.
Subsurface Storage of Oil and Gas
The proposed rule would change the
existing 43 CFR 3105.5 to just the
heading ‘‘Subsurface storage of oil and
gas.’’
Section 3105.41 Where Filed
The proposed rule would update
paragraph (a) to include designation of
successor operators for gas storage
agreements among the applications to be
filed in the proper BLM office. This
information needs to be filed with the
BLM when there is a change in operator.
The proposed rule would update
paragraph (b) to remove the requirement
for five copies of a gas storage
agreements to be submitted when these
are filed with the BLM as the BLM
believes this requirement is no longer
necessary because of electronic filing. A
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new paragraph (c) would require that all
applications for a subsurface gas storage
agreement or a designation of a
successor operator must include the
new processing fee found in the fee
schedule in 43 CFR 3000.120.
Section 3105.42 Purpose
The proposed rule would add
clarification that a gas storage agreement
will require a bond under 43 CFR part
3104.
Section 3105.43 Requirements
The proposed rule would update the
language in this section to mirror the
language found in 43 CFR 3105.42 for
clarity.
Section 3105.50 Consolidation of
Leases
The proposed rule would split the
single paragraph under this section into
several paragraphs for clarity. These
paragraphs would also incorporate
language from 43 CFR 3135.17 to
provide a consistent approach across
leasing in the NPR–A and under the
MLA. Paragraph (a) would incorporate
language stating that leases may be
consolidated upon written request of the
lessee filed with the proper BLM office.
This change is proposed to identify who
should submit the request for
consolidation. The request must identify
each lease involved by serial number
and must explain the factors that justify
the consolidation. Paragraph (b) would
state that all parties holding any
undivided interest in any lease involved
in the consolidation must agree to enter
into the same lease consolidation.
Consistent with the existing language,
paragraph (c) would clarify the
circumstances under which leases
cannot be consolidated. Paragraph (d)
would state that a consolidated lease
will not exceed acreage limits of 2,560
acres for competitive leases and 10,240
acres for noncompetitive leases, as
required by 30 U.S.C. 226. Paragraph (e)
would require the effective date,
anniversary date, and the primary term
of the consolidated lease to be those of
the oldest original lease included in the
consolidation. It would also allow the
term of a consolidated lease to be
extended beyond the primary lease term
pursuant to 43 CFR subpart 3107.
Paragraph (f) would state that the
highest royalty and rental rates of the
each of the leases to be consolidated
would apply to the consolidated lease.
Paragraph (g) would state that lease
stipulations and other terms and
conditions of each original lease would,
in general, continue to apply to the lease
to which they originally applied,
regardless of the lease becoming a part
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of a consolidated lease. These additions
bring consistency between §§ 3135.17
and 3105.50.
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8. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3106
The proposed rule would add one
section and remove two sections in
existing subpart 3106. The proposed
rule would revise five section headings
in the existing subpart 3106 to provide
clarity and replace the existing
question-and-answer formats.
Section 3106.10 Transfers, General
The proposed rule would split
paragraph (a) into two paragraphs and
add a provision regarding transfers of
operating rights to provide clarity and
reduce the confusion the BLM has seen
in applications. The new paragraph (b)
would state that an assignment of a
separate zone, deposit, depth,
formation, a specific well, or part of a
legal subdivision will be denied. The
proposed rule would add a new
paragraph (c) to state that operating
rights may only be divided with respect
to legal subdivisions, depth ranges, and
formations within the boundaries of a
Federal lease. Terms, such as
stratigraphic equivalent, pools,
reservoirs, wellbores, and references to
unnamed formations occurring at a
specified depth within a specific well
are not allowed, as they are not
definitive, and introduce ambiguity into
the boundaries along which lease rights
are split.
The proposed language more clearly
states the BLM’s current obligations.
The current regulation at 43 CFR
3106.1(a) states: ‘‘Leases may be
transferred by assignment or sublease as
to all or part of the acreage in the lease
or as to either a divided or undivided
interest therein. An assignment of a
separate zone or deposit, or of part of a
legal subdivision, shall be
disapproved.’’ The ‘‘stratigraphic
equivalent’’ of a formation (i.e., a
division that extends beyond that
formation) meets the definition of a
‘‘zone.’’ A ‘‘pool’’ of oil or gas trapped
in the rocks below the ground surface
meets the definition of a ‘‘deposit.’’
Under the current regulations, therefore,
the BLM must disapprove these types of
assignments.
The BLM’s practice is sound as a
practical matter. The BLM cannot
approve assignments or transfers that
attempt to separate rights along
boundaries that cannot be defined
without geological interpretation (for
example, ‘‘the stratigraphic equivalent
of the formation encountered in Well X,
at a depth of Y feet below the surface’’).
A boundary that requires geological
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interpretation is inherently imprecise.
As for wellbore-only transfers, a
wellbore is essentially a line, not a
spatial region within a leasehold. The
BLM cannot define a distribution of
lease rights relative to a linear feature in
three-dimensional space below the
surface of the ground. Wellbore-only
rights that purportedly encompass the
area drained by that wellbore pose the
problem of defining the boundaries of
the area drained, which may require
geological interpretation and/or
engineering analysis.
The proposed rule would also split
the existing paragraph (b) into five
paragraphs due to the length of the
paragraph and for clarity. The proposed
paragraph (d) would revise the second
sentence to simply reference 43 CFR
3102.51(g) for certification of
compliance rather than repeating the
language set out in 43 CFR 3102.51(g).
The proposed rule would redesignate
the existing paragraph (c) to paragraph
(i) because of the previously mentioned
reorganization.
Section 3106.20
Transfers
Qualifications of
The purpose of this section is to
ensure new lessees and operating rights
owners comply with the provisions of
43 CFR subpart 3102. The proposed rule
would update the title of the section
from ‘‘Qualifications of transferees’’ to
‘‘Qualifications of assignees and
transferees.’’ The proposed rule would
also update the paragraph to include
‘‘assignees’’ as well as ‘‘transferees.’’
The purpose of these changes is to
clarify that this section on qualifications
applies to both assignments of record
title as well as transfers of operating
rights. The proposed rule would add a
sentence that states ‘‘Only qualified and
responsible lessees may own, hold, or
control an interest in a lease.’’ This
addition is made to conform the
language in this provision with similar
proposed changes.
Section 3106.30
Fees
This section includes the requirement
to submit the requisite filing fees with
assignment and transfer applications.
The proposed rule would split the
current paragraph into two paragraphs
for clarity. The reference to the filing fee
for assignments and transfers would
now be found under paragraph (a). The
reference to the filing fee for transfer of
overriding royalty or payment out of
production would now be found under
paragraph (b). References to the filing
fees for mergers and name changes and
for transfers to heirs or devisees would
be removed from this section as the
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filing fee requirement is included in the
sections for those specific topics.
Section 3106.41 Transfers of Record
Title and of Operating Rights
(Subleases)
This section describes the forms
required for assignment and transfers.
The proposed rule would update this
section to allow for the acceptance of
electronic submissions. The proposed
rule would reduce the triplicate filing to
a duplicate filing so that the BLM can
keep one copy for the official case file
and return one copy of the approved
assignment or transfer for the
applicant’s records. The BLM does not
require a duplicate copy of the
assignment or transfer when it is
electronically submitted.
The proposed rule would also require
assignments and transfers to be
submitted on a current form and would
no longer allow the use of obsolete
forms. All current forms can be located
on the BLM’s web pages. The BLM
believes that lessees may locate the
current form far easier now than in the
days prior to widespread internet
access.
The current regulations allow for the
assignee or transferee to sign only one
copy of the assignment or transfer,
while the assignor or transferor must
sign all three copies of the form. In light
of the proposal to reduce the triplicate
filing to (at most) a duplicate filing, the
BLM believes it would no longer be a
burden for the assignee or transferee to
sign both copies of the form submitted
to the BLM. This change would
streamline the BLM’s verification of the
required signatures.
Section 3106.42 Transfers of Other
Interest, Including Royalty Interests and
Production Payments
The proposed rule would update
paragraphs (a) and (b) to ensure
overriding royalty transfers are
submitted on the BLM’s current
assignment or transfer forms.
Section 3106.43 Mass Transfers
This section allows an assignor or
transferor to make a mass assignment or
transfer when conveying any type of
interest in a large number of Federal
leases to the same assignee or transferee.
The proposed rule would update
paragraph (a) to include the words
‘‘assignor’’ and ‘‘assignee.’’ As
explained earlier, the term ‘‘transferees’’
usually refers to transfers of operating
rights, but this section has always
functioned to apply to both assignments
of record title as well as transfers of
operating rights. The BLM believes that
adding assignors and assignees to this
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language would reduce any confusion
on this matter. In addition, the
regulatory language was clarified to
ensure that the minimum number of
leases for a mass transfer is more than
one lease.
The proposed rule would update
paragraph (b) to reduce the triplicate
filing to a duplicate filing so the BLM
can keep one copy for the official case
file and return one copy of the approved
assignment or transfer for the
applicant’s records. The proposed rule
would update paragraph (c) to state that
the BLM does not require a duplicate
copy of the assignment or transfer when
it is electronically submitted. In
addition, a new paragraph (c)(2) would
be added to state that when the BLM
does not receive the requisite number of
copies for mass transfers, the applicant
would reimburse the BLM for the full
costs incurred to make the required
number of copies. The BLM would
waive any copy fees under one dollar.
Section 3106.50
Description of Lands
The proposed rule would update the
language in this paragraph from
‘‘transfer of record title’’ to ‘‘assignment
of record title’’ for consistency. In
addition, the reference to 43 CFR 3110.5
would be removed to more simply state
that each assignment must describe the
lands in the same manner as the lands
described in the lease.
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Section 3106.60
Bond Requirements
The purpose of this section is to
ensure the new lessee or operating
rights owner obtains a bond equivalent
in coverage to the assignor’s or
transferor’s bond before approval of the
assignment or transfer. The proposed
rule would update the title of this
section from ‘‘Bonds’’ to ‘‘Bond
requirements.’’ This section would also
consolidate the separate sections for
‘‘Lease bond’’ (43 CFR 3106.6–1) and
‘‘Statewide/nationwide bond’’ (43 CFR
3106.6–2) into one paragraph to
streamline the regulations. In addition,
the rule would remove references to a
transferee or a new operator as a coprincipal on the transferor’s or
operator’s bond. In the BLM’s
experience, this dynamic does not
occur. An assignee assumes all the
obligations incurred by the assignor as
well as the benefits that have accrued to
the assignor. The bond the assignee,
transferee, or new operator must
provide is a proper bond that would
cover any obligations arising under the
lease to the same extent as the assignor’s
bond. The BLM’s practice is to ascertain
the adequacy of such bond before
approving the assignment.
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Approval of Transfer or Assignment
The proposed rule would change the
existing 43 CFR 3106.7 ‘‘Approval of
transfer’’ to the heading ‘‘Approval of
transfer or assignment.’’ The reference
to both assignments and transfers
conforms the title of this section with
similar proposed changes.
Section 3106.71 Failure To Qualify
The proposed rule would update the
paragraph in this section to active voice
and update the language from ‘‘transfer
of record title or of operating rights
(sublease)’’ to ‘‘assignment of record
title or transfer of operating rights
(sublease),’’ consistent with the other
changes made to this subpart. In
addition, the term ‘‘qualified lessee’’ is
used in place of the existing language
‘‘qualified to hold the transferred
interest.’’ i.
Section 3106.72 Continuing Obligation
of an Assignor or Transferor
The purpose of this section is to
describe the continuing obligation of the
assignor or transferor after the BLM
approves the assignment or transfer. The
proposed rule would update the title
and paragraphs of this section to remove
the question-and-answer format. The
title would change from ‘‘If I transfer my
lease, what is my continuing
obligation?’’ to read ‘‘Continuing
obligation of an assignor or transferor.’’
In paragraph (a), the proposed rule
would change ‘‘you are responsible’’ to
‘‘the lessee or sublessee remains
responsible’’ and paragraph (b) would
change ‘‘you’’ to ‘‘the assignor or
transferor.’’ This is intended to clarify
who ‘‘you’’ is in this section.
Section 3106.73 Lease Account Status
The proposed rule would update this
section to active voice and revise the
phrase ‘‘unless the lease account is in
good standing’’ to clarify that the lease
account must not be delinquent with
respect to royalty payments; lease
obligations, such as, but not limited to,
rent and minimum royalty; or
production reporting to the ONRR for a
lease in non-terminable status.
Section 3106.75 Effect of Transfer
This section requires that an
assignment to 100 percent of a portion
of the lease segregates the transferred
and retained portions into separate
leases. The proposed rule would update
the language in this paragraph from
‘‘transfer of record title’’ to ‘‘assignment
of record title,’’ consistent with the
other changes made to this subpart. The
proposed rule would also update the
paragraph in this section to clarify the
meaning of undivided interest to the
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more commonly used phrase of ‘‘less
than 100 percent of a portion of the
lease.’’
Section 3106.76 Obligations of
Assignee or Transferee
The purpose of this section is to
describe the obligations the lessee or
sublessee assumes after the BLM
approves the assignment or transfer. By
seeking approval of the assignment or
transfer and being substituted in place
of the assignor or transferor, the
assignee or transferee assumes the
responsibility for complying with all
lease obligations in existence and that a
purchaser exercising reasonable
diligence should have known existed at
the time of the transfer. The proposed
rule would update the title and
paragraphs of this section to remove the
question-and-answer format. The title
would change from ‘‘If I acquire a lease
by an assignment or transfer, what
obligations do I agree to assume?’’ to
read ‘‘Obligations of assignee or
transferee.’’ This formatting change
brings overall consistency with the
other regulations in this subpart. The
proposed rule would also replace ‘‘you’’
in this section with ‘‘the record title
holder’’ or ‘‘transferee of operating
rights,’’ as appropriate. It would also
state more clearly that the transferee
assumes the responsibility to plug and
abandon all wells that are no longer
capable of producing.
Section 3106.81 Heirs and Devisees
The proposed rule would split
paragraph (a) into two paragraphs for
clarity. The existing paragraph (b)
would become paragraph (c) due to the
reorganization of the section. The
language in paragraph (a) would be
updated to state that the lease interest
would be assigned or transferred to the
heirs, devisees, executor, or
administrator of the estate, as
appropriate, upon the filing of a court
order, death certificate, or other legal
document demonstrating that the
assignee is to be recognized as the
successor of the deceased. New
paragraph (b) would contain the
requirement for the filing fee. Newly
redesignated paragraph (c) would
include a requirement to file a
qualification statement, as well as the
current language found in existing
paragraph (b). The proposed rule would
add a new paragraph (d) that would
contain the bonding requirements that
are found in paragraph (a) in the current
regulation.
Section 3106.82 Change of Name
The proposed rule would split the
reference to the filing fee and bond into
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three separate paragraphs for clarity.
The current regulation requires a notice
of the name change to be accompanied
by a list of the serial numbers of the
leases affected by the name change. This
requirement would be removed, as it is
outdated. In practice, the BLM generates
a report of the leases affected by the
name change and returns that list to the
lessee with a notice that recognizes the
name change. The proposed paragraph
(a) would be updated to require that for
a corporate name change, the request
must include the Secretary of State’s
Certificate of Name Change, along with
the Articles of Incorporation, or
Amendment, if available. This is
consistent with the BLM’s current
approach for processing these types of
documents. New paragraph (b) would
contain the requirement for the filing
fee. The proposed rule would add a new
paragraph (c) that would contain the
bonding requirements that are found in
the current regulation.
Section 3106.83 Corporate Mergers
and Dissolution of Corporations,
Partnerships, and Trust
The proposed rule would update the
title of this section from ‘‘Corporate
merger’’ to ‘‘Corporate Mergers and
Dissolution of Corporations,
Partnerships, and Trust.’’ The goal of
renaming the section is to incorporate
other types of changes to lease
ownership interests that may occur
without any intention by the holder of
an interest to assign or transfer the
interest. The proposed rule would split
the current paragraph into three
paragraphs for clarity.
The current regulation requires a
notification of merger to be
accompanied by a list of the serial
numbers of the leases affected by the
merger. This requirement would be
removed, as it is outdated. In practice,
the BLM does not rely on a list of leases
provided by a lessee and, instead,
generates its own report of the leases
affected by the merger. The BLM returns
that list to the lessee with a notice that
recognizes the corporate merger.
This section would be updated to
require that, for a merger, the request
must include the Secretary of State’s
Certificate of Merger, along with the
Articles of Incorporation, or
Amendment, if available. This
requirement is consistent with the
BLM’s current approach for processing
these types of documents. New
paragraphs would be added allowing
the BLM to recognize lease interests
assigned through dissolutions of
corporations and dissolutions of
partnerships and trust. The new
provision would state that the BLM
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would not recognize any transfers
provided by the Articles of Dissolution
unless an entity has filed with the BLM
a Certificate of Dissolution of an
incorporated entity, certified as
accepted by the State where the entity
was incorporated. Dissolution of a
partnership or trust through an order or
decree that authorizes settlement,
discharge, and distribution of the lease
holdings and/or interests must be filed
with the BLM for official recognition of
the assignment of lease interests. These
requirements are consistent with the
BLM’s current approach for processing
these types of documents.
Section 3106.84 Sheriff’s Sale/Deed
The proposed rule would add a new
section under § 3106.80, to include
sheriff’s sales as another type of transfer.
The BLM accepts these types of
assignments to recognize lease interests
assigned to other parties through
foreclosure actions. The proposed rule
would state that where a notice of sale
of the leasehold interest is published
pursuant to State law applicable to the
execution of sales of real property, the
purchaser must submit to the proper
BLM office a copy of the Sheriff’s
Certificate of Sale after any redemption
period has passed. Additional
paragraphs under this new section
would include a filing fee requirement,
a qualification statement, and bonding
requirements. These requirements are
consistent requirements with the BLM’s
current approach for processing these
types of documents.
9. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3107
The proposed rule would remove six
sections in existing 43 CFR subpart
3107. The proposed rule would change
the title of this subpart from
‘‘Continuation, Extension or Renewal’’
to ‘‘Continuation and Extension’’ due to
the removal of the sections on renewal
of leases, as explained later. The
proposed rule would revise two section
headings in the existing 43 CFR subpart
3107. The goal of the revisions is to
replace ‘‘plans’’ with ‘‘agreements’’ to
provide clarity and to conform this
language with other changes in this
proposed rule.
Section 3107.10 Extension by Drilling
The proposed rule would split the
existing paragraph into two separate
paragraphs for clarity. In paragraph (a),
a sentence would be added to state that
the BLM would not grant a drilling
extension for a lease in its extended
term. This change would clarify and
complement the first sentence of this
section, which states that a drilling
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extension would only be granted for a
lease on which actual drilling
operations are being diligently pursued
at the end of the primary lease term or
any lease that is committed to an
approved oil and gas agreement. A new
paragraph (c) would be added to address
directional or horizontal wells on offlease locations by stating that when a
BLM-approved directional or horizontal
well is drilled within the leased area
from an off-lease location with the
intent to produce from the leased area,
the BLM would consider drilling to
have commenced on the leased area
when drilling is commenced at the offlease location. This addition is
consistent with the leasing regulations
under 43 CFR part 3130.
Section 3107.22
Production
Cessation of
The proposed rule would update this
section because the IBLA has held that
the current regulations—which provide
that ‘‘[t]he 60-day period commences
upon receipt of notification from the
authorized officer’’—directly conflicts
with the statutory provision of section
17(i) of the MLA (30 U.S.C. 226(i)).
Refer to Two Bay Petroleum, Inc, 166
IBLA 329 (2005), International Metals &
Petroleum Corp, 158 IBLA 15 (2002),
and Merit Productions, et al., 144 IBLA
156 (1998). In summary, these cases
explain that through operation of law a
lease in its extended term expires 60
days following cessation of production,
not 60 days after the lessee receives the
BLM notice.
The paragraph in the proposed rule
would now read that a lease in its
extended term because of production
(and lacking a well capable of
production in paying quantities) would
not expire upon cessation of production,
if, within 60 calendar days of cessation
of production, reworking or drilling
operations on the leasehold are
commenced and are thereafter
conducted with reasonable diligence
during the period of nonproduction.
The proposed rule would also add a
sentence stating, ‘‘If these reworking or
drilling operations fail to result in
production in paying quantities, the
lease will expire by operation of law,
effective as of the date production
ceased.’’
Section 3107.23
Production
Leases Capable of
The proposed rule would update the
existing paragraph to specify 60
‘‘calendar days’’ in order to be clearer.
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Section 3107.30
of Agreements
Extension for Terms
The proposed rule would update the
title of this section from ‘‘Extension for
terms of cooperative or unit plan’’ to
‘‘Extension for Terms of Agreements.’’
This conforms this language to other
changes in this proposed rule.
Section 3107.31
an Agreement
Leases Committed to
The proposed rule would update the
title of this section from ‘‘Leases
committed to plan’’ to ‘‘Leases
committed to an agreement.’’ The
proposed rule would also remove the
reference to the existing 43 CFR 3107.3–
3 (renewal leases) due to the changes
made to that section, as further
described later.
The proposed rule would add a new
paragraph (b) because IBLA cases have
held that a well that is capable of
production in paying quantities on a
lease basis and that is completed on a
committed tract within a unit agreement
will extend the term of all expiring
Federal leases committed to the unit
agreement for the term of the unit
agreement and/or for so long as the well
is capable of production in paying
quantities. Refer to Yates Petroleum
Corp. 67 IBLA 246 (1982).
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Section 3107.32 Segregation of Leases
Committed in Part
This section addresses any lease
committed to a unit agreement that
covers less than the entirety of the lands
covered by the lease. In paragraph (a),
a sentence would be added to state that,
for unproven areas, segregation would
occur only when the public interest
requirement is satisfied pursuant to 43
CFR 3183.4(b). The sentence would also
provide that, upon satisfaction of the
public interest requirement, the BLM
would deem the segregation to have
been effective as of the date of
commitment of the lands to the unit.
Segregating a lease after the public
interest requirement is met would create
efficiencies in the program. If the public
interest requirement is not met, the BLM
would not be required to consolidate the
improperly segregated leases, and the
ONRR would not be required to
consolidate improperly segregated lease
accounts for payments.
The proposed rule would delete the
portion of existing paragraph (b), which
described how a lease segregation
would be declared invalid if the public
interest requirement was not met. This
change is consistent with the changes
made to paragraph (a).
The proposed rule would add a new
paragraph (b)(2) to clarify that the base
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or segregated lease may be extended by
production on the associated lease by
stating that, if a partially committed
lease is in an extended term because of
production, the segregated, nonproducing lease would continue in
effect so long as the producing lease
exists and rentals are paid, and so long
thereafter as oil or gas is produced from
the committed lease.
Section 3107.3–3 20-Year Lease or
Any Renewal Thereof.
The proposed rule would eliminate
this section because it is outdated. All
20-year leases, also known as renewal
leases, have either expired or are held
by production. Renewal leases are
further described in detail under 43 CFR
3107.80.
Section 3107.51 Extension After
Discovery on Other Segregated Portions
The proposed rule would update the
language in this paragraph from ‘‘the
date of first discovery of oil or gas in
paying quantities’’ to read ‘‘the date a
well capable of production in paying
quantities is established.’’ The change
reflects language more commonly used
by the BLM.
Section 3107.7
Year Term
Exchange Leases: 20-
The proposed rule would eliminate
this section because it is obsolete.
Exchange leases were outstanding MLA
leases that could be exchanged for a
new lease under the Act of August 21,
1935, Public Law 74–295 § 2(a), 49 Stat.
674, 679. The August 8, 1946, Act
eliminated the 1935 Act provisions for
exchange leases, and the BLM no longer
accepts these types of applications.
Public Law 79–696 sec. 3, 60 Stat. 950,
951.
Section 3107.8
Renewal Leases
The proposed rule would eliminate
§§ 3107.8–1 through 3107.8–3, which
are the provisions related to renewal
leases, in their entirety because they are
obsolete. Renewal leases that had an
expiration date after November 15,
1990, were eligible for a final renewal
under the provisions of the November
15, 1990, Act, (for 10 years and for so
long thereafter as oil and gas is
produced in paying quantities). Public
Law 101–567, 104 Stat. 2802. If a lease
was renewed after the 1990 amendment
and was not producing oil or gas at the
end of its 10-year renewal term, the
lease expired with no further option for
renewal. The BLM no longer accepts
these types of applications.
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Section 3107.71 Payment of
Compensatory Royalty
The proposed rule would redesignate
this section from §§ 3107.9–1 to 3107.71
pursuant to the reorganization identified
earlier.
Section 3107.72 Subsurface Storage of
Oil and Gas
Instead of citing to 43 CFR 3105.5–4,
the proposed rule would add the
language from 43 CFR 3105.5–4 to this
section. This change negates the need to
refer to another section of the rule.
10. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3108
The proposed rule would remove one
section and revise two section headings
in the existing 43 CFR subpart 3108.
The goal of the revisions is to replace
the question-and-answer format and to
remove obsolete language related to
Class III reinstatements.
Section 3108.10 Relinquishment
The proposed rule would update the
title from ‘‘As a lessee, may I relinquish
my lease?’’ to read ‘‘Relinquishment.’’
The proposed rule would also change
references to ‘‘you’’ to ‘‘the lessee(s).’’ In
addition, the proposed rule would
update paragraph (c) to allow either the
BLM or the appropriate surface
management agency to approve a plan
for the reclamation of the oil and gas
operations on a relinquished lease.
Section 3108.21 Automatic
Termination
The proposed rule would update
paragraph (b) to remove the phrase ‘‘bill
rendered by the designated Service
Office, or,’’ because the ONRR updated
its policy in 2015 to eliminate the
mailing of courtesy notices. The
proposed rule would add a new
paragraph (c) to incorporate caselaw
providing that Congress intended the
automatic termination provision of 30
U.S.C. 188 to apply to the regular,
annual rental payment, the necessity for
which a lessee had continuous notice,
and that the automatic termination
provision was not intended to apply to
a case where a lessee had no way of
knowing that the obligation had
accrued, e.g., where a lease suspension
is lifted or where the lease account
reverts from a royalty to a rental status.
See Husky Oil Company of Delaware
Depco, Inc., 5 IBLA 7 (1972). This might
happen where a lease suspension is
lifted or where the leases were held by
allocated production from an agreement
and the agreement terminates, thus
reverting the lease account from a
royalty to a rental status. The new
paragraph (c) would state that the
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automatic termination provision does
not apply where, due to other
contingencies such as a suspension
being lifted or unit terminating,
additional rental is due on a date other
than the lease anniversary date and
where the lessee did not receive notice
that the obligation had accrued, unless
the lessee fails to pay the rental within
the period prescribed in the BLM notice.
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Section 3108.22 Reinstatement at
Existing Rental and Royalty Rates: Class
I Reinstatements
The proposed rule would update
paragraph (a)(2) to replace the reference
to a postmark by the U.S. Postal Service
with a reference to the ONRR’s online
rental payment system, since the ONRR
updated its policy in 2015 to require
only electronic rental payments. The
proposed rule would move paragraph
(d)—which provides that the BLM
would not issue a new lease for lands
that have been covered by a lease that
terminated automatically until 90 days
after the date of termination—to 43 CFR
3101.40(a). The intent is to ensure that
this language is not overlooked by
placing it more prominently with lease
issuance provisions. The IRA did not
make any changes to the grounds and
conditions for Class I reinstatements.
Section 3108.23 Reinstatement at
Higher Rental and Royalty Rates: Class
II Reinstatements
To further implement the IRA, the
proposed rule would update paragraph
(a) so that the grounds for a Class II
reinstatement only apply to competitive
leases. The IRA explicitly rescinded the
BLM’s authority to approve Class II
reinstatements for noncompetitive
leases issued for public domain lands
under the MLA and implicitly did the
same for the MLAAL (by eliminating
references to higher rental requirements
for reinstated, noncompetitive leases).
In any event, reinstatements are
discretionary; had Congress not directed
the BLM to eliminate reinstatement of
noncompetitive leases under the
MLAAL, the BLM has concluded that
such reinstatements are not prudent
because the grounds for a reinstatement
should be based on the type of lease and
not be based on the land status.
The proposed rule would eliminate
the existing paragraph (b)(1) in its
entirety. This provision addresses the
timeliness of Class II reinstatement
petitions for leases that terminated on or
before August 8, 2005, and is no longer
applicable. The proposed rule would
update the proposed redesignated
paragraph (b)(2)(iii) to remove the
reference to funds held in escrow, as
this is outdated. The BLM would not
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approve a reinstatement if the BLM does
not collect all back rentals and royalties
at the rates established in the reinstated
lease, but the BLM would not require
the funds to be held in escrow until a
reinstatement is approved.
The proposed rule would move
existing paragraph (c)—which states
that the BLM will not issue a new lease
for lands covered by a terminated lease
until all action on the petition is final—
to 43 CFR 3101.40(a). The intent is to
ensure that this language is not
overlooked by placing it more
prominently with lease issuance
provisions. The proposed rule would
update the reference to the Committee
on Interior and Insular Affairs (which
no longer exists) to the current House
Committee on Natural Resources. The
proposed rule would remove existing
paragraph (f), which refers to royalty
reductions, as this language would
already be covered under the proposed
43 CFR 3103.41(c).
leasing under railway and other rightsof-ways.
Section 3108.2–4 Conversion of
Unpatented Oil Placer Mining Claims:
Class III Reinstatements (Existing Rule)
The proposed rule would update the
phrase ‘‘a bid for the amount or percent
of compensatory royalty’’ to read ‘‘a bid
for the percent of compensatory
royalty.’’ This change aligns with the
BLM’s existing process and reduces
confusion.
The purpose of the existing section is
for converting unpatented oil placer
mining claims validly located prior to
February 24, 1920, to an oil and gas
lease. The proposed rule would remove
the language related to Class III
reinstatements in its entirety because
the IRA removed the authority for Class
III reinstatements.
Section 3108.30
Cancellation
The proposed rule would update the
last sentence in paragraph (a) to remove
the phrase ‘‘after notice to the lessee in
accordance with section 31(b) of the Act
and only.’’ This phrase does not add
anything to the existing regulation and
has therefore led to confusion. The
proposed rule would state instead that
‘‘The lease may be canceled only after
default continues for 30 calendar days
after a notice of default has been
delivered in accordance with 43 CFR
1810.2.’’ The proposed rule would
update paragraphs (b) and (c) to change
the phrase from ‘‘by judicial
proceedings’’ to ‘‘by court order’’ to
align with the text found in 43 CFR
3136.3(b), bringing consistency to the
regulations.
11. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3109
The proposed rule would not make
any revisions to the section headings in
the existing subpart 3109 regulations.
This subpart covers the process for
leasing lands under the provisions in 30
U.S.C. 301–306, which addresses
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Section 3109.12
Application
The proposed rule would split the
existing paragraph into four separate
paragraphs by topic (no specific form is
required, who can file, the filing fee,
and what an application must include)
for clarity. The proposed rule would
also add a new requirement (proposed
paragraph (d)(5)) that the applicant must
include a map of the applicable lands,
which would support the bidding
process related to the lease or
compensatory royalty agreement. In
many cases, the adjacent mineral
owners or lessees, who can bid upon the
parcel, require a map to identify the
lands. The requirement for the applicant
to provide a map would reduce the cost
to the public and would ensure that the
BLM is reviewing the correct lands for
a lease.
Section 3109.13
Notice
Section 3109.15 Compensatory
Royalty Agreement or Lease
The proposed rule would adjust the
terms of a ROW lease to match the terms
of a competitive lease issued under the
MLA with respect to the rental, royalty,
and primary term of the lease (10 years).
The proposed rule would also specify
for clarity that the provisions of 43 CFR
part 3100 apply to the issuance and
administration of leases for oil and gas
deposits underlying a ROW issued
under this part.
12. Section-by-Section Discussion for
Changes to 43 CFR Part 3110
The proposed rule would remove the
existing 43 CFR part 3110 in its entirety.
The IRA removed the BLM’s authority
to issue a noncompetitive lease. The
BLM is rejecting all pending
noncompetitive lease applications
received before enactment of the IRA.
13. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3120
The proposed rule would add two
new sections and remove four sections
in existing 43 CFR subpart 3120. The
proposed rule would revise four section
headings. The goal of the revisions is to
streamline and provide clarity and
consistency with other changes in this
proposed rule.
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Section 3120.11 Lands Available for
Competitive Bidding
The proposed rule would update the
introductory paragraph from ‘‘All lands
available for leasing shall be offered’’ to
‘‘All lands eligible and available for
leasing may be offered’’ to conform this
section with the language of 30 U.S.C
226(a) and (b). This language will also
better reflect Interior’s statutory
discretion to identify lands available for
oil and gas leasing.
The proposed rule would update
paragraph (a) to change the language
from ‘‘Lands in oil and gas leases’’ to
‘‘Lands that were covered by previously
issued oil and gas leases’’ to provide
clarity.
The proposed rule would update
paragraph (c) to clarify that a lease
interest forfeited through a bankruptcy
to the United States may be reoffered
through a competitive auction.
The proposed rule would also revise
existing paragraph (e) to reflect the
IRA’s removal of noncompetitive
leasing.
The proposed rule would add a new
paragraph (g) to implement provisions
of the IRA by stating that lands offered
in a previous sale for which no bids
were accepted or received may be
offered for competitive auction under
this subpart. Prior to the IRA, these
lands would have been eligible for
noncompetitive leasing.
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Section 3120.12
Requirements
The proposed rule would update
paragraph (a) to conform this section
with the language of 30 U.S.C 226(a)
and (b). The proposed rule would
update paragraph (b) to change
‘‘competitive oral or internet-based
bidding process’’ to read ‘‘a competitive
auction process.’’ A definition for
competitive auction would be added to
43 CFR 3100.5 as explained previously.
The proposed rule would add a new
paragraph (c) to codify existing policy
and strengthen the bidder registration
process. The MLA provides that leases
may be issued only to a ‘‘responsible
qualified bidder’’ (30 U.S.C.
226(b)(1)(A)). A bid submitted at a
competitive auction represents a goodfaith intention to acquire an oil and gas
lease, and any winning bid constitutes
a legally binding commitment to accept
the lease and pay monies owed. Any
bidder who has not paid the minimum
monies owed on the day of sale is not
a ‘‘responsible qualified bidder’’ and
would be referred to the DOI’s Office of
the Inspector General, Administrative
Remedies Division, for appropriate
action, including potential suspension
and debarment. Definitions for qualified
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bidder and responsible bidder would be
added to 43 CFR 3100.5 as explained
previously.
The proposed rule would redesignate
the existing paragraph (c) to paragraph
(d). The proposed rule would update
this paragraph to refer to the increased
national minimum bid of $10 per acre,
or fraction thereof, in 43 CFR 3000.130.
The cross-reference to § 3000.130 allows
BLM to adjust the minimum bid
regularly for inflation. The IRA raised
the national minimum bid from $2 per
acre to $10 per acre. Notably, the IRA
specifically authorizes the Secretary to,
at the conclusion of the 10-year period
established by the statute, ‘‘establish by
regulation a higher national minimum
acceptable bid for all leases based upon
a finding that such action is necessary:
(i) To enhance financial returns to the
United States; and (ii) to promote more
efficient management of oil and gas
resources on Federal lands.’’ The
minimum acceptable bid is important
because it establishes the starting bid at
the BLM’s oil and gas lease sale
auctions.
Section 3120.13 Protests
The proposed rule would rename this
section from ‘‘Protests and appeals’’ to
‘‘Protests’’ and would update the
paragraphs in this section to change the
term ‘‘appeal’’ to ‘‘protest.’’ This change
reflects IBLA decisions providing that
the current use of the term ‘‘appeal’’ is
imprecise and creates confusion. Refer
to Wyoming Outdoor Council, et al., 156
IBLA 377 (2002). The BLM’s issuance of
a Notice of Competitive Lease Sale is
not an appealable action, because a
notice merely distributes and
communicates general information
about a proposed action. The term
‘‘protest,’’ which is any objection raised
by any person before an action is taken
by the BLM, is the proper term. Appeals
are covered under 43 CFR 3000.40 and
do not need to be repeated in this
section.
Section 3120.30 Nomination Process
The BLM is proposing to update the
process by which it formally nominates
parcels for sale at a competitive auction.
The BLM is considering using this
process for certain BLM state offices or
for future leases sales and requests
comments on whether the regulations
should retain this process and, if so,
what changes to the formal nomination
process should be made.
In 1988, following the passage of
FOOGLRA, the BLM published new oil
and gas regulations that established two
separate processes for leasing public
lands: (1) the informal process, which
primarily relies on EOIs from the public;
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and (2) the formal nomination process.
53 FR 22829 (‘‘the final rulemaking
provides administrative flexibility to
allow for either informal EOIs or a
formal nomination process to determine
the lands offered competitively’’). Aside
from a few test sales following the
enactment of FOOGLRA, the BLM has
never employed the formal nomination
process. See 53 FR 22829 (‘‘the Director
elects to permit informal expressions of
interest to be submitted to the proper
BLM office but declines at this time to
employ formal nominations under 43
CFR 3120.30’’). However, the existing
regulations, as well as the BLM’s current
competitive leasing handbook, continue
to provide for the use of the formal
nomination process, following notice to
the public in the Federal Register.
The BLM believes that aspects of this
process could be used as a possible
mechanism to implement the
recommendations from the DOI’s
November 2021 ‘‘Report on the Federal
Oil and Gas Leasing Program,’’
including ‘‘carefully consider[ing] what
lands make the most sense to lease in
terms of expected yields of oil and gas,
prospects of earning a fair return for
U.S. taxpayers, and conflicts with other
uses’’ and ‘‘evaluat[ing] operational
adjustments to its leasing program that
will avoid nomination or leasing of low
potential lands.’’ 16 The proposed rule
would update the following sections for
the formal nomination process with the
intent to make these nominations
nonbinding as the BLM considered a
nomination to be similar to the
noncompetitive pre-sale leasing process,
and the IRA removed the
noncompetitive leasing process. In
addition, the rule proposes to eliminate
the allowance for unnominated parcels
to become available for noncompetitive
leasing.
Section 3120.31 General
The proposed rule would update this
paragraph to remove the requirement
that a nomination be submitted with a
national minimum bid. The purpose of
removing this requirement is to make
formal nominations nonbinding. To
provide the BLM with flexibility, this
paragraph would also be updated to
remove the citation to 43 CFR 3120.4;
that would remove the requirement that
a List of Lands Available for
Competitive Nominations be posted in
the same manner as the Notice of
Competitive Lease Sale. This paragraph
would also be updated to include
language stating that nominations may
16 https://www.doi.gov/sites/doi.gov/files/reporton-the-federal-oil-and-gas-leasing-program-doi-eo14008.pdf.
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be filed on a form or by a method
approved by the Director, providing the
BLM with flexibility and discretion to
continue to improve the program (by,
for example, allowing the public to send
electronic nominations).
Section 3120.32 Filing of a
Nomination for Competitive Leasing.
Section 3120.3–3 Minimum Bid and
Rental Remittance
The proposed rule would remove this
existing section in its entirety,
consistent with the changes made to the
nomination process, to make formal
nominations nonbinding.
Withdrawal of a
The proposed rule would remove this
existing section in its entirety,
consistent with the changes made to the
nomination process, to make formal
nominations nonbinding.
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Section 3120.33
Nominations
Parcels Receiving
The proposed rule would redesignate
this section from 43 CFR 3120.3–5 to 43
CFR 3120.33 due to the proposed
removal of the sections preceding this
one. The language for parcels receiving
nominations would be updated to use
‘‘may’’ (rather than ‘‘shall’’) be included
in a Notice of Competitive Lease Sale to
be consistent with the BLM’s statutory
discretion to lease.
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The proposed rule would remove this
section in its entirety, due to the
removal of the noncompetitive leasing
process, consistent with changes made
by the IRA.
Section 3120.3–7
The proposed rule would revise the
introductory paragraph under this
section to state that nominations may be
filed ‘‘on a form or using a method
approved by the Director’’ similar to the
change in § 3120.31 described earlier.
The existing paragraph (b) would be
revised to remove the second sentence
referring to the execution of a
nomination constituting a legally
binding offer, due to the removal of the
noncompetitive leasing process as
prescribed by the IRA. The existing
paragraph (c) would be updated to
remove the reference to refunding all
moneys if the nomination has not been
completed or timely filed, since the
administrative filing fees are
nonrefundable. The existing paragraph
(d) would be updated to remove the
requirement that a nomination must be
submitted with a minimum bid and first
year rental to reflect the nonbinding
nature of the nomination. Through these
changes, the only fee that would be
required to be submitted with a
nomination is the nonrefundable,
administrative filing fee, as specified in
the proposed 43 CFR 3000.120.
Section 3120.3–4
Nomination
Section 3120.3–6 Parcels Not
Receiving Nominations
Refund
The proposed rule would remove this
section because the minimum bid and
first year’s rental would not be required
for nominations, as explained earlier.
The administrative filing fees found
under the proposed 43 CFR 3000.120
are nonrefundable and would not be
refunded to nominators who are
unsuccessful at the competitive auction.
Expression of Interest
The proposed rule would add a new
heading, ‘‘Expression of Interest,’’ to
include rules for receiving EOIs for
competitive leasing.
Section 3120.41
Process
The proposed rule would add
requirements for submitting an EOI to
the BLM. Paragraph (a) would state that
a party submitting an EOI must include
the submitter’s name and address and
must submit the EOI through the BLM’s
online leasing system. The National
Fluids Lease Sale System (NFLSS)
supports BLM administration of the
leasing program for Federal onshore oil
and gas and geothermal leasing. Using
the NFLSS for the submittal of EOIs
gives the BLM the capability for realtime reporting, which can streamline
the leasing process and reduce the
BLM’s costs by (1) eliminating data
entry by BLM staff, placing the onus for
correct EOI submissions on the
submitter; (2) automatically publishing
EOIs in the NFLSS, which facilitates
transparency of the EOI process; and (3)
supporting the BLM’s communication
with submitters by allowing them to
track the status of their EOIs through the
NFLSS.
Paragraph (b) would require the use of
legal land descriptions in EOIs. The
scenarios cover: (1) lands surveyed
under the public land survey system; (2)
unsurveyed lands; (3) lands approved
by protracted surveys; (4) lands that
have water boundaries; (5) fractional
mineral interest in lands; and (5)
fractional interest lands. The proposed
rule would add the requirement under
paragraph (b)(6) that the submitter
provide the surface owner information
for split estate lands to reflect current
policy in Handbook H–3120–1,
Competitive Leases, and add paragraph
(7) to allow the BLM to accept an
acquisition or tract number in lieu of the
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legal land description, if it constitutes
an adequate description of the lands.
Paragraph (c) would allow the
submission of more than one EOI by a
submitter, so long as each expression
separately satisfies the requirements of
paragraph (b).
Paragraph (d) would state that each
EOI must include the filing fee set out
in the proposed 43 CFR 3000.120.
Paragraph (e) would allow the BLM to
include lands in a lease sale on its own
initiative.
Paragraph (f) would state that, when
determining whether the BLM should
offer lands specified in an EOI at a lease
sale, the BLM would evaluate the
Secretary’s obligations to manage public
lands for multiple use and sustained
yield and to take any action required to
prevent unnecessary or undue
degradation of the lands and their
resources, along with other applicable
legal requirements. At a minimum, the
BLM would consider: (1) proximity to
oil and gas development existing at the
time of the BLM’s evaluation, giving
preference to lands upon which a
prudent operator would seek to expand
existing operations; (2) the presence of
important fish and wildlife habitats,
including wetland habitats, or
connectivity areas, giving preference to
lands that would not impair the proper
functioning of such habitats or
corridors; (3) the presence of historical
properties, sacred sites, and other highvalue leasing lands, giving preference to
lands that would not impair the cultural
significance of such resources; (4) the
presence of recreation and other
important uses or resources, giving
preference to lands that would not
impair the value of such uses or
resources; and (5) the potential for oil
and gas development, giving preference
to lands with high potential for
development.
Although paragraph (f) lists specific
criteria for the BLM to review, the listed
criteria do not limit the BLM’s authority
to fulfill its legal obligations under
FLPMA, NEPA, and MLA. The BLM
would consider additional criteria and
factors when evaluating parcels for a
lease sale. The BLM requests comments
on additional criteria the BLM might
consider when giving preference to
leasing parcels. Should this rule include
among the listed criteria compliance
with the goals and objectives of
applicable land use plans and protecting
communities with environmental justice
concerns? How can the rule better
achieve the BLM’s intent to give
preference to leasing parcels where
development would have less impacts
on nearby communities?
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The BLM proposes that promulgating
rules for this EOI preference process
would provide a mechanism for
implementing the recommendations
from the DOI’s ‘‘Report on the Federal
Oil and Gas Leasing Program,’’
including the recommendation to
‘‘carefully consider what lands make the
most sense to lease in terms of expected
yields of oil and gas, prospects of
earning a fair return for U.S. taxpayers,
and conflicts with other uses’’ and to
‘‘evaluate operational adjustments to its
leasing program that will avoid
nomination or leasing of low potential
lands.’’ This process would ensure that
oil and gas leasing on public lands
occurs in a way that is consistent and
deliberate, focus development where
there is the most potential for recovery,
and allow the agency to manage public
lands for other uses as well, including
conservation and restoration of wildlife
habitat. For example, offering leases
where current infrastructure exists
should reduce the overall footprint of
energy development and limit wildlife
impacts and habitat fragmentation.
Giving preference to leasing outside of
important wildlife habitat would help to
ensure that important seasonal ranges
remain connected, and that species can
access important resources undeterred
as they move across the landscape.
The BLM would implement this EOI
preference process to conserve certain
public lands while ensuring the
American taxpayer receives a fair return
and meeting the energy demands of the
future. The BLM does not intend that
parcels must meet all five of the
preference criteria in order to be
available for leasing, and the term
‘‘preference’’ should not be interpreted
to mean ‘‘absolute.’’ The BLM
recognizes the need for balance and for
the preference criteria to be situational
and considered on a case-by-case basis.
The preference criteria generally would
be applied before the NEPA analysis is
completed. A summary of how the
criteria apply would be included for
public comment. The BLM could then
take the public comments into account
when considering current and future
sales.
The BLM requests comments
addressing whether or how the
preference criteria should be applied
when the Federal surface lands are
administered by another Federal agency.
For example, in National Forest System
lands, the Forest Service typically
prepares a pre-leasing NEPA analysis
that the BLM subsequently relies upon
when making its leasing determination.
Paragraph (g) would allow the BLM to
reconfigure the lands that are included
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in an expression of interest in the
parcels that the BLM offers for sale.
Section 3120.42 Agency Inventory of
Leasing
The proposed rule would add this
new section to provide that periodically
the BLM will calculate the acreage for
which EOIs have been submitted in the
previous year, along with the total
acreage offered for lease. This would
clarify how the BLM will comply with
section 50265 of the IRA, consistent
with Instruction Memorandum 2023–
006, Implementation of Section 50265
in the Inflation Reduction Act for
Expressions of Interest for Oil and Gas
Lease Sales. The BLM requests public
comments on this point.
Section 3120.50 Notice of Competitive
Lease Sale
The proposed rule would redesignate
this section from 43 CFR 3120.4 to 43
CFR 3120.50 per the previously
mentioned reorganization.
Section 3120.51 General
The proposed rule would redesignate
this section from 43 CFR 3120.4–1 to 43
CFR 3120.51 per the previously
mentioned reorganization.
Section 3120.52 Posting Timeframes
The proposed rule would revise the
title of this section from ‘‘Posting of
notice’’ to ‘‘Posting timeframes.’’ The
proposed rule would add a new
paragraph (a), providing that, after
identifying a preliminary list of lands
for a lease sale, the BLM would provide
a scoping period, of not less than 30
calendar days, for public comment. The
BLM uses preliminary parcel lists to
roughly organize potential parcels for
sale and to initiate environmental
review. While the BLM invites public
feedback on the parcel list, preliminary
parcel lists do not constitute an official
notice of a proposed BLM action or final
action and are not subject to protests or
appeals.
The proposed rule would add a new
paragraph (b) providing that, after
drafting a preliminary NEPA document
for a lease sale, the BLM would provide
a comment period, not less than 30
calendar days. Similar to preliminary
parcel lists, preliminary NEPA
documents do not constitute an official
notice of a proposed BLM action or a
final action and are not subject to
protests or appeals.
The proposed rule would add a new
paragraph (c) providing that the BLM
would post the Notice of Competitive
Lease Sale at least 60 calendar days
prior to the sale and would make
available to the public a list of lands to
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be offered for competitive sale. This is
an additional 15 calendar days from the
BLM’s current practice. The extended
posting timeframe would provide the
BLM more time to resolve protests prior
to any proposed lease sale. The BLM
routinely receives one or more protests
on posted sale offerings, but it often
does not receive the protests until
shortly before or on the morning of the
protest deadline. The BLM state offices
need a reasonable amount of time to
review the reasons for the protest in
advance of the sale and decide if
withdrawing the protested parcel from
the sale is appropriate. Consequently, in
new paragraph (d), the BLM would
provide that the protest period is
allowed only for the first 30 days that
the sale notice is posted to provide the
second 30 days as the time in which the
BLM would review protests.
The proposed rule would also remove
the requirement for the notice to be
posted in the BLM office or any surface
managing agency office. In the BLM’s
experience, the public finds information
concerning Notices of Competitive
Lease Sale through the NFLSS or on the
individual state office web page, rather
than a posted sale notice in the
individual offices. The BLM believes
that remaining silent in the regulations
on how the sale notice would be made
available to the public allows the BLM
the flexibility and discretion to continue
to improve the program. This silence,
however, does not in any way abnegate
any applicable legal obligations to
provide notice in the first instance.
The proposed rule would also add a
new paragraph (d) to state that the BLM
would provide a protest period, of not
less than 30 days, for public input on
the upcoming lease sale during the first
30 days of the 60-day public notice
period provided for in paragraph (c)
earlier. Establishing a deadline for filing
protests ensures an orderly and efficient
leasing process. Finally, the proposed
rule would add a new paragraph (e) to
state that ‘‘the BLM will make available
the final NEPA compliance documents
prior to issuing a lease from the lease
sale.’’ The BLM plans to post the NEPA
compliance documents on ePlanning,
but the proposed rule would not codify
that practice so that BLM retains
flexibility for future sales.
Competitive Auction
The proposed rule would redesignate
this section from 43 CFR 3120.5 to
remove the regulatory section number,
as this is a heading that has no text
associated it. The proposed rule would
revise the title of this section from
‘‘Competitive sale’’ to ‘‘Competitive
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auction,’’ consistent with the proposed
definition.
Section 3120.61 Competitive Auction
The proposed rule would redesignate
this section from 43 CFR 3120.5–1 to 43
CFR 3120.61 due to the previously
mentioned reorganization. The
proposed rule would rename this
section from ‘‘Oral or internet-based
auction’’ to ‘‘Competitive auction’’ and
update the paragraphs in this section to
replace the reference to oral or internetbased bidding with the term
‘‘competitive auction,’’ consistent with
the proposed definition.
Paragraph (a) would also be updated
to remove the reference to the formal
nominations process, consistent with
the changes made to the nomination
process.
For this same reason, paragraph (c)
would be removed in its entirety.
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Section 3120.62 Payments Required
The proposed rule would redesignate
this section from 43 CFR 3120.5–2 to 43
CFR 3120.62 due to the previously
mentioned reorganization.
The proposed rule would update
paragraph (b)(1) to increase the
minimum bonus bid to reference 43 CFR
3000.130, consistent with the change
described earlier in the proposed 43
CFR 3120.12.
The proposed rule would update
paragraph (c) to replace ‘‘10 working
days’’ with ‘‘10 business days’’ and
would replace the reference to ‘‘oral or
internet-based auction’’ with the term
‘‘competitive auction.’’
Section 3120.63 Award of Lease
The proposed rule would redesignate
this section from 43 CFR 3120.5–3 to 43
CFR 3120.63 due to the previously
mentioned reorganization.
The proposed rule would update
paragraph (c) to remove the reference to
noncompetitive offers, consistent with
the proposed removal of 43 CFR part
3110.
The proposed rule would revise
paragraph (d) to remove the reference to
noncompetitive lease offers as required
by the IRA. The proposed rule would
update Paragraph (d) to require the BLM
to resolve all protests covering the lands
to be leased prior to issuing a lease to
comport with the BLM’s longstanding
policy not to issue a lease until all
protests covering the lands to be leased
have been resolved by the BLM.
Finally, the proposed rule would add
a statement that leases would be issued
within 60 calendar days following
resolution of any protests not resolved
prior to the sale and payment by the
successful bidder of the remainder of
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the bonus bid, if any, and the annual
rental for the first lease year. This text
corresponds to the provisions in the
MLA at 30 U.S.C. 226(b)(1)(A). The
proposed rule would also add to
paragraph (e) a provision stating that, if
the BLM cannot issue the lease within
60 days, the BLM may reject the offer.
The BLM has received an increased
number of protests and legal challenges
to its decision to offer lands for lease or
issue leases. These protests and
challenges may require the BLM to
complete a corrective environmental
analysis to reach resolution. The
protests, challenges, and new analysis
can lead to lengthy delays after the sale
before the BLM can issue the lease, with
the BLM holding the first-year rentals
and bonus bids collected from the sales.
In these cases, the BLM’s policy is to
reach out to the successful bidder to see
if they want to decline the lease or
continue to wait until there is a
resolution. If the successful bidder
declines the lease, the BLM would reject
the lease offer.
Section 3120.70
Auction
Parcels Not Bid on at
The proposed rule would redesignate
this section from 43 CFR 3120.6 to 43
CFR 3120.70 due to the previously
mentioned reorganization. The
proposed rule would update the
paragraph to replace the reference to
‘‘oral or internet-based’’ auction with
the term ‘‘competitive auction,’’
consistent with the changes made
earlier in this subpart. The section
would also remove references to
noncompetitive leases pursuant to the
IRA and would provide that parcels not
bid on at auction would be available for
future competitive sale.
Section 3120.80
Future Interest
The proposed rule would redesignate
this section from 43 CFR 3120.7 to 43
CFR 3120.80 due to the previously
mentioned reorganization.
Section 3120.81 Nomination or
Expression of Interest To Make Lands
Available for Competitive Lease
The proposed rule would redesignate
this section from 43 CFR 3120.7–1 to 43
CFR 3120.81 due to the previously
mentioned reorganization. The
proposed rule would update the title
and paragraph of this section from
‘‘Nomination’’ to ‘‘Nomination or
Expression of Interest to make lands
available for competitive lease,’’
consistent with the changes made in
this subpart.
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Section 3120.82 Future Interest Terms
and Conditions
The proposed rule would redesignate
this section from 43 CFR 3120.7–2 to 43
CFR 3120.82 due to the previously
mentioned reorganization.
Section 3120.83 Compensatory
Royalty Agreements
The proposed rule would redesignate
this section from 43 CFR 3120.7–3 to 43
CFR 3120.82 due to the previously
mentioned reorganization.
14. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3137
The proposed rule would revise two
of the sections and their headings in the
existing subpart 3137 regulations. The
purpose of updating these sections is to
add the processing fees for unit
applications and successor operators.
Section 3137.23 NPR–A Unitization
Application
The proposed rule would update the
title from ‘‘What must I include in my
NPR–A unitization application?’’ to
‘‘NPR–A unitization application.’’ The
proposed rule would update paragraphs
(d)(1) and (4) to change ‘‘you’’ to ‘‘the
operator.’’ This is intended to clarify
who ‘‘you’’ is in this section. The
proposed rule would add a new
paragraph (i) to include the required
new processing fee for unit agreement
applications found in the fee schedule
in 43 CFR 3000.120 of this chapter.
Section 3137.61 Change in Unit
Operators
The proposed rule would update the
title from ‘‘How do I change unit
operators?’’ to ‘‘Change in unit
operators.’’ The proposed rule would
update paragraph (a)(1)(i) by changing
‘‘It’’ to ‘‘The new operator.’’ This is
intended to clarify who ‘‘it’’ references
in this section. The proposed rule
would add a new paragraph (a)(3) to
include the required new processing fee
for designation of a successor operator
found in the fee schedule in 43 CFR
3000.120 of this chapter.
15. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3138
The proposed rule would revise one
section and its headings in the existing
43 CFR subpart 3138 regulations. The
purpose of updating this section is to
add the processing fee for subsurface
storage agreement.
Section 3138.11 Applications for a
Subsurface Storage Agreement
The proposed rule would revise the
title from ‘‘How do I apply for a
subsurface storage agreement?’’ to
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‘‘Applications for a subsurface storage
agreement.’’ The proposed rule would
update paragraphs (a)(6), (b), and (c) to
change ‘‘you’’ to ‘‘the operator.’’ This is
intended to clarify who ‘‘you’’
references in this section. The proposed
rule would add a new paragraph (a)(12)
to include the required new processing
fee for subsurface gas storage agreement
applications found in the fee schedule
in 43 CFR 3000.120 of this chapter.
16. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3140
The proposed rule would not make
any revisions to the section headings in
the existing 43 CFR subpart 3140
regulations.
Section 3140.5
Definitions
The BLM is proposing to alphabetize
the definitions in this section.
Section 3140.11
Existing Rights
The proposed rule would update
paragraph (a) to state the application
time period ended on November 15,
1983. These regulations are not
proposed for elimination because the
BLM is still processing applications.
The BLM has been working on the
planning efforts surrounding the special
tar sand areas and the environmental
analysis under NEPA to support the
conversion to a combined hydrocarbon
lease. This process has delayed the BLM
in issuing decisions related to the
applications.
Section 3140.12
Convert
Notice of Intent To
The proposed rule would update
paragraphs (a) and (c) to have the
specific effective date of November 15,
1983, to ensure there is no confusion
related to this rulemaking. In addition,
the language in this section would be
updated to past tense.
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Section 3140.14
Other Provisions
The proposed rule would increase the
rental rate in paragraph (b) from $2 per
acre to the annual rental, as specified in
43 CFR 3000.130, consistent with the
rental increases in this proposed rule.
The proposed rule would update
paragraph (c)(2) to update the royalty
rate for a combined hydrocarbon lease
from 12.5 percent to 16.67 percent to
implement provisions of the IRA. The
proposed rule would update paragraph
(c)(3) to clarify that the royalty rate
reduction requested for tar sands will
not apply to the oil and gas and vice
versa. Due to the different methods to
extract tar sands versus oil and gas, the
lessee may need a royalty rate reduction
for one resource to continue operations
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and no royalty rate reduction for
another resource.
existing 43 CFR subpart 3141
regulations.
Section 3140.23 Application
Requirements
The proposed rule would update
paragraph (a) to clarify that the
application window has closed. The
remaining paragraphs under this section
would remain unchanged because the
BLM continues to process applications;
however, the BLM proposed to update
the language to past tense.
Section 3141.10 General
The proposed rule would update
paragraph (b) to remove the reference to
noncompetitive leasing, as described in
43 CFR subpart 3110. This change is
consistent with the implementation of
the IRA. The proposed rule would
update paragraph (g) to increase the
minimum acceptable bid from $2 per
acre to reference the minimum bid in 43
CFR 3000.130, consistent with the
change described earlier in 43 CFR
3120.12.
Section 3140.42 Issuance of the
Combined Hydrocarbon Lease
The proposed rule would update
paragraph (d) to state that the BLM
would issue one combined hydrocarbon
lease to cover the existing oil and gas
lease or valid claim based on mineral
locations which have been approved for
conversion within the special tar sand
area. The existing paragraph (d)(2) is
eliminated in its entirety as the BLM
would not issue a combined
hydrocarbon lease covering multiple oil
and gas leases. Together, these changes
permit the existing lease to be converted
to a combined hydrocarbon lease
without changes to the legal land
description or leased area. The BLM
believes that converting multiple leases
into a combined hydrocarbon lease is
not necessary, because combined
hydrocarbon leases can be unitized.
Unitization allows for the joining
together of large areas such as an entire
reservoir or field to optimize operations.
Existing combined hydrocarbon leases
have already been unitized, and the
BLM believes there is no need to
maintain the conversion of multiple
leases in the regulations.
Section 3140.50 Duration of the Lease
The proposed rule would update the
paragraph in this section to state that if
the applicant withdraws the combined
hydrocarbon lease application or the
BLM denies the conversion application,
the suspension on the oil and gas lease
would be lifted and the term would be
adjusted by the time remaining on the
term of the lease.
Section 3140.70 Lands Within the
National Park System
The proposed rule would update the
paragraph in this section to make it
clear that the conversion application
window closed in 1983, consistent with
the previously described proposed
changes.
17. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3141
The proposed rule would not make
any revisions to section headings in the
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Section 3141.22 Exploration Licenses
The proposed rule would update
paragraph (b)(2) to refer to the fee
schedule in 43 CFR 3000.120. The
proposed rule would update paragraph
(b)(4) to remove the triplicate filing
requirement. The proposed rule would
update paragraph (e)(2) to increase the
rental from $2 per acre for new oil and
gas leases issued after August 16, 2022,
to the rental rate in 43 CFR 3000.130,
consistent with the requirements of the
IRA.
Section 3141.52 Term of Lease
The proposed rule would update
paragraph (a) to clarify that this section
pertains to the primary term of oil and
gas leases in special tar sands areas.
Section 3141.53 Royalties and Rentals
The proposed rule would increase the
royalty in paragraph (a) from 12.5
percent to 16.67 percent and change the
reference from the ‘‘Minerals
Management Service’’ to the ‘‘ONRR,’’
consistent with the other changes in this
proposed rule and the IRA.
The proposed rule would update
paragraph (b) to reference the oil shale
lease procedures for reducing the
royalty rate applicable to a tar sand
lease prior to the commencement of
commercial operations, currently at 43
CFR 3903.54. The BLM considers the
current regulations to be unclear on
which procedures to reference to reduce
the royalty rate applicable to a tar sand
lease prior to the commencement of
commercial operations.
The proposed rule would update
paragraph (c) to simply state that the
annual rental for all combined
hydrocarbon leases is as stated in the
lease. The BLM will increase the rentals
for combined hydrocarbon leases issued
after the effective date of the final rule
using 43 CFR 3000.130 for the rental
rate, consistent with the changes
described previously.
The proposed rule would likewise
update paragraph (d) to simply state that
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the annual rental for all tar sand leases
is as stated in the lease. The BLM will
increase the rentals for tar sand leases
issued after the effective date of the final
rule using 43 CFR 3000.130 for the
rental rate, consistent with the changes
described previously.
Section 3141.62 Publication of a
Notice of Competitive Lease Offering
The proposed rule would remove
paragraph (a) in its entirety, eliminating
the requirement that the BLM publish a
lease sale notice in the Federal Register
and in a newspaper and providing the
BLM with flexibility when determining
the appropriate notice method. The
remaining paragraph in this section,
which refers to making a sale notice
available to the public, would be
extended to combined hydrocarbon
leases in addition to the tar sand and oil
and gas leases listed in this paragraph.
The proposed rule would change the
remaining paragraph to make the Notice
of Competitive Lease Sale requirements
consistent with the proposed 43 CFR
3120.61 requirements.
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Section 3141.63 Conduct of Sales
The proposed rule would eliminate
paragraph (a) in its entirety and update
the proposed paragraph (b) so there is a
single consistent approach for
conducting lease sales by competitive
auction for both combined hydrocarbon
leases and tar sand leases. This change
would remove the written sealed bid
approach for combined hydrocarbon
leases.
The proposed paragraph (b)(2) would
be updated to increase the minimum
bonus bids for combined hydrocarbon
leases and tar sand leases issued after
the effective date of the final rule, and
it moves the bids to 43 CFR 3000.130 for
the Fiscal Terms of New Leases,
consistent with the changes described
earlier. Finally, the BLM proposes to set
the minimum bonus bid for
hydrocarbon leases based upon an
economic evaluation, which the BLM
will complete prior to holding a
competitive sale for a hydrocarbon
lease.
Section 3141.65 Rejection of Bid
The proposed rule would eliminate
existing § 3141.6–4. Since the BLM
would hold competitive auctions in a
similar manner for oil and gas leases, tar
sand leases, and hydrocarbon leases and
would use the economic analysis to set
the minimum bonus bid, the BLM
would not need to reject a bid based
upon the fair market value. The
reference to the ‘‘one-fifth bonus’’ was
changed to ‘‘minimum bonus’’ as
needed to reflect the proposed changes
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to have a consistent sale approach for
both tar sand leases and hydrocarbon
leases.
Section 3151.10 Notice of Intent To
Conduct Oil and Gas Geophysical
Exploration Operations
Section 3141.70
The introductory paragraph would be
updated to include the requirement for
the filing fee.
Award of Lease
The proposed rule would eliminate
the requirement for triplicate copies of
the lease forms to be executed by the
successful bidder. In addition, the
proposed rule would update this section
to specify the 30th ‘‘calendar day’’ in
order to reduce confusion.
18. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3142
The proposed rule would rename the
title of this subpart from ‘‘Paying
Quantities/Diligent Development for
Combined Hydrocarbon Leases’’ to
‘‘Paying Quantities/Diligent
Development for Combined
Hydrocarbon and Tar Sand Leases.’’ The
proposed rule would not make any
revisions to the section headings in the
existing 43 CFR subpart 3142
regulations.
Section 3142.1
Definitions
The proposed rule would amend the
first defined term to be ‘‘Production in
paying quantities for combined
hydrocarbon leases.’’ The proposed rule
would add definitions for the terms
‘‘Production in paying quantities for oil
and gas leases’’ and ‘‘Production in
paying quantities for tar sand leases.’’
Section 3142.21
Schedule
Minimum Production
The proposed rule would add a new
paragraph (b) to specify that the
minimum annual tar sand production
schedule for the lease or unit operations
would be set at an economical level.
The proposed new paragraph (b) would
also state that, if the operator or lessee
cannot establish economic production,
the lease would terminate at the end of
the lease’s primary term.
19. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3151
The proposed rule would revise
§ 3151.10 and add a new § 3151.30. The
BLM proposes these changes to protect
the fiscal and scientific interests of the
American public by ensuring the BLM
has adequate cost recovery mechanisms
for geophysical exploration permits and
that it has access to the information
obtained by the permittees.
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The proposed rule would add a new
section entitled ‘‘Collection and
submission of data’’ that would require
the permittee to submit to the BLM all
data and information obtained from the
exploration permit. This new
requirement is consistent with
exploration permits carried out in
Alaska, as set forth in the existing
regulations at 43 CFR 3152.6.
20. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3160
The proposed rule would not make
any revisions to the numbering or
section headings in the existing 43 CFR
3160.0–5 regulations.
Section 3160.0–5
Purpose
The proposed rule would add ‘‘and
tar sand leases’’ so that this subpart
applies to both combined hydrocarbon
and tar sand leases.
Section 3142.5
Section 3151.30 Collection and
Submission of Data
Definitions
The BLM is proposing to modify the
existing definition for ‘‘New or resumed
production under section 102(b)(3) of
the Federal Oil and Gas Royalty
Management Act.’’ The revised
definition would remove the sentence
describing circumstances in which a gas
well would be considered to have been
off of production, providing consistency
in the BLM’s management of both oil
wells (which does not include this
language) and gas wells. The BLM is
proposing to add a new requirement for
operators to notify the BLM when they
shut-in a gas well, as described in
greater detail under the proposed
changes for 43 CFR 3162.3–4. The
potential amount of plugging and
remediation liability related to longterm shut-in wells is often difficult to
identify. The update would therefore
require operators to notify the BLM
when it is shutting in a well and would
allow the BLM to adequately track and
evaluate the risk of nonproducing wells.
The BLM proposes new definitions
for ‘‘Shut-in well’’ and ‘‘Temporarily
abandoned well.’’ These definitions
would clarify the terms for the new
proposed requirements. The definition
would describe a ‘‘Shut-in well’’ as a
nonoperational well that can physically
and mechanically operate by opening
valves or activating existing equipment.
The definition would describe a
‘‘Temporarily abandoned well’’ as a
nonoperational well that is not
physically or mechanically capable of
production or injection without
additional equipment or without
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servicing the well, but that may have
future beneficial use.
These definitions were pulled from
the BLM’s existing policy and are
similar to existing industry standard
definitions for the two well statuses.
The International Association of Drilling
Contractors (IADC) and the Alaska Oil
and Gas Conservation Commission
defines ‘‘shut in’’ as ‘‘to close a well’s
surface, wellhead, or subsurface valves
to halt flow from or into the well, with
the completion interval remaining open
to the tubing below the closed valve’’
(see https://iadclexicon.org/shut-in/).
The IADC and the Colorado Oil and Gas
Conservation Commission defines
‘‘temporarily abandoned well’’ to ‘‘mean
a well which is incapable of production
or injection without the addition of one
or more pieces of wellhead or other
equipment, including valves, tubing,
rods, pumps, heater-treaters, separators,
dehydrators, compressors, piping or
tanks’’ (see https://iadclexicon.org/
temporarily-abandoned-well/). The BLM
proposes to add the statement ‘‘may
have future beneficial use’’ into the
temporarily abandoned well definition
to clarify that the BLM expects an
operator to promptly plug a well
without future beneficial use. In some
cases, the operator could use a
nonproductive well bore for enhanced
recovery operations or water disposal,
even though the well cannot produce
hydrocarbons.
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21. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3162
The proposed rule would not make
any revisions to the numbering or
section headings in the existing 43 CFR
3162.3–4 regulations.
Section 3162.3–4 Well Abandonment
The proposed rule would modify
paragraph (c) to state that no well may
be temporarily abandoned for more than
30 days without the prior approval of
the authorized officer and unless the
operator provides adequate and detailed
justification for the abandonment,
verifies the mechanical integrity of the
wells, and isolates the completed
interval(s). The BLM would not accept
vague assertations that the well may
produce. See Goldmark Engineering,
Inc., 146 IBLA 225, 227 (1998). The
BLM requests comments on whether a
temporary abandonment should trigger
a bond review in addition to the
adequate and detailed justification for
the abandonment.
In addition, except in extraordinary
circumstances, the proposed rule would
provide that the maximum period of
time for an operator to delay permanent
abandonment of a temporarily
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abandoned well would not exceed 4
years. The Energy Policy Act of 2005, as
amended by the IIJA, defines an idled
well as ‘‘a well that has been
nonoperational for at least 4 years and
for which there is no anticipated
beneficial use’’ (see 42 U.S.C. 15907).
Therefore, to help avoid wells becoming
idled in the first place, the BLM is
proposing new reporting and
operational requirements for operators
of temporarily abandoned wells. When
an operator does not address a
temporarily abandoned well by
returning the well to production in
paying quantities (i.e., production
sufficient to cover the operator’s
operational costs) or plugging and
permanently abandoning the well,
historical data available to the BLM
indicates that such wells are at an
increased risk of becoming orphaned.
The proposed rule would add a new
paragraph (d) outlining new
requirements for operators of shut-in
wells. Paragraph (d)(1) would require
notification to the BLM of the well’s
shut-in status and shut-in date within
90 days of well shut-in. Paragraph (d)(2)
would require, within 3 years of well
shut-in, the operator to provide the
authorized officer with verification of
the mechanical integrity of the well and
confirmation that the well remains
capable of producing in paying
quantities. Currently, an operator is not
required to inform the BLM when they
shut-in a well, and these additions
would allow the BLM to better track its
shut-in well inventory and to take
proactive steps to ensure that those
wells do not become idled, as directed
by Congress at 42 U.S.C. 15907.
The proposed rule would add a
paragraph (d)(3) stating that, within 4
years of well shut-in, the operator must:
(i) permanently abandon the well; (ii)
resume production in paying quantities;
or (iii) provide the authorized officer
with a detailed plan and timeline for
future beneficial use for the well. The
proposed rule would further provide
that if the BLM determines that there is
a legitimate future beneficial use for the
well, it may allow the operator to delay
permanent abandonment by 1 year. The
proposed rule would provide that the
authorized officer may grant additional
delays in 1-year increments, provided
that the operator confirms the future
beneficial use of the well and is making
verifiable progress on returning the well
to a beneficial use. The BLM believes
these new requirements with yearly
interval checks would help operators
manage shut-in wells, preventing them
from becoming orphaned in the future.
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22. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3165.1
The proposed rule would revise the
43 CFR 3165.1 heading from ‘‘Relief
from operating and producing
requirements’’ to ‘‘Relief from operating
and/or producing requirements.’’
Section 3165.1 Relief From Operating
and/or Producing Requirements
The purpose of this section is to
describe the requirements for lease
suspension applications. The BLM
proposes to update this section to
encourage diligent development of
leased lands and ensure lease
suspensions are justified and tied to an
end date. The BLM is proposing to
modify paragraph (b) to clarify who may
apply for a lease suspension.
The proposed rule would add a new
paragraph (c) to state the BLM would
not approve an application for a
suspension of a lease in circumstances
where an APD on the subject lease is
filed less than 90 calendar days before
the expiration date of the lease.
Applications for lease suspensions are
often filed late in the primary term of a
lease. Although lessees and operating
rights owners are entitled to the full
primary term of the lease, they are also
responsible for timely filing required
plans and necessary applications.
Lessees and operating rights owners
should not assume the BLM will grant
a suspension merely to relieve them of
their obligations of diligence and
timeliness when complying with these
and related requirements. See Vaquero
Energy Inc., 185 IBLA 233, 237 (2015).
On average, the BLM requires 90 days
to complete the required reviews and
analysis before issuing a decision on an
APD. This change would encourage
lessees and operators to diligently
pursue development when APDs are
filed with the BLM near the end of the
primary term of the lease; otherwise, the
lease would expire.
The proposed rule would also update
the proposed paragraph (d) to ensure
lease suspensions would not exceed 1
year when they are requested by the
operator. If the circumstances that
warranted the suspension are still
applicable, a request to extend the
suspension prior to the lifting date of
the suspension would be required.
The proposed rule would add a new
paragraph (e) to state that BLM-directed
suspensions may exceed 1 year.
The proposed rule would add a new
paragraph (f) to state that lease
suspensions would lift when they are no
longer justified, when lifting the
suspension is in the public interest of
the lessor, or as stated in the approval
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
letter. The BLM requests comments on
the best approach for making
determinations on lease suspensions
that would reduce the cost to the
American public and encourage diligent
development of leased lands. In June
2018, the GAO issued a final report
entitled, ‘‘BLM Could Improve
Oversight of Lease Suspensions with
Better Data and Monitoring Procedures’’
(GAO–18–411). In summary, oil and gas
leases on Federal lands generate billions
of dollars in rents and royalty payments
each year, but these revenues decline if
leases are suspended (i.e., the lease term
is placed on hold). In response to GAO
recommendations, the BLM issued
policy guidance requiring the BLM state
offices to regularly review suspended
leases and monitor lease suspensions to
ensure that lease suspensions in effect
are warranted.17 The BLM believes the
proposed additions and updates are
warranted to ensure lease suspensions
are justified and tied to an end date.
23. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3171
The proposed rule would not make
any revisions to the numbering or
section headings in the existing 43 CFR
subpart 3171.6 regulations.
Section 3171.6 Components of a
Complete APD Package
The proposed rule would update the
existing paragraph (b)(1)(i) to replace
the phrase ‘‘referenced to the National
Section 3171.14 Valid Period of
Approved APD
The proposed rule would not make
any revisions to the numbering or
section headings in the existing subpart
43 CFR 3171.14 regulations and
proposes to adjust the valid period of
time for approved APDs and address
instances when an operator does not
drill to total depth.
The BLM reviewed the number of
APD extensions granted in the past and
estimates that operators request
extensions on approximately 33 percent
or one-third of the APDs approved. The
BLM approved 4,859 APDs in FY 2021
and expects to receive approximately
1,600 APD extension requests in FY
2023. This would result in an estimated
3,800 hours of BLM staff time and
$136,000 annually to process APD
extension requests, based upon an
average processing time of 2.4 hours and
processing cost of $85 per APD
extension application. Therefore, the
BLM proposes adjusting the valid
State
Term for State permit to drill
California ..............................
1-year permit with an optional 1-year extension upon
application of the operator.
3-year permit with no extensions. ...................................
Colorado ...............................
Louisiana ..............................
Montana ...............................
New Mexico .........................
North Dakota ........................
Oklahoma .............................
Texas ...................................
Utah ......................................
Wyoming ..............................
lotter on DSK11XQN23PROD with PROPOSALS2
Spatial Reference System, North
American Datum 1983 or latest edition’’
with the phrase ‘‘generated by an
electronic navigation system, and
document the datum referenced to
generate these coordinates.’’ The BLM is
proposing this change to modernize the
existing language that dates to 2007 and
avoid the need to incorporate by
reference the National Spatial Reference
System, North American Datum 1983.
Reference
6-month or 1-year permit. Must re-apply for the APD
after it expires.
6-month permit. Must re-apply for the APD after the 6months.
2-year permit with an optional 1-year extension upon
application by the operator on C–103.
1-year permit with the ability to extend the APD with a
$100 filing fee.
18-month permit with an optional 6-month extension
without fee. Only one extension may be granted.
2-year permit. ..................................................................
1-year permit ...................................................................
2-year permit with the ability to resubmit the APD with
an extension filing fee for an additional 2 years.
Therefore, the BLM is considering
changes to this section and is requesting
comments on the best approach to
adjust APD extensions that would
period of time for approved APDs to
reduce the cost to the American public
and encourage diligent development of
leased lands.
To find the correct approach, the BLM
reviewed the timeframe for operators to
drill an approved APD based on well
spuds from calendar year 2015 through
calendar year 2021. On average, an
operator spuds a Federal well 0.78 years
after APD approval. Based on the data
reviewed, 74 percent of the wells were
spud in the first year after APD
approval, 15 percent of the wells were
spud in the second year after APD
approval, 6 percent of the wells were
spud in the third year after APD
approval, and 5 percent of the wells
were spud in fourth year after APD
approval. Therefore, because APD
approvals are ordinarily valid for 2
years, only 11 percent of the wells spud
required an APD extension approval
from the BLM.
The BLM also reviewed the valid
period for State permits to drill based
upon State regulations or conditions
tied to the permits. The State permits
are valid for different times depending
on the state; however, the time frame
ranges from 6 months to 2 years with
some states granting extensions and
some states requiring the operator to
resubmit the APD for a new permit if
the well is not drilled. The BLM
summarizes the State’s permit to drill
terms in the following table:
Chapter 4. Subchapter 1. Article 3. § 1722(d). Regulations here.
Permitting Process Regulations: 311.a. & b. Regulations here.
Title 30. RS 30:28. section 28(B). Regulations here.
36.22.604 Permit Issuance—Expiration—Extensions.
Regulations here.
Based on conditions of approval tied to the permit,
found here. NM regulations do not specify permit validity.
Found on ND DMR website here.
Okla. Admin. Code § 165:10–3–1(j). Regulations here.
Title 16. Part 1. Chapter 3. section 3.5(g). Regulations
here.
R649–3–4. 6. Regulations here.
WY OGCC Chapter 3. section 8(h). Regulations here.
reduce the cost to the American public
and encourage diligent development of
leased lands. The BLM is considering
two options. The first option would
involve removing the option to extend
APDs and changing the APD term from
2 years to 3 years. The second option
would retain the 2-year APD term with
17 PIM 2019–007, Monitoring and Review of
Lease Suspensions. https://www.blm.gov/policy/
pim-2019-007.
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
a potential for a 1-year extension. The
BLM would require a filing fee based
upon the required review in Instruction
Memorandum 2023–011, Approved
Application for Permit to Drill
Extensions, and incorporate this policy
for APD extensions into the regulations.
Either option would continue to allow
operators to spud 95 percent of the
wells approved in the initial APD based
upon the current time between APD
approval and well spud. If the operator
does not drill the APD in the time
provided, then the operator would need
to apply for a new APD.
At this time, the BLM is proposing the
first option to change the APD term
from 2 years to 3 years with no
extensions to reduce the administrative
burden. This would reduce the cost for
both the American public and the
operators by eliminating the need for
operators to file and BLM to review
applications for APD extensions. The
current proposal would update the
existing paragraph (a) to state that an
APD is valid for 3 years. The BLM
proposes to remove the sentence
describing the 2-year extension.
The BLM is proposing to add two new
paragraphs to this section to address the
many partially drilled and uncompleted
wells remaining on Federal lands and to
require operators to comply with the
approved APD prior to the permit’s
expiration date. Under the BLM’s
current regulations, operators can spud
wells near the APD’s expiration date by
setting conductor or surface casing. The
operators could then extend past the
APD’s primary term and delay
reclamation of the disturbed land by
arguing that it would return and drill to
total depth in the future. The BLM is
proposing to add paragraphs (b) and (c)
to remove the loophole and encourage
operators to pursue diligent
development of leased lands.
The proposed rule would add a new
paragraph (b) to state that the approved
APD expires on the date as written
unless the operator has: (1) drilled the
well to the approximate total depth in
the approved APD; (2) is drilling the
well with a rig capable of drilling the
well to total depth; or (3) submits a
plan, approved by the BLM, for
continuously drilling the well to reach
the proposed total depth in the
approved APD. If the APD expiration
date passes without satisfying one of
these three requirements, the operator
would need to submit a new APD to
47597
drill or continue drilling the well under
the expired APD.
The proposed rule adds a new
paragraph (c) to address outstanding
surface disturbance or wellbores upon
the APD’s expiration. The new section
states that upon expiration of the
approved APD, if the operator created
surface disturbance or began drilling the
well under the approved APD, the
operator or lessee must comply with
plugging, abandonment, and
reclamation requirements. The BLM
proposes to add this section to ensure
operators will promptly resolve any
surface disturbance or wellbores upon
expiration of the APD.
24. Section-by-Section Discussion for
Changes to 43 CFR Subpart 3186
The proposed rule would remove the
existing § 3186.2 regulations in their
entirety, consistent with the changes in
43 CFR 3104.4 to remove the unit
operator’s bond.
VI. Overview of Modifications
The following is an overview table of
the proposed significant modifications
to parts 3000, 3100, 3110, 3120, 3130,
3140, 3150, 3160, 3171, and 3180:
43 CFR SUBPART 3000—MINERALS MANAGEMENT: GENERAL
Existing regulation
Proposed regulation
43 CFR 3000.0–5—Definitions. ..........................
43 CFR 3000.1—Nondiscrimination ...................
43 CFR 3000.2—False statements ....................
43 CFR 3000.3—Unlawful interests ...................
43 CFR 3000.4—Appeals ..................................
43 CFR 3000.5—Limitations on time to institute
suit to contest a decision of the Secretary.
43 CFR 3000.5—Definitions ............................
43 CFR 3000.10—Nondiscrimination ..............
43 CFR 3000.20—False statements ...............
43 CFR 3000.30—Unlawful interests ..............
43 CFR 3000.40—Appeals ..............................
43 CFR 3000.50—Limitations on time to institute suit to challenge a decision of the Secretary.
43 CFR 3000.60—Filing of documents ...........
43 CFR 3000.70 Multiple development ...........
43 CFR 3000.80—Management of Federal
minerals from reserved mineral estates.
43 CFR 3000.90—Enforcement actions under
30 U.S.C. 195.
43 CFR 3000.100—Fees in general ................
No
No
No
No
No
No
43 CFR 3000.110—Processing fees on a
case-by-case basis.
No significant change.
43 CFR 3000.120—Fee schedule for fixed
fees.
The proposed rule would add a new fee for
EOIs, as required by the IRA;
Would propose a new fixed filing fees for various oil and gas applications; and
Would propose an update to existing oil and
gas fixed filing fees.
The proposed rule would add a new section
covering the financial terms of new leases
(including rentals and minimum bonus
bids).
43 CFR 3000.6—Filing of documents ................
43 CFR 3000.7—Multiple development .............
43 CFR 3000.8—Management of Federal minerals from reserved mineral estates.
43 CFR 3000.9—Enforcement ...........................
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43 CFR 3000.10—What do I need to know
about fees in general?
43 CFR 3000.11—When and how does BLM
charge me processing fees on a case-bycase basis?
43 CFR 3000.12—What is the fee schedule for
fixed fees?
New ....................................................................
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Substantive changes
43 CFR 3000.130—Fiscal terms of new
leases.
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significant
significant
significant
significant
significant
significant
change.
change.
change.
change.
change.
change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
43 CFR SUBPART 3100—OIL AND GAS LEASING
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3100.0–3—Authority .............................
43 CFR 3100.3—Authority ...............................
43 CFR 3100.0–5—Definitions ..........................
43 CFR 3100.5—Definitions ............................
43 CFR 3100.0–9—Information collection .........
43 CFR 3100.9—Information collection ...........
43 CFR 3100.1—Helium ....................................
43 CFR 3100.2—Drainage .................................
43 CFR 3100.2–1—Compensation for drainage
43 CFR 3100.2–2—Drilling and production or
payment of compensatory royalty.
43 CFR 3100.3—Options ...................................
43 CFR 3100.3–1—Enforceability ......................
43 CFR 3100.3–2—Effect of option on acreage
43 CFR 3100.3–3—Option statements ..............
43 CFR 3100.4—Public availability of information.
43 CFR 3100.10—Helium ................................
Drainage ...........................................................
43 CFR 3100.21—Compensation for drainage
43 CFR 3100.22—Drilling and production or
payment of compensatory royalty.
Options .............................................................
43 CFR 3100.31—Enforceability .....................
43 CFR 3100.32—Effect of option on acreage
43 CFR 3100.33—Option statements .............
43 CFR 3100.40—Public availability of information.
The proposed rule would add or remove legal
references for lands identified as eligible for
leasing; and
Would move wildlife refuge lands, as well as
lands patented under the Recreation and
Public Purposes Act, formerly found under
subpart 3101, to this part’s authority section;
The proposed rule would alphabetize and add
new definitions for ‘‘competitive lease sale,’’
‘‘exception,’’ ‘‘modification,’’ ‘‘oil and gas
agreements,’’ ‘‘qualified bidder,’’ ‘‘qualified
lessee,’’ ‘‘responsible bidder,’’ ‘‘responsible
lessee,’’ and ‘‘waiver.’’
The proposed rule would remove the outdated
Paperwork Reduction Act Information Collection (IC) Control Numbers and updates
the IC section to include a table summarizing the current OMB-approved Control
Numbers for oil and gas leasing; and would
add a new section to allow the BLM to accept electronic signatures and submission
of documents.
No significant change.
No significant change.
No significant change.
No significant change.
No
No
No
No
No
significant
significant
significant
significant
significant
change.
change.
change.
change.
change.
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43 CFR SUBPART 3101—ISSUANCE OF LEASES
Existing regulation
Proposed regulation
43 CFR 3101.1—Lease terms and conditions ...
43 CFR 3101.1–1—Lease form .........................
43 CFR 3101.1–2—Surface use rights ..............
43 CFR 3101.1–3—Stipulations and information
notices.
43 CFR 3101.1–4—Modification or waiver of
lease terms and stipulations.
Lease terms and conditions .............................
43 CFR 3101.11—Lease form .........................
43 CFR 3101.12—Surface use rights .............
43 CFR 3101.13—Stipulations and information notices.
43 CFR 3101.14—Modification, waiver, or exception.
43
43
43
43
43
43
43
3101.2—Acreage limitations .................
3101.2–1—Public domain lands ...........
3101.2–2—Acquired lands ...................
3101.2–3—Excepted acreage ..............
3101.2–4—Excess acreage ..................
3101.2–5—Computation .......................
3101.2–6 Showing required ..................
Acreage limitations ...........................................
43 CFR 3101.21—Public domain lands ..........
43 CFR 3101.22—Acquired lands ...................
43 CFR 3101.23—Excepted acreage ..............
43 CFR 3101.24—Excess acreage .................
43 CFR 3101.25—Computation ......................
Removed ..........................................................
43 CFR 3101.3—Leases within unit areas ........
43 CFR 3101.3–1—Joinder evidence required ..
43 CFR 3101.30—Leases within unit areas,
joinder evidence required.
Removed ..........................................................
43 CFR 3101.3–2—Separate leases to issue ...
Removed ..........................................................
43 CFR 3101.4—Lands covered by application
to close lands to mineral leasing.
Removed ..........................................................
CFR
CFR
CFR
CFR
CFR
CFR
CFR
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Substantive changes
No
No
No
No
significant
significant
significant
significant
change.
change.
change.
change.
The proposed rule would update the provisions on modification or waiver of lease
terms and stipulations.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
The proposed rule would remove this section
and other portions of the regulations related
to qualification statements declared out of
date (see 47 FR 8544 (Feb. 26, 1982)).
No significant change.
The proposed rule would remove this title
since the next section would be removed.
The proposed rule would remove this section,
as well as references to the nomination
process based on proposed changes to
part 3120.
The proposed rule would remove this section,
as well as references to the nomination
process based on proposed changes to
part 3120.
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
47599
43 CFR SUBPART 3101—ISSUANCE OF LEASES—Continued
Existing regulation
Proposed regulation
Substantive changes
New ....................................................................
43 CFR 3101.40—Terminated leases .............
43 CFR 3101.5—National Wildlife Refuge System lands.
43 CFR 3101.5–1—Wildlife refuge lands ...........
Removed ..........................................................
43 CFR 3101.5–2—Coordination lands .............
Removed ..........................................................
43 CFR 3101.5–3—Alaska wildlife areas ..........
Removed ..........................................................
43 CFR 3101.5–4—Stipulations .........................
Removed ..........................................................
43 CFR 3101.6—Recreation and public purposes lands.
Removed ..........................................................
43 CFR 3101.7—Federal lands administered by
an agency outside of the Department of the
Interior.
43 CFR 3101.7–1—General requirements ........
Federal lands administered by an agency outside of the Department of the Interior.
The proposed rule would move 43 CFR
3108.2–2(d) and 43 CFR 3108.2–3(c) on
issuing leases for lands that were previously covered by a terminated lease to
this section on lease issuance.
The proposed rule would move this part to 43
CFR 3100, which is in the Authority section.
The proposed rule would move this section to
43 CFR 3100.0–3(a)(2)(xii) and 3100.0–
3(b)(2)(xiv), which are in the Authority section.
The proposed rule would move this section to
43 CFR 3100.3, which is in the Authority
section.
The proposed rule would move this section to
43 CFR 3100.3, which is in the Authority
section.
The proposed rule would consolidate this section with 43 CFR 3101.13.
The proposed rule would move this section to
43 CFR 3100.3, which is in the Authority
section.
No significant change.
43 CFR 3101.7–2—Action by the Bureau of
Land Management.
43 CFR 3101.7–3—Appeals ..............................
43 CFR 3101.8—State’s or charitable organization’s ownership of surface overlying federally
owned minerals.
43 CFR 3101.52—Action by the Bureau of
Land Management.
43 CFR 3101.53—Appeals ..............................
43 CFR 3101.60—State’s or charitable organization’s ownership of surface overlying
federally owned minerals.
Removed ..........................................................
43 CFR 3101.51 General requirements ..........
The proposed rule would consolidate the separate paragraphs under this section into
one paragraph.
No significant change.
No significant change.
No significant change.
43 CFR SUBPART 3102—QUALIFICATIONS OF LESSEES
lotter on DSK11XQN23PROD with PROPOSALS2
Existing regulation
Proposed regulation
Substantive changes
No significant change.
The proposed rule would change the terminology for referring to citizens of other
countries; and Would add language from
the Treasury Department regulations at 31
CFR part 802, where the Committee on
Foreign Investment in the United States
(CFIUS) is authorized to review covered
real estate transactions and to mitigate any
risk to the national security of the United
States that arises as a result of such transactions.
No significant change.
The proposed rule would update this section
to give the BLM the ability to accept documents with electronic signatures;
Would remove the requirement for multiple
copies of assignments or transfers to be
submitted to the BLM; and
Would remove the reference to qualification
numbers, which were declared obsolete
(see 47 FR 8544 (Feb. 26, 1982)).
No significant change.
43 CFR 3102.1
43 CFR 3102.2
Who may hold leases ............
Aliens .....................................
43 CFR 3102.10 Who may hold leases ........
43 CFR 3102.20 Non-U.S. Citizens ..............
43 CFR 3102.3
43 CFR 3102.4
Minors ....................................
Signature ................................
43 CFR 3102.30 Minors ................................
43 CFR 3102.40 Signature ...........................
43 CFR 3102.5 Compliance, certification of
compliance and evidence.
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Compliance, certification of compliance and
evidence.
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47600
Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
43 CFR SUBPART 3102—QUALIFICATIONS OF LESSEES—Continued
Existing regulation
Proposed regulation
Substantive changes
The proposed rule would update the current
section to refer to reclamation obligations to
be compliant with requirements of section
17(g) of the MLA start at the Notice of Proposed Civil Penalties instead of the imposition of a civil penalty; and Would add a
qualification requirement to ensure compliance with 2 CFR parts 180 and 1400,
based on which the BLM would reject any
lease issuance, assignment, or transfer to
any entity excluded from doing business
with the Federal government through suspension and debarment.
No significant change.
No significant change.
43 CFR 3102.5–1
Compliance ........................
43 CFR 3102.51 Compliance ..........................
43 CFR 3102.5–2
43 CFR 3102.5–3
Certification of compliance
Evidence of compliance .....
43 CFR 3102.52 Certification of compliance
43 CFR 3102.53 Evidence of compliance ....
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR SUBPART 3103—FEES, RENTALS AND ROYALTY
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3103.1—Payments ...............................
43 CFR 3103.1–1—Form of remittance .............
43 CFR 3103.1–2—Where submitted ................
43 CFR 3103.2—Rentals ...................................
43 CFR 3103.2–1—Rental requirements ...........
43 CFR 3103.2–2—Annual rental payments .....
Payments .........................................................
43 CFR 3103.11—Form of remittance ............
43 CFR 3103.12—Where remittance is submitted.
Rentals .............................................................
43 CFR 3103.21—Rental requirements ..........
43 CFR 3103.22—Annual rental payments .....
43 CFR 3103.3—Royalties ................................
43 CFR 3103.3–1—Royalty on production ........
43 CFR 3103.3–2—Minimum royalties ..............
Royalties ..........................................................
43 CFR 3103.31—Royalty on production ........
43 CFR 3103.32—Minimum royalties ..............
43 CFR 3103.4—Production incentives .............
43 CFR 3103.4–1—Royalty reductions ..............
43 CFR 3103.4–2—Stripper well royalty reductions.
Production incentives .......................................
43 CFR 3103.41—Royalty reductions .............
Removed ..........................................................
43 CFR 3103.4–3—Heavy oil royalty reductions
Removed ..........................................................
43 CFR 3103.4–4—Suspension of operations
and/or production.
43 CFR 3103.42 Suspension of operations
and/or production.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
The proposed rule would remove outdated
phase-in language from past rulemakings;
and Would update the following financial
terms of new leases as required by the
IRA:
• Rental amount for competitive leases is
to be $3 per acre, or fraction thereof,
for the first 2 years, then $5 per acre,
or fraction thereof, for lease years 3
through 8, and then $15 per acre, or
fraction thereof, thereafter;
• For Class II reinstated competitive
leases, the rent increases to $20 per
acre;
• Royalty percentage is proposed to be
not less than 16.67 percent for competitive leases; and
• For reinstated competitive leases, the
royalty increases to not less than 20
percent, plus 2 percentage points for
each succeeding reinstatement.
No significant change.
No significant change.
The proposed rule would clarify the intent of
minimum royalty to be reduced by the actual royalty paid throughout the year.
No significant change.
No significant change.
The proposed rule would remove the regulations governing stripper well royalty reductions.
The proposed rule would remove the regulations governing heavy oil royalty reductions.
No significant change.
43 CFR SUBPART 3104—BONDS
Existing regulation
Proposed regulation
43 CFR 3104.1—Bond obligations .....................
43 CFR 3104.10—Bond obligations ................
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Substantive changes
The proposed rule would remove Certificates
of Deposits (CD) and Letters of Credit
(LOC) as forms of security for personal
bonds.
E:\FR\FM\24JYP2.SGM
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
47601
43 CFR SUBPART 3104—BONDS—Continued
Existing regulation
Proposed regulation
43 CFR 3104.2—Lease bond ............................
43 CFR 3104.20—Lease bond ........................
43 CFR 3104.3—Statewide and nationwide
bonds.
43 CFR 3104.30—Statewide bonds ................
43 CFR 3104.4—Unit operator’s bond ...............
43 CFR 3104.40—Surface owner protection
bond.
43 CFR 3104.50—Increased amount of bonds
43 CFR 3104.60—Where filed and number of
copies.
43 CFR 3104.70—Default ...............................
43 CFR 3104.5—Increased amount of bonds ...
43 CFR 3104.6—Where filed and number of
copies.
43 CFR 3104.7—Default ....................................
43 CFR 3104.8—Termination of period of liability.
New ....................................................................
Substantive changes
43 CFR 3104.80—Termination of period of liability.
43 CFR 3104.90—Bonds held prior to [EFFECTIVE DATE OF FINAL RULE].
The proposed rule would increase the minimum bonding amounts to $150,000 per
lease bond.
The proposed rule would increase the minimum bonding amounts to $500,000 per
statewide bond; and would remove nationwide bonds.
The proposed rule would remove unit operator’s bonds.
No significant change.
No significant change.
The proposed rule would update the language
to state reference that noncompliance is in
violation of section 17 of the MLA; and
would add language stating that being in
noncompliance would result in not being
able to acquire new lease interests, as well
as referring the entity for a determination as
to whether the entity should be suspended
or debarred from doing business with the
Federal government in accordance with 2
CFR part 1400.
No significant change.
The proposed rule would add a phase-in period for the new minimum bond amounts.
43 CFR SUBPART 3105—COOPERATIVE CONSERVATION PROVISIONS
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3105.1—Cooperative or unit agreement.
43 CFR 3105.10—Cooperative or unit agreement.
43 CFR 3105.2—Communitization or drilling
agreements.
Communitization agreements ..........................
43 CFR 3105.2–1—Where filed .........................
43 CFR 3105.21—Where filed ........................
43 CFR 3105.2–2—Purpose ..............................
43 CFR 3105.2–3—Requirements .....................
43 CFR 3105.22—Purpose .............................
43 CFR 3105.23—Requirements ....................
New ....................................................................
43 CFR 3105.24—Communitization agreement terms.
Operating, drilling or development contracts ...
The proposed rule would add a reference to
the new fixed filing fees proposed in 43
CFR 3000.120.
The proposed rule would remove references
to drilling agreements that the BLM does
not create or manage.
The proposed rule would remove the requirement for multiple copies of applications to
be filed with the BLM.
No significant change.
The proposed rule would add conditions and
requirements for Communitization Agreements (self-certification statement, maps,
exhibits showing tracts and ownership).
The proposed rule would add the primary
term of communitization agreements.
No significant change.
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR 3105.3—Operating, drilling or development contracts.
43 CFR 3105.3–1—Where filed .........................
43 CFR 3105.31—Where filed ........................
43 CFR 3105.3–2—Purpose ..............................
43 CFR 3105.3–3—Requirements .....................
43 CFR 3105.4—Combination for joint operations or for transportation of oil.
43 CFR 3105.4–1—Where filed .........................
43 CFR 3105.32—Purpose .............................
43 CFR 3105.33—Requirements ....................
Removed ..........................................................
43 CFR 3105.4–2—Purpose ..............................
Removed ..........................................................
43 CFR 3105.4–3—Requirements .....................
Removed ..........................................................
43 CFR 3105.4–4—Rights-of-way .....................
Removed ..........................................................
43 CFR 3105.5—Subsurface storage of oil and
gas.
Subsurface storage of oil and gas ...................
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The proposed rule would remove the requirement for multiple copies of applications to
be filed with the BLM.
No significant change.
No significant change.
The proposed rule would remove this section
as it is not used by the BLM or operators.
The proposed rule would remove this section
as it is not used by the BLM or operators.
The proposed rule would remove this section
as it is not used by the BLM or operators.
The proposed rule would remove this section
as it is not used by the BLM or operators.
The proposed rule would remove this section
as it is covered under 43 CFR part 2880.
No significant change.
E:\FR\FM\24JYP2.SGM
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47602
Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
43 CFR SUBPART 3105—COOPERATIVE CONSERVATION PROVISIONS—Continued
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3105.5–1—Where filed .........................
3105.41—Where filed ......................................
43
43
43
43
43
43
43
43
The proposed rule would add a reference to
the new fixed filing fees proposed in 43
CFR 3000.120; and would remove the requirement for multiple copies of applications
to be filed with the BLM.
No significant change.
No significant change.
No significant change.
The proposed rule would split this section into
multiple paragraphs to increase readability.
CFR
CFR
CFR
CFR
3105.5–2—Purpose ..............................
3105.5–3—Requirements .....................
3105.5–4—Extension of lease term .....
3105.6—Consolidation of leases ..........
CFR
CFR
CFR
CFR
3105.42—Purpose .............................
3105.43—Requirements ....................
3105.44—Extension of lease term .....
3105.50—Consolidation of leases .....
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR SUBPART 3106—TRANSFERS BY ASSIGNMENT, SUBLEASE, OR OTHERWISE
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3106.1—Transfers, general ..................
43 CFR 3106.10—Transfers, general .............
43 CFR 3106.2—Qualifications of transferees ..
43 CFR 3106.3—Fees .......................................
43 CFR 3106.4—Forms .....................................
43 CFR 3106.4–1—Transfers of record title and
of operating rights (subleases).
43 CFR 3106.20—Qualifications of assignees
and transferees.
43 CFR 3106.30—Fees ...................................
Forms ...............................................................
43 CFR 3106.41—Transfers of record title
and of operating rights (subleases).
The proposed rule would clarify the requirements for transfers of operating rights. The
proposed rule would state that operating
rights may only be divided with respect to
legal subdivision, depth ranges, and formations, within the boundaries of a Federal
lease.
No significant change.
43 CFR 3106.4–2—Transfers of other interests,
including royalty interests and production
payments.
43 CFR 3106.4–3—Mass transfers ....................
43 CFR 3106.42—Transfers of other interests, including royalty interests and production payments.
43 CFR 3106.43—Mass transfers ...................
43 CFR 3106.5—Description of lands ...............
43 CFR 3106.6—Bonds .....................................
43 CFR 3106.6–1—Lease bond ........................
43 CFR 3106.50—Description of lands ...........
43 CFR 3106.60—Bond Requirements ...........
Removed ..........................................................
43 CFR 3106.6–2—Statewide/nationwide bond
43 CFR 3106.7—Approval of transfer ................
43 CFR 3106.7–1—Failure to qualify .................
43 CFR 3106.7–2—If I transfer my lease, what
is my continuing obligation?
43 CFR 3106.7–3—Lease account status .........
43 CFR 3106.7–4—Effective date of transfer ....
43 CFR 3106.7–5—Effect of transfer ................
43 CFR 3106.7–6—If I acquire a lease by an
assignment or transfer, what obligations do I
agree to assume?
43 CFR 3106.8—Other types of transfers .........
43 CFR 3106.8–1—Heirs and devisees ............
43 CFR 3106.8–2—Change of name ................
43 CFR 3106.8–3—Corporate merger ...............
Removed ..........................................................
Approval of transfer or assignment .................
43 CFR 3106.71—Failure to qualify ................
43 CFR 3106.72—Continuing obligation of an
assignor or transferor.
43 CFR 3106.73—Lease account status ........
43 CFR 3106.74—Effective date of transfer ...
43 CFR 3106.75—Effect of transfer ................
43 CFR 3106.76—Obligations of assignee or
transferee.
New ....................................................................
43 CFR 3106.84—Sheriff’s sale/deed .............
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Other types of transfers ...................................
43 CFR 3106.81—Heirs and devisees ............
43 CFR 3106.82—Change of name ................
43 CFR 3106.83—Corporate mergers and
dissolution of corporations, partnerships,
and trust.
PO 00000
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No significant change.
No significant change.
The proposed rule would change the triplicate
filing requirement to a duplicate filing requirement.
The proposed rule would require transfers of
overriding royalty to be submitted on a BLM
form.
The proposed rule would change the triplicate
filing requirement to a duplicate filing requirement and would waive the need for the
duplicate when the filing is submitted electronically.
No significant change.
No significant change.
The proposed rule would update the bond
section related to a new interest owner’s responsibility for holding a bond.
No significant change.
No significant change.
No significant change.
No significant change.
No
No
No
No
significant
significant
significant
significant
change.
change.
change.
change.
No significant change.
No significant change.
No significant change.
The proposed rule would include the new filing fee and requirements for other types of
transfers that the BLM accepts (for example, dissolutions of corporations).
The proposed rule would include the new filing fee and requirements for other types of
transfers that the BLM accepts (for example, Sheriff’s sale/deeds).
E:\FR\FM\24JYP2.SGM
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
47603
43 CFR SUBPART 3107—CONTINUATION AND EXTENSION
Existing regulation
Proposed regulation
43 CFR 3107.1—Extension by drilling ...............
43 CFR 3107.10—Extension by drilling ..........
43 CFR 3107.2—Production ..............................
43 CFR 3107.2–1—Continuation by production
43 CFR 3107.2–2—Cessation of production .....
Production ........................................................
43 CFR 3107.21—Continuation by production
43 CFR 3107.22—Cessation of production .....
43 CFR 3107.2–3—Leases capable of production.
43 CFR 3107.3—Extension for terms of cooperative or unit plan.
43 CFR 3107.3–1—Leases committed to plan ..
43 CFR 3107.23—Leases capable of production.
Extension for terms of agreements .................
43 CFR 3107.3–2—Segregation of leases committed in part.
43 CFR 3107.31—Leases committed to an
agreement.
43 CFR 3107.32—Segregation of leases committed in part.
43 CFR 3107.3–3—20-year lease or any renewal thereof.
Removed ..........................................................
43 CFR 3107.4—Extension by elimination ........
43 CFR 3107.5—Extension of leases segregated by assignment.
43 CFR 3107.5–1—Extension after discovery
on other segregated portions.
43 CFR 3107.5–2—Undeveloped parts of
leases in their extended term.
43 CFR 3107.5–3—Undeveloped parts of producing leases.
43 CFR 3107.6—Extension of reinstated leases
43 CFR 3107.40—Extension by elimination ....
Extension of leases segregated by assignment.
43 CFR 3107.51—Extension after discovery
on other segregated portions.
43 CFR 3107.52—Undeveloped parts of
leases in their extended term.
43 CFR 3107.53—Undeveloped parts of producing leases.
43 CFR 3107.60—Extension of reinstated
leases.
Removed ..........................................................
43 CFR 3107.7—Exchange leases: 20-year
term.
lotter on DSK11XQN23PROD with PROPOSALS2
Substantive changes
43 CFR 3107.8—Renewal leases ......................
Removed ..........................................................
43 CFR 3107.8–1—Requirements .....................
Removed ..........................................................
43 CFR 3107.8–2—Application ..........................
Removed ..........................................................
43 CFR 3107.8–3—Approval .............................
Removed ..........................................................
43 CFR 3107.9—Other types ............................
43 CFR 3107.9–1—Payment of compensatory
royalty.
43 CFR 3107.9–2—Subsurface storage of oil
and gas.
Other types ......................................................
43 CFR 3107.71—Payment of compensatory
royalty.
43 CFR 3107.72—Subsurface storage of oil
and gas.
The proposed rule would add language pertaining to lease extensions to address circumstances where directional or horizontal
wells are drilled from an off-lease location
with the intent to produce from the leased
area.
No significant change.
No significant change.
The proposed rule would rephrase the provision regarding cessation of production to
better reflect section 17(i) of the MLA.
No significant change.
No significant change.
No significant change.
The proposed rule would revise the section
for the segregation of leases committed in
part to units to state this would occur only
after the public interest requirement has
been met; and would clarify when leases
may be extended by production from associated leases.
The proposed rule would remove this section
and all references to renewal leases as this
was removed by the Act of November 15,
1990.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
The proposed rule would remove this section
and all references to exchange leases as
these have either expired or are held by
production.
The proposed rule would remove this section
and all references to renewal leases as this
was removed by the Act of November 15,
1990.
The proposed rule would remove this section
and all references to renewal leases as this
was removed by the Act of November 15,
1990.
The proposed rule would remove this section
and all references to renewal leases as this
was removed by the Act of November 15,
1990.
The proposed rule would remove this section
and all references to renewal leases as this
was removed by the Act of November 15,
1990.
No significant change.
No significant change.
No significant change.
43 CFR SUBPART 3108—RELINQUISHMENT, TERMINATION, CANCELLATION
Existing regulation
Proposed regulation
43 CFR 3108.1—As a lessee, may I relinquish
my lease?.
43 CFR 3108.10—Relinquishment ..................
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Substantive changes
No significant change.
E:\FR\FM\24JYP2.SGM
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47604
Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
43 CFR SUBPART 3108—RELINQUISHMENT, TERMINATION, CANCELLATION—Continued
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3108.2—Termination by operation of
law and reinstatement.
43 CFR 3108.2–1—Automatic termination ........
Termination by operation of law and reinstatement.
43 CFR 3108.21—Automatic termination ........
43 CFR 3108.2–2—Reinstatement at existing
rental and royalty rates: Class I reinstatements.
43 CFR 3108.22—Reinstatement at existing
rental and royalty rates: Class I reinstatements.
43 CFR 3108.2–3—Reinstatement at higher
rental and royalty rates: Class II reinstatements.
43 CFR 3108.23—Reinstatement at higher
rental and royalty rates: Class II reinstatements.
43 CFR 3108.2–4—Conversion of unpatented
oil placer mining claims: Class III reinstatements.
43 CFR 3108.3—Cancellation ...........................
43 CFR 3108.4—Bona fide purchasers .............
43 CFR 3108.5—Waiver or suspension of lease
rights.
Removed ..........................................................
43 CFR 3108.30—Cancellation .......................
43 CFR 3108.40—Bona fide purchasers ........
43 CFR 3108.50 Waiver or suspension of
lease rights.
No significant change.
The proposed rule would remove the reference to ‘‘a bill rendered by the designated
Service office’’ from the section on automatic terminations, since the Office of Natural Resources Revenue’s (ONRR) no
longer sends courtesy notices; and would
specify that the automatic termination provision does not apply when rental becomes
due on a date other than the anniversary
date, unless the lessee fails to pay the rental within the period prescribed by the BLM
notice to reflect developments in case law.
The proposed rule would revise the explanation of ‘‘reasonable diligence’’ to reference payment to the ONRR’s online rental payment system.
The proposed rule would remove the grounds
for a Class II reinstatement to apply to all
noncompetitive leases; would remove references to reinstating leases that terminated before 2005; would change outdated
references to the House Committee on Interior and Insular Affairs to the House Committee on Natural Resources; and would remove the reference to royalty reductions,
which are already covered under 43 CFR
subpart 3103.
The proposed rule would remove this section
as the IRA rescinded the authority for Class
III reinstatements.
No significant change.
No significant change.
No significant change.
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR SUBPART 3109—LEASING UNDER SPECIAL ACTS
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3109.1—Rights-of-way .........................
43 CFR 3109.1–1—Generally ............................
43 CFR 3109.1–2—Application ..........................
Rights-of-way ...................................................
43 CFR 3109.11—Generally ...........................
43 CFR 3109.12—Application .........................
43 CFR 3109.1–3—Notice .................................
43 CFR 3109.1–4—Award of lease or compensatory royalty agreement.
43 CFR 3109.1–5—Compensatory royalty
agreement or lease.
43 CFR 3109.13—Notice .................................
43 CFR 3109.14—Award of lease or compensatory royalty agreement.
43 CFR 3109.15—Compensatory royalty
agreement or lease.
43 CFR 3109.2—Units of the National Park
System.
43 CFR 3109.2–1—Authority to lease. [Reserved].
43 CFR 3109.2–2—Area subject to lease. [Reserved].
43 CFR 3109.3—Shasta and Trinity Units of
the Whiskeytown-Shasta-Trinity National
Recreation Area.
43 CFR 3109.20—Units of the National Park
System.
Removed ..........................................................
No significant change.
No significant change.
The proposed rule would add a requirement
for applicants to provide a map to process
rights-of-way (ROW) lease applications.
No significant change.
No significant change.
The proposed rule would add a list of references to the part 3100 regulations that
apply to ROW leases covered by subpart
3109 for clarity.
No significant change.
No significant change.
Removed ..........................................................
No significant change.
43 CFR 3109.30—Shasta and Trinity Units of
the Whiskeytown-Shasta-Trinity National
Recreation Area.
No significant change.
43 CFR Part 3110—Noncompetitive
Leases
• Removes this part in its entirety as
required by the IRA.
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47605
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR SUBPART 3120—COMPETITIVE LEASES
Existing regulation
Proposed regulation
43 CFR 3120.1—General ..................................
43 CFR 3120.1–1—Lands available for competitive leasing.
43 CFR 3120.1–2—Requirements .....................
43 CFR 3120.1–3—Protests and appeals .........
General ............................................................
43 CFR 3120.11—Lands available for competitive leasing.
43 CFR 3120.12—Requirements ....................
43 CFR 3120.13—Protests ..............................
43
43
43
43
43
3120.2—Lease terms ...........................
3120.2–1—Duration of lease ................
3120.2–2—Dating of leases .................
3120.2–3—Lease size ..........................
3120.3—Nomination process ...............
Lease terms .....................................................
43 CFR 3120.21—Duration of lease ...............
43 CFR 3120.22—Dating of leases .................
43 CFR 3120.23—Lease size .........................
43 CFR 3120.30—Nomination process ...........
43 CFR 3120.3–1—General ..............................
43 CFR 3120.3–2—Filing of a nomination for
competitive leasing.
43 CFR 3120.3–3—Minimum bid and rental remittance.
43 CFR 3120.3–4—Withdrawal of a nomination
43 CFR 3120.31—General ..............................
43 CFR 3120.32—Filing of a nomination for
competitive leasing.
Removed ..........................................................
43 CFR 3120.3–5—Parcels receiving nominations.
43 CFR 3120.3–6—Parcels not receiving nominations.
43 CFR 3120.33—Parcels receiving nominations.
Removed ..........................................................
43 CFR 3120.3–7—Refund ................................
Removed ..........................................................
New ....................................................................
Expressions of interest ....................................
New ....................................................................
43 CFR 3120.41—Process ..............................
New ....................................................................
43 CFR 3120.42—Agency Inventory of Leasing.
43 CFR
sale.
43 CFR
43 CFR
43 CFR
43 CFR
tion.
43 CFR
3120.4—Notice of competitive lease
Notice of competitive lease sale ......................
The proposed rule would update this section
to remove the allowance for noncompetitive
lease offers to be submitted on
unnominated parcels.
The proposed rule would update this section
to make clear that nominations are nonbinding.
The proposed rule would add information on
the submission of EOIs; and would add a
new filing fee for EOIs, as required by the
IRA.
The proposed rule would clarify the BLM’s existing discretion to deny EOIs that are not in
the public interest.
The proposed rule would add a section providing that periodically the BLM will calculate the acreage for which EOIs have
been submitted in the previous year and
the total acreage offered for lease.
No significant change.
3120.4–1—General ..............................
3120.4–2—Posting of notice ................
3120.5—Competitive sale .....................
3120.5–1—Oral or Internet-based auc-
43 CFR 3120.51 General ................................
43 CFR 3120.52—Posting timeframes ............
Competitive auction .........................................
43 CFR 3120.61—Competitive auction ...........
No
No
No
No
3120.5–2—Payments required .............
43 CFR 3120.62—Payments required ............
43 CFR 3120.5–3—Award of lease ...................
43 CFR 3120.6—Parcels not bid on at auction
43 CFR 3120.63—Award of lease ...................
43 CFR 3120.70—Parcels not bid on at auction.
Future interest ..................................................
43 CFR 3120.81—Nomination or Expression
of Interest to make lands available for competitive lease.
The proposed rule would increase the minimum bonus bid from $2 per acre to $10
per acre, or fraction thereof as required by
the IRA; and would add a new requirement
that, if a person or entity does not pay the
minimum monies owed the day of the sale,
the BLM may refer that person or entity to
the DOI’s Office of the Inspector General,
Administrative Remedies Division, for appropriate action, including potential suspension and debarment.
No significant change.
No significant change.
CFR
CFR
CFR
CFR
CFR
43 CFR 3120.7—Future interest ........................
43 CFR 3120.7–1—Nomination to make lands
available for competitive lease.
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Substantive changes
Removed ..........................................................
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No significant change.
No significant change.
No significant change.
The proposed rule would update the language
under protests and appeals to reflect developments in case law.
No significant change.
No significant change.
No significant change.
No significant change.
The proposed rule would update the nomination process to make clear that they are
nonbinding, would add a new filing fee, and
would remove the allowance for noncompetitive lease offers to be submitted on
unnominated parcels.
No significant change.
No significant change.
The proposed rule would update this section
to make nominations nonbinding.
The proposed rule would update this section
to make clear that nominations are nonbinding.
No significant change.
significant
significant
significant
significant
change.
change.
change.
change.
No significant change.
No significant change.
E:\FR\FM\24JYP2.SGM
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
43 CFR SUBPART 3120—COMPETITIVE LEASES—Continued
Existing regulation
Proposed regulation
43 CFR 3120.7–2—Future interest terms and
conditions.
43 CFR 3120.7–3—Compensatory royalty
agreements.
Substantive changes
43 CFR 3120.82—Future interest terms and
conditions.
43 CFR 3120.83—Compensatory royalty
agreements.
No significant change.
No significant change.
43 CFR SUBPART 3137—UNITIZATION AGREEMENTS-NATIONAL PETROLEUM RESERVE-ALASKA
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3137.23—What must I include in my
NPR–A unitization application?
43 CFR 3137.61—How do I change unit operators?
43 CFR 3137.23—NPR–A unitization application.
43 CFR 3137.61—Change in unit operators ...
The proposed rule would add a new filing fee
for unit applications.
The proposed rule would add a new filing fee
for successor operators.
43 CFR SUBPART 3138—SUBSURFACE STORAGE AGREEMENTS IN THE NATIONAL PETROLEUM RESERVE-ALASKA (NPR–
A)
Existing regulation
Proposed regulation
43 CFR 3138.11—How do I apply for a subsurface storage agreement?
Substantive changes
43 CFR 3138.11—Applications for a subsurface storage agreement.
The proposed rule would add a new filing fee
for subsurface storage agreements.
43 CFR SUBPART 3140—CONVERSION OF EXISTING OIL AND GAS LEASES AND VALID CLAIMS BASED ON MINERAL
LOCATIONS
Existing regulation
Proposed regulation
Substantive changes
3140.0–1—Purpose ..............................
3140.0–3—Authority .............................
3140.0–5—Definitions ..........................
3140.1—General provisions .................
3140.1–1—Existing rights .....................
43 CFR 3140.1—Purpose ...............................
43 CFR 3140.3—Authority ...............................
43 CFR 3140.5—Definitions ............................
General provisions ...........................................
43 CFR 3140.11—Existing rights ....................
43 CFR 3140.1–2—Notice of intent to convert ..
43 CFR 3140.1–3—Exploration plans ................
43 CFR 3140.1–4—Other provisions .................
43 CFR 3140.12—Notice of intent to convert
43 CFR 3140.13—Exploration plans ...............
43 CFR 3140.14—Other provisions ................
43 CFR 3140.2—Applications ............................
43 CFR 3140.2–1—Forms .................................
43 CFR 3140.2–2—Who may apply ..................
43 CFR 3140.2–3—Application requirements ....
43 CFR 3140.3—Time limitations ......................
43 CFR 3140.3–1—Conversion applications .....
43 CFR 3140.3–2—Action on an application .....
43 CFR 3140.4—Conversion .............................
43 CFR 3140.4–1—Approval of plan of operations (and unit and operating agreements).
43 CFR 3140.4–2—Issuance of the combined
hydrocarbon lease.
43 CFR 3140.5—Duration of the lease ..............
43 CFR 3140.6—Use of additional lands ..........
43 CFR 3140.7—Lands within the National
Park System.
Applications ......................................................
43 CFR 3140.21—Forms .................................
43 CFR 3140.22—Who may apply ..................
43 CFR 3140.23—Application requirements ...
Time limitations ................................................
43 CFR 3140.31—Conversion applications ....
43 CFR 3140.32—Action on an application ....
Conversion .......................................................
43 CFR 3140.41—Approval of plan of operations (and unit and operating agreements).
43 CFR 3140.42—Issuance of the combined
hydrocarbon lease.
43 CFR 3140.50—Duration of the lease .........
43 CFR 3140.60—Use of additional lands ......
43 CFR 3140.70—Lands within the National
Park System.
No significant change.
No significant change.
No significant change.
No significant change
The proposed rule would clarify that the application time period ended on November 15,
1983.
No significant change.
No significant change.
The proposed rule would specify that royalty
rate reductions for tar sands would not
apply to oil and gas leases and vice versa.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
43
43
43
43
43
CFR
CFR
CFR
CFR
CFR
No significant change.
No significant change.
No significant change.
No significant change.
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR SUBPART 3141—LEASING IN SPECIAL TAR SAND AREAS
Existing regulation
Proposed regulation
43 CFR 3141.0–1—Purpose ..............................
43 CFR 3141.0–3—Authority .............................
43 CFR 3141.0–5—Definitions ..........................
43 CFR 3141.0–8—Other Applicable Regulations.
43 CFR 3141.1—General ..................................
43 CFR 3141.2—Prelease exploration within
Special Tar Sand Areas.
43 CFR 3141.1—Purpose ...............................
43 CFR 3141.3—Authority ...............................
43 CFR 3141.5—Definitions ............................
43 CFR 3141.8—Other Applicable Regulations.
43 CFR 3141.10—General ..............................
Prelease exploration within Special Tar Sand
Areas.
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Substantive changes
No
No
No
No
significant
significant
significant
significant
change.
change.
change.
change.
No significant change.
No significant change.
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
47607
43 CFR SUBPART 3141—LEASING IN SPECIAL TAR SAND AREAS—Continued
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3141.2–1—Geophysical exploration .....
43 CFR 3141.2–2—Exploration licenses ...........
43 CFR 3141.3—Land use plans ......................
43 CFR 3141.21—Geophysical exploration ....
43 CFR 3141.22—Exploration licenses ...........
43 CFR 3141.30—Land use plans ..................
43 CFR 3141.4—Consultation ...........................
43 CFR 3141.4–1—Consultation with the Governor.
43 CFR 3141.4–2—Consultation with others .....
43 CFR 3141.5—Leasing procedures ................
43 CFR 3141.5–1—Economic evaluation ..........
43 CFR 3141.5–2—Term of lease .....................
43 CFR 3141.5–3—Royalties and rentals .........
43 CFR 3141.5–4—Lease size ..........................
43 CFR 3141.5–5—Dating of lease ...................
43 CFR 3141.6—Sale procedures .....................
43 CFR 3141.6–1—Initiation of competitive
lease offering.
43 CFR 3141.6–2—Publication of a notice of
competitive lease offering.
43 CFR 3141.6–3—Conduct of sales ................
43 CFR 3141.6–4—Qualifications ......................
43 CFR 3141.6–5—Fair market value for combined hydrocarbon leases.
Consultation .....................................................
43 CFR 3141.41—Consultation with the Governor.
43 CFR 3141.42—Consultation with others ....
Leasing procedures .........................................
43 CFR 3141.51—Economic evaluation .........
43 CFR 3141.52—Term of lease ....................
43 CFR 3141.53—Royalties and rentals .........
43 CFR 3141.54—Lease size .........................
43 CFR 3141.55—Dating of lease ..................
Sale procedures ...............................................
43 CFR 3141.61—Initiation of competitive
lease offering.
43 CFR 3141.62—Publication of a notice of
competitive lease offering.
43 CFR 3141.63—Conduct of sales ................
43 CFR 3141.64—Qualifications .....................
43 CFR 3141.65—Fair market value for combined hydrocarbon leases.
No significant change.
No significant change.
The proposed rule would specify that royalty
rate reductions for tar sands would not
apply to oil and gas leases and vice versa.
No significant change.
No significant change.
43 CFR 3141.6–6—Rejection of bid ..................
43 CFR 3141.6–7—Consideration of next highest bid.
43 CFR 3141.7—Award of lease .......................
43 CFR 3141.65—Rejection of bid ..................
43 CFR 3141.66—Consideration of next highest bid.
43 CFR 3141.70—Award of lease ...................
No
No
No
No
No
No
No
No
No
significant
significant
significant
significant
significant
significant
significant
significant
significant
change.
change.
change.
change.
change.
change.
change.
change.
change.
No significant change.
No significant change.
No significant change.
The proposed rule would remove this section
as it is not needed with the changes to
§ 3141.63.
No significant change.
No significant change.
No significant change.
43 CFR SUBPART 3142—PAYING QUANTITIES/DILIGENT DEVELOPMENT FOR COMBINED HYDROCARBON AND TAR SAND
LEASES
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3142.0–1—Purpose ..............................
43 CFR 3142.0–3—Authority .............................
43 CFR 3142.0–5—Definitions ..........................
43 CFR 3142.1—Purpose ...............................
43 CFR 3142.3—Authority ...............................
43 CFR 3142.5—Definitions ............................
43 CFR 3142.1—Diligent development ..............
43 CFR 3142.2—Minimum production levels ....
43 CFR 3142.2–1—Minimum production schedule.
43 CFR 3142.2–2—Advance royalties in lieu of
production.
43 CFR 3142.3—Expiration ...............................
43 CFR 3142.10—Diligent development .........
Minimum production levels ..............................
43 CFR 3142.21—Minimum production
schedule.
43 CFR 3142.22—Advance royalties in lieu of
production.
43 CFR 3142.30—Expiration ...........................
No significant change.
No significant change.
Added definitions for production in paying
quantities.
No significant change.
No significant change.
No significant change.
No significant change.
No significant change.
lotter on DSK11XQN23PROD with PROPOSALS2
43 CFR SUBPART 3151—EXPLORATION OUTSIDE OF ALASKA
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3151.1—Notice of intent to conduct oil
and gas geophysical exploration operations.
43 CFR 3151.10—Notice of intent to conduct
oil and gas geophysical exploration operations.
43 CFR 3151.2—Notice of completion of operations.
New ....................................................................
43 CFR 3151.20—Notice of completion of operations.
43 CFR 3151.30—Collection and submission
of data.
The proposed rule would require notices of intent to include the filing fee required by 43
CFR 3000.120 in order to be to consider a
Notice of Intent to Conduct Oil and Gas Exploration Operations properly filed.
No significant change.
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The proposed rule would add a new requirement for the permittee to provide the BLM
with all data and information obtained in
carrying out the exploration plan, matching
the requirement for geophysical exploration
permits in Alaska.
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47608
Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
43 CFR SUBPART 3160—ONSHORE OIL AND GAS OPERATIONS: GENERAL
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3160.0–5—Definitions ..........................
43 CFR 3160.0–5—Definitions ........................
The proposed rule would add definitions for
‘‘shut-in well’’ and ‘‘temporarily abandoned
well.’’
43 CFR SUBPART 3162—REQUIREMENTS FOR OPERATING RIGHTS OWNERS AND OPERATORS
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3162.3–4—Well abandonment .............
43 CFR 3162.3–4—Well abandonment ...........
The proposed rule would add a cap for temporarily abandoning a well and new requirements for shut-in wells to reduce the liability
to the public.
43 CFR SUBPART 3165—RELIEF, CONFLICTS, AND APPEALS
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3165.1—Relief from operating and producing requirements.
43 CFR 3165.1—Relief from operating and/or
producing requirements.
The proposed rule would clarify that the BLM
would not grant lease suspensions based
solely on an APD filed at the end of a
lease’s life cycle and would ensures that
any suspension is justified and tied to an
end date.
43 CFR 3171—APPROVAL OF OPERATIONS
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3171.6—Components of a complete
APD package.
43 CFR 3171.6—Components of a complete
APD package.
43 CFR 3171.14—Valid Period of Approved
APD.
43 CFR 3171.14—Valid Period of Approved
APD.
The proposed rule would avoid the need to incorporate by reference the National Spatial
Reference System, North American Datum
1983.
The proposed rule would change the validity
period for an APD from 2 years to 3 years
and would removes the potential for an extension of an APD.
43 CFR 3186—MODEL FORMS
Existing regulation
Proposed regulation
Substantive changes
43 CFR 3186.2—Model Collective Bond ...........
Removed ..........................................................
The proposed rule would remove this section
in its entirety due to changes made under
3104.
VII. Procedural Matters
lotter on DSK11XQN23PROD with PROPOSALS2
A. Regulatory Planning and Review
(E.O. 12866, E.O. 13563)
Executive Order 12866 provides that
the Office of Information and Regulatory
Affairs (OIRA) within the OMB will
review all significant rules. The OIRA
has determined that this proposed rule
is economically significant.
Executive Order 13563 reaffirms the
principles of Executive Order 12866
while calling for improvements in the
Nation’s regulatory system to promote
predictability, to reduce uncertainty,
and to use the best, most innovative,
and least burdensome tools for
achieving regulatory ends. The
Executive Order directs agencies to
VerDate Sep<11>2014
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Jkt 259001
consider regulatory approaches that
reduce burdens and maintain flexibility
and freedom of choice for the public
where these approaches are relevant,
feasible, and consistent with regulatory
objectives. Executive Order 13563
emphasizes further that regulations
must be based on the best available
science and that the rulemaking process
must allow for public participation and
an open exchange of ideas. We have
developed this rule in a manner
consistent with these requirements.
This proposed rule would replace the
BLM’s current rules governing oil and
gas leasing, which are contained in 43
CFR 3100 through 3140, and revise
some oil and gas operations, which are
contained in 43 CFR 3160 and 3171.
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The BLM developed this proposed rule
in a manner consistent with the
requirements in Executive Order 12866
and Executive Order 13563.
The BLM reviewed the requirements
of the proposed rule and determined
that it would not adversely affect in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or Tribal
governments or communities. For more
detailed information, see the RIA
prepared for this proposed rule. The
RIA has been posted in the docket for
the proposed rule on the Federal
eRulemaking Portal: https://
www.regulations.gov. In the Searchbox,
enter ‘‘RIN 1004–AE80’’, click the
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
existing Federal oil and gas leases is
estimated to be 476,687 in that industry.
lotter on DSK11XQN23PROD with PROPOSALS2
‘‘Search’’ button, open the Docket
Folder, and look under Supporting
Documents.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) requires that
Federal agencies prepare a regulatory
flexibility analysis for rules subject to
the notice-and-comment rulemaking
requirements under the Administrative
Procedure Act (5 U.S.C. 500 et seq.), if
the rule would have a significant
economic impact, whether detrimental
or beneficial, on a substantial number of
small entities. See 5 U.S.C. 601–612.
Congress enacted the RFA to ensure that
government regulations do not
unnecessarily or disproportionately
burden small entities. Small entities
include small businesses, small
governmental jurisdictions, and small
not-for-profit enterprises.
The BLM reviewed the SBA size
standards for small businesses and the
number of entities fitting those size
standards as reported by the U.S.
Census Bureau in the Economic Census.
The number of small businesses in
states where there are existing Federal
oil and gas leases is estimated to be
20,975 for the Crude Petroleum
Extraction and Natural Gas Extraction
industries (NAICS codes 211120 and
21130, respectively). The BLM
concludes that the proposed bonding
requirement changes might increase
challenges when securing bonds,
especially for small businesses. This
will increase the cost for business on
Federal onshore oil and gas leases and
might provide some incentives to shift
leasing and operations to State or
private lands. The cost of securing
bonds may have a disproportionately
larger impact on small businesses
because it results in a larger percentage
of the companies’ net revenue.
However, because the bonds would cost
an estimated 1 to 3.5 percent of the
bond value (one bonding agency
reported that over 70 percent of their
small-business customers paid 2 percent
or less on their surety bond premiums)
the annual cost to secure a bond would
not be material (see https://
www.insureon.com/small-businessinsurance/surety-bonds/cost).
Finally, the rule would have a
distributional and positive impact on
the Direct Property and Casualty
Insurance Carriers Industry (NAICS
524126). Additional premiums would
be paid by lessees in the oil and natural
gas extraction industries to surety
companies who would be providing the
coverage to meet the proposed
requirements. The number of small
businesses in states where there are
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17:27 Jul 21, 2023
Jkt 259001
C. Congressional Review Act
Based upon the economic analysis,
this proposed rule is not a major rule
under 5 U.S.C. 804(2), the Congressional
Review Act. This proposed rule:
(a) Would not have an annual effect
on the economy of $100 million or
more.
(b) Would not cause a major increase
in costs or prices for consumers,
individual industries, Federal, State, or
local government agencies, or
geographic regions.
(c) Would not have significant adverse
effects on competition, employment,
investment, productivity, innovation, or
the ability of U.S. based enterprises to
compete with foreign based enterprises.
D. Unfunded Mandates Reform Act
(UMRA)
The proposed rule would not have a
significant or unique effect on State,
local, or tribal governments or the
private sector. The proposed rule
contains no requirements that would
apply to State, local, or tribal
governments. The proposed rule would
revise requirements that would
otherwise apply to the private sector
participation in a voluntary Federal
program. The costs that the proposed
rule would impose on the private sector
are below the monetary threshold
established at 2 U.S.C. 1532(a). A
statement containing the information
required by the Unfunded Mandates
Reform Act (UMRA) (2 U.S.C. 1531 et
seq.) is therefore not required for the
proposed rule. This proposed rule is
also not subject to the requirements of
section 203 of UMRA because it
contains no regulatory requirements that
might significantly or uniquely affect
small governments, because it contains
no requirements that apply to such
governments, nor does it impose
obligations upon them.
E. Governmental Actions and
Interference With Constitutionally
Protected Property Right—Takings
(Executive Order 12630)
This proposed rule would not affect a
taking of private property or otherwise
have taking implications under
Executive Order 12630. A takings
implication assessment is not required.
The proposed rule would replace the
BLM’s current rules governing oil and
gas leasing, which are contained in 43
CFR 3100 through 3140, and some oil
and gas operations, which are contained
in 43 CFR 3160 and 3171. Therefore, the
proposed rule would impact future
leases on Federal land; however, it
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would not impact current leases. All
other terms in the regulations are not
considered a taking of private property
as such operations are subject to the
existing lease terms which expressly
require that subsequent lease activities
be conducted in compliance with
subsequently adopted Federal laws and
regulations.
This proposed rule conforms to the
terms of the existing leases and
applicable statutes and, as such, the rule
is not a government action capable of
interfering with constitutionally
protected property rights. Therefore, the
BLM has determined that the rule
would not cause a taking of private
property or require further discussion of
takings implications under Executive
Order 12630.
F. Federalism (Executive Order 13132)
Under the criteria in section 1 of
Executive Order 13132, this proposed
rule does not have sufficient federalism
implications to warrant the preparation
of a federalism summary impact
statement. A federalism impact
statement is not required.
The proposed rule would not have a
substantial direct effect on the States, on
the relationship between the Federal
Government and the States, or on the
distribution of power and
responsibilities among the levels of
government. It would not apply to
States or local governments or State or
local governmental entities. The rule
would affect the relationship between
operators, lessees, and the BLM, but it
does not directly impact the States.
Therefore, in accordance with Executive
Order 13132, the BLM has determined
that this proposed rule does not have
sufficient federalism implications to
warrant preparation of a Federalism
Assessment.
G. Civil Justice Reform (Executive Order
12988)
This proposed rule complies with the
requirements of Executive Order 12988.
More specifically, this proposed rule
meets the criteria of section 3(a), which
requires agencies to review all
regulations to eliminate errors and
ambiguity and to write all regulations to
minimize litigation. This proposed rule
also meets the criteria of section 3(b)(2),
which requires agencies to write all
regulations in clear language with clear
legal standards.
H. Consultation and Coordination With
Indian Tribal Governments (Executive
Order 13175 and Departmental Policy)
The Department strives to strengthen
its government-to-government
relationship with Indian Tribes through
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a commitment to consultation with
Indian Tribes and recognition of their
right to self-governance and tribal
sovereignty.
The BLM evaluated this proposed rule
under the Department’s consultation
policy and under the criteria in
Executive Order 13175 to identify
possible effects of the rule on federally
recognized Indian Tribes. Since the
proposed changes to leasing only apply
to Federal lands, the proposed rule will
not impact the leasing of Indian
minerals.
In August of 2021, the BLM sent a
letter to each registered Tribe informing
them of certain rulemaking efforts,
including the development of this
proposed rule. The letter offered Tribes
the opportunity for individual
government-to-government consultation
regarding the proposed rule. The
opportunity for tribal consultation will
remain open throughout the rulemaking
process.
I. Paperwork Reduction Act
The Paperwork Reduction Act (PRA)
(44 U.S.C. 3501–3521) generally
provides that an agency may not
conduct or sponsor, and not
withstanding any other provision of law
a person is not required to respond to,
a collection of information, unless it
displays a currently valid OMB control
number. Collections of information
include any request or requirement that
persons obtain, maintain, retain, or
report information to an agency, or
disclose information to a third party or
to the public (44 U.S.C. 3502(3) and 5
CFR 1320.3(c)).
This proposed rule contains
information-collection requirements
that are subject to review by OMB under
the PRA. OMB has generally approved
the existing information collection
requirements contained in the
regulations that would be affected by
this proposed rule under the following
OMB Control Numbers:
• 43 CFR 3100, 3120, and Subpart
3162—OMB Control Number 1004–
0185;
• 43 CFR 3106—OMB Control
Number 1004–0034;
• 43 CFR part 3130—OMB Control
Number 1004–0196;
• 43 CFR 3150—OMB Control
Number 1004–0162; and
• 43 CFR 3160—OMB Control
Number 1004–0137.
The BLM plans to transfer the
information collection requirements
contained in 43 CFR 3106 from OMB
control number 1004–0034 to OMB
Control Number 1004–0185 in order to
keep similar information collections
requirements together under the same
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OMB Control Number. Additionally, the
BLM plans to transfer information
collection requirements contained in 43
CFR 3160 from OMB Control Number
1004–0137 to a new OMB Control
Number. The new and revised
information collection requirements are
discussed as follows, along with the
resulting changes in public burdens.
1. Proposed Changes Impacting
Information Collections Formerly Under
OMB Control Number 1004–0137
The proposed rule would result in
new information collection
requirements that would require OMB
approval under a new OMB control
number (formerly 1004–0137). This
proposed rule is estimated to result in
33,121 annual responses, 252,928
annual burden hours, $35,400,000 nonhour cost burdens under this new OMB
Control Number.
The proposed new information
collection requirements are described as
follows.
43 CFR 3162.3–4—Well
Abandonment. The BLM is proposing to
modify paragraph (c) to include that no
well may be temporarily abandoned
unless the operator provides adequate
and detailed justifications, verifies the
mechanical integrity of the wells, and
isolates the completed interval(s). The
BLM proposes to add a new paragraph
(d) outlining new requirements for
operators of shut-in wells. Paragraph
(d)(1) provides for notification of the
well’s shut-in status and shut-in date
within 90 days of shut in. Paragraph
(d)(2) provides for the verification of the
mechanical integrity of the well and
confirmation that the well remains
capable of producing in paying
quantities within 3 years. When a well
remains in a shut-in status by the fourth
year, as outlined in paragraph (d)(3), the
operator must either: (i) permanently
abandon the well; (ii) resume
production; or (iii) provide a detailed
plan and timeline for the beneficial use
for the well. The BLM may grant
additional delays provided the operator
submits information that confirms the
use and is making progress on returning
the well to a beneficial use. The new
information collection requirements
would include:
• Justification for Temporary Well
Abandonment—43 CFR 3162.3–4(c);
• Abandon Well Shut-in Status—43
CFR 3162.3–4(d);
• Verification of Mechanical
Integrity—43 CFR 3162.3–4(d)(2); and
• Plan and Timeline for Future
Beneficial Use—43 CFR 3162.3–
4(d)(3)(iii).
The BLM believes these new
requirements with yearly interval
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checks will help operators stay on top
of shut-in wells, thus preventing them
from becoming orphaned in the future.
The addition of these information
collection requirements would result in
an addition of 5,000 annual responses,
44,000 annual burden hours.
Currently, there are 301,663 annual
responses, 1,835,888 annual burden
hours, and $31,080,000 annual nonhour cost burdens inventoried under the
OMB Control Number 1004–0137. This
rule will create a new OMB Control
Number and removes 28,121 annual
responses, 208,298 annual burden
hours, and $31,080,000 annual nonhour cost burdens inventoried under
OMB Control Number 1004–0137 into
this OMB Control Number.
In addition, there is an adjustment of
$4.3 million in annual non-hour cost
burdens (from $31 million to 35.4
million). This adjustment results from
the annual inflation adjustment of filing
fees and do not result from the proposed
rule. The resulting new estimated total
burdens for this new OMB Control
Number are provided as follows.
Title of Collection: Onshore Oil and
Gas Operations and Production (43 CFR
parts 3160 and 3170).
OMB Control Number: 1004–NEW.
Form Numbers: BLM Form 3160–003;
BLM Form 3160–004; and BLM Form
3160–005 (these forms will not change).
Type of Review: Revision of a
currently approved collection of
information.
Respondents/Affected Public: Oil and
gas operators on public lands and some
Indian lands.
Total Estimated Number of Annual
Respondents: 7,500.
Total Estimated Number of Annual
Responses: 33,121.
Estimated Completion Time per
Response: Varies from 4 to 32 hours,
depending on activity.
Total Estimated Number of Annual
Burden Hours: 252,928.
Respondent’s Obligation: Required to
obtain or retain a benefit.
Frequency of Collection: On occasion;
One-time; and Monthly.
Annual Burden Cost: $35,400,000.
2. Proposed Changes Impacting OMB
Control Number 1004–0162
Currently, there are 68 annual
responses, 26 annual burden hours, and
$25 annual non-hour cost burdens
inventoried under OMB Control
Number 1004–0162. It is not anticipated
that the proposed rule will change the
results to the annual responses, annual
burden hours, or non-hour cost burdens
under this OMB Control Number. The
proposed revised information collection
requirement is described as follows.
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43 CFR 3151.3—Collection and
submission of data. The proposed rule
would add a new requirement for the
permittee to provide the BLM with all
data and information obtained in
carrying out the exploration plan,
matching the requirement for
geophysical exploration permits in
Alaska. This does not change the
existing burden for what applicants
need to submit to the BLM for acquiring
a geophysical exploration permit.
Title of Collection: Onshore
Geophysical Exploration (43 CFR part
3150 and 36 CFR parts 228 and 251).
OMB Control Number: 1004–0162.
Form Number: BLM 3150–4/FS 2800–
16; BLM 3150–5/FS 2816a (these forms
will not change).
Type of Review: Revision of a
currently approved collection of
information.
Respondents/Affected Public: The
respondents for this collection of
information are businesses that seek to
conduct geophysical exploration on
Federal lands.
Respondent’s Obligation: Required to
Obtain or Retain a Benefit.
Frequency of Collection: On occasion.
Estimated Completion Time per
Response: Varies from 20 minutes to 1
hour, depending on activity.
Number of Respondents: 68.
Annual Responses: 68.
Annual Burden Hours: 26.
Annual Burden Cost: $1,150.
3. Proposed Changes Impacting OMB
Control Number 1004–0185
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Currently, there are 9,132 annual
responses, 37,695 annual burden hours,
and $751,415 annual non-hour cost
burdens inventoried under OMB
Control Number 1004–0185. This
proposed rule is estimated to result in
16,340 annual responses, 29,410 annual
burden hours, $1,793,159, non-hour cost
burdens under this OMB Control
Number. The proposed rule would
result in new, revised, and removed
information collection requirements.
Additionally, as discussed earlier, the
BLM will also be transferring certain
information collection requirements,
along with the associated burdens from
OMB Control Number 1004–0034 to
OMB Control Number 1004–0185. These
proposed changes are discussed as
follows.
Revised Information Collection
Requirements
43 CFR 3100.31(b)—Option
Enforceability. The proposed rule
revises this requirement to clarify that a
statement of the number of acres and the
type and percentage of interest to be
conveyed and retained by the parties to
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the option must be submitted for an
option or renewal to be enforceable.
This does not change the burden
requirement. The existing regulation
already states the interest to be
conveyed and retained in exercise of the
option. The BLM needs to understand if
the type of interest is referring to record
title or operating rights and the
percentage to be conveyed and retained
by the option holder.
43 CFR 3105.21—Where to File
Communitization Agreements. The
proposed rule removes the triplicate
filing requirement. The proposed rule
adds a new paragraph (b) to this section
to require that all applications to form
a CA be filed with a statement as to
whether the proposed CA deviates from
the BLM’s current model CA form, and
a certification that the applicant
received the required signatures.
Further, all applications to form a CA
shall include an Exhibit A displaying a
map of the agreement and the separate
agreement tracts and all applications to
form a CA shall include an Exhibit B
displaying the separate tracts and
ownership. The new paragraph (c) states
that all applications to form a CA
should be submitted at least 90 calendar
days prior to first production to ensure
correct reporting to the ONRR. These
requirements codify existing policy
requirements and does not change the
existing burden for what applicants to
submit to the BLM. The information is
needed to understand all the parties that
share in the production of a well due to
State spacing orders.
43 CFR 3105.31—Where to file
Operating, Drilling or Development
Contracts. The proposed rule would
remove the requirement for five copies
of an operating, drilling or development
contract to be submitted when these
contracts are submitted to the BLM for
approval. This reduces the burden to
respondents.
43 CFR 3105.40—Subsurface storage
application (formerly 3105.5). The
proposed rule would designate the
existing 43 CFR 3105.5 for gas storage
agreements to the proposed numbering
43 CFR 3105.40. This redesignation
would be due to the elimination of the
section on the combination for joint
operations or for transportation of oil.
The proposed rule would update
paragraph (a) to include designation of
successor operators for gas storage
agreements among the applications to be
filed in the proper BLM office. The
proposed rule would update paragraph
(b) to remove the requirement for five
copies of a gas storage agreements to be
submitted when these are filed with the
BLM. A new paragraph (c) would
require that all applications for a gas
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storage agreement or a designation of a
successor operator must include the
new processing fee found in the fee
schedule in 43 CFR 3000.120. The new
processing fee is intended to reimburse
the BLM for processing the applications.
43 CFR 3105.50—Consolidation of
Leases (formerly 3105.6). Leases may be
consolidated upon written request of the
lessee filed with the proper BLM
identify each lease involved by serial
number and shall explain the factors
that justify the consolidation and
requires that each request for a
consolidation of leases the processing
fee found in the fee schedule in 43 CFR
3000.120. The proposed rule splits the
single paragraph under this section into
several paragraphs for clarity, however
these are not new requirements and do
not change the existing burden.
43 CFR 3106.81—Heirs and devisees.
The proposed updates this information
collection requirement to state that the
lease interest will be transferred to the
heirs, devisees, executor or
administrator of the estate, as
appropriate, upon the filing of a court
order, death certificate, or other legal
document demonstrating that transferee
is to be recognized as the successor of
the deceased. These requirements codify
existing policy requirements and does
not change the existing burden for what
applicants currently submit to the BLM
to show proof on how the lease interest
transferred to another party.
43 CFR 3106.82—Change of name.
The current regulation requires a notice
of the name change to be accompanied
by a list of the serial numbers of the
leases affected by the name change. This
requirement is removed as it is outdated
and unenforceable. This lessens the
burden to respondents. In practice, the
BLM generates a report of the leases
affected by the name change and returns
that list to the lessee with a notice that
recognizes the name change that
occurred through operation of law. This
section is updated to require that, for a
corporate name change, the request
should include the Secretary of State’s
Certificate of Name Change along with
the Articles of Incorporation, or
Amendment, if available. This is
consistent with the BLM’s current
approach for processing these types of
documents. These requirements codify
existing policy requirements and do not
change the existing burden for what
applicants currently submit to the BLM
to show proof on how the lease interest
transferred to another party.
43 CFR 3106.83—Corporate mergers
and dissolution of corporations,
partnerships and trust. The proposed
rule updates the title of this section
from ‘‘Corporate merger’’ to ‘‘Corporate
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mergers and dissolution of corporations,
partnerships and trust.’’ The goal of the
renaming of this section is to
incorporate these other types of
transfers that have the same process.
The current regulation requires a
notification of merger to be
accompanied by a list of the serial
numbers of the leases affected by the
merger. This requirement is eliminated
as it is outdated and unenforceable. This
lessens the burden to respondents. In
practice, the BLM does not rely on a list
of leases provided by a lessee and
instead generates its own report of the
leases affected by the merger. The BLM
returns that list to the lessee with a
notice that recognizes the merger that
occurred through operation of State law.
This section is updated to require that,
for a merger, the request should include
the Secretary of State’s Certificate of
Merger along with the Articles of
Incorporation, or Amendment, if
available. This is consistent with the
BLM’s current approach for processing
these types of documents. These
requirements codify existing policy
requirements and do not change the
existing burden for what applicants
currently submit to the BLM to show
proof on how the lease interest
transferred to another party.
43 CFR 3108.23—Reinstatement at
higher rental and royalty rates: Class II
reinstatements. The proposed rule
would eliminate the existing paragraph
(b)(1) in its entirety. This provision
addresses the timeliness of Class II
reinstatement petitions for leases that
terminated on or before August 8, 2005,
and is no longer applicable. This does
not change an existing burden since a
petition to reinstate a lease that
terminated on or before August 8, 2005,
would have already been received by an
applicant.
43 CFR 3109.12—Application. The
proposed rule also adds a new
requirement that the applicant must
include a map of the applicable lands
which will support the bidding process
related to the lease or compensatory
royalty agreement. These requirements
codify existing policy requirements and
does not change the existing burden for
what applicants to submit to the BLM.
New Information Collection
Requirements
43 CFR 3106.84—Sheriff’s sale/deed.
The proposed rule adds a new section
under other types of transfers to include
sheriff’s sales. The BLM accepts these
types of transfers to recognize lease
interests transferred to other parties
through foreclosure actions. The
proposed rule states that where a notice
of sale of the leasehold interest is
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published pursuant to State law
applicable to the execution of sales of
real property, the purchaser shall
submit a copy of the Sheriff’s Certificate
of Sale after any redemption period has
passed to the proper BLM office.
Additional paragraphs under this new
section include a filing fee requirement,
a qualification statement, and bonding
requirements. These requirements are
consistent with the BLM’s current
approach for processing these types of
documents. These documents are
already submitted and recognized by the
BLM when changes in ownership of
interests in Federal oil and gas leases
occur without any intention by the
holder of interest to assign or transfer
interest. The addition of this
information collection would result in
an addition of 1 annual response, 1
annual burden hour, and $55.80 annual
non-hour cost burdens.
43 CFR 3120.43—Expression of
Interest. The proposed rule adds a new
section titled ‘‘Expression of Interest’’ to
codify the current process of receiving
EOIs for competitive leasing to the
BLM’s online leasing system. An
expression of interest is a description of
lands that an applicant seeks to include
in a competitive auction. The
expression must provide a description
of the lands identified by legal land
description and identify the U.S.
mineral ownership percentage. The
addition of this information collection
would result in an addition of 395,864
annual responses (calculated by acreage
received), 3,958,640 annual burden
hours (to process the acreage received),
and $220,892,112 annual non-hour cost
burdens.
Removed Information Collection
Requirements
43 CFR 3101.26—Ad-Hoc Acreage
Statement. At any time, the BLM may
require a lessee or operator to file a
statement showing as of the specified
date, the serial number and the date of
each lease in which he/she has any
interest, in the particular State, setting
forth the acreage covered thereby. The
BLM uses the information to determine
whether or not a lessee is in compliance
with the law with respect to statutory
acreage limitations. This revision results
in the reduction of 1 response and 1
burden hour, annually.
43 CFR 3105.4—Combination for joint
operations or for transportation of oil.
The proposed rule eliminates the
section on the combination for joint
operations or for transportation of oil.
These provisions are not used by the
BLM or operators and are outdated. This
revision results in the reduction of 1
response and 1 burden hour, annually.
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43 CFR 3107.8—Renewal leases. The
proposed rule eliminates the provisions
on renewal leases in their entirety
because they are outdated. Renewal
leases that had an expiration date after
November 15, 1990, were eligible for
one last renewal under the provisions of
the November 15, 1990, Act, i.e., for 10
years, and for so long thereafter as oil
and gas is produced in paying
quantities. If a lease was renewed after
the 1990 amendment and was not
producing oil or gas at the end of its 10year renewal term, the lease expired
with no further option for renewal. The
removal of this information collection
would result in a reduction 1 annual
response, 1 annual burden hour, and
$475 annual non-hour cost burdens.
D. Class III reinstatement petition (43
CFR 3108.2–4).
The requirement would be removed
from the proposed rule resulting in a
reduction of one annual response and
one burden hour as well as $651 in nonhour cost burden.
Information Collection Requirements
Transferred From OMB Control Number
1004–0034.
The following two information
collection will be moved into OMB
Control Number 1004–0185 to keep
information collection requirements in
Subpart 3106 under the same OMB
Control Number:
1. 43 CFR 3106.41—Transfers of
record title and of operating rights
(subleases) and 3106.42, Transfers of
other interests, including royalty
interests and production payments. This
transfer would result in 3,852 annual
responses, 1,926 annual burden hours,
and $404,460 non-hours cost burdens
being added to this OMB Control
Number.
2. 43 CFR 3106.43—Mass transfers.
This transfer would result in 4,944
annual responses, 2,472 annual burden
hours, and $519,120 non-hours cost
burdens being added to this OMB
Control Number.
The resulting new estimated total
burdens for OMB Control Number
1004–0185 are provided as follows.
Title of Collection: Onshore Oil and
Gas Leasing, and Drainage Protection
(43 CFR parts 3100, 3120, and 3150, and
Subpart 3162).
OMB Control Number: 1004–0185.
Form Number: None.
Type of Review: Revision of a
currently approved collection of
information.
Respondents/Affected Public: Holders
of onshore oil and gas lease and public
lands and Indian lands (except on the
Osage Reservation), operators of such
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leases, and holders of operating rights
on such leases.
Respondent’s Obligation: Required to
Obtain or Retain a Benefit.
Frequency of Collection: Varies from 1
hour to 24 hours per response,
depending on activity.
Number of Respondents: 16,339.
Annual Responses: 16,340.
Annual Burden Hours: 29,410.
Annual Burden Cost: $1,793,159.
4. Proposed Changes Impacting OMB
Control Number 1004–0196
Currently, there are there are 21
annual responses and 220 annual
burden hours associated with this OMB
control number. There are also no nonhours cost burden currently associated
with this OMB control number. The
proposed rule is not projected to result
in any new annual responses The
additional requirements proposed in 43
CFR 3170.80(b) include description of
the anticipated PA(s) size and define the
proposed PAs in the unit designation
agreements required by 43 CFR 3137.21,
and 3137.23 is not projected to result in
additional burden for that information
collection.
43 CFR 3000.12 would introduce new
filing fees for the following information
collections, resulting in a new non-hour
burden cost of $1,320:
• Statement of change of unit
operator (43 CFR 3137.61); and
• Application for storage agreement
(43 CFR 3138.11). Additionally, 43 CFR
3137.86, New information
demonstrating that the participating
area should be larger or smaller than
previously determined, contains the
following three information collection
requirements for which the burden has
not been formerly captured in this OMB
control number:
• Information demonstrating that a
participating area should be larger than
previously determined (43 CFR
3137.86(a)(1));
• Application to enlarge participating
area outside of existing boundaries (43
CFR 3137.86(a)(2)); and
• Statement for additional committed
tract or tracts are added to the unit
under paragraph (a)(2) (43 CFR
3137.86(a)(3)).
The resulting new estimated total
burdens for OMB Control Number
1004–0196 are provided as follows.
Annual responses
Title of Collection: Oil and Gas
Leasing: National Petroleum Reserve—
Alaska (43 CFR part 3130).
OMB Control Number: 1004–0196.
Form Number: None.
Type of Review: Revision of a
currently approved collection of
information.
Respondents/Affected Public:
Participants within the oil and gas
leasing program within the National
Petroleum Reserve-Alaska.
Respondent’s Obligation: Required to
Obtain or Retain a Benefit.
Frequency of Collection: On occasion.
Estimated Completion Time per
Response: Varies from 15 minutes to 80
hours, depending on activity.
Number of Respondents: 24.
Annual Responses: 24.
Annual Burden Hours: 223.
Annual Burden Cost: $1,320.
In summary, the net burden changes
that would result from the new, revised,
and removed information collection
requirements as contained in the
proposed rule are as follows:
Annual burden hours
Non-hour burden costs
OMB Control No.
Current
1004–0NEW (transfer from
1004–0137) ............................
1004–0162 ................................
1004–0185 ................................
1004–0196 ................................
lotter on DSK11XQN23PROD with PROPOSALS2
Total Burden Changes .......
Minus Burden Transferers from
1004–0034: ............................
Minus Burden Transfer from
1004–0137 .............................
Minus changes from the IRA in
1004–0185 for EOIs: .............
Net Burden Changes Resulting
from the Proposed Rule: .......
Proposed
Change
Current
Proposed
Proposed
Change
33,121
68
16,340
24
+5,000
0
+7,208
+3
208,928
26
37,695
220
252,928
26
29,410
223
+44,000
0
+¥8,285
+3
$31,080,000
25
751,415
0
$35,400,000
1,150
1,793,159
1,320
+$4,320,000
+1,125
+1,041,744
+1,320
37,342
49,553
+12,211
246,869
282,587
+35,716
31,831,440
39,125,897
+5,364,189
....................
....................
¥8,796
....................
....................
¥4,398
....................
....................
¥923,580
....................
....................
¥28,121
....................
....................
¥208,928
....................
....................
4,320,000
....................
....................
¥395
....................
....................
¥3,160
....................
....................
¥1,975,000
....................
....................
+3,020
....................
....................
+28,160
....................
....................
1,854,391
extraordinary circumstances listed in 43
CFR 46.215 that would require further
analysis under NEPA.
J. National Environmental Policy Act
Under Executive Order 13211,
agencies are required to prepare and
submit to OMB a Statement of Energy
Effects for significant energy actions.
This statement is to include a detailed
statement of ‘‘any adverse effects on
energy supply, distribution, or use
(including a shortfall in supply, price
increases, and increase use of foreign
supplies)’’ for the action and reasonable
alternatives and their effects.
Section 4(b) of Executive Order 13211
defines a ‘‘significant energy action’’ as
A detailed environmental analysis
under NEPA is not required, because the
proposed rule is covered by a
categorical exclusion (see 43 CFR
46.205). This proposed rule meets the
criteria set forth at 43 CFR 46.210(i) for
a Departmental categorical exclusion in
that this proposed rule is ‘‘of an
administrative, financial, legal,
technical, or procedural nature.’’ We
have also determined that the proposed
rule does not involve any of the
17:27 Jul 21, 2023
Current
28,121
68
9,132
21
If you want to comment on the
information-collection requirements of
this proposed rule, please send your
comments and suggestions on this
information-collection by the date
indicated in the DATES and ADDRESSES
sections as previously described
VerDate Sep<11>2014
Change
Jkt 259001
K. Actions Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use (Executive Order
13211)
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Sfmt 4702
‘‘any action by an agency (normally
published in the Federal Register) that
promulgates or is expected to lead to the
promulgation of a final rule or
regulation, including notices of inquiry,
advance notices of proposed
rulemaking, and notices of proposed
rulemaking: (1)(i) that is a significant
regulatory action under Executive Order
12866 or any successor order, and (ii) is
likely to have a significant adverse effect
on the supply, distribution, or use of
energy; or (2) that is designated by OIRA
as a significant energy action.’’
The BLM believes that the rule may
affect the location chosen for future oil
or gas development but will have little
impact on an entity’s decision to invest
in energy development, the size of that
development, or the production from
that development. As a result of this
E:\FR\FM\24JYP2.SGM
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47614
Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
rule, an entity holding existing
nonproducing leases may choose to shift
more future development to these
existing leases or to develop nonFederal acreage instead of securing new
Federal leases, and some entities may be
relatively less likely to choose a new
Federal lease to a comparable nonFederal lease. Also, any incremental
changes in oil or gas production
estimated to result from the rule’s
enactment would constitute a small
fraction of total U.S. gas production, and
any potential and temporary deferred
production of oil would likewise
constitute a small fraction of total U.S.
oil production. For these reasons, we do
not expect that the proposed rule would
significantly impact the supply,
distribution, or use of energy. As such,
the rulemaking is not a ‘‘significant
energy action’’ as defined in Executive
Order 13211.
lotter on DSK11XQN23PROD with PROPOSALS2
L. Clarity of This Regulation (Executive
Orders 12866, 12988, and 13563)
We are required by Executive Orders
12866 (section 1(b)(12)), 12988 (section
3(b)(1)(B)), and 13563 (section 1(a)), and
by the Presidential Memorandum of
June 1, 1988, to write all rules in plain
language. This means that each rule
must:
(a) Be logically organized;
(b) Use the active voice to address
readers directly;
(c) Use common, everyday words and
clear language rather than jargon;
(d) Be divided into short sections and
sentences; and
(e) Use lists and tables wherever
possible.
If you feel that we have not met these
requirements, send us comments by one
of the methods listed in the ADDRESSES
section. To better help the BLM revise
the proposed rule, your comments
should be as specific as possible. For
example, you should tell us the
numbers of the sections or paragraphs
that you find unclear, which sections or
sentences are too long, the sections
where you feel lists or tables would be
useful, etc.
Authors
The principal authors of this final rule
include: Peter Cowan, Senior Mineral
Leasing Specialist in BLM Headquarters;
Jennifer Spencer, Mineral Leasing
Specialist in BLM Headquarters;
William Lambert, Petroleum Engineer in
BLM Headquarters; Christopher
Rhymes, former Attorney Advisor in
DOI Office of the Solicitor. Technical
support provided by: Scott Rickard,
Economist in BLM Headquarters; Holly
Elliott, Planning and Environmental
Specialist in BLM Wind River Bighorn
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Basin District; Erik Vernon, Air
Resources Program Lead in BLM Utah
State Office; Bret Anderson, National
Air Resources Program Lead in BLM
Headquarters; and James Tichenor,
Technical Advisor in BLM
Headquarters. Assisted by: Duane
Spencer, Deputy State Director of
Minerals and Land in BLM Wyoming
State Office; JulieAnn Serrano,
Supervisory Land Law Examiner in
BLM New Mexico State Office; Rebecca
Baca, former Supervisory Land Law
Examiner in BLM Colorado State Office;
and Darrin King, Senior Regulatory
Analysts in BLM Headquarters.
List of Subjects
43 CFR Part 3000
Public lands-mineral resources,
Reporting and recordkeeping
requirements.
43 CFR Part 3100
Government contracts, Mineral
royalties, Oil and gas reserves, Public
lands-mineral resources, Reporting and
recordkeeping requirements, Surety
bonds.
43 CFR Part 3110
Government contracts, Oil and gas
exploration, Public lands-mineral
resources, Reporting and recordkeeping
requirements.
43 CFR Part 3120
Government contracts, Oil and gas
exploration, Public lands-mineral
resources, Reporting and recordkeeping
requirements.
43 CFR Part 3130
Alaska, Government contracts,
Mineral royalties, Oil and gas
exploration, Oil and gas reserves, Public
lands-mineral resources, Reporting and
recordkeeping requirements, Surety
bonds.
43 CFR Part 3140
Government contracts, Hydrocarbons,
Mineral royalties, Oil and gas
exploration, Public lands-mineral
resources, Reporting and recordkeeping
requirements.
43 CFR Part 3150
Administrative practice and
procedure, Alaska, Oil and gas
exploration, Public lands-mineral
resources, Reporting and recordkeeping
requirements, Surety bonds.
43 CFR Part 3160
Administrative practice and
procedure, Government contracts,
Indians-lands, Mineral royalties, Oil and
gas exploration, Penalties, Public lands-
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mineral resources, Reporting and
recordkeeping requirements.
43 CFR Part 3170
Administrative practice and
procedure, Flaring, Immediate
assessments, Indians-lands, Mineral
royalties, Oil and gas exploration, Oil
and gas measurement, Public lands—
mineral resources, Reporting and record
keeping requirements, Royalty-free use,
Venting.
43 CFR Part 3180
Government contracts, Mineral
royalties, Oil and gas exploration,
Public lands-mineral resources,
Reporting and recordkeeping
requirements.
43 CFR Chapter II
For the reasons set out in the
preamble, the Bureau of Land
Management proposes to amend 43 CFR
parts 3000, 3100, 3110, 3120, 3130,
3140, 3150, 3160, 3170, and 3180 as
follows:
■ 1. Revise part 3000 to read as follows:
PART 3000—MINERALS
MANAGEMENT: GENERAL
Sec.
3000.5 Definitions.
3000.10 Nondiscrimination.
3000.20 False statements.
3000.30 Unlawful interests.
3000.40 Appeals.
3000.50 Limitations on time to institute suit
to challenge a decision of the Secretary.
3000.60 Filing of documents.
3000.70 Multiple development.
3000.80 Management of Federal minerals
from reserved mineral estates.
3000.90 Enforcement actions under 30
U.S.C. 195.
3000.100 Fees in general.
3000.110 Processing fees on a case-by-case
basis.
3000.120 Fee schedule for fixed fees.
3000.130 Fiscal terms of new leases.
Authority: 16 U.S.C. 3101 et seq.; 30
U.S.C. 181 et seq., 301–306, 351–359, and
601 et seq.; 31 U.S.C. 9701; 40 U.S.C. 471 et
seq.; 42 U.S.C. 6508; 43 U.S.C. 1701 et seq.;
and Pub. L. 97–35, 95 Stat. 357.
§ 3000.5
Definitions.
As used in 43 CFR parts 3000 and
3100, the term:
Acquired lands means lands which
the United States obtained by deed
through purchase or gift, or through
condemnation proceedings, including
lands previously disposed of under the
public land laws including the mining
laws.
Acreage for which expressions of
interest have been submitted means
acreage that is identified in an
expression of interest received by BLM,
that has not been proposed for leasing
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
in any pending sale or other expression
of interest pending BLM disposition,
and for which BLM may lawfully issue
an oil and gas lease.
Acres offered for lease means all acres
that BLM has offered for oil and gas
lease, regardless of whether those acres
are acreage for which expressions of
interest have been submitted.
Act or MLA means the Mineral
Leasing Act of 1920, as amended and
supplemented (30 U.S.C. 181 et seq.).
Anniversary date means the same day
and month in succeeding years as that
on which the lease became effective.
Authorized officer means any BLM
employee authorized to perform the
duties described in parts 3000 and 3100.
BLM or Bureau means the Bureau of
Land Management.
Director means the Director of the
Bureau of Land Management.
Gas means any fluid, either
combustible or noncombustible, which
is produced in a natural state from the
earth and which maintains a gaseous or
rarefied state at ordinary temperatures
and pressure conditions.
Interest means ownership in a lease,
or prospective lease, of all or a portion
of the record title, working interest,
operating rights, overriding royalty,
payments out of production, carried
interests, net profit share or similar
instrument for participation in the
benefit derived from a lease. An interest
may be created by direct or indirect
ownership, including options. Interest
does not mean stock ownership,
stockholding or stock control in an
application, offer, competitive bid or
lease, except for purposes of acreage
limitations in 43 CFR 3101.20 and
qualifications of lessees in 43 CFR
subpart 3102.
Oil means all nongaseous
hydrocarbon substances other than
those substances leasable as coal, oil
shale or gilsonite (including all veintype solid hydrocarbons).
ONRR means the Office of Natural
Resources Revenue.
Party in interest means a party who is
or will be vested with any interest under
the lease as defined in this section. No
one is a sole party in interest with
respect to an application, offer,
competitive bid or lease in which any
other party has an interest.
Person means any individual or
entity, including a partnership,
association, State, political subdivision
of a State or territory, or a private,
public, or municipal corporation.
Proper BLM office means the Bureau
of Land Management state office having
jurisdiction over the lands subject to the
regulations in parts 3000 and 3100. (See
43 CFR 1821.10 for office location and
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area of jurisdiction of Bureau of Land
Management offices.)
Properly filed means a document or
form submitted to the proper BLM office
with all necessary information and
payments, as provided in 43 CFR
subpart 1822.
Public domain lands means lands,
including mineral estates, which never
left the ownership of the United States,
lands which were obtained by the
United States in exchange for public
domain lands, lands which have
reverted to the ownership of the United
States through the operation of the
public land laws and other lands
specifically identified by the Congress
as part of the public domain.
Secretary means the Secretary of the
Interior.
Surface managing agency means any
Federal agency, other than the BLM,
having management responsibility for
the surface resources that overlay
federally owned minerals.
§ 3000.10
Nondiscrimination.
Any person acquiring a lease under
this chapter must comply fully with the
equal opportunity provisions of
Executive Order 11246 dated September
24, 1965, as amended, and the rules,
regulations and relevant orders of the
Secretary of Labor (41 CFR part 60 and
43 CFR part 17).
§ 3000.20
False statements.
As provided in 18 U.S.C. 1001, it is
a crime punishable by imprisonment or
a fine, or both, for any person
knowingly and willfully to submit or
cause to be submitted to any agency of
the United States any false or fraudulent
statement(s) as to any matter within the
agency’s jurisdiction.
47615
§ 3000.50 Limitations on time to institute
suit to challenge a decision of the
Secretary.
No action challenging a decision of
the Secretary involving any oil or gas
lease, offer or application can be
maintained unless such action is
commenced or taken within 90 days
after the final decision of the Secretary
relating to such matter.
§ 3000.60
Filing of documents.
All necessary documents must be
filed in the proper BLM office.
Documents may be submitted to the
BLM using hard-copy delivery services,
in-person delivery, or by electronic
filing. A document will be considered
filed when it is received in the proper
BLM office. When using hard-copy
delivery services or in-person delivery,
the document will be considered filed
only when received during regular
business hours. See 43 CFR part 1820,
subpart 1822.
§ 3000.70
Multiple development.
The granting of a permit or lease for
the prospecting, development or
production of deposits of any one
mineral does not preclude the issuance
of other permits or leases for the same
lands for deposits of other minerals with
suitable stipulations for simultaneous
operation, nor the allowance of
applicable entries, locations or
selections of leased lands with a
reservation of the mineral deposits to
the United States.
§ 3000.80 Management of Federal minerals
from reserved mineral estates.
No member of, or delegate to,
Congress, or Resident Commissioner,
and no employee of the Department of
the Interior, except as provided in 43
CFR part 20, is allowed or entitled to
acquire or hold any Federal lease, or
interest therein. (Officer, agent or
employee of the Department—see 43
CFR part 20; Member of Congress—see
R.S. 3741; 41 U.S.C. 22; 18 U.S.C. 431–
433.)
Where nonmineral public land
disposal statutes provide that in
conveyances of title all or certain
minerals are reserved to the United
States together with the right to prospect
for, mine and remove the minerals
under applicable law and regulations as
the Secretary may prescribe, the lease or
sale, and administration and
management of the use of such minerals
will be accomplished under the
regulations of 43 CFR parts 3000 and
3100. Such mineral estates include, but
are not limited to, those that have been
or will be reserved under the authorities
of the Small Tract Act of June 1, 1938,
as amended (43 U.S.C. 682(b)) and the
Federal Land Policy and Management
Act of 1976 (43 U.S.C. 1701 et seq.).
§ 3000.40
§ 3000.90
§ 3000.30
Unlawful interests.
Appeals.
Except as provided in 43 CFR
3000.120, 3000.130, 3101.53(b), 3165.4,
and 3427.2, any party adversely affected
by a decision of the authorized officer
made pursuant to the provisions of 43
CFR parts 3000 or 3100 has a right of
appeal pursuant to 43 CFR part 4.
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Enforcement actions.
The United States Department of
Justice is the agency responsible for the
enforcement actions described in 30
U.S.C. 195, which makes it unlawful for
any person to organize or participate in
any scheme, arrangement, plan, or
agreement to circumvent or defeat the
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
provisions of the MLA or its
implementing regulations; or to seek to
obtain or to obtain any money or
property by means of false statements of
material facts or by failing to state
materials facts concerning the:
(a) Value of any lease or portion
thereof issued or to be issued under the
MLA;
(b) Availability of any land for leasing
under the MLA;
(c) Ability of any person to obtain
leases under the MLA; or
(d) Provisions of the MLA and its
implementing regulations.
lotter on DSK11XQN23PROD with PROPOSALS2
§ 3000.100
Fees in general.
(a) Setting fees. Fees may be
statutorily set fees, relatively nominal
filing fees, or processing fees intended
to reimburse the BLM for its reasonable
processing costs. For processing fees,
the BLM takes into account the factors
in section 304(b) of the Federal Land
Policy and Management Act of 1976
(FLPMA) (43 U.S.C. 1734(b)) before
deciding a fee. The BLM considers the
factors for each type of document when
the processing fee is a fixed fee and for
each individual document when the fee
is decided on a case-by-case basis, as
explained in § 3000.110.
(b) Conditions for filing. The BLM will
not accept a document that the
applicant submits without the proper
filing or processing fee amounts except
for documents where the BLM sets the
fee on a case-by-case basis. Fees are not
refundable except as provided for caseby-case fees in § 3000.110. The BLM
will keep the fixed filing or processing
fee as a service charge even if the BLM
does not approve the application or the
applicant withdraws it completely or
partially.
(c) Periodic adjustment. The BLM will
periodically adjust fees established in
this subchapter according to changes in
the Implicit Price Deflator for Gross
Domestic Product, which is published
quarterly by the U.S. Department of
Commerce. Because the fee
recalculations are simply based on a
mathematical formula, the BLM will
change the fees in final rules without
opportunity for notice and comment.
(d) Timing of fee applicability. (1) For
a document that the BLM received
before November 7, 2005, the BLM will
not charge a fixed fee or a case-by-case
fee under this subchapter for processing
that document, except for fees
applicable under then-existing
regulations.
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(2) For a document that the BLM
receives on or after November 7, 2005,
the applicant must include the required
fixed fees with the documents filed, as
provided in § 3000.120(a) of this
chapter, and the applicant is subject to
case-by-case processing fees as provided
in § 3000.110 and under other
provisions of this chapter.
§ 3000.110 Processing fees on a case-bycase basis.
(a) Fees in this subchapter are
designated either as case-by-case fees or
as fixed fees. The fixed fees are
established in this subchapter for
specified types of documents. However,
if the BLM decides at any time that a
particular document designated for a
fixed fee will have a unique processing
cost, such as the preparation of an
Environmental Impact Statement, the
BLM may set the fee under the case-bycase procedures in this section.
(b) For case-by-case fees, the BLM
measures the ongoing processing cost
for each individual document and
considers the factors in section 304(b) of
FLPMA on a case-by-case basis
according to the following procedures:
(1) The applicant may request the
BLM’s approval to do all or part of any
study or other activity according to
standards the BLM specifies, thereby
reducing the BLM’s costs for processing
the document, in accordance with all
other applicable laws and regulations.
(2) Before performing any case
processing, the BLM will give the
applicant a written estimate of the
proposed fee for reasonable processing
costs after the BLM considers the
FLPMA section 304(b) factors.
(3) The applicant may comment on
the proposed fee.
(4) The BLM will then give the
applicant the final estimate of the
processing fee amount after considering
the applicant’s comments and any BLMapproved work that the applicant will
do.
(i) If the BLM encounters higher or
lower processing costs than anticipated,
the BLM will re-estimate the reasonable
processing costs following the
procedure in paragraphs (b)(1) through
(4) of this section, but the BLM will not
stop ongoing processing unless the
applicant does not pay in accordance
with paragraph (b)(5) of this section.
(ii) If the fee the applicant would pay
under this paragraph (b)(4) is less than
the BLM’s actual costs as a result of
consideration of the FLPMA section
304(b) factors, and the BLM is not able
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to process the document promptly
because of the unavailability of funding
or other resources, the applicant will
have the option to pay the BLM’s actual
costs to process the document.
(iii) Once processing is complete, the
BLM will refund to the applicant any
money that the BLM did not spend on
processing costs.
(5)(i) The BLM will periodically
estimate what its reasonable processing
costs will be for a specific period and
will bill the applicant for that period.
Payment is due to the BLM 30 days after
the applicant receives its bill. The BLM
will stop processing the document if the
applicant does not pay the bill by the
date payment is due.
(ii) If a periodic payment turns out to
be more or less than the BLM’s
reasonable processing costs for the
period, the BLM will adjust the next
billing accordingly or make a refund. Do
not deduct any amount from a payment
without the BLM’s prior written
approval.
(6) The applicant must pay the entire
fee before the BLM will issue the final
document.
(7) The applicant may appeal the
BLM’s estimated processing costs in
accordance with the regulations in 43
CFR part 4, subpart E. The applicant
may also appeal any determination the
BLM makes under paragraph (a) of this
section that a document designated for
a fixed fee will be processed as a caseby-case fee. The BLM will not process
the document further until the appeal is
resolved, in accordance with paragraph
(b)(5)(i) of this section, unless the
applicant pays the fee under protest
while the appeal is pending. If the
appeal results in a decision changing
the proposed fee, the BLM will adjust
the fee in accordance with paragraph
(b)(5)(ii) of this section.
§ 3000.120
Fee schedule for fixed fees.
(a) The table in this section shows the
fixed fees that must be paid to the BLM
for the services listed for FY 2024.
These fees are nonrefundable and must
be included with documents filed under
this chapter. Fees will be adjusted
annually according to the change in the
Implicit Price Deflator for Gross
Domestic Product since the previous
adjustment and will subsequently be
posted on the BLM website (https://
www.blm.gov) before October 1 each
year. Revised fees are effective each year
on October 1.
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47617
TABLE 1 TO PARAGRAPH (a)—FY 2024 PROCESSING AND FILING FEE TABLE
Document/action
FY 2023 fee
Oil & Gas (parts 3100, 3110, 3120, 3130, 3150, 3160, and 3180):
Formal Lease nomination ......................................................................................................................
Expression of Interest fee per acre, or fraction thereof ........................................................................
Competitive lease application ................................................................................................................
Leasing under right-of-way ....................................................................................................................
Lease consolidation ...............................................................................................................................
Assignment and transfer of record title or operating rights ...................................................................
Overriding royalty transfer, payment out of production .........................................................................
Name change, corporate merger, sheriff’s deed, corporate dissolution, or transfer to heir/devisee ...
Lease reinstatement, Class I .................................................................................................................
Geophysical exploration permit application—all states .........................................................................
Renewal of exploration permit—Alaska ................................................................................................
Final application for Federal unit agreement approval, Federal unit agreement expansion, and Federal subsurface gas storage application.
Designation of successor operator for Federal agreements .................................................................
Geothermal (part 3200):
Noncompetitive lease application ..........................................................................................................
Competitive lease application ................................................................................................................
Assignment and transfer of record title or operating rights ...................................................................
Name change, corporate merger or transfer to heir/devisee ................................................................
Lease consolidation ...............................................................................................................................
Lease reinstatement ..............................................................................................................................
Nomination of lands ...............................................................................................................................
plus per acre nomination fee .................................................................................................................
Site license application ..........................................................................................................................
Assignment or transfer of site license ...................................................................................................
Coal (parts 3400, 3470):
License to mine application ...................................................................................................................
Exploration license application ..............................................................................................................
Lease or lease interest transfer .............................................................................................................
Leasing of Solid Minerals Other Than Coal and Oil Shale (parts 3500, 3580):
Applications other than those listed below ............................................................................................
Prospecting permit application amendment ..........................................................................................
Extension of prospecting permit ............................................................................................................
Lease modification or fringe acreage lease ..........................................................................................
Lease renewal .......................................................................................................................................
Assignment, sublease, or transfer of operating rights ..........................................................................
Transfer of overriding royalty .................................................................................................................
Use permit .............................................................................................................................................
Shasta and Trinity hardrock mineral lease ............................................................................................
Renewal of existing sand and gravel lease in Nevada .........................................................................
Public Law 359; Mining in Powersite Withdrawals: General (part 3730):
Notice of protest of placer mining operations .......................................................................................
Mining Law Administration (parts 3800, 3810, 3830, 3860, 3870):
Application to open lands to location ....................................................................................................
Notice of location * .................................................................................................................................
Amendment of location ..........................................................................................................................
Transfer of mining claim/site .................................................................................................................
Recording an annual FLPMA filing ........................................................................................................
Deferment of assessment work .............................................................................................................
Recording a notice of intent to locate mining claims on Stockraising Homestead Act lands ..............
Mineral patent adjudication ....................................................................................................................
Adverse claim ........................................................................................................................................
Protest ....................................................................................................................................................
Oil Shale Management (parts 3900, 3910, 3930):
Exploration license application ..............................................................................................................
Application for assignment or sublease of record title or overriding royalty .........................................
Onshore Oil and Gas Operations and Production (parts 3160, 3170):
Application for Permit to Drill .................................................................................................................
$125.
5.
3,100.
660.
525.
105.
15.
250.
1,260.
1,150.
30.
1,200.
120.
475.
185.
105.
250.
525.
90.
135.
0.13.
70.
70.
15.
390.
80.
45.
80.
130.
35.
610.
35.
35.
35.
35.
35.
15.
15.
20.
15.
15.
15.
130.
35.
3,585 (more than 10 claims).
1,790 (10 or fewer claims).
130.
80.
375.
75.
11,805.
lotter on DSK11XQN23PROD with PROPOSALS2
* To record a mining claim or site location, this processing fee along with the initial maintenance fee and the one-time location fee required by
statute must be paid.
(b) The amount of a fixed fee is not
subject to appeal to the Interior Board of
Land Appeals pursuant to 43 CFR part
4, subpart E.
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§ 3000.130
Fiscal terms of new leases.
(a) The table in this section shows the
fiscal terms for new leases. Terms will
be adjusted annually according to the
change in the Implicit Price Deflator for
Gross Domestic Product since the
PO 00000
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previous adjustment and will
subsequently be posted on the BLM
website (https://www.blm.gov) before
October 1 each year. Revised fees are
effective each year on October 1.
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
TABLE 1 TO PARAGRAPH (a)—FISCAL TERMS FOR NEW LEASES TABLE
Oil and gas
(parts 3100, 3110, 3120, 3130, 3140)
Fiscal term
Competitive oil and gas, tar sand, and
combined hydrocarbon leases.
Rental of $3 per acre, or fraction thereof, per year during the first 2-year period beginning upon lease
issuance, $5 per acre per year, or fraction thereof, for the following 6 years, and then $15 per acre,
or fraction thereof, per year thereafter.
Base rental of $20 per acre, or fraction thereof.
Minimum bonus bids of $25 per acre, or fraction thereof.
Competitive lease reinstatement, Class II
Competitive
combined
hydrocarbon
leases.
Competitive oil and gas and tar sand
leases.
Minimum bonus bids of $10 per acre, or fraction thereof.
(b) The financial terms for new leases
are not subject to appeal to the Interior
Board of Land Appeals pursuant to 43
CFR part 4, subpart E.
■ 2. Revise part 3100 to read as follows:
Compliance, Certification of Compliance and
Evidence
PART 3100—OIL AND GAS LEASING
Subpart 3103—Fees, Rentals, and Royalty
Compliance.
Certification of compliance.
Evidence of compliance.
Payments
Subpart 3100—Oil and Gas Leasing:
General
Sec.
3100.3 Authority.
3100.5 Definitions.
3100.9 Information collection.
3100.10 Helium.
3103.11
3103.12
Form of remittance.
Where remittance is submitted.
Rentals
3103.21
3103.22
Rental requirements.
Annual rental payments.
Drainage
3100.21 Compensation for drainage.
3100.22 Drilling and production or
payment of compensatory royalty.
Royalties
Options
3100.31
3100.32
3100.33
3100.40
3103.41 Royalty reductions.
3103.42 Suspension of operations and/or
production.
3103.31
3103.32
Enforceability.
Effect of option on acreage.
Option statements.
Public availability of information.
Lease Terms and Conditions
3101.11 Lease form.
3101.12 Surface use rights.
3101.13 Stipulations and information
notices.
3101.14 Modification, waiver, or exception.
Acreage Limitations
3101.21 Public domain lands.
3101.22 Acquired lands.
3101.23 Excepted acreage.
3101.24 Excess acreage.
3101.25 Computation.
3101.30 Leases within unit areas, joinder
evidence required.
3101.40 Terminated leases.
Federal Lands Administered by an Agency
Outside of the Department of the Interior
3101.51 General requirements.
3101.52 Action by the Bureau of Land
Management.
3101.53 Appeals.
3101.60 State’s or charitable organization’s
ownership of surface overlying federally
owned minerals.
Subpart 3102—Qualifications of Lessees
3102.10 Who may hold leases.
3102.20 Non-U.S. Citizens.
3102.30 Minors.
3102.40 Signature.
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Royalty on production.
Minimum royalties.
Production Incentives
Subpart 3101—Issuance of Leases
lotter on DSK11XQN23PROD with PROPOSALS2
3102.51
3102.52
3102.53
Subpart 3104—Bonds
3104.10 Bond obligations.
3104.20 Lease bond.
3104.30 Statewide bonds.
3104.40 Surface owner protection bond.
3104.50 Increased amount of bonds.
3104.60 Where filed and number of copies.
3104.70 Default.
3104.80 Termination of period of liability.
3104.90 Bonds held prior to [EFFECTIVE
DATE OF THE FINAL RULE].
Subpart 3105—Cooperative Conservation
Provisions
3105.10
Cooperative or unit agreement.
Communitization Agreements
3105.21
3105.22
3105.23
3105.24
Where filed.
Purpose.
Requirements.
Communitization agreement terms.
Operating, Drilling, or Development
Contracts
3105.31
3105.32
3105.33
Where filed.
Purpose.
Requirements.
Subsurface Storage of Oil and Gas
3105.41
3105.42
3105.43
3105.44
3105.50
PO 00000
Where filed.
Purpose.
Requirements.
Extension of lease term.
Consolidation of leases.
Frm 00058
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Subpart 3106—Transfers by Assignment,
Sublease, or Otherwise
3106.10 Transfers, general.
3106.20 Qualifications of assignees and
transferees.
3106.30 Fees.
Forms
3106.41 Transfers of record title and of
operating rights (subleases).
3106.42 Transfers of other interests,
including royalty interests and
production payments.
3106.43 Mass transfers.
3106.50 Description of lands.
3106.60 Bond requirements.
Approval of Transfer or Assignment
3106.71 Failure to qualify.
3106.72 Continuing obligation of an
assignor or transferor.
3106.73 Lease account status.
3106.74 Effective date of transfer.
3106.75 Effect of transfer.
3106.76 Obligations of assignee or
transferee.
Other Types of Transfers
3106.81 Heirs and devisees.
3106.82 Change of name.
3106.83 Corporate mergers and dissolution
of corporations, partnerships, and trusts.
3106.84 Sheriff’s sale/deed.
Subpart 3107—Continuation and Extension
3107.10 Extension by drilling.
Production
3107.21 Continuation by production.
3107.22 Cessation of production.
3107.23 Leases capable of production.
Extension for Terms of Agreements
3107.31 Leases committed to an agreement.
3107.32 Segregation of leases committed in
part.
3107.40 Extension by elimination.
Extension of Leases Segregated by
Assignment
3107.51 Extension after discovery on other
segregated portions.
3107.52 Undeveloped parts of leases in
their extended term.
3107.53 Undeveloped parts of producing
leases.
3107.60 Extension of reinstated leases.
Other Types
3107.71 Payment of compensatory royalty.
3107.72 Subsurface storage of oil and gas
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
Subpart 3108—Relinquishment,
Termination, Cancellation
3108.10 Relinquishment.
Termination by Operation of Law and
Reinstatement
3108.21 Automatic termination.
3108.22 Reinstatement at existing rental
and royalty rates: Class I reinstatements.
3108.23 Reinstatement at higher rental and
royalty rates: Class II reinstatements.
3108.30 Cancellation.
3108.40 Bona fide purchasers.
3108.50 Waiver or suspension of lease
rights.
Subpart 3109—Leasing Under Special Acts
Rights-of-Way
3109.11 Generally.
3109.12 Application.
3109.13 Notice.
3109.14 Award of lease or compensatory
royalty agreement.
3109.15 Compensatory royalty agreement or
lease.
3109.20 Units of the National Park System.
3109.21–3109.22 [Reserved]
3109.30 Shasta and Trinity Units of the
Whiskeytown-Shasta-Trinity National
Recreation Area.
Authority: 25 U.S.C. 396d and 2107; 30
U.S.C. 189, 306, 359, and 1751; 43 U.S.C.
1732(b), 1733, and 1740; and 42 U.S.C.
15801.
Subpart 3100—Onshore Oil and Gas
Leasing: General
lotter on DSK11XQN23PROD with PROPOSALS2
§ 3100.3
Authority.
(a)(1) Public domain. Oil and gas in
public domain lands and lands returned
to the public domain under 43 CFR
2370 are subject to lease under the
Mineral Leasing Act of 1920, as
amended and supplemented (30 U.S.C.
181 et seq.), by acts, including, but not
limited to, section 1009 of the Alaska
National Interest Lands Conservation
Act (16 U.S.C. 3148).
(2) Exceptions. (i) Units of the
National Park System, including lands
withdrawn by section 206 of the Alaska
National Interest Lands Conservation
Act, except as provided in paragraph
(g)(4) of this section;
(ii) Indian reservations;
(iii) Incorporated cities, towns and
villages;
(iv) Naval petroleum and oil shale
reserves;
(v) Lands north of 68 degrees north
latitude and east of the western
boundary of the National Petroleum
Reserve—Alaska;
(vi) Lands recommended for
wilderness allocation by the surface
managing agency;
(vii) Lands within the BLM’s
wilderness study areas;
(viii) Lands designated by Congress as
wilderness study areas, except where oil
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and gas leasing is specifically allowed to
continue by the statute designating the
study area;
(ix) Lands within areas allocated for
wilderness or further planning in
Executive Communication 1504, NinetySixth Congress (House Document
numbered 96–119), unless such lands
are allocated to uses other than
wilderness by a land and resource
management plan or have been released
to uses other than wilderness by an Act
of Congress;
(x) Lands within the National
Wilderness Preservation System, subject
to valid existing rights under section
4(d)(3) of the Wilderness Act (16 U.S.C.
1133) established before midnight,
December 31, 1983, unless otherwise
provided by law;
(xi) Lands designated under the Wild
and Scenic Rivers Act, subject to valid
existing rights, and that constitute the
bed or bank or are situated within onequarter mile of the bank of any river
designated as a wild river under the
Wild and Scenic Rivers Act (16 U.S.C.
1280); and
(xii) Wildlife refuge lands, which are
those lands embraced in a withdrawal of
lands of the United States for the
protection of all species of wildlife
within a particular area. Sole and
complete jurisdiction over such lands
for wildlife conservation purposes is
vested in the Fish and Wildlife Service
even though such lands may be subject
to prior rights for other public purposes
or, by the terms of the withdrawal order,
may be subject to mineral leasing. No
expressions of interest covering wildlife
refuge lands will be considered for oil
and gas leasing, except as provided by
applicable law.
(b)(1) Acquired lands. Oil and gas in
acquired lands are subject to lease under
the Mineral Leasing Act for Acquired
Lands of August 7, 1947, as amended
(30 U.S.C. 351 et seq.).
(2) Exceptions. (i) Units of the
National Park System, except as
provided in paragraph (g)(4) of this
section;
(ii) Incorporated cities, towns and
villages;
(iii) Naval petroleum and oil shale
reserves;
(iv) Tidelands or submerged coastal
lands within the continental shelf
adjacent or littoral to lands within the
jurisdiction of the United States;
(v) Lands acquired by the United
States for development of helium,
fissionable material deposits or other
minerals essential to the defense of the
country, except oil, gas and other
minerals subject to leasing under the
Act;
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47619
(vi) Lands reported as excess under
the Federal Property and Administrative
Services Act of 1949;
(vii) Lands acquired by the United
States by foreclosure or otherwise for
resale;
(viii) Lands recommended for
wilderness allocation by the surface
managing agency;
(ix) Lands within the BLM’s
wilderness study areas;
(x) Lands designated by Congress as
wilderness study areas, except where oil
and gas leasing is specifically allowed to
continue by the statute designating the
study area;
(xi) Lands within areas allocated for
wilderness or further planning in
Executive Communication 1504, NinetySixth Congress (House Document
numbered 96–119), unless such lands
are allocated to uses other than
wilderness by a land and resource
management plan or have been released
to uses other than wilderness by an Act
of Congress;
(xii) Lands within the National
Wilderness Preservation System, subject
to valid existing rights under section
4(d)(3) of the Wilderness Act (16 U.S.C.
1133) established before midnight,
December 31, 1983, unless otherwise
provided by law;
(xiii) Lands designated under the
Wild and Scenic Rivers Act, subject to
valid existing rights, and that constitute
the bed or bank or are situated within
one-quarter mile of the bank of any river
designated as a wild river under the
Wild and Scenic Rivers Act (16 U.S.C.
1280); and
(xiv) Wildlife refuge lands, which are
those lands embraced in a withdrawal of
lands of the United States for the
protection of all species of wildlife
within a particular area. Sole and
complete jurisdiction over such lands
for wildlife conservation purposes is
vested in the Fish and Wildlife Service
even though such lands may be subject
to prior rights for other public purposes
or, by the terms of the withdrawal order,
may be subject to mineral leasing. No
expressions of interest for wildlife
refuge lands will be considered except
as provided in applicable law.
(c) National Petroleum Reserve—
Alaska is subject to lease under the
Department of the Interior
Appropriations Act, Fiscal Year 1981
(42 U.S.C. 6508).
(d) Where oil or gas is being drained
from lands otherwise unavailable for
leasing, there is implied authority in the
agency having jurisdiction of those
lands to grant authority to the BLM to
lease such lands (see 43 U.S.C. 1457;
also Attorney General’s Opinion of
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
April 2, 1941 (Vol. 40 Op. Atty. Gen.
41)).
(e) Where lands previously
withdrawn or reserved from the public
domain are no longer needed by the
agency for which the lands were
withdrawn or reserved and such lands
are retained by the General Services
Administration, or where acquired
lands are declared as excess to or
surplus by the General Services
Administration, authority to lease such
lands may be transferred to the
Department in accordance with the
Federal Property and Administrative
Services Act of 1949 and the Mineral
Leasing Act for Acquired Lands, as
amended.
(f) The Act of May 21, 1930 (30 U.S.C.
301–306), authorizes the leasing of oil
and gas deposits under certain rights-ofway to the owner of the right-of-way or
any assignee.
(g)(1) Certain lands in Nevada. The
Act of May 9, 1942 (56 Stat. 273), as
amended by the Act of October 25, 1949
(63 Stat. 886), authorizes leasing on
certain lands in Nevada.
(2) Lands patented to the State of
California. The Act of March 3, 1933 (47
Stat. 1487), as amended by the Act of
June 5, 1936 (49 Stat. 1482) and the Act
of June 29, 1936 (49 Stat. 2026),
authorizes leasing on certain lands
patented to the State of California.
(3) National Forest Service Lands in
Minnesota. The Act of June 30, 1950 (16
U.S.C. 508(b)) authorizes leasing on
certain National Forest Service Lands in
Minnesota.
(4) Units of the National Park System.
The Secretary is authorized to permit
mineral leasing in the following units of
the National Park System if he/she finds
that such disposition would not have
significant adverse effects on the
administration of the area and if lease
operations can be conducted in a
manner that will preserve the scenic,
scientific and historic features
contributing to public enjoyment of the
area, pursuant to the following
authorities:
(i) Lake Mead National Recreation
Area—The Act of October 8, 1964 (16
U.S.C. 460n et seq.).
(ii) Whiskeytown Unit of the
Whiskeytown-Shasta-Trinity National
Recreation Area—The Act of November
8, 1965 (79 Stat. 1295; 16 U.S.C. 460q
et seq.).
(iii) Ross Lake and Lake Chelan
National Recreation Areas—The Act of
October 2, 1968 (82 Stat. 926; 16 U.S.C.
90 et seq.).
(iv) Glen Canyon National Recreation
Area—The Act of October 27, 1972 (86
Stat. 1311; 16 U.S.C. 460dd et seq.).
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(5) Shasta and Trinity Units of the
Whiskeytown-Shasta-Trinity National
Recreation Area. Section 6 of the Act of
November 8, 1965 (Pub. L. 89–336; 79
Stat. 1295), authorizes the Secretary of
the Interior to permit the removal of
leasable minerals from lands (or interest
in lands) within the recreation area
under the jurisdiction of the Secretary of
Agriculture in accordance with the
Mineral Leasing Act of February 25,
1920, as amended (30 U.S.C. 181 et
seq.), or the Acquired Lands Mineral
Leasing Act of August 7, 1947 (30 U.S.C.
351 et seq.), if he finds that such
disposition would not have significant
adverse effects on the purpose of the
Central Valley project or the
administration of the recreation area.
(h) Under the Recreation and Public
Purposes Act, as amended (43 U.S.C.
869 et seq.), all lands within Recreation
and Public Purposes leases and patents
are subject to lease under the provisions
of this part, subject to such conditions
as the Secretary deems appropriate.
(i)(1) Coordination lands are those
lands withdrawn or acquired by the
United States and made available to the
States by cooperative agreements
entered into between the Fish and
Wildlife Service and the game
commissions of the various States, in
accordance with the Fish and Wildlife
Coordination Act (16 U.S.C. 661), or by
long-term leases or agreements between
the Department of Agriculture and the
game commissions of the various States
pursuant to the Bankhead-Jones Farm
Tenant Act (50 Stat. 525), as amended,
where such lands were subsequently
transferred to the Department of the
Interior, with the Fish and Wildlife
Service as the custodial agency of the
United States.
(2) Representatives of the BLM and
the Fish and Wildlife Service will, in
cooperation with the authorized
members of the various State game
commissions, confer for the purpose of
determining by agreement those
coordination lands which will not be
subject to oil and gas leasing.
Coordination lands not closed to oil and
gas leasing may be subject to leasing on
the imposition of such stipulations as
are agreed upon by the State Game
Commission, the Fish and Wildlife
Service and the BLM.
(j) No lands within a refuge in Alaska
open to leasing will be available until
the Fish and Wildlife Service has first
completed compatibility
determinations.
§ 3100.5
Definitions.
As used in this part, the term:
Actual drilling operations includes
not only the physical drilling of a well,
PO 00000
Frm 00060
Fmt 4701
Sfmt 4702
but also the testing, completing or
equipping of such well for production.
Assignment means a transfer of all or
a portion of the lessee’s record title
interest in a lease.
Bid means an amount of remittance
offered as partial compensation for a
lease equal to or in excess of the
national minimum acceptable bonus bid
set by statute or by the Secretary,
submitted by a person for a lease parcel
in a competitive lease sale. For leases or
compensatory royalty agreements issued
under 43 CFR subpart 3109, ‘‘bid’’
means an amount or percent of royalty
or compensatory royalty that the owner
or lessee must pay for the extraction of
the oil and gas underlying the right-ofway.
Competitive auction means an inperson or internet-based bidding
process where leases are offered to the
highest bidder.
Exception is a limited exemption, for
a particular site within the leasehold, to
a stipulation.
Lessee means a person holding record
title in a lease issued by the United
States.
Modification is a change to the
provisions of a lease stipulation for
some or all sites within the leasehold
and either temporarily or for the term of
the lease.
National Wildlife Refuge System
Lands means lands and water, or
interests therein, administered by the
Secretary as wildlife refuges, areas for
the protection and conservation of fish
and wildlife that are threatened with
extinction; wildlife management areas;
or waterfowl production areas.
Oil and gas agreement means an
agreement between lessees and the BLM
to govern the development and
allocation of production for existing
leases, including, but not limited to,
communitization agreements, unit
agreements, secondary recovery
agreements, and gas storage agreements.
Operating right (working interest)
means the interest created out of a lease
authorizing the holder of that right to
enter upon the leased lands to conduct
drilling and related operations,
including production of oil or gas from
such lands in accordance with the terms
of the lease. Operating rights include the
obligation to comply with the terms of
the original lease, as it applies to the
area or horizons for the interest
acquired, including the responsibility to
plug and abandon all wells that are no
longer capable of producing, reclaim the
lease site, and remedy environmental
problems.
Operating rights owner means a
person holding operating rights in a
lease issued by the United States. A
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Federal Register / Vol. 88, No. 140 / Monday, July 24, 2023 / Proposed Rules
lessee also may be an operating rights
owner if the operating rights in a lease
or portion thereof have not been severed
from record title.
Operator means any person,
including, but not limited to, the lessee
or operating rights owner, who has
stated in writing to the authorized
officer that it is responsible under the
terms and conditions of the lease for the
operations conducted on the leased
lands or a portion thereof.
Primary term of lease subject to
section 4(d) of the Act prior to the
revision of 1960 (30 U.S.C. 226–1(d))
means all periods of the life of the lease
prior to its extension by reason of
production of oil and gas in paying
quantities; and
Primary term of all other leases means
the initial term of the lease, which is 10
years.
Qualified bidder means any person in
compliance with the laws and
regulations governing a bid.
Qualified lessee means any person in
compliance with the laws and
regulations governing the BLM issued
leases held by that person.
Record title means a lessee’s interest
in a lease, which includes the obligation
to pay rent and the ability to assign and
relinquish the lease. Record title
includes the obligation to comply with
the lease terms, including requirements
relating to well operations and
abandonment. Overriding royalty and
operating rights are severable from
record title interests.
Responsible bidder means any person
who has not defaulted on the payment
of winning bids for BLM-issued oil and
gas leases, is capable of fulfilling the
requirements of onshore BLM oil and
gas leases, and does not have a history
of noncompliance with applicable
statutes and regulations or with the
terms of a BLM-issued oil and gas lease.
The term ‘‘responsible bidder’’ does not
include persons who bid with no
intention of paying a winning bid or
persons who default on a winning bid.
Responsible lessee means any person
who has not defaulted on previous
winning bids, is capable of fulfilling the
requirements of onshore Federal oil and
gas leases, and does not have a history
of noncompliance with applicable
statutes or the terms of a BLM-issued oil
and gas lease.
Sublease means a transfer of a nonrecord title interest in a lease, i.e., a
transfer of operating rights is normally
a sublease, and a sublease also is a
subsidiary arrangement between the
lessee (sublessor) and the sublessee, but
a sublease does not include a transfer of
a purely financial interest, such as
overriding royalty interest or payment
out of production, nor does it affect the
relationship imposed by a lease between
the lessee(s) and the United States.
Transfer means any conveyance of an
interest in a lease by assignment,
sublease or otherwise. This definition
includes the terms: Assignment and
Sublease. Unit operator means the
person authorized under the unit
agreement approved by the Department
of the Interior to conduct operations
within the unit.
Waiver is a permanent exemption
from a lease stipulation.
§ 3100.9
Information collection.
(a) Authority: 44 U.S.C. 3501–3520.
(b)(1) Purpose. The Paperwork
Reduction Act of 1995 generally
provides that an agency may not
conduct or sponsor, and
notwithstanding any other provision of
law, a person is not required to respond
to a collection of information, unless the
collection displays a currently valid
Office of Management and Budget
(OMB) Control Number. This part
displays OMB control numbers assigned
to information collection requirements
contained in the BLM’s regulations at 43
CFR part 3100. This section aids in
fulfilling the requirements of the
Paperwork Reduction Act to display
current OMB Control Numbers for these
information collection requirements.
Interested persons should consult
https://www.reginfo.gov for the most
current information on these OMB
control numbers; including among other
things, the justification for the
information collection requirements,
description of likely respondents,
estimated burdens, and current
expiration dates.
(2) Table 1 to Paragraph (b)—OMB
Control number assigned pursuant to
the Paperwork Reduction Act.
OMB Control
No.
43 CFR part or section
§§ 3100, 3103.41, 3120, and Subpart 3162 ........................................................................................................................................
§§ 3106, 3135, and 3216 .....................................................................................................................................................................
Part 3130 .............................................................................................................................................................................................
Subpart 3195 .......................................................................................................................................................................................
§ 3150 ..................................................................................................................................................................................................
§§ ,* 3160 3171, 3176, and 3177 .........................................................................................................................................................
§§ 3172, 3173, 3174, 3175 ..................................................................................................................................................................
§§ 3162.3–1, 3178.5, 3178.7, 3178.8, 3178.9 and Subpart * 3179 ....................................................................................................
1004–0185
1004–0034
1004–0196
1004–0179
1004–0162
1004–NEW
1004–0137
1004–0211
* Information collection requirements for onshore oil and gas operations are generally accounted for under OMB Control Number 1004–NEW;
however, information collection requirements pertaining to particular to waste prevention, production subject to royalties, and resource conservation are accounted for under OMB Control Number 1004–0211.
lotter on DSK11XQN23PROD with PROPOSALS2
§ 3100.10
Helium.
The ownership of and the right to
extract helium from all gas produced
from lands leased or otherwise disposed
of under the Act have been reserved to
the United States.
Drainage
§ 3100.21
Compensation for drainage.
Upon a determination by the
authorized officer that lands owned by
the United States are being drained of
oil or gas by wells drilled on adjacent
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lands, the authorized officer may
execute agreements with the owners of
adjacent lands whereby the United
States and its lessees will be
compensated for such drainage. Such
agreements must be made with the
consent of any lessee affected by an
agreement. Such lands may also be
offered for lease in accordance with 43
CFR part 3120.
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§ 3100.22 Drilling and production or
payment of compensatory royalty.
Where lands in any leases are being
drained of their oil or gas content by
wells either on a Federal lease issued at
a lower rate of royalty or on non-Federal
lands, the lessee must both drill and
produce all wells necessary to protect
the leased lands from drainage. In lieu
of drilling necessary wells, the lessee
may, with the consent of the authorized
officer, pay compensatory royalty in the
amount determined in accordance with
43 CFR 3162.2–4.
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Options
Department of the Interior records.
Certain mineral information not
protected from public disclosure under
43 CFR part 2may be made available for
inspection without a Freedom of
Information Act (FOIA) (5 U.S.C. 552)
request.
(b) When you submit data and
information under this part 3100 and
parts 3120 through 3190 of this chapter
that you believe to be exempt from
disclosure to the public, you must
clearly mark each page that you believe
includes confidential information. The
BLM will keep all such data and
information confidential to the extent
allowed by 43 CFR 2.26.
(c) Under the Indian Mineral
Development Act of 1982 (IMDA) (25
U.S.C. 2101 et seq.), the Department of
the Interior will hold as privileged
proprietary information of the affected
Indian or Indian Tribe—
(1) All findings forming the basis of
the Secretary’s intent to approve or
disapprove any Minerals Agreement
under IMDA; and
(2) All projections, studies, data, or
other information concerning a Minerals
Agreement under IMDA, regardless of
the date received, related to:
(i) The terms, conditions, or financial
return to the Indian parties;
(ii) The extent, nature, value, or
disposition of the Indian mineral
resources; or
(iii) The production, products, or
proceeds thereof.
(d) For information concerning Indian
minerals not covered by paragraph (c) of
this section:
(1) The BLM will withhold such
records as may be withheld under an
exemption to FOIA when it receives a
request for information related to tribal
or Indian minerals held in trust or
subject to restrictions on alienation;
(2) The BLM will notify the Indian
mineral owner(s) identified in the
records of the Bureau of Indian Affairs
(BIA) and give them a reasonable period
of time to state objections to disclosure,
using the standards and procedures of
43 CFR 2.28, before making a decision
about the applicability of FOIA
exemption 4 to:
(i) Information obtained from a person
outside the United States Government;
when
(ii) Following consultation with a
submitter under 43 CFR 2.28, the BLM
determines that the submitter does not
have an interest in withholding the
records that can be protected under
FOIA; but
(iii) The BLM has reason to believe
that disclosure of the information may
result in commercial or financial injury
§ 3100.31
Enforceability.
(a) No option to acquire any interest
in a lease is enforceable if entered into
for a period of more than 3 years
(including any renewal period that may
be provided for in the option).
(b) No option or renewal thereof is
enforceable until a signed copy or notice
of the option has been filed in the
proper BLM office. Each such signed
copy or notice must include:
(1) The names and addresses of the
parties thereto;
(2) The serial number of the lease to
which the option is applicable;
(3) A statement of the number of acres
and the type and percentage of interests
to be conveyed and retained by the
parties to the option, including the date
and expiration date of the option.
(c) The signatures of all parties to the
option or their duly authorized agents.
The signed copy or notice of the option
required by this paragraph must contain
or be accompanied by a signed
statement by the holder of the option
that he/she is the sole party in interest
in the option; if not, he/she must set
forth the names and provide a
description of the interest therein of the
other interested parties, and provide a
description of the agreement between
them, if oral, and a copy of such
agreement, if written.
§ 3100.32
Effect of option on acreage.
The acreage to which the option is
applicable will be charged both to the
grantor of the option and the option
holder. The acreage covered by an
unexercised option remains charged
during its term until notice of its
relinquishment or surrender has been
filed in the proper BLM office.
§ 3100.33
Option statements.
Each option holder must file in the
proper BLM office within 90 days after
June 30 and December 31 of each year
a statement showing:
(a) Any changes to the statements
submitted under § 3100.31(b); and
(b) The number of acres covered by
each option and the total acreage of all
options held in each State.
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§ 3100.40 Public availability of
information.
(a) All data and information
concerning Federal and Indian minerals
submitted under this part 3100 and
parts 3120 through 3190 of this chapter
are subject to 43 CFR part 2, except as
provided in paragraph (c) of this
section. 43 CFR part 2 includes the
regulations of the Department of the
Interior covering the public disclosure
of data and information contained in
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to the Indian mineral owner(s) but is
uncertain that such is the case.
Subpart 3101—Issuance of Leases
Lease Terms and Conditions
§ 3101.11
Lease form.
A lease will be issued only on the
standard form approved by the Director.
§ 3101.12
Surface use rights.
A lessee will have the right to use
only so much of the leased lands as is
necessary to explore for, drill for, mine,
extract, remove and dispose of all the
leased resource in a leasehold subject to
applicable requirements, including
stipulations attached to the lease,
restrictions deriving from specific,
nondiscretionary statutes, and such
reasonable measures as may be required
and detailed by the authorized officer to
avoid, minimize, or mitigate adverse
impacts to other resource values, land
uses or users, federally recognized
Tribes, and underserved communities.
Such reasonable measures may include,
but are not limited to, relocation or
modification to siting or design of
facilities, timing of operations,
specification of interim and final
reclamation measures, and specification
of rates of development and production
in the public interest. Modifications that
are consistent with lease rights include,
but are not limited to, requiring
relocation of proposed operations by
more than 800 meters and prohibiting
new surface disturbing operations for a
period of up to 90 days in any lease
year.
§ 3101.13
notices.
Stipulations and information
(a) The BLM may consider the
sensitivity and importance of
potentially affected resources and any
uncertainty concerning the present or
future condition of those resources and
will assess whether a resource is
adequately protected by stipulation
without regard for the restrictiveness of
the stipulation on operations.
(b) The authorized officer may require
stipulations as conditions of lease
issuance. Stipulations will become part
of the lease and will supersede
inconsistent provisions of the standard
lease form. Any party submitting a bid
under subpart 3120 will be deemed to
have agreed to stipulations applicable to
the specific parcel as indicated in the
Notice of Competitive Lease Sale
available from the proper BLM office.
(c) The BLM may attach an
information notice to the lease. An
information notice has no legal
consequences, except to give notice of
existing requirements, and may be
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attached to a lease by the authorized
officer at the time of lease issuance to
convey certain operational, procedural
or administrative requirements relative
to lease management within the terms
and conditions of the standard lease
form. Information notices may not be a
basis for denial of lease operations.
(d) Where the surface managing
agency is the Fish and Wildlife Service,
leases will be issued subject to
stipulations prescribed by the Fish and
Wildlife Service as to the time, place,
nature and condition of such operations
in order to minimize impacts to fish and
wildlife populations and habitat and
other refuge resources on the areas
leased. The specific conduct of lease
activities on any refuge lands will be
subject to site-specific stipulations
prescribed by the Fish and Wildlife
Service.
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§ 3101.14 Modification, waiver, or
exception.
(a) A stipulation included in an oil
and gas lease will be subject to
modification, waiver, or exception if the
authorized officer determines, in
conjunction with any surface
management agency, that the factors
leading to its inclusion in the lease have
changed sufficiently to make the
specific protections provided by the
stipulation no longer justified. If the
authorized officer determines that a
change to a lease term or stipulation is
substantial or a stipulation involves an
issue of major concern to the public, the
changes to the stipulation will be
subject to public review for at least 30
calendar days.
(b) Prior to lease issuance, if the BLM
determines that an additional
stipulation will be added to the lease or
a modification to an existing stipulation
is required, the potential lessee must be
given an opportunity to accept the
additional or modified stipulation. If the
potential lessee does not accept the
additional or modified stipulation, the
BLM may reject the bid, and may
include the lands in the next Notice of
Competitive Lease Sale. If the change in
stipulation(s) increases the value of the
parcel, the BLM will reject the bid, and
will include the lands in the next Notice
of Competitive Lease Sale.
(c) After lease issuance, if a lessee
does not accept an additional or
modified stipulation, that additional or
modified stipulation is not binding on
the lessee and is without effect. When
a stipulation is required by the relevant
Resource Management Plan, or surface
management agency land management
plan, and was inadvertently omitted, a
lessee’s failure to sign and accept
changes in the stipulations when
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requested by the authorized officer may
subject the lease to cancellation.
Acreage Limitations
§ 3101.21
Public domain lands.
(a) No person may take, hold, own or
control more than 246,080 acres of
Federal oil and gas leases in any one
State at any one time. No more than
200,000 acres of such acres may be held
under option.
(b) In Alaska, the acreage that can be
taken, held, owned or controlled is
limited to 300,000 acres in the northern
leasing district and 300,000 acres in the
southern leasing district, of which no
more than 200,000 acres may be held
under option in each of the two leasing
districts. The boundary between the two
leasing districts in Alaska begins at the
northeast corner of the Tetlin National
Wildlife Refuge as established by
section 302(8) of the Alaska National
Interest Lands Conservation Act, at a
point on the boundary between the
United States and Canada, then
northwesterly along the northern
boundary of the refuge to the left limit
of the Tanana River (63°9′38″ north
latitude, 142°20′52″ west longitude),
then westerly along the left limit to the
confluence of the Tanana and Yukon
Rivers, and then along the left limit of
the Yukon River from said confluence to
its principal southern mouth.
§ 3101.22
Acquired lands.
No person may take, hold, own or
control more than 246,080 acres of
Federal oil and gas leases in any one
State at any one time. No more than
200,000 acres of such acres may be held
under option. Where the United States
owns only a fractional interest in the
mineral resources of the lands involved
in a lease, only that part owned by the
United States will be charged as acreage
holdings. The acreage embraced in a
future interest lease will not be charged
as acreage holdings until the lease for
the future interest becomes effective.
§ 3101.23
Excepted acreage.
(a) The following acreage will not be
included in computing acreage
limitations:
(1) Acreage under any lease any
portion of which is committed to any
federally approved oil and gas
agreement;
(2) Acreage under any lease for which
royalty (including compensatory royalty
or royalty in-kind) was paid in the
preceding calendar year; and
(3) Acreage under leases subject to an
operating, drilling or development
contract approved by the Secretary, as
provided in 43 CFR 3105.30.
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47623
(b) Acreage subject to offers to lease,
overriding royalties and payments out of
production will not be included in
computing acreage limitations.
§ 3101.24
Excess acreage.
(a) Where, as the result of the
termination or contraction of an oil and
gas agreement or the elimination of a
lease from an operating, drilling, or
development contract, a party holds or
controls excess accountable acreage,
that party will have 90 calendar days
from the date of termination,
contraction or elimination, to reduce the
holdings to the prescribed limitation
and to file proof of the reduction in the
proper BLM office. Where, as a result of
a merger or the purchase of the
controlling interest in a corporation, a
party acquired acreage in excess of the
amount permitted, the party holding the
excess acreage will have 180 calendar
days from the date of the merger or
purchase to divest the excess acreage. If
additional time is required to complete
the divestiture of the excess acreage, a
petition requesting additional time,
along with a full justification for the
additional time, may be filed with the
authorized officer prior to the
termination of the 180 days provided
herein.
(b) If any person is found to hold
accountable acreage in violation of the
provisions of these regulations, lease(s)
or interests therein will be subject to
cancellation or forfeiture in their
entirety, until sufficient acreage has
been eliminated to comply with the
acreage limitation. Excess acreage or
interest will be cancelled in the inverse
order of acquisition.
§ 3101.25
Computation.
The accountable acreage of a party
owning an undivided interest in a lease
will be the party’s proportionate part of
the total lease acreage.
§ 3101.30 Leases within unit areas, joinder
evidence required.
Before issuance of a lease for lands
within an approved unit, the lease
offeror must file evidence with the
proper BLM office that it has joined in
the unit agreement and unit operating
agreement or a statement giving
satisfactory reasons for its failure to
enter into such agreement. If such
statement is satisfactory to the
authorized officer, the lessee may be
permitted to operate independently but
will be required to conform to the terms
and provisions of the unit agreement
with respect to such operations.
§ 3101.40
Terminated leases.
(a) The authorized officer will not
issue a lease for lands which have been
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covered by a lease which terminated
automatically until 90 calendar days
after the date of termination.
(b) The authorized officer will not,
after the receipt of a petition for
reinstatement, issue a new lease
affecting any of the lands covered by the
terminated lease until all action on the
petition is final.
Federal Lands Administered by an
Agency Outside of the Department of
the Interior
§ 3101.51
General requirements.
Public domain and acquired lands
will be leased only with the consent of
the surface managing agency, which,
upon receipt of a description of the
lands from the authorized officer, will
report to the authorized officer that it
consents to leasing with stipulations, if
any, or withholds consent or objects to
leasing.
§ 3101.52 Action by the Bureau of Land
Management.
(a) Where the surface managing
agency has consented to leasing with
required stipulations, and the Secretary
decides to issue a lease, the authorized
officer will incorporate the stipulations
into any lease which it may issue. The
authorized officer may add stipulations.
(b) The authorized officer will not
issue a lease on lands to which the
surface managing agency objects or
withholds consent. In all other
instances, the Secretary has the final
authority and discretion to decide to
issue a lease.
(c) The authorized officer will review
all recommendations and will accept all
reasonable recommendations of the
surface managing agency.
(d) Where the surface managing
agency is the Fish and Wildlife Service,
there will be no drilling or prospecting
under any lease heretofore or hereafter
issued on lands within a wildlife refuge,
except with the consent and approval of
the Secretary with the concurrence of
the Fish and Wildlife Service as to the
time, place and nature of such
operations in order to give complete
protection to wildlife populations and
wildlife habitat on the areas leased, and
all such operations must be conducted
in accordance with BLM stipulations.
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§ 3101.53
Appeals.
(a) The decision of the authorized
officer to reject an offer to lease or to
issue a lease with stipulations
recommended by the surface managing
agency may be appealed to the Interior
Board of Land Appeals under 43 CFR
part 4.
(b) Where, as provided by statute, the
surface managing agency has required
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that certain stipulations be included in
a lease or has consented, or objected or
refused to consent to leasing, any appeal
by an affected lease offeror will be
subject to the administrative remedies if
provided for by the particular surface
managing agency.
§ 3101.60 State’s or charitable
organization’s ownership of surface
overlying federally owned minerals.
Where the United States has conveyed
title to, or otherwise transferred the
control of the surface of lands to any
State or political subdivision, agency, or
instrumentality thereof, or a college or
any other educational corporation or
association, or a charitable or religious
corporation or association, with
reservation of the oil and gas rights to
the United States, such party will be
given an opportunity to suggest any
lease stipulations deemed necessary for
the protection of existing surface
improvements or uses, to set forth the
facts supporting the necessity of the
stipulations and also to file any
objections it may have to the issuance
of a lease. Where a party controlling the
surface opposes the issuance of a lease
or wishes to place such restrictive
stipulations upon the lease that it could
not be operated upon or become part of
a drilling unit and hence is without
mineral value, the facts submitted in
support of the opposition or request for
restrictive stipulations may be given
consideration and each case will be
decided on its merits. The opposition to
lease or necessity for restrictive
stipulations expressed by the party
controlling the surface affords no legal
basis or authority to refuse to issue the
lease or to issue the lease with the
requested restrictive stipulations for the
reserved minerals in the lands; in such
case, the final determination whether to
issue and with what stipulations, or not
to issue the lease depends upon whether
or not the interests of the United States
would best be served by the issuance of
the lease.
Subpart 3102—Qualifications of
Lessees
§ 3102.10
Who may hold leases.
Leases or interests therein may be
acquired and held only by citizens of
the United States; associations
(including partnerships and trusts) of
such citizens; corporations organized
under the laws of the United States or
of any State or Territory thereof; and
municipalities.
§ 3102.20
Non-U.S. Citizens.
(a) Leases or interests therein may be
acquired and held by non-U.S. Citizens
only through stock ownership, holding
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or control in a present or potential
lessee that is incorporated under the
laws of the United States or of any State
or territory thereof, and only if the laws,
customs or regulations of their country
do not deny similar or like privileges to
citizens or corporations of the United
States. If it is determined that a country
has denied similar or like privileges to
citizens or corporations of the United
States, it would be placed on a list
available from any BLM State office.
(b) The Committee on Foreign
Investment in the United States is
authorized to review covered real estate
transactions and to mitigate any risk to
the national security of the United
States that arises as a result of such
transactions. Covered real estate
transactions may include certain
transactions involving the Federal
mineral estate (see 31 CFR part 802).
§ 3102.30
Minors.
Leases must not be acquired or held
by someone considered to be a minor
under the laws of the State in which the
lands are located, but leases may be
acquired and held by legal guardians or
trustees of minors on their behalf. Such
legal guardians or trustees must be
citizens of the United States or
otherwise meet the provisions of 43 CFR
3102.10.
§ 3102.40
Signature.
Signatures on all applications and
BLM forms certify acceptance of lease
terms and stipulations, as well as
compliance with the regulations under
43 CFR part 3100. Refer to § 3102.50 for
certification of compliance and
evidence. The BLM also accepts
electronic signatures and submissions.
(a) A bid to lease must be made on a
current form approved by the Director.
Copies must be exact reproductions of
the official approved form, without
additions, omissions, or other changes.
When the bid is filed in person at the
proper BLM office, the bid must be
typed or printed plainly, signed, and
dated by the offeror or an authorized
agent on behalf of the present or
potential lessee. Bids may be made to
the BLM by other arrangements, such as
electronically signed and filed, when
specifically authorized by the BLM.
(b) Documents signed by any party
other than the present or potential
lessee must be rendered in a manner to
reveal the name of the present or
potential lessee, the name of the
signatory and their relationship. A
signatory who is a member of the
organization that constitutes the present
or potential lessee (e.g., officer of a
corporation, partner of a partnership,
etc.) may be requested by the authorized
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officer to clarify his/her relationship,
when the relationship is not shown on
the documents filed.
Compliance, Certification of
Compliance and Evidence
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§ 3102.51
Compliance.
Only responsible and qualified
bidders and lessees may own, hold, or
control an interest in a lease or
prospective lease. Responsible and
qualified bidders and lessees, including
corporations, and all members of
associations, including partnerships of
all types, will, without exception, be
qualified and in compliance with the
Act. Compliance means that the persons
are:
(a) Citizens of the United States (see
§ 3102.10) or non-U.S. citizens who own
stock in a corporation organized under
State or Federal law (see § 3102.20);
(b) In compliance with the Federal
acreage limitations (see § 3101.20);
(c) Not minors (see § 3102.30);
(d) Except for an assignment or
transfer under 43 CFR subpart 3106, in
compliance with section 2(a)(2)(A) of
the Act (30 U.S.C. 201(2)(A)), in which
case the signature on a bid or lease
constitutes evidence of compliance. A
lease issued to any person in violation
of this paragraph (d) will be subject to
the cancellation provisions of 43 CFR
3108.30.
(e) Not in violation of the provisions
of section 41 of the Act (30 U.S.C. 195);
and
(f) In compliance with section 17(g) of
the Act (30 U.S.C. 226(g)), in which case
the signature on an offer, lease,
assignment, or transfer constitutes
evidence of compliance that the
signatory and any subsidiary, affiliate,
or person, association, or corporation
controlled by or under common control
with the signatory, as defined in 43 CFR
3400.0–5(rr), has not failed or refused to
comply with reclamation requirements
with respect to all leases and operations
thereon in which such person has an
interest. A person is noncompliant with
section 17(g) of the Act when they fail
to comply with their reclamation
obligations or other standards
established under 30 U.S.C. 226 in the
time specified in a notice from the BLM.
A lease issued, or an assignment or
transfer approved, to any such person in
violation of this paragraph (f) will be
subject to the cancellation provisions of
43 CFR 3108.30, notwithstanding any
administrative or judicial appeals that
may be pending with respect to
violations or penalties assessed for
failure to comply with the prescribed
reclamation standards on any lease
holdings. Noncompliance will end upon
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a determination by the authorized
officer that all required reclamation has
been completed and that the United
States has been fully reimbursed for any
costs incurred due to the required
reclamation.
(g) In compliance with 43 CFR
3106.10(d) and section 30A of the Act
(30 U.S.C. 187(a)). The authorized
officer may accept the signature on a
request for approval of an assignment of
less than 640 acres outside of Alaska
(2,560 acres within Alaska) as
acceptable certification that the
assignment would further the
development of oil and gas, or the
authorized officer may apply the
provisions of 43 CFR 3102.53.
(h) Not excluded or disqualified from
participating in a transaction covered by
Federal non-procurement debarment
and suspension (2 CFR parts 180 and
1400), unless the Department explicitly
approves an exception for a transaction
pursuant to the regulations in those
parts.
§ 3102.52
Certification of compliance.
Any party(s) seeking to obtain an
interest in a lease must certify that it is
in compliance with the Act as set forth
in 43 CFR 3102.51. A corporation or
publicly traded association, including a
publicly traded partnership, must
certify that constituent members of the
corporation, association or partnership
holding or controlling more than 10
percent of the instruments of ownership
of the corporation, association or
partnership are in compliance with the
Act. Execution and submission of a
competitive bid form or request for
approval of a transfer of record title or
of operating rights (sublease),
constitutes certification of compliance.
§ 3102.53
Evidence of compliance.
The authorized officer may request at
any time further evidence of compliance
and qualification from any party
holding or seeking to hold an interest in
a lease. Failure to comply with the
request of the authorized officer will
result in adjudication of the action
based on the incomplete submission.
Subpart 3103—Fees, Rentals and
Royalty Payments
§ 3103.11
Form of remittance.
All remittances must be by personal
check, cashier’s check, certified check,
or money order, and must be made
payable to the Department of the
Interior—Bureau of Land Management
or the Department of the Interior—
Office of Natural Resources Revenue, as
appropriate. Payments made to the BLM
may be made by other arrangements
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47625
such as by electronic funds transfer or
credit card when specifically authorized
by the BLM. In the case of payments
made to the ONRR, such payments may
also be made by electronic funds
transfer.
§ 3103.12
Where remittance is submitted.
(a)(1) All processing fees for the
respective lease applications,
nominations, or requests for approval of
a transfer found in the fee schedule in
§ 3000.120 of this chapter and all firstyear rentals and bonuses for leases
issued under 43 CFR part 3100 must be
paid to the proper BLM office.
(2) All second-year and subsequent
rentals, except for leases specified in
paragraph (b) of this section, must be
paid to the ONRR through its online
rental payment system.
(b) All rentals and royalties on
producing leases, communitized leases
in producing spacing units, unitized
leases in producing unit areas, leases on
which compensatory royalty is payable
and all payments under subsurface
storage agreements must be paid to the
ONRR.
Rentals
§ 3103.21
Rental requirements.
(a) Each competitive bid submitted in
response to a Notice of Competitive
Lease Sale must be accompanied by full
payment of the first year’s rental based
on the total acreage in the Notice of
Competitive Lease Sale.
(b) If the acreage is incorrectly
indicated in a Notice of Competitive
Lease Sale, payment of the rental based
on the error is curable within 15
calendar days of receipt of notice from
the authorized officer of the error.
(c) Rental will not be prorated for any
lands in which the United States owns
an undivided fractional interest and
must be paid for the full acreage in such
lands.
§ 3103.22
Annual rental payments.
Rentals must be paid on or before the
lease anniversary date. A full year’s
rental must be submitted even when
less than a full year remains in the lease
term, except as provided in 43 CFR
3103.42(d). Failure to make the required
payment on or before the lease
anniversary date will cause a lease to
terminate automatically by operation of
law. If the designated ONRR office is not
open on the anniversary date, payment
received on the next day the designated
ONRR office is open to the public will
be deemed to be timely made. Payments
made to an improper BLM or ONRR
office will be returned and will not be
forwarded to the designated ONRR
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office. Rental must be paid at the
following rates:
(a) The annual rental for all leases is
as stated in the lease;
(b) Rental will not be due on acreage
for which royalty or minimum royalty is
being paid, except on nonproducing
leases when compensatory royalty has
been assessed in which case annual
rental as established in the lease will be
due in addition to compensatory
royalty;
(c) For leases that are reinstated under
§ 3108.23, the annual rental will be as
specified in 43 CFR 3000.130 beginning
with the termination date upon the
filing of a petition to reinstate a lease;
and
(d) Each succeeding time a specific
lease is reinstated under § 3108.23, the
annual rental on that lease will increase
by an additional $10 per acre or fraction
thereof.
Royalties
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§ 3103.31
Royalty on production.
(a) Royalty on production will be
payable only on the mineral interest
owned by the United States. Royalty
must be paid in the amount or value of
the production removed or sold as
follows:
(1) For leases issued before August 16,
2022, the rate prescribed in the lease or
in applicable regulations at the time of
lease issuance;
(2) For leases issued between August
16, 2022, and August 16, 2032, the
royalty rate will be 16.67 percent;
(3) For leases issued on or after
August 16, 2032, a rate of not less than
16.67 percent on all leases issued under
the Act;
(4) A minimum of 16.67 percent on all
leases issued under 43 CFR subpart
3109;
(5) For reinstated leases, the rate used
for royalty determination that applies to
new leases at the time of the
reinstatement plus 4 percentage points,
plus an additional 2 percentage points
for each succeeding reinstatement. In no
case will royalties on the reinstated
lease be less than 20 percent.
(b) Leases that qualify under specific
provisions of the Act of August 8, 1946
(30 U.S.C. 226c) may apply for a
limitation of a 121⁄2 percent royalty rate.
(c) The average production per well
per day for oil and gas will be
determined pursuant to 43 CFR 3162.7–
4.
(d) Payment of a royalty on the
helium component of gas will not
convey the right to extract the helium
from the gas stream. Applications for
the right to extract helium from the gas
stream will be made under 43 CFR part
16.
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§ 3103.32
Minimum royalties.
(a) A minimum royalty must be paid
at the expiration of each lease year
beginning on or after a discovery of oil
or gas in paying quantities on the lands
leased, except on unitized leases that
lack production, the minimum royalty
must be paid only on the participating
acreage, at the following rates:
(1) On leases issued on or after August
8, 1946, and on those issued prior
thereto if the lessee files an election
under section 15 of the Act of August 8,
1946, a minimum royalty of $1 per acre
or fraction thereof in lieu of rental,
except as provided in paragraph (a)(2) of
this section; and
(2) On leases issued from offers filed
after December 22, 1987, and on
competitive leases issued after
December 22, 1987, a minimum royalty
in lieu of rental of not less than the
amount of rental which otherwise
would be required for that lease year.
(b) Minimum royalties will not be
prorated for any lands in which the
United States owns a fractional interest
and must be paid on the full acreage of
the lease.
(c) Minimum royalties and rentals on
non-participating acreage must be paid
to the ONRR.
(d) The minimum royalty provisions
of this section are applicable to leases
reinstated under 43 CFR 3108.23.
(e) If the royalty paid during any year
aggregates to less than the minimum
royalty, then the lessee must pay the
difference at the end of the lease year.
Production Incentives
§ 3103.41
Royalty reductions.
(a) In order to encourage the greatest
ultimate recovery of oil or gas and in the
interest of conservation, the Secretary,
upon a determination that it is
necessary to promote development or
that the leases cannot be produced in
paying quantities under the terms
provided therein, may waive, suspend
or reduce the rental or minimum royalty
or reduce the royalty on an entire
leasehold, or any portion thereof.
(b)(1) An application for the benefits
under paragraph (a) of this section must
be filed by the operator/payor in the
proper BLM office. The application
must contain the serial number of the
leases, the names of the record title
holders, operating rights owners
(sublessees), and operators for each
lease, the description of lands by legal
subdivision and a description of the
relief requested.
(2) Each application must show the
number, location and status of each well
drilled, a tabulated statement for each
month covering a period of not less than
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6 months prior to the date of filing the
application of the aggregate amount of
oil or gas subject to royalty, the number
of wells counted as producing each
month and the average production per
well per day.
(3) Every application must contain a
detailed statement of expenses and costs
of operating the entire lease, the income
from the sale of any production and all
facts tending to show whether the wells
can be produced in paying quantities
upon the fixed royalty or rental. Where
the application is for a reduction in
royalty, complete information must be
furnished as to whether overriding
royalties, payments out of production,
or similar interests are paid to others
than the United States, the amounts so
paid and efforts made to reduce them.
The applicant must also file agreements
of the holders to a reduction of all other
royalties or similar payments from the
leasehold to an aggregate not in excess
of one-half the royalties due the United
States.
(c) Petition may be made for a
reduction of royalty for leases reinstated
under 43 CFR 3108.23. Petitions to
waive, suspend or reduce rental or
minimum royalty for leases reinstated
under 43 CFR 3108.23 may be made
under this section.
§ 3103.42 Suspension of operations and/or
production.
(a) A suspension of all operations and
production may be directed or
consented to by the authorized officer
only in the interest of conservation of
natural resources. A suspension of
operations only or a suspension of
production only may be directed or
consented to by the authorized officer in
cases where the lessee is prevented from
operating on the lease or producing
from the lease, despite the exercise of
due care and diligence, by reason of
force majeure, that is, by matters beyond
the reasonable control of the lessee.
Applications for any suspension must
be filed in the proper BLM office.
Complete information showing the
necessity of such relief must be
furnished.
(b) The term of any lease will be
adjusted to account for the suspension.
Beginning on the date the suspension is
lifted, the term will be extended by the
time that was remaining on the term of
the lease on the effective date of the
suspension. No lease will expire during
any suspension.
(c) A suspension will take effect as of
the time specified in the direction or
assent of the authorized officer, in
accordance with the provisions of 43
CFR 3165.1.
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(d) Rental and minimum royalty
payments will be suspended during any
period of suspension of all operations
and production directed or assented to
by the authorized officer beginning with
the first day of the lease month in which
the suspension of all operations and
production becomes effective, or if the
suspension of all operations and
production becomes effective on any
date other than the first day of a lease
month, beginning with the first day of
the lease month following such effective
date. However, if there is any
production sold or removed during the
suspension, the lessee must pay royalty
on that production.
(e) Rental and minimum royalty
payments will resume on the first day
of the lease month in which the
suspension of all operations and
production is lifted. Where rentals are
creditable against royalties and have
been paid in advance, proper credit may
be allowed on the next rental or royalty
due under the terms of the lease.
(f) Rental and minimum royalty
payments will not be suspended during
any period of suspension of operations
only or suspension of production only.
(g) Where all operations and
production are suspended on a lease on
which there is a well capable of
producing in paying quantities and the
authorized officer approves resumption
of operations and production, such
resumption will be regarded as lifting
the suspension, including the
suspension of rental and minimum
royalty payments, as provided in
paragraph (e) of this section.
(h) The relief authorized under this
section also may be obtained for any
Federal lease included within an
approved oil and gas agreement. Oil and
gas agreement obligations will not be
suspended by relief obtained under this
section but will be suspended only in
accordance with the terms and
conditions of the specific agreement.
Subpart 3104—Bonds
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§ 3104.10
Bond obligations.
(a) Prior to the commencement of
surface disturbing activities related to
drilling operations, the lessee, operating
rights owner (sublessee), or operator
must submit a surety or a personal
bond, conditioned upon compliance
with all of the terms and conditions of
the entire leasehold(s) covered by the
bond, as described in this subpart. The
bond amounts must be not less than the
minimum amounts described in this
subpart in order to ensure compliance
with the Act, including complete and
timely plugging of the well(s),
reclamation of the lease area(s), and the
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restoration of any lands or surface
waters adversely affected by lease
operations after the abandonment or
cessation of oil and gas operations on
the lease(s) in accordance with, but not
limited to, the standards and
requirements set forth in 43 CFR 3162.3
and 3162.5 and orders issued by the
authorized officer.
(b) Surety bonds must be issued by
qualified surety companies approved by
the Department of the Treasury (see
Department of the Treasury Circular No.
570).
(c) Personal bonds must be
accompanied by a:
(1) Cashier’s check;
(2) Certified check; or
(3) Negotiable Treasury securities of
the United States of a value equal to the
amount specified in the bond.
Negotiable Treasury securities must be
accompanied by a proper conveyance to
the Secretary of full authority to sell
such securities in case of default in the
performance of the terms and conditions
of a lease.
§ 3104.20
Lease bond.
The operator must be covered by a
bond in its own name as principal or
obligor in an amount of not less than
$150,000 for each lease conditioned
upon compliance with all of the terms
of the lease. Additional bonding may be
posted by a lessee, or owner of operating
rights (sublessee), as they are ultimately
responsible under § 3106.72. Where two
or more principals have interests in
different formations or portions of the
lease, separate bonds may be posted.
§ 3104.30
Statewide bonds.
In lieu of lease bonds, lessees, owners
of operating rights (sublessees), or
operators may furnish a bond in an
amount of not less than $500,000
covering all leases and operations in any
one State.
§ 3104.40
Surface owner protection bond.
(a) If a good-faith effort by the Federal
lessee, its operator, or representatives
has not resulted in an agreement with
the surface owner to pay compensatory
damages to the surface owner, the
authorized officer will require an
adequate surface owner protection bond
in an amount sufficient to indemnify the
surface owner against the reasonable
and foreseeable damages to crops and
tangible improvements from the
proposed operations that would not
otherwise be covered by a bond held by
the BLM. This surface owner protection
bond is not part of the bond obligations
under lease or statewide bonds.
(b) The surface owner protection bond
must be provided on a BLM-approved
form.
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47627
(c) The surface owner protection bond
may be a personal or surety bond and
must be not less than $1,000.
(d) The BLM will notify the surface
owner of the proposed surface owner
protection bond amount.
(e) If the surface owner objects to the
sufficiency of the surface owner
protection bond, the BLM authorized
officer will determine the sufficiency of
the bond necessary to indemnify the
surface owner for the reasonable and
foreseeable damages to crops and
tangible improvements.
§ 3104.50
Increased amount of bonds.
(a) When an operator desiring
approval of an APD has caused the
BLM, or a surface management agency,
to make a demand for payment under a
bond or other financial guarantee within
the 5-year period prior to submission of
the APD, due to failure to plug a well
or reclaim lands completely in a timely
manner, the authorized officer will
require, prior to approval of the APD, a
bond in an amount equal to the costs,
when higher than the minimum bond
amounts, as estimated by the authorized
officer of plugging the well and
reclaiming the disturbed area involved
in the proposed operation, or in the
minimum amount as prescribed in this
subpart, whichever is greater.
(b) The authorized officer may require
an increase in the amount of any bond
whenever it is determined that the
operator poses a risk due to factors,
including, but not limited to, a history
of previous violations, a notice from the
ONRR that there are uncollected
royalties due, or the total cost of
plugging existing wells and reclaiming
lands exceeds the present bond amount
based on the estimates determined by
the authorized officer. The increase in
bond amount may be to any level
specified by the authorized officer, but
in no circumstances will it exceed the
total of the estimated costs of plugging
and reclamation, the amount of
uncollected royalties due to the ONRR,
plus the amount of money owed to the
lessor due to previous violations
remaining outstanding.
§ 3104.60
copies.
Where filed and number of
All bonds must be filed in the proper
BLM office on a current form approved
by the Director. A single copy executed
by the principal or, in the case of surety
bonds, by both the principal and an
acceptable surety is sufficient. A bond
filed on a form not currently in use will
be acceptable, unless such form has
been declared obsolete by the Director
prior to the filing of such bond. For
purposes of 43 CFR 3104.20 and
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3104.30, bonds or bond riders must be
filed in the BLM State office having
jurisdiction over the lease or operations
covered by the bond or rider.
§ 3104.70
Default.
(a) Where, upon a default, the surety
makes a payment to the United States of
an obligation incurred under a lease, the
face amount of the surety bond or
personal bonds and the surety’s liability
thereunder will be reduced by the
amount of such payment.
(b) After default, where the obligation
in default equals or is less than the face
amount of the bond(s), the principal
must either post a new bond or restore
the existing bond(s) to the amount
previously held or a larger amount as
determined by the authorized officer. In
lieu thereof, the principal may file
separate bonds for each lease covered by
the deficient bond(s). Where the
obligation incurred exceeds the face
amount of the bond(s), the principal
must make full payment to the United
States for all obligations incurred that
are in excess of the face amount of the
bond(s) and must post a new bond in
the amount previously held or such
larger amount as determined by the
authorized officer. The restoration of a
bond or posting of a new bond must be
made within 6 months or less after
receipt of notice from the authorized
officer. Failure to comply with these
requirements may:
(1) Subject all leases covered by such
bond(s) to cancellation under the
provisions of 43 CFR 3108.30;
(2) Prevent the bond obligor or
principal from acquiring any additional
Federal leases in accordance with 43
CFR 3102.51(f); and
(3) Result in the bond obligor or
principal being referred to the
Department’s Suspension and
Debarment Program under 2 CFR part
1400 to determine if the person will be
suspended or debarred from doing
business with the Federal Government.
§ 3104.80
Termination of period of liability.
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The authorized officer will not give
consent to termination of the period of
liability of any bond unless an
acceptable replacement bond has been
filed or until all the terms and
conditions of the lease have been met.
§ 3104.90 Bonds held prior to [EFFECTIVE
DATE OF THE FINAL RULE].
(a) Unit operator bonds accepted by
the BLM prior to [EFFECTIVE DATE OF
THE FINAL RULE] must be replaced
with a statewide bond by [DATE TWO
YEARS AFTER EFFECTIVE DATE OF
THE FINAL RULE]. The BLM will not
accept any new unit operator bonds.
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(b) All bonds not meeting the
appropriate minimum bond amount as
of [EFFECTIVE DATE OF THE FINAL
RULE] must meet that amount by:
(1) [DATE ONE YEAR AFTER THE
EFFECTIVE DATE OF THE FINAL
RULE] for lease bonds; and
(2) [DATE TWO YEARS AFTER THE
EFFECTIVE DATE OF THE FINAL
RULE] for statewide bonds;
(c) All nationwide bonds must be
converted to statewide bonds by [DATE
THREE YEARS AFTER THE EFFECTIVE
DATE OF THE FINAL RULE].
Subpart 3105—Cooperative
Conservation Provisions
§ 3105.10
Cooperative or unit agreement.
(a) The suggested contents of such an
agreement and the procedures for
obtaining approval are contained in 43
CFR part 3180.
(b) An application to form a unit
agreement, a unit expansion, or a
designation of a successor operator must
include the processing fee found in the
fee schedule in § 3000.120 of this
chapter.
Communitization Agreements
§ 3105.21
Where filed.
(a) An application to form a
communitization agreement (CA) or
modify an existing agreement must be
filed with the proper BLM office for
final approval.
(b) An application for a CA must
include:
(1) A statement as to whether the
proposed CA deviates from the BLM’s
current model CA form, and a
certification that the applicant received
the required signatures;
(2) An Exhibit A displaying a map of
the area covered by the proposed
agreement and the separate agreement
tracts; and
(3) An Exhibit B displaying the
separate tracts and ownership;
(c) To ensure accurate reporting to
ONRR, an application for a CA should
be submitted at least 90 calendar days
prior to first production.
(d) An application for designations of
successor operator for a CA must
include the processing fee found in the
fee schedule in § 3000.120 of this
chapter.
§ 3105.22
Purpose.
When a lease or a portion thereof
cannot be independently developed and
operated in conformity with an
established well-spacing or welldevelopment program, the authorized
officer may approve a CA for such lands
with other lands, whether or not owned
by the United States, upon a
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determination that it is in the public
interest. Operations or production under
such an agreement will be deemed to be
operations or production as to each
lease committed thereto.
§ 3105.23
Requirements.
(a) The CA must describe the separate
tracts comprising the drilling or spacing
unit, must show the apportionment of
the production or royalties to the several
parties, the name of the operator, and
contain adequate provisions for the
protection of the interests of the United
States. The agreement must be signed by
or on behalf of all necessary parties and
must be filed prior to the expiration of
the Federal lease(s) involved in order to
confer the benefits of the agreement
upon such lease(s).
(b) The agreement will be effective as
to the Federal lease(s) involved only if
approved by the authorized officer.
Approved CAs are considered effective
from the date of the agreement or from
the date of the onset of production from
the communitized formation, whichever
is earlier, except when the spacing unit
is subject to a State pooling order after
the date of first sale, then the effective
date of the agreement will be the
effective date of the order.
(c) The public interest requirement for
an approved CA will be satisfied only if
the well dedicated thereto has been
completed for production in the
communitized formation at the time the
agreement is approved or, if not, that the
operator thereafter commences and/or
diligently continues drilling operations
to a depth sufficient to test the
communitized formation or establishes
to the satisfaction of the authorized
officer that further drilling of the well
would be unwarranted or impracticable.
If an application is received for
voluntary termination of a CA during its
fixed term or such an agreement
automatically expires at the end of its
fixed term without the public interest
requirement having been satisfied, the
approval of that agreement by the
authorized officer will be invalid and no
Federal lease included in the CA will be
eligible for an extension under 43 CFR
3107.40.
§ 3105.24
terms.
Communitization agreement
The CA will remain in effect for a
period of 2 years from the effective date
or approval date, whichever is later, and
so long thereafter as communitized
substances may be produced in paying
quantities, or as otherwise specified in
the agreement.
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Operating, Drilling or Development
Contracts
§ 3105.31
Where filed.
A contract submitted for approval
under this section must be filed with the
proper BLM office.
§ 3105.32
Purpose.
Approval of operating, drilling or
development contracts will be granted
only to permit operators or pipeline
companies to enter into contracts with
a number of lessees sufficient to justify
operations on a scale large enough to
justify the discovery, development,
production or transportation of oil or
gas and to finance the same.
§ 3105.33
Requirements.
The contract must be accompanied by
a statement showing all the interests
held by the contractor in the area or
field and the proposed or agreed plan
for development and operation of the
field. All the contracts held by the same
contractor in the area or field must be
submitted for approval at the same time
and full disclosure of the projects made.
Subsurface Storage of Oil and Gas
§ 3105.41
Where filed.
(a) Applications for subsurface storage
or designations of successor operator
must be filed in the proper BLM office.
(b) The final gas storage agreement
signed by all the parties in interest must
be submitted to the BLM.
(c) Applications for subsurface storage
agreements or designations of successor
operator must include the processing fee
found in the fee schedule in § 3000.120
of this chapter.
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§ 3105.42
Purpose.
To avoid waste and to promote
conservation of natural resources, the
Secretary, upon application by the
interested parties, may authorize the
subsurface storage of oil and gas,
whether or not produced from lands
owned by the United States. Such
authorization will provide for the
payment of such storage fee or rental on
the stored oil or gas as may be
determined adequate in each case, or, in
lieu thereof, for a royalty other than that
prescribed in the lease when such
stored oil or gas is produced in
conjunction with oil or gas not
previously produced. The BLM will
require a bond as provided under § 3104
for operations conducted in a subsurface
storage agreement.
§ 3105.43
Requirements.
The agreement must disclose the
ownership of the lands involved, the
parties in interest, the storage fee, rental
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or royalty offered to be paid for such
storage and all information
demonstrating such storage would avoid
waste and promote the conservation of
natural resources.
§ 3105.44
Extension of lease term.
Any lease used for the storage of oil
or gas will be extended for the period
of storage under an approved agreement.
The obligation to pay annual lease rent
continues during the extended period.
§ 3105.50
Consolidation of leases.
(a) Leases may be consolidated upon
written request of the lessee filed with
the proper BLM office. The request must
identify each lease involved by serial
number and justify the consolidation.
Each request for a consolidation of
leases must include the processing fee
found in the fee schedule in § 3000.120
of this chapter.
(b) All parties holding any undivided
interest in any lease involved in the
consolidation must agree to enter into
the same lease consolidation.
(c) Leases containing different types
of lands (public domain lands vs.
acquired lands), mixed fractional
mineral interest, or provisions required
by law that cannot be reconciled, will
not be consolidated.
(d) Consolidation of leases will not
exceed acreage limits of 2,560 acres for
competitive leases and 10,240 acres for
noncompetitive leases.
(e) The effective date, the anniversary
date, and the primary term of the
consolidated lease will be those of the
oldest original lease included in the
consolidation. The term of a
consolidated lease may be extended
beyond the primary lease term under
subpart 3107.
(f) The highest royalty and rental rates
of the each of the leases to be
consolidated will apply to the
consolidated lease.
(g) Lease stipulations and other terms
and conditions of each original lease,
except as noted in paragraphs (e) and (f)
of this section, will continue to apply to
that lease or any portion thereof
regardless of the lease becoming a part
of a consolidated lease.
Subpart 3106—Transfers by
Assignment, Sublease, or Otherwise
§ 3106.10
Transfers, general.
(a) Leases may be transferred by
assignment or sublease as to all or part
of the acreage in the lease or as to either
a divided or undivided interest therein.
(b) An assignment of a separate zone,
deposit, depth, formation, specific well,
or of part of a legal subdivision, will be
denied.
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(c) Within the boundaries of a Federal
lease, operating rights may only be
divided with respect to legal
subdivisions, depth ranges, and
formations.
(d) An assignment of less than 640
acres outside Alaska or of less than
2,560 acres within Alaska will be
denied unless the assignment
constitutes the entire lease or is
demonstrated to further the
development of oil and gas to the
satisfaction of the authorized officer.
Reference 43 CFR 3102.51(g) for
certification of compliance.
(e) The rights of the transferee to a
lease or an interest therein will not be
recognized by the Department until the
transfer has been approved by the
authorized officer.
(f) A transfer may be withdrawn in
writing, signed by the transferor and the
transferee, if the transfer has not been
approved by the authorized officer.
(g) A request for approval of a transfer
of a lease or interest in a lease must be
filed within 90 days from the date of its
execution. The 90-day filing period will
begin on the date the transferor signs
and dates the transfer. If the transfer is
filed after the 90th day, the authorized
officer may require verification that the
transfer is still in force and effect.
(h) A transfer of production payments
or overriding royalty or other similar
payments, arrangements, or interests
must be filed in the proper BLM office
but will not require approval.
(i) No transfer of an offer to lease or
interest in a lease will be approved prior
to the issuance of the lease.
§ 3106.20 Qualifications of assignees and
transferees.
Assignees and transferees must
comply with the provisions of 43 CFR
subpart 3102 and post any bond that
may be required. Only responsible and
qualified lessees may own, hold, or
control an interest in a lease.
§ 3106.30
Fees.
(a) Each transfer of record title or of
operating rights (sublease) for each lease
must include payment of the processing
fee for assignments and transfers found
in the fee schedule in § 3000.120 of this
chapter.
(b) Each transfer of overriding royalty
or payment out of production must
include payment of the processing fee
for overriding royalty transfers or
payments out of productions found in
the fee schedule in § 3000.120 of this
chapter for each lease to which it
applies.
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Forms
the full costs incurred to make the
required number of copies. The BLM
will waive fees under one dollar.
(d) A mass transfer must include the
processing fee for assignments and
transfers found in the fee schedule in
§ 3000.120 of this chapter for each such
interest transferred for each lease.
§ 3106.41 Transfers of record title and of
operating rights (subleases).
Each transfer of record title or of an
operating right (sublease) must be filed
with the proper BLM office on a current
form approved by the Director. A
separate form for each transfer, in
duplicate, must be filed for each lease
out of which a transfer is made. The
BLM does not require a duplicate copy
of the assignment or transfer when it is
electronically submitted. Copies of
documents other than the current form
approved by the Director must not be
submitted. However, reference(s) to
other documents containing information
affecting the terms of the transfer may
be made on the submitted form.
§ 3106.42 Transfers of other interests,
including royalty interests and production
payments.
(a) Each transfer of overriding royalty
interest, payment out of production or
similar interests created or reserved
must be described for each lease on the
current assignment or transfer form
when filed.
(b) A single executed copy of each
such transfer of other interests for each
lease must be filed with the proper BLM
office.
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§ 3106.43
Mass transfers.
(a) A mass transfer may be utilized in
lieu of the provisions of 43 CFR 3106.41
and 3106.42 when an assignor or
transferor transfers interests of any type
in more than one Federal lease to the
same assignee or transferee.
(b) The mass transfer must be filed
with each proper BLM office
administering any lease affected by the
mass transfer. The transfer must be on
a current form approved by the Director
with an exhibit attached to each copy
listing the following for each lease:
(1) The serial number;
(2) The type and percent of interest
being conveyed; and
(3) A description of the lands affected
by the transfer in accordance with 43
CFR 3106.50.
(c)(1) One duplicate copy of the form
must be filed with the proper BLM
office for each lease involved in the
mass transfer. A copy of the exhibit for
each lease may be limited to line items
pertaining to individual leases as long
as that line item includes the
information required by paragraph (b) of
this section. The BLM does not require
a duplicate copy of the assignment or
transfer when it is electronically
submitted.
(2) When the BLM does not receive
the requisite number of copies, the
applicant must reimburse the BLM for
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respect to: royalty payments; lease
obligations, such as, but not limited to,
rent and minimum royalty; or
production reporting to ONRR for a
lease in non-terminable status.
§ 3106.74
Effective date of transfer.
Each assignment of record title must
describe the lands involved in the same
manner as the lands are described in the
lease, except no land description is
required when 100 percent of the entire
area encompassed within a lease is
conveyed.
The signature of the authorized officer
on the official form will constitute
approval of the assignment of record
title or transfer of operating rights
(sublease) which will take effect as of
the first day of the lease month
following the date of filing in the proper
BLM office of all documents and
statements required by this subpart and
an appropriate bond, if one is required.
§ 3106.60
§ 3106.75
§ 3106.50
Description of lands.
Bond requirements.
Where the lessee or operating rights
owner (sublessee) maintains a bond
covering the lease (including a
statewide bond), the assignee of record
title interest or transferee of operating
rights in such lease must furnish, if
bond coverage continues to be required,
a proper bond that will cover any
obligations arising under the lease to the
same extent as the assignor’s or
transferor’s bond.
Approval of Transfer or Assignment
§ 3106.71
§ 3106.76 Obligations of assignee or
transferee.
Failure to qualify.
The BLM will not approve any
assignment of record title or transfer of
operating rights (sublease) if any party
in interest is not a qualified lessee, or if
the bond is insufficient. The BLM
approves assignments and transfers for
administrative purposes only. Approval
does not warrant or certify that either
party to a transfer holds legal or
equitable title to a lease.
§ 3106.72 Continuing obligation of an
assignor or transferor.
(a) The lessee or sublessee remains
responsible for performing all
obligations under the lease until the
date the BLM approves an assignment of
record title interest or transfer of
operating rights.
(b) After the BLM approves the
assignment or transfer, the assignor or
transferor will continue to be
responsible for lease obligations that
accrued before the approval date,
whether or not they were identified at
the time of the assignment or transfer.
This includes paying compensatory
royalties for drainage. It also includes
responsibility for plugging wells and
abandoning facilities drilled, installed,
or used before the effective date of the
assignment or transfer.
§ 3106.73
Lease account status.
The BLM will not approve a transfer
if the lease account is delinquent with
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Effect of transfer.
An assignment of record title to 100
percent of a portion of the lease
segregates the transferred portion and
the retained portion into separate leases.
Each resulting lease retains the
anniversary date and the terms and
conditions of the original lease. An
assignment of record title to less than
100 percent of a portion of the lease or
a transfer of operating rights (sublease)
will not segregate the transferred and
retained portions into separate leases.
(a) The assignee of record title agrees
to comply with the terms of the original
lease during the lease tenure. The
assignee assumes the responsibility to
plug and abandon all wells which are
no longer capable of producing, reclaim
the lease site, and remedy all
environmental problems in existence
and that a purchaser exercising
reasonable diligence should have
known existed at the time of the
transfer. When required, the record title
holder must also maintain an adequate
bond to ensure performance of these
responsibilities.
(b) The transferee of operating rights
agrees to comply with the terms of the
original lease as it applies to the area or
horizons for the interest acquired. The
transferee assumes the responsibility to
plug and abandon all wells that are no
longer capable of producing, reclaim the
lease site, and remedy all environmental
problems in existence and that a
purchaser exercising reasonable
diligence should have known at the
time of the transfer. When required, the
operating rights holder must also
maintain an adequate bond to ensure
performance of these responsibilities.
Other Types of Transfers
§ 3106.81
Heirs and devisees.
(a) If an offeror, applicant, lessee or
transferee dies, their rights will be
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assigned or transferred to the heirs,
devisees, executor or administrator of
the estate, as appropriate, upon the
filing of legal documents demonstrating
that the assignee or transferee is
recognized as the successor of the
deceased.
(b) The filing must include the
processing fee for the assignment to an
heir/devisee found in the fee schedule
in § 3000.120 of this chapter with the
request to assign lease rights.
(c) The filing must include a
qualification statement demonstrating
qualification to hold an interest in a
lease in accordance with 43 CFR subpart
3102. Any ownership or interest
otherwise forbidden by the regulations
in this part which may be acquired by
descent, will, judgment or decree may
be held for a period not to exceed 2
years after its acquisition. Any such
forbidden ownership or interest held for
a period of more than 2 years after
acquisition may be subject to
cancellation.
(d) A bond rider or replacement bond
may be required for any bond(s)
previously furnished by the decedent.
§ 3106.82
Change of name.
(a) A legally recognized change of
name of a lessee or sublessee must be
reported to the proper BLM office. The
notice of name change must be
submitted in writing with adequate
information concerning the name
change. For a corporate name change,
the request must include the Secretary
of State’s Certificate of Name Change,
along with the Articles of Incorporation,
or Amendment, if available.
(b) An entity must include with the
notice of name change the required
processing fee listed in the fee schedule
in § 3000.120 of this chapter.
(c) If a bond(s) has been furnished, a
change of name on the bond may be
made by surety consent or a rider to the
original bond or by a replacement bond.
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§ 3106.83 Corporate mergers and
dissolution of corporations, partnerships,
and trusts.
(a) In the event a corporate merger
affects leases where property of the
dissolving corporation to the surviving
corporation is accomplished by
operation of law, an assignment of any
affected lease interest is not required.
An entity must notify the BLM of the
merger and provide copies of the
Secretary of State’s Certificate of Merger,
along with the Articles of Incorporation,
or Amendment, if available, to the BLM.
(b) The BLM will not recognize any
transfers provided by the Articles of
Dissolution unless an entity has filed
with the BLM a Certificate of
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Dissolution of an incorporated entity,
certified as accepted by the State where
the entity was incorporated.
(c) An entity must file with the BLM
a dissolution of a partnership or trust
through an order or decree that
authorizes settlement, discharge, and
distribution of the lease holdings and/or
interests for official recognition of the
assignment of lease interests.
(d) An entity must include the
processing fee for corporate merger
found in the fee schedule in § 3000.120
of this chapter.
(e) The authorized officer may require
a bond rider or replacement bond for all
affected corporations, partnerships or
trusts.
§ 3106.84
Sheriff’s sale/deed.
(a) Where a notice of sale of the
leasehold interest is published pursuant
to State law applicable to the execution
of sales of real property, the purchaser
must submit a copy of the Sheriff’s
Certificate of Sale to the proper BLM
office after any redemption period has
passed.
(b) When submitting the certificate
described in paragraph (a), an entity
must include the processing fee for
sheriff’s deed found in the fee schedule
in § 3000.120 of this chapter.
(c) The purchaser(s) must file a
qualification statement to hold an
interest in a lease in accordance with 43
CFR subpart 3102. Failure to provide a
qualification statement after 2 years will
result in the BLM cancelling the lease or
interest.
(d) If a bond has been furnished by
the previous interest holder, the
authorized officer may require a new
bond.
47631
pertinent facts. In drilling a new well on
a lease or for the benefit of a lease under
the terms of an approved agreement, it
must be taken to a depth sufficient to
penetrate at least one formation
recognized in the area as potentially
productive of oil or gas, or where an
existing well is reentered, it must be
taken to a depth sufficient to penetrate
at least one new and deeper formation
recognized in the area as potentially
productive of oil or gas. The authorized
officer may determine that further
drilling is unwarranted or
impracticable.
(c) When a BLM-approved directional
or horizontal well is drilled within the
leased area from an off-lease location
with the intent to produce from the
leased area, the BLM will consider
drilling to have commenced on the
leased area when drilling is commenced
at the off-lease location.
Production
§ 3107.21
Continuation by production.
A lease will be extended so long as oil
or gas is being produced in paying
quantities.
§ 3107.22
Cessation of production.
Subpart 3107—Continuation and
Extension
A lease in its extended term because
of production (and lacking a well
capable of production in paying
quantities) will not expire upon
cessation of production, if, within 60
calendar days of cessation of
production, reworking or drilling
operations on the leasehold are
commenced and are thereafter
conducted with reasonable diligence
during the period of nonproduction. If
these reworking or drilling operations
fail to result in production in paying
quantities, the lease will expire by
operation of law, effective as of the date
production ceased.
§ 3107.10
§ 3107.23
Extension by drilling.
(a) Any lease on which actual drilling
operations were commenced prior to the
end of its primary term and are being
diligently prosecuted at the end of the
primary term or any lease which is part
of an approved oil and gas agreement
upon which such drilling takes place,
will be extended for 2 years subject to
the rental being timely paid as required
by 43 CFR 3103.20, and subject to the
provisions of 43 CFR 3105.23 and
3186.1, if applicable. The BLM will not
grant a drilling extension for a lease in
its extended term.
(b) Actual drilling operations must be
conducted in a manner that a reasonable
person seriously looking for oil or gas
could be expected to make in that
particular area, given the existing
knowledge of geologic and other
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Leases capable of production.
No lease for lands on which there is
a well capable of producing oil or gas
in paying quantities will expire because
the lessee fails to produce the same,
unless the lessee fails to place the lease
in production within a period of not less
than 60 calendar days as specified by
the authorized officer after receipt of
notice by certified mail from the
authorized officer to do so. Such
production must be continued unless
and until suspension of production is
granted by the authorized officer.
Extension for Terms of Agreements
§ 3107.31 Leases committed to an
agreement.
(a) Any lease or portion of a lease
committed to an oil and gas agreement
that contains a general provision for
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allocation of oil or gas will continue in
effect so long as the lease or portion
thereof remains subject to the
agreement; provided, that there is
production of oil or gas in paying
quantities under the agreement prior to
the expiration date of such lease.
(b) A well that is drilled and
completed on a lease committed to a
unit agreement, and that is capable of
production in paying quantities on a
lease basis, will extend the term of all
expiring Federal leases committed to the
unit agreement for the term of the unit
agreement and for so long as the well is
capable of production in paying
quantities.
§ 3107.32
in part.
Segregation of leases committed
(a) Any lease committed after July 29,
1954, to any unit agreement, which
covers lands within and lands outside
the area covered by the agreement, will
be segregated, as of the effective date of
commitment to the unit, into separate
leases; one covering the lands
committed to the agreement, the other
lands not committed to the agreement.
For unproven areas, such segregation
will occur only when the public interest
requirement is satisfied pursuant to 43
CFR 3183.4(b). Upon satisfaction of the
public interest requirement, the BLM
will deem the segregation to have been
effective as of the date of commitment
of the lands to the unit.
(b)(1) The segregated lease covering
the non-unitized portion of the lands
will continue in force and effect for the
term of the lease or for 2 years from the
date of segregation, whichever is longer.
(2) If a partially committed lease is in
an extended term because of
production, the segregated, nonproducing lease will continue in effect
so long as the producing lease exists and
rentals are paid, and so long thereafter
as oil or gas is produced from the
committed lease.
lotter on DSK11XQN23PROD with PROPOSALS2
§ 3107.40
Extension by elimination.
Any lease eliminated from any
approved or prescribed oil and gas
agreement authorized by the Act and
any lease in effect at the termination of
such agreement, unless relinquished,
will continue in effect for the original
term of the lease or for 2 years after its
elimination from the agreement or after
the termination of the plan or
agreement, whichever is longer, and for
so long thereafter as oil or gas is
produced in paying quantities. No lease
will be extended if the public interest
requirement for an approved oil and gas
agreement has not been satisfied, as
determined by the authorized officer.
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Extension of Leases Segregated by
Assignment
§ 3107.72
gas.
§ 3107.51 Extension after discovery on
other segregated portions.
Any lease used for the storage of oil
or gas will be extended for the period
of storage under an approved agreement.
Any lease segregated by assignment,
including the retained portion, will
continue in effect for the primary term
of the original lease, or for 2 years after
the date a well capable of production in
paying quantities is established upon
any other portion of the original lease,
whichever is the longer period.
§ 3107.52 Undeveloped parts of leases in
their extended term.
Undeveloped parts of leases retained
or assigned out of leases which are in
their extended term will continue in
effect for 2 years after the effective date
of assignment, provided the parent lease
was issued prior to September 2, 1960.
§ 3107.53
leases.
Undeveloped parts of producing
Undeveloped parts of leases retained
or assigned out of leases which are
extended by production, actual or
suspended, or the payment of
compensatory royalty will continue in
effect for 2 years after the effective date
of assignment and for so long thereafter
as oil or gas is produced in paying
quantities.
§ 3107.60
Extension of reinstated leases.
Where a reinstatement of a terminated
lease is granted under 43 CFR 3108.20
and the authorized officer finds that the
reinstatement will not afford the lessee
a reasonable opportunity to continue
operations under the lease, the
authorized officer may extend the term
of such lease for a period sufficient to
give the lessee such an opportunity.
Any extension will be subject to the
following conditions:
(a) No extension will exceed a period
equal to the unexpired portion of the
lease or any extension thereof remaining
at the date of termination.
(b) When the reinstatement occurs
after the expiration of the term or
extension thereof, the lease may be
extended from the date the authorized
officer grants the petition, but in no
event for more than 2 years from the
date the reinstatement is authorized and
so long thereafter as oil or gas is
produced in paying quantities.
Other Types
§ 3107.71
royalty.
Payment of compensatory
The payment of a compensatory
royalty will extend the term of any lease
for the period during which such
compensatory royalty is paid and for a
period of 1 year from the
discontinuance of such payments.
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Subsurface storage of oil and
Subpart 3108—Relinquishment,
Termination, Cancellation
§ 3108.10
Relinquishment.
The lessee(s) may relinquish the lease
or any legal subdivision of the lease at
any time. The lessee(s) must file a
written relinquishment with the BLM
State Office with jurisdiction over the
lease. All lessees holding record title
interests in the lease must sign the
relinquishment. A relinquishment takes
effect on the date the lessee filed it with
the BLM. However, the lessee(s) and the
party that issued the bond will continue
to be obligated to:
(a) Make payments of all accrued
rentals and royalties, including
payments of compensatory royalty due
for all drainage that occurred before the
relinquishment;
(b) Place all wells to be relinquished
in condition for suspension or
abandonment as the BLM requires; and
(c) Complete reclamation of the leased
sites after stopping or abandoning oil
and gas operations on the lease, under
a plan approved by the BLM or the
appropriate surface management
agency.
Termination by Operation of Law and
Reinstatement
§ 3108.21
Automatic termination.
(a) Except as provided in paragraph
(b) of this section, any lease on which
there is no well capable of producing oil
or gas in paying quantities will
automatically terminate by operation of
law (30 U.S.C. 188) if the lessee fails to
pay the rental at the designated ONRR
office on or before the lease anniversary
date. However, if the designated ONRR
office is closed on the anniversary date,
a rental payment received on the next
business day the ONRR office is open to
the public will be considered timely
made.
(b) If the rental payment due under a
lease is paid on or before its anniversary
date but the amount of the payment is
deficient and the deficiency is nominal
as defined in this section, or the amount
of payment made was determined in
accordance with the rental or acreage
figure stated in a decision rendered by
the authorized officer, and such figure is
found to be in error resulting in a
deficiency, such lease will not have
automatically terminated unless the
lessee fails to pay the deficiency within
the period prescribed in the Notice of
Deficiency provided for in this section.
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A deficiency will be considered
nominal if it is not more than $100 or
more than 5 percent of the total
payment due, whichever is less. The
designated ONRR office will send a
Notice of Deficiency to the lessee. The
Notice will allow the lessee 15 days
from the date of receipt or until the due
date, whichever is later, to submit the
full balance due to the designated ONRR
office. If the payment required by the
Notice is not paid within the time
allowed, the lease will have terminated
by operation of law as of its anniversary
date.
(c) The automatic termination
provision does not apply where, due to
other contingencies, additional rental is
due on a date other than the lease
anniversary date and where the lessee
did not receive notice that the obligation
had accrued, unless the lessee fails to
pay the rental within the period
prescribed in the BLM Notice.
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§ 3108.22 Reinstatement at existing rental
and royalty rates: Class I reinstatements.
(a) Except as hereinafter provided, the
authorized officer may reinstate a lease
which has terminated for failure to pay
on or before the anniversary date the
full amount of rental due, provided that:
(1) Such rental was paid or tendered
within 20 days after the anniversary
date; and
(2) It is shown to the satisfaction of
the authorized officer that the failure to
timely submit the full amount of the
rental due was either justified or not
due to a lack of reasonable diligence on
the part of the lessee (reasonable
diligence includes a rental payment that
is paid to the ONRR through its online
rental payment system on or before the
lease anniversary date. If the designated
ONRR office or payment system is not
operational on the anniversary date,
payment received on the next business
day in which the designated ONRR
office or payment system is operational
to the public will be deemed timely);
and
(3) A petition for reinstatement and
the processing fee for lease
reinstatement, Class I, found in the fee
schedule in § 3000.120 of this chapter,
are filed with the proper BLM office
within 60 days after receipt of Notice of
Termination of Lease due to late
payment of rental. If a terminated lease
becomes productive prior to the time
the lease is reinstated, all required
royalty that has accrued must be paid to
the ONRR.
(b) The burden of showing that the
failure to pay on or before the
anniversary date was justified or not
due to lack of reasonable diligence is on
the lessee.
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(c) Under no circumstances will a
terminated lease be reinstated if:
(1) A valid oil and gas lease has been
issued prior to the filing of a petition for
reinstatement affecting any of the lands
covered by that terminated lease; or
(2) The oil and gas interests of the
United States in the lands have been
disposed of or otherwise have become
unavailable for leasing.
§ 3108.23 Reinstatement at higher rental
and royalty rates: Class II reinstatements.
(a) The authorized officer may, if the
requirements of this section are met,
reinstate a competitive oil and gas lease
which was terminated by operation of
law for failure to pay rental timely when
the rental was not paid or tendered
within 20 calendar days of the
termination date, and it is shown to the
satisfaction of the authorized officer that
such failure was justified or not due to
a lack of reasonable diligence, or no
matter when the rental was paid, it is
shown to the satisfaction of the
authorized officer that such failure was
inadvertent.
(b)(1) Such leases may be reinstated if
the required back rental and royalty at
the increased rates accruing from the
date of termination, together with a
petition for reinstatement, are filed on
or before the earlier of:
(i) Sixty calendar days after the last
date that any lessee of record received
Notice of Termination by certified mail;
or
(ii) Twenty-four months after
termination of the lease.
(2) After determining that the
requirements for filing of the petition for
reinstatement have been timely met, the
authorized officer may reinstate the
lease if:
(i) No valid lease has been issued
prior to the filing of the petition for
reinstatement affecting any of the lands
covered by the terminated lease,
whether such lease is still in effect or
not;
(ii) The oil and gas interests of the
United States in the lands have not been
disposed of or have not otherwise
become unavailable for leasing;
(iii) Payment of all back rentals and
royalties at the rates established for the
reinstated lease has been made;
(iv) An agreement has been signed by
the lessee and attached to and made a
part of the lease specifying future
rentals at the applicable rates specified
for reinstated leases in 43 CFR 3103.22
and future royalties at the rates set in 43
CFR 3103.31 for all production removed
or sold from such lease or shared by
such lease from production allocated to
the lease by virtue of its participation in
an oil and gas agreement;
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(v) A notice of the proposed
reinstatement of the terminated lease
and the terms and conditions of
reinstatement has been published in the
Federal Register at least 30 days prior
to the date of reinstatement for which
the lessee must reimburse the BLM for
the full costs incurred in the publishing
of said notice; and
(vi) The lessee has paid the BLM a
nonrefundable administrative fee of
$500.
(c) The authorized officer will furnish
to the Chairpersons of the Committee on
Natural Resources of the House of
Representatives and of the Committee
on Energy and Natural Resources of the
Senate, at least 30 days prior to the date
of reinstatement, a copy of the notice,
together with information concerning
rental, royalty, volume of production, if
any, and any other matter which the
authorized officer considers significant
in making the determination to
reinstate.
(d) If the authorized officer reinstates
the lease, the reinstatement will be
effective as of the date of termination,
for the unexpired portion of the original
lease or any extension thereof remaining
on the date of termination, and so long
thereafter as oil or gas is produced in
paying quantities. Where a lease is
reinstated under this section and the
authorized officer finds that the
reinstatement of such lease either:
(1) Occurs after the expiration of the
primary term or any extension thereof;
or
(2) Will not afford the lessee a
reasonable opportunity to continue
operations under the lease, the
authorized officer may extend the term
of the reinstated lease for such period as
determined reasonable, but in no event
for more than 2 years from the date of
the reinstatement and so long thereafter
as oil or gas is produced in paying
quantities.
§ 3108.30
Cancellation.
(a) Whenever the lessee fails to
comply with any of the provisions of the
law, the regulations issued thereunder,
or the lease, the lease may be canceled
by the Secretary, if the leasehold does
not contain a well capable of production
of oil or gas in paying quantities, or if
the lease is not committed to an
approved oil and gas agreement that
contains a well capable of production of
unitized substances in paying
quantities. The lease may be canceled
only if the default continues for 30
calendar days after a notice of default
has been delivered in accordance with
43 CFR 1810.2.
(b) Whenever the lessee fails to
comply with any of the provisions of the
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law, the regulations issued thereunder,
or the lease, and if the leasehold
contains a well capable of production of
oil or gas in paying quantities, or if the
lease is committed to an approved oil
and gas agreement that contains a well
capable of production of unitized
substances in paying quantities, the
lease may be canceled only by court
order in the manner provided by section
31(a) of the Act (30 U.S.C. 188).
(c) If any interest in any lease is
owned or controlled, directly or
indirectly, by means of stock or
otherwise, in violation of any of the
provisions of the Act, the lease may be
canceled, or the interest so owned may
be forfeited, or the person so owning or
controlling the interest may be
compelled to dispose of the interest,
only by court order in the manner
provided by section 27(h)(1) of the Act
(30 U.S.C. 184).
(d) Leases will be subject to
cancellation if improperly issued.
§ 3108.40
Bona fide purchasers.
A lease or interest therein may not be
cancelled to the extent that such action
adversely affects the title or interest of
a bona fide purchaser even though such
lease or interest, when held by a
predecessor in title, may have been
subject to cancellation. All purchasers
will be charged with constructive notice
as to all pertinent regulations and all
BLM records pertaining to the lease and
the lands covered by the lease. Prompt
action may be taken to dismiss as a
party to any proceedings with respect to
a violation by a predecessor of any
provisions of the Act, any person who
shows the holding of an interest as a
bona fide purchaser without having
violated any provisions of the Act. No
hearing will be necessary upon such
showing unless prima facie evidence is
presented that the purchaser is not a
bona fide purchaser.
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§ 3108.50
rights.
Waiver or suspension of lease
If, during any proceeding with respect
to a violation of any provision of the
regulations in 43 CFR parts 3000 and
3100 or the Act, a party thereto files a
waiver of his/her rights under the lease
to drill or to assign his/her lease
interests, or if such rights are suspended
by order of the Secretary pending a
decision, payments of rentals and the
running of time against the term of the
lease involved will be suspended as of
the first day of the month following the
filing of the waiver or the Secretary’s
suspension until the first day of the
month following the final decision in
the proceeding or the revocation of the
waiver or suspension.
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Subpart 3109—Leasing Under Special
Acts
Rights-of-Way
§ 3109.11
Generally.
The Act of May 21, 1930 (30 U.S.C.
301–306), authorizes either the leasing
of oil and gas deposits under railroad
and other rights-of-way to the owner of
the right-of-way or the entering of a
compensatory royalty agreement with
adjoining landowners. This authority
will be exercised only with respect to
railroad rights-of-way and easements
issued pursuant either to the Act of
March 3, 1875 (43 U.S.C. 934 et seq.),
or pursuant to earlier railroad right-ofway statutes, and with respect to rightsof-way and easements issued pursuant
to the Act of March 3, 1891 (43 U.S.C.
946 et seq.). The oil and gas underlying
any other right-of-way or easement is
included within any oil and gas lease
issued pursuant to the Act which covers
the lands within the right-of-way,
subject to the limitations on use of the
surface, if any, set out in the statute
under which, or permit by which, the
right-of-way or easement was issued,
and such oil and gas will not be leased
under the Act of May 21, 1930.
§ 3109.12
Application.
(a) No approved form is required for
an application to lease oil and gas
deposits underlying a right-of-way.
(b) The right-of-way owner or his/her
transferee must file the application in
the proper BLM office.
(c) Include the processing fee for
leasing under right-of-way found in the
fee schedule in § 3000.120 of this
chapter.
(d) An application must include:
(1) Facts as to the ownership of the
right-of-way, and of the transfer if the
application is filed by a transferee;
(2) An executed transfer of the right
to obtain a lease, if necessary;
(3) A description of the development
of oil or gas in adjacent or nearby lands,
the location and depth of the wells, the
production and the probability of
drainage of the deposits in the right-ofway;
(4) A description of each legal
subdivision through which a portion of
the right-of-way desired to be leased
traverses; however, a description by
metes and bounds of the right-of-way is
not required; and
(5) A map of the applicable lands.
§ 3109.13
Notice.
After the BLM has determined that a
lease of a right-of-way or any portion
thereof is consistent with the public
interest, either upon consideration of an
application for lease or on its own
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motion, the authorized officer will serve
notice on the owner or lessee of the oil
and gas rights of the adjoining lands.
The adjoining landowner or lessee will
be allowed a reasonable time, as
provided in the notice, within which to
submit a bid for the percent of
compensatory royalty, the owner or
lessee must pay for the extraction of the
oil and gas underlying the right-of-way
through wells on such adjoining lands.
The owner of the right-of-way will be
given the same time period to submit a
bid for the lease.
§ 3109.14 Award of lease or compensatory
royalty agreement.
Award of lease to the owner of the
right-of-way, or a contract for the
payment of compensatory royalty by the
owner or lessee of the adjoining lands
will be made to the bidder whose offer
is determined by the authorized officer
to be to the best advantage of the United
States, considering the amount of
royalty to be received and the better
development under the respective
means of production and operation.
§ 3109.15 Compensatory royalty
agreement or lease.
(a) The lease or compensatory royalty
agreement will be on a form approved
by the Director.
(b) The primary term of the lease will
be for a period of 10 years.
(c) The following provisions of 43
CFR part 3100 apply to the issuance and
administration of leases for oil and gas
deposits underlying a right-of-way
issued under this part:
(1) All of subpart 3101, except
§ 3101.20; and
(2) All of subparts 3102 through 3108;
§ 3109.20
System.
Units of the National Park
(a) Oil and gas leasing in units of the
National Park System will be governed
by 43 CFR part 3100 and all operations
conducted on a lease or permit in such
units will be governed by 43 CFR parts
3160 and 3180.
(b) Any lease or permit respecting
minerals in units of the National Park
System may be issued or renewed only
with the consent of the Regional
Director, National Park Service. Such
consent will only be granted upon a
determination by the Regional Director
that the activity permitted under the
lease or permit will not have significant
adverse effect upon the resources or
administration of the unit pursuant to
the authorizing legislation of the unit.
Any lease or permit issued will be
subject to such conditions as may be
prescribed by the Regional Director to
protect the surface and significant
resources of the unit, to preserve their
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use for public recreation, and to the
condition that site specific approval of
any activity on the lease will only be
given upon concurrence by the Regional
Director. All lease applications received
for reclamation withdrawn lands will
also be submitted to the Bureau of
Reclamation for review.
(c) The units subject to the regulations
in this part are those units of land and
water which are shown on the following
maps on file and available for public
inspection in the office of the Director
of the National Park Service and in the
Superintendent’s Office of each unit.
The boundaries of these units may be
revised by the Secretary as authorized in
the Acts.
(1) Lake Mead National Recreation
Area—The map identified as ‘‘boundary
map, 8360–80013B, revised February
1986.
(2) Whiskeytown Unit of the
Whiskeytown-Shasta-Trinity National
Recreation Area—The map identified as
‘‘Proposed Whiskeytown-Shasta-Trinity
National Recreation Area,’’ numbered
BOR–WST 1004, dated July 1963.
(3) Ross Lake and Lake Chelan
National Recreation Areas—The map
identified as ‘‘Proposed Management
Units, North Cascades, Washington,’’
numbered NP–CAS–7002, dated
October 1967.
(4) Glen Canyon National Recreation
Area—the map identified as ‘‘boundary
map, Glen Canyon National Recreation
Area,’’ numbered GLC–91,006, dated
August 1972.
(d) The following excepted units will
not be open to mineral leasing:
(1) Lake Mead National Recreation
Area. (i) All waters of Lakes Mead and
Mohave and all lands within 300 feet of
those lakes measured horizontally from
the shoreline at maximum surface
elevation;
(ii) All lands within the unit of
supervision of the Bureau of
Reclamation around Hoover and Davis
Dams and all lands outside of resource
utilization zones as designated by the
Superintendent on the map (602–2291B,
dated October 1987) of Lake Mead
National Recreation Area which is
available for inspection in the Office of
the Superintendent.
(2) Whiskeytown Unit of the
Whiskeytown-Shasta-Trinity National
Recreation Area. (i) All waters of
Whiskeytown Lake and all lands within
1 mile of that lake measured from the
shoreline at maximum surface elevation;
(ii) All lands classified as highdensity recreation, general outdoor
recreation, outstanding natural and
historic, as shown on the map
numbered 611–20,004B, dated April
1979, entitled ‘‘Land Classification,
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47635
Whiskeytown Unit, WhiskeytownShasta-Trinity National Recreation
Area.’’ This map is available for public
inspection in the Office of the
Superintendent;
(iii) All lands within section 34 of
Township 33 north, Range 7 west, Mt.
Diablo Meridian.
(3) Ross Lake and Lake Chelan
National Recreation Areas. (i) All of
Lake Chelan National Recreation Area;
(ii) All lands within 1⁄2 mile of Gorge,
Diablo and Ross Lakes measured from
the shoreline at maximum surface
elevation;
(iii) All lands proposed for or
designated as wilderness;
(iv) All lands within 1⁄2 mile of State
Highway 20;
(v) Pyramid Lake Research Natural
Area and all lands within 1⁄2 mile of its
boundaries.
(4) Glen Canyon National Recreation
Area. Those units closed to mineral
disposition within the natural zone,
development zone, cultural zone and
portions of the recreation and resource
utilization zone as shown on the map
numbered 80,022A, dated March 1980,
entitled ‘‘Mineral Management Plan—
Glen Canyon National Recreation Area.’’
This map is available for public
inspection in the Office of the
Superintendent and the office of the
BLM State Offices, Arizona and Utah.
3120.13
§§ 3109.21–3109.22
Subpart 3120—Competitive Leases
[Reserved]
§ 3109.30 Shasta and Trinity Units of the
Whiskeytown-Shasta-Trinity National
Recreation Area.
Section 6 of the Act of November 8,
1965 (Pub. L. 89–336), authorizes the
Secretary to permit the removal of oil
and gas from lands within the Shasta
and Trinity Units of the WhiskeytownShasta-Trinity National Recreation Area
in accordance with the Act or the
Mineral Leasing Act for Acquired
Lands. Subject to the determination by
the Secretary of Agriculture that
removal will not have significant
adverse effects on the purposes of the
Central Valley project or the
administration of the recreation area.
PART 3110 [REMOVED]
3. Under the authority of 30 U.S.C.
189, part 3110 is removed.
■ 4. Revise part 3120 to read as follows:
■
PART 3120—COMPETITIVE LEASES
Subpart 3120—Competitive Leases
Sec.
General
3120.11 Lands available for competitive
leasing.
3120.12 Requirements.
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Protests.
Lease Terms
3120.21 Duration of lease.
3120.22 Dating of leases.
3120.23 Lease size.
3120.30 Nomination process.
3120.31 General.
3120.32 Filing of a nomination for
competitive leasing.
3120.33 Parcels receiving nominations.
Expressions of Interest
3120.41 Process.
3120.42 Agency inventory of leasing.
Notice of Competitive Lease Sale
3120.51 General.
3120.52 Posting timeframes.
Competitive Auction
3120.61 Competitive auction.
3120.62 Payments required.
3120.63 Award of lease.
3120.70 Parcels not bid on at auction.
Future Interest
3120.81 Nomination or expression of
interest to make lands available for
competitive lease.
3120.82 Future interest terms and
conditions.
3120.83 Compensatory royalty agreements.
Authority: 16 U.S.C. 3101 et seq.; 30
U.S.C. 181 et seq. and 351–359; 40 U.S.C. 471
et seq.; 43 U.S.C. 1701 et seq.; Pub. L. 113–
291, 128 Stat. 3762; and the Attorney
General’s Opinion of April 2, 1941 (40 Op.
Atty. Gen. 41).
General
§ 3120.11
leasing.
Lands available for competitive
All lands eligible and available for
leasing may be offered for competitive
auction under this subpart, including
but not limited to:
(a) Lands that were covered by
previously issued oil and gas leases that
have terminated, expired, been
cancelled or relinquished;
(b) Lands for which authority to lease
has been delegated from the General
Services Administration;
(c) If, in proceeding to cancel a lease,
interest in a lease, option to acquire a
lease or an interest therein, acquired in
violation of any of the provisions of the
Act, an underlying lease, interest or
option in the lease is cancelled or
forfeited through a bankruptcy or
otherwise to the United States and there
are valid interests therein that are not
subject to cancellation, forfeiture, or
compulsory disposition, such
underlying lease, interest, or option may
be sold to the highest responsible and
qualified bidder by competitive bidding
under this subpart, subject to all
outstanding valid interests therein and
valid options pertaining thereto. If less
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than the whole interest in the lease,
interest, or option is cancelled or
forfeited, such partial interest may
likewise be sold by competitive bidding.
If no satisfactory bid is obtained as a
result of the competitive offering of such
whole or partial interests, such interests
may be sold in accordance with 30
U.S.C. 184(h)(2) by such other methods
as the authorized officer deems
appropriate, but on terms no less
favorable to the United States than those
of the best competitive bid received.
Interest in outstanding leases(s) so sold
will be subject to the terms and
conditions of the existing lease(s);
(d) Lands which are otherwise
unavailable for leasing but which are
subject to drainage (protective leasing);
(e) Lands included in any expression
of interest submitted to the authorized
officer;
(f) Lands selected by the authorized
officer; and
(g) Lands that were offered on a
previous sale for which no bid was
accepted or received.
§ 3120.12
Requirements.
(a) Each BLM State Office will hold
sales at least quarterly if eligible lands
are available for competitive leasing.
(b) Lease sales will be conducted by
a competitive auction process.
(c) The BLM may issue a lease only
to the highest responsible and qualified
bidder. If a person does not pay the
minimum monies owed the day of the
sale, the BLM may refer that person to
the Department of the Interior’s Office of
the Inspector General, Administrative
Remedies Division, for appropriate
action, including potential suspension
and debarment.
(d) The national minimum acceptable
bid will be as specified in § 3000.130 of
this chapter and payable on the gross
acreage and will not be prorated for any
lands in which the United States owns
a fractional interest.
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§ 3120.13
Protests.
(a) No action pursuant to the
regulations in this subpart will be
suspended under 43 CFR 4.21(a) due to
a protest from a notice by the authorized
officer to hold a lease sale.
(b) Notwithstanding paragraph (a) of
this section, the authorized officer may
suspend the offering of a specific parcel
while considering a protest against its
inclusion in a Notice of Competitive
Lease Sale.
(c) Only the Assistant Secretary for
Land and Minerals Management may
suspend a lease sale for good cause after
reviewing the reason(s) for a protest.
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Lease Terms
§ 3120.21
Duration of lease.
Competitive leases will be issued for
a primary term of 10 years.
§ 3120.22
Dating of leases.
All competitive leases will be
considered issued when signed by the
authorized officer. Competitive leases,
except future interest leases issued
under § 3120.80, will be effective as of
the first day of the month following the
date the leases are signed on behalf of
the United States. A lease may be made
effective on the first day of the month
within which it is issued if a written
request is made prior to the date of
signature of the authorized officer.
Leases for future interest will be
effective as of the date the mineral
interests vest in the United States.
§ 3120.23
Lease size.
Lands may be offered in leasing units
of not more than 2,560 acres outside
Alaska, or 5,760 acres within Alaska,
which may be as nearly compact in form
as possible.
§ 3120.30
Nomination process.
The Director may elect to implement
the provisions contained in §§ 3120.31
through 3120.33 after review of any
comments received during a period of
not less than 30 calendar days following
publication in the Federal Register of
notice that implementation of those
sections is being considered.
§ 3120.31
General.
The Director may elect to accept
nominations, as set forth in this section,
as part of the competitive process
required by the Act or elect to accept
informal expressions of interest. A List
of Lands Available for Competitive
Nominations may be posted, and
nominations in response to this list
must be made in accordance with
instructions contained therein and on a
form or by a method approved by the
Director. Those parcels receiving
nominations will be included in a
Notice of Competitive Lease Sale, unless
the parcel is withdrawn by the BLM.
§ 3120.32 Filing of a nomination for
competitive leasing.
Nominations filed in response to a
List of Lands Available for Competitive
Nominations and on a form or using a
method approved by the Director must:
(a) Include the nominator’s name and
personal or business address. The name
of only one citizen, association or
partnership, corporation or municipality
must appear as the nominator. All
communications relating to leasing will
be sent to that name and address, which
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will constitute the nominator’s name
and address of record;
(b) Be completed, and filed in
accordance with the instructions
printed on the form and the regulations
in this subpart;
(c) Be filed within the filing period
and in the BLM State Office specified in
the List of Lands Available for
Competitive Nominations. A
nomination will be unacceptable and
will be returned if it has not been
completed and timely filed in
accordance with the instructions on the
form or with the other requirements in
this subpart; and
(d) Be accompanied by a remittance,
as specified in § 3000.120 of this chapter
for a formal lease nomination.
§ 3120.33
Parcels receiving nominations.
Parcels which receive nominations
may be included in a Notice of
Competitive Lease Sale. The Notice will
indicate the number of nominations
received for each parcel.
Expressions of Interest
§ 3120.41
Process.
(a) A party submitting an expression
of interest in leasing land available for
disposition under section 17 of the
Mineral Leasing Act must include the
submitter’s name and address and must
submit the expression of interest
through the BLM’s online leasing
system.
(b) The expression must provide a
description of the lands identified by
legal land description, as follows:
(1) For lands surveyed under the
public land survey system, describe the
lands to the nearest aliquot part within
the legal subdivision, section, township,
range, and meridian;
(2) For unsurveyed lands, describe the
lands by metes and bounds, giving
courses and distances, and tie this
information to an official corner of the
public land surveys, or to a prominent
topographic feature;
(3) For approved protracted surveys,
include an entire section, township,
range, and meridian. Do not divide
protracted sections into aliquot parts;
(4) For lands that have water
boundaries, describe the lands based on
the initial survey or deed acquiring
ownership;
(5) For fractional interest lands,
identify the United States mineral
ownership by percentage;
(6) For split estate lands, where the
surface rights are in private ownership
and the rights to develop the oil and gas
are managed by the Federal
Government, submit the private surface
owner’s name and address.
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(7) For lands where the acquiring
agency has assigned an acquisition or
tract number covering the lands applied,
submit the number in addition to any
description otherwise required by this
section. If the authorized officer
determines that the acquisition or tract
number, together with identification of
the State and county, constitutes an
adequate description, the authorized
officer may allow the description in this
manner in lieu of other descriptions
required by this section.
(c) A submitter may submit more than
one expression of interest, so long as
each expression separately satisfies the
requirements of paragraph (b) of this
section.
(d) Each expression of interest must
include a filing fee, as found in the fee
schedule in § 3000.120 of this chapter.
(e) The BLM may include lands in a
lease sale on its own initiative.
(f) When determining whether the
BLM should offer lands specified in an
expression of interest at lease sales, the
BLM will evaluate the Secretary’s
obligations to manage public lands for
multiple use and sustained yield and to
take any action required to prevent
unnecessary or undue degradation of
the lands and their resources, along
with other applicable legal
requirements. At a minimum, the BLM
will consider:
(1) Proximity to oil and gas
development existing at the time of the
BLM’s evaluation, giving preference to
lands upon which a prudent operator
would seek to expand existing
operations;
(2) The presence of important fish and
wildlife habitats or connectivity areas,
giving preference to lands that would
not impair the proper functioning of
such habitats or corridors;
(3) The presence of historic
properties, sacred sites, and other high
value leasing lands, giving preference to
lands that would not impair the cultural
significance of such resources;
(4) The presence of recreation and
other important uses or resources,
giving preference to lands that would
not impair the value of such uses or
resources; and
(5) The potential for oil and gas
development, giving preference to lands
with high potential for development.
(g) The BLM may offer for sale all or
some of the lands specified in an
expression of interest and may offer
those lands as part of a parcel that
includes lands not specified in the
expression of interest.
§ 3120.42
Agency inventory of leasing.
Until August 16, 2032, the BLM will
from time to time calculate, for the
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preceding 1-year period, the acreage for
which expressions of interest have been
submitted to the BLM and the sum total
of acres offered for lease.
Notice of Competitive Lease Sale
§ 3120.51
General.
(a) The lands available for competitive
lease sale under this subpart will be
described in a Notice of Competitive
Lease Sale.
(b) The time, date, and place of the
competitive lease sale will be stated in
the notice.
(c) The notice will include an
identification of, and a copy of,
stipulations applicable to each parcel.
47637
(1) The minimum bonus bid as
specified in § 3000.130 of this chapter;
(2) The total amount of the first year’s
rental; and
(3) The processing fee for competitive
lease applications found in the fee
schedule in § 3000.120 of this chapter
for each parcel.
(c) The winning bidder must submit
the balance of the bonus bid to the
proper BLM office within 10 business
days after the last day of the competitive
auction.
§ 3120.63
Award of lease.
Competitive Auction
(a) A bid will not be withdrawn and
will constitute a legally binding
commitment to execute the lease bid
form and accept a lease, including the
obligation to pay the bonus bid, first
year’s rental, and processing fee.
Execution by the high bidder of a
competitive lease bid form approved by
the Director constitutes certification of
compliance with 43 CFR subpart 3102,
will constitute a binding lease offer,
including all terms and conditions
applicable thereto, and must be
submitted when payment is made in
accordance with § 3120.62(b). Failure to
comply with § 3120.62(c) will result in
rejection of the bid and forfeiture of the
monies submitted under § 3120.62(b).
(b) A lease will be awarded to the
highest responsible and qualified
bidder. A copy of the lease will be
provided to the lessee after signature by
the authorized officer.
(c) If a bid is rejected, the land may
be reoffered competitively under this
subpart.
(d) The BLM will not issue a lease
until it resolves all protests covering the
lands to be leased.
(e) Leases will be issued within 60
calendar days, following payment by the
successful bidder of the remainder of
the bonus bid, if any, and the annual
rental for the first lease year. If the BLM
cannot issue the lease within 60 days,
the BLM may reject the offer.
§ 3120.61
§ 3120.70
§ 3120.52
Posting timeframes.
(a) After identifying a preliminary list
of lands for a lease sale, the BLM will
provide a scoping period, of not less
than 30 calendar days, for public
comment on the preliminary parcel list
for the upcoming lease sale. The
preliminary parcel list is not subject to
protests.
(b) After drafting a National
Environmental Policy Act (NEPA)
document for a lease sale, the BLM will
provide a comment period, of not less
than 30 calendar days, for public
comment on the NEPA document for the
upcoming lease sale. The draft NEPA
document is not subject to protests or
appeals.
(c) At least 60 calendar days prior to
conducting a competitive auction, the
BLM will make available to the public
a list of lands to be offered for
competitive lease sale in a Notice of
Competitive Lease Sale.
(d) After posting the Notice of
Competitive Lease Sale notice, the BLM
will provide a protest period, of not less
than 30 calendar days, for public input
on the upcoming lease sale.
(e) The BLM will make available the
final NEPA compliance documents prior
to issuing a lease from the lease sale.
Competitive auction.
Parcels not bid on at auction.
(a) Parcels will be offered by
competitive auction.
(b) A winning bid will be the highest
bid by a responsible and qualified
bidder, equal to or exceeding the
national minimum acceptable bid. The
decision of the auctioneer will be final.
Lands offered at the competitive
auction that received no bids may be
offered in a future competitive auction.
§ 3120.62
A nomination or expression of
interest for a future interest lease must
be filed in accordance with this subpart.
Payments required.
(a) Payments must be made in
accordance with 43 CFR 3103.11.
(b) Each winning bidder must submit,
by the close of official business hours,
or such other time as may be specified
by the authorized officer, on the day of
the sale for the parcel:
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Future Interest
§ 3120.81 Nomination or expression of
interest to make lands available for
competitive lease.
§ 3120.82 Future interest terms and
conditions.
(a) No rental or royalty will be due to
the United States prior to the vesting of
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the oil and gas rights in the United
States. However, the future interest
lessee must agree that if, he/she is or
becomes the holder of any present
interest operating rights in the lands:
(1) The future interest lessee transfers
all or a part of the lessee’s present oil
and gas interests, such lessee must file
in the proper BLM office an assignment
or transfer, in accordance with 43 CFR
subpart 3106, of the future interest lease
of the same type and proportion as the
transfer of the present interest; and
(2) The future interest lessee’s present
lease interests are relinquished,
cancelled, terminated, or expired, the
future interest lease rights with the
United States also will cease and
terminate to the same extent.
(b) Upon vesting of the oil and gas
rights in the United States, the future
interest lease rental and royalty will be
as for any competitive lease issued
under this subpart, as provided in 43
CFR subpart 3103, and the acreage will
be chargeable in accordance with 43
CFR 3101.20.
§ 3120.83 Compensatory royalty
agreements.
The terms and conditions of
compensatory royalty agreements
involving acquired lands in which the
United States owns a future or fractional
interest will be established on an
individual case basis. Such agreements
may be required when leasing is not
possible in situations where the interest
of the United States in the oil and gas
deposit includes both a present and a
future fractional interest in the same
tract containing a producing well.
PART 3130—OIL AND GAS LEASING:
NATIONAL PETROLEUM RESERVE,
ALASKA
5. The authority citation for part 3130
continues to read as follows:
■
Authority: 42 U.S.C. 6508, 43 U.S.C. 1733
and 1740.
■
6. Revise § 3137.23 to read as follows:
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§ 3137.23
NPR–A unitization application.
The unitization application must
include:
(a) The proposed unit agreement;
(b) A map showing the proposed unit
area;
(c) A list of committed tracts
including, for each tract, the:
(1) Legal land description and
acreage;
(2) Names of persons holding record
title interest;
(3) Names of persons owning
operating rights; and
(4) Name of the unit operator.
(d) A statement certifying:
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(1) The operator invited all owners of
oil and gas rights (leased or unleased)
and lease interests (record title and
operating rights) within the external
boundary of the unit area described in
the application to join the unit;
(2) That there are sufficient tracts
committed to the unit agreement to
reasonably operate and develop the unit
area;
(3) The commitment status of all
tracts within the area proposed for
unitization; and
(4) The operator accepts unit
obligations under § 3137.60 of this
subpart.
(e) Evidence of acceptable bonding;
(f) A discussion of reasonably
foreseeable and significantly adverse
effects on the surface resources of the
NPR–A and how unit operations may
reduce impacts compared to individual
lease operations;
(g) A discussion of the proposed
methodology for allocating production
among the committed tracts. If the unit
includes non-Federal oil and gas
mineral estate, you must explain how
the methodology takes into account
reservoir heterogeneity and area
variation in reservoir producibility; and
(h) Other documentation that the BLM
may request. The BLM may require
additional copies of maps, plats, and
other similar exhibits.
(i) The processing fee found in the fee
schedule in § 3000.120 of this chapter.
■ 7. Revise § 3137.61 to read as follows:
§ 3137.61
Change in unit operators.
(a) To change unit operators, the new
unit operator must submit to the BLM:
(1) Statements that:
(i) The new operator accepts unit
obligations; and
(ii) The percentage of required interest
owners consented to a change of unit
operator;
(2) Evidence of acceptable bonding
(see § 3137.60(b)); and
(3) The processing fee found in the fee
schedule in § 3000.120 of this chapter.
(b) The effective date of the change in
unit operator is the date the BLM
approves the new unit operator.
■ 8. Revise § 3138.11 to read as follows:
§ 3138.11 Applications for a subsurface
storage agreement.
(a) An application for a subsurface
storage agreement must include:
(1) The reason for forming a
subsurface storage agreement;
(2) A description of the area to be
included in the subsurface storage
agreement;
(3) A description of the formation to
be used for storage;
(4) The proposed storage fees or
rentals. The fees or rentals must be
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based on the value of the subsurface
storage, injection, and withdrawal
volumes, and rental income or other
income generated by the operator for
letting or subletting the storage
facilities;
(5) The payment of royalty for native
oil or gas (oil or gas that exists in the
formation before injection and that is
produced when the stored oil or gas is
withdrawn);
(6) A description of how often and
under what circumstances the operator
and the BLM intend to renegotiate fees
and payments;
(7) The proposed effective date and
term of the subsurface storage
agreement;
(8) Certification that all owners of
mineral rights (leased or unleased) and
lease interests have consented to the gas
storage agreement in writing;
(9) An ownership schedule showing
lease or land status;
(10) A schedule showing the
participation factor for all parties to the
subsurface storage agreement;
(11) Supporting data (geologic maps
showing the storage formation, reservoir
data, etc.) demonstrating the capability
of the reservoir for storage; and
(12) The processing fee found in the
fee schedule in § 3000.120 of this
chapter.
(b) The BLM will negotiate the terms
of a subsurface storage agreement with
the operator, including bonding, and
reservoir management.
(c) The BLM may request
documentation in addition to that
which the operator provides under
paragraph (a) of this section.
■ 9. Revise part 3140 to read as follows:
PART 3140—LEASING IN SPECIAL
TAR SAND AREAS
Subpart 3140—Conversion of Existing Oil
and Gas Leases and Valid Claims Based on
Mineral Locations
Sec.
3140.1 Purpose.
3140.3 Authority.
3140.5 Definitions.
General Provisions
3140.11 Existing rights.
3140.12 Notice of intent to convert.
3140.13 Exploration plans.
3140.14 Other provisions.
Applications
3140.21 Forms.
3140.22 Who may apply.
3140.23 Application requirements.
Time Limitations
3140.31 Conversion applications.
3140.32 Action on an application.
Conversion
3140.41 Approval of plan of operations
(and unit and operating agreements).
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3140.42 Issuance of the combined
hydrocarbon lease.
3140.50 Duration of the lease.
3140.60 Use of additional lands.
3140.70 Lands within the National Park
System.
Leasing Act of February 25, 1920 (30
U.S.C. 181 et seq.), the Mineral Leasing
Act for Acquired Lands (30 U.S.C. 351
et seq.), and the Combined Hydrocarbon
Leasing Act of 1981 (Pub. L. 97–78).
to convert a valid claim based on a
mineral location within the time herein
provided will have no effect on the
validity of the mining claim nor the
right to maintain that claim.
Subpart 3141—Leasing in Special Tar Sand
Areas
3141.1 Purpose.
3141.3 Authority.
3141.5 Definitions.
3141.8 Other applicable regulations.
3141.10 General.
§ 3140.5
§ 3140.12
Prelease Exploration Within Special Tar
Sand Areas
3141.21 Geophysical exploration.
3141.22 Exploration licenses.
3141.30 Land use plans.
Consultation
3141.41 Consultation with the Governor.
3141.42 Consultation with others.
Leasing Procedures
3141.51 Economic evaluation.
3141.52 Term of lease.
3141.53 Royalties and rentals.
3141.54 Lease size.
3141.55 Dating of lease.
Sale Procedures
3141.61 Initiation of competitive lease
offering.
3141.62 Publication of a notice of
competitive lease offering.
3141.63 Conduct of sales.
3141.64 Qualifications.
3141.65 Rejection of bid.
3141.66 Consideration of next highest bid.
3141.70 Award of lease.
Subpart 3142—Paying Quantities/Diligent
Development for Combined Hydrocarbon
and Tar Sand Leases
3142.1 Purpose.
3142.3 Authority.
3142.5 Definitions.
3142.10 Diligent development.
Minimum Production Levels
3142.21 Minimum production schedule.
3142.22 Advance royalties in lieu of
production.
3142.30 Expiration.
§ 3140.11
Subpart 3140—Conversion of Existing
Oil and Gas Leases and Valid Claims
Based on Mineral Locations
§ 3140.1
Purpose.
The purpose of this subpart is to
provide for the conversion of existing
oil and gas leases and valid claims
based on mineral locations within
Special Tar Sand Areas to combined
hydrocarbon leases.
§ 3140.3
Authority.
These regulations are issued under
the authority of the Mineral Lands
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Definitions.
As used in this subpart, the term:
Combined hydrocarbon lease means a
lease issued in a Special Tar Sand Area
for the removal of gas and nongaseous
hydrocarbon substances other than coal,
oil shale or gilsonite.
Complete plan of operations means a
plan of operations that is in substantial
compliance with the information
requirements of 43 CFR part 3592 for
both exploration plans and mining
plans, as well as any additional
information required in this part and
under 43 CFR part 3593, as may be
appropriate.
Owner of an oil and gas lease means
all of the record title holders of an oil
gas lease.
Owner of a valid claim based on a
mineral location means all parties
appearing on the title records
recognized as official under State law as
having the right to sell or transfer any
part of the mining claim, which was
located within a Special Tar Sand Area
prior to January 21, 1926, for any
hydrocarbon resource, except coal, oil
shale or gilsonite, leasable under the
Combined Hydrocarbon Leasing Act.
Special Tar Sand Area means an area
designated by the Department of the
Interior’s orders of November 20, 1980
(45 FR 76800), and January 21, 1981 (46
FR 6077) referred to in those orders as
Designated Tar Sand Areas, as
containing substantial deposits of tar
sand.
Unitization means unitization as that
term is defined in 43 CFR part 3180.
General Provisions
Authority: 30 U.S.C. 181 et seq.; 30 U.S.C.
351–359; 43 U.S.C. 1701 et seq.; Pub. L. 97–
78, 95 Stat. 1070; 42 U.S.C. 15801, unless
otherwise noted.
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47639
(a) The owner of an oil and gas lease
issued prior to November 16, 1981, or
the owner of a valid claim based on a
mineral location situated within a
Special Tar Sand Area may convert that
portion of the lease or claim so situated
to a combined hydrocarbon lease,
provided that such conversion is
consistent with the provisions of this
subpart. The application time period
ended on November 15, 1983.
(b) Owners of oil and gas leases in
Special Tar Sand Areas who elect not to
convert their leases to a combined
hydrocarbon lease do not acquire the
rights to any hydrocarbon resource
except oil and gas as those terms were
defined prior to the enactment of the
Combined Hydrocarbon Leasing Act of
1981. The failure to file an application
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§ 3140.13
Sfmt 4702
Exploration plans.
(a) The authorized officer may grant
permission to holders of existing oil and
gas leases to gather information to
develop, perfect, complete or amend a
plan of operations required for
conversion upon the approval of the
authorized officer of an exploration plan
developed in accordance with 43 CFR
3592.1.
(b) The approval of an exploration
plan in units of the National Park
System requires the consent of the
Regional Director of the National Park
Service in accordance with § 3140.70.
(c) The filing of an exploration plan
alone will be insufficient to meet the
requirements of a complete plan of
operations as set forth in § 3140.2–3.
§ 3140.14
Existing rights.
Notice of intent to convert.
(a) Owners of oil and gas leases in
Special Tar Sand Areas which were
scheduled to expire prior to November
15, 1983, could have preserved the right
to convert their leases to combined
hydrocarbon leases by filing a Notice of
Intent to Convert with the BLM Utah
State Office.
(b) A letter, submitted by the lessee,
notifying the BLM of the lessee’s
intention to submit a plan of operations
constituted a notice of intent to convert
a lease. The Notice of Intent must have
contained the lease number.
(c) The Notice of Intent must have
been filed prior to the expiration date of
the lease. The notice would have
preserved the lessee’s conversion rights
only until November 15, 1983.
Other provisions.
(a) A combined hydrocarbon lease
will be for no more than 5,760 acres.
Acreage held under a combined
hydrocarbon lease in a Special Tar Sand
Area is not chargeable to State oil and
gas limitations allowable in 43 CFR
3101.2.
(b) The annual rental rate for all
combined hydrocarbon leases will be as
stated in the lease. The rental rate for a
combined hydrocarbon lease will be
payable upon conversion and annually,
in advance, thereafter.
(c)(1) The royalty rate for a combined
hydrocarbon lease converted from an oil
and gas lease will be that provided for
in the original oil and gas lease.
(2) The royalty rate for a combined
hydrocarbon lease converted from a
valid claim based on a mineral location
will be 16.67 percent.
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(3) A reduction of royalties may be
granted either as provided in § 3103.40
or, at the request of the lessee and upon
a review of information provided by the
lessee, prior to commencement of
commercial operations if the purpose of
the request is to promote development
and the maximum production of tar
sand. A reduction of royalties for the tar
sand will not apply to the oil and gas
resource. A reduction of royalties for the
oil and gas will not apply to the tar sand
resource.
(d)(1) Existing oil and gas leases and
valid claims based on mineral locations
may be unitized prior to or after the
lease or claim has been converted to a
combined hydrocarbon lease. The
requirements of 43 CFR part 3180 will
provide the procedures and general
guidelines for unitization of combined
hydrocarbon leases. For leases within
units of the National Park System,
unitization requires the consent of the
Regional Director of the National Park
Service in accordance with § 3140.41(b).
(2) If the plan of operations submitted
for conversion is designed to cover a
unit, a fully executed unit agreement
will be approved before the plan of
operations applicable to the unit may be
approved under § 3140.20. The
proposed plan of operations and the
proposed unit agreement may be
reviewed concurrently. The approved
unit agreement will be effective after the
leases or claims subject to it are
converted to combined hydrocarbon
leases. The plan of operations will
explain how and when each lease
included in the unit operation will be
developed.
(e) Except as provided for in this
subpart, the regulations set out in 43
CFR part 3100 are applicable, as
appropriate, to all combined
hydrocarbon leases issued under this
subpart.
Applications
§ 3140.21
Forms.
No special form is required for a
conversion application.
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§ 3140.22
Who may apply.
Only owners of oil and gas leases
issued within Special Tar Sands Areas,
on or before November 16, 1981, and
owners of valid claims based on mineral
locations within Special Tar Sands
Areas, are eligible to convert leases or
claims to combined hydrocarbon leases
in Special Tar Sands Areas.
§ 3140.23
Application requirements.
(a) The BLM stopped accepting
conversion applications on November
15, 1983. The applicant must have
submitted to the BLM Utah State Office,
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a written request for a combined
hydrocarbon lease signed by the owner
of the lease or valid claim which must
be accompanied by three copies of a
plan of operations which must meet the
requirements of 43 CFR 3592.1 and
which must have provided for
reasonable protection of the
environment and diligent development
of the resources requiring enhanced
recovery methods of development or
mining.
(b) A plan of operations may be
modified or amended before or after
conversion of a lease or valid claim to
reflect changes in technology, slippages
in schedule beyond the control of the
lessee, new information about the
resource or the economic or
environmental aspects of its
development, changes to or initiation of
applicable unit agreements or for other
purposes. To obtain approval of a
modification or amended plan, the
applicant must submit a written
statement of the proposed changes or
supplements and the justification for the
changes proposed. Any modifications
will be in accordance with 43 CFR
3592.1(c). The approval of the
modification or amendment is the
responsibility of the authorized officer.
Changes or modification to the plan of
operations will have no effect on the
primary term of the lease. The
authorized officer will, prior to
approving any amendment or
modification, review the modification or
amendment with the appropriate
surface management agency. For leases
within units of the National Park
System, no amendment or modification
will be approved without the consent of
the Regional Director of the National
Park Service in accordance with
§ 3140.70.
(c) The plan of operations may be for
a single existing oil and gas lease or
valid claim or for an area of proposed
unit operation.
(d) The plan of operations must
identify by lease number all Federal oil
and gas leases proposed for conversion
and identify valid claims proposed for
conversion by the recordation number
of the mining claim.
(e) The plan of operations must
include any proposed designation of
operator or proposed operating
agreement.
(f) The plan of operations may include
an exploration phase, if necessary, but
it must include a development phase.
Such a plan can be approved even
though it may indicate work under the
exploration phase is necessary to perfect
the proposed plan for the development
phase as long as the overall plan
demonstrates reasonable protection of
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the environment and diligent
development of the resources requiring
enhanced recovery methods of mining.
(g)(1) Upon determination that the
plan of operations is complete, the
authorized officer will suspend the term
of the Federal oil and gas lease(s) as of
the date that the complete plan was
filed until the plan is finally approved
or rejected. Only the term of the oil and
gas lease will be suspended, not any
operation and production requirements
thereunder.
(2) If the authorized officer
determines that the plan of operations is
not complete, the applicant will be
notified that the plan is subject to
rejection if not completed within the
period specified in the notice.
(3) The authorized officer may request
additional data after the plan of
operations has been determined to be
complete. This request for additional
information will have no effect on the
suspension of the running of the oil and
gas lease.
Time Limitations
§ 3140.31
Conversion applications.
A plan of operations to convert an
existing oil and gas lease or valid claim
based on a mineral location to a
combined hydrocarbon lease must have
been filed on or before November 15,
1983, or prior to the expiration of the oil
and gas lease, whichever was earlier,
except as provided in § 3140.12.
§ 3140.32
Action on an application.
The authorized officer will take action
on an application for conversion within
15 months of receipt of a proposed plan
of operations.
Conversion
§ 3140.41 Approval of plan of operations
(and unit and operating agreements).
(a) The owner of an oil and gas lease,
or the owner of a valid claim based on
a mineral location will have such lease
or claim converted to a combined
hydrocarbon lease when the plan of
operations, filed under § 3140.23, is
deemed acceptable and is approved by
the authorized officer.
(b) The conversion of a lease within
a unit of the National Park System will
be approved only with the consent of
the Regional Director of the National
Park Service in accordance with
§ 3140.70.
(c) A plan of operations may not be
approved in part but may be approved
where it contains an appropriately
staged plan of exploration and
development operations.
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§ 3140.42 Issuance of the combined
hydrocarbon lease.
(a) After a plan of operations is found
acceptable, and is approved, the
authorized officer will prepare and
submit to the owner, for execution, a
combined hydrocarbon lease containing
all appropriate terms and conditions,
including any necessary stipulations
that were part of the oil and gas lease
being converted, as well as any
additional stipulations, such as those
required to ensure compliance with the
plan of operations.
(b) The authorized officer will not
sign the combined hydrocarbon lease
until it has been executed by the
conversion applicant and the lease or
claim to be converted has been formally
relinquished to the United States.
(c) The effective date of the combined
hydrocarbon lease will be the first day
of the month following the date that the
authorized officer signs the lease.
(d) The authorized officer will issue
one combined hydrocarbon lease to
cover the existing contiguous oil and gas
leases or valid claims based on mineral
locations which have been approved for
conversion within the special tar sand
area.
§ 3140.50
Duration of the lease.
A combined hydrocarbon lease will
be for a primary term of 10 years and for
so long thereafter as oil or gas is
produced in paying quantities. If the
applicant withdraws the combined
hydrocarbon lease application or the
BLM denies the conversion application,
the suspension on the oil and gas lease
will be lifted and the term will be
extended by the time remaining on the
term of the lease.
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§ 3140.60
Use of additional lands.
(a) The authorized officer may
noncompetitively lease additional lands
for ancillary facilities in a Special Tar
Sand Area that are needed to support
any operations necessary for the
recovery of tar sand. Such uses include,
but are not limited to, mill site or waste
disposal. Application for a lease or
permit to use additional lands must be
filed under the provisions of 43 CFR
part 2920 with the proper BLM office
having jurisdiction of the lands. The
application for additional lands may be
filed at the time a plan of operations is
filed.
(b) A lease for the use of additional
lands will not be issued when the use
can be authorized under 43 CFR parts
2800 and 2880. Such uses include, but
are not limited to, reservoirs, pipelines,
electrical generation systems,
transmission lines, roads, and railroads.
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(c) Within units of the National Park
System, permits or leases for additional
lands will only be issued by the
National Park Service. Applications for
such permits or leases must be filed
with the Regional Director of the
National Park Service.
§ 3140.70
System.
Lands within the National Park
The BLM stopped accepting
conversion applications on November
15, 1983. Conversions of existing oil and
gas leases and valid claims based on
mineral locations to combined
hydrocarbon leases within units of the
National Park System will be allowed
only where mineral leasing is permitted
by law and where the lands covered by
the lease or claim proposed for
conversion are open to mineral resource
disposition in accordance with any
applicable minerals management plan.
(See 43 CFR 3100.3(h)(4)). In order to
consent to any conversion or any
subsequent development under a
combined hydrocarbon lease requiring
further approval, the Regional Director
of the National Park Service must find
that there will be no resulting
significant adverse impacts on the
resources and administration of such
areas or on other contiguous units of the
National Park System in accordance
with 43 CFR 3109.20(b).
Subpart 3141—Leasing in Special Tar
Sand Areas
§ 3141.1
Purpose.
The purpose of this subpart is to
provide for the competitive leasing of
lands and issuance of combined
hydrocarbon leases, oil and gas leases,
or tar sand leases within special tar sand
areas.
§ 3141.3
Authority.
The regulations in this subpart are
issued under the authority of the
Mineral Leasing Act of February 25,
1920 (30 U.S.C. 181 et seq.), the Mineral
Leasing Act for Acquired Lands (30
U.S.C. 351 et seq.), the Federal Land
Policy and Management Act of 1976 (43
U.S.C. 1701 et seq.), the Combined
Hydrocarbon Leasing Act of 1981 (95
Stat. 1070), and the Energy Policy Act
of 2005 (Pub. L. 109–58).
§ 3141. 5
Definitions.
As used in this subpart, the term:
Combined hydrocarbon lease means a
lease issued in a Special Tar Sand Area
for the removal of any gas and
nongaseous hydrocarbon substance
other than coal, oil shale or gilsonite.
Oil and gas lease means a lease issued
in a Special Tar Sand Area for the
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47641
exploration and development of oil and
gas resources other than tar sand.
Special Tar Sand Area means an area
designated by the Department of the
Interior’s Orders of November 20, 1980
(45 FR 76800), and January 21, 1981 (46
FR 6077), and referred to in those orders
as Designated Tar Sand Areas, as
containing substantial deposits of tar
sand.
Tar sand means any consolidated or
unconsolidated rock (other than coal, oil
shale or gilsonite) that either:
(1) Contains a hydrocarbonaceous
material with a gas-free viscosity, at
original reservoir temperature greater
than 10,000 centipoise, or
(2) contains a hydrocarbonaceous
material and is produced by mining or
quarrying.
Tar sand lease means a lease issued
in a Special Tar Sand area exclusively
for the exploration for and extraction of
tar sand.
§ 3141.8
Other applicable regulations.
(a) Combined hydrocarbon leases. (1)
The following provisions of 43 CFR part
3100, as they relate to competitive
leasing, apply to the issuance and
administration of combined
hydrocarbon leases issued under this
part.
(i) All of 43 CFR subpart 3100;
(ii) The following sections of 43 CFR
subpart 3101: §§ 3101.11, 3101.21,
3101.22, 3101.24, 3101.25, 3101.61,
3101.62, and 3101.65;
(iii) All of 43 CFR subpart 3102;
(iv) All of 43 CFR subpart 3103, with
the exception of §§ 3103.21, and
3103.31–1 (a), (b), and (c);
(v) All of 43 CFR subpart 3104;
(vi) All of 43 CFR subpart 3105;
(vii) All of 43 CFR subpart 3106, with
the exception of § 3106.10(i);
(viii) All of 43 CFR subpart 3107;
(ix) All of 43 CFR subpart 3108; and
(x) All of 43 CFR subpart 3109, with
special emphasis on § 3109.20(b).
(2) Prior to commencement of
operations, the lessee must develop
either a plan of operations as described
in 43 CFR 3592.1 which ensures
reasonable protection of the
environment or file an application for a
permit to drill as described in 43 CFR
part 3160, whichever is appropriate.
(3) The provisions of 43 CFR part
3180 will serve as general guidance to
the administration of combined
hydrocarbon leases issued under this
part to the extent they may be included
in unit or cooperative agreements.
(b) Oil and gas leases. (1) All of the
provisions of 43 CFR parts 3100, and
3120 apply to the issuance and
administration of oil and gas leases
issued under this part.
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(2) All of the provisions of 43 CFR
parts 3160 and 3170 apply to operations
on an oil and gas lease issued under this
part.
(3) The provisions of 43 CFR part
3180 apply to the administration of oil
and gas leases issued under this part.
(c) Tar sand leases. (1) The following
provisions of 43 CFR part 3100, as they
relate to competitive leasing, apply to
the issuance of tar sand leases issued
under this part.
(i) All of 43 CFR subpart 3102;
(ii) All of 43 CFR subpart 3103 with
the exception of §§ 3103.21, 3103.22(d),
and 3103.30;
(iii) All of 43 CFR 3120.50; and
(iv) All of 43 CFR 3120.60.
(2) Prior to commencement of
operations, the lessee must develop a
plan of operations as described in 43
CFR 3592.1 which ensures reasonable
protection of the environment.
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§ 3141.10
General.
(a) Combined hydrocarbons or tar
sands within a Special Tar Sand Area
will be leased only by competitive
bonus bidding.
(b) Oil and gas within a Special Tar
Sand Area will be leased by competitive
bonus bidding as described in 43 CFR
part 3120.
(c) The authorized officer may issue
either combined hydrocarbon leases, or
oil and gas leases for oil and gas within
such areas.
(d) The rights to explore for or
develop tar sand deposits in a Special
Tar Sand Area may be acquired through
either a combined hydrocarbon lease or
a tar sand lease.
(e) An oil and gas lease in a Special
Tar Sand Area does not include the
rights to explore for or develop tar sand.
(f) A tar sand lease in a Special Tar
Sand Area does not include the rights to
explore for or develop oil and gas.
(g) The minimum acceptable bid for a
lease issued for tar sand will be as
specified in § 3000.130 of this chapter.
(h) The acreage of combined
hydrocarbon leases or tar sand leases
held within a Special Tar Sand Area
will not be charged against acreage
limitations for the holding of oil and gas
leases as provided in 43 CFR 3101.21.
(i)(1) The authorized officer may
noncompetitively lease additional lands
for ancillary facilities in a Special Tar
Sand Area that are shown by an
applicant to be needed to support any
operations necessary for the recovery of
tar sand. Such uses include, but are not
limited to, mill siting or waste disposal.
An application for a lease or permit to
use additional lands must be filed under
the provisions of 43 CFR part 2920 with
the proper BLM office having
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jurisdiction of the lands. The
application for additional lands may be
filed at the time a plan of operations is
filed.
(2) A lease for the use of additional
lands will not be issued under this part
when the use can be authorized under
43 CFR part 2800. Such uses include,
but are not limited to, reservoirs,
pipelines, electrical generation systems,
transmission lines, roads and railroads.
(3) Within units of the National Park
System, permits or leases for additional
lands for any purpose will be issued
only by the National Park Service.
Applications for such permits or leases
must be filed with the Regional Director
of the National Park Service.
Prelease Exploration Within Special
Tar Sand Areas
§ 3141.21
Geophysical exploration.
Geophysical exploration in Special
Tar Sand Areas will be governed by 43
CFR part 3150. Information obtained
under a permit must be made available
to the BLM upon request.
§ 3141.22
Exploration licenses.
(a) Any person(s) responsible and
qualified to hold a lease under the
provisions of 43 CFR subpart 3102 and
this subpart may obtain an exploration
license to conduct core drilling and
other exploration activities to collect
geologic, environmental and other data
concerning tar sand resources only on
lands, the surface of which are under
the jurisdiction of the BLM, within or
adjacent to a Special Tar Sand Area. The
application for such a license must be
submitted to the proper BLM office
having jurisdiction over the lands. No
drilling for oil or gas will be allowed
under an exploration license issued
under this subpart. No specific form is
required for an application for an
exploration license.
(b) The application for an exploration
license will be subject to the following
requirements:
(1) Each application must contain the
name and address of the applicant(s);
(2) Each application must be
accompanied by a nonrefundable filing
fee based on the coal exploration license
application fee found in the fee
schedule in § 3000.120 of this chapter;
(3) Each application must contain a
description of the lands covered by the
application according to section,
township and range in accordance with
the official survey;
(4) Each application must include an
exploration plan which complies with
the requirements of 43 CFR 4392.1(a);
and
(5) An application must cover no
more than 5,760 acres, which will be as
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compact as possible. The authorized
officer may grant an exploration license
covering more than 5,760 acres only if
the application contains a justification
for an exception to the normal
limitation.
(c) The authorized officer may, if he/
she determines it necessary to avoid
impacts resulting from duplication of
exploration activities, require applicants
for exploration licenses to provide an
opportunity for other parties to
participate in exploration under the
license on a pro rata cost sharing basis.
If joint participation is determined
necessary, it will be conducted
according to the following:
(1) Immediately upon the notification
of a determination that parties will be
given an opportunity to participate in
the exploration license, the applicant
must publish a ‘‘Notice of Invitation,’’
approved by the authorized officer, once
every week for 2 consecutive weeks in
at least one newspaper of general
circulation in the area where the lands
covered by the exploration license are
situated. This notice must contain an
invitation to the public to participate in
the exploration license on a pro rata cost
sharing basis. Copies of the ‘‘Notice of
Invitation’’ must be filed with the
authorized officer at the time of
publication by the applicant for posting
in the proper BLM office having
jurisdiction over the lands covered by
the application for at least 30 days prior
to the issuance of the exploration
license.
(2) Any person seeking to participate
in the exploration program described in
the Notice of Invitation must notify the
authorized officer and the applicant in
writing of such intention within 30 days
after posting in the proper BLM office
having jurisdiction over the lands
covered by the Notice of Invitation. The
authorized officer may require
modification of the original exploration
plan to accommodate the legitimate
exploration needs of the person(s)
seeking to participate and to avoid the
duplication of exploration activities in
the same area, or that the person(s)
should file a separate application for an
exploration license.
(3) An application to conduct
exploration which could have been
conducted under an existing or recent
exploration license issued under this
paragraph may be rejected.
(d) The authorized officer may accept
or reject an exploration license
application. An exploration license will
become effective on the date specified
by the authorized officer as the date
when exploration activities may begin.
The exploration plan approved by the
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BLM will be attached and made a part
of each exploration license.
(e) An exploration license will be
subject to these terms and conditions:
(1) The license will be for a term of
not more than 2 years;
(2) The annual rental rate for an
exploration license will be as stated in
the license;
(3) The licensee must provide a bond
in an amount determined by the
authorized officer, but not less than
$5,000. The authorized officer may
accept bonds furnished under 43 CFR
subpart 3104, if adequate. The period of
liability under the bond will be
terminated only after the authorized
officer determines that the terms and
conditions of the license, the
exploration plan and the regulations
have been met;
(4) The licensee must provide to the
BLM, upon request, all required
information obtained under the license.
Any information provided will be
treated as confidential and proprietary,
if appropriate, at the request of the
licensee, and will not be made public
until the areas involved have been
leased or if the BLM determines that
public access to the data will not
damage the competitive position of the
licensee.
(5) Operations conducted under a
license will not unreasonably interfere
with or endanger any other lawful
activity on the same lands, must not
damage any improvements on the lands,
and will not result in any substantial
disturbance to the surface of the lands
and their resources;
(6) The authorized officer will include
in each license requirements and
stipulations to protect the environment
and associated natural resources, and to
ensure reclamation of the land disturbed
by exploration operations;
(7) When unforeseen conditions are
encountered that could result in an
action prohibited by paragraph (e)(5) of
this section, or when warranted by
geologic or other physical conditions,
the authorized officer may adjust the
terms and conditions of the exploration
license and may direct adjustment in
the exploration plan;
(8) The licensee may submit a request
for modification of the exploration plan
to the authorized officer. Any
modification will be subject to the
regulations in this section and the terms
and conditions of the license. The
authorized officer may approve the
modification after any necessary
adjustments to the terms and conditions
of the license that are accepted in
writing by the licensee; and
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(9) The license will be subject to
termination or suspension as provided
in 43 CFR 2920.9–3.
§ 3141.30
Land use plans.
No lease will be issued under this
subpart unless the lands have been
included in a land use plan which
meets the requirements under 43 CFR
part 1600 or an approved Minerals
Management Plan of the National Park
Service. The decision to hold a lease
sale and issue leases will be in
conformance with the appropriate plan.
Consultation
§ 3141.41
The Secretary will consult with the
Governor of the State in which any tract
proposed for sale is located. The
Secretary will give the Governor 30 days
to comment before determining whether
to conduct a lease sale. The Secretary
will seek the recommendations of the
Governor of the State in which the lands
proposed for lease are located as to
whether or not to lease such lands and
what alternative actions are available
and what special conditions could be
added to the proposed lease(s) to
mitigate impacts. The Secretary will
accept the recommendations of the
Governor if he/she determines that they
provide for a reasonable balance
between the national interest and the
State’s interest. The Secretary will
communicate to the Governor in writing
and publish in the Federal Register the
reasons for his/her determination to
accept or reject such Governor’s
recommendations.
§ 3141.42
Consultation with others.
(a) Where the surface is administered
by an agency other than the BLM,
including lands patented or leased
under the provisions of the Recreation
and Public Purposes Act, as amended
(43 U.S.C. 869 et seq.), all leasing under
this subpart will be in accordance with
the consultation requirements of 43 CFR
subpart 3100.
(b) The issuance of combined
hydrocarbon leases, oil and gas leases,
and tar sand leases within special tar
sand areas in units of the National Park
System will be allowed only where
mineral leasing is permitted by law and
where the lands are open to mineral
resource disposition in accordance with
any applicable Minerals Management
Plan. In order to consent to any issuance
of a combined hydrocarbon lease, oil
and gas lease, tar sand lease, or
subsequent development of
hydrocarbon resources within a unit of
National Park System, the Regional
Director of the National Park Service
will find that there will be no resulting
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significant adverse impacts to the
resources and administration of the unit
or other contiguous units of the National
Park System in accordance with 43 CFR
3109.20(b).
Leasing Procedures
§ 3141.51
Sfmt 4702
Economic evaluation.
Prior to any lease sale for a combined
hydrocarbon lease, the authorized
officer will request an economic
evaluation of the total hydrocarbon
resource on each proposed lease tract
exclusive of coal, oil shale, or gilsonite.
§ 3141.52
Consultation with the Governor.
47643
Term of lease.
(a) Oil and gas leases in special tar
sand areas will have a primary term of
10 years and will remain in effect so
long thereafter as oil or gas is produced
in paying quantities.
(b) Tar Sand leases will have a
primary term of 10 years and will
remain in effect so long thereafter as tar
sand is produced in paying quantities.
§ 3141.53
Royalties and rentals.
(a) The royalty rate on all combined
hydrocarbon leases or tar sand leases is
16.67 percent of the value of production
removed or sold from a lease. The
ONRR will be responsible for collecting
and administering royalties.
(b) The lessee may request the
Secretary to reduce the royalty rate
applicable to a tar sand lease prior to
commencement of commercial
operations in order to promote
development and maximum production
of the tar sand resource in accordance
with procedures established by the BLM
for oil shale leases and may request a
reduction in the royalty after
commencement of commercial
operations in accordance with 43 CFR
3103.41.
(c) The annual rental rate for a
combined hydrocarbon lease will be as
stated in the lease.
(d) The annual rental rate for a tar
sand lease will be as stated in the lease.
(e) Except as explained in paragraphs
(a) through (c) of this section, all other
provisions of 43 CFR 3103.20 and
3103.30 apply to combined hydrocarbon
leasing.
§ 3141.54
Lease size.
Combined hydrocarbon leases or tar
sand leases in Special Tar Sand Areas
will not exceed 5,760 acres.
§ 3141.55
Dating of lease.
A combined hydrocarbon lease will
be effective as of the first day of the
month following the date the lease is
signed on behalf of the United States,
except where a prior written request is
made, a lease may be made effective on
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the first of the month in which the lease
is signed.
Sale Procedures
§ 3141.61
offering.
Initiation of competitive lease
The BLM may, on its own motion,
offer lands through competitive bidding.
A request or expression(s) of interest in
tract(s) for competitive lease offerings
must be submitted in writing to the
proper BLM office.
§ 3141.62 Publication of a notice of
competitive lease offering.
Combined Hydrocarbon Leases, Tar
Sand Leases or Oil and Gas Leases. At
least 45 days prior to conducting a
competitive auction, lands to be offered
for a competitive lease sale, as in a
Notice of Competitive Lease Sale, will
be made available to the public. The
notice will specify the time and place of
sale; the manner in which the bids may
be submitted; the description of the
lands; the terms and conditions of the
lease, including the royalty and rental
rates; the amount of the minimum bid;
and will state that the terms and
conditions of the leases are available for
inspection and designate the proper
BLM office where bid forms may be
obtained.
§ 3141.63
Conduct of sales.
(a) Oil and gas leases. Lease sales for
oil and gas leases will be conducted
using the procedures for oil and gas
leases in 43 CFR 3120.60.
(b) Combined hydrocarbon leases and
tar sand leases. (1) Parcels will be
offered by competitive auction.
(2) The winning bid will be the
highest bid by a responsible and
qualified bidder, equal to the minimum
bonus bid amount as specified in
§ 3000.130 of this chapter or for
hydrocarbon leases, the minimum
bonus bid amount determined under
§ 3141.51, whichever is larger.
(3) Payments must be made as
provided in 43 CFR 3120.62.
§ 3141.64
Qualifications.
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Each bidder must submit with the bid
a statement over the bidder’s signature
with respect to compliance with 43 CFR
subpart 3102.
§ 3141.65
Rejection of bid.
If the high bid is rejected for failure
by the successful bidder to execute the
lease forms and pay the balance of the
bonus bid, or otherwise to comply with
the regulations of this subpart, the
minimum bonus payment
accompanying the bid will be forfeited.
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§ 3141.66
bid.
Consideration of next highest
The Department reserves the right to
accept the next highest bid if the highest
bid is rejected. In no event will an offer
be made to the next highest bidder if the
difference between that bid and the bid
of the rejected successful bidder is
greater than the minimum bonus
payment forfeited by the rejected
successful bidder.
return after all costs of production have
been met, including the amortized costs
of the capital investment.
§ 3142.10
Diligent development.
Subpart 3142—Paying Quantities/
Diligent Development for Combined
Hydrocarbon and Tar Sand Leases
A lessee will have met its diligent
development obligation if:
(a) The lessee is conducting activity
on the lease in accordance with an
approved plan of operations; and
(b) The lessee files with the
authorized officer, not later than the end
of the eighth lease year, a supplement to
the approved plan of operations which
must include the estimated recoverable
tar sand reserves and a detailed
development plan for the next stage of
operations;
(c) The lessee has achieved
production in paying quantities, as that
term is defined in § 3142.5(a), by the
end of the primary term; and
(d) The lessee annually produces the
minimum amount of tar sand
established by the authorized officer
under the lease in the minimum
production schedule which will be
made part of the plan of operations or
pays annually advance royalty in lieu of
this minimum production.
§ 3142.1
Minimum Production Levels
§ 3141.70
Award of lease.
After determining the highest
responsible and qualified bidder, the
authorized officer will send the lease on
a form approved by the Director, and
any necessary stipulations, to the
successful bidder. The successful bidder
must, not later than the 30th calendar
day after receipt of the lease, execute the
lease, pay the balance of the bid and the
first year’s rental, and file a bond as
required in 43 CFR subpart 3104.
Failure to comply with this section will
result in rejection of the lease.
Purpose.
This subpart provides definitions and
procedures for meeting the production
in paying quantities and the diligent
development requirements for tar sand
in all combined hydrocarbon leases and
tar sand leases.
§ 3142.3
Authority.
These regulations are issued under
the authority of the Mineral Leasing Act
of 1920, as amended and supplemented
(30 U.S.C. 181 et seq.), the Mineral
Leasing Act for Acquired Lands (30
U.S.C. 351–359), the Federal Land
Policy and Management Act of 1976 (43
U.S.C. 1701 et seq.) and the Combined
Hydrocarbon Leasing Act of 1981 (95
Stat. 1070).
§ 3142.5
Definitions.
As used in this subpart, the term:
Production in paying quantities for
combined hydrocarbon leases means:
(1) Production, in compliance with an
approved plan of operations and by
nonconventional methods, of oil and gas
which can be marketed; or
(2) Production of oil or gas by
conventional methods as the term is
currently used in 43 CFR part 3160.
Production in paying quantities for oil
and gas leases means production of oil
or gas by conventional methods that
meets the definition of ‘‘production in
paying quantities’’ in 43 CFR 3160.0–5.
Production in paying quantities for tar
sand leases means production of shale
oil quantities that provide a positive
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§ 3142.21
Minimum production schedule.
(a) Upon receipt of the supplement to
the plan of operations described in
§ 3142.10(b), the authorized officer will
examine the information furnished by
the lessee and determine if the estimate
of the recoverable tar sand reserves is
adequate and reasonable. In making this
determination, the authorized officer
may request, and the lessee must
furnish, any information that is the basis
of the lessee’s estimate of the
recoverable tar sand reserves. As part of
the authorized officer’s determination
that the estimate of the recoverable tar
sand reserves is adequate and
reasonable, he/she may consider, but is
not limited to, the following: ore grade,
strip ratio, vertical and horizontal
continuity, extract process
recoverability, and proven or unproven
status of extraction technology, terrain,
environmental mitigation factors,
marketability of products and capital
operations costs. The authorized officer
will then establish as soon as possible,
but prior to the beginning of the
eleventh year, based upon the estimate
of the recoverable tar sand reserves, a
minimum annual tar sand production
schedule for the lease or unit operations
which will start in the eleventh year of
the lease. This minimum production
level will escalate in equal annual
increments to a maximum of 1 percent
of the estimated recoverable tar sand
reserves in the twentieth year of the
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lease and remain at 1 percent each year
thereafter.
(b) The minimum annual tar sand
production schedule for the lease or
unit operations will be set at a level for
paying quantities. If the operator or
lessee cannot establish production in
paying quantities, the lease will
terminate at the end of the lease’s
primary term.
§ 3142.22 Advance royalties in lieu of
production.
(a) Failure to meet the minimum
annual tar sand production schedule
level in any year will result in the
assessment of an advance royalty in lieu
of production which will be credited to
future production royalty assessments
applicable to the lease or unit.
(b) If there is no production during
the lease year, and the lessee has reason
to believe that there will be no
production during the remainder of the
lease year, the lessee must submit to the
authorized officer a request for
suspension of production at least 90
days prior to the end of that lease year
and a payment sufficient to cover any
advance royalty due and owing as a
result of the failure to produce. Upon
receipt of the request for suspension of
production and the accompanying
payment, the authorized officer may
approve a suspension of production for
that lease year and the lease will not
expire during that year for lack of
production.
(c) If there is production on the lease
or unit during the lease year, but such
production fails to meet the minimum
production schedule required by the
plan of operations for that lease or unit,
the lessee must pay an advance royalty
within 60 days of the end of the lease
year in an amount sufficient to cover the
difference between such actual
production and the production schedule
required by the plan of operations for
that lease or unit and the authorized
officer may direct a suspension of
production for those periods during
which no production occurred.
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§ 3142.30
Expiration.
Failure of the lessee to pay advance
royalty within the time prescribed by
the authorized officer, or failure of the
lessee to comply with any other
provisions of this subpart following the
end of the primary term of the lease,
will result in the automatic expiration of
the lease as of the first of the month
following notice to the lessee of its
failure to comply. The lessee will
remain subject to the requirement of
applicable laws, regulations and lease
terms which have not been met at the
expiration of the lease.
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47645
PART 3150—ONSHORE OIL AND GAS
GEOPHYSICAL EXPLORATION
extent of actions to be taken by the
permitee.
■
10. The authority citation for part
3150 continues to read as follows:
§ 3151.30
data.
Authority: 16 U.S.C. 3150(b) and 668dd;
30 U.S.C. 189 and 359; 42 U.S.C. 6508; 43
U.S.C. 1201, 1732(b), 1733, 1734, 1740.
(a) The permittee must submit to the
authorized officer all data and
information obtained in carrying out the
exploration plan.
(b) All information submitted under
this section is subject to 43 CFR part 2,
which sets forth the rules of the
Department of the Interior relating to
public availability of information
contained in Departmental records, as
provided at § 3100.40 of this chapter.
11. Revise subpart 3151 to read as
follows:
■
Subpart 3151—Exploration Outside of
Alaska
Sec.
3151.10 Notice of intent to conduct oil and
gas geophysical exploration operations.
3151.20 Notice of completion of operations.
3151.30 Collection and submission of data.
Subpart 3151—Exploration Outside of
Alaska
§ 3151.10 Notice of intent to conduct oil
and gas geophysical exploration
operations.
Parties wishing to conduct oil and gas
geophysical exploration outside of the
State of Alaska must file a Notice of
Intent to Conduct Oil and Gas
Exploration Operations, referred to
herein as a notice of intent. The notice
of intent must include the filing fee
required by 43 CFR 3000.120 and must
be filed with the authorized officer of
the proper BLM office on the form
approved by the Director. Within 5
business days of the filing date, the
authorized officer will process the
notice of intent and notify the operator
of practices and procedures to be
followed. If the notice of intent cannot
be processed within 5 business days of
the filing date, the authorized officer
will promptly notify the operator as to
when processing will be completed,
giving the reason for the delay. The
operator must, within 5 business days of
the filing date, or such other time as
may be convenient for the operator,
participate in a field inspection if
requested by the authorized officer.
Signing of the notice of intent by the
operator will signify agreement to
comply with the terms and conditions
contained therein and in this part, and
with all practices and procedures
specified at any time by the authorized
officer.
§ 3151.20 Notice of completion of
operations.
Upon completion of exploration, the
permitee must file with the District
Manager a Notice of Completion of Oil
and Gas Exploration Operations. Within
30 days after this filing, the authorized
officer will notify the permitee whether
rehabilitation of the lands is satisfactory
or whether additional rehabilitation is
necessary, specifying the nature and
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Collection and submission of
PART 3160—ONSHORE OIL AND GAS
OPERATIONS
12. The authority citation for part
3160 continues to read as follows:
■
Authority: 25 U.S.C. 396d and 2107; 30
U.S.C. 189, 306, 359, and 1751; 43 U.S.C.
1732(b), 1733, 1740; and Sec. 107, Pub. L.
114–74, 129 Stat. 599, unless otherwise
noted.
13. Revise § 3160.0–5 to read as
follows:
■
§ 3160.0–5
Definitions.
As used in this part, the term:
Authorized representative means any
entity or individual authorized by the
Secretary to perform duties by
cooperative agreement, delegation or
contract.
Drainage means the migration of
hydrocarbons, inert gases (other than
helium), or associated resources caused
by production from other wells.
Federal lands means all lands and
interests in lands owned by the United
States which are subject to the mineral
leasing laws, including mineral
resources or mineral estates reserved to
the United States in the conveyance of
a surface or nonmineral estate.
Fresh water means water containing
not more than 1,000 ppm of total
dissolved solids, provided that such
water does not contain objectionable
levels of any constituent that is toxic to
animal, plant or aquatic life, unless
otherwise specified in applicable
notices or orders.
Knowingly or willfully means a
violation that constitutes the voluntary
or conscious performance of an act that
is prohibited or the voluntary or
conscious failure to perform an act or
duty that is required. It does not include
performances or failures to perform that
are honest mistakes or merely
inadvertent. It includes, but does not
require, performances or failures to
perform that result from a criminal or
evil intent or from a specific intent to
violate the law. The knowing or willful
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nature of conduct may be established by
plain indifference to or reckless
disregard of the requirements of the law,
regulations, orders, or terms of the lease.
A consistent pattern of performance or
failure to perform also may be sufficient
to establish the knowing or willful
nature of the conduct, where such
consistent pattern is neither the result of
honest mistakes or mere inadvertency.
Conduct that is otherwise regarded as
being knowing or willful is rendered
neither accidental nor mitigated in
character by the belief that the conduct
is reasonable or legal.
Lease means any contract, profit-share
arrangement, joint venture or other
agreement issued or approved by the
United States under a mineral leasing
law that authorizes exploration for,
extraction of, or removal of oil or gas.
Lease site means any lands, including
the surface of a severed mineral estate,
on which exploration for, or extraction
and removal of, oil or gas is authorized
under a lease.
Lessee means any person holding
record title or owning operating rights
in a lease issued or approved by the
United States.
Lessor means the party to a lease who
holds legal or beneficial title to the
mineral estate in the leased lands.
Major violation means noncompliance
that causes or threatens immediate,
substantial, and adverse impacts on
public health and safety, the
environment, production accountability,
or royalty income.
Maximum ultimate economic
recovery means the recovery of oil and
gas from leased lands which a prudent
operator could be expected to make
from that field or reservoir given
existing knowledge of reservoir and
other pertinent facts and utilizing
common industry practices for primary,
secondary, or tertiary recovery
operations.
Minor violation means
noncompliance that does not rise to the
level of a major violation.
New or resumed production under
section 102(b)(3) of the Federal Oil and
Gas Royalty Management Act means the
date on which a well commences
production, or resumes production after
having been off production for more
than 90 days, and is to be construed as
follows:
(1) For an oil well, the date on which
liquid hydrocarbons are first sold or
shipped from a temporary storage
facility, such as a test tank, or the date
on which liquid hydrocarbons are first
produced into a permanent storage
facility, whichever first occurs; and
(2) For a gas well, the date on which
gas is first measured through sales
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metering facilities or the date on which
associated liquid hydrocarbons are first
sold or shipped from a temporary
storage facility, whichever first occurs.
Notice to lessees and operators (NTL)
means a written notice issued by the
authorized officer. NTL’s implement the
regulations in this part and operating
orders, and serve as instructions on
specific item(s) of importance within a
State, District, or Area.
Onshore oil and gas order means a
formal numbered order issued by the
Director that implements and
supplements the regulations in this part.
Operating rights owner means a
person who owns operating rights in a
lease. A record title holder may also be
an operating rights owner in a lease if
it did not transfer all of its operating
rights.
Operator means any person or entity
including but not limited to the lessee
or operating rights owner, who has
stated in writing to the authorized
officer that it is responsible under the
terms and conditions of the lease for the
operations conducted on the leased
lands or a portion thereof.
Paying well means a well that is
capable of producing oil or gas of
sufficient value to exceed direct
operating costs and the costs of lease
rentals or minimum royalty.
Person means any individual, firm,
corporation, association, partnership,
consortium or joint venture.
Production in paying quantities
means production from a lease of oil
and/or gas of sufficient value to exceed
direct operating costs and the cost of
lease rentals or minimum royalties.
Protective well means a well drilled or
modified to prevent or offset drainage of
oil and gas resources from its Federal or
Indian lease.
Record title holder means the
person(s) to whom BLM or an Indian
lessor issued a lease or approved the
assignment of record title in a lease.
Shut-in well means a nonoperational
well that can physically and
mechanically operate by opening valves
or activating existing equipment.
Superintendent means the
superintendent of an Indian Agency, or
other officer authorized to act in matters
of record and law with respect to oil and
gas leases on restricted Indian lands.
Surface use plan of operations means
a plan for surface use, disturbance, and
reclamation.
Temporarily abandoned well means a
nonoperational well that is not
physically or mechanically capable of
production or injection without
additional equipment or without
servicing the well, but that may have
future beneficial use.
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Waste of oil or gas means any act or
failure to act by the operator that is not
sanctioned by the authorized officer as
necessary for proper development and
production and which results in:
(1) A reduction in the quantity or
quality of oil and gas ultimately
producible from a reservoir under
prudent and proper operations; or
(2) Avoidable surface loss of oil or
gas.
■ 14. Revise § 3162.3–4 to read as
follows:
§ 3162.3–4
Well abandonment.
(a) The operator must promptly plug
and abandon, in accordance with a plan
first approved in writing or prescribed
by the authorized officer, each newly
completed or recompleted well in
which oil or gas is not encountered in
paying quantities or which, after being
completed as a producing well, is
demonstrated to the satisfaction of the
authorized officer to be no longer
capable of producing oil or gas in
paying quantities, unless the authorized
officer approves the use of the well as
a service well for injection to recover
additional oil or gas or for subsurface
disposal of produced water. In the case
of a newly drilled or recompleted well,
the approval to abandon may be written
or oral with written confirmation.
(b) Completion of a well as plugged
and abandoned may also include
conditioning the well as a water supply
source for lease operations or for use by
the surface owner or appropriate
Government Agency, when authorized
by the authorized officer. All costs over
and above the normal plugging and
abandonment expense will be paid by
the party accepting the water well.
(c) No well may be temporarily
abandoned for more than 30 days
without the prior approval of the
authorized officer. The operator must
provide adequate and detailed
justification for the abandonment, verify
the mechanical integrity of the well, and
isolate the completed interval(s) prior to
abandonment. The authorized officer
may authorize a delay in the permanent
abandonment of a well for a period of
up to 1 year and the authorized officer
may authorize additional delays, no one
of which may exceed an additional 1year period. Except in extraordinary
circumstances, the maximum period of
time for an operator to delay permanent
abandonment of a temporarily
abandoned well will not exceed 4 years.
Upon the removal of drilling or
producing equipment from the site of a
well which is to be permanently
abandoned, the surface of the lands
disturbed in connection with the
conduct of operations must be
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reclaimed in accordance with a plan
first approved or prescribed by the
authorized officer.
(d) Operators of shut-in wells must:
(1) Notify the authorized officer of the
well’s shut-in status and provide the
date the well was shut-in within 90 days
of well shut-in;
(2) Within 3 years of well shut-in,
provide the authorized officer with
verification of the mechanical integrity
of the well and confirmation that the
well remains capable of producing in
paying quantities; and
(3) Within 4 years of well shut-in,
complete one of the following actions:
(i) Permanently abandon the well;
(ii) Resume production in paying
quantities; or
(iii) Provide the authorized officer
with a detailed plan and timeline for
future beneficial use of the well. If the
authorized officer determines that there
is a legitimate future beneficial use for
the well, the officer may allow the
operator to delay permanent
abandonment by 1 year. The authorized
officer may grant additional delays in 1year increments, provided that the
operator confirms the future beneficial
use of the well and is making verifiable
progress on returning the well to a
beneficial use.
■ 15. Revise § 3165.1 to read as follows:
lotter on DSK11XQN23PROD with PROPOSALS2
§ 3165.1 Relief from operating and/or
producing requirements.
(a) Applications for relief from either
the operating or the producing
requirements of a lease, or both, must be
filed with the authorized officer, and
must include a full statement of the
circumstances that render such relief
necessary.
(b) The authorized officer will act on
applications submitted for a suspension
of operations or production, or both,
filed pursuant to 43 CFR 3103.42. The
application for suspension must be filed
with the authorized officer prior to the
expiration date of the lease; must be
executed by all operating rights owners
or by the operator on behalf of the
operating rights owners; and must
include a full statement of the
circumstances that makes such relief
necessary.
(c) The authorized officer will not
approve an application for a suspension
of a lease where the applicant cites, as
the basis for the suspension, a pending
APD filed less than 90 calendar days
prior to the expiration date of the lease.
(d) If approved, a suspension of
operations and production will be
effective on the first of the month in
which the completed application was
filed or the date specified by the
authorized officer in the approval.
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17:27 Jul 21, 2023
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Approved suspensions will not exceed
1 year. If the circumstances warrant all
operating rights owners, or the operator
on behalf of the operating rights owners,
may submit a request to extend the
suspension prior to the end of the
suspension.
(e) BLM-directed suspensions may
exceed 1 year.
(f) Suspensions will lift when the
basis provided for the suspension no
longer exists, when lifting the
suspension is in the public interest, or
as otherwise stated by the authorized
officer in the approval letter.
PART 3170—ONSHORE OIL AND GAS
PRODUCTION
16. The authority citation for part
3170 continues to read as follows:
■
Authority: 25 U.S.C. 396d and 2107; 30
U.S.C. 189, 306, 359, and 1751; and 43 U.S.C.
1732(b), 1733, and 1740.
■
17. Revise § 3171.6 to read as follows:
§ 3171.6 Components of a complete APD
package.
Operators are encouraged to consider
and incorporate Best Management
Practices into their APDs because Best
Management Practices can result in
reduced processing times and reduced
number of Conditions of Approval. An
APD package must include the
following information that will be
reviewed by technical specialists of the
appropriate agencies to determine the
technical adequacy of the package:
(a) A completed Form 3160–3; and
(b) A well plat. Operators must
include in the APD package a well plat
and geospatial database prepared by a
registered surveyor depicting the
proposed location of the well and
identifying the points of control and
datum used to establish the section lines
or metes and bounds. The purpose of
this plat is to ensure that operations are
within the boundaries of the lease or
agreement and that the depiction of
these operations is accurately recorded
both as to location (latitude and
longitude) and in relation to the
surrounding lease or agreement
boundaries (public land survey corner
and boundary ties). The registered
surveyor should coordinate with the
cadastral survey division of the
appropriate BLM State Office,
particularly where the lands have not
been surveyed under the Public Land
Survey System.
(1) The plat and geospatial database
must describe the location of operations
in:
(i) Geographical coordinates generated
by an electronic navigation system, and
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Fmt 4701
Sfmt 4702
47647
document the datum referenced to
generate these coordinates; and
(ii) In feet and direction from the
nearest two adjacent section lines, or, if
not within the Rectangular Survey
System, the nearest two adjacent
property lines, generated from the
BLM’s current Geographic Coordinate
Data Base.
(2) The surveyor who prepared the
plat must sign it, certifying that the
location has been staked on the ground
as shown on the plat.
(3) Surveying and staking are
necessary casual uses, typically
involving negligible surface disturbance.
The operator is responsible for making
access arrangements with the
appropriate Surface Managing Agency
(other than the BLM and the FS) or
private surface owner. On tribal or
allotted lands, the operator must contact
the appropriate office of the BIA to
make access arrangements with the
Indian surface owners. In the event that
not all of the Indian owners consent or
may be located, but a majority of those
who can be located consent, or the
owners of interests are so numerous that
it would be impracticable to obtain their
consent and the BIA finds that the
issuance of the APD will cause no
substantive injury to the land or any
owner thereof, the BIA may approve
access. Typical off-road vehicular use,
when conducted in conjunction with
these activities, is a necessary action for
obtaining a permit and may be done
without advance approval from the
Surface Managing Agency, except for:
(i) Lands administered by the
Department of Defense;
(ii) Other lands used for military
purposes;
(iii) Indian lands; or
(iv) Where more than negligible
surface disturbance is likely to occur or
is otherwise prohibited.
(4) No entry on split estate lands for
surveying and staking should occur
without the operator first making a good
faith effort to notify the surface owner.
Also, operators are encouraged to notify
the BLM or the FS, as appropriate,
before entering private lands to stake for
Federal mineral estate locations.
■ 18. Revise § 3171.14 to read as
follows:
§ 3171.14
Valid Period of Approved APD.
(a) An APD approval is ordinarily
valid for 3 years from the date that it is
approved, or until lease expiration,
whichever occurs first.
(b) Notwithstanding paragraph (a) of
this section, if an APD approval expires
by reason other than lease expiration,
the APD approval shall remain valid if
the operator or lessee:
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(1) Has drilled the well to the
approximate total depth in the approved
APD;
(2) Is drilling the well with a rig
capable of drilling the well to the
proposed total depth in the approved
APD; or
(3) Has submitted a plan, approved by
the BLM prior to expiration of the APD
approval, for continuously drilling the
well to reach the proposed total depth
in the approved APD.
(c) If, upon expiration of the approved
APD, the operator created surface
disturbance or began drilling the well
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17:27 Jul 21, 2023
Jkt 259001
under the approved APD, the operator
or lessee must comply with all
applicable plugging, abandonment, and
reclamation requirements.
(d) The operator is responsible for
reclaiming any surface disturbance that
resulted from its actions, even if a well
was not drilled.
PART 3180—ONSHORE OIL AND GAS
UNIT AGREEMENTS: UNPROVEN
AREAS
Authority: 30 U.S.C. 189.
§ 3186.2
■
[Removed]
20. Remove § 3186.2.
Laura Daniel-Davis,
Principal Deputy Assistant Secretary, Land
and Minerals Management.
[FR Doc. 2023–14287 Filed 7–21–23; 8:45 am]
BILLING CODE 4331–29–P
19. The authority citation for part
3180 continues to read as follows:
■
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]]>Agencies
[Federal Register Volume 88, Number 140 (Monday, July 24, 2023)]
[Proposed Rules]
[Pages 47562-47648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14287]
[[Page 47561]]
Vol. 88
Monday,
No. 140
July 24, 2023
Part II
Department of the Interior
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Bureau of Land Management
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43 CFR Parts 3000, 3100, 3110, et al.
Federal Register / Vol. 88 , No. 140 / Monday, July 24, 2023 /
Proposed Rules
[[Page 47562]]
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DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160, 3170,
and 3180
[BLM_HQ_FRN_MO4500172196]
RIN 1004-AE80
Fluid Mineral Leases and Leasing Process
AGENCY: Bureau of Land Management, Interior.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Land Management (BLM) is proposing to revise the
BLM's oil and gas leasing regulations. Among other things, the proposed
rule would reflect provisions of the Inflation Reduction Act pertaining
to royalty rates, rentals, and minimum bids, and would update the
bonding requirements for leasing, development, and production. The
proposed rule would also improve the BLM's leasing process to ensure
proper stewardship of public lands and resources and would revise some
operating requirements.
DATES: Send your comments on this proposed rule to the BLM on or before
September 22, 2023. The BLM is not obligated to consider any comments
received after this date in making its decision on the final rule.
Information Collection Requirements: This proposed rule includes
revised and new information-collection requirements that must be
approved by the Office of Management and Budget (OMB). If you wish to
comment on the information-collection requirements, please note that
those comments should be sent directly to OMB. OMB is required to make
a decision concerning the collection of information contained in this
proposed rule between 30 and 60 days after publication of this document
in the Federal Register. Therefore, a comment to the OMB on the
proposed information-collection revisions is best assured of being
given full consideration if the OMB receives it by September 19, 2023.
ADDRESSES: Mail, personal, or messenger delivery: U.S. Department of
the Interior, Director (630), Bureau of Land Management, 1849 C St. NW,
Room 5646, Washington, DC 20240, Attention: 1004-AE80. Federal
eRulemaking Portal: https://www.regulations.gov. In the Search-box,
enter ``RIN 1004-AE80'' and click the ``Search'' button. Follow the
instructions at this website.
For Comments on Information--Collection Activities
Information-Collection Requirements: Written comments and
suggestions on the information-collection requirements should be
submitted by the date specified earlier in DATES to https://www.reginfo.gov/public/do/PRAMain. Find this specific information-
collection by selecting ``Currently under Review--Open for Public
Comments'' or by using the search function.
If you submit comments on these information-collection burdens, you
should provide the BLM with a copy at one of the addresses shown
earlier in this section so that we can summarize all written comments
and address them in the final rulemaking. Please indicate ``Attention:
Paperwork Reduction Act Comments (RIN 1004-AE80).'' Comments not
pertaining to the proposed rule's information-collection burdens should
not be submitted to OMB. The BLM is not obligated to consider or
include in the Administrative Record for the final rule any comments
that are improperly directed to OMB.
FOR FURTHER INFORMATION CONTACT: Peter Cowan, Senior Mineral Leasing
Specialist, telephone: (720) 838-1641 or email: [email protected], for
information regarding the substance of this proposed rule or Matt
Warren, Acting Division Chief for the Division of Fluid Minerals,
telephone: (505) 216-8832, or email: [email protected], for information
about the BLM's fluid minerals program. For questions relating to
regulatory process issues, contact Faith Bremner at email:
[email protected]. Individuals in the United States who are deaf, blind,
hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or
TeleBraille) to access telecommunications relay services for contacting
Mr. Warren. Individuals outside the United States should use the relay
services offered within their country to make international calls to
the point-of-contact in the United States.
SUPPLEMENTARY INFORMATION:
I. List of Acronyms
II. Executive Summary
III. Public Comment Procedures
IV. Background
V. Discussion of the Proposed Rule
VI. Overview of Modifications
VII. Procedural Matters
I. List of Acronyms
ANWR = Arctic National Wildlife Refuge
BLM = Bureau of Land Management
CA = Communitization Agreement
CD = Certificate of Deposit
CFIUS = Committee on Foreign Investment in the United States
CFR = Code of Federal Regulations
DOI = Department of the Interior
E.O. = Executive Order
EOI = Expression of Interest
EPAct = Energy Policy Act of 2005
FLPMA = Federal Land Policy and Management Act
FOOGLRA = Federal Onshore Oil and Gas Leasing Reform Act of 1987
GAO = Government Accountability Office
IBLA = Interior Board of Land Appeals
IIJA = Infrastructure Investment and Jobs Act of 2021
IRA = Inflation Reduction Act of 2022
LOC = Letter of Credit
MLA = Mineral Leasing Act of 1920, as amended (MLA is also referred
to as ``Act'' in the regulations.)
MLAAL = Mineral Leasing Act for Acquired Lands of 1947, as amended
MLRS = Mineral and Land Records System
NEPA = National Environmental Policy Act
NFLSS = National Fluids Lease Sale System
NPR-A = National Petroleum Reserve--Alaska
OIG = Office of the Inspector General
OMB = Office of Management and Budget
ONRR = Office of Natural Resources Revenue
OPM = Office of Personnel Management
PRA = Paperwork Reduction Act
RIA = Regulatory Impact Analysis
ROW = Right-of-way
SBA = Small Business Administration
SO = Secretarial Order
SME = Subject matter expert
U.S.C. = United States Code
USFS = United States Forest Service
II. Executive Summary
This proposed rule aims to enhance the administration of oil and
gas-related activities on America's public lands and reflects
provisions in recently enacted laws that modify aspects of the Federal
onshore oil and gas program. Specifically, the proposed rule would
implement changes pertaining to royalty rates, rentals, and minimum
bids for BLM-issued oil and gas leases and would update the bonding
requirements for leasing, development, and production. The BLM has not
comprehensively updated the Federal onshore oil and gas program's
regulatory framework since 1988. As a result, many of the program's
regulatory requirements are outdated, do not adequately protect the
fiscal interests of the American public, and do not promote leasing
practices that are consistent with diligent development requirements
and multiple-use and sustained-yield principles. This proposed rule
seeks to update the existing regulations accordingly.
The Secretary of the Interior manages a Federal onshore oil and gas
program pursuant to the requirements of various statutes, including the
Federal Land Policy and Management Act of 1976, as amended (43 U.S.C.
1701 et seq.) (FLPMA), the Mineral Leasing Act of
[[Page 47563]]
1920, as amended (30 U.S.C. 181 et seq.) (MLA), and the Mineral Leasing
Act for Acquired Lands of 1947, as amended (30 U.S.C. 351 et seq.)
(MLAAL), as well as the recently enacted Inflation Reduction Act (IRA)
of 2022 and Infrastructure Investment and Jobs Act (IIJA) of 2021.
Under FLPMA, the BLM manages approximately 245 million acres of public
lands and approximately 700 million acres of federally owned subsurface
minerals ``on the basis of multiple use and sustained yield,'' which
requires the BLM to achieve ``a combination of balanced and diverse
resource uses that takes into account the long-term needs of future
generations for renewable and non-renewable resources.'' The BLM is
required to avoid ``permanent impairment of the productivity of the
land and the quality of the environment with consideration being given
to the relative values of the resources and not necessarily to the
combination of uses that will give the greatest economic return or the
greatest unit output.'' Oil and gas-related activities are one of the
multiple land uses that FLPMA authorizes and which the BLM administers
in accordance with the MLA and MLAAL. Both of those Acts govern the
leasing of public lands to explore for and develop petroleum, natural
gas, coal, and other hydrocarbons, amongst other mineral deposits.
Over the past 2 years, Congress has modified certain aspects of the
Federal onshore oil and gas program through the IRA and IIJA. In the
IRA, Congress updated the onshore oil and gas program's fiscal terms
and established a new leasing scheme for Federal lands. In the IIJA,
Congress directed the BLM to proactively ``reduce the inventory of
idled wells on Federal land.'' Idled wells can cause a wide range of
impacts on public lands, waters, wildlife, and nearby communities.
There are currently thousands of idled wells on Federal lands, many of
which have not produced oil or gas in years. The BLM intends to address
the IRA and IIJA in this rulemaking.
Prior to the enactment of the IRA and IIJA, the Government
Accountability Office (GAO) and the Department of the Interior's (DOI)
Office of the Inspector General (OIG) reviewed and audited the BLM's
Federal onshore oil and gas program to identify problematic areas in
this program and recommended actions to address them. As part of the
GAO's and OIG's respective audits, they highlighted weaknesses in the
onshore program's fiscal framework and recommended that the BLM take
steps to ensure that the American public receives a fair return from
oil and gas activities on public lands. The DOI and the BLM concurred
with these recommendations in the Report on the Federal Oil and Gas
Leasing Program issued in November 2021. Accordingly, the BLM is
proposing to adjust its oil and gas bonding requirements, including by
increasing minimum bond amounts for the first time in decades. The BLM
believes that doing so, along with other proposed changes, would help
ensure that reclamation costs reside primarily with oil and gas
lessees, operating rights owners, and operators and not the American
public. In the same vein, the BLM is proposing to adjust its cost
recovery mechanisms so that project applicants provide a more
appropriate share of up-front costs. Finally, the BLM is proposing
several changes to encourage diligent development of leased lands and
to direct leasing to areas with fewer multiple-use conflicts and a
greater likelihood of achieving responsible development.
III. Public Comment Procedures
If you wish to comment on this proposed rule, you may submit your
comments to the BLM by mail, personal or messenger delivery, or through
https://www.regulations.gov (see the ADDRESSES section). Please make
your comments on the proposed rule as specific as possible, confine
them to issues pertinent to the proposed rule, explain the reason for
any changes you recommend, and include any supporting documentation.
Where possible, your comments should reference the specific section or
paragraph of the proposal that you are addressing. The BLM is not
obligated to consider or include in the Administrative Record for the
final rule any comments received after the close of the comment period
(see DATES) or comments delivered to an address other than those listed
previously (see ADDRESSES). Comments, including names and street
addresses of respondents, will be available for public review at the
address listed under ``ADDRESSES: Mail, personal or messenger
delivery'' during regular hours (7:45 a.m. to 4:15 p.m. Eastern Time),
Monday through Friday, except holidays. Before including your address,
telephone number, email address, or other personal identifying
information in your comment, be advised that your entire comment--
including your personal identifying information--may be made publicly
available at any time. While you can ask us in your comment to withhold
from public review your personal identifying information, we cannot
guarantee that we will be able to do so.
As explained later, this proposed rule includes revisions to
information collection requirements that must be approved by the OMB.
If you wish to comment on the revised information collection
requirements in this proposed rule, please note that such comments must
be sent directly to the OMB in the manner described in the ADDRESSES
section. The OMB is required to make a decision concerning the
collection of information contained in this proposed rule between 30
and 60 days after publication of this document in the Federal Register.
Therefore, a comment to the OMB on the proposed information collection
revisions is best assured of being given full consideration if the OMB
receives it by September 19, 2023.
IV. Background
The BLM is undertaking this rulemaking for two primary reasons: (1)
to reflect provisions in recently enacted laws that modify aspects of
the Federal onshore oil and gas program; and (2) to enhance the
administration of the onshore program, consistent with the BLM's
multiple-use and sustained-yield mission. As documented in a DOI report
released in November 2021,\1\ and in numerous reports from the GAO and
DOI's OIG,\2\ the onshore program, historically, has failed to provide
the Federal Government with a fair return; exposed the Federal
Government to significant reclamation-related liabilities; lacked
adequate cost recovery mechanisms; and encouraged speculative leasing
and wasteful development practices. Through this rulemaking, the BLM
intends to adopt new procedures and requirements to address those
issues.
---------------------------------------------------------------------------
\1\ DOI, ``Report on the Federal Oil and Gas Leasing Program''
(Nov. 2021).
\2\ See, e.g., OIG, ``Inspector General's Statement Summarizing
the Major Management and Performance Challenges Facing the U.S.
Department of the Interior'' (Nov. 2022); GAO, ``OIL AND GAS
LEASING--BLM Should Update Its Guidance and Review Its Fees'' (Nov.
2021); GAO, ``OIL AND GAS--Onshore Competitive and Noncompetitive
Lease Revenues'' (Nov. 2020); GAO, ``FEDERAL ENERGY DEVELOPMENT--
Challenges to Ensuring a Fair Return for Federal Energy Resources''
(Sept. 2019); GAO, ``OIL AND GAS--Bureau of Land Management Should
Address Risk from Insufficient Bonds to Reclaim Wells'' (Sept.
2019); GAO, ``OIL AND GAS LEASE MANAGEMENT--BLM Could Improve
Oversight of Lease Suspensions with Better Data and Monitoring
Procedures'' (June 2018); OIG, ``Bureau of Land Management's Idle
Well Program'' (Jan. 2018).
---------------------------------------------------------------------------
The Secretary of the Interior manages Federal oil and gas resources
pursuant to the MLA, MLAAL, and other statutes pertaining to specific
categories of lands. The MLA and MLAAL prescribe
[[Page 47564]]
the minimum bid amounts, minimum rental rates, and minimum percentage
of royalty reserved to the United States under onshore oil and gas
leases on most Federal lands. The BLM is the agency within DOI
responsible for regulating onshore leasing activities for federally
managed lands and the subsurface mineral estate. The BLM regulations
governing onshore oil and gas leasing activities are set out in 43 CFR
parts 3000 and 3100. Aside from updating certain application fees for
consistency, the BLM is not proposing in this rule to revise the
regulations at 43 CFR part 3130, which govern oil and gas activity in
the National Petroleum Reserve--Alaska.
In 1976, FLPMA established particular land and resource management
authorities for the BLM, emphasizing multiple use, sustained yield, and
environmental protection as the guiding principles for public land
management. FLPMA directs the BLM to manage some areas for
conservation, to consider the best use of public lands in a broader
context than just economic return, and to take action necessary to
prevent unnecessary or undue degradation of the lands.
Today, Federal onshore oil and gas production accounts for
approximately 10 percent of domestically produced oil and 8 percent of
domestically produced natural gas. As of the end of Fiscal Year (FY)
2022, the BLM managed 34,409 Federal oil and gas leases covering 23.7
million acres with nearly 89,350 wells that are capable of production.
Of the more than 23 million onshore acres under lease today, over 11
million (approximately 48 percent) of those acres are non-producing.
A. Addressing Recently Enacted Laws Concerning the Federal Onshore Oil
and Gas Program
Over the past 2 years, Congress has enacted two laws--the IRA (Pub.
L. 117-169) and the IIJA (Pub. L. 117-58)--that modify the Federal
onshore oil and gas program's statutory framework. Through this
rulemaking, the BLM will incorporate the provisions that are contained
in these Acts into its oil and gas regulations.
1. Inflation Reduction Act
In August 2022, Congress passed the IRA, two sections of which the
BLM intends to implement, in part, through this rulemaking: (1) Section
50262--Mineral Leasing Act Modernization; and (2) Section 50265--
Ensuring Energy Security.
Section 50262--Mineral Leasing Act Modernization
In IRA section 50262, Congress modernized the onshore oil and gas
program's fiscal terms. Over the past decade, the GAO and OIG have
repeatedly raised concerns about the fiscal soundness of the onshore
program.\3\ Furthermore, in 2011, the GAO added the ``Management of
Federal Oil and Gas Resources'' to its list of ``high-risk'' Federal
programs after determining that DOI ``does not have reasonable
assurance that it is collecting its share of revenue from oil and gas
produced on Federal lands.'' \4\ ``High-risk'' programs are
``vulnerable to waste, fraud, abuse, or mismanagement, or in need of
transformation.'' GAO reaffirmed this ``high-risk'' determination in
2021 and specifically recommended that DOI ``needs to commit to
developing policies that consistently lead towards improvements in . .
. ensuring the government receives a fair return.'' \5\
---------------------------------------------------------------------------
\3\ See, e.g., OIG, ``Inspector General's Statement Summarizing
the Major Management and Performance Challenges Facing the U.S.
Department of the Interior'' (Nov. 2022); GAO, ``FEDERAL ENERGY
DEVELOMPENT--Challenges to Ensuring a Fair Return for Federal Energy
Resources'' (Sept. 2019).
\4\ GAO, ``HIGH-RISK SERIES--An Update'' (Feb. 2011).
\5\ GAO, ``HIGH-RISK SERIES--Dedicated Leadership Needed to
Address Limited Progress in Most High-Risk Areas'' (Mar. 2021).
---------------------------------------------------------------------------
The IRA addressed some of the GAO and OIG's concerns by increasing
the onshore program's statutory royalty rate, minimum rental rates, and
minimum lease bid, and establishing a new fee on expressions of
interest (EOI). The BLM proposes to incorporate these statutory changes
into its oil and gas regulations.
Section 50265--Ensuring Energy Security
In section 50265 of the IRA, Congress enacted new oil and gas
leasing terms for Federal lands. Under these terms, the BLM ``may not
issue a right-of-way for wind or solar energy development on Federal
land'' unless it has: (1) held an onshore oil and gas lease sale during
the 120-day period ending on the date of the issuance of the right-of-
way; and (2) ``the sum total of acres offered for lease in onshore
lease sales during the 1-year period ending on the date of the issuance
of the right-of-way . . . is not less than the lesser of . . .
2,000,000 acres[ ] and 50 percent of the acreage for which expressions
of interest have been submitted for lease sales during that period. . .
.''
2. Infrastructure Investment and Jobs Act
In November 2021, Congress passed the IIJA, which amended section
349 of the Energy Policy Act of 2005 (EPAct) (Pub. L. 109-58). Section
349 of EPAct directs the BLM to ``establish a program . . . to
remediate, reclaim, and close orphaned, abandoned, or idled oil and gas
wells located on land administered by the land management agencies
within the Department of the Interior and the Department of
Agriculture.'' Section 349 defines an ``idled well'' as ``a well . . .
[that] has been nonoperational for at least 7 years'' and has ``no
anticipated beneficial use.''
Since EPAct's passage in 2005, the BLM has gained additional
information, experience, and insights into its efforts to inventory and
manage idled wells. In 2018, the OIG issued a report finding that
``[i]dle wells pose notable financial risk to the U.S. Government and
the taxpayer, as idle wells can fall into disrepair creating
environmental, safety, and public health hazards. In addition, idle
wells pose a risk of becoming orphaned, thus creating an undue
financial burden on the taxpayer to pay for plugging and reclaiming.
Idle wells have the potential to cost taxpayers millions of dollars if
not properly reviewed and managed.'' \6\ The OIG also identified
``various program management issues,'' including a ``lack of an
accurate inventory of idle wells'' and ``unreliable data in managing
idle wells,'' ``that have contributed to BLM's inability to reduce its
idle well numbers.'' To address these issues, the OIG recommended that
the BLM strengthen its procedures for monitoring and tracking idled
wells.
---------------------------------------------------------------------------
\6\ OIG, ``Bureau of Land Management's Idle Well Program'' (Jan.
2018).
---------------------------------------------------------------------------
The GAO also addressed the idled well program in a pair of reports
issued in May 2018 and September 2019.\7\ In these reports, the GAO
stated that the BLM has ``few policy tools to manage shut-in wells,''
which represent a ``large portion'' of wells that become idled and
orphaned.\8\ The GAO also identified nearly 2,300 idled wells ``at
increased risk of becoming orphaned because they have not produced
since June 2008 and have not been reclaimed.'' The bonds for ``a
majority of these at-risk wells'' were ``too low to cover'' their
anticipated reclamation costs, which,
[[Page 47565]]
according to the GAO, may exceed $330 million.
---------------------------------------------------------------------------
\7\ GAO, ``OIL AND GAS--Bureau of Land Management Should Address
Risk from Insufficient Bonds to Reclaim Wells'' (Sept. 2019); GAO,
``OIL AND GAS WELLS--Bureau of Land Management Needs to Improve Its
Data and Oversight of Its Potential Liabilities'' (May 2018).
\8\ See Sec. 3160.0-5 for a proposed definition of shut-in
well.
---------------------------------------------------------------------------
In the IIJA, Congress provided the BLM with additional direction
concerning the idled well program. Specifically, the IIJA requires the
BLM to ``periodically review'' and proactively ``reduce the inventory
of idled wells on Federal land.'' The IIJA also reduces the
nonoperational period after which a well is considered idled from 7 to
4 years. In light of these statutory directives, as well as the
recommendations from the OIG and GAO, the BLM is proposing to adopt
additional requirements for operators of nonoperational wells
(specifically, shut-in and temporarily abandoned wells). The BLM
believes that these requirements would help the BLM reduce its
inventory of idled wells through improved identification, tracking, and
proactive management.
B. Enhancing the Administration and Functioning of the Federal Onshore
Oil and Gas Program
In addition to addressing recent Congressional directives, the BLM
is undertaking this rulemaking for the purpose of adopting new
procedures and requirements that would enhance the administration of
the Federal onshore oil and gas program, consistent with the BLM's
multiple use and sustained yield mission. The BLM has not updated its
oil and gas regulations comprehensively since 1988 and believes that
changes are needed to reduce taxpayer exposure to reclamation-related
liabilities; provide adequate cost recovery mechanisms; direct oil and
gas leasing to appropriate locations; and encourage diligent
development by parties that are responsible and qualified to conduct
such development.
1. Reducing Taxpayer Exposure to Reclamation-Related Liabilities
The MLA requires the BLM to ``establish such standards as may be
necessary to ensure that an adequate bond, surety, or other financial
arrangement will be established prior to the commencement of surface-
disturbing activities on any lease, to ensure the complete and timely
reclamation of the lease tract, and the restoration of any lands or
surface waters adversely affected by lease operations after the
abandonment or cessation of oil and gas operations on the lease'' (see
30 U.S.C. 226(g)). The MLA further requires the BLM to include in oil
and gas leases ``such provisions as [it] deem[s] necessary . . . for
the protection of the interests of the United States . . . and for the
safeguarding of the public welfare'' (see 30 U.S.C. 187). To comply
with these statutory requirements, the BLM is proposing to update its
bonding framework for the first time in over 60 years and adopt
additional changes to limit the reclamation-related liabilities of the
Federal Government.
The BLM's current minimum bond amounts are outdated, expose the
Federal Government to significant financial risks in the event of
bankruptcies, and delay ``complete and timely'' reclamation and
restoration of lease tracts, which can cause or exacerbate a range of
environmental issues, including methane leaks, surface and groundwater
contamination, interference with agricultural activities, and degraded
wildlife habitat.\9\ The BLM has not increased its minimum bond
amounts, which are currently $10,000 for individual lease bonds,
$25,000 for statewide bonds, and $150,000 for nationwide bonds, since
1951 (statewide and nationwide bonds) and 1960 (individual lease
bonds). Accounting for inflation, the 2022 equivalents of those bond
amounts are $100,105, $281,399, and $1,688,394 respectively. (See
https://www.usinflationcalculator.com/). Consequently, the BLM's
current bonding requirements ``may not create an incentive for
operators to promptly reclaim wells after operations cease because it
costs more to reclaim the wells than the operator could collect from
its bond.'' \9\ According to the BLM's internal estimates, plugging
costs alone typically range from $35,000 to $200,000 per well.
---------------------------------------------------------------------------
\9\ GAO, ``OIL AND GAS--Bureau of Land Management Should Address
Risk from Insufficient Bonds to Reclaim Wells'' (Sept. 2019).
---------------------------------------------------------------------------
In addition to increasing minimum bond amounts, the BLM is
proposing other measures to protect taxpayers from reclamation-related
liabilities. These include enhanced oversight of idled wells, as
discussed previously. The BLM also intends to streamline the process
for adding noncompliant entities to its list of entities and their
officers that may not receive new leases under section 17(g) of the
MLA, 30 U.S.C. 226(g).
2. Providing Adequate Cost Recovery Mechanisms
As explained in greater detail in the Discussion of the Proposed
Rule, the BLM is proposing to revise the onshore program's cost
recovery mechanisms. The BLM is doing so to ensure that the program's
application fees reflect actual processing costs. In 2021, the GAO
released a report on the BLM's fee structure for the onshore oil and
gas program, which stated that the ``BLM does not have assurance that
its current application fees reflect changes in conditions because its
biennial fee review does not examine all the costs BLM intended to
recover through its application fees.'' \10\ The BLM concurred with
that finding, and, in conjunction with this rulemaking, evaluated those
costs, which informed the proposed adjustments to the onshore program's
application fees.
---------------------------------------------------------------------------
\10\ GAO, ``OIL AND GAS LEASING--BLM Should Update Its Guidance
and Review Its Fees'' (Nov. 2021).
---------------------------------------------------------------------------
3. Directing Oil and Gas Leasing to Appropriate Locations
To assist with the consideration and selection of lease sale
parcels, the BLM intends to incorporate preference criteria into its
oil and gas regulations. Historically, the BLM has not employed
nationwide criteria to inform its selection of sale parcels. The BLM
has invested a considerable amount of time and resources on evaluating
parcels that the public does not purchase and that lessees do not
develop. Between 2013 and 2022, the BLM offered approximately 40.3
million acres and leased approximately 9.5 million acres from
competitive lease sales.\11\ Even when parcels sell at or above the
minimum bid, they are rarely developed or generate royalties for the
Federal Government. The GAO found that only about 7 percent of the
leases reviewed produced oil and gas in the primary term of the
lease.\12\ The BLM believes that by directing Federal oil and gas
leasing towards areas that are more likely to produce, it can
appropriately utilize the BLM's time and resources. When new technology
becomes available, the BLM would reevaluate development potential in
light of that technology, which could change the identified areas that
are more likely to produce.
---------------------------------------------------------------------------
\11\ BLM Public Lands Statistics, Table 11, available at https://www.blm.gov/programs-energy-and-minerals-oil-and-gas-oil-and-gas-statistics.
\12\ GAO, ``OIL AND GAS--Onshore Competitive and Noncompetitive
Lease Revenues'' (Nov. 2020).
---------------------------------------------------------------------------
The lack of preference criteria to aid in the selection of sale
parcels also leads to conflict when leases are offered in areas with
sensitive cultural, wildlife, and recreation resources. By directing
leasing toward areas that do not have such resources, the BLM believes
it can proactively avoid some of these conflicts. Additionally, the BLM
believes that this approach would provide stakeholders with greater
certainty, as it would be understood at the outset of the leasing
process that the
[[Page 47566]]
preference criteria would guide the BLM's decision-making.
While the proposed rule text sets out a number of criteria to aid
the BLM in selecting parcels for potential inclusion in lease sales,
the analysis of the impacts of leasing these parcels would also address
the potential impacts of direct, indirect, and cumulative greenhouse
gas emissions from leasing in accordance with the National
Environmental Policy Act (NEPA) and applicable legal precedent. While
the preference criteria will also affect the environmental consequences
of proposed leasing, the BLM requests comment on whether the preference
criteria or other portions of this proposed rule should be expanded, or
new provisions added, to discuss analysis of greenhouse gas emissions
and related decision-making based on the analysis.
4. Encouraging Diligent Development of Federal Oil and Gas Leased
Resources
The BLM has added provisions to the proposed rule that would
incentivize diligent development of leased resources by responsible and
qualified parties. When oil and gas leases are not diligently
developed, as required by the MLA and expressly stated in the BLM's oil
and gas lease form,\13\ there can be significant opportunity costs. For
example, the BLM expends time and resources processing and
administering lease suspensions and drilling permit extensions that
often do not lead to development.\14\ Additionally, leases that are not
diligently developed can limit the BLM's ability to manage public lands
for other uses and resources and fulfill its multiple-use and
sustained-yield missions. For these reasons, the BLM is proposing to
limit the use of lease suspensions and drilling permit extensions, and,
prior to issuing or approving the transfer of leases, strengthen its
oversight of whether the potential transferees are responsible and
qualified to pursue development.
---------------------------------------------------------------------------
\13\ BLM Form 3100-11, ``Offer to Lease and Lease for Oil and
Gas,'' available at https://www.blm.gov/sites/blm.gov/files/uploads/Services_National-Operations-Center_Eforms_Fluid-and-Solid-Minerals_3100-011.pdf.
\14\ GAO, ``OIL AND GAS LEASE MANAGEMENT--BLM Could Improve
Oversight of Lease Suspensions with Better Data and Monitoring
Procedures'' (June 2018).
---------------------------------------------------------------------------
V. Discussion of the Proposed Rule
A. Summary
The proposed modifications to parts 3000, 3100, 3110, 3120, 3130,
3140, 3150, 3160, 3170, and 3180 are described in detail in the
following section-by-section discussion. In addition, minor non-
substantive changes, which do not warrant detailed discussion, are also
proposed throughout the rule. For example, the rule proposes to change
``the Bureau'' to ``the BLM,'' change ``Service'' to ``ONRR,'' spell
out single-digit numbers, and change the question-and-answer formatting
to be consistent with other regulations that appear in the CFR.
Throughout the proposed rule, the existing term ``shall'' has been
replaced with the words ``must,'' ``will,'' or ``may,'' as appropriate,
to reduce confusion. The proposed rule would update all time frames to
specify either business or calendar days in order to reduce confusion.
In addition, all sections in the parts that are being revised and
replaced would be redesignated to remove the hyphens from the existing
section numbers to comply with the Office of the Federal Register's
updated style requirements. For example, Sec. 3000.0-5 would be
redesignated to Sec. 3000.5. Removing the hyphens would require the
BLM to redesignate some of the existing section numbers with decimals
by adding more place values to them, which would allow the BLM to
subsequently delineate the different sections. For example, Sec.
3000.1 would be redesignated as Sec. 3000.10, Sec. 3000.2 would be
redesignated as Sec. 3000.20, and so on. This redesignation would be
carried throughout the proposed rule, even in sections that are not
otherwise being updated. Finally, the BLM would remove the regulatory
section numbers for headings that have no text associated them. These
are referred to as ``undesignated center headings'' and serve as
section guideposts in the regulations.
Each section of each subpart, and each provision within those
sections, is separate and severable from the other sections and
provisions. If any provision of this rule is stayed or determined to be
invalid or unenforceable, that provision shall be severable from the
rest of the rule and not affect any remaining provisions. The remaining
provisions would remain in force. This rule should be construed to
continue to give the maximum effect to each provision as permitted by
law.
B. Section-by-Section Discussion
The following discussion addresses the proposed changes to the
existing regulations. If a provision is not specifically discussed in
this section-by-section analysis, then the provision would be
essentially the same as the existing regulation, except for the minor
non-substantive changes discussed previously.
1. Section-by-Section Discussion for Changes to 43 CFR Subpart 3000
The proposed rule would add a new section to the existing subpart
3000 regulations and revise five section headings. The goal of the
revisions is to replace the existing question-and-answer formats and
use more commonly used terms, consistent with other changes made
throughout this rule.
Section 3000.5 Definitions
The BLM is proposing to alphabetize the definitions in this
section.
The proposed rule would add a definition for ``acreage for which
expressions of interest have been submitted'' to refer to acreage that
is identified in an expression of interest received by BLM, that has
not been proposed for leasing in any pending sale or other expression
of interest pending BLM disposition, and for which BLM may lawfully
issue an oil and gas lease. This definition and the below definition of
``acres offered for lease'' are intended to clarify the means by which
BLM will internally track its leasing progress for purposes of the
Inflation Reduction Act, as further specified in new Sec. 3120.42.
The proposed rule would add a definition for ``acres offered for
lease'' to mean all acres that BLM has offered for oil and gas lease,
regardless of whether those acres are acreage for which expressions of
interest have been submitted.
The proposed rule would update the definition for ``Act'' to
include the acronym MLA for the Mineral Leasing Act of 1920, as this
acronym would appear in the proposed regulatory text.
The proposed rule would replace the term ``Service'' in this
section with ``ONRR'' because the relevant functions of the prior
Minerals Management Service (also referred to throughout the existing
regulations as ``Service'') are now performed by the ONRR. The proposed
rule would likewise change the term ``Service'' to ``ONRR'' wherever it
appears in the parts 3000 and 3100 regulations.
The proposed rule would add a definition for ``Person'' to unify
the terms ``person'' and ``entity.'' The proposed definition would
define ``person'' to mean any individual or entity, such as a
partnership, association, State, political subdivision of a State or
territory, or a private, public, or municipal corporation.
The proposed rule would modify the existing definition for ``Proper
BLM office'' to remove the reference to the BLM Alaska State Office.
The definition of this term would continue to refer the reader to Sec.
1821.10, which contains the
[[Page 47567]]
location information for all BLM state offices.
A new definition for ``Properly filed'' would be added to proposed
Sec. 3000.5 to correspond to the use of the term in Sec. 3000.60. The
new definition would describe ``Properly filed'' as a document or form
submitted to the appropriate office with all necessary information and
payments, as provided in 43 CFR subpart 1822.
The proposed rule would modify the existing definition for
``Surface managing agency'' to ensure that the definition includes
other agencies within the DOI with which the BLM must coordinate, in
addition to non-DOI agencies that have management responsibility for
the surface resources that overlay federally owned minerals. The
revised definition would replace the phrase ``any Federal agency
outside of the Department of the Interior with jurisdiction over the
surface overlying federally owned minerals'' with ``any Federal agency,
other than the BLM, having management responsibility for the surface
resources that overlay federally owned minerals.''
Section 3000.20 False Statements
The purpose of this section is to inform the public that submitting
false or fraudulent statements to the agency is a crime punishable by
imprisonment or a fine, or both. The proposed rule would remove the
references to specific imprisonment times and fine amounts for
violations provided in 18 U.S.C. 1001. The purpose of this change is to
ensure that this regulation does not become inaccurate or obsolete if
the penalty provisions in 18 U.S.C. 1001 are updated. The penalties are
already referenced at 18 U.S.C. 1001, which is cited in the BLM's
regulation.
Section 3000.40 Appeals
A BLM decision is subject to appeal to the Interior Board of Land
Appeals (IBLA) in accordance with the regulations contained in 43 CFR
part 4, when a decision accomplishes, authorizes, or prohibits some
action. See International Petroleum, 190 IBLA 130, 134-35 (2017). The
BLM will identify the applicable authority under which it made its
decision. Actions under certain sections of BLM's oil and gas leasing
regulations, for example the BLM's filing fees, are not subject to
appeal, because such actions are authorized pursuant to a previous
notice-and-comment process. The proposed rule would add a reference to
Sec. 3000.120 to clarify that point, consistent with existing language
found under Sec. 3000.12(b), which states the amount of a fixed fee is
not an agency decision subject to appeal under Sec. 3000.40 and part
4. The BLM also proposes to also add a reference to proposed Sec.
3000.130, which includes a similar paragraph stating the financial
terms for new leases are not subject to appeal. The proposed rule would
update an existing CFR reference from Sec. 3101.7-3(b) to Sec.
3101.53(b). This change reflects the proposed redesignation changes to
the process for oil and gas lease issuances under Sec. 3101. The
proposed rule would remove a reference to Sec. 3120.1-3, as the title
and language in that section are proposed to change from ``protests and
appeals'' to ``protest'' only. (See the discussion on the proposed
Sec. 3120 later in this preamble.)
Section 3000.50 Limitations On Time To Institute Suit To Challenge a
Decision of the Secretary
The proposed rule would update the word ``contesting'' in this
section to the more commonly used term ``challenging'' to provide
clarity.
Section 3000.60 Filing of Documents
This section describes how to file documents with the BLM. The
proposed rule would update this section to enable the BLM to accept
electronically filed documents. The provision would still allow the use
of hard-copy mailing services. In addition, this section would update
the reference to Sec. 1821.2 to the correct citation of subpart 1822.
Section 3000.90 Enforcement Actions Under 30 U.S.C. 195
This section explains that the U.S. Department of Justice is the
agency responsible for enforcement actions described in section 41 of
the MLA. The proposed rule would update the title and language in this
section to cite 30 U.S.C. 195. The U.S. Code reference is more
informative than the current reference to ``provisions of section 41 of
the Act.'' The proposed rule would add language from 30 U.S.C. 195 to
make this provision more informative.
Section 3000.100 Fees in General
The proposed rule would rename this section from ``What do I need
to know about fees in general?'' to ``Fees in general.''
Section 3000.110 Processing Fees on a Case-by-Case Basis
The proposed rule would rename this section from ``When and how
does BLM charge me processing fees on a case-by-case basis?'' to
``Processing fees on a case-by-case basis.'' In addition, the BLM
proposes to add ``and in accordance with all other applicable laws and
regulations'' into paragraph (b)(1) to avoid implying that an applicant
may prepare or assist in the preparation of certain NEPA documents
that, under CEQ regulations, are to be prepared solely by the
applicable agency.
Section 3000.120 Fee Schedule for Fixed Fees
Consistent with the IRA, the BLM has implemented a nonrefundable
filing fee of $5 per acre, or fraction thereof, for EOIs. This fee is
not considered a cost-recovery fee, and the monies collected are
transferred to the Treasury as miscellaneous receipts (see 30 U.S.C.
191).
The proposed rule would update the existing fee for name changes,
corporate mergers, or transfers to heirs and devisees to include
corporate dissolutions and sheriff's deeds. The BLM accepts corporate
dissolutions and sheriff's deeds to recognize the change in the
ownership of interest in a lease per existing policy at H-3106-1,
Transfers by Assignment, Sublease or Otherwise. The BLM processes these
types of changes in the same manner as name changes, corporate mergers
or transfers to heirs and devisees. Thus, these changes should also
require a fixed filing fee.
The BLM is also proposing to adjust the existing oil and gas filing
fees for competitive lease applications, leasing under rights-of ways,
class I lease reinstatements, and geophysical exploration permits. When
these fees were initially set in 2005, the BLM explained that it
reserved the right to amend the fees in future rulemakings to reflect
new data or other evidence that the fees did not accurately reflect
reasonable costs (70 FR 41532 (July 19, 2005)). The GAO has since found
that the BLM has not reviewed its application fees in response to
changing conditions. See GAO-22-103968, Oil and Gas Leasing: BLM Should
Update Its Guidance and Review Its Fees. The BLM concurred with GAO's
findings because the cost to the BLM of its oil and gas leasing process
has changed since 2005. For example, the BLM moved to online auctions
in 2016, and it no longer expends resources on holding auctions because
the winning bidders pay the auction company directly for auction
expenses. Previously, a portion of the competitive leasing application
fees was intended to recover the BLM's costs for holding in-person
auctions. Conversely, the BLM proposes to include the cost related to
complying with the NEPA in the filing fee for a competitive lease
application; that causes an increase to the filing fee. To reflect the
cost changes, the BLM is
[[Page 47568]]
proposing to amend the fee for the following document filings or
actions: competitive leasing application fee, leasing under rights-of
ways, class I lease reinstatements, and geophysical exploration
permits.
The BLM is proposing to include new fixed filing fees for the
following Federal oil and gas actions to reimburse the BLM for its
reasonable processing costs: designation of successor operator; unit
agreement applications; subsurface storage agreement applications; unit
agreement expansion applications; and formal lease nominations. The BLM
considered proposing new fixed filing fees for Federal communitization
agreements (CA), Federal participating area applications, and royalty
rate reduction applications, but it ultimately declined to propose
these fees due to the low value and the public benefit related to these
items. Royalty rate reductions occur at the end of a lease's life and
allow the operator to continue producing from the property based on
reduced royalties. This gives the American public the benefit of
additional production and Federal revenue without additional surface
disturbance or environmental impact.
The BLM considered both case-by-case and fixed filing fees for the
new fees proposed in this rule. Historically, the BLM has determined
costs on a case-by-case basis for types of documents where the costs
may differ significantly in each case. In this proposal, the BLM has
opted to institute fixed filing fees for designation of successor
operator; unit agreement applications; subsurface storage agreement
applications; unit agreement expansion applications; and a formal lease
nomination fee because charging processing costs on a case-by-case
basis would be time consuming and would not be the most efficient use
of BLM resources. Collecting cost data on a case-by-case basis for each
document to be processed adds to the processing costs. The BLM decided
that, for the oil and gas documents at issue, it would likely be more
efficient and sufficiently reliable to set a fixed fee based on average
costs and indexed to inflation. In addition, applicants benefit from
knowing fees in advance.
To determine the new oil and gas fixed filing fees, the BLM
followed the same method it used in 2005 to set the current fixed fees:
using a weighted average rather than a simple average to determine the
processing cost for each type of document. This method gives greater
weight to the processing cost data from state offices with a heavy
workload and, thus, more expertise in processing a particular type of
document. The BLM's fluid minerals program identified the processing
steps and then asked the state office subject matter experts (SMEs) to
identify the appropriate job position, salary level, and time required
for particular steps specified by the BLM handbooks. The fluid minerals
program considered changes to the processing of each type of document
since the handbooks were last updated. The BLM then calculated a direct
cost for each process and adjusted to 2021 salary rates without a
locality factor. The BLM's fluid minerals program spot-checked the data
and sent each state office a summary of the cost data that the office
had previously submitted for these types of documents, along with the
BLM-wide weighted average cost for each. State offices were asked to
review the cost data and report whether that data, adjusted to current
filing fee amounts, remained reasonable. They were also asked to re-
estimate costs if the state office found the re-examined adjusted cost
data to be inaccurate. A re-examination verified that the BLM's data
continued to be valid and ensured that figures, which varied
significantly among offices, had not been submitted in error.
Processing Steps for the Fixed Fees
The BLM reviewed the changes in processing steps due to changes in
the law, regulations, and policy to determine how processing the
different fixed fee applications have changed since the BLM established
the fixed filing fee in 2005. The following table summarizes the
results of this review.
----------------------------------------------------------------------------------------------------------------
Current processing Removed processing
Document/action steps Added processing steps steps
----------------------------------------------------------------------------------------------------------------
Formal lease nomination *............ Validating data
received; Sorting
parcels (developing
parcel configuration/
acreage); Preparing
stipulations;
Preparing sale notices.
Competitive lease application........ Preparing sale notices; Adjudicating high bids; Sorting parcels
Noting land status Conducting (developing parcel
records; Preparing and environmental reviews. configuration/
conducting sale acreage); Preparing
auctions; Preparing sale notices;
lease decisions; Preparing and
Entering and conducting sale
transmitting data auctions; Entering
updates. data updates.
Leasing under right-of-way........... Receiving, validating, Adjudicating the Sorting parcels
and entering data; application and (developing parcel
Examining land status; preparing the notice/ configuration/
Sorting parcels invitation to bid; acreage); Preparing
(developing parcel Conducting sale notices;
configuration/ environmental review. Preparing and
acreage); Preparing conducting sale
stipulations; auctions; Entering
Preparing sale data updates.
notices; Noting land
status records;
Preparing and
conducting sale
auctions; Preparing
lease decisions;
Entering and
transmitting data
updates.
Lease consolidation.................. Receiving, validating,
and entering data;
Examining requests,
lease term conditions,
and production;
Preparing new leases
and decisions;
Entering and
transmitting updates.
Assignment and transfer of record Receiving, validating,
title or operating rights. and entering data;
Examining assignment
and transfer forms;
Reviewing leases and
bonds; Approving,
entering, and
transmitting updates.
Overriding royalty transfer, payment Receiving, validating,
out of production. and entering data.
[[Page 47569]]
Name change, corporate merger, Receiving, validating,
sheriff's deed, corporate and entering data;
dissolution, or transfer to heir/ Examining requests;
devisee. Determining successors-
in-interest or other
special requirements;
Reviewing leases and
bonds; Preparing
decisions; Entering
and transmitting
updates.
Lease reinstatement, Class I......... Receiving, validating, Conducting
and entering data; environmental review.
Examining eligibility;
Preparing decisions;
Entering and
transmitting updates.
Geophysical exploration permit Nominal filing fee for For all states--
application. Alaska only. Receiving, validating,
and entering data;
Examining land status;
Conducting
environmental review;
Preparing notices/
decisions; Entering
data updates.
Final application for Federal unit Receiving, validating,
approval, Federal unit agreement and entering data;
expansion, Federal subsurface gas Technical review;
storage application *. Determine commitment
status; Preparing
notices/decisions;
Entering data updates.
Designation of successor operator for Receiving, validating,
Federal agreements *. and entering data;
Technical review;
Preparing notices/
decisions; Entering
and transmitting data
updates.
----------------------------------------------------------------------------------------------------------------
* New proposed fixed filing fee.
The fixed fee for lease renewals would be removed, as there are no
longer any leases eligible for renewal. Under the MLA, any lease
renewal issued on or after November 15, 1990, ``continue[s] for twenty
years and so long thereafter as oil and gas is produced in paying
quantities.'' 30 U.S.C. 188(f)(3). If a lease renewed on or after
November 15, 1990, fails to produce oil and gas in paying quantities at
the end of its renewal term, the lease expires with no further option
of renewal.
The current $500 fee for Class II lease reinstatements is located
at existing 43 CFR 3108.2-3(b)(3)(vi). The BLM considered moving the
existing fee to 43 CFR 3000.120 for inclusion alongside the fixed
filing fees, increasing the fee to reflect the processing costs, and
then adjusting the fee annually for inflation. However, the MLA, at 30
U.S.C. 188(e), specifically states for Class II lease reinstatements
that ``[t]he lessee of a reinstated lease shall reimburse the Secretary
for the administrative costs of reinstating the lease, but not to
exceed $500.'' Accordingly, the BLM proposes to leave the
administrative fee of $500 in its current location at 43 CFR
3108.23(b)(3)(vi).
FLPMA Factors and Processing Fees
Section 304(b) of FLPMA lists six factors, commonly known as the
``FLPMA reasonableness factors,'' that the BLM must consider when
deciding the amount of a reasonable processing fee. Those factors are:
(1) The BLM's actual costs to process a document not including
management overhead, i.e., the processing time spent by the BLM State
Directors, Deputy State Directors, and other management staff. Actual
costs include (but are not limited to) time spent at the state and
field office levels by SMEs who work on a specific authorization, such
as a lease, and funds spent on environmental reviews, technical
reviews, and analyses.
(2) The monetary value, or objective worth, of the right or
privilege that the applicant seeks.
(3) The efficiency with which the BLM processes a document, i.e.,
minimizing of waste by carefully managing agency expenses and time.
(4) Whether any of the BLM's processing costs, for actions such as
studies or data collection, benefit the general public or the Federal
Government, rather than just the applicant alone.
(5) Whether the project provides any significantly tangible
improvement, such as a road, or other direct service to the public.
Occasionally, a negative factor, such as an adverse impact on wildlife,
habitats, or surface drainage, may prevent an improvement from
qualifying as a public service. Data collection that the BLM requires
of an applicant for monitoring an activity is not a public service.
(6) Other relevant factors.
The BLM considered each of the FLPMA reasonableness factors for
each type of document for which the BLM is proposing to adjust the
existing fee or add a new fixed fee. The BLM first estimated the actual
cost to process a type of document. When estimating the processing
costs, the BLM determined a range based on the range of costs provided
by the BLM State Offices. The BLM then considered each of the other
FLPMA factors to determine if they warranted setting the fee at less
than actual cost. If so, the BLM then considered whether any of the
remaining factors acted as an enhancing factor that would mitigate
against setting the fee at less than actual cost. Lastly, the BLM
decided the amount of the fee, which cannot be more than the processing
cost. For all of the fees in this proposal, this method resulted in
fees set at the lower end of the BLM's processing cost.
Actual Costs
Actual costs are the sum of both direct and indirect costs. Direct
costs include such things as labor, material, and equipment. The BLM
estimated the direct costs by reaching out to each BLM state office and
requesting an estimate of the processing time for each application
based on the steps detailed in the previous table. Then using the
average hourly wage, the BLM calculated the direct cost for the BLM to
process the application. Indirect costs include items such as rent and
overhead, excluding State Director and management overhead. For an
example of how the BLM would determine the sum of direct and indirect
costs, assume the measured direct cost of processing a document is
$200. To estimate the indirect cost for processing that document, the
BLM uses a ratio that it calculates annually. Annually, the BLM
calculates the indirect cost rate, which is assessed on these fixed
filing fees. Indirect costs are the overhead costs, which remain after
direct costs have been computed, and may include utilities,
telecommunications, information
[[Page 47570]]
technology, space rental, and other administrative support functions.
Currently that ratio is 10 to 2, or 20 percent, meaning for every $10
of direct costs there would be $2 of indirect costs. The BLM would
estimate the indirect cost using the ratio and direct cost figures. In
this example, since the direct cost was $200 and the ratio is 10 to 2,
the indirect cost is $40. The BLM then would add the direct and
indirect cost figures to arrive at the actual cost figure of $240 to
process the document. This method is generally accepted in the private
and public sectors.
Monetary Value of the Right or Privilege
Historically, the BLM concluded that its processing costs to
prepare parcels for lease sale benefit three classes of beneficiaries:
the party who requests that the parcel be included in the sale, all
parties who bid on the parcel, and the successful bidder. The party who
requests that a parcel be included in a lease sale benefits by
influencing the selection of parcels offered. The BLM considered this
benefit to be greatly outweighed by the benefit to the successful
bidder who ultimately obtains the lease and can develop the minerals on
the parcel. Similarly, while all bidders receive the benefit of being
considered for a lease, the BLM considered this benefit to be greatly
outweighed by the benefits to the successful bidder who obtains the
lease. With respect to the new proposed fees for agreements, the
operator benefits through economic gain if and when drilling activity
occurs and through development of the lease. In addition, any benefit
to the general public that would accrue from increased oil and gas
availability or lower prices is considered too speculative and indirect
to warrant consideration.
Monetary Value to the Applicant
The BLM did not attempt to calculate the monetary benefit to each
applicant because those values are not always knowable to the BLM, and
it would be inefficient to attempt to calculate them for each
application or submission.
Monetary Value of the Right or Privilege Granted
To gauge the monetary value, the BLM considered the monetary value
of similar rights or privileges granted to applicants historically. The
BLM reviewed each type of document and compared the proposed filing fee
for a given type of document with our professional judgment of the
historical values of similar rights or privileges the BLM has granted.
In each case, the BLM believes the value of the right or privilege is
so much greater than the processing cost that a fee based on the
average actual cost would not significantly affect the applicant's
proposed action. This is not surprising considering that the costs
pertain to documents related to the commercial development of minerals.
The BLM did not reduce any fees because of this factor.
Monetary Value Change
The BLM bases its decision about the monetary value of the benefit
to the applicant on the value at the time the applicant submits its
application. All leases have relatively large monetary value before
exploration compared with the proposed fees. The basic value of the
opportunity provided by a lease to explore for minerals is shown by the
willingness of applicants to pay large sums before exploration for
bonus bids, for lease transfers, and for exploration activities such as
drilling. Because the monetary value of the right sought in a lease is
much greater than the cost of processing the lease, the BLM considers
it reasonable to charge a fee equal to processing costs for all lease
applications.
The Efficiency Factor
The BLM's fluid minerals program asked the state office's SMEs to
provide a minimum, maximum, and average time spent on each application
process. Some SMEs stated that their estimated range depended on the
experience of the staff. The estimates from less experienced staff
increased the amounts for the average and the high estimate for
processing costs. In addition, some state offices receive fewer
applications than compared with other state offices. This can increase
the processing time spent for researching and processing applications
when they are not frequently received in a particular office.
Therefore, the BLM chose to use the lowest estimate for time spent on
processing applications to create the weighted average so that
applicants are not penalized for understaffed offices or offices with
fewer seasoned employees.
The BLM ensured that the field offices efficiently process the
documents for which fees are charged. For all of the new and existing
fees, the BLM based the processing procedures on standardized steps as
outlined in the BLM Handbooks and Instruction Memoranda in order to
eliminate duplication and extraneous procedures. The BLM developed
these detailed and measurable processing steps to be efficient.
The Public Benefit Factor
Possible public benefits from the BLM processing activities, such
as studies or data collection, are also difficult to measure. For
example, studies related to document processing often provide
information about an area's natural resources. This is sometimes a
public benefit, but the value of the information, or whether there will
be a benefit at all, is not predictable. The BLM concluded that
document processing for types of fixed fee documents in this rulemaking
does not usually produce studies or data that significantly benefits
the public. In addition, the BLM determined that for each type of
document in this rulemaking, the monetary value to the applicant
outweighs the possible benefit of such studies to the public. The BLM
analysts used their knowledge of the historical values of such cases to
make these determinations. The BLM has, therefore, decided that this
factor does not warrant setting any fee in this rulemaking at less than
its actual processing cost.
The Public Service Factor
A project's service to the public concerns whether the applicant's
project itself, as opposed to the BLM's processing of the related
documents, provides some significant direct service or benefit to the
general public. FLPMA refers to this as public service. Examples
include improvements, such as roads, trails, or recreation facilities.
Occasionally, a negative factor, such as an adverse impact on wildlife,
habitats, or surface drainage, may prevent the BLM from regarding an
improvement as a public service.
The BLM reviewed exploration data shared with the government to
consider whether it constitutes a public service. Applicants for
geophysical exploration for the oil and gas program in Alaska are
required to share with the government the mineral resource data they
derive from exploration. However, that information likely would not be
made public. Moreover, if the information is valuable for mineral
development, the BLM expects the findings would result in oil and gas
leases in that area. In that case, the monetary value of the
information to the permittee would outweigh its value to the public.
The BLM considered that even information that is not valuable to the
permit holder for mineral development might still provide some
geological or geophysical information of value to the government, which
the BLM could sometimes use for some types of resource management, such
as land classifications. However, because there is very little
information
[[Page 47571]]
obtained in this way and because its use is unpredictable, the
potential benefits of the information to the public are too small to
warrant an adjustment to the proposed fee. Finally, the operator may
consider geophysical information indicating low-development potential
valuable because the identification of low-development potential helps
the operator avoid unprofitable development; therefore, the value to
the operator outweighs any public benefit.
The projects with a proposed fixed fee do not generally provide a
public service. Large projects could include road construction, but
such roads are rarely open to the public or built to public safety
standards. In addition, they eventually must be removed. Consequently,
for fixed fee documents, the likelihood of providing such a public
service is too remote and speculative to warrant charging a fee less
than actual costs.
Other Factors
The BLM did not find other factors that made it reasonable to
adjust fees in this proposed rulemaking.
New Proposed Oil and Gas Fixed Fees
Table 1--Category: Fixed Fees
[Note that fees will be adjusted annually for inflation according to the
IPD-GDP and posted on the BLM's website. Revised fees are effective each
October 1]
------------------------------------------------------------------------
Document/action Existing fee Proposed fee
------------------------------------------------------------------------
Oil and Gas (parts 3100, 3110, 3120, 3130, 3150, 3160 and 3180)
------------------------------------------------------------------------
Formal lease nomination................. $0 $125
Expression of Interest fee per acre, or 0 5
fraction thereof.......................
Competitive lease application........... 185 3,100
Leasing under right-of-way.............. 475 660
Leases consolidation.................... 525 525
Assignment and transfer of record title 105 105
or operating rights....................
Overriding royalty transfer, payment out 15 15
of production..........................
Name change, corporate merger, sheriff's 250 250
deed, corporate dissolution, or
transfer to heir/devisee...............
Lease reinstatement, Class I............ 90 1,260
Geophysical exploration permit \a\ 30 \b\ 1,150
application--all states................
Renewal of exploration permit--Alaska... 30 30
Final application for Federal unit 0 1,200
agreement approval, Federal unit
agreement expansion, Federal subsurface
gas storage application................
Designation of successor operator for 0 120
Federal agreements.....................
------------------------------------------------------------------------
\a\ Alaska only.
\b\ All states.
We have rounded estimated fees down or up to the nearest $5.00, for
ease of payment and administration. This is consistent with general
business practices.
Annual Inflation Adjustments
The BLM is also proposing to cease publishing the annual fee
adjustments in the Federal Register and the CFR. The BLM would instead
post the updated table on the BLM's web page with the historical fees
posted in the same location. Revised fees would be effective each year
on October 1. The BLM is requesting comments on this process change.
Annual inflation adjustments would be calculated based on the
percentage change in the Implicit Price Deflator for Gross Domestic
Product (IPD-GDP) for the 1-year period between the fourth quarters of
the previous 2 years, consistent with the 2005 Cost Recovery Rule. For
example, the FY 2022 fees were set based on the change in the IPD-GDP
from the fourth quarter of 2020 to the fourth quarter of 2021. The BLM
would then multiply the current fee amounts by that multiplier to
obtain the adjusted fee amounts. The resulting amounts would be rounded
to the nearest $5 at the end of the calculation process for ease of
payment and administration. This is consistent with general business
practices.
Existing Applications
The BLM would not charge a new fixed fee under this rule for
processing a document that the BLM received before the effective date
of the rule. Documents submitted before the effective date of the final
rule will be processed with the appropriate fees under the regulations
existing as of the submittal date.
Section 3000.130 Fiscal Terms of New Leases
The BLM is proposing a new provision consisting of a table
outlining the fiscal terms for new leases. Under the existing
regulations, various subparts describe the base rental rate for leases.
Likewise, various subparts describe the minimum bonus bids for
competitive leases. In this rule, the BLM proposes to conform its
regulations to the IRA by increasing the minimum bids and base rental
rates. The BLM proposes to identify these rates in a new section and
table so the rates can be regularly adjusted for inflation. The IRA
precludes the adjustment of these fiscal terms until after August 16,
2032. Each of the various sections would now refer to this new section,
rather than itemizing the relevant fees. The BLM proposes to include a
paragraph (b) to state that these rates are not subject to appeal,
since these base rates would be applied through the publication of a
final rule in the Federal Register.
Consistent with 43 CFR 3000.120, the BLM is also proposing to no
longer publish the annual fee adjustments in the Federal Register and
the CFR. The BLM would instead post the updated table on the BLM's
website before October 1 of each year. Revised fees would be effective
each year on October 1. The BLM is requesting comments on this process
change.
Annual inflation adjustments would be calculated based on the
percentage change in the Implicit Price Deflator for Gross Domestic
Product (IPD-GDP) for the 1-year period between the fourth quarters of
the previous 2 years, consistent with the 2005 Cost Recovery Rule. For
example, the FY 2022 fees were set based on the change in the IPD-GDP
from the fourth quarter of 2020 to the fourth quarter of 2021. The BLM
would then multiply the current fee amounts by that multiplier to
obtain the adjusted fee amounts. The resulting amounts would be rounded
to the
[[Page 47572]]
nearest $5 at the end of the calculation process for ease of payment
and administration. This is consistent with general business practices.
2. Section-by-Section Discussion for Changes to 43 CFR Subpart 3100
The proposed rule does not make any revisions to the section
headings in the existing subpart 3100 regulations.
Section 3100.3 Authority
The purpose of this section is to describe lands that are subject
to leasing. The proposed changes to this section were made to provide
clarity and to conform the regulations to various other laws. This
proposed section would remove the reference to the National Petroleum
Reserve--Alaska (NPR-A) from the exceptions listed under both Public
Domain and Acquired lands to reduce confusion. The NPR-A is
appropriately listed under 43 CFR 3100.3(c) and would remain as lands
that are subject to leasing under the Department of the Interior
Appropriations Act, FY 1981 (42 U.S.C. 6508). These lands are subject
to leasing under the regulations found under 43 CFR part 3130.
The proposed rule updates the exceptions for lands within the
National Wilderness Preservation System to cite to 16 U.S.C. 1133. The
proposed reference to the United States Code is more informative than
the current reference to ``section 4(d)(3) of the Wilderness Act.''
This proposed section would also add lands within Wild and Scenic
Rivers to the exceptions listed under both Public Domain and Acquired
lands. Subject to valid existing rights, the Wild and Scenic Rivers Act
(16 U.S.C. 1280) withdraws from leasing lands within designated Wild
and Scenic Rivers that constitute the bed or bank or are situated
within one-quarter mile of the bank of any river designated a wild
river.
This proposed rule would move the reference to lands within
wildlife refuges in existing 43 CFR 3101.5-1 to the exceptions listed
under both Public Domain and Acquired lands in the proposed
redesignated 43 CFR 3100.3. This change would not impose new
requirements. The proposed rule would remove the reference to
noncompetitive lease offers, consistent with changes made by the IRA.
Currently, existing 43 CFR 3101.6 states that lands within
Recreation and Public Purposes leases and patents are subject to lease
under 43 CFR part 3100. The proposed rule would move that statement to
Sec. 3100.3(h) because it belongs in the list of authorities. It would
not result in any substantive regulatory change.
Finally, this proposed section would add a reference to the Fish
and Wildlife Coordinating Act (16 U.S.C. 661) in paragraphs (j)(1)
through (3) dealing with coordination lands and refuges in Alaska.
These references are currently found in the existing 43 CFR 3101.5-
2(a), Sec. 3101.5-2(b), and Sec. 3101.5-3, but are more appropriately
listed under the authority for leasing. These are not new requirements.
Section 3100.5 Definitions
The purpose of this section is to provide definitions of terms used
through subpart 3100. The proposed rule would alphabetize the
definitions and remove embedded definitions, so the terms are defined
separately.
The proposed rule would update the definition for the term ``bid''
to include a specific definition corresponding to the term's use in 43
CFR 3109 as, in the BLM's experience, this has caused confusion in the
past. For leases or compensatory royalty agreements issued under 43 CFR
3109, the term ``bid'' would mean an amount or percent of royalty or
compensatory royalty that the owner or lessee must pay for the
extraction of the oil and gas underlying the ROW, which is different
from the bonus bids received on competitive leases.
The proposed rule would add a definition for ``competitive
auction,'' which would mean an in-person or internet-based bidding
process where leases are offered to the highest bidder. The addition of
this term would help the BLM to streamline the regulations by obviating
the need to use the longer phrase ``oral or internet-based auction''
throughout the regulations.
The proposed rule would add a new definition for the term
``exception'' which would mean a limited exemption, for a particular
site within the leasehold, to a stipulation. The addition of this term
would help to provide clarity in the regulations. The term is used in
43 CFR subpart 3101 and is further discussed later.
The proposed rule would add a new definition for the term
``modification'' which would mean a change to the provisions of a lease
stipulation for some or all sites within the leasehold and either
temporarily or for the term of the lease. The term is used in 43 CFR
subpart 3101 and is further discussed later. The addition of this term
would allow the BLM to incorporate existing policy into its regulations
and help to provide clarity in the regulations.
The proposed rule would add a new definition for the term ``oil and
gas agreement'' which would mean an agreement between lessees and the
BLM to govern the development and allocation of production for existing
leases, including, but not limited to, CAs, unit agreements, secondary
recovery agreements, and gas storage agreements. The BLM would add this
term to identify regulations that apply to multiple types of
agreements. The term is used in the proposed rule in 43 CFR subpart
3105 and is further discussed later.
The proposed rule would update the definition for ``operating right
(working interest)'' to include the holder's obligations under the
lease. The amended rule would state, ``Operating rights include the
obligation to comply with the terms of the original lease, as it
applies to the area or horizons for the interest acquired, including
the responsibility to plug and abandon all wells that are no longer
capable of producing, reclaim the lease site, and remedy environmental
problems.'' The update to this term would provide clarity in the
regulations.
The proposed rule would update the definition for the ``primary
term of all other leases'' to state that it means the initial term of
the lease, which is set at 10 years. The change in this definition
updates the outdated reference to 5-year terms for competitive leases
used prior to FOOGLRA.
The proposed rule would update the definition for ``record title''
to include the lessee's obligations under the lease. The lessee's
interest, which is also referred to as the record title, includes the
obligations to perform and bear ultimate responsibility to adhere to
lease terms, including requirements relating to well operations and
abandonment. The update to this term would provide clarity in the
regulations.
The proposed rule would add a new definition for ``qualified
bidder'' to mean any person in compliance with the laws and regulations
governing a bid. The addition of this term would provide clarity in the
regulations.
The proposed rule would add a new definition for ``qualified
lessee'' to mean any person that is compliant with the laws and
regulations governing the BLM issued leases held by that person. The
addition of this term would provide clarity in the regulations.
The proposed rule would add a new definition for ``responsible
bidder'' to mean any person who has not defaulted on winning bids, is
capable of fulfilling the requirements of onshore BLM oil and gas
leases, and does not have a history of noncompliance with applicable
statutes and regulations or the terms of a BLM-issued oil and gas
[[Page 47573]]
lease. The term ``responsible bidder'' would not include persons who
bid with no intention of paying a winning bid or persons who default on
a winning bid. The addition of this term would provide clarity in the
regulations.
The proposed rule would add a new definition for ``responsible
lessee'' to mean any person who has not defaulted on previous winning
bids, is capable of fulfilling the requirements of onshore Federal oil
and gas leases, and does not have a history of noncompliance with
applicable statutes or the terms of a BLM-issued oil and gas lease. The
addition of this term would provide clarity in the regulations.
The proposed rule would add a new definition for the term
``waiver'' which would mean a permanent exemption from a lease
stipulation. The term is used in subpart 3101 and is further discussed
later. The addition of this term would allow the BLM to incorporate
existing policy into its regulations and help to provide clarity in the
regulations.
Finally, the BLM split out the definitions for ``assignment'' and
``sublease'' from the current definition of ``transfer'' in the
existing regulations. This will assist the public in finding the
applicable definition as well as highlight the differences between an
assignment and a sublease.
Section 3100.9 Information Collection
The current regulation lists out-of-date OMB control numbers for
information collection requirements. The proposed rule would update
those control numbers and restructure the format of this section to
include the authority for and purpose of the section, including a table
that lists the current OMB control numbers.
Section 3100.31 Enforceability
The proposed rule would streamline the section on options. The MLA
expressly authorizes and restricts options to acquire an interest in a
lease. See 30 U.S.C. 184(d). While the BLM has not previously received
option statements from the industry, the BLM cannot prohibit options
and will continue to accept option statements for the record if they
are submitted to the BLM. Under the ``Enforceability'' section (43 CFR
3100.31(a)), the BLM would remove the phrase ``without the approval of
the Secretary.'' That would eliminate the discretion to authorize
options for a period of more than 3 years. Paragraph (b)(3) would be
revised for clarity to change the reference to ``the number of acres
covered by the option and of the interests and obligations of the
parties to the option, including the date and expiration date of the
option'' to read ``the number of acres and the type and percentage of
interest to be conveyed and retained by the parties to the option,
including the expiration date of the option.''
Section 3100.40 Public Availability of Information
The proposed rule would not make any substantive changes to this
section; however, the BLM is considering adding language that would
provide notice that names and addresses of the nominator, lessee,
operating rights holders, and operators would be made public through
the BLM's automated system. The BLM's lease and agreement case files
are already public records, and any change to this section would merely
reflect the BLM's current practice.
3. Section-by-Section Discussion for Changes to 43 CFR Subpart 3101
The proposed rule would remove 10 sections in the existing subpart
3101 as outlined in Section VI of this preamble titled Overview of
Modifications. The removal of these sections would cause some of the
sections to be redesignated accordingly. The purpose of this removing
and redesignating is to achieve consistency and ease of reference
throughout subpart 3101, as sections were consolidated and reorganized.
Section 3101.12 Surface Use Rights
This section was promulgated in 1988 to clarify the BLM's authority
to use the terms and conditions of the standard lease form to control
site-specific environmental impacts on leaseholds, as opposed to lease-
specific protective measures, addressed in lease stipulations, to
mitigate impacts to specific resources values identified on leased
lands. The standard lease form authorizes the BLM to require
``reasonable measures'' to the extent that such measures would be
consistent with the lessee's rights. However, this revised section
would more clearly outline the measures that the BLM may require to
promote development practices that are consistent with multiple use and
sustained yield and the terms of the BLM's oil and gas leases.
Specifically, this section would be updated to state that the
authorized officer may require and detail reasonable measures to avoid,
minimize, or mitigate adverse impacts to other resource values, land
uses or users, federally recognized Tribes, and underserved
communities. Such reasonable measures may include, but are not limited
to, relocation or modification to siting or design of facilities,
timing of operations, specification of interim and final reclamation
measures, and specification of rates of development and production in
the public interest. These measures are consistent with the BLM's
standard lease form, which has been in effect since October 2008 and
which states that the BLM ``reserves [the] right to specify rates of
development and production in the public interest. . . .''
Additionally, the MLA authorizes the BLM to adopt ``such other
provisions as [it] may deem necessary . . . for the protection of the
interests of the United States . . . and for the safeguarding of the
public welfare.'' 30 U.S.C. 187. The BLM may also manage the manner of
development under this section, which may include waste prevention
measures, containment of fluids, and monitoring both water and air
quality in the project area. As set out in E.O. 14035, ``[t]he term
`underserved communities' refers to populations sharing a particular
characteristic, as well as geographic communities, who have been
systematically denied a full opportunity to participate in aspects of
economic, social, and civic life.'' E.O. 14008 provides additional
guidance on securing environmental justice by requiring agencies to
``[develop] programs, policies, and activities to address the
disproportionately high and adverse human health, environmental,
climate-related and other cumulative impacts on disadvantaged
communities, as well as the accompanying economic challenges of such
impacts.'' For the purposes of E.O. 14008, the Council on Environmental
Quality has provided interim guidance on the definition of community to
``mean either a group of individuals living in geographic proximity to
one another, or a geographically dispersed set of individuals (such as
migrant workers or Native Americans), where either type of group
experiences common conditions.'' \15\ These underserved communities can
be impacted as a result of greater vulnerability to environmental
hazards, lack of opportunity for public participation, or other
factors. Increased vulnerability may be attributable to an accumulation
of negative or lack of positive environmental, health, economic, or
social conditions within these populations or places. The term
describes situations where multiple factors, including both
environmental and socio-economic stressors, may act cumulatively to
affect health and the environment and contribute to
[[Page 47574]]
persistent environmental health disparities.
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\15\ M-21-28, July 20, 2021, https://www.whitehouse.gov/wp-content/uploads/2021/07/M-21-28.pdf.
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Due to the advances in horizontal and directional drilling, and in
an effort to strike the best multiple use balance, the BLM proposes to
update the following language: ``At a minimum, measures shall be deemed
consistent with lease rights granted, provided that they do not:
require relocation of proposed operations by more than 200 meters;
require that operations be sited off the leasehold; or prohibit new
surface-disturbing operations for a period in excess of 60 days in any
lease year.'' The proposed language would state, ``Modifications that
are consistent with lease rights include, but are not limited to:
requiring relocation of proposed operations by more than 800 meters and
prohibiting new surface disturbing operations for a period of 90 days
in any lease year.'' With the changes in technology allowing 3-mile
laterals and \1/2\-mile directional wells, the BLM considers 800 meters
(approximately \1/2\ mile) to be a reasonable floor for moving
operations due to resource concerns. The BLM proposes updating the
floor to account for changes in technology.
The BLM also proposes these changes because the existing provision
has been misconstrued as limiting BLM's authority to require relocation
only up to 200 meters. The IBLA has upheld the BLM's authority to move
operations and confirmed that the siting and timing parameters in the
current regulations are minimums. The BLM has the authority to impose
measures higher than those in the regulations as long as they
``constitute [ ] reasonable measure[s] to minimize adverse impacts
under 43 CFR 3101.1-2.'' Yates Petroleum, 176 IBLA 144, 156 (2008). The
BLM is requesting comments on the proposed distance standard for
reasonable measures.
Section 3101.13 Stipulations and Information Notices
The proposed rule would split the existing content of this section
into two paragraphs for clarity and would add a new paragraph (a) to
state that, when developing stipulations, the BLM would consider the
sensitivity and importance of potentially affected resources and any
uncertainty concerning the present or future condition of those
resources. The BLM is proposing this change to more explicitly
recognize its mandate to manage the Federal lands for multiple use and
to provide for the protection of the resources on those lands. When
evaluating stipulations to be included in a lease, the BLM will assess
whether a resource is adequately protected by stipulation without
regard to the restrictiveness of the stipulation on operations.
The proposed rule also would update the existing content of this
section (paragraph (b)) to reflect the IRA's elimination of the
noncompetitive leasing process. Paragraph (b) refers to lease
stipulations, and paragraph (c) refers to lease information notices. No
other substantive changes have been made to the language that now
constitutes these two paragraphs. In addition, the BLM proposes to move
the language and requirements from the existing regulation found at
Sec. 3101.5-4 (which refers to stipulations applied to leases for
lands managed by the Fish and Wildlife Service) to a new paragraph (d)
under this section to consolidate all stipulation requirements in one
section.
Section 3101.14 Modification, Waiver, or Exception
The proposed rule would update the title of this section from
``Modification or waiver of lease terms and stipulations'' to
``Modification, waiver, or exception.'' The first paragraph in this
section describes the standards the BLM will use when evaluating
modifications, waivers, or exceptions. It states that a public review
period will be required when a change to a lease term or stipulation is
substantial or involves a major concern to the public.
In paragraph (a), the proposed rule proposes to add the existing
modification, waiver, or exception policy for lease stipulations into
the regulations based on Instruction Memorandum Number 2022-003,
Documentation and Tracking Requirements for Waivers, Exceptions, and
Modifications for Fluid Minerals Exploration and Development
Activities. Unlike the existing policy, the BLM is proposing to remove
the provision that allows the BLM to grant modifications, waivers, or
exceptions (MWEs) to lease stipulations if the authorized officer
determines that the ``proposed operations would not cause unacceptable
impacts.'' This very subjective standard has been overused at times and
has led to unnecessary adverse environmental impacts in some instances.
The BLM would consider a change to the lease terms to be substantial if
the change would have an important, considerable, consequential, major,
or meaningful effect on the environment that was not previously
considered, thus requiring public notification (30-day public review)
of a lease term or stipulation.
In paragraphs (b) and (c), the proposed rule would split an
existing provision in the regulations related to modifications of
stipulations into two provisions, one of which would address
modifications made before lease issuance and the other of which would
address modifications made after lease issuance. This regulatory change
reflects decisions of the IBLA, which have stated that if a lease is
issued without prior notice of an additional stipulation, the
stipulation is not binding on the potential lessee and is without
effect in the absence of the potential lessee's acceptance of the
stipulation. See Emery Energy, Inc, 64 IBLA 175 (1982). For
modifications to stipulations prior to lease issuance, the BLM proposes
to add language clarifying that the potential lessee must be given an
opportunity to accept the additional or modified stipulation. If the
potential lessee does not accept the additional or modified
stipulation, the BLM may reject the bid and include the lands in the
next Notice of Competitive Lease Sale. If the modification in
stipulation(s) increases the value of the parcel, the BLM, following
current policy, will reject the bid and include the lands in the next
Notice of Competitive Lease Sale. For example, if the lease is
currently subject to a no-surface-occupancy stipulation, and the BLM
determines a controlled-surface-use stipulation is appropriate instead,
this could increase the value of the lease. After lease issuance, if
the BLM adds or modifies a stipulation without notice to the lessee,
the additional or modified stipulation is not binding on the lessee and
is without effect in the absence of the lessee's acceptance of the
stipulation. When a stipulation is required by the relevant Resource
Management Plan and the BLM inadvertently omits it, a lessee's failure
to sign and accept modifications to the stipulations when requested by
the authorized officer may subject the lease to cancellation.
Section 3101.22 Acquired Lands
For clarity, the BLM proposes to repeat the language found in the
existing 43 CFR 3101.2-1(a) for public domain lands to describe the
same acreage limitations that also apply to acquired lands.
Section 3101.23 Excepted Acreage
The proposed rule would update the existing 43 CFR 3101.2-3(a)(1)
to change the language from ``unit or cooperative plan or
communitization agreement'' to read ``oil and gas agreement.'' Under
this proposed rule, unit agreements and CAs would no longer be referred
to as cooperative plans and, as discussed earlier in this preamble, a
new definition would be added to define ``oil and gas
[[Page 47575]]
agreements,'' which includes unit agreements and CAs. In addition, the
BLM has noticed that the phrase ``operating, drilling, or development
contract'' in the existing 43 CFR 3101.2-3(a)(3) has often been
confused with approved Applications for Permit to Drill. A reference to
43 CFR 3105.30 would be added to this section to clarify the phrase
since ``operating, drilling, or development contract'' has a specific
regulatory meaning.
Section 3101.25 Computation
The proposed rule would remove as outdated all language referencing
an entity's ownership in a company, parties to a contract, and acreage
held in common by the same persons. In 1982, the BLM eliminated the
requirement to submit documents related to qualifications and now
requires entities to certify their compliance with law on the lease or
assignment application, subject to the criminal sanctions in 18 U.S.C.
1001 (see 47 FR 8544, February 28, 1982). Accordingly, the BLM no
longer keeps documents related to qualifications and does not collect
information on stock ownership, company or corporate structures
(resolutions or company formation documents), or ownership in a
company.
Section 3101.2-6 Showing Required
As explained in the previous section, the BLM eliminated
qualification statements in 1982. The proposed rule would remove this
section in its entirety, as it is outdated and no longer necessary. The
BLM can run reports through its Mineral and Lands Record System to
obtain the data confirming compliance with acreage limitations. When an
entity exceeds its acreage limitation, the BLM provides the company
with a list of the entity's leases for a particular State and provides
the entity with an appropriate timeframe to identify inconsistencies or
to relinquish, transfer, or otherwise divest sufficient interests
before the BLM takes appropriate action to cancel the entity's
excessive leases or interests.
Section 3101.30 Leases Within Unit Areas, Joinder Evidence Required
It is the policy of the BLM not to include lands that are partly
within and partly outside the boundary of an oil and gas agreement in
any one parcel listed in a Notice of Competitive Lease Sale. The
proposed rule would remove 43 CFR 3101.3-2, ``Separate Leases to
Issue,'' in its entirety due to the elimination of noncompetitive
offers from the IRA. Incorporating this change, the heading of 43 CFR
3101.30 would now read, ``Leases within unit areas, joinder evidence
required.'' In the remaining language regarding joinder evidence, the
BLM proposes to change the term ``operator'' to ``lessee'' because this
section is referring to the time of lease issuance.
Section 3101.40 Terminated Leases
The proposed rule would remove the existing 43 CFR 3101.4, ``Lands
Covered by Application to Close Lands to Mineral Leasing'' in its
entirety, since this section only applies to noncompetitive leases,
which the IRA eliminated. Section 3101.40 would now be referred to as
``Terminated leases.'' The BLM proposes to move the content of the
existing regulations at 43 CFR 3108.2-2(d) and 43 CFR 3108.2-3(c) to
this section to consolidate the requirements for issuing a lease for
previously leased lands that have terminated.
Section 3101.5-1 Wildlife Refuge Lands (Existing Rule)
The BLM proposes to move the content of this existing section to
the Authority for leasing section (43 CFR 3100.3), for ease of
reference. The BLM proposes to move paragraph (a) and the first
sentence of paragraph (b), which refer to lands subject to leasing, to
the Authority for leasing section at 43 CFR 3100.3(b)(2)(xiv). The BLM
proposes to move the remaining language in paragraph (b) to 43 CFR
3101.52(d), to consolidate it with the regulations addressing consent
from other Federal agencies.
Section 3101.5-2 Coordination Lands (Existing Rule)
The BLM proposes to move the content of this existing section to
the Authority for leasing section (43 CFR 3100.03) for ease of
reference.
Section 3101.53 Alaska Wildlife Areas (Existing Rule)
The BLM proposes to move the content of this existing section to
the Authority for leasing section (43 CFR 3100.3(k)) for ease of
reference.
Section 3101.5-4 Stipulations (Existing Rule)
The BLM proposes to move the content of this existing section,
which refers to stipulations prescribed by the Fish and Wildlife
Service, to the general stipulations section (43 CFR 3101.13) for ease
of reference.
Section 3101.6 Recreation and Public Purposes Lands (Existing Rule)
The BLM proposes to move the content of this existing section,
which refers to lands subject to leasing, to the Authority for leasing
section (43 CFR 3100.3(i)) for ease of reference.
Section 3101.50 Federal Lands Administered by an Agency Outside of the
Department of the Interior
The proposed rule would redesignate this section from 43 CFR 3101.7
to 43 CFR 3101.50 because of the consolidation and reorganization of
neighboring sections.
Section 3101.51 General Requirements
The proposed rule would consolidate the three paragraphs under this
existing section into one paragraph. Currently, there are separate
paragraphs for (a) Acquired lands, (b) Public Domain lands, and (c)
National Forest System lands. The new paragraph would provide that all
lands will be leased only with the consent of the surface managing
agency and that the surface management agency will report to the BLM
whether it consents to leasing with stipulations, or, alternately,
withholds consent or objects to leasing. On acquired lands, National
Forest System lands, and public lands reserved for the use of the
Department of Defense, the consent of the surface management agency is
statutorily required prior to offering the lands for oil and gas lease.
The surface management agency has the authority to refuse to consent to
lease. Pursuant to longstanding BLM policy, public domain lands
withdrawn or reserved for the use of another agency will be leased only
after consultation with the surface management agency or upon
recommendation for leasing by the surface management agency. The BLM
deems a surface management agency's recommendation to not lease to have
the same effect as the agency withholding consent or objecting to
leasing. Regardless of whether the lands are acquired or public domain
lands, the BLM will not lease lands when a surface management agency
objects to leasing or withholds its consent. Consolidating these
paragraphs would reduce any confusion. When an agency has given its
consent to leasing, the BLM incorporates all the stipulations provided
by the agency for a lease parcel. The BLM may add its own stipulations
to the lease parcel. The Secretary of the Interior has the final
authority and discretion to decide to offer and issue a lease.
Therefore, although an agency agrees that the lands may be leased, the
BLM has the authority, on behalf of the Secretary, to not issue a lease
for all or a portion of the lands.
[[Page 47576]]
Section 3101.52 Action by the Bureau of Land Management
The proposed rule would update paragraph (b) to remove the phrase
``and shall reject any lease offer,'' because the IRA, by eliminating
noncompetitive leasing, eliminated such offers. For ease of reference,
the proposed rule would add a paragraph (d) from language now found at
43 CFR 3101.5-1(b), which references the consent required for lands
managed by the Fish and Wildlife Service. The proposed rule would also
remove from paragraph (d) the phrase ``on a form approved by the
director,'' as there is no such standard form for stipulations.
4. Section-by-Section Discussion for Changes to 43 CFR Subpart 3102
The proposed rule would revise one section heading in the existing
subpart 3102. The purpose of this revision is to replace outdated
terminology.
Section 3102.20 Non-U.S. Citizens
The BLM proposes to rename the section on ``aliens'' and to replace
this outdated, derogatory terminology with the phrase ``non-U.S.
citizens'' in both the heading of the section and the language used in
the paragraph. The BLM proposes to add a new paragraph (b) due to a
final rule from the Office of Investment Security, Department of the
Treasury, implementing the provisions relating to real estate
transactions in section 721 of the Defense Production Act of 1950, as
amended by the Foreign Investment Risk Review Modernization Act of
2018. That final rule was published at 85 FR 3158 (Jan. 17, 2020) and
codified at 31 CFR part 802. The rule sets forth the process relating
to the national security review by the Committee on Foreign Investment
in the United States (CFIUS) of certain transactions, referred to in
the rule as ``covered real estate transactions,'' that involve the
purchase or lease (including an assignment or other transfer) by, or
concession to, a foreign person of certain real estate in the United
States. Covered real estate transactions may include certain
transactions involving the Federal mineral estate. The CFIUS looks not
only at the entities that are lessees, but also to any (legal) person
with the ability to exercise control, as defined by the regulations of
the Department of Treasury's implementing regulations, over the lessee.
The CFIUS review could result in the modification, suspension, or
prohibition of the acquisition of a lease or interest therein.
Accordingly, the BLM recommends that each potential bidder, lessee, or
other interest holder review the regulations at 31 CFR part 802 before
bidding on or acquiring an interest in a Federal oil and gas lease.
Section 3102.40 Signatures
The BLM proposes to add a new introductory paragraph to clarify
that this section applies to signatures on all applications and forms.
When applicants submit a form or application to the BLM, they are
certifying their acceptance of lease terms and stipulations, as well as
their compliance with the regulations under subpart 3100. The BLM may,
in its discretion, accept electronic signatures and submissions.
Paragraph (a) would be updated to include that when copies of the BLM-
approved forms are submitted to the BLM, they must be exact
reproductions without additions, omissions, or other changes. The
existing paragraph (b), referring to assignments and transfers, would
be removed from this section since this language is already covered in
the existing 43 CFR 3106.4-1. The existing paragraph (d), which refers
to qualification numbers, would be removed as obsolete: the BLM
discarded qualification statements in favor of self-certifications in
1982.
Section 3102.51 Compliance
The proposed rule would revise the introductory paragraph to more
clearly define the qualifications to hold interest in a lease. The BLM
proposes to update paragraph (a) to change the term ``alien
stockholders'' to ``non-U.S. citizens who own stock'' for consistency
with the changes described earlier. Paragraph (d) would be updated to
remove the sentence, ``The term entity is defined at 43 CFR 3400.0-
5(rr) of this title,'' because the proposed rule would add a new
definition for ``person,'' which would include ``entities'' as
explained earlier in 43 CFR 3000.5. Paragraphs (d), (e), and (f) would
be updated to include the appropriate references to the United States
Code, which are more meaningful than ``sections 2(a)(2)(A) of the
Act,'' ``section 41 of the Act,'' ``section 17(g) of the Act,'' and
``section 30A of the Act.''
In addition, the BLM proposes to revise paragraph (f) to emphasize
that reclamation obligations reside primarily with oil and gas lessees,
operating rights owners, and operators and not the American public and
to ensure that those who are in non-compliance with section 17(g) of
the MLA are not qualified to hold a lease. The BLM reviewed the
timeframe it takes to add a person to the list of persons in
noncompliance with MLA section 17(g). Under the current policy, it
takes a minimum of 100 days from the date when the BLM first issues an
incident of noncompliance (INC), or 130 days from the date when the BLM
first issues a written order, due to the time it takes to complete each
enforcement action. The timeframe to complete each enforcement action
is generally as follows:
Written Order (30 days)
First INC (30 days)
Second INC (30 days)
Impose civil penalties (40 days)
Therefore, the BLM proposes to modify paragraph (f) and specify
that noncompliance with MLA section 17(g) begins when a person has
failed to comply with their reclamation obligations in the time
specified by notice from the BLM, not, as under the current
regulations, when the authorized officer has imposed a civil penalty or
collected a bond, whichever is first. The new language would more
closely track the language of the MLA at 30 U.S.C. 226(g) and would
recognize the changes that were made in 2016 to 43 CFR 3163.1 and
3163.2 (81 FR 81609, Nov. 17, 2016) regarding notice of noncompliance.
This language clearly states that a person's failure to timely comply
with a notice of noncompliance with reclamation requirements or other
standards would trigger the noncompliance with section 17(g); it would
not rely on a specific follow-up action (assessment, civil penalty, or
bond collection) by the BLM. This would allow the BLM flexibility in
how it responds to a person's failure to comply, while clearly stating
when noncompliance with section 17(g) begins.
With the regulations matching the law, the BLM would expect to
quickly identify persons in noncompliance and prevent these persons
from acquiring future Federal leases. The BLM would add a person to the
list of persons in noncompliance with MLA section 17(g) after the
abatement date has passed for the first enforcement action, either a
written order or the first INC. This would result in a person being
added to the 17(g) list in a minimum of 30 days, instead of the current
minimum of 100 or 130 days.
Finally, the BLM proposes to add a new paragraph (h) to state that,
in accordance with 2 CFR parts 180 and 1400, compliance means that the
lessee, potential lessee, and all parties described at the beginning of
the section are not excluded or disqualified from participating in a
transaction covered by Federal non-procurement debarment and
suspension, unless the DOI explicitly approves an exception for a
[[Page 47577]]
transaction pursuant to the regulations in those parts.
Section 3102.52 Certification of Compliance
The BLM proposes to update the last sentence of this paragraph to
remove the phrase ``an offer,'' because the IRA, by eliminating
noncompetitive leasing, eliminated such offers.
5. Section-by-Section Discussion for Changes to 43 CFR Subpart 3103
The proposed rule would revise one section heading and remove two
others in the existing 43 CFR subpart 3103 regulations, necessitating
redesignating throughout the subpart.
Section 3103.11 Form of Remittance
The BLM proposes to update the existing paragraph by changing the
reference from the Minerals Management Service to the successor agency,
the ONRR.
Section 3103.12 Where Remittance Is Submitted
The proposed rule would rename this section from ``Where
submitted'' to ``Where remittance is submitted.'' The BLM proposes to
update paragraph (a)(1) to clarify that the processing fees for various
applications would be found in the fee schedule in 43 CFR 3000.120. The
BLM proposes to update paragraph (a)(2) to replace the ONRR's mailing
address and direct rental payments to the ONRR's online rental payment
system to conform to ONRR's regulations at 30 CFR 1218.51. The BLM
proposes to update paragraph (b) to replace the phrase ``communitized
leases in producing well units'' with the more commonly used language
of ``communitized leases in producing spacing units.'' In addition, the
BLM proposes to remove the phrase ``and easements for directional
drilling,'' as this is an outdated reference, and the BLM has never
issued easements for directional drilling.
Section 3103.21 Rental Requirements
The proposed rule would update paragraph (a) to remove the phrases
``or competitive nomination'' and ``List of Lands Available for
Competitive Nominations or'' consistent with the changes made to 43 CFR
part 3120. The proposed rule would also remove the reference to
noncompetitive lease offers, the phrase ``if known, and, if not known,
shall be based on 40 acres for each smallest legal subdivision,'' as
well as the last two sentences in their entirety, because the IRA ended
noncompetitive leasing. The proposed rule would update paragraph (b) in
this section to remove the phrase ``List of Lands Available for
Competitive Nominations or a'' due to modifications made to 43 CFR part
3120 to make nominations nonbinding.
Diligent Development
The BLM is considering adding a new requirement for diligent
development obligations under Federal oil and gas leases and is
particularly interested in receiving comments on this topic. As stated
in the DOI's Report on the Federal Oil and Gas Leasing Program, dated
November 2021, noncompetitive leases are frequently less developed than
competitive leases. Similarly, the GAO reported (see GAO 22-103968 and
GAO 21-138) that competitive leases with higher bonus bids were more
likely to produce than competitive leases with lower bonus bids or
noncompetitive leases. Accordingly, the BLM is considering adding a
section to further promote development of leases by specifying the
steps that must be taken to meet diligent development obligations. For
example, the lessee would meet the diligent development obligation if,
at the end of the fifth year of the lease term, the lessee: (a) has
established actual production in paying quantities on the lease; (b)
has established allocated production in paying quantities on the lease;
(c) has filed a complete Application for Permit to Drill; (d) has
extended the lease term by committing it to an oil and gas agreement,
43 CFR 3107.30; (e) has filed a Notice of Intent to undertake
geophysical exploration. The BLM reviewed existing leases and the
development milestones on those leases and determined that 56 percent
of the current leases have met the proposed diligent development
obligation under one of the options set out here prior to the fifth
lease year.
In addition, the BLM is considering requiring the lessee to provide
notice to the BLM of how and when the lessee met the diligent
development obligation, and a provision increasing the rent if the
lessee has not satisfied the diligent development obligation by the end
of the fifth lease year. Under this provision, the lease would be
subject to a supplemental escalating rental rate of an additional $1
per acre, or fraction thereof, for each lease year between the sixth
and tenth lease years until the diligent development obligation is met.
The BLM solicits comments as to whether the increased rental rates
prescribed by the IRA may render a diligent development obligation
unnecessary.
Section 3103.22 Annual Rental Payments
This section provides information on the royalty rate for existing
and future leases. The proposed rule would revise the phrase ``timely
payment'' in the introductory paragraph to ``payment on or before the
lease anniversary date'' to more clearly specify what constitutes a
timely payment. The proposed rule would update paragraph (a) to simply
state that the annual rental for all leases is as stated in the lease.
To implement the IRA, for all new oil and gas leases issued in the
next 10 years, rentals are set at $3 per acre, or fraction thereof, for
lease years 1 and 2; $5 per acre, or fraction thereof, for years 3
through 8; and $15 per acre, or fraction thereof, thereafter. After 10
years following the enactment of the IRA, those rental rates become
minimums and are subject to increase. Paragraph (b) reflects that
following the commencement of production, the rental requirement
converts to a minimum royalty in lieu of rental. The minimum royalty is
``not less than the rental which otherwise would be required for that
lease year'' when production begins in paying quantities. (See Sec.
3103.32(a)(2)).
The proposed rule would revise paragraph (b) because the existing
paragraph (b) is obsolete. The proposed rule would eliminate the
existing introductory paragraph (b). The proposed rule would remove the
existing paragraph (d) because, due to the IRA's amendment of the MLA,
reinstatements will no longer be available for noncompetitive leases
issued for public domain lands. The proposed paragraph (c) would now
state the annual rental for a reinstated lease is located in 43 CFR
3000.130. As required by the IRA, the rental rate for reinstated
competitive leases is $20 per acre, or fraction thereof. The proposed
rule would redesignate the existing paragraph (f) to paragraph (d) to
state that each succeeding time a specific lease is reinstated, the
rental rate will increase by an additional $10 per acre, or fraction
thereof, as required by the IRA.
Section 3103.31 Royalty on Production
All updates to this section would implement provisions of the IRA.
The proposed rule would update paragraph (a)(1) to state that leases
issued before the passage of the IRA will have a rate as prescribed in
the lease or applicable regulations at the time of lease issuance. In
paragraph (a)(2), the proposed rule would increase the royalty rates
for leases issued on or after the effective
[[Page 47578]]
date of the IRA and for the next 10 years to 16.67 percent. Paragraph
(a)(3) would be updated to state that for leases issued after the 10-
year period following the passage of the IRA, the royalty rate will be
not less than 16.67 percent. The proposed paragraph (a)(4) would state
that ROW leases issued under subpart 3109 would have a minimum royalty
rate of 16.67 percent.
The proposed paragraph (a)(5) would be updated to state that for
reinstated leases, the royalty rate is the rate used for royalty
determination that applies to new leases at the time of the
reinstatement plus 4 percentage points, plus an additional 2 percentage
points for each succeeding reinstatement. In no case will the
reinstated lease have royalties at a rate less than 20 percent. The IRA
amended the MLA to state that competitive leases may be reinstated
under a condition that ``a requirement for future royalties at a rate
of not less than 20 percent computed on a sliding scale based upon the
average production per well per day, at a rate which shall be not less
than 4 percentage points greater than the competitive royalty schedule
then in force [i.e., at the time of the lease] and used for royalty
determination for competitive leases issued pursuant to such section,
as determined by the Secretary.'' (30 U.S.C. 188(e)(3)). To implement
this provision of the IRA, the reinstatement of a terminated lease with
a royalty rate of 12.5 percent would be conditioned on a reinstated
royalty rate of not less than 20 percent. Leases issued after the
enactment of the IRA that carry a royalty rate of 16.67 percent royalty
would be conditioned on a reinstated royalty rate of not less than 4
percentage points greater than the competitive royalty schedule in
force at the time of the lease, or 20.67 percent. The current
regulation increases the royalty rate 2 percentage points for each
succeeding reinstatement. This language would remain in the regulation.
Section 3103.32 Minimum Royalties
The proposed rule would revise the exception clause in paragraph
(a) by changing ``except that on unitized leases'' to ``except on
unitized leases that lack production.'' This change clarifies the
intended exception without suggesting that rental should be paid on the
leased area outside the participating area, even when the producing
well for the participating area is located on the leasehold. In
general, once oil and/or gas is discovered in paying quantities on the
lands committed to a unit, all lands included in the participating area
are charged a minimum royalty per acre per year in lieu of rental.
Rental for those portions of unitized leases that are not within such
participating areas continue at the rental rate established in the
lease. That is, the portion of a lease inside the participating area
will pay minimum royalty and the portion outside the participating area
is subject to rental. However, if there is actual production on a
unitized lease, then minimum royalty should apply to the entire lease
(i.e., both portions within and outside the participating area). The
proposed changes clarify that for leases partly inside and partly
outside the participating area and containing a producing well (or a
well that was once capable of production in paying quantities), the
entire lease is obligated to pay minimum royalty.
Paragraph (a)(2) would be updated to change ``competitive leases
issued from successful bids placed at oral or internet-based auctions
conducted after December 22, 1987'' to read ``competitive leases issued
after December 22, 1987.'' The extra language was necessary to
implement changes from FOOGLRA in 1987, but it no longer applies, since
the BLM does not have pending competitive lease applications that date
back to 1987.
Paragraph (d) would be updated to remove the reference to 43 CFR
3108.2-4, since the section for Class III reinstatements would be
eliminated, as further described in the discussion of subpart 3108.
The proposed rule would add a new paragraph (e) to state that if
the royalty paid during any year aggregates to less than the minimum
royalty, then the lessee must pay the difference at the end of the
lease year. This is not a new requirement or a change in the BLM's
policy; it is only added to clarify the pre-existing requirement.
Section 3103.41 Royalty Reductions
The proposed rule would revise paragraph (a) to change the phrase
``successfully operated'' to ``produced in paying quantities,'' which
has a clearly understood meaning within the oil and gas industry. This
change is to clarify the prerequisite for obtaining this relief as the
previous term ``successfully operated'' is not a term that is easily
defined.
The BLM considered additional changes to this section due to the
GAO's report entitled, ``Federal Oil and Gas Revenue: Actions Needed to
Improve BLM's Royalty Relief Policy'' GAO-21-169T. In this report, the
GAO found that the BLM's decisions to grant royalty relief during the
COVID-19 pandemic were not made efficiently and equitably across the
states. The BLM considered using the Bureau of Ocean Energy Management
(BOEM) regulations and policy on royalty rate reductions. The BOEM has
multiple authorities to provide royalty relief. The BOEM regulations
include the authority to grant royalty relief for deep water leases and
for development and expansion projects (see 30 CFR 203.60 to 203.80),
drilling ultra-deep wells on leases not subject to deep water royalty
relief (see 30 CFR 203.30 to 203.36), drilling deep gas wells on leases
not subject to deep water royalty relief (see 30 CFR 203.40 to 203.49),
and end-of-life leases (see 30 CFR 203.50 to 203.56). The BLM provides
royalty relief only for a lease's end-of-life (equivalent to the BOEM's
regulations at 30 CFR 203.50 through 203.56). After reviewing BOEM's
authority, the BLM concluded that the BOEM's regulations were based on
specific legal authorities that the BLM does not have. Therefore, the
BLM is not proposing any changes to this section at this time. The
existing regulations require evaluation of royalty reduction
applications on a lease-by-lease basis, require applicants to provide a
detailed statement with ``all facts tending to show whether the wells
can be successfully operated upon the fixed royalty or rental,'' and
generally provide for royalty rate reductions. The BLM is committed to
adhering to those rules and will ensure that they are consistently and
faithfully applied to future royalty relief applications.
The BLM solicits feedback to improve the royalty rate reduction
section. Revised regulations could provide explicit criteria on royalty
rate reductions, which could include setting a limit on the lower end
of a royalty rate reduction, implementing a calculation to decide if
the BLM should approve a royalty rate reduction, implementing an
automatic lifting provision similar to BOEM (see 30 CFR 203.55), or
making it explicit that a royalty rate reduction would transfer to the
new lessee when a lease is assigned.
Sections 3103.4-2 Stripper Well Royalty Reductions and 3103.4-3 Heavy
Oil Royalty Reductions
The proposed rule would eliminate both of these sections in their
entirety because they are obsolete. Both sections were revised on
October 6, 2010 (75 FR 61624), to eliminate these types of royalty
relief. However, these provisions were retained in the final rule
because, while these types of royalty relief were no longer available
for current production, prior production subject to this relief
continued to be subject to audits. In addition, the 7-year statute of
limitations period during which ONRR could pursue a demand for royalty
[[Page 47579]]
continued to apply. Since that statute of limitations period has passed
for all production that qualified for relief under these sections, they
are no longer necessary and are being removed.
Section 3103.42 Suspension of Operations and/or Production
This section of the existing regulations implements the provisions
of 30 U.S.C. 226(i) and 209 for suspending oil and gas leases. The
proposed rule would redesignate this section from 43 CFR 3103.4-4 to 43
CFR 3103.42 as discussed at the beginning of the preamble. The proposed
rule would change the language in paragraph (b) to clarify that the
term of a suspended lease will be adjusted to account for the time of
suspension, i.e., by calculating the running of the primary term
without including the time during which the lease was suspended. In the
BLM's experience, the language in the current regulations--providing
that the primary term of a lease will be ``extended by adding the
period of the suspension''--has been incorrectly interpreted to mean
that the length of the suspension is added to the lease term when the
suspension is lifted. For example, consider a lease issued for a
primary term of 10 years. In the ninth year, a suspension is granted.
The suspension lasts for 2 years. When the suspension is lifted, the
time remaining on the primary term is the 1 year that was left prior to
the suspension. The 2 years of the suspension are not added to the
primary term.
Paragraph (d) would be clarified to state that if there is any
production sold or removed during the month the suspension is granted,
the lessee must pay royalty on that production. Paragraph (d) would
also be split into three sections due to the length of the paragraph
and for clarity. The other two sections would become new paragraphs (e)
and (f), and the remaining paragraphs would be redesignated.
Redesignated paragraph (g) would update the term ``terminating a
suspension'' to ``lifting a suspension,'' since ``termination'' is a
term of art that refers to a lease ending through operation of law when
the rental is not paid.
The proposed rule would update redesignated paragraph (h) to change
the language from ``unit or cooperative plan'' to read ``agreement'' to
conform to the definitional change made earlier in this proposed rule.
6. Section-by-Section Discussion for Changes to 43 CFR Subpart 3104
The BLM proposes to revise its oil and gas bonding requirements in
several respects. The BLM proposes to increase minimum bond amounts for
the first time since 1951 (statewide and nationwide bonds) and 1960
(lease bonds). In addition, the proposed rule would add one section,
Sec. 3104.90, into the existing subpart 3104 regulations to address
when lessees must come into compliance with the new bond amounts and
would revise two section headings in the existing subpart 3104 to more
accurately reflect the contents of those sections. The proposed rule
would also remove nationwide and unit operator's bonds and add surface
owner protection bonds. The BLM believes these proposed changes,
particularly the increased bond amounts and the elimination of
nationwide bonding, would help ensure that reclamation responsibilities
reside primarily with oil and gas lessees and operators and not the
American public.
The MLA authorizes the Secretary to establish standards ``as may be
necessary to ensure that an adequate bond, surety, or other financial
arrangement will be established prior to the commencement of surface-
disturbing activities on any lease, to ensure the complete and timely
reclamation of the lease tract, and the restoration of any lands or
surface waters adversely affected by lease operations after the
abandonment or cessation of oil and gas operations on the lease.'' (30
U.S.C. 226(g)). The existing regulations at Sec. 3104.1 implement this
authority and require that, prior to surface-disturbing activities
related to drilling operations, the lessee, sublessee, or operator
submit a surety or personal bond. The purpose of the bond is to ensure
the ``complete and timely plugging of the well(s), reclamation of the
lease area(s), and the restoration of any lands or surface waters
adversely affected by lease operations after the abandonment or
cessation of oil and gas operations.'' (43 CFR 3104.1(a)). The
regulations at Sec. Sec. 3104.2 through 3104.4 currently set forth
four different bond types:
[cir] Lease/Individual Bonds, which provide coverage for one lease
and must be in an amount of not less than $10,000;
[cir] Statewide Bonds, which cover all leases and operations in one
State and must be in an amount of not less than $25,000;
[cir] Nationwide Bonds, which cover all leases and operations
nationwide and must be in an amount of not less than $150,000; and
[cir] Unit Operator's Bonds, which may be used in lieu of
individual lease, statewide, or nationwide bonds for operations
conducted on leases committed to an approved unit agreement.
Existing regulations set a minimum amount for these types of bonds.
The BLM has not increased its minimum bond amounts since 1951
(statewide and nationwide bonds) and 1960 (individual lease bonds). In
September of 2019, the GAO issued a report recommending that the BLM
address risks from insufficient bonding (GAO-19-615). The GAO found the
bonds held by the BLM were insufficient to prevent wells from becoming
orphan wells and thereby shifting the costs to plug and abandon and
reclaim these wells onto the taxpayer. Specifically, GAO found that 84
percent of the bonds reviewed were not sufficient to cover the costs to
reclaim the wells covered by the bonds. Further, GAO determined the
bond amounts, which were usually set at the regulatory minimum, ``does
not account for variables such as the number of wells [the bonds] cover
or other characteristics that affect reclamation costs, such as well
depth.''
Currently, the BLM uses Instruction Memorandum 2019-014, Oil and
Gas Bond Adequacy Reviews, to review existing Federal bond amounts and
request increases to the bond amount based on the potential risk or
liability posed by the operators. Similar policy has been in place for
the past decade, see Instruction Memorandums 2013-151, 2010-161, 2008-
122, and 2006-206. The BLM is proposing to increase the minimum bond
amounts to reflect inflation and the minimum coverage that would be
required for operations on Federal land, based on the BLM's estimate of
current plugging and reclamation costs. The proposed minimum bond
amounts would provide sufficient protection to allow an operator to
begin drilling; however, the BLM would still need to review bond
amounts periodically to determine whether the bond amount should be
increased based upon the risk of default posed by the operator or the
risk to the environment posed by the operations. In the past 2 fiscal
years, the BLM has spent $2.7 million annually on orphaned wells.
Without an increase in the bond amounts, the BLM expects to continue to
incur similar annual costs to address orphaned wells. Because of
inflation, the lack of increased bond amounts for almost 40 years, and
the increased number of orphaned wells resulting from insufficient
funds available under current bonds and associated costs ultimately
borne by the American taxpayer, the revisions to the bond amounts
proposed here are justified.
[[Page 47580]]
In addition to the proposed rule, the BLM also considered two
alternatives: adjusting the bond only for inflation (alternative 2) and
requiring a full liability bond (alternative 3). The second
alternative, only adjusting the bond amount for inflation, would
increase the lease/individual bond to $100,000 and the statewide bond
to $300,000. The third alternative considered adjusting the bond to
cover the full plugging and reclamation cost of all Federal onshore
operations covered by the bond. In this alternative, the BLM would
allow the operator to use either a statewide bond or an individual
bond; however, the operator would be required to submit a bond rider
for each additional well drilled to ensure the bond amount covers the
full cost for plugging and reclamation for all wells covered by the
bond. In this instance, the BLM estimated an average lease/individual
bond of $994,000 would cover 14 wells and an average statewide bond of
$4,686,000 would cover 66 wells. The BLM concluded that implementing
the third alternative would require increased staffing at the field and
state offices to manage increased workload surrounding the additional
bond riders. In addition, it is expected that the BLM's application for
permit to drill processing time would slow down due to waiting for
additional bond riders.
Although the BLM analyzed the second and third alternatives in the
economic analysis, the BLM did not propose either of these alternatives
in the proposed rule. The BLM is requesting commenters to provide
information on additional alternatives for bonding that the BLM might
consider.
Additionally, the BLM is requesting comments on whether it should
propose to adjust the minimum bond amounts by inflation. Currently, the
BLM is not proposing this in the rule; however, the BLM would prefer to
have a method to adjust minimum bond amounts by inflation factors.
Please provide comments on if and how the BLM should adjust minimum
bond amounts in the future.
Finally, the BLM also proposes to remove the nationwide and unit
operator bond types to reduce the cost and burden on the American
public for administering these types of bonds. For nationwide bonds,
the state office that is administering a nationwide bond must
coordinate with not only the field offices within the state, but also
every other state office. With the proposed elimination of nationwide
bonds, the BLM would not need to coordinate with all the other state
offices for a bond adequacy review. In addition, the BLM state office
could more easily ensure that the field offices within the State have
completed the required bond reviews. As a result, the BLM would be able
to better tailor the bond amounts to the local conditions and State-
specific requirements when reviewing a bond for adequacy. The BLM also
would be able to review statewide bond amounts and ensure that the bond
amount is adjusted before an operator defaults, thus reducing the
financial burden on the American taxpayer. Overall, the elimination of
nationwide bonding in favor of the proposed increase in the amount of
the statewide and lease bonds would allow the agency to ensure improved
bonding, with an appropriate focus on specific areas and fields, which
should reduce the burden to the taxpayer if an operator fails to
complete proper plugging and abandonment.
Section 3104.10 Bond Obligations
To enhance the administration of oil and gas bonding on America's
public lands, the BLM is proposing to remove paragraphs (c)(1) and (5),
which allow certificates of deposits (CDs) and letters of credit (LOCs)
to secure a personal bond. The BLM is proposing to remove CDs because
they are difficult to manage: the face of these instruments do not
include the BLM's required language that Secretarial approval is
required prior to redemption of the CD by any party. The BLM is
proposing to remove LOCs because the BLM has found it is difficult for
banks to include the BLM's requirements in LOCs. Under the proposed
rule, any existing personal bond that is secured by a CD or a LOC need
not change the security until the bond is replaced. However, the BLM
would not accept CDs or LOCs as security for a new personal bond after
the final rule takes effect. Finally, the BLM requests comments with
any supporting information on whether the final regulation should
provide for any other types of approved financial arrangements and the
types of financial arrangements that the BLM should consider.
Section 3104.20 Lease Bond
The proposed rule would change the specifications regarding who
must post a bond to state that the operator must be covered by a bond
in its name as principal or obligor. The existing regulations authorize
a lessee, owner of operating rights (sublease), or operator to post a
lease bond. The proposed change would not result in any administrative
changes for the BLM, because under the existing regulations, when a
lessee or an operating rights owner posts the bond for the operator,
the bond must include the operator as principal. The proposed language
is intended to simplify these provisions by requiring an operator to
have a bond in its own name and removing the requirement for lessees
and sublessees to ensure their bonds cover the operator. The BLM
recognizes that lessees and owners of operating rights (sublessees)
have certain obligations and are ultimately responsible for operations
on their lease, as required by 43 CFR 3106.76, and additional bonding
may be required by the authorized officer when, for example, an
operator is noncompliant.
The proposed rule would increase the minimum lease bond amount to
be not less than $150,000. The existing lease bond amount of $10,000,
established in 1960, no longer provides an adequate incentive for
companies to meet their reclamation obligations, nor does it cover the
potential costs to reclaim a well should this obligation not be met.
This current bond requirement increases the risk that taxpayers will
cover the cost of reclaiming wells in the event the operator refuses to
do so or declares bankruptcy. According to a GAO report entitled,
Federal Energy Development, Challenges to Ensuring a Fair Return for
Federal Energy Resources, GAO-19-718T, ``weaknesses with bonds for coal
mining and for oil and gas development pose a financial risk to the
Federal Government as laws, regulations, or agency practices have not
been adjusted to reflect current economic circumstances.''
To determine the appropriate minimum lease bond amount, the BLM
reviewed its existing lease bonds and the number of wells tied to the
lease bonds. The BLM currently manages 933 lease bonds; however, only
369 lease bonds cover existing wells or liability. The lease bonds that
do not cover any existing liability are usually put in place for a well
that has not yet been drilled or where the principal forgot to request
termination of the bond after transferring or plugging and abandoning
its prior oil and gas liability. For the lease bonds with existing
wells, each lease bond, on average, covers 14 wells; however, lease
bonds cover a median number of one well per bond. In addition, the
lease bonds covering existing wells average $26,000 per bond. For
background, the BLM calculated the average by adding up all the lease
bond amounts and dividing this total by the number of lease bonds. The
BLM calculated the median by taking the middle value, i.e., the value
for which half of the lease bonds are larger and half are smaller.
Thus, half of the lease
[[Page 47581]]
bonds with existing liability cover one well per bond. The cost to plug
one well and reclaim the surface, however, can vary significantly based
on the depth of the well. The proposed rule would require the minimum
bond amount to be sufficient to reclaim two wells to account for the
uncertainty surrounding the depth of wells and the large variability in
reclamation costs for orphaned wells. The BLM would conduct bond
adequacy reviews on all bonds and increase the required bond amount
based upon the risk of the operations. This review would include
several risk factors regarding the wells covered by the bond and the
operator's compliance history.
Between 1960 and 2022, the cumulative inflation rate, as measured
by the U.S. Consumer Price Index was 901 percent and, accordingly, the
2022 equivalent of $10,000 (the 1960 lease bond amount) would be
$100,105 (https://www.usinflationcalculator.com). After reviewing the
costs to plug orphaned wells, the BLM determined the cost to plug a
well and reclaim the surface ranges from $35,000 to $200,000, with an
average cost of $71,000. Considering that the median number of wells is
one well per lease bonds, the BLM is proposing to set the new minimum
lease bond amount at $150,000 (rounded up from $142,000), which would
cover the estimated plugging and reclamation costs for two wells. The
BLM is proposing to round the bond amount up to the nearest $50,000 for
ease of payment and administration. Through the BLM's current policy
for bond adequacy reviews, the BLM will increase the lease bond amount
for operators with more than two wells tied to the bond. The proposed
minimum lease bond amount would provide sufficient coverage for an
operator starting operations with a lease bond.
Based upon a review of the lease bond and related operations, the
BLM determined that the minimum lease bond amount should be not less
than $150,000. In addition, the minimum lease bond amount of $150,000
matches the amounts proposed in Congress by Senator Michael Bennet (S.
2177) and Representative Teresa Leger Fernandez (H.R. 2415). The BLM
believes this update would help ensure that reclamation
responsibilities reside primarily with oil and gas lessees and
operators and not the American public. The BLM requests comments with
any supporting information on whether the final regulation should
provide a higher or lower amount for lease bonds.
Section 3104.30 Statewide Bonds
The proposed rule would rename this section from ``Statewide and
nationwide bonds'' to ``Statewide Bonds'' as BLM proposes to remove
nationwide bonds. The proposed rule increases the statewide bond amount
to not less than $500,000, covering all leases and operations in any
one State to reflect current economic circumstances. The BLM
established the previous statewide bond amount of $25,000 in 1951. As
stated earlier, insufficient bonding levels provide an inadequate
incentive for companies to meet their reclamation obligations and do
not provide sufficient funding in the event a company fails or refuses
to meet its obligations, thereby ultimately shifting the reclamation
obligations on the taxpayer.
To determine the appropriate minimum statewide bond amount, the BLM
reviewed its existing statewide bonds, and the number of wells tied to
the statewide bonds. The BLM currently manages 1,815 statewide bonds;
however, only 1,007 statewide bonds cover existing wells. For the
statewide bonds with wells, each statewide bond, on average, covers 66
wells; however, the statewide bonds cover a median number of seven
wells per bond. The larger number of wells covered provides the BLM
more time to conduct a bond adequacy review and increase bond amounts
if needed. In addition, the statewide bonds covering existing wells
averaged $387,000 per bond. For background, the BLM calculated the
average by adding up all the statewide bond amounts and dividing this
total by the number of statewide bonds. The BLM calculated the median
by taking the middle value, i.e., the value for which half of the
statewide bonds are larger and half are smaller. Since half of the
statewide bonds, with existing liability, cover seven wells per bond,
the proposed rule would require the minimum bond amount to cover seven
wells, the median number of wells. Unlike bonds for individual leases
where the BLM is proposing to cover more than the median number of
wells, for statewide bonds, the larger number of wells covered (7)
reduces the uncertainty related to depth of individual wells and the
variability of reclamation costs. It also gives the BLM more time to
conduct a bond adequacy review and increase bond amounts if needed. The
BLM would conduct bond adequacy reviews on all bonds and increase the
required bond amount based upon the risk of the operations. This review
would include the number of wells covered by the bond.
Between 1951 and 2022, the cumulative inflation rate, as measured
by the U.S. Consumer Price Index was 1,040 percent and, accordingly,
the 2022 equivalent of $25,000 (the 1951 statewide bond amount) would
be $284,914 (https://www.usinflationcalculator.com). After researching
the BLM's data on orphaned wells, the cost to plug a well and to
reclaim the surface ranged from $35,000 to $200,000, with an average
cost of $71,000. Considering that the median number of wells is seven
wells per statewide bond, the BLM opted to have the minimum statewide
bond cover seven wells, which resulted in a statewide bond of $500,000,
rounded from $497,000. The BLM rounded the bond to the nearest $50,000
for ease of payment and administration. Through the BLM's current
policy for bond adequacy reviews, the BLM will increase the statewide
bond amount for operators with more than seven wells tied to the bond.
The new minimum statewide bond amount would provide sufficient coverage
for an operator starting operations with a statewide bond.
Based upon a review of the statewide bond and related operations,
the BLM determined that the minimum statewide bond amount should be not
less than $500,000. In addition, the minimum statewide bond amount of
$500,000 matches the amounts proposed in congress by Senator Michael
Bennet (S. 2177) and Representative Teresa Leger Fernandez (H.R. 2415).
The BLM believes this update would help ensure that end-of-life
liabilities reside primarily with oil and gas lessees and operators and
not the American public. The BLM requests comments with any supporting
information on whether the final regulation should provide a higher or
lower amount for statewide bonds.
Finally, the proposed rule would rescind the use of nationwide
bonds, which call upon the BLM to manage nationwide risks and
liabilities and are therefore administratively inefficient. The
elimination of nationwide bonding in favor of the proposed increase in
the amount of the statewide and lease bonds described earlier would
allow the agency to ensure improved bonding, with an appropriate focus
on specific areas and fields, which should reduce the burden to the
taxpayer if an operator fails to complete proper plugging and
abandonment.
For more background, the BLM reviewed its existing nationwide
bonds, and the number of wells tied to the nationwide bonds. The BLM
currently manages 241 nationwide bonds; however, only 129 nationwide
bonds
[[Page 47582]]
cover existing wells or liability. For the nationwide bonds with wells,
each nationwide bond, on average, covers 295 wells; however, the
nationwide bonds cover a median number of 35 wells per bond. The
nationwide bonds covering existing wells averaged $198,000 per bond.
Compared to statewide bonds, nationwide bonds cover more wells and
averaged lower amounts per bond. The BLM believes the increased
administrative burden related to managing nationwide bonds has caused
nationwide bonds to lag behind statewide bonds for bond increases and
reviews. Overall, the BLM believes the elimination of nationwide bonds
would result in prompt adjustments to bond amounts with changing
circumstances of the bonded parties' operations. The BLM seeks public
comment on the appropriate minimum amount for a nationwide bond, if it
opts to retain the nationwide bonding provision.
Section 3104.4 Unit Operator's Bond
The proposed rule would eliminate unit operator bonds in their
entirety, as currently found in 43 CFR 3104.4. Currently, these bonds
are treated like statewide bonds and may be used in lieu of individual
lease, statewide, or nationwide bonds for operations conducted on
leases committed to an approved unit agreement. The language for the
unit operator bond can be found at 43 CFR 3186.2. The BLM has less than
20 active unit operator's bonds nationwide. The BLM's review of bonds
shows that the forms predating June 1987 did not clearly cover the
principal in the capacity of a unit operator where the operator does
not hold an interest in the lease. Prior to June 1987, the BLM required
the principal or obligor to provide a rider to a statewide or
nationwide bond extending the bond's coverage to include all
obligations of the principal or obligor under the terms and conditions
of unit agreements. The current bond forms do not have this deficiency
as they contain the statement, ``WHEREAS the principal and surety
agree(s) that with notice to the surety the coverage of this bond, in
addition to the present holding(s) of and/or authorization(s) granted
to the principal, shall extend to and include: [. . .] Any activity
subsequent hereto of the principal as operator under a lease(s) issued
pursuant to the Acts cited in this bond.'' Today, unit operator bonds
are usually submitted to the BLM when a unit agreement includes lands
located in more than one State as it costs less to post a single unit
operator bond for $25,000 rather than posting two statewide bonds for
$50,000 or a nationwide bond for $150,000. This was not BLM's intention
for the unit operator bond in 1987 when the bond forms were updated.
Therefore, eliminating and replacing the unit operator's bond, which is
already treated and managed like statewide bonds, would bring
efficiencies to the program.
Section 3104.40 Surface Owner Protection Bond
The proposed rule would add a provision related to surface owner
protection bonds to consolidate all of the bonding provisions in one
place. The BLM promulgated the current requirements for surface owner
protection bonds through Onshore Order 1 in 2007. The BLM recently
codified these requirements in 43 CFR subpart 3171. In this proposed
rule, the BLM would incorporate the existing bonding requirements set
out in Onshore Order 1. It also would add a new requirement that the
surface owner protection bond must be filed on the BLM approved form
and specify that the type of bond can either be a personal or surety
bond. The BLM requests supporting documentation and comments on whether
the final rule should change the minimum bond amount for surface owner
protection bonds.
Section 3104.60 Where Filed and Number of Copies
The proposed rule would remove the last sentence in this paragraph,
which states that nationwide bonds may be filed in any BLM state
office. As noted previously, this rule would eliminate nationwide
bonds.
Section 3104.70 Default
The proposed rule would divide the current paragraph (b) into three
paragraphs for clarity. Paragraph (b)(1) would state that all the
leases covered by the bond may be subject to cancellation if the
principal fails to comply with the paragraph (b) requirements. The BLM
proposes to add information on failure to comply by referencing section
17 of the MLA and the DOI's suspension and debarment program to ensure
the bonded principal understands the risks that incur for a default
under the bond. The rule proposes to add paragraphs (b)(2) and (3).
Paragraph (b)(2) would state that the bonded party may be prevented
from acquiring any new lease or interest when the entity is in
violation of section 17 of the MLA; it references the provisions for
qualifications to hold a lease at 43 CFR 3102.51(f). Paragraph (b)(3)
would state that the bonded party may be referred to the DOI's
Suspension and Debarment Program under 2 CFR part 1400 to determine if
the person will be suspended or debarred from doing business with the
Federal Government for failure to comply with the paragraph (b)
requirements.
Section 3104.90 Bonds Held Prior to [EFFECTIVE DATE OF THE FINAL RULE]
The proposed rule would add a new section entitled ``Bonds Held
Prior to [EFFECTIVE DATE OF THE FINAL RULE]'' to manage the elimination
of existing nationwide and unit bonds. Paragraph (a) would state that
the current unit operator bonds accepted by the BLM prior to the
effective date of the final rule must be replaced by a statewide bond
within 2 years from the effective date of the final rule. The BLM would
no longer accept new unit operator bonds. Paragraph (b) would provide a
phase-in period within which bonds held prior to the final rule must
meet the increased minimum bond amounts. The phase-in period for
individual, state, and nationwide bonds would be 1, 2, and 3 years,
respectively (for nationwide bonds, the phase-in period refers to the
time in which nationwide bonds must be converted into state bonds).
The phase-in period should be as short as possible to account for
the large number of inadequate bonds and the associated taxpayer
exposure. The BLM opted for a 3-year phased approach based on the
workload related to reviewing and accepting new bonds or bond riders.
This approach would spread out the workload of replacing bonds over a
3-year period and allow the BLM to process the bond increases without
requiring additional adjudication staff to manage the increased
workload. The BLM opted to start with individual bonds as these are
usually smaller operations with an increased risk of bankruptcies. The
BLM requests supporting documentation and comments on whether the final
regulation should change the priority order for the phase-in period.
7. Section-by-Section Discussion for Changes to 43 CFR Subpart 3105
The proposed rule would add one section and remove five sections in
existing 43 CFR subpart 3105. The proposed rule would revise one
section heading in the existing 43 CFR subpart 3105 to remove an
unnecessary reference to drilling agreements.
[[Page 47583]]
Section 3105.10 Cooperative or Unit Agreement
The proposed rule would add a new paragraph (b) to this section to
require that all applications to form a unit agreement, a unit
expansion, or a designation of a successor operator include the new
processing fee found in the fee schedule in 43 CFR 3000.120 of this
chapter.
Communitization Agreements
This section of the regulations covers the BLM's management and
approval of communitization agreements, which are oil and gas
agreements covering one or more Federal leases that cannot be
independently developed due to well-spacing or well development
programs. The CA allows the lessees to cooperatively develop such
tracts. The proposed rule would rename this section from
``Communitization or Drilling Agreements'' to ``Communitization
Agreements.'' The proposed rule would eliminate ``drilling agreements''
in this section, since the BLM has determined that such agreements are
rarely if ever used.
Section 3105.21 Where Filed
The proposed rule would remove the triplicate filing requirement in
paragraph (a) as the BLM believes this requirement is no longer needed
given electronic filing. The proposed rule would replace the language
in current paragraph (b) with a list of three items that an application
for a CA must include. Paragraph (b)(1) would require that all
applications to form a CA must include a statement as to whether the
proposed CA deviates from the BLM's current model CA form and a
certification that the applicant received the required signatures.
Paragraph (b)(2) would require an Exhibit A to display a map of the
area covered by the agreement and the separate agreement tracts, and
paragraph (b)(3) would require the filing of an Exhibit B displaying
the separate tracts and ownership. The new paragraph (c) would state
that all applications to form a CA should be submitted at least 90
calendar days prior to first production to ensure accurate reporting to
the ONRR. Finally, the new paragraph (d) would require operators to
file the designation of successor operator with the filing fee in the
fee schedule at 43 CFR 3000.120.
Section 3105.22 Purpose
The proposed rule would remove the unnecessary reference to
drilling agreements.
Section 3105.23 Requirements
The proposed rule would remove the unnecessary reference to
drilling agreements.
Section 3105.24 Communitization Agreement Terms
The proposed rule would add a new section to outline CA terms to
provide clarity. The new paragraph in this section would provide that
these agreements would remain in effect for a period of 2 years from
the effective date of the CA or approval date, whichever is later, and
as long thereafter as communitized substances may be produced in paying
quantities, or as otherwise specified in the agreement.
Section 3105.31 Where Filed
The proposed rule would remove the requirement for five copies of
an operating, drilling, or development contract to be submitted when
these contracts are submitted to the BLM for approval as the BLM
believes this requirement is no longer necessary because of electronic
filing.
Section 3105.4 Combination for Joint Operations or for Transportation
of Oil
The proposed rule would eliminate the section on the combination
for joint operations or for transportation of oil. These provisions are
not used by the BLM or operators and are therefore obsolete. A ROW for
pipelines may be granted, as provided in 43 CFR part 2880, without
retaining the duplicative language under this subpart. A ROW grant is
an authorization to use a specific piece of public land for a certain
project, such as a road, pipeline, transmission line, or communication
site. A more complete explanation of the BLM ROW program is found in
Title 43 CFR parts 2800 and 2880.
Subsurface Storage of Oil and Gas
The proposed rule would change the existing 43 CFR 3105.5 to just
the heading ``Subsurface storage of oil and gas.''
Section 3105.41 Where Filed
The proposed rule would update paragraph (a) to include designation
of successor operators for gas storage agreements among the
applications to be filed in the proper BLM office. This information
needs to be filed with the BLM when there is a change in operator. The
proposed rule would update paragraph (b) to remove the requirement for
five copies of a gas storage agreements to be submitted when these are
filed with the BLM as the BLM believes this requirement is no longer
necessary because of electronic filing. A new paragraph (c) would
require that all applications for a subsurface gas storage agreement or
a designation of a successor operator must include the new processing
fee found in the fee schedule in 43 CFR 3000.120.
Section 3105.42 Purpose
The proposed rule would add clarification that a gas storage
agreement will require a bond under 43 CFR part 3104.
Section 3105.43 Requirements
The proposed rule would update the language in this section to
mirror the language found in 43 CFR 3105.42 for clarity.
Section 3105.50 Consolidation of Leases
The proposed rule would split the single paragraph under this
section into several paragraphs for clarity. These paragraphs would
also incorporate language from 43 CFR 3135.17 to provide a consistent
approach across leasing in the NPR-A and under the MLA. Paragraph (a)
would incorporate language stating that leases may be consolidated upon
written request of the lessee filed with the proper BLM office. This
change is proposed to identify who should submit the request for
consolidation. The request must identify each lease involved by serial
number and must explain the factors that justify the consolidation.
Paragraph (b) would state that all parties holding any undivided
interest in any lease involved in the consolidation must agree to enter
into the same lease consolidation. Consistent with the existing
language, paragraph (c) would clarify the circumstances under which
leases cannot be consolidated. Paragraph (d) would state that a
consolidated lease will not exceed acreage limits of 2,560 acres for
competitive leases and 10,240 acres for noncompetitive leases, as
required by 30 U.S.C. 226. Paragraph (e) would require the effective
date, anniversary date, and the primary term of the consolidated lease
to be those of the oldest original lease included in the consolidation.
It would also allow the term of a consolidated lease to be extended
beyond the primary lease term pursuant to 43 CFR subpart 3107.
Paragraph (f) would state that the highest royalty and rental rates of
the each of the leases to be consolidated would apply to the
consolidated lease. Paragraph (g) would state that lease stipulations
and other terms and conditions of each original lease would, in
general, continue to apply to the lease to which they originally
applied, regardless of the lease becoming a part
[[Page 47584]]
of a consolidated lease. These additions bring consistency between
Sec. Sec. 3135.17 and 3105.50.
8. Section-by-Section Discussion for Changes to 43 CFR Subpart 3106
The proposed rule would add one section and remove two sections in
existing subpart 3106. The proposed rule would revise five section
headings in the existing subpart 3106 to provide clarity and replace
the existing question-and-answer formats.
Section 3106.10 Transfers, General
The proposed rule would split paragraph (a) into two paragraphs and
add a provision regarding transfers of operating rights to provide
clarity and reduce the confusion the BLM has seen in applications. The
new paragraph (b) would state that an assignment of a separate zone,
deposit, depth, formation, a specific well, or part of a legal
subdivision will be denied. The proposed rule would add a new paragraph
(c) to state that operating rights may only be divided with respect to
legal subdivisions, depth ranges, and formations within the boundaries
of a Federal lease. Terms, such as stratigraphic equivalent, pools,
reservoirs, wellbores, and references to unnamed formations occurring
at a specified depth within a specific well are not allowed, as they
are not definitive, and introduce ambiguity into the boundaries along
which lease rights are split.
The proposed language more clearly states the BLM's current
obligations. The current regulation at 43 CFR 3106.1(a) states:
``Leases may be transferred by assignment or sublease as to all or part
of the acreage in the lease or as to either a divided or undivided
interest therein. An assignment of a separate zone or deposit, or of
part of a legal subdivision, shall be disapproved.'' The
``stratigraphic equivalent'' of a formation (i.e., a division that
extends beyond that formation) meets the definition of a ``zone.'' A
``pool'' of oil or gas trapped in the rocks below the ground surface
meets the definition of a ``deposit.'' Under the current regulations,
therefore, the BLM must disapprove these types of assignments.
The BLM's practice is sound as a practical matter. The BLM cannot
approve assignments or transfers that attempt to separate rights along
boundaries that cannot be defined without geological interpretation
(for example, ``the stratigraphic equivalent of the formation
encountered in Well X, at a depth of Y feet below the surface''). A
boundary that requires geological interpretation is inherently
imprecise. As for wellbore-only transfers, a wellbore is essentially a
line, not a spatial region within a leasehold. The BLM cannot define a
distribution of lease rights relative to a linear feature in three-
dimensional space below the surface of the ground. Wellbore-only rights
that purportedly encompass the area drained by that wellbore pose the
problem of defining the boundaries of the area drained, which may
require geological interpretation and/or engineering analysis.
The proposed rule would also split the existing paragraph (b) into
five paragraphs due to the length of the paragraph and for clarity. The
proposed paragraph (d) would revise the second sentence to simply
reference 43 CFR 3102.51(g) for certification of compliance rather than
repeating the language set out in 43 CFR 3102.51(g). The proposed rule
would redesignate the existing paragraph (c) to paragraph (i) because
of the previously mentioned reorganization.
Section 3106.20 Qualifications of Transfers
The purpose of this section is to ensure new lessees and operating
rights owners comply with the provisions of 43 CFR subpart 3102. The
proposed rule would update the title of the section from
``Qualifications of transferees'' to ``Qualifications of assignees and
transferees.'' The proposed rule would also update the paragraph to
include ``assignees'' as well as ``transferees.'' The purpose of these
changes is to clarify that this section on qualifications applies to
both assignments of record title as well as transfers of operating
rights. The proposed rule would add a sentence that states ``Only
qualified and responsible lessees may own, hold, or control an interest
in a lease.'' This addition is made to conform the language in this
provision with similar proposed changes.
Section 3106.30 Fees
This section includes the requirement to submit the requisite
filing fees with assignment and transfer applications. The proposed
rule would split the current paragraph into two paragraphs for clarity.
The reference to the filing fee for assignments and transfers would now
be found under paragraph (a). The reference to the filing fee for
transfer of overriding royalty or payment out of production would now
be found under paragraph (b). References to the filing fees for mergers
and name changes and for transfers to heirs or devisees would be
removed from this section as the filing fee requirement is included in
the sections for those specific topics.
Section 3106.41 Transfers of Record Title and of Operating Rights
(Subleases)
This section describes the forms required for assignment and
transfers. The proposed rule would update this section to allow for the
acceptance of electronic submissions. The proposed rule would reduce
the triplicate filing to a duplicate filing so that the BLM can keep
one copy for the official case file and return one copy of the approved
assignment or transfer for the applicant's records. The BLM does not
require a duplicate copy of the assignment or transfer when it is
electronically submitted.
The proposed rule would also require assignments and transfers to
be submitted on a current form and would no longer allow the use of
obsolete forms. All current forms can be located on the BLM's web
pages. The BLM believes that lessees may locate the current form far
easier now than in the days prior to widespread internet access.
The current regulations allow for the assignee or transferee to
sign only one copy of the assignment or transfer, while the assignor or
transferor must sign all three copies of the form. In light of the
proposal to reduce the triplicate filing to (at most) a duplicate
filing, the BLM believes it would no longer be a burden for the
assignee or transferee to sign both copies of the form submitted to the
BLM. This change would streamline the BLM's verification of the
required signatures.
Section 3106.42 Transfers of Other Interest, Including Royalty
Interests and Production Payments
The proposed rule would update paragraphs (a) and (b) to ensure
overriding royalty transfers are submitted on the BLM's current
assignment or transfer forms.
Section 3106.43 Mass Transfers
This section allows an assignor or transferor to make a mass
assignment or transfer when conveying any type of interest in a large
number of Federal leases to the same assignee or transferee. The
proposed rule would update paragraph (a) to include the words
``assignor'' and ``assignee.'' As explained earlier, the term
``transferees'' usually refers to transfers of operating rights, but
this section has always functioned to apply to both assignments of
record title as well as transfers of operating rights. The BLM believes
that adding assignors and assignees to this
[[Page 47585]]
language would reduce any confusion on this matter. In addition, the
regulatory language was clarified to ensure that the minimum number of
leases for a mass transfer is more than one lease.
The proposed rule would update paragraph (b) to reduce the
triplicate filing to a duplicate filing so the BLM can keep one copy
for the official case file and return one copy of the approved
assignment or transfer for the applicant's records. The proposed rule
would update paragraph (c) to state that the BLM does not require a
duplicate copy of the assignment or transfer when it is electronically
submitted. In addition, a new paragraph (c)(2) would be added to state
that when the BLM does not receive the requisite number of copies for
mass transfers, the applicant would reimburse the BLM for the full
costs incurred to make the required number of copies. The BLM would
waive any copy fees under one dollar.
Section 3106.50 Description of Lands
The proposed rule would update the language in this paragraph from
``transfer of record title'' to ``assignment of record title'' for
consistency. In addition, the reference to 43 CFR 3110.5 would be
removed to more simply state that each assignment must describe the
lands in the same manner as the lands described in the lease.
Section 3106.60 Bond Requirements
The purpose of this section is to ensure the new lessee or
operating rights owner obtains a bond equivalent in coverage to the
assignor's or transferor's bond before approval of the assignment or
transfer. The proposed rule would update the title of this section from
``Bonds'' to ``Bond requirements.'' This section would also consolidate
the separate sections for ``Lease bond'' (43 CFR 3106.6-1) and
``Statewide/nationwide bond'' (43 CFR 3106.6-2) into one paragraph to
streamline the regulations. In addition, the rule would remove
references to a transferee or a new operator as a co-principal on the
transferor's or operator's bond. In the BLM's experience, this dynamic
does not occur. An assignee assumes all the obligations incurred by the
assignor as well as the benefits that have accrued to the assignor. The
bond the assignee, transferee, or new operator must provide is a proper
bond that would cover any obligations arising under the lease to the
same extent as the assignor's bond. The BLM's practice is to ascertain
the adequacy of such bond before approving the assignment.
Approval of Transfer or Assignment
The proposed rule would change the existing 43 CFR 3106.7
``Approval of transfer'' to the heading ``Approval of transfer or
assignment.'' The reference to both assignments and transfers conforms
the title of this section with similar proposed changes.
Section 3106.71 Failure To Qualify
The proposed rule would update the paragraph in this section to
active voice and update the language from ``transfer of record title or
of operating rights (sublease)'' to ``assignment of record title or
transfer of operating rights (sublease),'' consistent with the other
changes made to this subpart. In addition, the term ``qualified
lessee'' is used in place of the existing language ``qualified to hold
the transferred interest.'' i.
Section 3106.72 Continuing Obligation of an Assignor or Transferor
The purpose of this section is to describe the continuing
obligation of the assignor or transferor after the BLM approves the
assignment or transfer. The proposed rule would update the title and
paragraphs of this section to remove the question-and-answer format.
The title would change from ``If I transfer my lease, what is my
continuing obligation?'' to read ``Continuing obligation of an assignor
or transferor.'' In paragraph (a), the proposed rule would change ``you
are responsible'' to ``the lessee or sublessee remains responsible''
and paragraph (b) would change ``you'' to ``the assignor or
transferor.'' This is intended to clarify who ``you'' is in this
section.
Section 3106.73 Lease Account Status
The proposed rule would update this section to active voice and
revise the phrase ``unless the lease account is in good standing'' to
clarify that the lease account must not be delinquent with respect to
royalty payments; lease obligations, such as, but not limited to, rent
and minimum royalty; or production reporting to the ONRR for a lease in
non-terminable status.
Section 3106.75 Effect of Transfer
This section requires that an assignment to 100 percent of a
portion of the lease segregates the transferred and retained portions
into separate leases. The proposed rule would update the language in
this paragraph from ``transfer of record title'' to ``assignment of
record title,'' consistent with the other changes made to this subpart.
The proposed rule would also update the paragraph in this section to
clarify the meaning of undivided interest to the more commonly used
phrase of ``less than 100 percent of a portion of the lease.''
Section 3106.76 Obligations of Assignee or Transferee
The purpose of this section is to describe the obligations the
lessee or sublessee assumes after the BLM approves the assignment or
transfer. By seeking approval of the assignment or transfer and being
substituted in place of the assignor or transferor, the assignee or
transferee assumes the responsibility for complying with all lease
obligations in existence and that a purchaser exercising reasonable
diligence should have known existed at the time of the transfer. The
proposed rule would update the title and paragraphs of this section to
remove the question-and-answer format. The title would change from ``If
I acquire a lease by an assignment or transfer, what obligations do I
agree to assume?'' to read ``Obligations of assignee or transferee.''
This formatting change brings overall consistency with the other
regulations in this subpart. The proposed rule would also replace
``you'' in this section with ``the record title holder'' or
``transferee of operating rights,'' as appropriate. It would also state
more clearly that the transferee assumes the responsibility to plug and
abandon all wells that are no longer capable of producing.
Section 3106.81 Heirs and Devisees
The proposed rule would split paragraph (a) into two paragraphs for
clarity. The existing paragraph (b) would become paragraph (c) due to
the reorganization of the section. The language in paragraph (a) would
be updated to state that the lease interest would be assigned or
transferred to the heirs, devisees, executor, or administrator of the
estate, as appropriate, upon the filing of a court order, death
certificate, or other legal document demonstrating that the assignee is
to be recognized as the successor of the deceased. New paragraph (b)
would contain the requirement for the filing fee. Newly redesignated
paragraph (c) would include a requirement to file a qualification
statement, as well as the current language found in existing paragraph
(b). The proposed rule would add a new paragraph (d) that would contain
the bonding requirements that are found in paragraph (a) in the current
regulation.
Section 3106.82 Change of Name
The proposed rule would split the reference to the filing fee and
bond into
[[Page 47586]]
three separate paragraphs for clarity. The current regulation requires
a notice of the name change to be accompanied by a list of the serial
numbers of the leases affected by the name change. This requirement
would be removed, as it is outdated. In practice, the BLM generates a
report of the leases affected by the name change and returns that list
to the lessee with a notice that recognizes the name change. The
proposed paragraph (a) would be updated to require that for a corporate
name change, the request must include the Secretary of State's
Certificate of Name Change, along with the Articles of Incorporation,
or Amendment, if available. This is consistent with the BLM's current
approach for processing these types of documents. New paragraph (b)
would contain the requirement for the filing fee. The proposed rule
would add a new paragraph (c) that would contain the bonding
requirements that are found in the current regulation.
Section 3106.83 Corporate Mergers and Dissolution of Corporations,
Partnerships, and Trust
The proposed rule would update the title of this section from
``Corporate merger'' to ``Corporate Mergers and Dissolution of
Corporations, Partnerships, and Trust.'' The goal of renaming the
section is to incorporate other types of changes to lease ownership
interests that may occur without any intention by the holder of an
interest to assign or transfer the interest. The proposed rule would
split the current paragraph into three paragraphs for clarity.
The current regulation requires a notification of merger to be
accompanied by a list of the serial numbers of the leases affected by
the merger. This requirement would be removed, as it is outdated. In
practice, the BLM does not rely on a list of leases provided by a
lessee and, instead, generates its own report of the leases affected by
the merger. The BLM returns that list to the lessee with a notice that
recognizes the corporate merger.
This section would be updated to require that, for a merger, the
request must include the Secretary of State's Certificate of Merger,
along with the Articles of Incorporation, or Amendment, if available.
This requirement is consistent with the BLM's current approach for
processing these types of documents. New paragraphs would be added
allowing the BLM to recognize lease interests assigned through
dissolutions of corporations and dissolutions of partnerships and
trust. The new provision would state that the BLM would not recognize
any transfers provided by the Articles of Dissolution unless an entity
has filed with the BLM a Certificate of Dissolution of an incorporated
entity, certified as accepted by the State where the entity was
incorporated. Dissolution of a partnership or trust through an order or
decree that authorizes settlement, discharge, and distribution of the
lease holdings and/or interests must be filed with the BLM for official
recognition of the assignment of lease interests. These requirements
are consistent with the BLM's current approach for processing these
types of documents.
Section 3106.84 Sheriff's Sale/Deed
The proposed rule would add a new section under Sec. 3106.80, to
include sheriff's sales as another type of transfer. The BLM accepts
these types of assignments to recognize lease interests assigned to
other parties through foreclosure actions. The proposed rule would
state that where a notice of sale of the leasehold interest is
published pursuant to State law applicable to the execution of sales of
real property, the purchaser must submit to the proper BLM office a
copy of the Sheriff's Certificate of Sale after any redemption period
has passed. Additional paragraphs under this new section would include
a filing fee requirement, a qualification statement, and bonding
requirements. These requirements are consistent requirements with the
BLM's current approach for processing these types of documents.
9. Section-by-Section Discussion for Changes to 43 CFR Subpart 3107
The proposed rule would remove six sections in existing 43 CFR
subpart 3107. The proposed rule would change the title of this subpart
from ``Continuation, Extension or Renewal'' to ``Continuation and
Extension'' due to the removal of the sections on renewal of leases, as
explained later. The proposed rule would revise two section headings in
the existing 43 CFR subpart 3107. The goal of the revisions is to
replace ``plans'' with ``agreements'' to provide clarity and to conform
this language with other changes in this proposed rule.
Section 3107.10 Extension by Drilling
The proposed rule would split the existing paragraph into two
separate paragraphs for clarity. In paragraph (a), a sentence would be
added to state that the BLM would not grant a drilling extension for a
lease in its extended term. This change would clarify and complement
the first sentence of this section, which states that a drilling
extension would only be granted for a lease on which actual drilling
operations are being diligently pursued at the end of the primary lease
term or any lease that is committed to an approved oil and gas
agreement. A new paragraph (c) would be added to address directional or
horizontal wells on off-lease locations by stating that when a BLM-
approved directional or horizontal well is drilled within the leased
area from an off-lease location with the intent to produce from the
leased area, the BLM would consider drilling to have commenced on the
leased area when drilling is commenced at the off-lease location. This
addition is consistent with the leasing regulations under 43 CFR part
3130.
Section 3107.22 Cessation of Production
The proposed rule would update this section because the IBLA has
held that the current regulations--which provide that ``[t]he 60-day
period commences upon receipt of notification from the authorized
officer''--directly conflicts with the statutory provision of section
17(i) of the MLA (30 U.S.C. 226(i)). Refer to Two Bay Petroleum, Inc,
166 IBLA 329 (2005), International Metals & Petroleum Corp, 158 IBLA 15
(2002), and Merit Productions, et al., 144 IBLA 156 (1998). In summary,
these cases explain that through operation of law a lease in its
extended term expires 60 days following cessation of production, not 60
days after the lessee receives the BLM notice.
The paragraph in the proposed rule would now read that a lease in
its extended term because of production (and lacking a well capable of
production in paying quantities) would not expire upon cessation of
production, if, within 60 calendar days of cessation of production,
reworking or drilling operations on the leasehold are commenced and are
thereafter conducted with reasonable diligence during the period of
nonproduction. The proposed rule would also add a sentence stating,
``If these reworking or drilling operations fail to result in
production in paying quantities, the lease will expire by operation of
law, effective as of the date production ceased.''
Section 3107.23 Leases Capable of Production
The proposed rule would update the existing paragraph to specify 60
``calendar days'' in order to be clearer.
[[Page 47587]]
Section 3107.30 Extension for Terms of Agreements
The proposed rule would update the title of this section from
``Extension for terms of cooperative or unit plan'' to ``Extension for
Terms of Agreements.'' This conforms this language to other changes in
this proposed rule.
Section 3107.31 Leases Committed to an Agreement
The proposed rule would update the title of this section from
``Leases committed to plan'' to ``Leases committed to an agreement.''
The proposed rule would also remove the reference to the existing 43
CFR 3107.3-3 (renewal leases) due to the changes made to that section,
as further described later.
The proposed rule would add a new paragraph (b) because IBLA cases
have held that a well that is capable of production in paying
quantities on a lease basis and that is completed on a committed tract
within a unit agreement will extend the term of all expiring Federal
leases committed to the unit agreement for the term of the unit
agreement and/or for so long as the well is capable of production in
paying quantities. Refer to Yates Petroleum Corp. 67 IBLA 246 (1982).
Section 3107.32 Segregation of Leases Committed in Part
This section addresses any lease committed to a unit agreement that
covers less than the entirety of the lands covered by the lease. In
paragraph (a), a sentence would be added to state that, for unproven
areas, segregation would occur only when the public interest
requirement is satisfied pursuant to 43 CFR 3183.4(b). The sentence
would also provide that, upon satisfaction of the public interest
requirement, the BLM would deem the segregation to have been effective
as of the date of commitment of the lands to the unit. Segregating a
lease after the public interest requirement is met would create
efficiencies in the program. If the public interest requirement is not
met, the BLM would not be required to consolidate the improperly
segregated leases, and the ONRR would not be required to consolidate
improperly segregated lease accounts for payments.
The proposed rule would delete the portion of existing paragraph
(b), which described how a lease segregation would be declared invalid
if the public interest requirement was not met. This change is
consistent with the changes made to paragraph (a).
The proposed rule would add a new paragraph (b)(2) to clarify that
the base or segregated lease may be extended by production on the
associated lease by stating that, if a partially committed lease is in
an extended term because of production, the segregated, non-producing
lease would continue in effect so long as the producing lease exists
and rentals are paid, and so long thereafter as oil or gas is produced
from the committed lease.
Section 3107.3-3 20-Year Lease or Any Renewal Thereof.
The proposed rule would eliminate this section because it is
outdated. All 20-year leases, also known as renewal leases, have either
expired or are held by production. Renewal leases are further described
in detail under 43 CFR 3107.80.
Section 3107.51 Extension After Discovery on Other Segregated Portions
The proposed rule would update the language in this paragraph from
``the date of first discovery of oil or gas in paying quantities'' to
read ``the date a well capable of production in paying quantities is
established.'' The change reflects language more commonly used by the
BLM.
Section 3107.7 Exchange Leases: 20-Year Term
The proposed rule would eliminate this section because it is
obsolete. Exchange leases were outstanding MLA leases that could be
exchanged for a new lease under the Act of August 21, 1935, Public Law
74-295 Sec. 2(a), 49 Stat. 674, 679. The August 8, 1946, Act
eliminated the 1935 Act provisions for exchange leases, and the BLM no
longer accepts these types of applications. Public Law 79-696 sec. 3,
60 Stat. 950, 951.
Section 3107.8 Renewal Leases
The proposed rule would eliminate Sec. Sec. 3107.8-1 through
3107.8-3, which are the provisions related to renewal leases, in their
entirety because they are obsolete. Renewal leases that had an
expiration date after November 15, 1990, were eligible for a final
renewal under the provisions of the November 15, 1990, Act, (for 10
years and for so long thereafter as oil and gas is produced in paying
quantities). Public Law 101-567, 104 Stat. 2802. If a lease was renewed
after the 1990 amendment and was not producing oil or gas at the end of
its 10-year renewal term, the lease expired with no further option for
renewal. The BLM no longer accepts these types of applications.
Section 3107.71 Payment of Compensatory Royalty
The proposed rule would redesignate this section from Sec. Sec.
3107.9-1 to 3107.71 pursuant to the reorganization identified earlier.
Section 3107.72 Subsurface Storage of Oil and Gas
Instead of citing to 43 CFR 3105.5-4, the proposed rule would add
the language from 43 CFR 3105.5-4 to this section. This change negates
the need to refer to another section of the rule.
10. Section-by-Section Discussion for Changes to 43 CFR Subpart 3108
The proposed rule would remove one section and revise two section
headings in the existing 43 CFR subpart 3108. The goal of the revisions
is to replace the question-and-answer format and to remove obsolete
language related to Class III reinstatements.
Section 3108.10 Relinquishment
The proposed rule would update the title from ``As a lessee, may I
relinquish my lease?'' to read ``Relinquishment.'' The proposed rule
would also change references to ``you'' to ``the lessee(s).'' In
addition, the proposed rule would update paragraph (c) to allow either
the BLM or the appropriate surface management agency to approve a plan
for the reclamation of the oil and gas operations on a relinquished
lease.
Section 3108.21 Automatic Termination
The proposed rule would update paragraph (b) to remove the phrase
``bill rendered by the designated Service Office, or,'' because the
ONRR updated its policy in 2015 to eliminate the mailing of courtesy
notices. The proposed rule would add a new paragraph (c) to incorporate
caselaw providing that Congress intended the automatic termination
provision of 30 U.S.C. 188 to apply to the regular, annual rental
payment, the necessity for which a lessee had continuous notice, and
that the automatic termination provision was not intended to apply to a
case where a lessee had no way of knowing that the obligation had
accrued, e.g., where a lease suspension is lifted or where the lease
account reverts from a royalty to a rental status. See Husky Oil
Company of Delaware Depco, Inc., 5 IBLA 7 (1972). This might happen
where a lease suspension is lifted or where the leases were held by
allocated production from an agreement and the agreement terminates,
thus reverting the lease account from a royalty to a rental status. The
new paragraph (c) would state that the
[[Page 47588]]
automatic termination provision does not apply where, due to other
contingencies such as a suspension being lifted or unit terminating,
additional rental is due on a date other than the lease anniversary
date and where the lessee did not receive notice that the obligation
had accrued, unless the lessee fails to pay the rental within the
period prescribed in the BLM notice.
Section 3108.22 Reinstatement at Existing Rental and Royalty Rates:
Class I Reinstatements
The proposed rule would update paragraph (a)(2) to replace the
reference to a postmark by the U.S. Postal Service with a reference to
the ONRR's online rental payment system, since the ONRR updated its
policy in 2015 to require only electronic rental payments. The proposed
rule would move paragraph (d)--which provides that the BLM would not
issue a new lease for lands that have been covered by a lease that
terminated automatically until 90 days after the date of termination--
to 43 CFR 3101.40(a). The intent is to ensure that this language is not
overlooked by placing it more prominently with lease issuance
provisions. The IRA did not make any changes to the grounds and
conditions for Class I reinstatements.
Section 3108.23 Reinstatement at Higher Rental and Royalty Rates: Class
II Reinstatements
To further implement the IRA, the proposed rule would update
paragraph (a) so that the grounds for a Class II reinstatement only
apply to competitive leases. The IRA explicitly rescinded the BLM's
authority to approve Class II reinstatements for noncompetitive leases
issued for public domain lands under the MLA and implicitly did the
same for the MLAAL (by eliminating references to higher rental
requirements for reinstated, noncompetitive leases). In any event,
reinstatements are discretionary; had Congress not directed the BLM to
eliminate reinstatement of noncompetitive leases under the MLAAL, the
BLM has concluded that such reinstatements are not prudent because the
grounds for a reinstatement should be based on the type of lease and
not be based on the land status.
The proposed rule would eliminate the existing paragraph (b)(1) in
its entirety. This provision addresses the timeliness of Class II
reinstatement petitions for leases that terminated on or before August
8, 2005, and is no longer applicable. The proposed rule would update
the proposed redesignated paragraph (b)(2)(iii) to remove the reference
to funds held in escrow, as this is outdated. The BLM would not approve
a reinstatement if the BLM does not collect all back rentals and
royalties at the rates established in the reinstated lease, but the BLM
would not require the funds to be held in escrow until a reinstatement
is approved.
The proposed rule would move existing paragraph (c)--which states
that the BLM will not issue a new lease for lands covered by a
terminated lease until all action on the petition is final--to 43 CFR
3101.40(a). The intent is to ensure that this language is not
overlooked by placing it more prominently with lease issuance
provisions. The proposed rule would update the reference to the
Committee on Interior and Insular Affairs (which no longer exists) to
the current House Committee on Natural Resources. The proposed rule
would remove existing paragraph (f), which refers to royalty
reductions, as this language would already be covered under the
proposed 43 CFR 3103.41(c).
Section 3108.2-4 Conversion of Unpatented Oil Placer Mining Claims:
Class III Reinstatements (Existing Rule)
The purpose of the existing section is for converting unpatented
oil placer mining claims validly located prior to February 24, 1920, to
an oil and gas lease. The proposed rule would remove the language
related to Class III reinstatements in its entirety because the IRA
removed the authority for Class III reinstatements.
Section 3108.30 Cancellation
The proposed rule would update the last sentence in paragraph (a)
to remove the phrase ``after notice to the lessee in accordance with
section 31(b) of the Act and only.'' This phrase does not add anything
to the existing regulation and has therefore led to confusion. The
proposed rule would state instead that ``The lease may be canceled only
after default continues for 30 calendar days after a notice of default
has been delivered in accordance with 43 CFR 1810.2.'' The proposed
rule would update paragraphs (b) and (c) to change the phrase from ``by
judicial proceedings'' to ``by court order'' to align with the text
found in 43 CFR 3136.3(b), bringing consistency to the regulations.
11. Section-by-Section Discussion for Changes to 43 CFR Subpart 3109
The proposed rule would not make any revisions to the section
headings in the existing subpart 3109 regulations. This subpart covers
the process for leasing lands under the provisions in 30 U.S.C. 301-
306, which addresses leasing under railway and other rights-of-ways.
Section 3109.12 Application
The proposed rule would split the existing paragraph into four
separate paragraphs by topic (no specific form is required, who can
file, the filing fee, and what an application must include) for
clarity. The proposed rule would also add a new requirement (proposed
paragraph (d)(5)) that the applicant must include a map of the
applicable lands, which would support the bidding process related to
the lease or compensatory royalty agreement. In many cases, the
adjacent mineral owners or lessees, who can bid upon the parcel,
require a map to identify the lands. The requirement for the applicant
to provide a map would reduce the cost to the public and would ensure
that the BLM is reviewing the correct lands for a lease.
Section 3109.13 Notice
The proposed rule would update the phrase ``a bid for the amount or
percent of compensatory royalty'' to read ``a bid for the percent of
compensatory royalty.'' This change aligns with the BLM's existing
process and reduces confusion.
Section 3109.15 Compensatory Royalty Agreement or Lease
The proposed rule would adjust the terms of a ROW lease to match
the terms of a competitive lease issued under the MLA with respect to
the rental, royalty, and primary term of the lease (10 years). The
proposed rule would also specify for clarity that the provisions of 43
CFR part 3100 apply to the issuance and administration of leases for
oil and gas deposits underlying a ROW issued under this part.
12. Section-by-Section Discussion for Changes to 43 CFR Part 3110
The proposed rule would remove the existing 43 CFR part 3110 in its
entirety. The IRA removed the BLM's authority to issue a noncompetitive
lease. The BLM is rejecting all pending noncompetitive lease
applications received before enactment of the IRA.
13. Section-by-Section Discussion for Changes to 43 CFR Subpart 3120
The proposed rule would add two new sections and remove four
sections in existing 43 CFR subpart 3120. The proposed rule would
revise four section headings. The goal of the revisions is to
streamline and provide clarity and consistency with other changes in
this proposed rule.
[[Page 47589]]
Section 3120.11 Lands Available for Competitive Bidding
The proposed rule would update the introductory paragraph from
``All lands available for leasing shall be offered'' to ``All lands
eligible and available for leasing may be offered'' to conform this
section with the language of 30 U.S.C 226(a) and (b). This language
will also better reflect Interior's statutory discretion to identify
lands available for oil and gas leasing.
The proposed rule would update paragraph (a) to change the language
from ``Lands in oil and gas leases'' to ``Lands that were covered by
previously issued oil and gas leases'' to provide clarity.
The proposed rule would update paragraph (c) to clarify that a
lease interest forfeited through a bankruptcy to the United States may
be reoffered through a competitive auction.
The proposed rule would also revise existing paragraph (e) to
reflect the IRA's removal of noncompetitive leasing.
The proposed rule would add a new paragraph (g) to implement
provisions of the IRA by stating that lands offered in a previous sale
for which no bids were accepted or received may be offered for
competitive auction under this subpart. Prior to the IRA, these lands
would have been eligible for noncompetitive leasing.
Section 3120.12 Requirements
The proposed rule would update paragraph (a) to conform this
section with the language of 30 U.S.C 226(a) and (b). The proposed rule
would update paragraph (b) to change ``competitive oral or internet-
based bidding process'' to read ``a competitive auction process.'' A
definition for competitive auction would be added to 43 CFR 3100.5 as
explained previously.
The proposed rule would add a new paragraph (c) to codify existing
policy and strengthen the bidder registration process. The MLA provides
that leases may be issued only to a ``responsible qualified bidder''
(30 U.S.C. 226(b)(1)(A)). A bid submitted at a competitive auction
represents a good-faith intention to acquire an oil and gas lease, and
any winning bid constitutes a legally binding commitment to accept the
lease and pay monies owed. Any bidder who has not paid the minimum
monies owed on the day of sale is not a ``responsible qualified
bidder'' and would be referred to the DOI's Office of the Inspector
General, Administrative Remedies Division, for appropriate action,
including potential suspension and debarment. Definitions for qualified
bidder and responsible bidder would be added to 43 CFR 3100.5 as
explained previously.
The proposed rule would redesignate the existing paragraph (c) to
paragraph (d). The proposed rule would update this paragraph to refer
to the increased national minimum bid of $10 per acre, or fraction
thereof, in 43 CFR 3000.130. The cross-reference to Sec. 3000.130
allows BLM to adjust the minimum bid regularly for inflation. The IRA
raised the national minimum bid from $2 per acre to $10 per acre.
Notably, the IRA specifically authorizes the Secretary to, at the
conclusion of the 10-year period established by the statute,
``establish by regulation a higher national minimum acceptable bid for
all leases based upon a finding that such action is necessary: (i) To
enhance financial returns to the United States; and (ii) to promote
more efficient management of oil and gas resources on Federal lands.''
The minimum acceptable bid is important because it establishes the
starting bid at the BLM's oil and gas lease sale auctions.
Section 3120.13 Protests
The proposed rule would rename this section from ``Protests and
appeals'' to ``Protests'' and would update the paragraphs in this
section to change the term ``appeal'' to ``protest.'' This change
reflects IBLA decisions providing that the current use of the term
``appeal'' is imprecise and creates confusion. Refer to Wyoming Outdoor
Council, et al., 156 IBLA 377 (2002). The BLM's issuance of a Notice of
Competitive Lease Sale is not an appealable action, because a notice
merely distributes and communicates general information about a
proposed action. The term ``protest,'' which is any objection raised by
any person before an action is taken by the BLM, is the proper term.
Appeals are covered under 43 CFR 3000.40 and do not need to be repeated
in this section.
Section 3120.30 Nomination Process
The BLM is proposing to update the process by which it formally
nominates parcels for sale at a competitive auction. The BLM is
considering using this process for certain BLM state offices or for
future leases sales and requests comments on whether the regulations
should retain this process and, if so, what changes to the formal
nomination process should be made.
In 1988, following the passage of FOOGLRA, the BLM published new
oil and gas regulations that established two separate processes for
leasing public lands: (1) the informal process, which primarily relies
on EOIs from the public; and (2) the formal nomination process. 53 FR
22829 (``the final rulemaking provides administrative flexibility to
allow for either informal EOIs or a formal nomination process to
determine the lands offered competitively''). Aside from a few test
sales following the enactment of FOOGLRA, the BLM has never employed
the formal nomination process. See 53 FR 22829 (``the Director elects
to permit informal expressions of interest to be submitted to the
proper BLM office but declines at this time to employ formal
nominations under 43 CFR 3120.30''). However, the existing regulations,
as well as the BLM's current competitive leasing handbook, continue to
provide for the use of the formal nomination process, following notice
to the public in the Federal Register.
The BLM believes that aspects of this process could be used as a
possible mechanism to implement the recommendations from the DOI's
November 2021 ``Report on the Federal Oil and Gas Leasing Program,''
including ``carefully consider[ing] what lands make the most sense to
lease in terms of expected yields of oil and gas, prospects of earning
a fair return for U.S. taxpayers, and conflicts with other uses'' and
``evaluat[ing] operational adjustments to its leasing program that will
avoid nomination or leasing of low potential lands.'' \16\ The proposed
rule would update the following sections for the formal nomination
process with the intent to make these nominations nonbinding as the BLM
considered a nomination to be similar to the noncompetitive pre-sale
leasing process, and the IRA removed the noncompetitive leasing
process. In addition, the rule proposes to eliminate the allowance for
unnominated parcels to become available for noncompetitive leasing.
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\16\ https://www.doi.gov/sites/doi.gov/files/report-on-the-federal-oil-and-gas-leasing-program-doi-eo-14008.pdf.
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Section 3120.31 General
The proposed rule would update this paragraph to remove the
requirement that a nomination be submitted with a national minimum bid.
The purpose of removing this requirement is to make formal nominations
nonbinding. To provide the BLM with flexibility, this paragraph would
also be updated to remove the citation to 43 CFR 3120.4; that would
remove the requirement that a List of Lands Available for Competitive
Nominations be posted in the same manner as the Notice of Competitive
Lease Sale. This paragraph would also be updated to include language
stating that nominations may
[[Page 47590]]
be filed on a form or by a method approved by the Director, providing
the BLM with flexibility and discretion to continue to improve the
program (by, for example, allowing the public to send electronic
nominations).
Section 3120.32 Filing of a Nomination for Competitive Leasing.
The proposed rule would revise the introductory paragraph under
this section to state that nominations may be filed ``on a form or
using a method approved by the Director'' similar to the change in
Sec. 3120.31 described earlier. The existing paragraph (b) would be
revised to remove the second sentence referring to the execution of a
nomination constituting a legally binding offer, due to the removal of
the noncompetitive leasing process as prescribed by the IRA. The
existing paragraph (c) would be updated to remove the reference to
refunding all moneys if the nomination has not been completed or timely
filed, since the administrative filing fees are nonrefundable. The
existing paragraph (d) would be updated to remove the requirement that
a nomination must be submitted with a minimum bid and first year rental
to reflect the nonbinding nature of the nomination. Through these
changes, the only fee that would be required to be submitted with a
nomination is the nonrefundable, administrative filing fee, as
specified in the proposed 43 CFR 3000.120.
Section 3120.3-3 Minimum Bid and Rental Remittance
The proposed rule would remove this existing section in its
entirety, consistent with the changes made to the nomination process,
to make formal nominations nonbinding.
Section 3120.3-4 Withdrawal of a Nomination
The proposed rule would remove this existing section in its
entirety, consistent with the changes made to the nomination process,
to make formal nominations nonbinding.
Section 3120.33 Parcels Receiving Nominations
The proposed rule would redesignate this section from 43 CFR
3120.3-5 to 43 CFR 3120.33 due to the proposed removal of the sections
preceding this one. The language for parcels receiving nominations
would be updated to use ``may'' (rather than ``shall'') be included in
a Notice of Competitive Lease Sale to be consistent with the BLM's
statutory discretion to lease.
Section 3120.3-6 Parcels Not Receiving Nominations
The proposed rule would remove this section in its entirety, due to
the removal of the noncompetitive leasing process, consistent with
changes made by the IRA.
Section 3120.3-7 Refund
The proposed rule would remove this section because the minimum bid
and first year's rental would not be required for nominations, as
explained earlier. The administrative filing fees found under the
proposed 43 CFR 3000.120 are nonrefundable and would not be refunded to
nominators who are unsuccessful at the competitive auction.
Expression of Interest
The proposed rule would add a new heading, ``Expression of
Interest,'' to include rules for receiving EOIs for competitive
leasing.
Section 3120.41 Process
The proposed rule would add requirements for submitting an EOI to
the BLM. Paragraph (a) would state that a party submitting an EOI must
include the submitter's name and address and must submit the EOI
through the BLM's online leasing system. The National Fluids Lease Sale
System (NFLSS) supports BLM administration of the leasing program for
Federal onshore oil and gas and geothermal leasing. Using the NFLSS for
the submittal of EOIs gives the BLM the capability for real-time
reporting, which can streamline the leasing process and reduce the
BLM's costs by (1) eliminating data entry by BLM staff, placing the
onus for correct EOI submissions on the submitter; (2) automatically
publishing EOIs in the NFLSS, which facilitates transparency of the EOI
process; and (3) supporting the BLM's communication with submitters by
allowing them to track the status of their EOIs through the NFLSS.
Paragraph (b) would require the use of legal land descriptions in
EOIs. The scenarios cover: (1) lands surveyed under the public land
survey system; (2) unsurveyed lands; (3) lands approved by protracted
surveys; (4) lands that have water boundaries; (5) fractional mineral
interest in lands; and (5) fractional interest lands. The proposed rule
would add the requirement under paragraph (b)(6) that the submitter
provide the surface owner information for split estate lands to reflect
current policy in Handbook H-3120-1, Competitive Leases, and add
paragraph (7) to allow the BLM to accept an acquisition or tract number
in lieu of the legal land description, if it constitutes an adequate
description of the lands.
Paragraph (c) would allow the submission of more than one EOI by a
submitter, so long as each expression separately satisfies the
requirements of paragraph (b).
Paragraph (d) would state that each EOI must include the filing fee
set out in the proposed 43 CFR 3000.120.
Paragraph (e) would allow the BLM to include lands in a lease sale
on its own initiative.
Paragraph (f) would state that, when determining whether the BLM
should offer lands specified in an EOI at a lease sale, the BLM would
evaluate the Secretary's obligations to manage public lands for
multiple use and sustained yield and to take any action required to
prevent unnecessary or undue degradation of the lands and their
resources, along with other applicable legal requirements. At a
minimum, the BLM would consider: (1) proximity to oil and gas
development existing at the time of the BLM's evaluation, giving
preference to lands upon which a prudent operator would seek to expand
existing operations; (2) the presence of important fish and wildlife
habitats, including wetland habitats, or connectivity areas, giving
preference to lands that would not impair the proper functioning of
such habitats or corridors; (3) the presence of historical properties,
sacred sites, and other high-value leasing lands, giving preference to
lands that would not impair the cultural significance of such
resources; (4) the presence of recreation and other important uses or
resources, giving preference to lands that would not impair the value
of such uses or resources; and (5) the potential for oil and gas
development, giving preference to lands with high potential for
development.
Although paragraph (f) lists specific criteria for the BLM to
review, the listed criteria do not limit the BLM's authority to fulfill
its legal obligations under FLPMA, NEPA, and MLA. The BLM would
consider additional criteria and factors when evaluating parcels for a
lease sale. The BLM requests comments on additional criteria the BLM
might consider when giving preference to leasing parcels. Should this
rule include among the listed criteria compliance with the goals and
objectives of applicable land use plans and protecting communities with
environmental justice concerns? How can the rule better achieve the
BLM's intent to give preference to leasing parcels where development
would have less impacts on nearby communities?
[[Page 47591]]
The BLM proposes that promulgating rules for this EOI preference
process would provide a mechanism for implementing the recommendations
from the DOI's ``Report on the Federal Oil and Gas Leasing Program,''
including the recommendation to ``carefully consider what lands make
the most sense to lease in terms of expected yields of oil and gas,
prospects of earning a fair return for U.S. taxpayers, and conflicts
with other uses'' and to ``evaluate operational adjustments to its
leasing program that will avoid nomination or leasing of low potential
lands.'' This process would ensure that oil and gas leasing on public
lands occurs in a way that is consistent and deliberate, focus
development where there is the most potential for recovery, and allow
the agency to manage public lands for other uses as well, including
conservation and restoration of wildlife habitat. For example, offering
leases where current infrastructure exists should reduce the overall
footprint of energy development and limit wildlife impacts and habitat
fragmentation. Giving preference to leasing outside of important
wildlife habitat would help to ensure that important seasonal ranges
remain connected, and that species can access important resources
undeterred as they move across the landscape.
The BLM would implement this EOI preference process to conserve
certain public lands while ensuring the American taxpayer receives a
fair return and meeting the energy demands of the future. The BLM does
not intend that parcels must meet all five of the preference criteria
in order to be available for leasing, and the term ``preference''
should not be interpreted to mean ``absolute.'' The BLM recognizes the
need for balance and for the preference criteria to be situational and
considered on a case-by-case basis. The preference criteria generally
would be applied before the NEPA analysis is completed. A summary of
how the criteria apply would be included for public comment. The BLM
could then take the public comments into account when considering
current and future sales.
The BLM requests comments addressing whether or how the preference
criteria should be applied when the Federal surface lands are
administered by another Federal agency. For example, in National Forest
System lands, the Forest Service typically prepares a pre-leasing NEPA
analysis that the BLM subsequently relies upon when making its leasing
determination.
Paragraph (g) would allow the BLM to reconfigure the lands that are
included in an expression of interest in the parcels that the BLM
offers for sale.
Section 3120.42 Agency Inventory of Leasing
The proposed rule would add this new section to provide that
periodically the BLM will calculate the acreage for which EOIs have
been submitted in the previous year, along with the total acreage
offered for lease. This would clarify how the BLM will comply with
section 50265 of the IRA, consistent with Instruction Memorandum 2023-
006, Implementation of Section 50265 in the Inflation Reduction Act for
Expressions of Interest for Oil and Gas Lease Sales. The BLM requests
public comments on this point.
Section 3120.50 Notice of Competitive Lease Sale
The proposed rule would redesignate this section from 43 CFR 3120.4
to 43 CFR 3120.50 per the previously mentioned reorganization.
Section 3120.51 General
The proposed rule would redesignate this section from 43 CFR
3120.4-1 to 43 CFR 3120.51 per the previously mentioned reorganization.
Section 3120.52 Posting Timeframes
The proposed rule would revise the title of this section from
``Posting of notice'' to ``Posting timeframes.'' The proposed rule
would add a new paragraph (a), providing that, after identifying a
preliminary list of lands for a lease sale, the BLM would provide a
scoping period, of not less than 30 calendar days, for public comment.
The BLM uses preliminary parcel lists to roughly organize potential
parcels for sale and to initiate environmental review. While the BLM
invites public feedback on the parcel list, preliminary parcel lists do
not constitute an official notice of a proposed BLM action or final
action and are not subject to protests or appeals.
The proposed rule would add a new paragraph (b) providing that,
after drafting a preliminary NEPA document for a lease sale, the BLM
would provide a comment period, not less than 30 calendar days. Similar
to preliminary parcel lists, preliminary NEPA documents do not
constitute an official notice of a proposed BLM action or a final
action and are not subject to protests or appeals.
The proposed rule would add a new paragraph (c) providing that the
BLM would post the Notice of Competitive Lease Sale at least 60
calendar days prior to the sale and would make available to the public
a list of lands to be offered for competitive sale. This is an
additional 15 calendar days from the BLM's current practice. The
extended posting timeframe would provide the BLM more time to resolve
protests prior to any proposed lease sale. The BLM routinely receives
one or more protests on posted sale offerings, but it often does not
receive the protests until shortly before or on the morning of the
protest deadline. The BLM state offices need a reasonable amount of
time to review the reasons for the protest in advance of the sale and
decide if withdrawing the protested parcel from the sale is
appropriate. Consequently, in new paragraph (d), the BLM would provide
that the protest period is allowed only for the first 30 days that the
sale notice is posted to provide the second 30 days as the time in
which the BLM would review protests.
The proposed rule would also remove the requirement for the notice
to be posted in the BLM office or any surface managing agency office.
In the BLM's experience, the public finds information concerning
Notices of Competitive Lease Sale through the NFLSS or on the
individual state office web page, rather than a posted sale notice in
the individual offices. The BLM believes that remaining silent in the
regulations on how the sale notice would be made available to the
public allows the BLM the flexibility and discretion to continue to
improve the program. This silence, however, does not in any way
abnegate any applicable legal obligations to provide notice in the
first instance.
The proposed rule would also add a new paragraph (d) to state that
the BLM would provide a protest period, of not less than 30 days, for
public input on the upcoming lease sale during the first 30 days of the
60-day public notice period provided for in paragraph (c) earlier.
Establishing a deadline for filing protests ensures an orderly and
efficient leasing process. Finally, the proposed rule would add a new
paragraph (e) to state that ``the BLM will make available the final
NEPA compliance documents prior to issuing a lease from the lease
sale.'' The BLM plans to post the NEPA compliance documents on
ePlanning, but the proposed rule would not codify that practice so that
BLM retains flexibility for future sales.
Competitive Auction
The proposed rule would redesignate this section from 43 CFR 3120.5
to remove the regulatory section number, as this is a heading that has
no text associated it. The proposed rule would revise the title of this
section from ``Competitive sale'' to ``Competitive
[[Page 47592]]
auction,'' consistent with the proposed definition.
Section 3120.61 Competitive Auction
The proposed rule would redesignate this section from 43 CFR
3120.5-1 to 43 CFR 3120.61 due to the previously mentioned
reorganization. The proposed rule would rename this section from ``Oral
or internet-based auction'' to ``Competitive auction'' and update the
paragraphs in this section to replace the reference to oral or
internet-based bidding with the term ``competitive auction,''
consistent with the proposed definition.
Paragraph (a) would also be updated to remove the reference to the
formal nominations process, consistent with the changes made to the
nomination process.
For this same reason, paragraph (c) would be removed in its
entirety.
Section 3120.62 Payments Required
The proposed rule would redesignate this section from 43 CFR
3120.5-2 to 43 CFR 3120.62 due to the previously mentioned
reorganization.
The proposed rule would update paragraph (b)(1) to increase the
minimum bonus bid to reference 43 CFR 3000.130, consistent with the
change described earlier in the proposed 43 CFR 3120.12.
The proposed rule would update paragraph (c) to replace ``10
working days'' with ``10 business days'' and would replace the
reference to ``oral or internet-based auction'' with the term
``competitive auction.''
Section 3120.63 Award of Lease
The proposed rule would redesignate this section from 43 CFR
3120.5-3 to 43 CFR 3120.63 due to the previously mentioned
reorganization.
The proposed rule would update paragraph (c) to remove the
reference to noncompetitive offers, consistent with the proposed
removal of 43 CFR part 3110.
The proposed rule would revise paragraph (d) to remove the
reference to noncompetitive lease offers as required by the IRA. The
proposed rule would update Paragraph (d) to require the BLM to resolve
all protests covering the lands to be leased prior to issuing a lease
to comport with the BLM's longstanding policy not to issue a lease
until all protests covering the lands to be leased have been resolved
by the BLM.
Finally, the proposed rule would add a statement that leases would
be issued within 60 calendar days following resolution of any protests
not resolved prior to the sale and payment by the successful bidder of
the remainder of the bonus bid, if any, and the annual rental for the
first lease year. This text corresponds to the provisions in the MLA at
30 U.S.C. 226(b)(1)(A). The proposed rule would also add to paragraph
(e) a provision stating that, if the BLM cannot issue the lease within
60 days, the BLM may reject the offer. The BLM has received an
increased number of protests and legal challenges to its decision to
offer lands for lease or issue leases. These protests and challenges
may require the BLM to complete a corrective environmental analysis to
reach resolution. The protests, challenges, and new analysis can lead
to lengthy delays after the sale before the BLM can issue the lease,
with the BLM holding the first-year rentals and bonus bids collected
from the sales. In these cases, the BLM's policy is to reach out to the
successful bidder to see if they want to decline the lease or continue
to wait until there is a resolution. If the successful bidder declines
the lease, the BLM would reject the lease offer.
Section 3120.70 Parcels Not Bid on at Auction
The proposed rule would redesignate this section from 43 CFR 3120.6
to 43 CFR 3120.70 due to the previously mentioned reorganization. The
proposed rule would update the paragraph to replace the reference to
``oral or internet-based'' auction with the term ``competitive
auction,'' consistent with the changes made earlier in this subpart.
The section would also remove references to noncompetitive leases
pursuant to the IRA and would provide that parcels not bid on at
auction would be available for future competitive sale.
Section 3120.80 Future Interest
The proposed rule would redesignate this section from 43 CFR 3120.7
to 43 CFR 3120.80 due to the previously mentioned reorganization.
Section 3120.81 Nomination or Expression of Interest To Make Lands
Available for Competitive Lease
The proposed rule would redesignate this section from 43 CFR
3120.7-1 to 43 CFR 3120.81 due to the previously mentioned
reorganization. The proposed rule would update the title and paragraph
of this section from ``Nomination'' to ``Nomination or Expression of
Interest to make lands available for competitive lease,'' consistent
with the changes made in this subpart.
Section 3120.82 Future Interest Terms and Conditions
The proposed rule would redesignate this section from 43 CFR
3120.7-2 to 43 CFR 3120.82 due to the previously mentioned
reorganization.
Section 3120.83 Compensatory Royalty Agreements
The proposed rule would redesignate this section from 43 CFR
3120.7-3 to 43 CFR 3120.82 due to the previously mentioned
reorganization.
14. Section-by-Section Discussion for Changes to 43 CFR Subpart 3137
The proposed rule would revise two of the sections and their
headings in the existing subpart 3137 regulations. The purpose of
updating these sections is to add the processing fees for unit
applications and successor operators.
Section 3137.23 NPR-A Unitization Application
The proposed rule would update the title from ``What must I include
in my NPR-A unitization application?'' to ``NPR-A unitization
application.'' The proposed rule would update paragraphs (d)(1) and (4)
to change ``you'' to ``the operator.'' This is intended to clarify who
``you'' is in this section. The proposed rule would add a new paragraph
(i) to include the required new processing fee for unit agreement
applications found in the fee schedule in 43 CFR 3000.120 of this
chapter.
Section 3137.61 Change in Unit Operators
The proposed rule would update the title from ``How do I change
unit operators?'' to ``Change in unit operators.'' The proposed rule
would update paragraph (a)(1)(i) by changing ``It'' to ``The new
operator.'' This is intended to clarify who ``it'' references in this
section. The proposed rule would add a new paragraph (a)(3) to include
the required new processing fee for designation of a successor operator
found in the fee schedule in 43 CFR 3000.120 of this chapter.
15. Section-by-Section Discussion for Changes to 43 CFR Subpart 3138
The proposed rule would revise one section and its headings in the
existing 43 CFR subpart 3138 regulations. The purpose of updating this
section is to add the processing fee for subsurface storage agreement.
Section 3138.11 Applications for a Subsurface Storage Agreement
The proposed rule would revise the title from ``How do I apply for
a subsurface storage agreement?'' to
[[Page 47593]]
``Applications for a subsurface storage agreement.'' The proposed rule
would update paragraphs (a)(6), (b), and (c) to change ``you'' to ``the
operator.'' This is intended to clarify who ``you'' references in this
section. The proposed rule would add a new paragraph (a)(12) to include
the required new processing fee for subsurface gas storage agreement
applications found in the fee schedule in 43 CFR 3000.120 of this
chapter.
16. Section-by-Section Discussion for Changes to 43 CFR Subpart 3140
The proposed rule would not make any revisions to the section
headings in the existing 43 CFR subpart 3140 regulations.
Section 3140.5 Definitions
The BLM is proposing to alphabetize the definitions in this
section.
Section 3140.11 Existing Rights
The proposed rule would update paragraph (a) to state the
application time period ended on November 15, 1983. These regulations
are not proposed for elimination because the BLM is still processing
applications. The BLM has been working on the planning efforts
surrounding the special tar sand areas and the environmental analysis
under NEPA to support the conversion to a combined hydrocarbon lease.
This process has delayed the BLM in issuing decisions related to the
applications.
Section 3140.12 Notice of Intent To Convert
The proposed rule would update paragraphs (a) and (c) to have the
specific effective date of November 15, 1983, to ensure there is no
confusion related to this rulemaking. In addition, the language in this
section would be updated to past tense.
Section 3140.14 Other Provisions
The proposed rule would increase the rental rate in paragraph (b)
from $2 per acre to the annual rental, as specified in 43 CFR 3000.130,
consistent with the rental increases in this proposed rule.
The proposed rule would update paragraph (c)(2) to update the
royalty rate for a combined hydrocarbon lease from 12.5 percent to
16.67 percent to implement provisions of the IRA. The proposed rule
would update paragraph (c)(3) to clarify that the royalty rate
reduction requested for tar sands will not apply to the oil and gas and
vice versa. Due to the different methods to extract tar sands versus
oil and gas, the lessee may need a royalty rate reduction for one
resource to continue operations and no royalty rate reduction for
another resource.
Section 3140.23 Application Requirements
The proposed rule would update paragraph (a) to clarify that the
application window has closed. The remaining paragraphs under this
section would remain unchanged because the BLM continues to process
applications; however, the BLM proposed to update the language to past
tense.
Section 3140.42 Issuance of the Combined Hydrocarbon Lease
The proposed rule would update paragraph (d) to state that the BLM
would issue one combined hydrocarbon lease to cover the existing oil
and gas lease or valid claim based on mineral locations which have been
approved for conversion within the special tar sand area. The existing
paragraph (d)(2) is eliminated in its entirety as the BLM would not
issue a combined hydrocarbon lease covering multiple oil and gas
leases. Together, these changes permit the existing lease to be
converted to a combined hydrocarbon lease without changes to the legal
land description or leased area. The BLM believes that converting
multiple leases into a combined hydrocarbon lease is not necessary,
because combined hydrocarbon leases can be unitized. Unitization allows
for the joining together of large areas such as an entire reservoir or
field to optimize operations. Existing combined hydrocarbon leases have
already been unitized, and the BLM believes there is no need to
maintain the conversion of multiple leases in the regulations.
Section 3140.50 Duration of the Lease
The proposed rule would update the paragraph in this section to
state that if the applicant withdraws the combined hydrocarbon lease
application or the BLM denies the conversion application, the
suspension on the oil and gas lease would be lifted and the term would
be adjusted by the time remaining on the term of the lease.
Section 3140.70 Lands Within the National Park System
The proposed rule would update the paragraph in this section to
make it clear that the conversion application window closed in 1983,
consistent with the previously described proposed changes.
17. Section-by-Section Discussion for Changes to 43 CFR Subpart 3141
The proposed rule would not make any revisions to section headings
in the existing 43 CFR subpart 3141 regulations.
Section 3141.10 General
The proposed rule would update paragraph (b) to remove the
reference to noncompetitive leasing, as described in 43 CFR subpart
3110. This change is consistent with the implementation of the IRA. The
proposed rule would update paragraph (g) to increase the minimum
acceptable bid from $2 per acre to reference the minimum bid in 43 CFR
3000.130, consistent with the change described earlier in 43 CFR
3120.12.
Section 3141.22 Exploration Licenses
The proposed rule would update paragraph (b)(2) to refer to the fee
schedule in 43 CFR 3000.120. The proposed rule would update paragraph
(b)(4) to remove the triplicate filing requirement. The proposed rule
would update paragraph (e)(2) to increase the rental from $2 per acre
for new oil and gas leases issued after August 16, 2022, to the rental
rate in 43 CFR 3000.130, consistent with the requirements of the IRA.
Section 3141.52 Term of Lease
The proposed rule would update paragraph (a) to clarify that this
section pertains to the primary term of oil and gas leases in special
tar sands areas.
Section 3141.53 Royalties and Rentals
The proposed rule would increase the royalty in paragraph (a) from
12.5 percent to 16.67 percent and change the reference from the
``Minerals Management Service'' to the ``ONRR,'' consistent with the
other changes in this proposed rule and the IRA.
The proposed rule would update paragraph (b) to reference the oil
shale lease procedures for reducing the royalty rate applicable to a
tar sand lease prior to the commencement of commercial operations,
currently at 43 CFR 3903.54. The BLM considers the current regulations
to be unclear on which procedures to reference to reduce the royalty
rate applicable to a tar sand lease prior to the commencement of
commercial operations.
The proposed rule would update paragraph (c) to simply state that
the annual rental for all combined hydrocarbon leases is as stated in
the lease. The BLM will increase the rentals for combined hydrocarbon
leases issued after the effective date of the final rule using 43 CFR
3000.130 for the rental rate, consistent with the changes described
previously.
The proposed rule would likewise update paragraph (d) to simply
state that
[[Page 47594]]
the annual rental for all tar sand leases is as stated in the lease.
The BLM will increase the rentals for tar sand leases issued after the
effective date of the final rule using 43 CFR 3000.130 for the rental
rate, consistent with the changes described previously.
Section 3141.62 Publication of a Notice of Competitive Lease Offering
The proposed rule would remove paragraph (a) in its entirety,
eliminating the requirement that the BLM publish a lease sale notice in
the Federal Register and in a newspaper and providing the BLM with
flexibility when determining the appropriate notice method. The
remaining paragraph in this section, which refers to making a sale
notice available to the public, would be extended to combined
hydrocarbon leases in addition to the tar sand and oil and gas leases
listed in this paragraph. The proposed rule would change the remaining
paragraph to make the Notice of Competitive Lease Sale requirements
consistent with the proposed 43 CFR 3120.61 requirements.
Section 3141.63 Conduct of Sales
The proposed rule would eliminate paragraph (a) in its entirety and
update the proposed paragraph (b) so there is a single consistent
approach for conducting lease sales by competitive auction for both
combined hydrocarbon leases and tar sand leases. This change would
remove the written sealed bid approach for combined hydrocarbon leases.
The proposed paragraph (b)(2) would be updated to increase the
minimum bonus bids for combined hydrocarbon leases and tar sand leases
issued after the effective date of the final rule, and it moves the
bids to 43 CFR 3000.130 for the Fiscal Terms of New Leases, consistent
with the changes described earlier. Finally, the BLM proposes to set
the minimum bonus bid for hydrocarbon leases based upon an economic
evaluation, which the BLM will complete prior to holding a competitive
sale for a hydrocarbon lease.
Section 3141.65 Rejection of Bid
The proposed rule would eliminate existing Sec. 3141.6-4. Since
the BLM would hold competitive auctions in a similar manner for oil and
gas leases, tar sand leases, and hydrocarbon leases and would use the
economic analysis to set the minimum bonus bid, the BLM would not need
to reject a bid based upon the fair market value. The reference to the
``one-fifth bonus'' was changed to ``minimum bonus'' as needed to
reflect the proposed changes to have a consistent sale approach for
both tar sand leases and hydrocarbon leases.
Section 3141.70 Award of Lease
The proposed rule would eliminate the requirement for triplicate
copies of the lease forms to be executed by the successful bidder. In
addition, the proposed rule would update this section to specify the
30th ``calendar day'' in order to reduce confusion.
18. Section-by-Section Discussion for Changes to 43 CFR Subpart 3142
The proposed rule would rename the title of this subpart from
``Paying Quantities/Diligent Development for Combined Hydrocarbon
Leases'' to ``Paying Quantities/Diligent Development for Combined
Hydrocarbon and Tar Sand Leases.'' The proposed rule would not make any
revisions to the section headings in the existing 43 CFR subpart 3142
regulations.
Section 3142.1 Purpose
The proposed rule would add ``and tar sand leases'' so that this
subpart applies to both combined hydrocarbon and tar sand leases.
Section 3142.5 Definitions
The proposed rule would amend the first defined term to be
``Production in paying quantities for combined hydrocarbon leases.''
The proposed rule would add definitions for the terms ``Production in
paying quantities for oil and gas leases'' and ``Production in paying
quantities for tar sand leases.''
Section 3142.21 Minimum Production Schedule
The proposed rule would add a new paragraph (b) to specify that the
minimum annual tar sand production schedule for the lease or unit
operations would be set at an economical level. The proposed new
paragraph (b) would also state that, if the operator or lessee cannot
establish economic production, the lease would terminate at the end of
the lease's primary term.
19. Section-by-Section Discussion for Changes to 43 CFR Subpart 3151
The proposed rule would revise Sec. 3151.10 and add a new Sec.
3151.30. The BLM proposes these changes to protect the fiscal and
scientific interests of the American public by ensuring the BLM has
adequate cost recovery mechanisms for geophysical exploration permits
and that it has access to the information obtained by the permittees.
Section 3151.10 Notice of Intent To Conduct Oil and Gas Geophysical
Exploration Operations
The introductory paragraph would be updated to include the
requirement for the filing fee.
Section 3151.30 Collection and Submission of Data
The proposed rule would add a new section entitled ``Collection and
submission of data'' that would require the permittee to submit to the
BLM all data and information obtained from the exploration permit. This
new requirement is consistent with exploration permits carried out in
Alaska, as set forth in the existing regulations at 43 CFR 3152.6.
20. Section-by-Section Discussion for Changes to 43 CFR Subpart 3160
The proposed rule would not make any revisions to the numbering or
section headings in the existing 43 CFR 3160.0-5 regulations.
Section 3160.0-5 Definitions
The BLM is proposing to modify the existing definition for ``New or
resumed production under section 102(b)(3) of the Federal Oil and Gas
Royalty Management Act.'' The revised definition would remove the
sentence describing circumstances in which a gas well would be
considered to have been off of production, providing consistency in the
BLM's management of both oil wells (which does not include this
language) and gas wells. The BLM is proposing to add a new requirement
for operators to notify the BLM when they shut-in a gas well, as
described in greater detail under the proposed changes for 43 CFR
3162.3-4. The potential amount of plugging and remediation liability
related to long-term shut-in wells is often difficult to identify. The
update would therefore require operators to notify the BLM when it is
shutting in a well and would allow the BLM to adequately track and
evaluate the risk of nonproducing wells.
The BLM proposes new definitions for ``Shut-in well'' and
``Temporarily abandoned well.'' These definitions would clarify the
terms for the new proposed requirements. The definition would describe
a ``Shut-in well'' as a nonoperational well that can physically and
mechanically operate by opening valves or activating existing
equipment. The definition would describe a ``Temporarily abandoned
well'' as a nonoperational well that is not physically or mechanically
capable of production or injection without additional equipment or
without
[[Page 47595]]
servicing the well, but that may have future beneficial use.
These definitions were pulled from the BLM's existing policy and
are similar to existing industry standard definitions for the two well
statuses. The International Association of Drilling Contractors (IADC)
and the Alaska Oil and Gas Conservation Commission defines ``shut in''
as ``to close a well's surface, wellhead, or subsurface valves to halt
flow from or into the well, with the completion interval remaining open
to the tubing below the closed valve'' (see https://iadclexicon.org/shut-in/). The IADC and the Colorado Oil and Gas Conservation
Commission defines ``temporarily abandoned well'' to ``mean a well
which is incapable of production or injection without the addition of
one or more pieces of wellhead or other equipment, including valves,
tubing, rods, pumps, heater-treaters, separators, dehydrators,
compressors, piping or tanks'' (see https://iadclexicon.org/temporarily-abandoned-well/). The BLM proposes to add the statement
``may have future beneficial use'' into the temporarily abandoned well
definition to clarify that the BLM expects an operator to promptly plug
a well without future beneficial use. In some cases, the operator could
use a nonproductive well bore for enhanced recovery operations or water
disposal, even though the well cannot produce hydrocarbons.
21. Section-by-Section Discussion for Changes to 43 CFR Subpart 3162
The proposed rule would not make any revisions to the numbering or
section headings in the existing 43 CFR 3162.3-4 regulations.
Section 3162.3-4 Well Abandonment
The proposed rule would modify paragraph (c) to state that no well
may be temporarily abandoned for more than 30 days without the prior
approval of the authorized officer and unless the operator provides
adequate and detailed justification for the abandonment, verifies the
mechanical integrity of the wells, and isolates the completed
interval(s). The BLM would not accept vague assertations that the well
may produce. See Goldmark Engineering, Inc., 146 IBLA 225, 227 (1998).
The BLM requests comments on whether a temporary abandonment should
trigger a bond review in addition to the adequate and detailed
justification for the abandonment.
In addition, except in extraordinary circumstances, the proposed
rule would provide that the maximum period of time for an operator to
delay permanent abandonment of a temporarily abandoned well would not
exceed 4 years. The Energy Policy Act of 2005, as amended by the IIJA,
defines an idled well as ``a well that has been nonoperational for at
least 4 years and for which there is no anticipated beneficial use''
(see 42 U.S.C. 15907). Therefore, to help avoid wells becoming idled in
the first place, the BLM is proposing new reporting and operational
requirements for operators of temporarily abandoned wells. When an
operator does not address a temporarily abandoned well by returning the
well to production in paying quantities (i.e., production sufficient to
cover the operator's operational costs) or plugging and permanently
abandoning the well, historical data available to the BLM indicates
that such wells are at an increased risk of becoming orphaned.
The proposed rule would add a new paragraph (d) outlining new
requirements for operators of shut-in wells. Paragraph (d)(1) would
require notification to the BLM of the well's shut-in status and shut-
in date within 90 days of well shut-in. Paragraph (d)(2) would require,
within 3 years of well shut-in, the operator to provide the authorized
officer with verification of the mechanical integrity of the well and
confirmation that the well remains capable of producing in paying
quantities. Currently, an operator is not required to inform the BLM
when they shut-in a well, and these additions would allow the BLM to
better track its shut-in well inventory and to take proactive steps to
ensure that those wells do not become idled, as directed by Congress at
42 U.S.C. 15907.
The proposed rule would add a paragraph (d)(3) stating that, within
4 years of well shut-in, the operator must: (i) permanently abandon the
well; (ii) resume production in paying quantities; or (iii) provide the
authorized officer with a detailed plan and timeline for future
beneficial use for the well. The proposed rule would further provide
that if the BLM determines that there is a legitimate future beneficial
use for the well, it may allow the operator to delay permanent
abandonment by 1 year. The proposed rule would provide that the
authorized officer may grant additional delays in 1-year increments,
provided that the operator confirms the future beneficial use of the
well and is making verifiable progress on returning the well to a
beneficial use. The BLM believes these new requirements with yearly
interval checks would help operators manage shut-in wells, preventing
them from becoming orphaned in the future.
22. Section-by-Section Discussion for Changes to 43 CFR Subpart 3165.1
The proposed rule would revise the 43 CFR 3165.1 heading from
``Relief from operating and producing requirements'' to ``Relief from
operating and/or producing requirements.''
Section 3165.1 Relief From Operating and/or Producing Requirements
The purpose of this section is to describe the requirements for
lease suspension applications. The BLM proposes to update this section
to encourage diligent development of leased lands and ensure lease
suspensions are justified and tied to an end date. The BLM is proposing
to modify paragraph (b) to clarify who may apply for a lease
suspension.
The proposed rule would add a new paragraph (c) to state the BLM
would not approve an application for a suspension of a lease in
circumstances where an APD on the subject lease is filed less than 90
calendar days before the expiration date of the lease. Applications for
lease suspensions are often filed late in the primary term of a lease.
Although lessees and operating rights owners are entitled to the full
primary term of the lease, they are also responsible for timely filing
required plans and necessary applications. Lessees and operating rights
owners should not assume the BLM will grant a suspension merely to
relieve them of their obligations of diligence and timeliness when
complying with these and related requirements. See Vaquero Energy Inc.,
185 IBLA 233, 237 (2015). On average, the BLM requires 90 days to
complete the required reviews and analysis before issuing a decision on
an APD. This change would encourage lessees and operators to diligently
pursue development when APDs are filed with the BLM near the end of the
primary term of the lease; otherwise, the lease would expire.
The proposed rule would also update the proposed paragraph (d) to
ensure lease suspensions would not exceed 1 year when they are
requested by the operator. If the circumstances that warranted the
suspension are still applicable, a request to extend the suspension
prior to the lifting date of the suspension would be required.
The proposed rule would add a new paragraph (e) to state that BLM-
directed suspensions may exceed 1 year.
The proposed rule would add a new paragraph (f) to state that lease
suspensions would lift when they are no longer justified, when lifting
the suspension is in the public interest of the lessor, or as stated in
the approval
[[Page 47596]]
letter. The BLM requests comments on the best approach for making
determinations on lease suspensions that would reduce the cost to the
American public and encourage diligent development of leased lands. In
June 2018, the GAO issued a final report entitled, ``BLM Could Improve
Oversight of Lease Suspensions with Better Data and Monitoring
Procedures'' (GAO-18-411). In summary, oil and gas leases on Federal
lands generate billions of dollars in rents and royalty payments each
year, but these revenues decline if leases are suspended (i.e., the
lease term is placed on hold). In response to GAO recommendations, the
BLM issued policy guidance requiring the BLM state offices to regularly
review suspended leases and monitor lease suspensions to ensure that
lease suspensions in effect are warranted.\17\ The BLM believes the
proposed additions and updates are warranted to ensure lease
suspensions are justified and tied to an end date.
---------------------------------------------------------------------------
\17\ PIM 2019-007, Monitoring and Review of Lease Suspensions.
https://www.blm.gov/policy/pim-2019-007.
---------------------------------------------------------------------------
23. Section-by-Section Discussion for Changes to 43 CFR Subpart 3171
The proposed rule would not make any revisions to the numbering or
section headings in the existing 43 CFR subpart 3171.6 regulations.
Section 3171.6 Components of a Complete APD Package
The proposed rule would update the existing paragraph (b)(1)(i) to
replace the phrase ``referenced to the National Spatial Reference
System, North American Datum 1983 or latest edition'' with the phrase
``generated by an electronic navigation system, and document the datum
referenced to generate these coordinates.'' The BLM is proposing this
change to modernize the existing language that dates to 2007 and avoid
the need to incorporate by reference the National Spatial Reference
System, North American Datum 1983.
Section 3171.14 Valid Period of Approved APD
The proposed rule would not make any revisions to the numbering or
section headings in the existing subpart 43 CFR 3171.14 regulations and
proposes to adjust the valid period of time for approved APDs and
address instances when an operator does not drill to total depth.
The BLM reviewed the number of APD extensions granted in the past
and estimates that operators request extensions on approximately 33
percent or one-third of the APDs approved. The BLM approved 4,859 APDs
in FY 2021 and expects to receive approximately 1,600 APD extension
requests in FY 2023. This would result in an estimated 3,800 hours of
BLM staff time and $136,000 annually to process APD extension requests,
based upon an average processing time of 2.4 hours and processing cost
of $85 per APD extension application. Therefore, the BLM proposes
adjusting the valid period of time for approved APDs to reduce the cost
to the American public and encourage diligent development of leased
lands.
To find the correct approach, the BLM reviewed the timeframe for
operators to drill an approved APD based on well spuds from calendar
year 2015 through calendar year 2021. On average, an operator spuds a
Federal well 0.78 years after APD approval. Based on the data reviewed,
74 percent of the wells were spud in the first year after APD approval,
15 percent of the wells were spud in the second year after APD
approval, 6 percent of the wells were spud in the third year after APD
approval, and 5 percent of the wells were spud in fourth year after APD
approval. Therefore, because APD approvals are ordinarily valid for 2
years, only 11 percent of the wells spud required an APD extension
approval from the BLM.
The BLM also reviewed the valid period for State permits to drill
based upon State regulations or conditions tied to the permits. The
State permits are valid for different times depending on the state;
however, the time frame ranges from 6 months to 2 years with some
states granting extensions and some states requiring the operator to
resubmit the APD for a new permit if the well is not drilled. The BLM
summarizes the State's permit to drill terms in the following table:
------------------------------------------------------------------------
Term for State
State permit to drill Reference
------------------------------------------------------------------------
California.................. 1-year permit with Chapter 4.
an optional 1-year Subchapter 1.
extension upon Article 3. Sec.
application of the 1722(d).
operator. Regulations here.
Colorado.................... 3-year permit with Permitting Process
no extensions.. Regulations: 311.a.
& b. Regulations
here.
Louisiana................... 6-month or 1-year Title 30. RS 30:28.
permit. Must re- section 28(B).
apply for the APD Regulations here.
after it expires.
Montana..................... 6-month permit. Must 36.22.604 Permit
re-apply for the Issuance--Expiratio
APD after the 6- n--Extensions.
months. Regulations here.
New Mexico.................. 2-year permit with Based on conditions
an optional 1-year of approval tied to
extension upon the permit, found
application by the here. NM
operator on C-103. regulations do not
specify permit
validity.
North Dakota................ 1-year permit with Found on ND DMR
the ability to website here.
extend the APD with
a $100 filing fee.
Oklahoma.................... 18-month permit with Okla. Admin. Code
an optional 6-month Sec. 165:10-3-
extension without 1(j). Regulations
fee. Only one here.
extension may be
granted.
Texas....................... 2-year permit....... Title 16. Part 1.
Chapter 3. section
3.5(g). Regulations
here.
Utah........................ 1-year permit....... R649-3-4. 6.
Regulations here.
Wyoming..................... 2-year permit with WY OGCC Chapter 3.
the ability to section 8(h).
resubmit the APD Regulations here.
with an extension
filing fee for an
additional 2 years.
------------------------------------------------------------------------
Therefore, the BLM is considering changes to this section and is
requesting comments on the best approach to adjust APD extensions that
would reduce the cost to the American public and encourage diligent
development of leased lands. The BLM is considering two options. The
first option would involve removing the option to extend APDs and
changing the APD term from 2 years to 3 years. The second option would
retain the 2-year APD term with
[[Page 47597]]
a potential for a 1-year extension. The BLM would require a filing fee
based upon the required review in Instruction Memorandum 2023-011,
Approved Application for Permit to Drill Extensions, and incorporate
this policy for APD extensions into the regulations. Either option
would continue to allow operators to spud 95 percent of the wells
approved in the initial APD based upon the current time between APD
approval and well spud. If the operator does not drill the APD in the
time provided, then the operator would need to apply for a new APD.
At this time, the BLM is proposing the first option to change the
APD term from 2 years to 3 years with no extensions to reduce the
administrative burden. This would reduce the cost for both the American
public and the operators by eliminating the need for operators to file
and BLM to review applications for APD extensions. The current proposal
would update the existing paragraph (a) to state that an APD is valid
for 3 years. The BLM proposes to remove the sentence describing the 2-
year extension.
The BLM is proposing to add two new paragraphs to this section to
address the many partially drilled and uncompleted wells remaining on
Federal lands and to require operators to comply with the approved APD
prior to the permit's expiration date. Under the BLM's current
regulations, operators can spud wells near the APD's expiration date by
setting conductor or surface casing. The operators could then extend
past the APD's primary term and delay reclamation of the disturbed land
by arguing that it would return and drill to total depth in the future.
The BLM is proposing to add paragraphs (b) and (c) to remove the
loophole and encourage operators to pursue diligent development of
leased lands.
The proposed rule would add a new paragraph (b) to state that the
approved APD expires on the date as written unless the operator has:
(1) drilled the well to the approximate total depth in the approved
APD; (2) is drilling the well with a rig capable of drilling the well
to total depth; or (3) submits a plan, approved by the BLM, for
continuously drilling the well to reach the proposed total depth in the
approved APD. If the APD expiration date passes without satisfying one
of these three requirements, the operator would need to submit a new
APD to drill or continue drilling the well under the expired APD.
The proposed rule adds a new paragraph (c) to address outstanding
surface disturbance or wellbores upon the APD's expiration. The new
section states that upon expiration of the approved APD, if the
operator created surface disturbance or began drilling the well under
the approved APD, the operator or lessee must comply with plugging,
abandonment, and reclamation requirements. The BLM proposes to add this
section to ensure operators will promptly resolve any surface
disturbance or wellbores upon expiration of the APD.
24. Section-by-Section Discussion for Changes to 43 CFR Subpart 3186
The proposed rule would remove the existing Sec. 3186.2
regulations in their entirety, consistent with the changes in 43 CFR
3104.4 to remove the unit operator's bond.
VI. Overview of Modifications
The following is an overview table of the proposed significant
modifications to parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160,
3171, and 3180:
43 CFR Subpart 3000--Minerals Management: General
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3000.0-5-- 43 CFR 3000.5-- No significant
Definitions.. Definitions. change.
43 CFR 3000.1-- 43 CFR 3000.10-- No significant
Nondiscrimination. Nondiscrimination. change.
43 CFR 3000.2--False 43 CFR 3000.20-- No significant
statements. False statements. change.
43 CFR 3000.3--Unlawful 43 CFR 3000.30-- No significant
interests. Unlawful interests. change.
43 CFR 3000.4--Appeals...... 43 CFR 3000.40-- No significant
Appeals. change.
43 CFR 3000.5--Limitations 43 CFR 3000.50-- No significant
on time to institute suit Limitations on time change.
to contest a decision of to institute suit
the Secretary. to challenge a
decision of the
Secretary.
43 CFR 3000.6--Filing of 43 CFR 3000.60-- No significant
documents. Filing of documents. change.
43 CFR 3000.7--Multiple 43 CFR 3000.70 No significant
development. Multiple change.
development.
43 CFR 3000.8--Management of 43 CFR 3000.80-- No significant
Federal minerals from Management of change.
reserved mineral estates. Federal minerals
from reserved
mineral estates.
43 CFR 3000.9--Enforcement.. 43 CFR 3000.90-- No significant
Enforcement actions change.
under 30 U.S.C. 195.
43 CFR 3000.10--What do I 43 CFR 3000.100-- No significant
need to know about fees in Fees in general. change.
general?
43 CFR 3000.11--When and how 43 CFR 3000.110-- No significant
does BLM charge me Processing fees on change.
processing fees on a case- a case-by-case
by-case basis? basis.
43 CFR 3000.12--What is the 43 CFR 3000.120--Fee The proposed rule
fee schedule for fixed schedule for fixed would add a new fee
fees? fees. for EOIs, as
required by the
IRA;
Would propose a new
fixed filing fees
for various oil and
gas applications;
and
Would propose an
update to existing
oil and gas fixed
filing fees.
New......................... 43 CFR 3000.130-- The proposed rule
Fiscal terms of new would add a new
leases. section covering
the financial terms
of new leases
(including rentals
and minimum bonus
bids).
------------------------------------------------------------------------
[[Page 47598]]
43 CFR Subpart 3100--Oil and Gas Leasing
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3100.0-3--Authority.. 43 CFR 3100.3-- The proposed rule
Authority. would add or remove
legal references
for lands
identified as
eligible for
leasing; and
Would move wildlife
refuge lands, as
well as lands
patented under the
Recreation and
Public Purposes
Act, formerly found
under subpart 3101,
to this part's
authority section;
43 CFR 3100.0-5--Definitions 43 CFR 3100.5-- The proposed rule
Definitions. would alphabetize
and add new
definitions for
``competitive lease
sale,''
``exception,''
``modification,''
``oil and gas
agreements,''
``qualified
bidder,''
``qualified
lessee,''
``responsible
bidder,''
``responsible
lessee,'' and
``waiver.''
43 CFR 3100.0-9--Information 43 CFR 3100.9-- The proposed rule
collection. Information would remove the
collection. outdated Paperwork
Reduction Act
Information
Collection (IC)
Control Numbers and
updates the IC
section to include
a table summarizing
the current OMB-
approved Control
Numbers for oil and
gas leasing; and
would add a new
section to allow
the BLM to accept
electronic
signatures and
submission of
documents.
43 CFR 3100.1--Helium....... 43 CFR 3100.10-- No significant
Helium. change.
43 CFR 3100.2--Drainage..... Drainage............ No significant
change.
43 CFR 3100.2-1-- 43 CFR 3100.21-- No significant
Compensation for drainage. Compensation for change.
drainage.
43 CFR 3100.2-2--Drilling 43 CFR 3100.22-- No significant
and production or payment Drilling and change.
of compensatory royalty. production or
payment of
compensatory
royalty.
43 CFR 3100.3--Options...... Options............. No significant
change.
43 CFR 3100.3-1-- 43 CFR 3100.31-- No significant
Enforceability. Enforceability. change.
43 CFR 3100.3-2--Effect of 43 CFR 3100.32-- No significant
option on acreage. Effect of option on change.
acreage.
43 CFR 3100.3-3--Option 43 CFR 3100.33-- No significant
statements. Option statements. change.
43 CFR 3100.4--Public 43 CFR 3100.40-- No significant
availability of information. Public availability change.
of information.
------------------------------------------------------------------------
43 CFR Subpart 3101--Issuance of Leases
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3101.1--Lease terms Lease terms and No significant
and conditions. conditions. change.
43 CFR 3101.1-1--Lease form. 43 CFR 3101.11-- No significant
Lease form. change.
43 CFR 3101.1-2--Surface use 43 CFR 3101.12-- No significant
rights. Surface use rights. change.
43 CFR 3101.1-3-- 43 CFR 3101.13-- No significant
Stipulations and Stipulations and change.
information notices. information notices.
43 CFR 3101.1-4-- 43 CFR 3101.14-- The proposed rule
Modification or waiver of Modification, would update the
lease terms and waiver, or provisions on
stipulations. exception. modification or
waiver of lease
terms and
stipulations.
43 CFR 3101.2--Acreage Acreage limitations. No significant
limitations. change.
43 CFR 3101.2-1--Public 43 CFR 3101.21-- No significant
domain lands. Public domain lands. change.
43 CFR 3101.2-2--Acquired 43 CFR 3101.22-- No significant
lands. Acquired lands. change.
43 CFR 3101.2-3--Excepted 43 CFR 3101.23-- No significant
acreage. Excepted acreage. change.
43 CFR 3101.2-4--Excess 43 CFR 3101.24-- No significant
acreage. Excess acreage. change.
43 CFR 3101.2-5--Computation 43 CFR 3101.25-- No significant
Computation. change.
43 CFR 3101.2-6 Showing Removed............. The proposed rule
required. would remove this
section and other
portions of the
regulations related
to qualification
statements declared
out of date (see 47
FR 8544 (Feb. 26,
1982)).
43 CFR 3101.3--Leases within 43 CFR 3101.30-- No significant
unit areas. Leases within unit change.
areas, joinder
evidence required.
43 CFR 3101.3-1--Joinder Removed............. The proposed rule
evidence required. would remove this
title since the
next section would
be removed.
43 CFR 3101.3-2--Separate Removed............. The proposed rule
leases to issue. would remove this
section, as well as
references to the
nomination process
based on proposed
changes to part
3120.
43 CFR 3101.4--Lands covered Removed............. The proposed rule
by application to close would remove this
lands to mineral leasing. section, as well as
references to the
nomination process
based on proposed
changes to part
3120.
[[Page 47599]]
New......................... 43 CFR 3101.40-- The proposed rule
Terminated leases. would move 43 CFR
3108.2-2(d) and 43
CFR 3108.2-3(c) on
issuing leases for
lands that were
previously covered
by a terminated
lease to this
section on lease
issuance.
43 CFR 3101.5--National Removed............. The proposed rule
Wildlife Refuge System would move this
lands. part to 43 CFR
3100, which is in
the Authority
section.
43 CFR 3101.5-1--Wildlife Removed............. The proposed rule
refuge lands. would move this
section to 43 CFR
3100.0-3(a)(2)(xii)
and 3100.0-
3(b)(2)(xiv), which
are in the
Authority section.
43 CFR 3101.5-2-- Removed............. The proposed rule
Coordination lands. would move this
section to 43 CFR
3100.3, which is in
the Authority
section.
43 CFR 3101.5-3--Alaska Removed............. The proposed rule
wildlife areas. would move this
section to 43 CFR
3100.3, which is in
the Authority
section.
43 CFR 3101.5-4-- Removed............. The proposed rule
Stipulations. would consolidate
this section with
43 CFR 3101.13.
43 CFR 3101.6--Recreation Removed............. The proposed rule
and public purposes lands. would move this
section to 43 CFR
3100.3, which is in
the Authority
section.
43 CFR 3101.7--Federal lands Federal lands No significant
administered by an agency administered by an change.
outside of the Department agency outside of
of the Interior. the Department of
the Interior.
43 CFR 3101.7-1--General 43 CFR 3101.51 The proposed rule
requirements. General would consolidate
requirements. the separate
paragraphs under
this section into
one paragraph.
43 CFR 3101.7-2--Action by 43 CFR 3101.52-- No significant
the Bureau of Land Action by the change.
Management. Bureau of Land
Management.
43 CFR 3101.7-3--Appeals.... 43 CFR 3101.53-- No significant
Appeals. change.
43 CFR 3101.8--State's or 43 CFR 3101.60-- No significant
charitable organization's State's or change.
ownership of surface charitable
overlying federally owned organization's
minerals. ownership of
surface overlying
federally owned
minerals.
------------------------------------------------------------------------
43 CFR Subpart 3102--Qualifications of Lessees
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3102.1 Who may hold 43 CFR 3102.10 Who No significant
leases. may hold leases. change.
43 CFR 3102.2 Aliens........ 43 CFR 3102.20 Non- The proposed rule
U.S. Citizens. would change the
terminology for
referring to
citizens of other
countries; and
Would add language
from the Treasury
Department
regulations at 31
CFR part 802, where
the Committee on
Foreign Investment
in the United
States (CFIUS) is
authorized to
review covered real
estate transactions
and to mitigate any
risk to the
national security
of the United
States that arises
as a result of such
transactions.
43 CFR 3102.3 Minors........ 43 CFR 3102.30 No significant
Minors. change.
43 CFR 3102.4 Signature..... 43 CFR 3102.40 The proposed rule
Signature. would update this
section to give the
BLM the ability to
accept documents
with electronic
signatures;
Would remove the
requirement for
multiple copies of
assignments or
transfers to be
submitted to the
BLM; and
Would remove the
reference to
qualification
numbers, which were
declared obsolete
(see 47 FR 8544
(Feb. 26, 1982)).
43 CFR 3102.5 Compliance, Compliance, No significant
certification of compliance certification of change.
and evidence. compliance and
evidence.
[[Page 47600]]
43 CFR 3102.5-1 Compliance.. 43 CFR 3102.51 The proposed rule
Compliance. would update the
current section to
refer to
reclamation
obligations to be
compliant with
requirements of
section 17(g) of
the MLA start at
the Notice of
Proposed Civil
Penalties instead
of the imposition
of a civil penalty;
and Would add a
qualification
requirement to
ensure compliance
with 2 CFR parts
180 and 1400, based
on which the BLM
would reject any
lease issuance,
assignment, or
transfer to any
entity excluded
from doing business
with the Federal
government through
suspension and
debarment.
43 CFR 3102.5-2 43 CFR 3102.52 No significant
Certification of compliance. Certification of change.
compliance.
43 CFR 3102.5-3 Evidence of 43 CFR 3102.53 No significant
compliance. Evidence of change.
compliance.
------------------------------------------------------------------------
43 CFR Subpart 3103--Fees, Rentals and Royalty
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3103.1--Payments..... Payments............ No significant
change.
43 CFR 3103.1-1--Form of 43 CFR 3103.11--Form No significant
remittance. of remittance. change.
43 CFR 3103.1-2--Where 43 CFR 3103.12-- No significant
submitted. Where remittance is change.
submitted.
43 CFR 3103.2--Rentals...... Rentals............. No significant
change.
43 CFR 3103.2-1--Rental 43 CFR 3103.21-- No significant
requirements. Rental requirements. change.
43 CFR 3103.2-2--Annual 43 CFR 3103.22-- The proposed rule
rental payments. Annual rental would remove
payments. outdated phase-in
language from past
rulemakings; and
Would update the
following financial
terms of new leases
as required by the
IRA:
Rental
amount for
competitive leases
is to be $3 per
acre, or fraction
thereof, for the
first 2 years, then
$5 per acre, or
fraction thereof,
for lease years 3
through 8, and then
$15 per acre, or
fraction thereof,
thereafter;
For
Class II
reinstated
competitive
leases, the rent
increases to $20
per acre;
Royalty
percentage is
proposed to be not
less than 16.67
percent for
competitive leases;
and
For
reinstated
competitive leases,
the royalty
increases to not
less than 20
percent, plus 2
percentage points
for each succeeding
reinstatement.
43 CFR 3103.3--Royalties.... Royalties........... No significant
change.
43 CFR 3103.3-1--Royalty on 43 CFR 3103.31-- No significant
production. Royalty on change.
production.
43 CFR 3103.3-2--Minimum 43 CFR 3103.32-- The proposed rule
royalties. Minimum royalties. would clarify the
intent of minimum
royalty to be
reduced by the
actual royalty paid
throughout the
year.
43 CFR 3103.4--Production Production No significant
incentives. incentives. change.
43 CFR 3103.4-1--Royalty 43 CFR 3103.41-- No significant
reductions. Royalty reductions. change.
43 CFR 3103.4-2--Stripper Removed............. The proposed rule
well royalty reductions. would remove the
regulations
governing stripper
well royalty
reductions.
43 CFR 3103.4-3--Heavy oil Removed............. The proposed rule
royalty reductions. would remove the
regulations
governing heavy oil
royalty reductions.
43 CFR 3103.4-4--Suspension 43 CFR 3103.42 No significant
of operations and/or Suspension of change.
production. operations and/or
production.
------------------------------------------------------------------------
43 CFR Subpart 3104--Bonds
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3104.1--Bond 43 CFR 3104.10--Bond The proposed rule
obligations. obligations. would remove
Certificates of
Deposits (CD) and
Letters of Credit
(LOC) as forms of
security for
personal bonds.
[[Page 47601]]
43 CFR 3104.2--Lease bond... 43 CFR 3104.20-- The proposed rule
Lease bond. would increase the
minimum bonding
amounts to $150,000
per lease bond.
43 CFR 3104.3--Statewide and 43 CFR 3104.30-- The proposed rule
nationwide bonds. Statewide bonds. would increase the
minimum bonding
amounts to $500,000
per statewide bond;
and would remove
nationwide bonds.
43 CFR 3104.4--Unit 43 CFR 3104.40-- The proposed rule
operator's bond. Surface owner would remove unit
protection bond. operator's bonds.
43 CFR 3104.5--Increased 43 CFR 3104.50-- No significant
amount of bonds. Increased amount of change.
bonds.
43 CFR 3104.6--Where filed 43 CFR 3104.60-- No significant
and number of copies. Where filed and change.
number of copies.
43 CFR 3104.7--Default...... 43 CFR 3104.70-- The proposed rule
Default. would update the
language to state
reference that
noncompliance is in
violation of
section 17 of the
MLA; and would add
language stating
that being in
noncompliance would
result in not being
able to acquire new
lease interests, as
well as referring
the entity for a
determination as to
whether the entity
should be suspended
or debarred from
doing business with
the Federal
government in
accordance with 2
CFR part 1400.
43 CFR 3104.8--Termination 43 CFR 3104.80-- No significant
of period of liability. Termination of change.
period of liability.
New......................... 43 CFR 3104.90-- The proposed rule
Bonds held prior to would add a phase-
[EFFECTIVE DATE OF in period for the
FINAL RULE]. new minimum bond
amounts.
------------------------------------------------------------------------
43 CFR Subpart 3105--Cooperative Conservation Provisions
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3105.1--Cooperative 43 CFR 3105.10-- The proposed rule
or unit agreement. Cooperative or unit would add a
agreement. reference to the
new fixed filing
fees proposed in 43
CFR 3000.120.
43 CFR 3105.2-- Communitization The proposed rule
Communitization or drilling agreements. would remove
agreements. references to
drilling agreements
that the BLM does
not create or
manage.
43 CFR 3105.2-1--Where filed 43 CFR 3105.21-- The proposed rule
Where filed. would remove the
requirement for
multiple copies of
applications to be
filed with the BLM.
43 CFR 3105.2-2--Purpose.... 43 CFR 3105.22-- No significant
Purpose. change.
43 CFR 3105.2-3-- 43 CFR 3105.23-- The proposed rule
Requirements. Requirements. would add
conditions and
requirements for
Communitization
Agreements (self-
certification
statement, maps,
exhibits showing
tracts and
ownership).
New......................... 43 CFR 3105.24-- The proposed rule
Communitization would add the
agreement terms. primary term of
communitization
agreements.
43 CFR 3105.3--Operating, Operating, drilling No significant
drilling or development or development change.
contracts. contracts.
43 CFR 3105.3-1--Where filed 43 CFR 3105.31-- The proposed rule
Where filed. would remove the
requirement for
multiple copies of
applications to be
filed with the BLM.
43 CFR 3105.3-2--Purpose.... 43 CFR 3105.32-- No significant
Purpose. change.
43 CFR 3105.3-3-- 43 CFR 3105.33-- No significant
Requirements. Requirements. change.
43 CFR 3105.4--Combination Removed............. The proposed rule
for joint operations or for would remove this
transportation of oil. section as it is
not used by the BLM
or operators.
43 CFR 3105.4-1--Where filed Removed............. The proposed rule
would remove this
section as it is
not used by the BLM
or operators.
43 CFR 3105.4-2--Purpose.... Removed............. The proposed rule
would remove this
section as it is
not used by the BLM
or operators.
43 CFR 3105.4-3-- Removed............. The proposed rule
Requirements. would remove this
section as it is
not used by the BLM
or operators.
43 CFR 3105.4-4--Rights-of- Removed............. The proposed rule
way. would remove this
section as it is
covered under 43
CFR part 2880.
43 CFR 3105.5--Subsurface Subsurface storage No significant
storage of oil and gas. of oil and gas. change.
[[Page 47602]]
43 CFR 3105.5-1--Where filed 3105.41--Where filed The proposed rule
would add a
reference to the
new fixed filing
fees proposed in 43
CFR 3000.120; and
would remove the
requirement for
multiple copies of
applications to be
filed with the BLM.
43 CFR 3105.5-2--Purpose.... 43 CFR 3105.42-- No significant
Purpose. change.
43 CFR 3105.5-3-- 43 CFR 3105.43-- No significant
Requirements. Requirements. change.
43 CFR 3105.5-4--Extension 43 CFR 3105.44-- No significant
of lease term. Extension of lease change.
term.
43 CFR 3105.6--Consolidation 43 CFR 3105.50-- The proposed rule
of leases. Consolidation of would split this
leases. section into
multiple paragraphs
to increase
readability.
------------------------------------------------------------------------
43 CFR Subpart 3106--Transfers by Assignment, Sublease, or Otherwise
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3106.1--Transfers, 43 CFR 3106.10-- The proposed rule
general. Transfers, general. would clarify the
requirements for
transfers of
operating rights.
The proposed rule
would state that
operating rights
may only be divided
with respect to
legal subdivision,
depth ranges, and
formations, within
the boundaries of a
Federal lease.
43 CFR 3106.2-- 43 CFR 3106.20-- No significant
Qualifications of Qualifications of change.
transferees. assignees and
transferees.
43 CFR 3106.3--Fees......... 43 CFR 3106.30--Fees No significant
change.
43 CFR 3106.4--Forms........ Forms............... No significant
change.
43 CFR 3106.4-1--Transfers 43 CFR 3106.41-- The proposed rule
of record title and of Transfers of record would change the
operating rights title and of triplicate filing
(subleases). operating rights requirement to a
(subleases). duplicate filing
requirement.
43 CFR 3106.4-2--Transfers 43 CFR 3106.42-- The proposed rule
of other interests, Transfers of other would require
including royalty interests interests, transfers of
and production payments. including royalty overriding royalty
interests and to be submitted on
production payments. a BLM form.
43 CFR 3106.4-3--Mass 43 CFR 3106.43--Mass The proposed rule
transfers. transfers. would change the
triplicate filing
requirement to a
duplicate filing
requirement and
would waive the
need for the
duplicate when the
filing is submitted
electronically.
43 CFR 3106.5--Description 43 CFR 3106.50-- No significant
of lands. Description of change.
lands.
43 CFR 3106.6--Bonds........ 43 CFR 3106.60--Bond No significant
Requirements. change.
43 CFR 3106.6-1--Lease bond. Removed............. The proposed rule
would update the
bond section
related to a new
interest owner's
responsibility for
holding a bond.
43 CFR 3106.6-2--Statewide/ Removed............. No significant
nationwide bond. change.
43 CFR 3106.7--Approval of Approval of transfer No significant
transfer. or assignment. change.
43 CFR 3106.7-1--Failure to 43 CFR 3106.71-- No significant
qualify. Failure to qualify. change.
43 CFR 3106.7-2--If I 43 CFR 3106.72-- No significant
transfer my lease, what is Continuing change.
my continuing obligation? obligation of an
assignor or
transferor.
43 CFR 3106.7-3--Lease 43 CFR 3106.73-- No significant
account status. Lease account change.
status.
43 CFR 3106.7-4--Effective 43 CFR 3106.74-- No significant
date of transfer. Effective date of change.
transfer.
43 CFR 3106.7-5--Effect of 43 CFR 3106.75-- No significant
transfer. Effect of transfer. change.
43 CFR 3106.7-6--If I 43 CFR 3106.76-- No significant
acquire a lease by an Obligations of change.
assignment or transfer, assignee or
what obligations do I agree transferee.
to assume?
43 CFR 3106.8--Other types Other types of No significant
of transfers. transfers. change.
43 CFR 3106.8-1--Heirs and 43 CFR 3106.81-- No significant
devisees. Heirs and devisees. change.
43 CFR 3106.8-2--Change of 43 CFR 3106.82-- No significant
name. Change of name. change.
43 CFR 3106.8-3--Corporate 43 CFR 3106.83-- The proposed rule
merger. Corporate mergers would include the
and dissolution of new filing fee and
corporations, requirements for
partnerships, and other types of
trust. transfers that the
BLM accepts (for
example,
dissolutions of
corporations).
New......................... 43 CFR 3106.84-- The proposed rule
Sheriff's sale/deed. would include the
new filing fee and
requirements for
other types of
transfers that the
BLM accepts (for
example, Sheriff's
sale/deeds).
------------------------------------------------------------------------
[[Page 47603]]
43 CFR Subpart 3107--Continuation and Extension
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3107.1--Extension by 43 CFR 3107.10-- The proposed rule
drilling. Extension by would add language
drilling. pertaining to lease
extensions to
address
circumstances where
directional or
horizontal wells
are drilled from an
off-lease location
with the intent to
produce from the
leased area.
43 CFR 3107.2--Production... Production.......... No significant
change.
43 CFR 3107.2-1-- 43 CFR 3107.21-- No significant
Continuation by production. Continuation by change.
production.
43 CFR 3107.2-2--Cessation 43 CFR 3107.22-- The proposed rule
of production. Cessation of would rephrase the
production. provision regarding
cessation of
production to
better reflect
section 17(i) of
the MLA.
43 CFR 3107.2-3--Leases 43 CFR 3107.23-- No significant
capable of production. Leases capable of change.
production.
43 CFR 3107.3--Extension for Extension for terms No significant
terms of cooperative or of agreements. change.
unit plan.
43 CFR 3107.3-1--Leases 43 CFR 3107.31-- No significant
committed to plan. Leases committed to change.
an agreement.
43 CFR 3107.3-2--Segregation 43 CFR 3107.32-- The proposed rule
of leases committed in part. Segregation of would revise the
leases committed in section for the
part. segregation of
leases committed in
part to units to
state this would
occur only after
the public interest
requirement has
been met; and would
clarify when leases
may be extended by
production from
associated leases.
43 CFR 3107.3-3--20-year Removed............. The proposed rule
lease or any renewal would remove this
thereof. section and all
references to
renewal leases as
this was removed by
the Act of November
15, 1990.
43 CFR 3107.4--Extension by 43 CFR 3107.40-- No significant
elimination. Extension by change.
elimination.
43 CFR 3107.5--Extension of Extension of leases No significant
leases segregated by segregated by change.
assignment. assignment.
43 CFR 3107.5-1--Extension 43 CFR 3107.51-- No significant
after discovery on other Extension after change.
segregated portions. discovery on other
segregated portions.
43 CFR 3107.5-2--Undeveloped 43 CFR 3107.52-- No significant
parts of leases in their Undeveloped parts change.
extended term. of leases in their
extended term.
43 CFR 3107.5-3--Undeveloped 43 CFR 3107.53-- No significant
parts of producing leases. Undeveloped parts change.
of producing leases.
43 CFR 3107.6--Extension of 43 CFR 3107.60-- No significant
reinstated leases. Extension of change.
reinstated leases.
43 CFR 3107.7--Exchange Removed............. The proposed rule
leases: 20-year term. would remove this
section and all
references to
exchange leases as
these have either
expired or are held
by production.
43 CFR 3107.8--Renewal Removed............. The proposed rule
leases. would remove this
section and all
references to
renewal leases as
this was removed by
the Act of November
15, 1990.
43 CFR 3107.8-1-- Removed............. The proposed rule
Requirements. would remove this
section and all
references to
renewal leases as
this was removed by
the Act of November
15, 1990.
43 CFR 3107.8-2--Application Removed............. The proposed rule
would remove this
section and all
references to
renewal leases as
this was removed by
the Act of November
15, 1990.
43 CFR 3107.8-3--Approval... Removed............. The proposed rule
would remove this
section and all
references to
renewal leases as
this was removed by
the Act of November
15, 1990.
43 CFR 3107.9--Other types.. Other types......... No significant
change.
43 CFR 3107.9-1--Payment of 43 CFR 3107.71-- No significant
compensatory royalty. Payment of change.
compensatory
royalty.
43 CFR 3107.9-2--Subsurface 43 CFR 3107.72-- No significant
storage of oil and gas. Subsurface storage change.
of oil and gas.
------------------------------------------------------------------------
43 CFR Subpart 3108--Relinquishment, Termination, Cancellation
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3108.1--As a lessee, 43 CFR 3108.10-- No significant
may I relinquish my lease?. Relinquishment. change.
[[Page 47604]]
43 CFR 3108.2--Termination Termination by No significant
by operation of law and operation of law change.
reinstatement. and reinstatement.
43 CFR 3108.2-1--Automatic 43 CFR 3108.21-- The proposed rule
termination. Automatic would remove the
termination. reference to ``a
bill rendered by
the designated
Service office''
from the section on
automatic
terminations, since
the Office of
Natural Resources
Revenue's (ONRR) no
longer sends
courtesy notices;
and would specify
that the automatic
termination
provision does not
apply when rental
becomes due on a
date other than the
anniversary date,
unless the lessee
fails to pay the
rental within the
period prescribed
by the BLM notice
to reflect
developments in
case law.
43 CFR 3108.2-2-- 43 CFR 3108.22-- The proposed rule
Reinstatement at existing Reinstatement at would revise the
rental and royalty rates: existing rental and explanation of
Class I reinstatements. royalty rates: ``reasonable
Class I diligence'' to
reinstatements. reference payment
to the ONRR's
online rental
payment system.
43 CFR 3108.2-3-- 43 CFR 3108.23-- The proposed rule
Reinstatement at higher Reinstatement at would remove the
rental and royalty rates: higher rental and grounds for a Class
Class II reinstatements. royalty rates: II reinstatement to
Class II apply to all
reinstatements. noncompetitive
leases; would
remove references
to reinstating
leases that
terminated before
2005; would change
outdated references
to the House
Committee on
Interior and
Insular Affairs to
the House Committee
on Natural
Resources; and
would remove the
reference to
royalty reductions,
which are already
covered under 43
CFR subpart 3103.
43 CFR 3108.2-4--Conversion Removed............. The proposed rule
of unpatented oil placer would remove this
mining claims: Class III section as the IRA
reinstatements. rescinded the
authority for Class
III reinstatements.
43 CFR 3108.3--Cancellation. 43 CFR 3108.30-- No significant
Cancellation. change.
43 CFR 3108.4--Bona fide 43 CFR 3108.40--Bona No significant
purchasers. fide purchasers. change.
43 CFR 3108.5--Waiver or 43 CFR 3108.50 No significant
suspension of lease rights. Waiver or change.
suspension of lease
rights.
------------------------------------------------------------------------
43 CFR Subpart 3109--Leasing Under Special Acts
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3109.1--Rights-of-way Rights-of-way....... No significant
change.
43 CFR 3109.1-1--Generally.. 43 CFR 3109.11-- No significant
Generally. change.
43 CFR 3109.1-2--Application 43 CFR 3109.12-- The proposed rule
Application. would add a
requirement for
applicants to
provide a map to
process rights-of-
way (ROW) lease
applications.
43 CFR 3109.1-3--Notice..... 43 CFR 3109.13-- No significant
Notice. change.
43 CFR 3109.1-4--Award of 43 CFR 3109.14-- No significant
lease or compensatory Award of lease or change.
royalty agreement. compensatory
royalty agreement.
43 CFR 3109.1-5-- 43 CFR 3109.15-- The proposed rule
Compensatory royalty Compensatory would add a list of
agreement or lease. royalty agreement references to the
or lease. part 3100
regulations that
apply to ROW leases
covered by subpart
3109 for clarity.
43 CFR 3109.2--Units of the 43 CFR 3109.20-- No significant
National Park System. Units of the change.
National Park
System.
43 CFR 3109.2-1--Authority Removed............. No significant
to lease. [Reserved]. change.
43 CFR 3109.2-2--Area Removed............. No significant
subject to lease. change.
[Reserved].
43 CFR 3109.3--Shasta and 43 CFR 3109.30-- No significant
Trinity Units of the Shasta and Trinity change.
Whiskeytown-Shasta-Trinity Units of the
National Recreation Area. Whiskeytown-Shasta-
Trinity National
Recreation Area.
------------------------------------------------------------------------
43 CFR Part 3110--Noncompetitive Leases
Removes this part in its entirety as required by the IRA.
[[Page 47605]]
43 CFR Subpart 3120--Competitive Leases
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3120.1--General...... General............. No significant
change.
43 CFR 3120.1-1--Lands 43 CFR 3120.11-- No significant
available for competitive Lands available for change.
leasing. competitive leasing.
43 CFR 3120.1-2-- 43 CFR 3120.12-- No significant
Requirements. Requirements. change.
43 CFR 3120.1-3--Protests 43 CFR 3120.13-- The proposed rule
and appeals. Protests. would update the
language under
protests and
appeals to reflect
developments in
case law.
43 CFR 3120.2--Lease terms.. Lease terms......... No significant
change.
43 CFR 3120.2-1--Duration of 43 CFR 3120.21-- No significant
lease. Duration of lease. change.
43 CFR 3120.2-2--Dating of 43 CFR 3120.22-- No significant
leases. Dating of leases. change.
43 CFR 3120.2-3--Lease size. 43 CFR 3120.23-- No significant
Lease size. change.
43 CFR 3120.3--Nomination 43 CFR 3120.30-- The proposed rule
process. Nomination process. would update the
nomination process
to make clear that
they are
nonbinding, would
add a new filing
fee, and would
remove the
allowance for
noncompetitive
lease offers to be
submitted on
unnominated
parcels.
43 CFR 3120.3-1--General.... 43 CFR 3120.31-- No significant
General. change.
43 CFR 3120.3-2--Filing of a 43 CFR 3120.32-- No significant
nomination for competitive Filing of a change.
leasing. nomination for
competitive leasing.
43 CFR 3120.3-3--Minimum bid Removed............. The proposed rule
and rental remittance. would update this
section to make
nominations
nonbinding.
43 CFR 3120.3-4--Withdrawal Removed............. The proposed rule
of a nomination. would update this
section to make
clear that
nominations are
nonbinding.
43 CFR 3120.3-5--Parcels 43 CFR 3120.33-- No significant
receiving nominations. Parcels receiving change.
nominations.
43 CFR 3120.3-6--Parcels not Removed............. The proposed rule
receiving nominations. would update this
section to remove
the allowance for
noncompetitive
lease offers to be
submitted on
unnominated
parcels.
43 CFR 3120.3-7--Refund..... Removed............. The proposed rule
would update this
section to make
clear that
nominations are
nonbinding.
New......................... Expressions of The proposed rule
interest. would add
information on the
submission of EOIs;
and would add a new
filing fee for
EOIs, as required
by the IRA.
New......................... 43 CFR 3120.41-- The proposed rule
Process. would clarify the
BLM's existing
discretion to deny
EOIs that are not
in the public
interest.
New......................... 43 CFR 3120.42-- The proposed rule
Agency Inventory of would add a section
Leasing. providing that
periodically the
BLM will calculate
the acreage for
which EOIs have
been submitted in
the previous year
and the total
acreage offered for
lease.
43 CFR 3120.4--Notice of Notice of No significant
competitive lease sale. competitive lease change.
sale.
43 CFR 3120.4-1--General.... 43 CFR 3120.51 No significant
General. change.
43 CFR 3120.4-2--Posting of 43 CFR 3120.52-- No significant
notice. Posting timeframes. change.
43 CFR 3120.5--Competitive Competitive auction. No significant
sale. change.
43 CFR 3120.5-1--Oral or 43 CFR 3120.61-- No significant
Internet-based auction. Competitive auction. change.
43 CFR 3120.5-2--Payments 43 CFR 3120.62-- The proposed rule
required. Payments required. would increase the
minimum bonus bid
from $2 per acre to
$10 per acre, or
fraction thereof as
required by the
IRA; and would add
a new requirement
that, if a person
or entity does not
pay the minimum
monies owed the day
of the sale, the
BLM may refer that
person or entity to
the DOI's Office of
the Inspector
General,
Administrative
Remedies Division,
for appropriate
action, including
potential
suspension and
debarment.
43 CFR 3120.5-3--Award of 43 CFR 3120.63-- No significant
lease. Award of lease. change.
43 CFR 3120.6--Parcels not 43 CFR 3120.70-- No significant
bid on at auction. Parcels not bid on change.
at auction.
43 CFR 3120.7--Future Future interest..... No significant
interest. change.
43 CFR 3120.7-1--Nomination 43 CFR 3120.81-- No significant
to make lands available for Nomination or change.
competitive lease. Expression of
Interest to make
lands available for
competitive lease.
[[Page 47606]]
43 CFR 3120.7-2--Future 43 CFR 3120.82-- No significant
interest terms and Future interest change.
conditions. terms and
conditions.
43 CFR 3120.7-3-- 43 CFR 3120.83-- No significant
Compensatory royalty Compensatory change.
agreements. royalty agreements.
------------------------------------------------------------------------
43 CFR Subpart 3137--Unitization Agreements-National Petroleum Reserve-Alaska
----------------------------------------------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
----------------------------------------------------------------------------------------------------------------
43 CFR 3137.23--What must I include in my NPR- 43 CFR 3137.23--NPR-A The proposed rule would add a
A unitization application? unitization application. new filing fee for unit
applications.
43 CFR 3137.61--How do I change unit 43 CFR 3137.61--Change in unit The proposed rule would add a
operators? operators. new filing fee for successor
operators.
----------------------------------------------------------------------------------------------------------------
43 CFR Subpart 3138--Subsurface Storage Agreements in the National Petroleum Reserve-Alaska (NPR-A)
----------------------------------------------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
----------------------------------------------------------------------------------------------------------------
43 CFR 3138.11--How do I apply for a 43 CFR 3138.11--Applications for The proposed rule would add a
subsurface storage agreement? a subsurface storage agreement. new filing fee for subsurface
storage agreements.
----------------------------------------------------------------------------------------------------------------
43 CFR Subpart 3140--Conversion of Existing Oil and Gas Leases and Valid
Claims Based on Mineral Locations
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3140.0-1--Purpose.... 43 CFR 3140.1-- No significant
Purpose. change.
43 CFR 3140.0-3--Authority.. 43 CFR 3140.3-- No significant
Authority. change.
43 CFR 3140.0-5--Definitions 43 CFR 3140.5-- No significant
Definitions. change.
43 CFR 3140.1--General General provisions.. No significant
provisions. change
43 CFR 3140.1-1--Existing 43 CFR 3140.11-- The proposed rule
rights. Existing rights. would clarify that
the application
time period ended
on November 15,
1983.
43 CFR 3140.1-2--Notice of 43 CFR 3140.12-- No significant
intent to convert. Notice of intent to change.
convert.
43 CFR 3140.1-3--Exploration 43 CFR 3140.13-- No significant
plans. Exploration plans. change.
43 CFR 3140.1-4--Other 43 CFR 3140.14-- The proposed rule
provisions. Other provisions. would specify that
royalty rate
reductions for tar
sands would not
apply to oil and
gas leases and vice
versa.
43 CFR 3140.2--Applications. Applications........ No significant
change.
43 CFR 3140.2-1--Forms...... 43 CFR 3140.21-- No significant
Forms. change.
43 CFR 3140.2-2--Who may 43 CFR 3140.22--Who No significant
apply. may apply. change.
43 CFR 3140.2-3--Application 43 CFR 3140.23-- No significant
requirements. Application change.
requirements.
43 CFR 3140.3--Time Time limitations.... No significant
limitations. change.
43 CFR 3140.3-1--Conversion 43 CFR 3140.31-- No significant
applications. Conversion change.
applications.
43 CFR 3140.3-2--Action on 43 CFR 3140.32-- No significant
an application. Action on an change.
application.
43 CFR 3140.4--Conversion... Conversion.......... No significant
change.
43 CFR 3140.4-1--Approval of 43 CFR 3140.41-- No significant
plan of operations (and Approval of plan of change.
unit and operating operations (and
agreements). unit and operating
agreements).
43 CFR 3140.4-2--Issuance of 43 CFR 3140.42-- No significant
the combined hydrocarbon Issuance of the change.
lease. combined
hydrocarbon lease.
43 CFR 3140.5--Duration of 43 CFR 3140.50-- No significant
the lease. Duration of the change.
lease.
43 CFR 3140.6--Use of 43 CFR 3140.60--Use No significant
additional lands. of additional lands. change.
43 CFR 3140.7--Lands within 43 CFR 3140.70-- No significant
the National Park System. Lands within the change.
National Park
System.
------------------------------------------------------------------------
43 CFR Subpart 3141--Leasing in Special Tar Sand Areas
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3141.0-1--Purpose.... 43 CFR 3141.1-- No significant
Purpose. change.
43 CFR 3141.0-3--Authority.. 43 CFR 3141.3-- No significant
Authority. change.
43 CFR 3141.0-5--Definitions 43 CFR 3141.5-- No significant
Definitions. change.
43 CFR 3141.0-8--Other 43 CFR 3141.8--Other No significant
Applicable Regulations. Applicable change.
Regulations.
43 CFR 3141.1--General...... 43 CFR 3141.10-- No significant
General. change.
43 CFR 3141.2--Prelease Prelease exploration No significant
exploration within Special within Special Tar change.
Tar Sand Areas. Sand Areas.
[[Page 47607]]
43 CFR 3141.2-1--Geophysical 43 CFR 3141.21-- No significant
exploration. Geophysical change.
exploration.
43 CFR 3141.2-2--Exploration 43 CFR 3141.22-- No significant
licenses. Exploration change.
licenses.
43 CFR 3141.3--Land use 43 CFR 3141.30--Land The proposed rule
plans. use plans. would specify that
royalty rate
reductions for tar
sands would not
apply to oil and
gas leases and vice
versa.
43 CFR 3141.4--Consultation. Consultation........ No significant
change.
43 CFR 3141.4-1-- 43 CFR 3141.41-- No significant
Consultation with the Consultation with change.
Governor. the Governor.
43 CFR 3141.4-2-- 43 CFR 3141.42-- No significant
Consultation with others. Consultation with change.
others.
43 CFR 3141.5--Leasing Leasing procedures.. No significant
procedures. change.
43 CFR 3141.5-1--Economic 43 CFR 3141.51-- No significant
evaluation. Economic evaluation. change.
43 CFR 3141.5-2--Term of 43 CFR 3141.52--Term No significant
lease. of lease. change.
43 CFR 3141.5-3--Royalties 43 CFR 3141.53-- No significant
and rentals. Royalties and change.
rentals.
43 CFR 3141.5-4--Lease size. 43 CFR 3141.54-- No significant
Lease size. change.
43 CFR 3141.5-5--Dating of 43 CFR 3141.55-- No significant
lease. Dating of lease. change.
43 CFR 3141.6--Sale Sale procedures..... No significant
procedures. change.
43 CFR 3141.6-1--Initiation 43 CFR 3141.61-- No significant
of competitive lease Initiation of change.
offering. competitive lease
offering.
43 CFR 3141.6-2--Publication 43 CFR 3141.62-- No significant
of a notice of competitive Publication of a change.
lease offering. notice of
competitive lease
offering.
43 CFR 3141.6-3--Conduct of 43 CFR 3141.63-- No significant
sales. Conduct of sales. change.
43 CFR 3141.6-4-- 43 CFR 3141.64-- No significant
Qualifications. Qualifications. change.
43 CFR 3141.6-5--Fair market 43 CFR 3141.65--Fair The proposed rule
value for combined market value for would remove this
hydrocarbon leases. combined section as it is
hydrocarbon leases. not needed with the
changes to Sec.
3141.63.
43 CFR 3141.6-6--Rejection 43 CFR 3141.65-- No significant
of bid. Rejection of bid. change.
43 CFR 3141.6-7-- 43 CFR 3141.66-- No significant
Consideration of next Consideration of change.
highest bid. next highest bid.
43 CFR 3141.7--Award of 43 CFR 3141.70-- No significant
lease. Award of lease. change.
------------------------------------------------------------------------
43 CFR Subpart 3142--Paying Quantities/Diligent Development for Combined
Hydrocarbon and Tar Sand Leases
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3142.0-1--Purpose.... 43 CFR 3142.1-- No significant
Purpose. change.
43 CFR 3142.0-3--Authority.. 43 CFR 3142.3-- No significant
Authority. change.
43 CFR 3142.0-5--Definitions 43 CFR 3142.5-- Added definitions
Definitions. for production in
paying quantities.
43 CFR 3142.1--Diligent 43 CFR 3142.10-- No significant
development. Diligent change.
development.
43 CFR 3142.2--Minimum Minimum production No significant
production levels. levels. change.
43 CFR 3142.2-1--Minimum 43 CFR 3142.21-- No significant
production schedule. Minimum production change.
schedule.
43 CFR 3142.2-2--Advance 43 CFR 3142.22-- No significant
royalties in lieu of Advance royalties change.
production. in lieu of
production.
43 CFR 3142.3--Expiration... 43 CFR 3142.30-- No significant
Expiration. change.
------------------------------------------------------------------------
43 CFR Subpart 3151--Exploration Outside of Alaska
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3151.1--Notice of 43 CFR 3151.10-- The proposed rule
intent to conduct oil and Notice of intent to would require
gas geophysical exploration conduct oil and gas notices of intent
operations. geophysical to include the
exploration filing fee required
operations. by 43 CFR 3000.120
in order to be to
consider a Notice
of Intent to
Conduct Oil and Gas
Exploration
Operations properly
filed.
43 CFR 3151.2--Notice of 43 CFR 3151.20-- No significant
completion of operations. Notice of change.
completion of
operations.
New......................... 43 CFR 3151.30-- The proposed rule
Collection and would add a new
submission of data. requirement for the
permittee to
provide the BLM
with all data and
information
obtained in
carrying out the
exploration plan,
matching the
requirement for
geophysical
exploration permits
in Alaska.
------------------------------------------------------------------------
[[Page 47608]]
43 CFR Subpart 3160--Onshore Oil and Gas Operations: General
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3160.0-5--Definitions 43 CFR 3160.0-5-- The proposed rule
Definitions. would add
definitions for
``shut-in well''
and ``temporarily
abandoned well.''
------------------------------------------------------------------------
43 CFR Subpart 3162--Requirements for Operating Rights Owners and
Operators
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3162.3-4--Well 43 CFR 3162.3-4-- The proposed rule
abandonment. Well abandonment. would add a cap for
temporarily
abandoning a well
and new
requirements for
shut-in wells to
reduce the
liability to the
public.
------------------------------------------------------------------------
43 CFR Subpart 3165--Relief, Conflicts, and Appeals
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3165.1--Relief from 43 CFR 3165.1-- The proposed rule
operating and producing Relief from would clarify that
requirements. operating and/or the BLM would not
producing grant lease
requirements. suspensions based
solely on an APD
filed at the end of
a lease's life
cycle and would
ensures that any
suspension is
justified and tied
to an end date.
------------------------------------------------------------------------
43 CFR 3171--Approval of Operations
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3171.6--Components of 43 CFR 3171.6-- The proposed rule
a complete APD package. Components of a would avoid the
complete APD need to incorporate
package. by reference the
National Spatial
Reference System,
North American
Datum 1983.
43 CFR 3171.14--Valid Period 43 CFR 3171.14-- The proposed rule
of Approved APD. Valid Period of would change the
Approved APD. validity period for
an APD from 2 years
to 3 years and
would removes the
potential for an
extension of an
APD.
------------------------------------------------------------------------
43 CFR 3186--Model Forms
------------------------------------------------------------------------
Existing regulation Proposed regulation Substantive changes
------------------------------------------------------------------------
43 CFR 3186.2--Model Removed............. The proposed rule
Collective Bond. would remove this
section in its
entirety due to
changes made under
3104.
------------------------------------------------------------------------
VII. Procedural Matters
A. Regulatory Planning and Review (E.O. 12866, E.O. 13563)
Executive Order 12866 provides that the Office of Information and
Regulatory Affairs (OIRA) within the OMB will review all significant
rules. The OIRA has determined that this proposed rule is economically
significant.
Executive Order 13563 reaffirms the principles of Executive Order
12866 while calling for improvements in the Nation's regulatory system
to promote predictability, to reduce uncertainty, and to use the best,
most innovative, and least burdensome tools for achieving regulatory
ends. The Executive Order directs agencies to consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public where these approaches are relevant, feasible,
and consistent with regulatory objectives. Executive Order 13563
emphasizes further that regulations must be based on the best available
science and that the rulemaking process must allow for public
participation and an open exchange of ideas. We have developed this
rule in a manner consistent with these requirements.
This proposed rule would replace the BLM's current rules governing
oil and gas leasing, which are contained in 43 CFR 3100 through 3140,
and revise some oil and gas operations, which are contained in 43 CFR
3160 and 3171. The BLM developed this proposed rule in a manner
consistent with the requirements in Executive Order 12866 and Executive
Order 13563.
The BLM reviewed the requirements of the proposed rule and
determined that it would not adversely affect in a material way the
economy, a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or Tribal
governments or communities. For more detailed information, see the RIA
prepared for this proposed rule. The RIA has been posted in the docket
for the proposed rule on the Federal eRulemaking Portal: https://www.regulations.gov. In the Searchbox, enter ``RIN 1004-AE80'', click
the
[[Page 47609]]
``Search'' button, open the Docket Folder, and look under Supporting
Documents.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA)
requires that Federal agencies prepare a regulatory flexibility
analysis for rules subject to the notice-and-comment rulemaking
requirements under the Administrative Procedure Act (5 U.S.C. 500 et
seq.), if the rule would have a significant economic impact, whether
detrimental or beneficial, on a substantial number of small entities.
See 5 U.S.C. 601-612. Congress enacted the RFA to ensure that
government regulations do not unnecessarily or disproportionately
burden small entities. Small entities include small businesses, small
governmental jurisdictions, and small not-for-profit enterprises.
The BLM reviewed the SBA size standards for small businesses and
the number of entities fitting those size standards as reported by the
U.S. Census Bureau in the Economic Census. The number of small
businesses in states where there are existing Federal oil and gas
leases is estimated to be 20,975 for the Crude Petroleum Extraction and
Natural Gas Extraction industries (NAICS codes 211120 and 21130,
respectively). The BLM concludes that the proposed bonding requirement
changes might increase challenges when securing bonds, especially for
small businesses. This will increase the cost for business on Federal
onshore oil and gas leases and might provide some incentives to shift
leasing and operations to State or private lands. The cost of securing
bonds may have a disproportionately larger impact on small businesses
because it results in a larger percentage of the companies' net
revenue. However, because the bonds would cost an estimated 1 to 3.5
percent of the bond value (one bonding agency reported that over 70
percent of their small-business customers paid 2 percent or less on
their surety bond premiums) the annual cost to secure a bond would not
be material (see https://www.insureon.com/small-business-insurance/surety-bonds/cost).
Finally, the rule would have a distributional and positive impact
on the Direct Property and Casualty Insurance Carriers Industry (NAICS
524126). Additional premiums would be paid by lessees in the oil and
natural gas extraction industries to surety companies who would be
providing the coverage to meet the proposed requirements. The number of
small businesses in states where there are existing Federal oil and gas
leases is estimated to be 476,687 in that industry.
C. Congressional Review Act
Based upon the economic analysis, this proposed rule is not a major
rule under 5 U.S.C. 804(2), the Congressional Review Act. This proposed
rule:
(a) Would not have an annual effect on the economy of $100 million
or more.
(b) Would not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions.
(c) Would not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
U.S. based enterprises to compete with foreign based enterprises.
D. Unfunded Mandates Reform Act (UMRA)
The proposed rule would not have a significant or unique effect on
State, local, or tribal governments or the private sector. The proposed
rule contains no requirements that would apply to State, local, or
tribal governments. The proposed rule would revise requirements that
would otherwise apply to the private sector participation in a
voluntary Federal program. The costs that the proposed rule would
impose on the private sector are below the monetary threshold
established at 2 U.S.C. 1532(a). A statement containing the information
required by the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531 et
seq.) is therefore not required for the proposed rule. This proposed
rule is also not subject to the requirements of section 203 of UMRA
because it contains no regulatory requirements that might significantly
or uniquely affect small governments, because it contains no
requirements that apply to such governments, nor does it impose
obligations upon them.
E. Governmental Actions and Interference With Constitutionally
Protected Property Right--Takings (Executive Order 12630)
This proposed rule would not affect a taking of private property or
otherwise have taking implications under Executive Order 12630. A
takings implication assessment is not required. The proposed rule would
replace the BLM's current rules governing oil and gas leasing, which
are contained in 43 CFR 3100 through 3140, and some oil and gas
operations, which are contained in 43 CFR 3160 and 3171. Therefore, the
proposed rule would impact future leases on Federal land; however, it
would not impact current leases. All other terms in the regulations are
not considered a taking of private property as such operations are
subject to the existing lease terms which expressly require that
subsequent lease activities be conducted in compliance with
subsequently adopted Federal laws and regulations.
This proposed rule conforms to the terms of the existing leases and
applicable statutes and, as such, the rule is not a government action
capable of interfering with constitutionally protected property rights.
Therefore, the BLM has determined that the rule would not cause a
taking of private property or require further discussion of takings
implications under Executive Order 12630.
F. Federalism (Executive Order 13132)
Under the criteria in section 1 of Executive Order 13132, this
proposed rule does not have sufficient federalism implications to
warrant the preparation of a federalism summary impact statement. A
federalism impact statement is not required.
The proposed rule would not have a substantial direct effect on the
States, on the relationship between the Federal Government and the
States, or on the distribution of power and responsibilities among the
levels of government. It would not apply to States or local governments
or State or local governmental entities. The rule would affect the
relationship between operators, lessees, and the BLM, but it does not
directly impact the States. Therefore, in accordance with Executive
Order 13132, the BLM has determined that this proposed rule does not
have sufficient federalism implications to warrant preparation of a
Federalism Assessment.
G. Civil Justice Reform (Executive Order 12988)
This proposed rule complies with the requirements of Executive
Order 12988. More specifically, this proposed rule meets the criteria
of section 3(a), which requires agencies to review all regulations to
eliminate errors and ambiguity and to write all regulations to minimize
litigation. This proposed rule also meets the criteria of section
3(b)(2), which requires agencies to write all regulations in clear
language with clear legal standards.
H. Consultation and Coordination With Indian Tribal Governments
(Executive Order 13175 and Departmental Policy)
The Department strives to strengthen its government-to-government
relationship with Indian Tribes through
[[Page 47610]]
a commitment to consultation with Indian Tribes and recognition of
their right to self-governance and tribal sovereignty.
The BLM evaluated this proposed rule under the Department's
consultation policy and under the criteria in Executive Order 13175 to
identify possible effects of the rule on federally recognized Indian
Tribes. Since the proposed changes to leasing only apply to Federal
lands, the proposed rule will not impact the leasing of Indian
minerals.
In August of 2021, the BLM sent a letter to each registered Tribe
informing them of certain rulemaking efforts, including the development
of this proposed rule. The letter offered Tribes the opportunity for
individual government-to-government consultation regarding the proposed
rule. The opportunity for tribal consultation will remain open
throughout the rulemaking process.
I. Paperwork Reduction Act
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) generally
provides that an agency may not conduct or sponsor, and not
withstanding any other provision of law a person is not required to
respond to, a collection of information, unless it displays a currently
valid OMB control number. Collections of information include any
request or requirement that persons obtain, maintain, retain, or report
information to an agency, or disclose information to a third party or
to the public (44 U.S.C. 3502(3) and 5 CFR 1320.3(c)).
This proposed rule contains information-collection requirements
that are subject to review by OMB under the PRA. OMB has generally
approved the existing information collection requirements contained in
the regulations that would be affected by this proposed rule under the
following OMB Control Numbers:
43 CFR 3100, 3120, and Subpart 3162--OMB Control Number
1004-0185;
43 CFR 3106--OMB Control Number 1004-0034;
43 CFR part 3130--OMB Control Number 1004-0196;
43 CFR 3150--OMB Control Number 1004-0162; and
43 CFR 3160--OMB Control Number 1004-0137.
The BLM plans to transfer the information collection requirements
contained in 43 CFR 3106 from OMB control number 1004-0034 to OMB
Control Number 1004-0185 in order to keep similar information
collections requirements together under the same OMB Control Number.
Additionally, the BLM plans to transfer information collection
requirements contained in 43 CFR 3160 from OMB Control Number 1004-0137
to a new OMB Control Number. The new and revised information collection
requirements are discussed as follows, along with the resulting changes
in public burdens.
1. Proposed Changes Impacting Information Collections Formerly Under
OMB Control Number 1004-0137
The proposed rule would result in new information collection
requirements that would require OMB approval under a new OMB control
number (formerly 1004-0137). This proposed rule is estimated to result
in 33,121 annual responses, 252,928 annual burden hours, $35,400,000
non-hour cost burdens under this new OMB Control Number.
The proposed new information collection requirements are described
as follows.
43 CFR 3162.3-4--Well Abandonment. The BLM is proposing to modify
paragraph (c) to include that no well may be temporarily abandoned
unless the operator provides adequate and detailed justifications,
verifies the mechanical integrity of the wells, and isolates the
completed interval(s). The BLM proposes to add a new paragraph (d)
outlining new requirements for operators of shut-in wells. Paragraph
(d)(1) provides for notification of the well's shut-in status and shut-
in date within 90 days of shut in. Paragraph (d)(2) provides for the
verification of the mechanical integrity of the well and confirmation
that the well remains capable of producing in paying quantities within
3 years. When a well remains in a shut-in status by the fourth year, as
outlined in paragraph (d)(3), the operator must either: (i) permanently
abandon the well; (ii) resume production; or (iii) provide a detailed
plan and timeline for the beneficial use for the well. The BLM may
grant additional delays provided the operator submits information that
confirms the use and is making progress on returning the well to a
beneficial use. The new information collection requirements would
include:
Justification for Temporary Well Abandonment--43 CFR
3162.3-4(c);
Abandon Well Shut-in Status--43 CFR 3162.3-4(d);
Verification of Mechanical Integrity--43 CFR 3162.3-
4(d)(2); and
Plan and Timeline for Future Beneficial Use--43 CFR
3162.3-4(d)(3)(iii).
The BLM believes these new requirements with yearly interval checks
will help operators stay on top of shut-in wells, thus preventing them
from becoming orphaned in the future. The addition of these information
collection requirements would result in an addition of 5,000 annual
responses, 44,000 annual burden hours.
Currently, there are 301,663 annual responses, 1,835,888 annual
burden hours, and $31,080,000 annual non-hour cost burdens inventoried
under the OMB Control Number 1004-0137. This rule will create a new OMB
Control Number and removes 28,121 annual responses, 208,298 annual
burden hours, and $31,080,000 annual non-hour cost burdens inventoried
under OMB Control Number 1004-0137 into this OMB Control Number.
In addition, there is an adjustment of $4.3 million in annual non-
hour cost burdens (from $31 million to 35.4 million). This adjustment
results from the annual inflation adjustment of filing fees and do not
result from the proposed rule. The resulting new estimated total
burdens for this new OMB Control Number are provided as follows.
Title of Collection: Onshore Oil and Gas Operations and Production
(43 CFR parts 3160 and 3170).
OMB Control Number: 1004-NEW.
Form Numbers: BLM Form 3160-003; BLM Form 3160-004; and BLM Form
3160-005 (these forms will not change).
Type of Review: Revision of a currently approved collection of
information.
Respondents/Affected Public: Oil and gas operators on public lands
and some Indian lands.
Total Estimated Number of Annual Respondents: 7,500.
Total Estimated Number of Annual Responses: 33,121.
Estimated Completion Time per Response: Varies from 4 to 32 hours,
depending on activity.
Total Estimated Number of Annual Burden Hours: 252,928.
Respondent's Obligation: Required to obtain or retain a benefit.
Frequency of Collection: On occasion; One-time; and Monthly.
Annual Burden Cost: $35,400,000.
2. Proposed Changes Impacting OMB Control Number 1004-0162
Currently, there are 68 annual responses, 26 annual burden hours,
and $25 annual non-hour cost burdens inventoried under OMB Control
Number 1004-0162. It is not anticipated that the proposed rule will
change the results to the annual responses, annual burden hours, or
non-hour cost burdens under this OMB Control Number. The proposed
revised information collection requirement is described as follows.
[[Page 47611]]
43 CFR 3151.3--Collection and submission of data. The proposed rule
would add a new requirement for the permittee to provide the BLM with
all data and information obtained in carrying out the exploration plan,
matching the requirement for geophysical exploration permits in Alaska.
This does not change the existing burden for what applicants need to
submit to the BLM for acquiring a geophysical exploration permit.
Title of Collection: Onshore Geophysical Exploration (43 CFR part
3150 and 36 CFR parts 228 and 251).
OMB Control Number: 1004-0162.
Form Number: BLM 3150-4/FS 2800-16; BLM 3150-5/FS 2816a (these
forms will not change).
Type of Review: Revision of a currently approved collection of
information.
Respondents/Affected Public: The respondents for this collection of
information are businesses that seek to conduct geophysical exploration
on Federal lands.
Respondent's Obligation: Required to Obtain or Retain a Benefit.
Frequency of Collection: On occasion.
Estimated Completion Time per Response: Varies from 20 minutes to 1
hour, depending on activity.
Number of Respondents: 68.
Annual Responses: 68.
Annual Burden Hours: 26.
Annual Burden Cost: $1,150.
3. Proposed Changes Impacting OMB Control Number 1004-0185
Currently, there are 9,132 annual responses, 37,695 annual burden
hours, and $751,415 annual non-hour cost burdens inventoried under OMB
Control Number 1004-0185. This proposed rule is estimated to result in
16,340 annual responses, 29,410 annual burden hours, $1,793,159, non-
hour cost burdens under this OMB Control Number. The proposed rule
would result in new, revised, and removed information collection
requirements. Additionally, as discussed earlier, the BLM will also be
transferring certain information collection requirements, along with
the associated burdens from OMB Control Number 1004-0034 to OMB Control
Number 1004-0185. These proposed changes are discussed as follows.
Revised Information Collection Requirements
43 CFR 3100.31(b)--Option Enforceability. The proposed rule revises
this requirement to clarify that a statement of the number of acres and
the type and percentage of interest to be conveyed and retained by the
parties to the option must be submitted for an option or renewal to be
enforceable. This does not change the burden requirement. The existing
regulation already states the interest to be conveyed and retained in
exercise of the option. The BLM needs to understand if the type of
interest is referring to record title or operating rights and the
percentage to be conveyed and retained by the option holder.
43 CFR 3105.21--Where to File Communitization Agreements. The
proposed rule removes the triplicate filing requirement. The proposed
rule adds a new paragraph (b) to this section to require that all
applications to form a CA be filed with a statement as to whether the
proposed CA deviates from the BLM's current model CA form, and a
certification that the applicant received the required signatures.
Further, all applications to form a CA shall include an Exhibit A
displaying a map of the agreement and the separate agreement tracts and
all applications to form a CA shall include an Exhibit B displaying the
separate tracts and ownership. The new paragraph (c) states that all
applications to form a CA should be submitted at least 90 calendar days
prior to first production to ensure correct reporting to the ONRR.
These requirements codify existing policy requirements and does not
change the existing burden for what applicants to submit to the BLM.
The information is needed to understand all the parties that share in
the production of a well due to State spacing orders.
43 CFR 3105.31--Where to file Operating, Drilling or Development
Contracts. The proposed rule would remove the requirement for five
copies of an operating, drilling or development contract to be
submitted when these contracts are submitted to the BLM for approval.
This reduces the burden to respondents.
43 CFR 3105.40--Subsurface storage application (formerly 3105.5).
The proposed rule would designate the existing 43 CFR 3105.5 for gas
storage agreements to the proposed numbering 43 CFR 3105.40. This
redesignation would be due to the elimination of the section on the
combination for joint operations or for transportation of oil. The
proposed rule would update paragraph (a) to include designation of
successor operators for gas storage agreements among the applications
to be filed in the proper BLM office. The proposed rule would update
paragraph (b) to remove the requirement for five copies of a gas
storage agreements to be submitted when these are filed with the BLM. A
new paragraph (c) would require that all applications for a gas storage
agreement or a designation of a successor operator must include the new
processing fee found in the fee schedule in 43 CFR 3000.120. The new
processing fee is intended to reimburse the BLM for processing the
applications.
43 CFR 3105.50--Consolidation of Leases (formerly 3105.6). Leases
may be consolidated upon written request of the lessee filed with the
proper BLM identify each lease involved by serial number and shall
explain the factors that justify the consolidation and requires that
each request for a consolidation of leases the processing fee found in
the fee schedule in 43 CFR 3000.120. The proposed rule splits the
single paragraph under this section into several paragraphs for
clarity, however these are not new requirements and do not change the
existing burden.
43 CFR 3106.81--Heirs and devisees. The proposed updates this
information collection requirement to state that the lease interest
will be transferred to the heirs, devisees, executor or administrator
of the estate, as appropriate, upon the filing of a court order, death
certificate, or other legal document demonstrating that transferee is
to be recognized as the successor of the deceased. These requirements
codify existing policy requirements and does not change the existing
burden for what applicants currently submit to the BLM to show proof on
how the lease interest transferred to another party.
43 CFR 3106.82--Change of name. The current regulation requires a
notice of the name change to be accompanied by a list of the serial
numbers of the leases affected by the name change. This requirement is
removed as it is outdated and unenforceable. This lessens the burden to
respondents. In practice, the BLM generates a report of the leases
affected by the name change and returns that list to the lessee with a
notice that recognizes the name change that occurred through operation
of law. This section is updated to require that, for a corporate name
change, the request should include the Secretary of State's Certificate
of Name Change along with the Articles of Incorporation, or Amendment,
if available. This is consistent with the BLM's current approach for
processing these types of documents. These requirements codify existing
policy requirements and do not change the existing burden for what
applicants currently submit to the BLM to show proof on how the lease
interest transferred to another party.
43 CFR 3106.83--Corporate mergers and dissolution of corporations,
partnerships and trust. The proposed rule updates the title of this
section from ``Corporate merger'' to ``Corporate
[[Page 47612]]
mergers and dissolution of corporations, partnerships and trust.'' The
goal of the renaming of this section is to incorporate these other
types of transfers that have the same process. The current regulation
requires a notification of merger to be accompanied by a list of the
serial numbers of the leases affected by the merger. This requirement
is eliminated as it is outdated and unenforceable. This lessens the
burden to respondents. In practice, the BLM does not rely on a list of
leases provided by a lessee and instead generates its own report of the
leases affected by the merger. The BLM returns that list to the lessee
with a notice that recognizes the merger that occurred through
operation of State law. This section is updated to require that, for a
merger, the request should include the Secretary of State's Certificate
of Merger along with the Articles of Incorporation, or Amendment, if
available. This is consistent with the BLM's current approach for
processing these types of documents. These requirements codify existing
policy requirements and do not change the existing burden for what
applicants currently submit to the BLM to show proof on how the lease
interest transferred to another party.
43 CFR 3108.23--Reinstatement at higher rental and royalty rates:
Class II reinstatements. The proposed rule would eliminate the existing
paragraph (b)(1) in its entirety. This provision addresses the
timeliness of Class II reinstatement petitions for leases that
terminated on or before August 8, 2005, and is no longer applicable.
This does not change an existing burden since a petition to reinstate a
lease that terminated on or before August 8, 2005, would have already
been received by an applicant.
43 CFR 3109.12--Application. The proposed rule also adds a new
requirement that the applicant must include a map of the applicable
lands which will support the bidding process related to the lease or
compensatory royalty agreement. These requirements codify existing
policy requirements and does not change the existing burden for what
applicants to submit to the BLM.
New Information Collection Requirements
43 CFR 3106.84--Sheriff's sale/deed. The proposed rule adds a new
section under other types of transfers to include sheriff's sales. The
BLM accepts these types of transfers to recognize lease interests
transferred to other parties through foreclosure actions. The proposed
rule states that where a notice of sale of the leasehold interest is
published pursuant to State law applicable to the execution of sales of
real property, the purchaser shall submit a copy of the Sheriff's
Certificate of Sale after any redemption period has passed to the
proper BLM office. Additional paragraphs under this new section include
a filing fee requirement, a qualification statement, and bonding
requirements. These requirements are consistent with the BLM's current
approach for processing these types of documents. These documents are
already submitted and recognized by the BLM when changes in ownership
of interests in Federal oil and gas leases occur without any intention
by the holder of interest to assign or transfer interest. The addition
of this information collection would result in an addition of 1 annual
response, 1 annual burden hour, and $55.80 annual non-hour cost
burdens.
43 CFR 3120.43--Expression of Interest. The proposed rule adds a
new section titled ``Expression of Interest'' to codify the current
process of receiving EOIs for competitive leasing to the BLM's online
leasing system. An expression of interest is a description of lands
that an applicant seeks to include in a competitive auction. The
expression must provide a description of the lands identified by legal
land description and identify the U.S. mineral ownership percentage.
The addition of this information collection would result in an addition
of 395,864 annual responses (calculated by acreage received), 3,958,640
annual burden hours (to process the acreage received), and $220,892,112
annual non-hour cost burdens.
Removed Information Collection Requirements
43 CFR 3101.26--Ad-Hoc Acreage Statement. At any time, the BLM may
require a lessee or operator to file a statement showing as of the
specified date, the serial number and the date of each lease in which
he/she has any interest, in the particular State, setting forth the
acreage covered thereby. The BLM uses the information to determine
whether or not a lessee is in compliance with the law with respect to
statutory acreage limitations. This revision results in the reduction
of 1 response and 1 burden hour, annually.
43 CFR 3105.4--Combination for joint operations or for
transportation of oil. The proposed rule eliminates the section on the
combination for joint operations or for transportation of oil. These
provisions are not used by the BLM or operators and are outdated. This
revision results in the reduction of 1 response and 1 burden hour,
annually.
43 CFR 3107.8--Renewal leases. The proposed rule eliminates the
provisions on renewal leases in their entirety because they are
outdated. Renewal leases that had an expiration date after November 15,
1990, were eligible for one last renewal under the provisions of the
November 15, 1990, Act, i.e., for 10 years, and for so long thereafter
as oil and gas is produced in paying quantities. If a lease was renewed
after the 1990 amendment and was not producing oil or gas at the end of
its 10-year renewal term, the lease expired with no further option for
renewal. The removal of this information collection would result in a
reduction 1 annual response, 1 annual burden hour, and $475 annual non-
hour cost burdens.
D. Class III reinstatement petition (43 CFR 3108.2-4).
The requirement would be removed from the proposed rule resulting
in a reduction of one annual response and one burden hour as well as
$651 in non-hour cost burden.
Information Collection Requirements Transferred From OMB Control Number
1004-0034.
The following two information collection will be moved into OMB
Control Number 1004-0185 to keep information collection requirements in
Subpart 3106 under the same OMB Control Number:
1. 43 CFR 3106.41--Transfers of record title and of operating
rights (subleases) and 3106.42, Transfers of other interests, including
royalty interests and production payments. This transfer would result
in 3,852 annual responses, 1,926 annual burden hours, and $404,460 non-
hours cost burdens being added to this OMB Control Number.
2. 43 CFR 3106.43--Mass transfers. This transfer would result in
4,944 annual responses, 2,472 annual burden hours, and $519,120 non-
hours cost burdens being added to this OMB Control Number.
The resulting new estimated total burdens for OMB Control Number
1004-0185 are provided as follows.
Title of Collection: Onshore Oil and Gas Leasing, and Drainage
Protection (43 CFR parts 3100, 3120, and 3150, and Subpart 3162).
OMB Control Number: 1004-0185.
Form Number: None.
Type of Review: Revision of a currently approved collection of
information.
Respondents/Affected Public: Holders of onshore oil and gas lease
and public lands and Indian lands (except on the Osage Reservation),
operators of such
[[Page 47613]]
leases, and holders of operating rights on such leases.
Respondent's Obligation: Required to Obtain or Retain a Benefit.
Frequency of Collection: Varies from 1 hour to 24 hours per
response, depending on activity.
Number of Respondents: 16,339.
Annual Responses: 16,340.
Annual Burden Hours: 29,410.
Annual Burden Cost: $1,793,159.
4. Proposed Changes Impacting OMB Control Number 1004-0196
Currently, there are there are 21 annual responses and 220 annual
burden hours associated with this OMB control number. There are also no
non-hours cost burden currently associated with this OMB control
number. The proposed rule is not projected to result in any new annual
responses The additional requirements proposed in 43 CFR 3170.80(b)
include description of the anticipated PA(s) size and define the
proposed PAs in the unit designation agreements required by 43 CFR
3137.21, and 3137.23 is not projected to result in additional burden
for that information collection.
43 CFR 3000.12 would introduce new filing fees for the following
information collections, resulting in a new non-hour burden cost of
$1,320:
Statement of change of unit operator (43 CFR 3137.61); and
Application for storage agreement (43 CFR 3138.11).
Additionally, 43 CFR 3137.86, New information demonstrating that the
participating area should be larger or smaller than previously
determined, contains the following three information collection
requirements for which the burden has not been formerly captured in
this OMB control number:
Information demonstrating that a participating area should
be larger than previously determined (43 CFR 3137.86(a)(1));
Application to enlarge participating area outside of
existing boundaries (43 CFR 3137.86(a)(2)); and
Statement for additional committed tract or tracts are
added to the unit under paragraph (a)(2) (43 CFR 3137.86(a)(3)).
The resulting new estimated total burdens for OMB Control Number
1004-0196 are provided as follows.
Title of Collection: Oil and Gas Leasing: National Petroleum
Reserve--Alaska (43 CFR part 3130).
OMB Control Number: 1004-0196.
Form Number: None.
Type of Review: Revision of a currently approved collection of
information.
Respondents/Affected Public: Participants within the oil and gas
leasing program within the National Petroleum Reserve-Alaska.
Respondent's Obligation: Required to Obtain or Retain a Benefit.
Frequency of Collection: On occasion.
Estimated Completion Time per Response: Varies from 15 minutes to
80 hours, depending on activity.
Number of Respondents: 24.
Annual Responses: 24.
Annual Burden Hours: 223.
Annual Burden Cost: $1,320.
In summary, the net burden changes that would result from the new,
revised, and removed information collection requirements as contained
in the proposed rule are as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual responses Annual burden hours Non-hour burden costs
OMB Control No. --------------------------------------------------------------------------------------------------------------------
Current Proposed Change Current Proposed Change Current Proposed Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
1004-0NEW (transfer from 1004-0137) 28,121 33,121 +5,000 208,928 252,928 +44,000 $31,080,000 $35,400,000 +$4,320,000
1004-0162.......................... 68 68 0 26 26 0 25 1,150 +1,125
1004-0185.......................... 9,132 16,340 +7,208 37,695 29,410 +-8,285 751,415 1,793,159 +1,041,744
1004-0196.......................... 21 24 +3 220 223 +3 0 1,320 +1,320
--------------------------------------------------------------------------------------------------------------------
Total Burden Changes........... 37,342 49,553 +12,211 246,869 282,587 +35,716 31,831,440 39,125,897 +5,364,189
Minus Burden Transferers from 1004- ........... ........... -8,796 ........... ........... -4,398 ........... ........... -923,580
0034:.............................
Minus Burden Transfer from 1004- ........... ........... -28,121 ........... ........... -208,928 ........... ........... 4,320,000
0137..............................
Minus changes from the IRA in 1004- ........... ........... -395 ........... ........... -3,160 ........... ........... -1,975,000
0185 for EOIs:....................
Net Burden Changes Resulting from ........... ........... +3,020 ........... ........... +28,160 ........... ........... 1,854,391
the Proposed Rule:................
--------------------------------------------------------------------------------------------------------------------------------------------------------
If you want to comment on the information-collection requirements
of this proposed rule, please send your comments and suggestions on
this information-collection by the date indicated in the DATES and
ADDRESSES sections as previously described
J. National Environmental Policy Act
A detailed environmental analysis under NEPA is not required,
because the proposed rule is covered by a categorical exclusion (see 43
CFR 46.205). This proposed rule meets the criteria set forth at 43 CFR
46.210(i) for a Departmental categorical exclusion in that this
proposed rule is ``of an administrative, financial, legal, technical,
or procedural nature.'' We have also determined that the proposed rule
does not involve any of the extraordinary circumstances listed in 43
CFR 46.215 that would require further analysis under NEPA.
K. Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use (Executive Order 13211)
Under Executive Order 13211, agencies are required to prepare and
submit to OMB a Statement of Energy Effects for significant energy
actions. This statement is to include a detailed statement of ``any
adverse effects on energy supply, distribution, or use (including a
shortfall in supply, price increases, and increase use of foreign
supplies)'' for the action and reasonable alternatives and their
effects.
Section 4(b) of Executive Order 13211 defines a ``significant
energy action'' as ``any action by an agency (normally published in the
Federal Register) that promulgates or is expected to lead to the
promulgation of a final rule or regulation, including notices of
inquiry, advance notices of proposed rulemaking, and notices of
proposed rulemaking: (1)(i) that is a significant regulatory action
under Executive Order 12866 or any successor order, and (ii) is likely
to have a significant adverse effect on the supply, distribution, or
use of energy; or (2) that is designated by OIRA as a significant
energy action.''
The BLM believes that the rule may affect the location chosen for
future oil or gas development but will have little impact on an
entity's decision to invest in energy development, the size of that
development, or the production from that development. As a result of
this
[[Page 47614]]
rule, an entity holding existing nonproducing leases may choose to
shift more future development to these existing leases or to develop
non-Federal acreage instead of securing new Federal leases, and some
entities may be relatively less likely to choose a new Federal lease to
a comparable non-Federal lease. Also, any incremental changes in oil or
gas production estimated to result from the rule's enactment would
constitute a small fraction of total U.S. gas production, and any
potential and temporary deferred production of oil would likewise
constitute a small fraction of total U.S. oil production. For these
reasons, we do not expect that the proposed rule would significantly
impact the supply, distribution, or use of energy. As such, the
rulemaking is not a ``significant energy action'' as defined in
Executive Order 13211.
L. Clarity of This Regulation (Executive Orders 12866, 12988, and
13563)
We are required by Executive Orders 12866 (section 1(b)(12)), 12988
(section 3(b)(1)(B)), and 13563 (section 1(a)), and by the Presidential
Memorandum of June 1, 1988, to write all rules in plain language. This
means that each rule must:
(a) Be logically organized;
(b) Use the active voice to address readers directly;
(c) Use common, everyday words and clear language rather than
jargon;
(d) Be divided into short sections and sentences; and
(e) Use lists and tables wherever possible.
If you feel that we have not met these requirements, send us
comments by one of the methods listed in the ADDRESSES section. To
better help the BLM revise the proposed rule, your comments should be
as specific as possible. For example, you should tell us the numbers of
the sections or paragraphs that you find unclear, which sections or
sentences are too long, the sections where you feel lists or tables
would be useful, etc.
Authors
The principal authors of this final rule include: Peter Cowan,
Senior Mineral Leasing Specialist in BLM Headquarters; Jennifer
Spencer, Mineral Leasing Specialist in BLM Headquarters; William
Lambert, Petroleum Engineer in BLM Headquarters; Christopher Rhymes,
former Attorney Advisor in DOI Office of the Solicitor. Technical
support provided by: Scott Rickard, Economist in BLM Headquarters;
Holly Elliott, Planning and Environmental Specialist in BLM Wind River
Bighorn Basin District; Erik Vernon, Air Resources Program Lead in BLM
Utah State Office; Bret Anderson, National Air Resources Program Lead
in BLM Headquarters; and James Tichenor, Technical Advisor in BLM
Headquarters. Assisted by: Duane Spencer, Deputy State Director of
Minerals and Land in BLM Wyoming State Office; JulieAnn Serrano,
Supervisory Land Law Examiner in BLM New Mexico State Office; Rebecca
Baca, former Supervisory Land Law Examiner in BLM Colorado State
Office; and Darrin King, Senior Regulatory Analysts in BLM
Headquarters.
List of Subjects
43 CFR Part 3000
Public lands-mineral resources, Reporting and recordkeeping
requirements.
43 CFR Part 3100
Government contracts, Mineral royalties, Oil and gas reserves,
Public lands-mineral resources, Reporting and recordkeeping
requirements, Surety bonds.
43 CFR Part 3110
Government contracts, Oil and gas exploration, Public lands-mineral
resources, Reporting and recordkeeping requirements.
43 CFR Part 3120
Government contracts, Oil and gas exploration, Public lands-mineral
resources, Reporting and recordkeeping requirements.
43 CFR Part 3130
Alaska, Government contracts, Mineral royalties, Oil and gas
exploration, Oil and gas reserves, Public lands-mineral resources,
Reporting and recordkeeping requirements, Surety bonds.
43 CFR Part 3140
Government contracts, Hydrocarbons, Mineral royalties, Oil and gas
exploration, Public lands-mineral resources, Reporting and
recordkeeping requirements.
43 CFR Part 3150
Administrative practice and procedure, Alaska, Oil and gas
exploration, Public lands-mineral resources, Reporting and
recordkeeping requirements, Surety bonds.
43 CFR Part 3160
Administrative practice and procedure, Government contracts,
Indians-lands, Mineral royalties, Oil and gas exploration, Penalties,
Public lands-mineral resources, Reporting and recordkeeping
requirements.
43 CFR Part 3170
Administrative practice and procedure, Flaring, Immediate
assessments, Indians-lands, Mineral royalties, Oil and gas exploration,
Oil and gas measurement, Public lands--mineral resources, Reporting and
record keeping requirements, Royalty-free use, Venting.
43 CFR Part 3180
Government contracts, Mineral royalties, Oil and gas exploration,
Public lands-mineral resources, Reporting and recordkeeping
requirements.
43 CFR Chapter II
For the reasons set out in the preamble, the Bureau of Land
Management proposes to amend 43 CFR parts 3000, 3100, 3110, 3120, 3130,
3140, 3150, 3160, 3170, and 3180 as follows:
0
1. Revise part 3000 to read as follows:
PART 3000--MINERALS MANAGEMENT: GENERAL
Sec.
3000.5 Definitions.
3000.10 Nondiscrimination.
3000.20 False statements.
3000.30 Unlawful interests.
3000.40 Appeals.
3000.50 Limitations on time to institute suit to challenge a
decision of the Secretary.
3000.60 Filing of documents.
3000.70 Multiple development.
3000.80 Management of Federal minerals from reserved mineral
estates.
3000.90 Enforcement actions under 30 U.S.C. 195.
3000.100 Fees in general.
3000.110 Processing fees on a case-by-case basis.
3000.120 Fee schedule for fixed fees.
3000.130 Fiscal terms of new leases.
Authority: 16 U.S.C. 3101 et seq.; 30 U.S.C. 181 et seq., 301-
306, 351-359, and 601 et seq.; 31 U.S.C. 9701; 40 U.S.C. 471 et
seq.; 42 U.S.C. 6508; 43 U.S.C. 1701 et seq.; and Pub. L. 97-35, 95
Stat. 357.
Sec. 3000.5 Definitions.
As used in 43 CFR parts 3000 and 3100, the term:
Acquired lands means lands which the United States obtained by deed
through purchase or gift, or through condemnation proceedings,
including lands previously disposed of under the public land laws
including the mining laws.
Acreage for which expressions of interest have been submitted means
acreage that is identified in an expression of interest received by
BLM, that has not been proposed for leasing
[[Page 47615]]
in any pending sale or other expression of interest pending BLM
disposition, and for which BLM may lawfully issue an oil and gas lease.
Acres offered for lease means all acres that BLM has offered for
oil and gas lease, regardless of whether those acres are acreage for
which expressions of interest have been submitted.
Act or MLA means the Mineral Leasing Act of 1920, as amended and
supplemented (30 U.S.C. 181 et seq.).
Anniversary date means the same day and month in succeeding years
as that on which the lease became effective.
Authorized officer means any BLM employee authorized to perform the
duties described in parts 3000 and 3100.
BLM or Bureau means the Bureau of Land Management.
Director means the Director of the Bureau of Land Management.
Gas means any fluid, either combustible or noncombustible, which is
produced in a natural state from the earth and which maintains a
gaseous or rarefied state at ordinary temperatures and pressure
conditions.
Interest means ownership in a lease, or prospective lease, of all
or a portion of the record title, working interest, operating rights,
overriding royalty, payments out of production, carried interests, net
profit share or similar instrument for participation in the benefit
derived from a lease. An interest may be created by direct or indirect
ownership, including options. Interest does not mean stock ownership,
stockholding or stock control in an application, offer, competitive bid
or lease, except for purposes of acreage limitations in 43 CFR 3101.20
and qualifications of lessees in 43 CFR subpart 3102.
Oil means all nongaseous hydrocarbon substances other than those
substances leasable as coal, oil shale or gilsonite (including all
vein-type solid hydrocarbons).
ONRR means the Office of Natural Resources Revenue.
Party in interest means a party who is or will be vested with any
interest under the lease as defined in this section. No one is a sole
party in interest with respect to an application, offer, competitive
bid or lease in which any other party has an interest.
Person means any individual or entity, including a partnership,
association, State, political subdivision of a State or territory, or a
private, public, or municipal corporation.
Proper BLM office means the Bureau of Land Management state office
having jurisdiction over the lands subject to the regulations in parts
3000 and 3100. (See 43 CFR 1821.10 for office location and area of
jurisdiction of Bureau of Land Management offices.)
Properly filed means a document or form submitted to the proper BLM
office with all necessary information and payments, as provided in 43
CFR subpart 1822.
Public domain lands means lands, including mineral estates, which
never left the ownership of the United States, lands which were
obtained by the United States in exchange for public domain lands,
lands which have reverted to the ownership of the United States through
the operation of the public land laws and other lands specifically
identified by the Congress as part of the public domain.
Secretary means the Secretary of the Interior.
Surface managing agency means any Federal agency, other than the
BLM, having management responsibility for the surface resources that
overlay federally owned minerals.
Sec. 3000.10 Nondiscrimination.
Any person acquiring a lease under this chapter must comply fully
with the equal opportunity provisions of Executive Order 11246 dated
September 24, 1965, as amended, and the rules, regulations and relevant
orders of the Secretary of Labor (41 CFR part 60 and 43 CFR part 17).
Sec. 3000.20 False statements.
As provided in 18 U.S.C. 1001, it is a crime punishable by
imprisonment or a fine, or both, for any person knowingly and willfully
to submit or cause to be submitted to any agency of the United States
any false or fraudulent statement(s) as to any matter within the
agency's jurisdiction.
Sec. 3000.30 Unlawful interests.
No member of, or delegate to, Congress, or Resident Commissioner,
and no employee of the Department of the Interior, except as provided
in 43 CFR part 20, is allowed or entitled to acquire or hold any
Federal lease, or interest therein. (Officer, agent or employee of the
Department--see 43 CFR part 20; Member of Congress--see R.S. 3741; 41
U.S.C. 22; 18 U.S.C. 431-433.)
Sec. 3000.40 Appeals.
Except as provided in 43 CFR 3000.120, 3000.130, 3101.53(b),
3165.4, and 3427.2, any party adversely affected by a decision of the
authorized officer made pursuant to the provisions of 43 CFR parts 3000
or 3100 has a right of appeal pursuant to 43 CFR part 4.
Sec. 3000.50 Limitations on time to institute suit to challenge a
decision of the Secretary.
No action challenging a decision of the Secretary involving any oil
or gas lease, offer or application can be maintained unless such action
is commenced or taken within 90 days after the final decision of the
Secretary relating to such matter.
Sec. 3000.60 Filing of documents.
All necessary documents must be filed in the proper BLM office.
Documents may be submitted to the BLM using hard-copy delivery
services, in-person delivery, or by electronic filing. A document will
be considered filed when it is received in the proper BLM office. When
using hard-copy delivery services or in-person delivery, the document
will be considered filed only when received during regular business
hours. See 43 CFR part 1820, subpart 1822.
Sec. 3000.70 Multiple development.
The granting of a permit or lease for the prospecting, development
or production of deposits of any one mineral does not preclude the
issuance of other permits or leases for the same lands for deposits of
other minerals with suitable stipulations for simultaneous operation,
nor the allowance of applicable entries, locations or selections of
leased lands with a reservation of the mineral deposits to the United
States.
Sec. 3000.80 Management of Federal minerals from reserved mineral
estates.
Where nonmineral public land disposal statutes provide that in
conveyances of title all or certain minerals are reserved to the United
States together with the right to prospect for, mine and remove the
minerals under applicable law and regulations as the Secretary may
prescribe, the lease or sale, and administration and management of the
use of such minerals will be accomplished under the regulations of 43
CFR parts 3000 and 3100. Such mineral estates include, but are not
limited to, those that have been or will be reserved under the
authorities of the Small Tract Act of June 1, 1938, as amended (43
U.S.C. 682(b)) and the Federal Land Policy and Management Act of 1976
(43 U.S.C. 1701 et seq.).
Sec. 3000.90 Enforcement actions.
The United States Department of Justice is the agency responsible
for the enforcement actions described in 30 U.S.C. 195, which makes it
unlawful for any person to organize or participate in any scheme,
arrangement, plan, or agreement to circumvent or defeat the
[[Page 47616]]
provisions of the MLA or its implementing regulations; or to seek to
obtain or to obtain any money or property by means of false statements
of material facts or by failing to state materials facts concerning
the:
(a) Value of any lease or portion thereof issued or to be issued
under the MLA;
(b) Availability of any land for leasing under the MLA;
(c) Ability of any person to obtain leases under the MLA; or
(d) Provisions of the MLA and its implementing regulations.
Sec. 3000.100 Fees in general.
(a) Setting fees. Fees may be statutorily set fees, relatively
nominal filing fees, or processing fees intended to reimburse the BLM
for its reasonable processing costs. For processing fees, the BLM takes
into account the factors in section 304(b) of the Federal Land Policy
and Management Act of 1976 (FLPMA) (43 U.S.C. 1734(b)) before deciding
a fee. The BLM considers the factors for each type of document when the
processing fee is a fixed fee and for each individual document when the
fee is decided on a case-by-case basis, as explained in Sec. 3000.110.
(b) Conditions for filing. The BLM will not accept a document that
the applicant submits without the proper filing or processing fee
amounts except for documents where the BLM sets the fee on a case-by-
case basis. Fees are not refundable except as provided for case-by-case
fees in Sec. 3000.110. The BLM will keep the fixed filing or
processing fee as a service charge even if the BLM does not approve the
application or the applicant withdraws it completely or partially.
(c) Periodic adjustment. The BLM will periodically adjust fees
established in this subchapter according to changes in the Implicit
Price Deflator for Gross Domestic Product, which is published quarterly
by the U.S. Department of Commerce. Because the fee recalculations are
simply based on a mathematical formula, the BLM will change the fees in
final rules without opportunity for notice and comment.
(d) Timing of fee applicability. (1) For a document that the BLM
received before November 7, 2005, the BLM will not charge a fixed fee
or a case-by-case fee under this subchapter for processing that
document, except for fees applicable under then-existing regulations.
(2) For a document that the BLM receives on or after November 7,
2005, the applicant must include the required fixed fees with the
documents filed, as provided in Sec. 3000.120(a) of this chapter, and
the applicant is subject to case-by-case processing fees as provided in
Sec. 3000.110 and under other provisions of this chapter.
Sec. 3000.110 Processing fees on a case-by-case basis.
(a) Fees in this subchapter are designated either as case-by-case
fees or as fixed fees. The fixed fees are established in this
subchapter for specified types of documents. However, if the BLM
decides at any time that a particular document designated for a fixed
fee will have a unique processing cost, such as the preparation of an
Environmental Impact Statement, the BLM may set the fee under the case-
by-case procedures in this section.
(b) For case-by-case fees, the BLM measures the ongoing processing
cost for each individual document and considers the factors in section
304(b) of FLPMA on a case-by-case basis according to the following
procedures:
(1) The applicant may request the BLM's approval to do all or part
of any study or other activity according to standards the BLM
specifies, thereby reducing the BLM's costs for processing the
document, in accordance with all other applicable laws and regulations.
(2) Before performing any case processing, the BLM will give the
applicant a written estimate of the proposed fee for reasonable
processing costs after the BLM considers the FLPMA section 304(b)
factors.
(3) The applicant may comment on the proposed fee.
(4) The BLM will then give the applicant the final estimate of the
processing fee amount after considering the applicant's comments and
any BLM-approved work that the applicant will do.
(i) If the BLM encounters higher or lower processing costs than
anticipated, the BLM will re-estimate the reasonable processing costs
following the procedure in paragraphs (b)(1) through (4) of this
section, but the BLM will not stop ongoing processing unless the
applicant does not pay in accordance with paragraph (b)(5) of this
section.
(ii) If the fee the applicant would pay under this paragraph (b)(4)
is less than the BLM's actual costs as a result of consideration of the
FLPMA section 304(b) factors, and the BLM is not able to process the
document promptly because of the unavailability of funding or other
resources, the applicant will have the option to pay the BLM's actual
costs to process the document.
(iii) Once processing is complete, the BLM will refund to the
applicant any money that the BLM did not spend on processing costs.
(5)(i) The BLM will periodically estimate what its reasonable
processing costs will be for a specific period and will bill the
applicant for that period. Payment is due to the BLM 30 days after the
applicant receives its bill. The BLM will stop processing the document
if the applicant does not pay the bill by the date payment is due.
(ii) If a periodic payment turns out to be more or less than the
BLM's reasonable processing costs for the period, the BLM will adjust
the next billing accordingly or make a refund. Do not deduct any amount
from a payment without the BLM's prior written approval.
(6) The applicant must pay the entire fee before the BLM will issue
the final document.
(7) The applicant may appeal the BLM's estimated processing costs
in accordance with the regulations in 43 CFR part 4, subpart E. The
applicant may also appeal any determination the BLM makes under
paragraph (a) of this section that a document designated for a fixed
fee will be processed as a case-by-case fee. The BLM will not process
the document further until the appeal is resolved, in accordance with
paragraph (b)(5)(i) of this section, unless the applicant pays the fee
under protest while the appeal is pending. If the appeal results in a
decision changing the proposed fee, the BLM will adjust the fee in
accordance with paragraph (b)(5)(ii) of this section.
Sec. 3000.120 Fee schedule for fixed fees.
(a) The table in this section shows the fixed fees that must be
paid to the BLM for the services listed for FY 2024. These fees are
nonrefundable and must be included with documents filed under this
chapter. Fees will be adjusted annually according to the change in the
Implicit Price Deflator for Gross Domestic Product since the previous
adjustment and will subsequently be posted on the BLM website (https://www.blm.gov) before October 1 each year. Revised fees are effective
each year on October 1.
[[Page 47617]]
Table 1 to Paragraph (a)--FY 2024 Processing and Filing Fee Table
------------------------------------------------------------------------
Document/action FY 2023 fee
------------------------------------------------------------------------
Oil & Gas (parts 3100, 3110, 3120, 3130, 3150,
3160, and 3180):
Formal Lease nomination..................... $125.
Expression of Interest fee per acre, or 5.
fraction thereof.
Competitive lease application............... 3,100.
Leasing under right-of-way.................. 660.
Lease consolidation......................... 525.
Assignment and transfer of record title or 105.
operating rights.
Overriding royalty transfer, payment out of 15.
production.
Name change, corporate merger, sheriff's 250.
deed, corporate dissolution, or transfer to
heir/devisee.
Lease reinstatement, Class I................ 1,260.
Geophysical exploration permit application-- 1,150.
all states.
Renewal of exploration permit--Alaska....... 30.
Final application for Federal unit agreement 1,200.
approval, Federal unit agreement expansion,
and Federal subsurface gas storage
application.
Designation of successor operator for 120.
Federal agreements.
Geothermal (part 3200):
Noncompetitive lease application............ 475.
Competitive lease application............... 185.
Assignment and transfer of record title or 105.
operating rights.
Name change, corporate merger or transfer to 250.
heir/devisee.
Lease consolidation......................... 525.
Lease reinstatement......................... 90.
Nomination of lands......................... 135.
plus per acre nomination fee................ 0.13.
Site license application.................... 70.
Assignment or transfer of site license...... 70.
Coal (parts 3400, 3470):
License to mine application................. 15.
Exploration license application............. 390.
Lease or lease interest transfer............ 80.
Leasing of Solid Minerals Other Than Coal and
Oil Shale (parts 3500, 3580):
Applications other than those listed below.. 45.
Prospecting permit application amendment.... 80.
Extension of prospecting permit............. 130.
Lease modification or fringe acreage lease.. 35.
Lease renewal............................... 610.
Assignment, sublease, or transfer of 35.
operating rights.
Transfer of overriding royalty.............. 35.
Use permit.................................. 35.
Shasta and Trinity hardrock mineral lease... 35.
Renewal of existing sand and gravel lease in 35.
Nevada.
Public Law 359; Mining in Powersite Withdrawals:
General (part 3730):
Notice of protest of placer mining 15.
operations.
Mining Law Administration (parts 3800, 3810,
3830, 3860, 3870):
Application to open lands to location....... 15.
Notice of location *........................ 20.
Amendment of location....................... 15.
Transfer of mining claim/site............... 15.
Recording an annual FLPMA filing............ 15.
Deferment of assessment work................ 130.
Recording a notice of intent to locate 35.
mining claims on Stockraising Homestead Act
lands.
Mineral patent adjudication................. 3,585 (more than 10
claims).
1,790 (10 or fewer
claims).
Adverse claim............................... 130.
Protest..................................... 80.
Oil Shale Management (parts 3900, 3910, 3930):
Exploration license application............. 375.
Application for assignment or sublease of 75.
record title or overriding royalty.
Onshore Oil and Gas Operations and Production
(parts 3160, 3170):
Application for Permit to Drill............. 11,805.
------------------------------------------------------------------------
* To record a mining claim or site location, this processing fee along
with the initial maintenance fee and the one-time location fee
required by statute must be paid.
(b) The amount of a fixed fee is not subject to appeal to the
Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E.
Sec. 3000.130 Fiscal terms of new leases.
(a) The table in this section shows the fiscal terms for new
leases. Terms will be adjusted annually according to the change in the
Implicit Price Deflator for Gross Domestic Product since the previous
adjustment and will subsequently be posted on the BLM website (https://www.blm.gov) before October 1 each year. Revised fees are effective
each year on October 1.
[[Page 47618]]
Table 1 to Paragraph (a)--Fiscal Terms for New Leases Table
----------------------------------------------------------------------------------------------------------------
Oil and gas (parts 3100, 3110, 3120, 3130,
3140) Fiscal term
----------------------------------------------------------------------------------------------------------------
Competitive oil and gas, tar sand, and Rental of $3 per acre, or fraction thereof, per year during the
combined hydrocarbon leases. first 2-year period beginning upon lease issuance, $5 per acre
per year, or fraction thereof, for the following 6 years, and
then $15 per acre, or fraction thereof, per year thereafter.
Competitive lease reinstatement, Class II... Base rental of $20 per acre, or fraction thereof.
Competitive combined hydrocarbon leases..... Minimum bonus bids of $25 per acre, or fraction thereof.
Competitive oil and gas and tar sand leases. Minimum bonus bids of $10 per acre, or fraction thereof.
----------------------------------------------------------------------------------------------------------------
(b) The financial terms for new leases are not subject to appeal to
the Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart
E.
0
2. Revise part 3100 to read as follows:
PART 3100--OIL AND GAS LEASING
Subpart 3100--Oil and Gas Leasing: General
Sec.
3100.3 Authority.
3100.5 Definitions.
3100.9 Information collection.
3100.10 Helium.
Drainage
3100.21 Compensation for drainage.
3100.22 Drilling and production or payment of compensatory royalty.
Options
3100.31 Enforceability.
3100.32 Effect of option on acreage.
3100.33 Option statements.
3100.40 Public availability of information.
Subpart 3101--Issuance of Leases
Lease Terms and Conditions
3101.11 Lease form.
3101.12 Surface use rights.
3101.13 Stipulations and information notices.
3101.14 Modification, waiver, or exception.
Acreage Limitations
3101.21 Public domain lands.
3101.22 Acquired lands.
3101.23 Excepted acreage.
3101.24 Excess acreage.
3101.25 Computation.
3101.30 Leases within unit areas, joinder evidence required.
3101.40 Terminated leases.
Federal Lands Administered by an Agency Outside of the Department of
the Interior
3101.51 General requirements.
3101.52 Action by the Bureau of Land Management.
3101.53 Appeals.
3101.60 State's or charitable organization's ownership of surface
overlying federally owned minerals.
Subpart 3102--Qualifications of Lessees
3102.10 Who may hold leases.
3102.20 Non-U.S. Citizens.
3102.30 Minors.
3102.40 Signature.
Compliance, Certification of Compliance and Evidence
3102.51 Compliance.
3102.52 Certification of compliance.
3102.53 Evidence of compliance.
Subpart 3103--Fees, Rentals, and Royalty
Payments
3103.11 Form of remittance.
3103.12 Where remittance is submitted.
Rentals
3103.21 Rental requirements.
3103.22 Annual rental payments.
Royalties
3103.31 Royalty on production.
3103.32 Minimum royalties.
Production Incentives
3103.41 Royalty reductions.
3103.42 Suspension of operations and/or production.
Subpart 3104--Bonds
3104.10 Bond obligations.
3104.20 Lease bond.
3104.30 Statewide bonds.
3104.40 Surface owner protection bond.
3104.50 Increased amount of bonds.
3104.60 Where filed and number of copies.
3104.70 Default.
3104.80 Termination of period of liability.
3104.90 Bonds held prior to [EFFECTIVE DATE OF THE FINAL RULE].
Subpart 3105--Cooperative Conservation Provisions
3105.10 Cooperative or unit agreement.
Communitization Agreements
3105.21 Where filed.
3105.22 Purpose.
3105.23 Requirements.
3105.24 Communitization agreement terms.
Operating, Drilling, or Development Contracts
3105.31 Where filed.
3105.32 Purpose.
3105.33 Requirements.
Subsurface Storage of Oil and Gas
3105.41 Where filed.
3105.42 Purpose.
3105.43 Requirements.
3105.44 Extension of lease term.
3105.50 Consolidation of leases.
Subpart 3106--Transfers by Assignment, Sublease, or Otherwise
3106.10 Transfers, general.
3106.20 Qualifications of assignees and transferees.
3106.30 Fees.
Forms
3106.41 Transfers of record title and of operating rights
(subleases).
3106.42 Transfers of other interests, including royalty interests
and production payments.
3106.43 Mass transfers.
3106.50 Description of lands.
3106.60 Bond requirements.
Approval of Transfer or Assignment
3106.71 Failure to qualify.
3106.72 Continuing obligation of an assignor or transferor.
3106.73 Lease account status.
3106.74 Effective date of transfer.
3106.75 Effect of transfer.
3106.76 Obligations of assignee or transferee.
Other Types of Transfers
3106.81 Heirs and devisees.
3106.82 Change of name.
3106.83 Corporate mergers and dissolution of corporations,
partnerships, and trusts.
3106.84 Sheriff's sale/deed.
Subpart 3107--Continuation and Extension
3107.10 Extension by drilling.
Production
3107.21 Continuation by production.
3107.22 Cessation of production.
3107.23 Leases capable of production.
Extension for Terms of Agreements
3107.31 Leases committed to an agreement.
3107.32 Segregation of leases committed in part.
3107.40 Extension by elimination.
Extension of Leases Segregated by Assignment
3107.51 Extension after discovery on other segregated portions.
3107.52 Undeveloped parts of leases in their extended term.
3107.53 Undeveloped parts of producing leases.
3107.60 Extension of reinstated leases.
Other Types
3107.71 Payment of compensatory royalty.
3107.72 Subsurface storage of oil and gas
[[Page 47619]]
Subpart 3108--Relinquishment, Termination, Cancellation
3108.10 Relinquishment.
Termination by Operation of Law and Reinstatement
3108.21 Automatic termination.
3108.22 Reinstatement at existing rental and royalty rates: Class I
reinstatements.
3108.23 Reinstatement at higher rental and royalty rates: Class II
reinstatements.
3108.30 Cancellation.
3108.40 Bona fide purchasers.
3108.50 Waiver or suspension of lease rights.
Subpart 3109--Leasing Under Special Acts
Rights-of-Way
3109.11 Generally.
3109.12 Application.
3109.13 Notice.
3109.14 Award of lease or compensatory royalty agreement.
3109.15 Compensatory royalty agreement or lease.
3109.20 Units of the National Park System.
3109.21-3109.22 [Reserved]
3109.30 Shasta and Trinity Units of the Whiskeytown-Shasta-Trinity
National Recreation Area.
Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359,
and 1751; 43 U.S.C. 1732(b), 1733, and 1740; and 42 U.S.C. 15801.
Subpart 3100--Onshore Oil and Gas Leasing: General
Sec. 3100.3 Authority.
(a)(1) Public domain. Oil and gas in public domain lands and lands
returned to the public domain under 43 CFR 2370 are subject to lease
under the Mineral Leasing Act of 1920, as amended and supplemented (30
U.S.C. 181 et seq.), by acts, including, but not limited to, section
1009 of the Alaska National Interest Lands Conservation Act (16 U.S.C.
3148).
(2) Exceptions. (i) Units of the National Park System, including
lands withdrawn by section 206 of the Alaska National Interest Lands
Conservation Act, except as provided in paragraph (g)(4) of this
section;
(ii) Indian reservations;
(iii) Incorporated cities, towns and villages;
(iv) Naval petroleum and oil shale reserves;
(v) Lands north of 68 degrees north latitude and east of the
western boundary of the National Petroleum Reserve--Alaska;
(vi) Lands recommended for wilderness allocation by the surface
managing agency;
(vii) Lands within the BLM's wilderness study areas;
(viii) Lands designated by Congress as wilderness study areas,
except where oil and gas leasing is specifically allowed to continue by
the statute designating the study area;
(ix) Lands within areas allocated for wilderness or further
planning in Executive Communication 1504, Ninety-Sixth Congress (House
Document numbered 96-119), unless such lands are allocated to uses
other than wilderness by a land and resource management plan or have
been released to uses other than wilderness by an Act of Congress;
(x) Lands within the National Wilderness Preservation System,
subject to valid existing rights under section 4(d)(3) of the
Wilderness Act (16 U.S.C. 1133) established before midnight, December
31, 1983, unless otherwise provided by law;
(xi) Lands designated under the Wild and Scenic Rivers Act, subject
to valid existing rights, and that constitute the bed or bank or are
situated within one-quarter mile of the bank of any river designated as
a wild river under the Wild and Scenic Rivers Act (16 U.S.C. 1280); and
(xii) Wildlife refuge lands, which are those lands embraced in a
withdrawal of lands of the United States for the protection of all
species of wildlife within a particular area. Sole and complete
jurisdiction over such lands for wildlife conservation purposes is
vested in the Fish and Wildlife Service even though such lands may be
subject to prior rights for other public purposes or, by the terms of
the withdrawal order, may be subject to mineral leasing. No expressions
of interest covering wildlife refuge lands will be considered for oil
and gas leasing, except as provided by applicable law.
(b)(1) Acquired lands. Oil and gas in acquired lands are subject to
lease under the Mineral Leasing Act for Acquired Lands of August 7,
1947, as amended (30 U.S.C. 351 et seq.).
(2) Exceptions. (i) Units of the National Park System, except as
provided in paragraph (g)(4) of this section;
(ii) Incorporated cities, towns and villages;
(iii) Naval petroleum and oil shale reserves;
(iv) Tidelands or submerged coastal lands within the continental
shelf adjacent or littoral to lands within the jurisdiction of the
United States;
(v) Lands acquired by the United States for development of helium,
fissionable material deposits or other minerals essential to the
defense of the country, except oil, gas and other minerals subject to
leasing under the Act;
(vi) Lands reported as excess under the Federal Property and
Administrative Services Act of 1949;
(vii) Lands acquired by the United States by foreclosure or
otherwise for resale;
(viii) Lands recommended for wilderness allocation by the surface
managing agency;
(ix) Lands within the BLM's wilderness study areas;
(x) Lands designated by Congress as wilderness study areas, except
where oil and gas leasing is specifically allowed to continue by the
statute designating the study area;
(xi) Lands within areas allocated for wilderness or further
planning in Executive Communication 1504, Ninety-Sixth Congress (House
Document numbered 96-119), unless such lands are allocated to uses
other than wilderness by a land and resource management plan or have
been released to uses other than wilderness by an Act of Congress;
(xii) Lands within the National Wilderness Preservation System,
subject to valid existing rights under section 4(d)(3) of the
Wilderness Act (16 U.S.C. 1133) established before midnight, December
31, 1983, unless otherwise provided by law;
(xiii) Lands designated under the Wild and Scenic Rivers Act,
subject to valid existing rights, and that constitute the bed or bank
or are situated within one-quarter mile of the bank of any river
designated as a wild river under the Wild and Scenic Rivers Act (16
U.S.C. 1280); and
(xiv) Wildlife refuge lands, which are those lands embraced in a
withdrawal of lands of the United States for the protection of all
species of wildlife within a particular area. Sole and complete
jurisdiction over such lands for wildlife conservation purposes is
vested in the Fish and Wildlife Service even though such lands may be
subject to prior rights for other public purposes or, by the terms of
the withdrawal order, may be subject to mineral leasing. No expressions
of interest for wildlife refuge lands will be considered except as
provided in applicable law.
(c) National Petroleum Reserve--Alaska is subject to lease under
the Department of the Interior Appropriations Act, Fiscal Year 1981 (42
U.S.C. 6508).
(d) Where oil or gas is being drained from lands otherwise
unavailable for leasing, there is implied authority in the agency
having jurisdiction of those lands to grant authority to the BLM to
lease such lands (see 43 U.S.C. 1457; also Attorney General's Opinion
of
[[Page 47620]]
April 2, 1941 (Vol. 40 Op. Atty. Gen. 41)).
(e) Where lands previously withdrawn or reserved from the public
domain are no longer needed by the agency for which the lands were
withdrawn or reserved and such lands are retained by the General
Services Administration, or where acquired lands are declared as excess
to or surplus by the General Services Administration, authority to
lease such lands may be transferred to the Department in accordance
with the Federal Property and Administrative Services Act of 1949 and
the Mineral Leasing Act for Acquired Lands, as amended.
(f) The Act of May 21, 1930 (30 U.S.C. 301-306), authorizes the
leasing of oil and gas deposits under certain rights-of-way to the
owner of the right-of-way or any assignee.
(g)(1) Certain lands in Nevada. The Act of May 9, 1942 (56 Stat.
273), as amended by the Act of October 25, 1949 (63 Stat. 886),
authorizes leasing on certain lands in Nevada.
(2) Lands patented to the State of California. The Act of March 3,
1933 (47 Stat. 1487), as amended by the Act of June 5, 1936 (49 Stat.
1482) and the Act of June 29, 1936 (49 Stat. 2026), authorizes leasing
on certain lands patented to the State of California.
(3) National Forest Service Lands in Minnesota. The Act of June 30,
1950 (16 U.S.C. 508(b)) authorizes leasing on certain National Forest
Service Lands in Minnesota.
(4) Units of the National Park System. The Secretary is authorized
to permit mineral leasing in the following units of the National Park
System if he/she finds that such disposition would not have significant
adverse effects on the administration of the area and if lease
operations can be conducted in a manner that will preserve the scenic,
scientific and historic features contributing to public enjoyment of
the area, pursuant to the following authorities:
(i) Lake Mead National Recreation Area--The Act of October 8, 1964
(16 U.S.C. 460n et seq.).
(ii) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National
Recreation Area--The Act of November 8, 1965 (79 Stat. 1295; 16 U.S.C.
460q et seq.).
(iii) Ross Lake and Lake Chelan National Recreation Areas--The Act
of October 2, 1968 (82 Stat. 926; 16 U.S.C. 90 et seq.).
(iv) Glen Canyon National Recreation Area--The Act of October 27,
1972 (86 Stat. 1311; 16 U.S.C. 460dd et seq.).
(5) Shasta and Trinity Units of the Whiskeytown-Shasta-Trinity
National Recreation Area. Section 6 of the Act of November 8, 1965
(Pub. L. 89-336; 79 Stat. 1295), authorizes the Secretary of the
Interior to permit the removal of leasable minerals from lands (or
interest in lands) within the recreation area under the jurisdiction of
the Secretary of Agriculture in accordance with the Mineral Leasing Act
of February 25, 1920, as amended (30 U.S.C. 181 et seq.), or the
Acquired Lands Mineral Leasing Act of August 7, 1947 (30 U.S.C. 351 et
seq.), if he finds that such disposition would not have significant
adverse effects on the purpose of the Central Valley project or the
administration of the recreation area.
(h) Under the Recreation and Public Purposes Act, as amended (43
U.S.C. 869 et seq.), all lands within Recreation and Public Purposes
leases and patents are subject to lease under the provisions of this
part, subject to such conditions as the Secretary deems appropriate.
(i)(1) Coordination lands are those lands withdrawn or acquired by
the United States and made available to the States by cooperative
agreements entered into between the Fish and Wildlife Service and the
game commissions of the various States, in accordance with the Fish and
Wildlife Coordination Act (16 U.S.C. 661), or by long-term leases or
agreements between the Department of Agriculture and the game
commissions of the various States pursuant to the Bankhead-Jones Farm
Tenant Act (50 Stat. 525), as amended, where such lands were
subsequently transferred to the Department of the Interior, with the
Fish and Wildlife Service as the custodial agency of the United States.
(2) Representatives of the BLM and the Fish and Wildlife Service
will, in cooperation with the authorized members of the various State
game commissions, confer for the purpose of determining by agreement
those coordination lands which will not be subject to oil and gas
leasing. Coordination lands not closed to oil and gas leasing may be
subject to leasing on the imposition of such stipulations as are agreed
upon by the State Game Commission, the Fish and Wildlife Service and
the BLM.
(j) No lands within a refuge in Alaska open to leasing will be
available until the Fish and Wildlife Service has first completed
compatibility determinations.
Sec. 3100.5 Definitions.
As used in this part, the term:
Actual drilling operations includes not only the physical drilling
of a well, but also the testing, completing or equipping of such well
for production.
Assignment means a transfer of all or a portion of the lessee's
record title interest in a lease.
Bid means an amount of remittance offered as partial compensation
for a lease equal to or in excess of the national minimum acceptable
bonus bid set by statute or by the Secretary, submitted by a person for
a lease parcel in a competitive lease sale. For leases or compensatory
royalty agreements issued under 43 CFR subpart 3109, ``bid'' means an
amount or percent of royalty or compensatory royalty that the owner or
lessee must pay for the extraction of the oil and gas underlying the
right-of-way.
Competitive auction means an in-person or internet-based bidding
process where leases are offered to the highest bidder.
Exception is a limited exemption, for a particular site within the
leasehold, to a stipulation.
Lessee means a person holding record title in a lease issued by the
United States.
Modification is a change to the provisions of a lease stipulation
for some or all sites within the leasehold and either temporarily or
for the term of the lease.
National Wildlife Refuge System Lands means lands and water, or
interests therein, administered by the Secretary as wildlife refuges,
areas for the protection and conservation of fish and wildlife that are
threatened with extinction; wildlife management areas; or waterfowl
production areas.
Oil and gas agreement means an agreement between lessees and the
BLM to govern the development and allocation of production for existing
leases, including, but not limited to, communitization agreements, unit
agreements, secondary recovery agreements, and gas storage agreements.
Operating right (working interest) means the interest created out
of a lease authorizing the holder of that right to enter upon the
leased lands to conduct drilling and related operations, including
production of oil or gas from such lands in accordance with the terms
of the lease. Operating rights include the obligation to comply with
the terms of the original lease, as it applies to the area or horizons
for the interest acquired, including the responsibility to plug and
abandon all wells that are no longer capable of producing, reclaim the
lease site, and remedy environmental problems.
Operating rights owner means a person holding operating rights in a
lease issued by the United States. A
[[Page 47621]]
lessee also may be an operating rights owner if the operating rights in
a lease or portion thereof have not been severed from record title.
Operator means any person, including, but not limited to, the
lessee or operating rights owner, who has stated in writing to the
authorized officer that it is responsible under the terms and
conditions of the lease for the operations conducted on the leased
lands or a portion thereof.
Primary term of lease subject to section 4(d) of the Act prior to
the revision of 1960 (30 U.S.C. 226-1(d)) means all periods of the life
of the lease prior to its extension by reason of production of oil and
gas in paying quantities; and
Primary term of all other leases means the initial term of the
lease, which is 10 years.
Qualified bidder means any person in compliance with the laws and
regulations governing a bid.
Qualified lessee means any person in compliance with the laws and
regulations governing the BLM issued leases held by that person.
Record title means a lessee's interest in a lease, which includes
the obligation to pay rent and the ability to assign and relinquish the
lease. Record title includes the obligation to comply with the lease
terms, including requirements relating to well operations and
abandonment. Overriding royalty and operating rights are severable from
record title interests.
Responsible bidder means any person who has not defaulted on the
payment of winning bids for BLM-issued oil and gas leases, is capable
of fulfilling the requirements of onshore BLM oil and gas leases, and
does not have a history of noncompliance with applicable statutes and
regulations or with the terms of a BLM-issued oil and gas lease. The
term ``responsible bidder'' does not include persons who bid with no
intention of paying a winning bid or persons who default on a winning
bid.
Responsible lessee means any person who has not defaulted on
previous winning bids, is capable of fulfilling the requirements of
onshore Federal oil and gas leases, and does not have a history of
noncompliance with applicable statutes or the terms of a BLM-issued oil
and gas lease.
Sublease means a transfer of a non-record title interest in a
lease, i.e., a transfer of operating rights is normally a sublease, and
a sublease also is a subsidiary arrangement between the lessee
(sublessor) and the sublessee, but a sublease does not include a
transfer of a purely financial interest, such as overriding royalty
interest or payment out of production, nor does it affect the
relationship imposed by a lease between the lessee(s) and the United
States.
Transfer means any conveyance of an interest in a lease by
assignment, sublease or otherwise. This definition includes the terms:
Assignment and Sublease. Unit operator means the person authorized
under the unit agreement approved by the Department of the Interior to
conduct operations within the unit.
Waiver is a permanent exemption from a lease stipulation.
Sec. 3100.9 Information collection.
(a) Authority: 44 U.S.C. 3501-3520.
(b)(1) Purpose. The Paperwork Reduction Act of 1995 generally
provides that an agency may not conduct or sponsor, and notwithstanding
any other provision of law, a person is not required to respond to a
collection of information, unless the collection displays a currently
valid Office of Management and Budget (OMB) Control Number. This part
displays OMB control numbers assigned to information collection
requirements contained in the BLM's regulations at 43 CFR part 3100.
This section aids in fulfilling the requirements of the Paperwork
Reduction Act to display current OMB Control Numbers for these
information collection requirements. Interested persons should consult
https://www.reginfo.gov for the most current information on these OMB
control numbers; including among other things, the justification for
the information collection requirements, description of likely
respondents, estimated burdens, and current expiration dates.
(2) Table 1 to Paragraph (b)--OMB Control number assigned pursuant
to the Paperwork Reduction Act.
------------------------------------------------------------------------
OMB Control
43 CFR part or section No.
------------------------------------------------------------------------
Sec. Sec. 3100, 3103.41, 3120, and Subpart 3162...... 1004-0185
Sec. Sec. 3106, 3135, and 3216....................... 1004-0034
Part 3130............................................... 1004-0196
Subpart 3195............................................ 1004-0179
Sec. 3150............................................. 1004-0162
Sec. Sec. ,* 3160 3171, 3176, and 3177............... 1004-NEW
Sec. Sec. 3172, 3173, 3174, 3175..................... 1004-0137
Sec. Sec. 3162.3-1, 3178.5, 3178.7, 3178.8, 3178.9 1004-0211
and Subpart * 3179.....................................
------------------------------------------------------------------------
* Information collection requirements for onshore oil and gas operations
are generally accounted for under OMB Control Number 1004-NEW;
however, information collection requirements pertaining to particular
to waste prevention, production subject to royalties, and resource
conservation are accounted for under OMB Control Number 1004-0211.
Sec. 3100.10 Helium.
The ownership of and the right to extract helium from all gas
produced from lands leased or otherwise disposed of under the Act have
been reserved to the United States.
Drainage
Sec. 3100.21 Compensation for drainage.
Upon a determination by the authorized officer that lands owned by
the United States are being drained of oil or gas by wells drilled on
adjacent lands, the authorized officer may execute agreements with the
owners of adjacent lands whereby the United States and its lessees will
be compensated for such drainage. Such agreements must be made with the
consent of any lessee affected by an agreement. Such lands may also be
offered for lease in accordance with 43 CFR part 3120.
Sec. 3100.22 Drilling and production or payment of compensatory
royalty.
Where lands in any leases are being drained of their oil or gas
content by wells either on a Federal lease issued at a lower rate of
royalty or on non-Federal lands, the lessee must both drill and produce
all wells necessary to protect the leased lands from drainage. In lieu
of drilling necessary wells, the lessee may, with the consent of the
authorized officer, pay compensatory royalty in the amount determined
in accordance with 43 CFR 3162.2-4.
[[Page 47622]]
Options
Sec. 3100.31 Enforceability.
(a) No option to acquire any interest in a lease is enforceable if
entered into for a period of more than 3 years (including any renewal
period that may be provided for in the option).
(b) No option or renewal thereof is enforceable until a signed copy
or notice of the option has been filed in the proper BLM office. Each
such signed copy or notice must include:
(1) The names and addresses of the parties thereto;
(2) The serial number of the lease to which the option is
applicable;
(3) A statement of the number of acres and the type and percentage
of interests to be conveyed and retained by the parties to the option,
including the date and expiration date of the option.
(c) The signatures of all parties to the option or their duly
authorized agents. The signed copy or notice of the option required by
this paragraph must contain or be accompanied by a signed statement by
the holder of the option that he/she is the sole party in interest in
the option; if not, he/she must set forth the names and provide a
description of the interest therein of the other interested parties,
and provide a description of the agreement between them, if oral, and a
copy of such agreement, if written.
Sec. 3100.32 Effect of option on acreage.
The acreage to which the option is applicable will be charged both
to the grantor of the option and the option holder. The acreage covered
by an unexercised option remains charged during its term until notice
of its relinquishment or surrender has been filed in the proper BLM
office.
Sec. 3100.33 Option statements.
Each option holder must file in the proper BLM office within 90
days after June 30 and December 31 of each year a statement showing:
(a) Any changes to the statements submitted under Sec. 3100.31(b);
and
(b) The number of acres covered by each option and the total
acreage of all options held in each State.
Sec. 3100.40 Public availability of information.
(a) All data and information concerning Federal and Indian minerals
submitted under this part 3100 and parts 3120 through 3190 of this
chapter are subject to 43 CFR part 2, except as provided in paragraph
(c) of this section. 43 CFR part 2 includes the regulations of the
Department of the Interior covering the public disclosure of data and
information contained in Department of the Interior records. Certain
mineral information not protected from public disclosure under 43 CFR
part 2may be made available for inspection without a Freedom of
Information Act (FOIA) (5 U.S.C. 552) request.
(b) When you submit data and information under this part 3100 and
parts 3120 through 3190 of this chapter that you believe to be exempt
from disclosure to the public, you must clearly mark each page that you
believe includes confidential information. The BLM will keep all such
data and information confidential to the extent allowed by 43 CFR 2.26.
(c) Under the Indian Mineral Development Act of 1982 (IMDA) (25
U.S.C. 2101 et seq.), the Department of the Interior will hold as
privileged proprietary information of the affected Indian or Indian
Tribe--
(1) All findings forming the basis of the Secretary's intent to
approve or disapprove any Minerals Agreement under IMDA; and
(2) All projections, studies, data, or other information concerning
a Minerals Agreement under IMDA, regardless of the date received,
related to:
(i) The terms, conditions, or financial return to the Indian
parties;
(ii) The extent, nature, value, or disposition of the Indian
mineral resources; or
(iii) The production, products, or proceeds thereof.
(d) For information concerning Indian minerals not covered by
paragraph (c) of this section:
(1) The BLM will withhold such records as may be withheld under an
exemption to FOIA when it receives a request for information related to
tribal or Indian minerals held in trust or subject to restrictions on
alienation;
(2) The BLM will notify the Indian mineral owner(s) identified in
the records of the Bureau of Indian Affairs (BIA) and give them a
reasonable period of time to state objections to disclosure, using the
standards and procedures of 43 CFR 2.28, before making a decision about
the applicability of FOIA exemption 4 to:
(i) Information obtained from a person outside the United States
Government; when
(ii) Following consultation with a submitter under 43 CFR 2.28, the
BLM determines that the submitter does not have an interest in
withholding the records that can be protected under FOIA; but
(iii) The BLM has reason to believe that disclosure of the
information may result in commercial or financial injury to the Indian
mineral owner(s) but is uncertain that such is the case.
Subpart 3101--Issuance of Leases
Lease Terms and Conditions
Sec. 3101.11 Lease form.
A lease will be issued only on the standard form approved by the
Director.
Sec. 3101.12 Surface use rights.
A lessee will have the right to use only so much of the leased
lands as is necessary to explore for, drill for, mine, extract, remove
and dispose of all the leased resource in a leasehold subject to
applicable requirements, including stipulations attached to the lease,
restrictions deriving from specific, nondiscretionary statutes, and
such reasonable measures as may be required and detailed by the
authorized officer to avoid, minimize, or mitigate adverse impacts to
other resource values, land uses or users, federally recognized Tribes,
and underserved communities. Such reasonable measures may include, but
are not limited to, relocation or modification to siting or design of
facilities, timing of operations, specification of interim and final
reclamation measures, and specification of rates of development and
production in the public interest. Modifications that are consistent
with lease rights include, but are not limited to, requiring relocation
of proposed operations by more than 800 meters and prohibiting new
surface disturbing operations for a period of up to 90 days in any
lease year.
Sec. 3101.13 Stipulations and information notices.
(a) The BLM may consider the sensitivity and importance of
potentially affected resources and any uncertainty concerning the
present or future condition of those resources and will assess whether
a resource is adequately protected by stipulation without regard for
the restrictiveness of the stipulation on operations.
(b) The authorized officer may require stipulations as conditions
of lease issuance. Stipulations will become part of the lease and will
supersede inconsistent provisions of the standard lease form. Any party
submitting a bid under subpart 3120 will be deemed to have agreed to
stipulations applicable to the specific parcel as indicated in the
Notice of Competitive Lease Sale available from the proper BLM office.
(c) The BLM may attach an information notice to the lease. An
information notice has no legal consequences, except to give notice of
existing requirements, and may be
[[Page 47623]]
attached to a lease by the authorized officer at the time of lease
issuance to convey certain operational, procedural or administrative
requirements relative to lease management within the terms and
conditions of the standard lease form. Information notices may not be a
basis for denial of lease operations.
(d) Where the surface managing agency is the Fish and Wildlife
Service, leases will be issued subject to stipulations prescribed by
the Fish and Wildlife Service as to the time, place, nature and
condition of such operations in order to minimize impacts to fish and
wildlife populations and habitat and other refuge resources on the
areas leased. The specific conduct of lease activities on any refuge
lands will be subject to site-specific stipulations prescribed by the
Fish and Wildlife Service.
Sec. 3101.14 Modification, waiver, or exception.
(a) A stipulation included in an oil and gas lease will be subject
to modification, waiver, or exception if the authorized officer
determines, in conjunction with any surface management agency, that the
factors leading to its inclusion in the lease have changed sufficiently
to make the specific protections provided by the stipulation no longer
justified. If the authorized officer determines that a change to a
lease term or stipulation is substantial or a stipulation involves an
issue of major concern to the public, the changes to the stipulation
will be subject to public review for at least 30 calendar days.
(b) Prior to lease issuance, if the BLM determines that an
additional stipulation will be added to the lease or a modification to
an existing stipulation is required, the potential lessee must be given
an opportunity to accept the additional or modified stipulation. If the
potential lessee does not accept the additional or modified
stipulation, the BLM may reject the bid, and may include the lands in
the next Notice of Competitive Lease Sale. If the change in
stipulation(s) increases the value of the parcel, the BLM will reject
the bid, and will include the lands in the next Notice of Competitive
Lease Sale.
(c) After lease issuance, if a lessee does not accept an additional
or modified stipulation, that additional or modified stipulation is not
binding on the lessee and is without effect. When a stipulation is
required by the relevant Resource Management Plan, or surface
management agency land management plan, and was inadvertently omitted,
a lessee's failure to sign and accept changes in the stipulations when
requested by the authorized officer may subject the lease to
cancellation.
Acreage Limitations
Sec. 3101.21 Public domain lands.
(a) No person may take, hold, own or control more than 246,080
acres of Federal oil and gas leases in any one State at any one time.
No more than 200,000 acres of such acres may be held under option.
(b) In Alaska, the acreage that can be taken, held, owned or
controlled is limited to 300,000 acres in the northern leasing district
and 300,000 acres in the southern leasing district, of which no more
than 200,000 acres may be held under option in each of the two leasing
districts. The boundary between the two leasing districts in Alaska
begins at the northeast corner of the Tetlin National Wildlife Refuge
as established by section 302(8) of the Alaska National Interest Lands
Conservation Act, at a point on the boundary between the United States
and Canada, then northwesterly along the northern boundary of the
refuge to the left limit of the Tanana River (63[deg]9'38'' north
latitude, 142[deg]20'52'' west longitude), then westerly along the left
limit to the confluence of the Tanana and Yukon Rivers, and then along
the left limit of the Yukon River from said confluence to its principal
southern mouth.
Sec. 3101.22 Acquired lands.
No person may take, hold, own or control more than 246,080 acres of
Federal oil and gas leases in any one State at any one time. No more
than 200,000 acres of such acres may be held under option. Where the
United States owns only a fractional interest in the mineral resources
of the lands involved in a lease, only that part owned by the United
States will be charged as acreage holdings. The acreage embraced in a
future interest lease will not be charged as acreage holdings until the
lease for the future interest becomes effective.
Sec. 3101.23 Excepted acreage.
(a) The following acreage will not be included in computing acreage
limitations:
(1) Acreage under any lease any portion of which is committed to
any federally approved oil and gas agreement;
(2) Acreage under any lease for which royalty (including
compensatory royalty or royalty in-kind) was paid in the preceding
calendar year; and
(3) Acreage under leases subject to an operating, drilling or
development contract approved by the Secretary, as provided in 43 CFR
3105.30.
(b) Acreage subject to offers to lease, overriding royalties and
payments out of production will not be included in computing acreage
limitations.
Sec. 3101.24 Excess acreage.
(a) Where, as the result of the termination or contraction of an
oil and gas agreement or the elimination of a lease from an operating,
drilling, or development contract, a party holds or controls excess
accountable acreage, that party will have 90 calendar days from the
date of termination, contraction or elimination, to reduce the holdings
to the prescribed limitation and to file proof of the reduction in the
proper BLM office. Where, as a result of a merger or the purchase of
the controlling interest in a corporation, a party acquired acreage in
excess of the amount permitted, the party holding the excess acreage
will have 180 calendar days from the date of the merger or purchase to
divest the excess acreage. If additional time is required to complete
the divestiture of the excess acreage, a petition requesting additional
time, along with a full justification for the additional time, may be
filed with the authorized officer prior to the termination of the 180
days provided herein.
(b) If any person is found to hold accountable acreage in violation
of the provisions of these regulations, lease(s) or interests therein
will be subject to cancellation or forfeiture in their entirety, until
sufficient acreage has been eliminated to comply with the acreage
limitation. Excess acreage or interest will be cancelled in the inverse
order of acquisition.
Sec. 3101.25 Computation.
The accountable acreage of a party owning an undivided interest in
a lease will be the party's proportionate part of the total lease
acreage.
Sec. 3101.30 Leases within unit areas, joinder evidence required.
Before issuance of a lease for lands within an approved unit, the
lease offeror must file evidence with the proper BLM office that it has
joined in the unit agreement and unit operating agreement or a
statement giving satisfactory reasons for its failure to enter into
such agreement. If such statement is satisfactory to the authorized
officer, the lessee may be permitted to operate independently but will
be required to conform to the terms and provisions of the unit
agreement with respect to such operations.
Sec. 3101.40 Terminated leases.
(a) The authorized officer will not issue a lease for lands which
have been
[[Page 47624]]
covered by a lease which terminated automatically until 90 calendar
days after the date of termination.
(b) The authorized officer will not, after the receipt of a
petition for reinstatement, issue a new lease affecting any of the
lands covered by the terminated lease until all action on the petition
is final.
Federal Lands Administered by an Agency Outside of the Department of
the Interior
Sec. 3101.51 General requirements.
Public domain and acquired lands will be leased only with the
consent of the surface managing agency, which, upon receipt of a
description of the lands from the authorized officer, will report to
the authorized officer that it consents to leasing with stipulations,
if any, or withholds consent or objects to leasing.
Sec. 3101.52 Action by the Bureau of Land Management.
(a) Where the surface managing agency has consented to leasing with
required stipulations, and the Secretary decides to issue a lease, the
authorized officer will incorporate the stipulations into any lease
which it may issue. The authorized officer may add stipulations.
(b) The authorized officer will not issue a lease on lands to which
the surface managing agency objects or withholds consent. In all other
instances, the Secretary has the final authority and discretion to
decide to issue a lease.
(c) The authorized officer will review all recommendations and will
accept all reasonable recommendations of the surface managing agency.
(d) Where the surface managing agency is the Fish and Wildlife
Service, there will be no drilling or prospecting under any lease
heretofore or hereafter issued on lands within a wildlife refuge,
except with the consent and approval of the Secretary with the
concurrence of the Fish and Wildlife Service as to the time, place and
nature of such operations in order to give complete protection to
wildlife populations and wildlife habitat on the areas leased, and all
such operations must be conducted in accordance with BLM stipulations.
Sec. 3101.53 Appeals.
(a) The decision of the authorized officer to reject an offer to
lease or to issue a lease with stipulations recommended by the surface
managing agency may be appealed to the Interior Board of Land Appeals
under 43 CFR part 4.
(b) Where, as provided by statute, the surface managing agency has
required that certain stipulations be included in a lease or has
consented, or objected or refused to consent to leasing, any appeal by
an affected lease offeror will be subject to the administrative
remedies if provided for by the particular surface managing agency.
Sec. 3101.60 State's or charitable organization's ownership of
surface overlying federally owned minerals.
Where the United States has conveyed title to, or otherwise
transferred the control of the surface of lands to any State or
political subdivision, agency, or instrumentality thereof, or a college
or any other educational corporation or association, or a charitable or
religious corporation or association, with reservation of the oil and
gas rights to the United States, such party will be given an
opportunity to suggest any lease stipulations deemed necessary for the
protection of existing surface improvements or uses, to set forth the
facts supporting the necessity of the stipulations and also to file any
objections it may have to the issuance of a lease. Where a party
controlling the surface opposes the issuance of a lease or wishes to
place such restrictive stipulations upon the lease that it could not be
operated upon or become part of a drilling unit and hence is without
mineral value, the facts submitted in support of the opposition or
request for restrictive stipulations may be given consideration and
each case will be decided on its merits. The opposition to lease or
necessity for restrictive stipulations expressed by the party
controlling the surface affords no legal basis or authority to refuse
to issue the lease or to issue the lease with the requested restrictive
stipulations for the reserved minerals in the lands; in such case, the
final determination whether to issue and with what stipulations, or not
to issue the lease depends upon whether or not the interests of the
United States would best be served by the issuance of the lease.
Subpart 3102--Qualifications of Lessees
Sec. 3102.10 Who may hold leases.
Leases or interests therein may be acquired and held only by
citizens of the United States; associations (including partnerships and
trusts) of such citizens; corporations organized under the laws of the
United States or of any State or Territory thereof; and municipalities.
Sec. 3102.20 Non-U.S. Citizens.
(a) Leases or interests therein may be acquired and held by non-
U.S. Citizens only through stock ownership, holding or control in a
present or potential lessee that is incorporated under the laws of the
United States or of any State or territory thereof, and only if the
laws, customs or regulations of their country do not deny similar or
like privileges to citizens or corporations of the United States. If it
is determined that a country has denied similar or like privileges to
citizens or corporations of the United States, it would be placed on a
list available from any BLM State office.
(b) The Committee on Foreign Investment in the United States is
authorized to review covered real estate transactions and to mitigate
any risk to the national security of the United States that arises as a
result of such transactions. Covered real estate transactions may
include certain transactions involving the Federal mineral estate (see
31 CFR part 802).
Sec. 3102.30 Minors.
Leases must not be acquired or held by someone considered to be a
minor under the laws of the State in which the lands are located, but
leases may be acquired and held by legal guardians or trustees of
minors on their behalf. Such legal guardians or trustees must be
citizens of the United States or otherwise meet the provisions of 43
CFR 3102.10.
Sec. 3102.40 Signature.
Signatures on all applications and BLM forms certify acceptance of
lease terms and stipulations, as well as compliance with the
regulations under 43 CFR part 3100. Refer to Sec. 3102.50 for
certification of compliance and evidence. The BLM also accepts
electronic signatures and submissions.
(a) A bid to lease must be made on a current form approved by the
Director. Copies must be exact reproductions of the official approved
form, without additions, omissions, or other changes. When the bid is
filed in person at the proper BLM office, the bid must be typed or
printed plainly, signed, and dated by the offeror or an authorized
agent on behalf of the present or potential lessee. Bids may be made to
the BLM by other arrangements, such as electronically signed and filed,
when specifically authorized by the BLM.
(b) Documents signed by any party other than the present or
potential lessee must be rendered in a manner to reveal the name of the
present or potential lessee, the name of the signatory and their
relationship. A signatory who is a member of the organization that
constitutes the present or potential lessee (e.g., officer of a
corporation, partner of a partnership, etc.) may be requested by the
authorized
[[Page 47625]]
officer to clarify his/her relationship, when the relationship is not
shown on the documents filed.
Compliance, Certification of Compliance and Evidence
Sec. 3102.51 Compliance.
Only responsible and qualified bidders and lessees may own, hold,
or control an interest in a lease or prospective lease. Responsible and
qualified bidders and lessees, including corporations, and all members
of associations, including partnerships of all types, will, without
exception, be qualified and in compliance with the Act. Compliance
means that the persons are:
(a) Citizens of the United States (see Sec. 3102.10) or non-U.S.
citizens who own stock in a corporation organized under State or
Federal law (see Sec. 3102.20);
(b) In compliance with the Federal acreage limitations (see Sec.
3101.20);
(c) Not minors (see Sec. 3102.30);
(d) Except for an assignment or transfer under 43 CFR subpart 3106,
in compliance with section 2(a)(2)(A) of the Act (30 U.S.C. 201(2)(A)),
in which case the signature on a bid or lease constitutes evidence of
compliance. A lease issued to any person in violation of this paragraph
(d) will be subject to the cancellation provisions of 43 CFR 3108.30.
(e) Not in violation of the provisions of section 41 of the Act (30
U.S.C. 195); and
(f) In compliance with section 17(g) of the Act (30 U.S.C. 226(g)),
in which case the signature on an offer, lease, assignment, or transfer
constitutes evidence of compliance that the signatory and any
subsidiary, affiliate, or person, association, or corporation
controlled by or under common control with the signatory, as defined in
43 CFR 3400.0-5(rr), has not failed or refused to comply with
reclamation requirements with respect to all leases and operations
thereon in which such person has an interest. A person is noncompliant
with section 17(g) of the Act when they fail to comply with their
reclamation obligations or other standards established under 30 U.S.C.
226 in the time specified in a notice from the BLM. A lease issued, or
an assignment or transfer approved, to any such person in violation of
this paragraph (f) will be subject to the cancellation provisions of 43
CFR 3108.30, notwithstanding any administrative or judicial appeals
that may be pending with respect to violations or penalties assessed
for failure to comply with the prescribed reclamation standards on any
lease holdings. Noncompliance will end upon a determination by the
authorized officer that all required reclamation has been completed and
that the United States has been fully reimbursed for any costs incurred
due to the required reclamation.
(g) In compliance with 43 CFR 3106.10(d) and section 30A of the Act
(30 U.S.C. 187(a)). The authorized officer may accept the signature on
a request for approval of an assignment of less than 640 acres outside
of Alaska (2,560 acres within Alaska) as acceptable certification that
the assignment would further the development of oil and gas, or the
authorized officer may apply the provisions of 43 CFR 3102.53.
(h) Not excluded or disqualified from participating in a
transaction covered by Federal non-procurement debarment and suspension
(2 CFR parts 180 and 1400), unless the Department explicitly approves
an exception for a transaction pursuant to the regulations in those
parts.
Sec. 3102.52 Certification of compliance.
Any party(s) seeking to obtain an interest in a lease must certify
that it is in compliance with the Act as set forth in 43 CFR 3102.51. A
corporation or publicly traded association, including a publicly traded
partnership, must certify that constituent members of the corporation,
association or partnership holding or controlling more than 10 percent
of the instruments of ownership of the corporation, association or
partnership are in compliance with the Act. Execution and submission of
a competitive bid form or request for approval of a transfer of record
title or of operating rights (sublease), constitutes certification of
compliance.
Sec. 3102.53 Evidence of compliance.
The authorized officer may request at any time further evidence of
compliance and qualification from any party holding or seeking to hold
an interest in a lease. Failure to comply with the request of the
authorized officer will result in adjudication of the action based on
the incomplete submission.
Subpart 3103--Fees, Rentals and Royalty Payments
Sec. 3103.11 Form of remittance.
All remittances must be by personal check, cashier's check,
certified check, or money order, and must be made payable to the
Department of the Interior--Bureau of Land Management or the Department
of the Interior--Office of Natural Resources Revenue, as appropriate.
Payments made to the BLM may be made by other arrangements such as by
electronic funds transfer or credit card when specifically authorized
by the BLM. In the case of payments made to the ONRR, such payments may
also be made by electronic funds transfer.
Sec. 3103.12 Where remittance is submitted.
(a)(1) All processing fees for the respective lease applications,
nominations, or requests for approval of a transfer found in the fee
schedule in Sec. 3000.120 of this chapter and all first-year rentals
and bonuses for leases issued under 43 CFR part 3100 must be paid to
the proper BLM office.
(2) All second-year and subsequent rentals, except for leases
specified in paragraph (b) of this section, must be paid to the ONRR
through its online rental payment system.
(b) All rentals and royalties on producing leases, communitized
leases in producing spacing units, unitized leases in producing unit
areas, leases on which compensatory royalty is payable and all payments
under subsurface storage agreements must be paid to the ONRR.
Rentals
Sec. 3103.21 Rental requirements.
(a) Each competitive bid submitted in response to a Notice of
Competitive Lease Sale must be accompanied by full payment of the first
year's rental based on the total acreage in the Notice of Competitive
Lease Sale.
(b) If the acreage is incorrectly indicated in a Notice of
Competitive Lease Sale, payment of the rental based on the error is
curable within 15 calendar days of receipt of notice from the
authorized officer of the error.
(c) Rental will not be prorated for any lands in which the United
States owns an undivided fractional interest and must be paid for the
full acreage in such lands.
Sec. 3103.22 Annual rental payments.
Rentals must be paid on or before the lease anniversary date. A
full year's rental must be submitted even when less than a full year
remains in the lease term, except as provided in 43 CFR 3103.42(d).
Failure to make the required payment on or before the lease anniversary
date will cause a lease to terminate automatically by operation of law.
If the designated ONRR office is not open on the anniversary date,
payment received on the next day the designated ONRR office is open to
the public will be deemed to be timely made. Payments made to an
improper BLM or ONRR office will be returned and will not be forwarded
to the designated ONRR
[[Page 47626]]
office. Rental must be paid at the following rates:
(a) The annual rental for all leases is as stated in the lease;
(b) Rental will not be due on acreage for which royalty or minimum
royalty is being paid, except on nonproducing leases when compensatory
royalty has been assessed in which case annual rental as established in
the lease will be due in addition to compensatory royalty;
(c) For leases that are reinstated under Sec. 3108.23, the annual
rental will be as specified in 43 CFR 3000.130 beginning with the
termination date upon the filing of a petition to reinstate a lease;
and
(d) Each succeeding time a specific lease is reinstated under Sec.
3108.23, the annual rental on that lease will increase by an additional
$10 per acre or fraction thereof.
Royalties
Sec. 3103.31 Royalty on production.
(a) Royalty on production will be payable only on the mineral
interest owned by the United States. Royalty must be paid in the amount
or value of the production removed or sold as follows:
(1) For leases issued before August 16, 2022, the rate prescribed
in the lease or in applicable regulations at the time of lease
issuance;
(2) For leases issued between August 16, 2022, and August 16, 2032,
the royalty rate will be 16.67 percent;
(3) For leases issued on or after August 16, 2032, a rate of not
less than 16.67 percent on all leases issued under the Act;
(4) A minimum of 16.67 percent on all leases issued under 43 CFR
subpart 3109;
(5) For reinstated leases, the rate used for royalty determination
that applies to new leases at the time of the reinstatement plus 4
percentage points, plus an additional 2 percentage points for each
succeeding reinstatement. In no case will royalties on the reinstated
lease be less than 20 percent.
(b) Leases that qualify under specific provisions of the Act of
August 8, 1946 (30 U.S.C. 226c) may apply for a limitation of a 12\1/2\
percent royalty rate.
(c) The average production per well per day for oil and gas will be
determined pursuant to 43 CFR 3162.7-4.
(d) Payment of a royalty on the helium component of gas will not
convey the right to extract the helium from the gas stream.
Applications for the right to extract helium from the gas stream will
be made under 43 CFR part 16.
Sec. 3103.32 Minimum royalties.
(a) A minimum royalty must be paid at the expiration of each lease
year beginning on or after a discovery of oil or gas in paying
quantities on the lands leased, except on unitized leases that lack
production, the minimum royalty must be paid only on the participating
acreage, at the following rates:
(1) On leases issued on or after August 8, 1946, and on those
issued prior thereto if the lessee files an election under section 15
of the Act of August 8, 1946, a minimum royalty of $1 per acre or
fraction thereof in lieu of rental, except as provided in paragraph
(a)(2) of this section; and
(2) On leases issued from offers filed after December 22, 1987, and
on competitive leases issued after December 22, 1987, a minimum royalty
in lieu of rental of not less than the amount of rental which otherwise
would be required for that lease year.
(b) Minimum royalties will not be prorated for any lands in which
the United States owns a fractional interest and must be paid on the
full acreage of the lease.
(c) Minimum royalties and rentals on non-participating acreage must
be paid to the ONRR.
(d) The minimum royalty provisions of this section are applicable
to leases reinstated under 43 CFR 3108.23.
(e) If the royalty paid during any year aggregates to less than the
minimum royalty, then the lessee must pay the difference at the end of
the lease year.
Production Incentives
Sec. 3103.41 Royalty reductions.
(a) In order to encourage the greatest ultimate recovery of oil or
gas and in the interest of conservation, the Secretary, upon a
determination that it is necessary to promote development or that the
leases cannot be produced in paying quantities under the terms provided
therein, may waive, suspend or reduce the rental or minimum royalty or
reduce the royalty on an entire leasehold, or any portion thereof.
(b)(1) An application for the benefits under paragraph (a) of this
section must be filed by the operator/payor in the proper BLM office.
The application must contain the serial number of the leases, the names
of the record title holders, operating rights owners (sublessees), and
operators for each lease, the description of lands by legal subdivision
and a description of the relief requested.
(2) Each application must show the number, location and status of
each well drilled, a tabulated statement for each month covering a
period of not less than 6 months prior to the date of filing the
application of the aggregate amount of oil or gas subject to royalty,
the number of wells counted as producing each month and the average
production per well per day.
(3) Every application must contain a detailed statement of expenses
and costs of operating the entire lease, the income from the sale of
any production and all facts tending to show whether the wells can be
produced in paying quantities upon the fixed royalty or rental. Where
the application is for a reduction in royalty, complete information
must be furnished as to whether overriding royalties, payments out of
production, or similar interests are paid to others than the United
States, the amounts so paid and efforts made to reduce them. The
applicant must also file agreements of the holders to a reduction of
all other royalties or similar payments from the leasehold to an
aggregate not in excess of one-half the royalties due the United
States.
(c) Petition may be made for a reduction of royalty for leases
reinstated under 43 CFR 3108.23. Petitions to waive, suspend or reduce
rental or minimum royalty for leases reinstated under 43 CFR 3108.23
may be made under this section.
Sec. 3103.42 Suspension of operations and/or production.
(a) A suspension of all operations and production may be directed
or consented to by the authorized officer only in the interest of
conservation of natural resources. A suspension of operations only or a
suspension of production only may be directed or consented to by the
authorized officer in cases where the lessee is prevented from
operating on the lease or producing from the lease, despite the
exercise of due care and diligence, by reason of force majeure, that
is, by matters beyond the reasonable control of the lessee.
Applications for any suspension must be filed in the proper BLM office.
Complete information showing the necessity of such relief must be
furnished.
(b) The term of any lease will be adjusted to account for the
suspension. Beginning on the date the suspension is lifted, the term
will be extended by the time that was remaining on the term of the
lease on the effective date of the suspension. No lease will expire
during any suspension.
(c) A suspension will take effect as of the time specified in the
direction or assent of the authorized officer, in accordance with the
provisions of 43 CFR 3165.1.
[[Page 47627]]
(d) Rental and minimum royalty payments will be suspended during
any period of suspension of all operations and production directed or
assented to by the authorized officer beginning with the first day of
the lease month in which the suspension of all operations and
production becomes effective, or if the suspension of all operations
and production becomes effective on any date other than the first day
of a lease month, beginning with the first day of the lease month
following such effective date. However, if there is any production sold
or removed during the suspension, the lessee must pay royalty on that
production.
(e) Rental and minimum royalty payments will resume on the first
day of the lease month in which the suspension of all operations and
production is lifted. Where rentals are creditable against royalties
and have been paid in advance, proper credit may be allowed on the next
rental or royalty due under the terms of the lease.
(f) Rental and minimum royalty payments will not be suspended
during any period of suspension of operations only or suspension of
production only.
(g) Where all operations and production are suspended on a lease on
which there is a well capable of producing in paying quantities and the
authorized officer approves resumption of operations and production,
such resumption will be regarded as lifting the suspension, including
the suspension of rental and minimum royalty payments, as provided in
paragraph (e) of this section.
(h) The relief authorized under this section also may be obtained
for any Federal lease included within an approved oil and gas
agreement. Oil and gas agreement obligations will not be suspended by
relief obtained under this section but will be suspended only in
accordance with the terms and conditions of the specific agreement.
Subpart 3104--Bonds
Sec. 3104.10 Bond obligations.
(a) Prior to the commencement of surface disturbing activities
related to drilling operations, the lessee, operating rights owner
(sublessee), or operator must submit a surety or a personal bond,
conditioned upon compliance with all of the terms and conditions of the
entire leasehold(s) covered by the bond, as described in this subpart.
The bond amounts must be not less than the minimum amounts described in
this subpart in order to ensure compliance with the Act, including
complete and timely plugging of the well(s), reclamation of the lease
area(s), and the restoration of any lands or surface waters adversely
affected by lease operations after the abandonment or cessation of oil
and gas operations on the lease(s) in accordance with, but not limited
to, the standards and requirements set forth in 43 CFR 3162.3 and
3162.5 and orders issued by the authorized officer.
(b) Surety bonds must be issued by qualified surety companies
approved by the Department of the Treasury (see Department of the
Treasury Circular No. 570).
(c) Personal bonds must be accompanied by a:
(1) Cashier's check;
(2) Certified check; or
(3) Negotiable Treasury securities of the United States of a value
equal to the amount specified in the bond. Negotiable Treasury
securities must be accompanied by a proper conveyance to the Secretary
of full authority to sell such securities in case of default in the
performance of the terms and conditions of a lease.
Sec. 3104.20 Lease bond.
The operator must be covered by a bond in its own name as principal
or obligor in an amount of not less than $150,000 for each lease
conditioned upon compliance with all of the terms of the lease.
Additional bonding may be posted by a lessee, or owner of operating
rights (sublessee), as they are ultimately responsible under Sec.
3106.72. Where two or more principals have interests in different
formations or portions of the lease, separate bonds may be posted.
Sec. 3104.30 Statewide bonds.
In lieu of lease bonds, lessees, owners of operating rights
(sublessees), or operators may furnish a bond in an amount of not less
than $500,000 covering all leases and operations in any one State.
Sec. 3104.40 Surface owner protection bond.
(a) If a good-faith effort by the Federal lessee, its operator, or
representatives has not resulted in an agreement with the surface owner
to pay compensatory damages to the surface owner, the authorized
officer will require an adequate surface owner protection bond in an
amount sufficient to indemnify the surface owner against the reasonable
and foreseeable damages to crops and tangible improvements from the
proposed operations that would not otherwise be covered by a bond held
by the BLM. This surface owner protection bond is not part of the bond
obligations under lease or statewide bonds.
(b) The surface owner protection bond must be provided on a BLM-
approved form.
(c) The surface owner protection bond may be a personal or surety
bond and must be not less than $1,000.
(d) The BLM will notify the surface owner of the proposed surface
owner protection bond amount.
(e) If the surface owner objects to the sufficiency of the surface
owner protection bond, the BLM authorized officer will determine the
sufficiency of the bond necessary to indemnify the surface owner for
the reasonable and foreseeable damages to crops and tangible
improvements.
Sec. 3104.50 Increased amount of bonds.
(a) When an operator desiring approval of an APD has caused the
BLM, or a surface management agency, to make a demand for payment under
a bond or other financial guarantee within the 5-year period prior to
submission of the APD, due to failure to plug a well or reclaim lands
completely in a timely manner, the authorized officer will require,
prior to approval of the APD, a bond in an amount equal to the costs,
when higher than the minimum bond amounts, as estimated by the
authorized officer of plugging the well and reclaiming the disturbed
area involved in the proposed operation, or in the minimum amount as
prescribed in this subpart, whichever is greater.
(b) The authorized officer may require an increase in the amount of
any bond whenever it is determined that the operator poses a risk due
to factors, including, but not limited to, a history of previous
violations, a notice from the ONRR that there are uncollected royalties
due, or the total cost of plugging existing wells and reclaiming lands
exceeds the present bond amount based on the estimates determined by
the authorized officer. The increase in bond amount may be to any level
specified by the authorized officer, but in no circumstances will it
exceed the total of the estimated costs of plugging and reclamation,
the amount of uncollected royalties due to the ONRR, plus the amount of
money owed to the lessor due to previous violations remaining
outstanding.
Sec. 3104.60 Where filed and number of copies.
All bonds must be filed in the proper BLM office on a current form
approved by the Director. A single copy executed by the principal or,
in the case of surety bonds, by both the principal and an acceptable
surety is sufficient. A bond filed on a form not currently in use will
be acceptable, unless such form has been declared obsolete by the
Director prior to the filing of such bond. For purposes of 43 CFR
3104.20 and
[[Page 47628]]
3104.30, bonds or bond riders must be filed in the BLM State office
having jurisdiction over the lease or operations covered by the bond or
rider.
Sec. 3104.70 Default.
(a) Where, upon a default, the surety makes a payment to the United
States of an obligation incurred under a lease, the face amount of the
surety bond or personal bonds and the surety's liability thereunder
will be reduced by the amount of such payment.
(b) After default, where the obligation in default equals or is
less than the face amount of the bond(s), the principal must either
post a new bond or restore the existing bond(s) to the amount
previously held or a larger amount as determined by the authorized
officer. In lieu thereof, the principal may file separate bonds for
each lease covered by the deficient bond(s). Where the obligation
incurred exceeds the face amount of the bond(s), the principal must
make full payment to the United States for all obligations incurred
that are in excess of the face amount of the bond(s) and must post a
new bond in the amount previously held or such larger amount as
determined by the authorized officer. The restoration of a bond or
posting of a new bond must be made within 6 months or less after
receipt of notice from the authorized officer. Failure to comply with
these requirements may:
(1) Subject all leases covered by such bond(s) to cancellation
under the provisions of 43 CFR 3108.30;
(2) Prevent the bond obligor or principal from acquiring any
additional Federal leases in accordance with 43 CFR 3102.51(f); and
(3) Result in the bond obligor or principal being referred to the
Department's Suspension and Debarment Program under 2 CFR part 1400 to
determine if the person will be suspended or debarred from doing
business with the Federal Government.
Sec. 3104.80 Termination of period of liability.
The authorized officer will not give consent to termination of the
period of liability of any bond unless an acceptable replacement bond
has been filed or until all the terms and conditions of the lease have
been met.
Sec. 3104.90 Bonds held prior to [EFFECTIVE DATE OF THE FINAL RULE].
(a) Unit operator bonds accepted by the BLM prior to [EFFECTIVE
DATE OF THE FINAL RULE] must be replaced with a statewide bond by [DATE
TWO YEARS AFTER EFFECTIVE DATE OF THE FINAL RULE]. The BLM will not
accept any new unit operator bonds.
(b) All bonds not meeting the appropriate minimum bond amount as of
[EFFECTIVE DATE OF THE FINAL RULE] must meet that amount by:
(1) [DATE ONE YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE] for
lease bonds; and
(2) [DATE TWO YEARS AFTER THE EFFECTIVE DATE OF THE FINAL RULE] for
statewide bonds;
(c) All nationwide bonds must be converted to statewide bonds by
[DATE THREE YEARS AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
Subpart 3105--Cooperative Conservation Provisions
Sec. 3105.10 Cooperative or unit agreement.
(a) The suggested contents of such an agreement and the procedures
for obtaining approval are contained in 43 CFR part 3180.
(b) An application to form a unit agreement, a unit expansion, or a
designation of a successor operator must include the processing fee
found in the fee schedule in Sec. 3000.120 of this chapter.
Communitization Agreements
Sec. 3105.21 Where filed.
(a) An application to form a communitization agreement (CA) or
modify an existing agreement must be filed with the proper BLM office
for final approval.
(b) An application for a CA must include:
(1) A statement as to whether the proposed CA deviates from the
BLM's current model CA form, and a certification that the applicant
received the required signatures;
(2) An Exhibit A displaying a map of the area covered by the
proposed agreement and the separate agreement tracts; and
(3) An Exhibit B displaying the separate tracts and ownership;
(c) To ensure accurate reporting to ONRR, an application for a CA
should be submitted at least 90 calendar days prior to first
production.
(d) An application for designations of successor operator for a CA
must include the processing fee found in the fee schedule in Sec.
3000.120 of this chapter.
Sec. 3105.22 Purpose.
When a lease or a portion thereof cannot be independently developed
and operated in conformity with an established well-spacing or well-
development program, the authorized officer may approve a CA for such
lands with other lands, whether or not owned by the United States, upon
a determination that it is in the public interest. Operations or
production under such an agreement will be deemed to be operations or
production as to each lease committed thereto.
Sec. 3105.23 Requirements.
(a) The CA must describe the separate tracts comprising the
drilling or spacing unit, must show the apportionment of the production
or royalties to the several parties, the name of the operator, and
contain adequate provisions for the protection of the interests of the
United States. The agreement must be signed by or on behalf of all
necessary parties and must be filed prior to the expiration of the
Federal lease(s) involved in order to confer the benefits of the
agreement upon such lease(s).
(b) The agreement will be effective as to the Federal lease(s)
involved only if approved by the authorized officer. Approved CAs are
considered effective from the date of the agreement or from the date of
the onset of production from the communitized formation, whichever is
earlier, except when the spacing unit is subject to a State pooling
order after the date of first sale, then the effective date of the
agreement will be the effective date of the order.
(c) The public interest requirement for an approved CA will be
satisfied only if the well dedicated thereto has been completed for
production in the communitized formation at the time the agreement is
approved or, if not, that the operator thereafter commences and/or
diligently continues drilling operations to a depth sufficient to test
the communitized formation or establishes to the satisfaction of the
authorized officer that further drilling of the well would be
unwarranted or impracticable. If an application is received for
voluntary termination of a CA during its fixed term or such an
agreement automatically expires at the end of its fixed term without
the public interest requirement having been satisfied, the approval of
that agreement by the authorized officer will be invalid and no Federal
lease included in the CA will be eligible for an extension under 43 CFR
3107.40.
Sec. 3105.24 Communitization agreement terms.
The CA will remain in effect for a period of 2 years from the
effective date or approval date, whichever is later, and so long
thereafter as communitized substances may be produced in paying
quantities, or as otherwise specified in the agreement.
[[Page 47629]]
Operating, Drilling or Development Contracts
Sec. 3105.31 Where filed.
A contract submitted for approval under this section must be filed
with the proper BLM office.
Sec. 3105.32 Purpose.
Approval of operating, drilling or development contracts will be
granted only to permit operators or pipeline companies to enter into
contracts with a number of lessees sufficient to justify operations on
a scale large enough to justify the discovery, development, production
or transportation of oil or gas and to finance the same.
Sec. 3105.33 Requirements.
The contract must be accompanied by a statement showing all the
interests held by the contractor in the area or field and the proposed
or agreed plan for development and operation of the field. All the
contracts held by the same contractor in the area or field must be
submitted for approval at the same time and full disclosure of the
projects made.
Subsurface Storage of Oil and Gas
Sec. 3105.41 Where filed.
(a) Applications for subsurface storage or designations of
successor operator must be filed in the proper BLM office.
(b) The final gas storage agreement signed by all the parties in
interest must be submitted to the BLM.
(c) Applications for subsurface storage agreements or designations
of successor operator must include the processing fee found in the fee
schedule in Sec. 3000.120 of this chapter.
Sec. 3105.42 Purpose.
To avoid waste and to promote conservation of natural resources,
the Secretary, upon application by the interested parties, may
authorize the subsurface storage of oil and gas, whether or not
produced from lands owned by the United States. Such authorization will
provide for the payment of such storage fee or rental on the stored oil
or gas as may be determined adequate in each case, or, in lieu thereof,
for a royalty other than that prescribed in the lease when such stored
oil or gas is produced in conjunction with oil or gas not previously
produced. The BLM will require a bond as provided under Sec. 3104 for
operations conducted in a subsurface storage agreement.
Sec. 3105.43 Requirements.
The agreement must disclose the ownership of the lands involved,
the parties in interest, the storage fee, rental or royalty offered to
be paid for such storage and all information demonstrating such storage
would avoid waste and promote the conservation of natural resources.
Sec. 3105.44 Extension of lease term.
Any lease used for the storage of oil or gas will be extended for
the period of storage under an approved agreement. The obligation to
pay annual lease rent continues during the extended period.
Sec. 3105.50 Consolidation of leases.
(a) Leases may be consolidated upon written request of the lessee
filed with the proper BLM office. The request must identify each lease
involved by serial number and justify the consolidation. Each request
for a consolidation of leases must include the processing fee found in
the fee schedule in Sec. 3000.120 of this chapter.
(b) All parties holding any undivided interest in any lease
involved in the consolidation must agree to enter into the same lease
consolidation.
(c) Leases containing different types of lands (public domain lands
vs. acquired lands), mixed fractional mineral interest, or provisions
required by law that cannot be reconciled, will not be consolidated.
(d) Consolidation of leases will not exceed acreage limits of 2,560
acres for competitive leases and 10,240 acres for noncompetitive
leases.
(e) The effective date, the anniversary date, and the primary term
of the consolidated lease will be those of the oldest original lease
included in the consolidation. The term of a consolidated lease may be
extended beyond the primary lease term under subpart 3107.
(f) The highest royalty and rental rates of the each of the leases
to be consolidated will apply to the consolidated lease.
(g) Lease stipulations and other terms and conditions of each
original lease, except as noted in paragraphs (e) and (f) of this
section, will continue to apply to that lease or any portion thereof
regardless of the lease becoming a part of a consolidated lease.
Subpart 3106--Transfers by Assignment, Sublease, or Otherwise
Sec. 3106.10 Transfers, general.
(a) Leases may be transferred by assignment or sublease as to all
or part of the acreage in the lease or as to either a divided or
undivided interest therein.
(b) An assignment of a separate zone, deposit, depth, formation,
specific well, or of part of a legal subdivision, will be denied.
(c) Within the boundaries of a Federal lease, operating rights may
only be divided with respect to legal subdivisions, depth ranges, and
formations.
(d) An assignment of less than 640 acres outside Alaska or of less
than 2,560 acres within Alaska will be denied unless the assignment
constitutes the entire lease or is demonstrated to further the
development of oil and gas to the satisfaction of the authorized
officer. Reference 43 CFR 3102.51(g) for certification of compliance.
(e) The rights of the transferee to a lease or an interest therein
will not be recognized by the Department until the transfer has been
approved by the authorized officer.
(f) A transfer may be withdrawn in writing, signed by the
transferor and the transferee, if the transfer has not been approved by
the authorized officer.
(g) A request for approval of a transfer of a lease or interest in
a lease must be filed within 90 days from the date of its execution.
The 90-day filing period will begin on the date the transferor signs
and dates the transfer. If the transfer is filed after the 90th day,
the authorized officer may require verification that the transfer is
still in force and effect.
(h) A transfer of production payments or overriding royalty or
other similar payments, arrangements, or interests must be filed in the
proper BLM office but will not require approval.
(i) No transfer of an offer to lease or interest in a lease will be
approved prior to the issuance of the lease.
Sec. 3106.20 Qualifications of assignees and transferees.
Assignees and transferees must comply with the provisions of 43 CFR
subpart 3102 and post any bond that may be required. Only responsible
and qualified lessees may own, hold, or control an interest in a lease.
Sec. 3106.30 Fees.
(a) Each transfer of record title or of operating rights (sublease)
for each lease must include payment of the processing fee for
assignments and transfers found in the fee schedule in Sec. 3000.120
of this chapter.
(b) Each transfer of overriding royalty or payment out of
production must include payment of the processing fee for overriding
royalty transfers or payments out of productions found in the fee
schedule in Sec. 3000.120 of this chapter for each lease to which it
applies.
[[Page 47630]]
Forms
Sec. 3106.41 Transfers of record title and of operating rights
(subleases).
Each transfer of record title or of an operating right (sublease)
must be filed with the proper BLM office on a current form approved by
the Director. A separate form for each transfer, in duplicate, must be
filed for each lease out of which a transfer is made. The BLM does not
require a duplicate copy of the assignment or transfer when it is
electronically submitted. Copies of documents other than the current
form approved by the Director must not be submitted. However,
reference(s) to other documents containing information affecting the
terms of the transfer may be made on the submitted form.
Sec. 3106.42 Transfers of other interests, including royalty
interests and production payments.
(a) Each transfer of overriding royalty interest, payment out of
production or similar interests created or reserved must be described
for each lease on the current assignment or transfer form when filed.
(b) A single executed copy of each such transfer of other interests
for each lease must be filed with the proper BLM office.
Sec. 3106.43 Mass transfers.
(a) A mass transfer may be utilized in lieu of the provisions of 43
CFR 3106.41 and 3106.42 when an assignor or transferor transfers
interests of any type in more than one Federal lease to the same
assignee or transferee.
(b) The mass transfer must be filed with each proper BLM office
administering any lease affected by the mass transfer. The transfer
must be on a current form approved by the Director with an exhibit
attached to each copy listing the following for each lease:
(1) The serial number;
(2) The type and percent of interest being conveyed; and
(3) A description of the lands affected by the transfer in
accordance with 43 CFR 3106.50.
(c)(1) One duplicate copy of the form must be filed with the proper
BLM office for each lease involved in the mass transfer. A copy of the
exhibit for each lease may be limited to line items pertaining to
individual leases as long as that line item includes the information
required by paragraph (b) of this section. The BLM does not require a
duplicate copy of the assignment or transfer when it is electronically
submitted.
(2) When the BLM does not receive the requisite number of copies,
the applicant must reimburse the BLM for the full costs incurred to
make the required number of copies. The BLM will waive fees under one
dollar.
(d) A mass transfer must include the processing fee for assignments
and transfers found in the fee schedule in Sec. 3000.120 of this
chapter for each such interest transferred for each lease.
Sec. 3106.50 Description of lands.
Each assignment of record title must describe the lands involved in
the same manner as the lands are described in the lease, except no land
description is required when 100 percent of the entire area encompassed
within a lease is conveyed.
Sec. 3106.60 Bond requirements.
Where the lessee or operating rights owner (sublessee) maintains a
bond covering the lease (including a statewide bond), the assignee of
record title interest or transferee of operating rights in such lease
must furnish, if bond coverage continues to be required, a proper bond
that will cover any obligations arising under the lease to the same
extent as the assignor's or transferor's bond.
Approval of Transfer or Assignment
Sec. 3106.71 Failure to qualify.
The BLM will not approve any assignment of record title or transfer
of operating rights (sublease) if any party in interest is not a
qualified lessee, or if the bond is insufficient. The BLM approves
assignments and transfers for administrative purposes only. Approval
does not warrant or certify that either party to a transfer holds legal
or equitable title to a lease.
Sec. 3106.72 Continuing obligation of an assignor or transferor.
(a) The lessee or sublessee remains responsible for performing all
obligations under the lease until the date the BLM approves an
assignment of record title interest or transfer of operating rights.
(b) After the BLM approves the assignment or transfer, the assignor
or transferor will continue to be responsible for lease obligations
that accrued before the approval date, whether or not they were
identified at the time of the assignment or transfer. This includes
paying compensatory royalties for drainage. It also includes
responsibility for plugging wells and abandoning facilities drilled,
installed, or used before the effective date of the assignment or
transfer.
Sec. 3106.73 Lease account status.
The BLM will not approve a transfer if the lease account is
delinquent with respect to: royalty payments; lease obligations, such
as, but not limited to, rent and minimum royalty; or production
reporting to ONRR for a lease in non-terminable status.
Sec. 3106.74 Effective date of transfer.
The signature of the authorized officer on the official form will
constitute approval of the assignment of record title or transfer of
operating rights (sublease) which will take effect as of the first day
of the lease month following the date of filing in the proper BLM
office of all documents and statements required by this subpart and an
appropriate bond, if one is required.
Sec. 3106.75 Effect of transfer.
An assignment of record title to 100 percent of a portion of the
lease segregates the transferred portion and the retained portion into
separate leases. Each resulting lease retains the anniversary date and
the terms and conditions of the original lease. An assignment of record
title to less than 100 percent of a portion of the lease or a transfer
of operating rights (sublease) will not segregate the transferred and
retained portions into separate leases.
Sec. 3106.76 Obligations of assignee or transferee.
(a) The assignee of record title agrees to comply with the terms of
the original lease during the lease tenure. The assignee assumes the
responsibility to plug and abandon all wells which are no longer
capable of producing, reclaim the lease site, and remedy all
environmental problems in existence and that a purchaser exercising
reasonable diligence should have known existed at the time of the
transfer. When required, the record title holder must also maintain an
adequate bond to ensure performance of these responsibilities.
(b) The transferee of operating rights agrees to comply with the
terms of the original lease as it applies to the area or horizons for
the interest acquired. The transferee assumes the responsibility to
plug and abandon all wells that are no longer capable of producing,
reclaim the lease site, and remedy all environmental problems in
existence and that a purchaser exercising reasonable diligence should
have known at the time of the transfer. When required, the operating
rights holder must also maintain an adequate bond to ensure performance
of these responsibilities.
Other Types of Transfers
Sec. 3106.81 Heirs and devisees.
(a) If an offeror, applicant, lessee or transferee dies, their
rights will be
[[Page 47631]]
assigned or transferred to the heirs, devisees, executor or
administrator of the estate, as appropriate, upon the filing of legal
documents demonstrating that the assignee or transferee is recognized
as the successor of the deceased.
(b) The filing must include the processing fee for the assignment
to an heir/devisee found in the fee schedule in Sec. 3000.120 of this
chapter with the request to assign lease rights.
(c) The filing must include a qualification statement demonstrating
qualification to hold an interest in a lease in accordance with 43 CFR
subpart 3102. Any ownership or interest otherwise forbidden by the
regulations in this part which may be acquired by descent, will,
judgment or decree may be held for a period not to exceed 2 years after
its acquisition. Any such forbidden ownership or interest held for a
period of more than 2 years after acquisition may be subject to
cancellation.
(d) A bond rider or replacement bond may be required for any
bond(s) previously furnished by the decedent.
Sec. 3106.82 Change of name.
(a) A legally recognized change of name of a lessee or sublessee
must be reported to the proper BLM office. The notice of name change
must be submitted in writing with adequate information concerning the
name change. For a corporate name change, the request must include the
Secretary of State's Certificate of Name Change, along with the
Articles of Incorporation, or Amendment, if available.
(b) An entity must include with the notice of name change the
required processing fee listed in the fee schedule in Sec. 3000.120 of
this chapter.
(c) If a bond(s) has been furnished, a change of name on the bond
may be made by surety consent or a rider to the original bond or by a
replacement bond.
Sec. 3106.83 Corporate mergers and dissolution of corporations,
partnerships, and trusts.
(a) In the event a corporate merger affects leases where property
of the dissolving corporation to the surviving corporation is
accomplished by operation of law, an assignment of any affected lease
interest is not required. An entity must notify the BLM of the merger
and provide copies of the Secretary of State's Certificate of Merger,
along with the Articles of Incorporation, or Amendment, if available,
to the BLM.
(b) The BLM will not recognize any transfers provided by the
Articles of Dissolution unless an entity has filed with the BLM a
Certificate of Dissolution of an incorporated entity, certified as
accepted by the State where the entity was incorporated.
(c) An entity must file with the BLM a dissolution of a partnership
or trust through an order or decree that authorizes settlement,
discharge, and distribution of the lease holdings and/or interests for
official recognition of the assignment of lease interests.
(d) An entity must include the processing fee for corporate merger
found in the fee schedule in Sec. 3000.120 of this chapter.
(e) The authorized officer may require a bond rider or replacement
bond for all affected corporations, partnerships or trusts.
Sec. 3106.84 Sheriff's sale/deed.
(a) Where a notice of sale of the leasehold interest is published
pursuant to State law applicable to the execution of sales of real
property, the purchaser must submit a copy of the Sheriff's Certificate
of Sale to the proper BLM office after any redemption period has
passed.
(b) When submitting the certificate described in paragraph (a), an
entity must include the processing fee for sheriff's deed found in the
fee schedule in Sec. 3000.120 of this chapter.
(c) The purchaser(s) must file a qualification statement to hold an
interest in a lease in accordance with 43 CFR subpart 3102. Failure to
provide a qualification statement after 2 years will result in the BLM
cancelling the lease or interest.
(d) If a bond has been furnished by the previous interest holder,
the authorized officer may require a new bond.
Subpart 3107--Continuation and Extension
Sec. 3107.10 Extension by drilling.
(a) Any lease on which actual drilling operations were commenced
prior to the end of its primary term and are being diligently
prosecuted at the end of the primary term or any lease which is part of
an approved oil and gas agreement upon which such drilling takes place,
will be extended for 2 years subject to the rental being timely paid as
required by 43 CFR 3103.20, and subject to the provisions of 43 CFR
3105.23 and 3186.1, if applicable. The BLM will not grant a drilling
extension for a lease in its extended term.
(b) Actual drilling operations must be conducted in a manner that a
reasonable person seriously looking for oil or gas could be expected to
make in that particular area, given the existing knowledge of geologic
and other pertinent facts. In drilling a new well on a lease or for the
benefit of a lease under the terms of an approved agreement, it must be
taken to a depth sufficient to penetrate at least one formation
recognized in the area as potentially productive of oil or gas, or
where an existing well is reentered, it must be taken to a depth
sufficient to penetrate at least one new and deeper formation
recognized in the area as potentially productive of oil or gas. The
authorized officer may determine that further drilling is unwarranted
or impracticable.
(c) When a BLM-approved directional or horizontal well is drilled
within the leased area from an off-lease location with the intent to
produce from the leased area, the BLM will consider drilling to have
commenced on the leased area when drilling is commenced at the off-
lease location.
Production
Sec. 3107.21 Continuation by production.
A lease will be extended so long as oil or gas is being produced in
paying quantities.
Sec. 3107.22 Cessation of production.
A lease in its extended term because of production (and lacking a
well capable of production in paying quantities) will not expire upon
cessation of production, if, within 60 calendar days of cessation of
production, reworking or drilling operations on the leasehold are
commenced and are thereafter conducted with reasonable diligence during
the period of nonproduction. If these reworking or drilling operations
fail to result in production in paying quantities, the lease will
expire by operation of law, effective as of the date production ceased.
Sec. 3107.23 Leases capable of production.
No lease for lands on which there is a well capable of producing
oil or gas in paying quantities will expire because the lessee fails to
produce the same, unless the lessee fails to place the lease in
production within a period of not less than 60 calendar days as
specified by the authorized officer after receipt of notice by
certified mail from the authorized officer to do so. Such production
must be continued unless and until suspension of production is granted
by the authorized officer.
Extension for Terms of Agreements
Sec. 3107.31 Leases committed to an agreement.
(a) Any lease or portion of a lease committed to an oil and gas
agreement that contains a general provision for
[[Page 47632]]
allocation of oil or gas will continue in effect so long as the lease
or portion thereof remains subject to the agreement; provided, that
there is production of oil or gas in paying quantities under the
agreement prior to the expiration date of such lease.
(b) A well that is drilled and completed on a lease committed to a
unit agreement, and that is capable of production in paying quantities
on a lease basis, will extend the term of all expiring Federal leases
committed to the unit agreement for the term of the unit agreement and
for so long as the well is capable of production in paying quantities.
Sec. 3107.32 Segregation of leases committed in part.
(a) Any lease committed after July 29, 1954, to any unit agreement,
which covers lands within and lands outside the area covered by the
agreement, will be segregated, as of the effective date of commitment
to the unit, into separate leases; one covering the lands committed to
the agreement, the other lands not committed to the agreement. For
unproven areas, such segregation will occur only when the public
interest requirement is satisfied pursuant to 43 CFR 3183.4(b). Upon
satisfaction of the public interest requirement, the BLM will deem the
segregation to have been effective as of the date of commitment of the
lands to the unit.
(b)(1) The segregated lease covering the non-unitized portion of
the lands will continue in force and effect for the term of the lease
or for 2 years from the date of segregation, whichever is longer.
(2) If a partially committed lease is in an extended term because
of production, the segregated, non-producing lease will continue in
effect so long as the producing lease exists and rentals are paid, and
so long thereafter as oil or gas is produced from the committed lease.
Sec. 3107.40 Extension by elimination.
Any lease eliminated from any approved or prescribed oil and gas
agreement authorized by the Act and any lease in effect at the
termination of such agreement, unless relinquished, will continue in
effect for the original term of the lease or for 2 years after its
elimination from the agreement or after the termination of the plan or
agreement, whichever is longer, and for so long thereafter as oil or
gas is produced in paying quantities. No lease will be extended if the
public interest requirement for an approved oil and gas agreement has
not been satisfied, as determined by the authorized officer.
Extension of Leases Segregated by Assignment
Sec. 3107.51 Extension after discovery on other segregated portions.
Any lease segregated by assignment, including the retained portion,
will continue in effect for the primary term of the original lease, or
for 2 years after the date a well capable of production in paying
quantities is established upon any other portion of the original lease,
whichever is the longer period.
Sec. 3107.52 Undeveloped parts of leases in their extended term.
Undeveloped parts of leases retained or assigned out of leases
which are in their extended term will continue in effect for 2 years
after the effective date of assignment, provided the parent lease was
issued prior to September 2, 1960.
Sec. 3107.53 Undeveloped parts of producing leases.
Undeveloped parts of leases retained or assigned out of leases
which are extended by production, actual or suspended, or the payment
of compensatory royalty will continue in effect for 2 years after the
effective date of assignment and for so long thereafter as oil or gas
is produced in paying quantities.
Sec. 3107.60 Extension of reinstated leases.
Where a reinstatement of a terminated lease is granted under 43 CFR
3108.20 and the authorized officer finds that the reinstatement will
not afford the lessee a reasonable opportunity to continue operations
under the lease, the authorized officer may extend the term of such
lease for a period sufficient to give the lessee such an opportunity.
Any extension will be subject to the following conditions:
(a) No extension will exceed a period equal to the unexpired
portion of the lease or any extension thereof remaining at the date of
termination.
(b) When the reinstatement occurs after the expiration of the term
or extension thereof, the lease may be extended from the date the
authorized officer grants the petition, but in no event for more than 2
years from the date the reinstatement is authorized and so long
thereafter as oil or gas is produced in paying quantities.
Other Types
Sec. 3107.71 Payment of compensatory royalty.
The payment of a compensatory royalty will extend the term of any
lease for the period during which such compensatory royalty is paid and
for a period of 1 year from the discontinuance of such payments.
Sec. 3107.72 Subsurface storage of oil and gas.
Any lease used for the storage of oil or gas will be extended for
the period of storage under an approved agreement.
Subpart 3108--Relinquishment, Termination, Cancellation
Sec. 3108.10 Relinquishment.
The lessee(s) may relinquish the lease or any legal subdivision of
the lease at any time. The lessee(s) must file a written relinquishment
with the BLM State Office with jurisdiction over the lease. All lessees
holding record title interests in the lease must sign the
relinquishment. A relinquishment takes effect on the date the lessee
filed it with the BLM. However, the lessee(s) and the party that issued
the bond will continue to be obligated to:
(a) Make payments of all accrued rentals and royalties, including
payments of compensatory royalty due for all drainage that occurred
before the relinquishment;
(b) Place all wells to be relinquished in condition for suspension
or abandonment as the BLM requires; and
(c) Complete reclamation of the leased sites after stopping or
abandoning oil and gas operations on the lease, under a plan approved
by the BLM or the appropriate surface management agency.
Termination by Operation of Law and Reinstatement
Sec. 3108.21 Automatic termination.
(a) Except as provided in paragraph (b) of this section, any lease
on which there is no well capable of producing oil or gas in paying
quantities will automatically terminate by operation of law (30 U.S.C.
188) if the lessee fails to pay the rental at the designated ONRR
office on or before the lease anniversary date. However, if the
designated ONRR office is closed on the anniversary date, a rental
payment received on the next business day the ONRR office is open to
the public will be considered timely made.
(b) If the rental payment due under a lease is paid on or before
its anniversary date but the amount of the payment is deficient and the
deficiency is nominal as defined in this section, or the amount of
payment made was determined in accordance with the rental or acreage
figure stated in a decision rendered by the authorized officer, and
such figure is found to be in error resulting in a deficiency, such
lease will not have automatically terminated unless the lessee fails to
pay the deficiency within the period prescribed in the Notice of
Deficiency provided for in this section.
[[Page 47633]]
A deficiency will be considered nominal if it is not more than $100 or
more than 5 percent of the total payment due, whichever is less. The
designated ONRR office will send a Notice of Deficiency to the lessee.
The Notice will allow the lessee 15 days from the date of receipt or
until the due date, whichever is later, to submit the full balance due
to the designated ONRR office. If the payment required by the Notice is
not paid within the time allowed, the lease will have terminated by
operation of law as of its anniversary date.
(c) The automatic termination provision does not apply where, due
to other contingencies, additional rental is due on a date other than
the lease anniversary date and where the lessee did not receive notice
that the obligation had accrued, unless the lessee fails to pay the
rental within the period prescribed in the BLM Notice.
Sec. 3108.22 Reinstatement at existing rental and royalty rates:
Class I reinstatements.
(a) Except as hereinafter provided, the authorized officer may
reinstate a lease which has terminated for failure to pay on or before
the anniversary date the full amount of rental due, provided that:
(1) Such rental was paid or tendered within 20 days after the
anniversary date; and
(2) It is shown to the satisfaction of the authorized officer that
the failure to timely submit the full amount of the rental due was
either justified or not due to a lack of reasonable diligence on the
part of the lessee (reasonable diligence includes a rental payment that
is paid to the ONRR through its online rental payment system on or
before the lease anniversary date. If the designated ONRR office or
payment system is not operational on the anniversary date, payment
received on the next business day in which the designated ONRR office
or payment system is operational to the public will be deemed timely);
and
(3) A petition for reinstatement and the processing fee for lease
reinstatement, Class I, found in the fee schedule in Sec. 3000.120 of
this chapter, are filed with the proper BLM office within 60 days after
receipt of Notice of Termination of Lease due to late payment of
rental. If a terminated lease becomes productive prior to the time the
lease is reinstated, all required royalty that has accrued must be paid
to the ONRR.
(b) The burden of showing that the failure to pay on or before the
anniversary date was justified or not due to lack of reasonable
diligence is on the lessee.
(c) Under no circumstances will a terminated lease be reinstated
if:
(1) A valid oil and gas lease has been issued prior to the filing
of a petition for reinstatement affecting any of the lands covered by
that terminated lease; or
(2) The oil and gas interests of the United States in the lands
have been disposed of or otherwise have become unavailable for leasing.
Sec. 3108.23 Reinstatement at higher rental and royalty rates: Class
II reinstatements.
(a) The authorized officer may, if the requirements of this section
are met, reinstate a competitive oil and gas lease which was terminated
by operation of law for failure to pay rental timely when the rental
was not paid or tendered within 20 calendar days of the termination
date, and it is shown to the satisfaction of the authorized officer
that such failure was justified or not due to a lack of reasonable
diligence, or no matter when the rental was paid, it is shown to the
satisfaction of the authorized officer that such failure was
inadvertent.
(b)(1) Such leases may be reinstated if the required back rental
and royalty at the increased rates accruing from the date of
termination, together with a petition for reinstatement, are filed on
or before the earlier of:
(i) Sixty calendar days after the last date that any lessee of
record received Notice of Termination by certified mail; or
(ii) Twenty-four months after termination of the lease.
(2) After determining that the requirements for filing of the
petition for reinstatement have been timely met, the authorized officer
may reinstate the lease if:
(i) No valid lease has been issued prior to the filing of the
petition for reinstatement affecting any of the lands covered by the
terminated lease, whether such lease is still in effect or not;
(ii) The oil and gas interests of the United States in the lands
have not been disposed of or have not otherwise become unavailable for
leasing;
(iii) Payment of all back rentals and royalties at the rates
established for the reinstated lease has been made;
(iv) An agreement has been signed by the lessee and attached to and
made a part of the lease specifying future rentals at the applicable
rates specified for reinstated leases in 43 CFR 3103.22 and future
royalties at the rates set in 43 CFR 3103.31 for all production removed
or sold from such lease or shared by such lease from production
allocated to the lease by virtue of its participation in an oil and gas
agreement;
(v) A notice of the proposed reinstatement of the terminated lease
and the terms and conditions of reinstatement has been published in the
Federal Register at least 30 days prior to the date of reinstatement
for which the lessee must reimburse the BLM for the full costs incurred
in the publishing of said notice; and
(vi) The lessee has paid the BLM a nonrefundable administrative fee
of $500.
(c) The authorized officer will furnish to the Chairpersons of the
Committee on Natural Resources of the House of Representatives and of
the Committee on Energy and Natural Resources of the Senate, at least
30 days prior to the date of reinstatement, a copy of the notice,
together with information concerning rental, royalty, volume of
production, if any, and any other matter which the authorized officer
considers significant in making the determination to reinstate.
(d) If the authorized officer reinstates the lease, the
reinstatement will be effective as of the date of termination, for the
unexpired portion of the original lease or any extension thereof
remaining on the date of termination, and so long thereafter as oil or
gas is produced in paying quantities. Where a lease is reinstated under
this section and the authorized officer finds that the reinstatement of
such lease either:
(1) Occurs after the expiration of the primary term or any
extension thereof; or
(2) Will not afford the lessee a reasonable opportunity to continue
operations under the lease, the authorized officer may extend the term
of the reinstated lease for such period as determined reasonable, but
in no event for more than 2 years from the date of the reinstatement
and so long thereafter as oil or gas is produced in paying quantities.
Sec. 3108.30 Cancellation.
(a) Whenever the lessee fails to comply with any of the provisions
of the law, the regulations issued thereunder, or the lease, the lease
may be canceled by the Secretary, if the leasehold does not contain a
well capable of production of oil or gas in paying quantities, or if
the lease is not committed to an approved oil and gas agreement that
contains a well capable of production of unitized substances in paying
quantities. The lease may be canceled only if the default continues for
30 calendar days after a notice of default has been delivered in
accordance with 43 CFR 1810.2.
(b) Whenever the lessee fails to comply with any of the provisions
of the
[[Page 47634]]
law, the regulations issued thereunder, or the lease, and if the
leasehold contains a well capable of production of oil or gas in paying
quantities, or if the lease is committed to an approved oil and gas
agreement that contains a well capable of production of unitized
substances in paying quantities, the lease may be canceled only by
court order in the manner provided by section 31(a) of the Act (30
U.S.C. 188).
(c) If any interest in any lease is owned or controlled, directly
or indirectly, by means of stock or otherwise, in violation of any of
the provisions of the Act, the lease may be canceled, or the interest
so owned may be forfeited, or the person so owning or controlling the
interest may be compelled to dispose of the interest, only by court
order in the manner provided by section 27(h)(1) of the Act (30 U.S.C.
184).
(d) Leases will be subject to cancellation if improperly issued.
Sec. 3108.40 Bona fide purchasers.
A lease or interest therein may not be cancelled to the extent that
such action adversely affects the title or interest of a bona fide
purchaser even though such lease or interest, when held by a
predecessor in title, may have been subject to cancellation. All
purchasers will be charged with constructive notice as to all pertinent
regulations and all BLM records pertaining to the lease and the lands
covered by the lease. Prompt action may be taken to dismiss as a party
to any proceedings with respect to a violation by a predecessor of any
provisions of the Act, any person who shows the holding of an interest
as a bona fide purchaser without having violated any provisions of the
Act. No hearing will be necessary upon such showing unless prima facie
evidence is presented that the purchaser is not a bona fide purchaser.
Sec. 3108.50 Waiver or suspension of lease rights.
If, during any proceeding with respect to a violation of any
provision of the regulations in 43 CFR parts 3000 and 3100 or the Act,
a party thereto files a waiver of his/her rights under the lease to
drill or to assign his/her lease interests, or if such rights are
suspended by order of the Secretary pending a decision, payments of
rentals and the running of time against the term of the lease involved
will be suspended as of the first day of the month following the filing
of the waiver or the Secretary's suspension until the first day of the
month following the final decision in the proceeding or the revocation
of the waiver or suspension.
Subpart 3109--Leasing Under Special Acts
Rights-of-Way
Sec. 3109.11 Generally.
The Act of May 21, 1930 (30 U.S.C. 301-306), authorizes either the
leasing of oil and gas deposits under railroad and other rights-of-way
to the owner of the right-of-way or the entering of a compensatory
royalty agreement with adjoining landowners. This authority will be
exercised only with respect to railroad rights-of-way and easements
issued pursuant either to the Act of March 3, 1875 (43 U.S.C. 934 et
seq.), or pursuant to earlier railroad right-of-way statutes, and with
respect to rights-of-way and easements issued pursuant to the Act of
March 3, 1891 (43 U.S.C. 946 et seq.). The oil and gas underlying any
other right-of-way or easement is included within any oil and gas lease
issued pursuant to the Act which covers the lands within the right-of-
way, subject to the limitations on use of the surface, if any, set out
in the statute under which, or permit by which, the right-of-way or
easement was issued, and such oil and gas will not be leased under the
Act of May 21, 1930.
Sec. 3109.12 Application.
(a) No approved form is required for an application to lease oil
and gas deposits underlying a right-of-way.
(b) The right-of-way owner or his/her transferee must file the
application in the proper BLM office.
(c) Include the processing fee for leasing under right-of-way found
in the fee schedule in Sec. 3000.120 of this chapter.
(d) An application must include:
(1) Facts as to the ownership of the right-of-way, and of the
transfer if the application is filed by a transferee;
(2) An executed transfer of the right to obtain a lease, if
necessary;
(3) A description of the development of oil or gas in adjacent or
nearby lands, the location and depth of the wells, the production and
the probability of drainage of the deposits in the right-of-way;
(4) A description of each legal subdivision through which a portion
of the right-of-way desired to be leased traverses; however, a
description by metes and bounds of the right-of-way is not required;
and
(5) A map of the applicable lands.
Sec. 3109.13 Notice.
After the BLM has determined that a lease of a right-of-way or any
portion thereof is consistent with the public interest, either upon
consideration of an application for lease or on its own motion, the
authorized officer will serve notice on the owner or lessee of the oil
and gas rights of the adjoining lands. The adjoining landowner or
lessee will be allowed a reasonable time, as provided in the notice,
within which to submit a bid for the percent of compensatory royalty,
the owner or lessee must pay for the extraction of the oil and gas
underlying the right-of-way through wells on such adjoining lands. The
owner of the right-of-way will be given the same time period to submit
a bid for the lease.
Sec. 3109.14 Award of lease or compensatory royalty agreement.
Award of lease to the owner of the right-of-way, or a contract for
the payment of compensatory royalty by the owner or lessee of the
adjoining lands will be made to the bidder whose offer is determined by
the authorized officer to be to the best advantage of the United
States, considering the amount of royalty to be received and the better
development under the respective means of production and operation.
Sec. 3109.15 Compensatory royalty agreement or lease.
(a) The lease or compensatory royalty agreement will be on a form
approved by the Director.
(b) The primary term of the lease will be for a period of 10 years.
(c) The following provisions of 43 CFR part 3100 apply to the
issuance and administration of leases for oil and gas deposits
underlying a right-of-way issued under this part:
(1) All of subpart 3101, except Sec. 3101.20; and
(2) All of subparts 3102 through 3108;
Sec. 3109.20 Units of the National Park System.
(a) Oil and gas leasing in units of the National Park System will
be governed by 43 CFR part 3100 and all operations conducted on a lease
or permit in such units will be governed by 43 CFR parts 3160 and 3180.
(b) Any lease or permit respecting minerals in units of the
National Park System may be issued or renewed only with the consent of
the Regional Director, National Park Service. Such consent will only be
granted upon a determination by the Regional Director that the activity
permitted under the lease or permit will not have significant adverse
effect upon the resources or administration of the unit pursuant to the
authorizing legislation of the unit. Any lease or permit issued will be
subject to such conditions as may be prescribed by the Regional
Director to protect the surface and significant resources of the unit,
to preserve their
[[Page 47635]]
use for public recreation, and to the condition that site specific
approval of any activity on the lease will only be given upon
concurrence by the Regional Director. All lease applications received
for reclamation withdrawn lands will also be submitted to the Bureau of
Reclamation for review.
(c) The units subject to the regulations in this part are those
units of land and water which are shown on the following maps on file
and available for public inspection in the office of the Director of
the National Park Service and in the Superintendent's Office of each
unit. The boundaries of these units may be revised by the Secretary as
authorized in the Acts.
(1) Lake Mead National Recreation Area--The map identified as
``boundary map, 8360-80013B, revised February 1986.
(2) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National
Recreation Area--The map identified as ``Proposed Whiskeytown-Shasta-
Trinity National Recreation Area,'' numbered BOR-WST 1004, dated July
1963.
(3) Ross Lake and Lake Chelan National Recreation Areas--The map
identified as ``Proposed Management Units, North Cascades,
Washington,'' numbered NP-CAS-7002, dated October 1967.
(4) Glen Canyon National Recreation Area--the map identified as
``boundary map, Glen Canyon National Recreation Area,'' numbered GLC-
91,006, dated August 1972.
(d) The following excepted units will not be open to mineral
leasing:
(1) Lake Mead National Recreation Area. (i) All waters of Lakes
Mead and Mohave and all lands within 300 feet of those lakes measured
horizontally from the shoreline at maximum surface elevation;
(ii) All lands within the unit of supervision of the Bureau of
Reclamation around Hoover and Davis Dams and all lands outside of
resource utilization zones as designated by the Superintendent on the
map (602-2291B, dated October 1987) of Lake Mead National Recreation
Area which is available for inspection in the Office of the
Superintendent.
(2) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National
Recreation Area. (i) All waters of Whiskeytown Lake and all lands
within 1 mile of that lake measured from the shoreline at maximum
surface elevation;
(ii) All lands classified as high-density recreation, general
outdoor recreation, outstanding natural and historic, as shown on the
map numbered 611-20,004B, dated April 1979, entitled ``Land
Classification, Whiskeytown Unit, Whiskeytown-Shasta-Trinity National
Recreation Area.'' This map is available for public inspection in the
Office of the Superintendent;
(iii) All lands within section 34 of Township 33 north, Range 7
west, Mt. Diablo Meridian.
(3) Ross Lake and Lake Chelan National Recreation Areas. (i) All of
Lake Chelan National Recreation Area;
(ii) All lands within \1/2\ mile of Gorge, Diablo and Ross Lakes
measured from the shoreline at maximum surface elevation;
(iii) All lands proposed for or designated as wilderness;
(iv) All lands within \1/2\ mile of State Highway 20;
(v) Pyramid Lake Research Natural Area and all lands within \1/2\
mile of its boundaries.
(4) Glen Canyon National Recreation Area. Those units closed to
mineral disposition within the natural zone, development zone, cultural
zone and portions of the recreation and resource utilization zone as
shown on the map numbered 80,022A, dated March 1980, entitled ``Mineral
Management Plan--Glen Canyon National Recreation Area.'' This map is
available for public inspection in the Office of the Superintendent and
the office of the BLM State Offices, Arizona and Utah.
Sec. Sec. 3109.21-3109.22 [Reserved]
Sec. 3109.30 Shasta and Trinity Units of the Whiskeytown-Shasta-
Trinity National Recreation Area.
Section 6 of the Act of November 8, 1965 (Pub. L. 89-336),
authorizes the Secretary to permit the removal of oil and gas from
lands within the Shasta and Trinity Units of the Whiskeytown-Shasta-
Trinity National Recreation Area in accordance with the Act or the
Mineral Leasing Act for Acquired Lands. Subject to the determination by
the Secretary of Agriculture that removal will not have significant
adverse effects on the purposes of the Central Valley project or the
administration of the recreation area.
PART 3110 [REMOVED]
0
3. Under the authority of 30 U.S.C. 189, part 3110 is removed.
0
4. Revise part 3120 to read as follows:
PART 3120--COMPETITIVE LEASES
Sec.
Subpart 3120--Competitive Leases
General
3120.11 Lands available for competitive leasing.
3120.12 Requirements.
3120.13 Protests.
Lease Terms
3120.21 Duration of lease.
3120.22 Dating of leases.
3120.23 Lease size.
3120.30 Nomination process.
3120.31 General.
3120.32 Filing of a nomination for competitive leasing.
3120.33 Parcels receiving nominations.
Expressions of Interest
3120.41 Process.
3120.42 Agency inventory of leasing.
Notice of Competitive Lease Sale
3120.51 General.
3120.52 Posting timeframes.
Competitive Auction
3120.61 Competitive auction.
3120.62 Payments required.
3120.63 Award of lease.
3120.70 Parcels not bid on at auction.
Future Interest
3120.81 Nomination or expression of interest to make lands available
for competitive lease.
3120.82 Future interest terms and conditions.
3120.83 Compensatory royalty agreements.
Authority: 16 U.S.C. 3101 et seq.; 30 U.S.C. 181 et seq. and
351-359; 40 U.S.C. 471 et seq.; 43 U.S.C. 1701 et seq.; Pub. L. 113-
291, 128 Stat. 3762; and the Attorney General's Opinion of April 2,
1941 (40 Op. Atty. Gen. 41).
Subpart 3120--Competitive Leases
General
Sec. 3120.11 Lands available for competitive leasing.
All lands eligible and available for leasing may be offered for
competitive auction under this subpart, including but not limited to:
(a) Lands that were covered by previously issued oil and gas leases
that have terminated, expired, been cancelled or relinquished;
(b) Lands for which authority to lease has been delegated from the
General Services Administration;
(c) If, in proceeding to cancel a lease, interest in a lease,
option to acquire a lease or an interest therein, acquired in violation
of any of the provisions of the Act, an underlying lease, interest or
option in the lease is cancelled or forfeited through a bankruptcy or
otherwise to the United States and there are valid interests therein
that are not subject to cancellation, forfeiture, or compulsory
disposition, such underlying lease, interest, or option may be sold to
the highest responsible and qualified bidder by competitive bidding
under this subpart, subject to all outstanding valid interests therein
and valid options pertaining thereto. If less
[[Page 47636]]
than the whole interest in the lease, interest, or option is cancelled
or forfeited, such partial interest may likewise be sold by competitive
bidding. If no satisfactory bid is obtained as a result of the
competitive offering of such whole or partial interests, such interests
may be sold in accordance with 30 U.S.C. 184(h)(2) by such other
methods as the authorized officer deems appropriate, but on terms no
less favorable to the United States than those of the best competitive
bid received. Interest in outstanding leases(s) so sold will be subject
to the terms and conditions of the existing lease(s);
(d) Lands which are otherwise unavailable for leasing but which are
subject to drainage (protective leasing);
(e) Lands included in any expression of interest submitted to the
authorized officer;
(f) Lands selected by the authorized officer; and
(g) Lands that were offered on a previous sale for which no bid was
accepted or received.
Sec. 3120.12 Requirements.
(a) Each BLM State Office will hold sales at least quarterly if
eligible lands are available for competitive leasing.
(b) Lease sales will be conducted by a competitive auction process.
(c) The BLM may issue a lease only to the highest responsible and
qualified bidder. If a person does not pay the minimum monies owed the
day of the sale, the BLM may refer that person to the Department of the
Interior's Office of the Inspector General, Administrative Remedies
Division, for appropriate action, including potential suspension and
debarment.
(d) The national minimum acceptable bid will be as specified in
Sec. 3000.130 of this chapter and payable on the gross acreage and
will not be prorated for any lands in which the United States owns a
fractional interest.
Sec. 3120.13 Protests.
(a) No action pursuant to the regulations in this subpart will be
suspended under 43 CFR 4.21(a) due to a protest from a notice by the
authorized officer to hold a lease sale.
(b) Notwithstanding paragraph (a) of this section, the authorized
officer may suspend the offering of a specific parcel while considering
a protest against its inclusion in a Notice of Competitive Lease Sale.
(c) Only the Assistant Secretary for Land and Minerals Management
may suspend a lease sale for good cause after reviewing the reason(s)
for a protest.
Lease Terms
Sec. 3120.21 Duration of lease.
Competitive leases will be issued for a primary term of 10 years.
Sec. 3120.22 Dating of leases.
All competitive leases will be considered issued when signed by the
authorized officer. Competitive leases, except future interest leases
issued under Sec. 3120.80, will be effective as of the first day of
the month following the date the leases are signed on behalf of the
United States. A lease may be made effective on the first day of the
month within which it is issued if a written request is made prior to
the date of signature of the authorized officer. Leases for future
interest will be effective as of the date the mineral interests vest in
the United States.
Sec. 3120.23 Lease size.
Lands may be offered in leasing units of not more than 2,560 acres
outside Alaska, or 5,760 acres within Alaska, which may be as nearly
compact in form as possible.
Sec. 3120.30 Nomination process.
The Director may elect to implement the provisions contained in
Sec. Sec. 3120.31 through 3120.33 after review of any comments
received during a period of not less than 30 calendar days following
publication in the Federal Register of notice that implementation of
those sections is being considered.
Sec. 3120.31 General.
The Director may elect to accept nominations, as set forth in this
section, as part of the competitive process required by the Act or
elect to accept informal expressions of interest. A List of Lands
Available for Competitive Nominations may be posted, and nominations in
response to this list must be made in accordance with instructions
contained therein and on a form or by a method approved by the
Director. Those parcels receiving nominations will be included in a
Notice of Competitive Lease Sale, unless the parcel is withdrawn by the
BLM.
Sec. 3120.32 Filing of a nomination for competitive leasing.
Nominations filed in response to a List of Lands Available for
Competitive Nominations and on a form or using a method approved by the
Director must:
(a) Include the nominator's name and personal or business address.
The name of only one citizen, association or partnership, corporation
or municipality must appear as the nominator. All communications
relating to leasing will be sent to that name and address, which will
constitute the nominator's name and address of record;
(b) Be completed, and filed in accordance with the instructions
printed on the form and the regulations in this subpart;
(c) Be filed within the filing period and in the BLM State Office
specified in the List of Lands Available for Competitive Nominations. A
nomination will be unacceptable and will be returned if it has not been
completed and timely filed in accordance with the instructions on the
form or with the other requirements in this subpart; and
(d) Be accompanied by a remittance, as specified in Sec. 3000.120
of this chapter for a formal lease nomination.
Sec. 3120.33 Parcels receiving nominations.
Parcels which receive nominations may be included in a Notice of
Competitive Lease Sale. The Notice will indicate the number of
nominations received for each parcel.
Expressions of Interest
Sec. 3120.41 Process.
(a) A party submitting an expression of interest in leasing land
available for disposition under section 17 of the Mineral Leasing Act
must include the submitter's name and address and must submit the
expression of interest through the BLM's online leasing system.
(b) The expression must provide a description of the lands
identified by legal land description, as follows:
(1) For lands surveyed under the public land survey system,
describe the lands to the nearest aliquot part within the legal
subdivision, section, township, range, and meridian;
(2) For unsurveyed lands, describe the lands by metes and bounds,
giving courses and distances, and tie this information to an official
corner of the public land surveys, or to a prominent topographic
feature;
(3) For approved protracted surveys, include an entire section,
township, range, and meridian. Do not divide protracted sections into
aliquot parts;
(4) For lands that have water boundaries, describe the lands based
on the initial survey or deed acquiring ownership;
(5) For fractional interest lands, identify the United States
mineral ownership by percentage;
(6) For split estate lands, where the surface rights are in private
ownership and the rights to develop the oil and gas are managed by the
Federal Government, submit the private surface owner's name and
address.
[[Page 47637]]
(7) For lands where the acquiring agency has assigned an
acquisition or tract number covering the lands applied, submit the
number in addition to any description otherwise required by this
section. If the authorized officer determines that the acquisition or
tract number, together with identification of the State and county,
constitutes an adequate description, the authorized officer may allow
the description in this manner in lieu of other descriptions required
by this section.
(c) A submitter may submit more than one expression of interest, so
long as each expression separately satisfies the requirements of
paragraph (b) of this section.
(d) Each expression of interest must include a filing fee, as found
in the fee schedule in Sec. 3000.120 of this chapter.
(e) The BLM may include lands in a lease sale on its own
initiative.
(f) When determining whether the BLM should offer lands specified
in an expression of interest at lease sales, the BLM will evaluate the
Secretary's obligations to manage public lands for multiple use and
sustained yield and to take any action required to prevent unnecessary
or undue degradation of the lands and their resources, along with other
applicable legal requirements. At a minimum, the BLM will consider:
(1) Proximity to oil and gas development existing at the time of
the BLM's evaluation, giving preference to lands upon which a prudent
operator would seek to expand existing operations;
(2) The presence of important fish and wildlife habitats or
connectivity areas, giving preference to lands that would not impair
the proper functioning of such habitats or corridors;
(3) The presence of historic properties, sacred sites, and other
high value leasing lands, giving preference to lands that would not
impair the cultural significance of such resources;
(4) The presence of recreation and other important uses or
resources, giving preference to lands that would not impair the value
of such uses or resources; and
(5) The potential for oil and gas development, giving preference to
lands with high potential for development.
(g) The BLM may offer for sale all or some of the lands specified
in an expression of interest and may offer those lands as part of a
parcel that includes lands not specified in the expression of interest.
Sec. 3120.42 Agency inventory of leasing.
Until August 16, 2032, the BLM will from time to time calculate,
for the preceding 1-year period, the acreage for which expressions of
interest have been submitted to the BLM and the sum total of acres
offered for lease.
Notice of Competitive Lease Sale
Sec. 3120.51 General.
(a) The lands available for competitive lease sale under this
subpart will be described in a Notice of Competitive Lease Sale.
(b) The time, date, and place of the competitive lease sale will be
stated in the notice.
(c) The notice will include an identification of, and a copy of,
stipulations applicable to each parcel.
Sec. 3120.52 Posting timeframes.
(a) After identifying a preliminary list of lands for a lease sale,
the BLM will provide a scoping period, of not less than 30 calendar
days, for public comment on the preliminary parcel list for the
upcoming lease sale. The preliminary parcel list is not subject to
protests.
(b) After drafting a National Environmental Policy Act (NEPA)
document for a lease sale, the BLM will provide a comment period, of
not less than 30 calendar days, for public comment on the NEPA document
for the upcoming lease sale. The draft NEPA document is not subject to
protests or appeals.
(c) At least 60 calendar days prior to conducting a competitive
auction, the BLM will make available to the public a list of lands to
be offered for competitive lease sale in a Notice of Competitive Lease
Sale.
(d) After posting the Notice of Competitive Lease Sale notice, the
BLM will provide a protest period, of not less than 30 calendar days,
for public input on the upcoming lease sale.
(e) The BLM will make available the final NEPA compliance documents
prior to issuing a lease from the lease sale.
Competitive Auction
Sec. 3120.61 Competitive auction.
(a) Parcels will be offered by competitive auction.
(b) A winning bid will be the highest bid by a responsible and
qualified bidder, equal to or exceeding the national minimum acceptable
bid. The decision of the auctioneer will be final.
Sec. 3120.62 Payments required.
(a) Payments must be made in accordance with 43 CFR 3103.11.
(b) Each winning bidder must submit, by the close of official
business hours, or such other time as may be specified by the
authorized officer, on the day of the sale for the parcel:
(1) The minimum bonus bid as specified in Sec. 3000.130 of this
chapter;
(2) The total amount of the first year's rental; and
(3) The processing fee for competitive lease applications found in
the fee schedule in Sec. 3000.120 of this chapter for each parcel.
(c) The winning bidder must submit the balance of the bonus bid to
the proper BLM office within 10 business days after the last day of the
competitive auction.
Sec. 3120.63 Award of lease.
(a) A bid will not be withdrawn and will constitute a legally
binding commitment to execute the lease bid form and accept a lease,
including the obligation to pay the bonus bid, first year's rental, and
processing fee. Execution by the high bidder of a competitive lease bid
form approved by the Director constitutes certification of compliance
with 43 CFR subpart 3102, will constitute a binding lease offer,
including all terms and conditions applicable thereto, and must be
submitted when payment is made in accordance with Sec. 3120.62(b).
Failure to comply with Sec. 3120.62(c) will result in rejection of the
bid and forfeiture of the monies submitted under Sec. 3120.62(b).
(b) A lease will be awarded to the highest responsible and
qualified bidder. A copy of the lease will be provided to the lessee
after signature by the authorized officer.
(c) If a bid is rejected, the land may be reoffered competitively
under this subpart.
(d) The BLM will not issue a lease until it resolves all protests
covering the lands to be leased.
(e) Leases will be issued within 60 calendar days, following
payment by the successful bidder of the remainder of the bonus bid, if
any, and the annual rental for the first lease year. If the BLM cannot
issue the lease within 60 days, the BLM may reject the offer.
Sec. 3120.70 Parcels not bid on at auction.
Lands offered at the competitive auction that received no bids may
be offered in a future competitive auction.
Future Interest
Sec. 3120.81 Nomination or expression of interest to make lands
available for competitive lease.
A nomination or expression of interest for a future interest lease
must be filed in accordance with this subpart.
Sec. 3120.82 Future interest terms and conditions.
(a) No rental or royalty will be due to the United States prior to
the vesting of
[[Page 47638]]
the oil and gas rights in the United States. However, the future
interest lessee must agree that if, he/she is or becomes the holder of
any present interest operating rights in the lands:
(1) The future interest lessee transfers all or a part of the
lessee's present oil and gas interests, such lessee must file in the
proper BLM office an assignment or transfer, in accordance with 43 CFR
subpart 3106, of the future interest lease of the same type and
proportion as the transfer of the present interest; and
(2) The future interest lessee's present lease interests are
relinquished, cancelled, terminated, or expired, the future interest
lease rights with the United States also will cease and terminate to
the same extent.
(b) Upon vesting of the oil and gas rights in the United States,
the future interest lease rental and royalty will be as for any
competitive lease issued under this subpart, as provided in 43 CFR
subpart 3103, and the acreage will be chargeable in accordance with 43
CFR 3101.20.
Sec. 3120.83 Compensatory royalty agreements.
The terms and conditions of compensatory royalty agreements
involving acquired lands in which the United States owns a future or
fractional interest will be established on an individual case basis.
Such agreements may be required when leasing is not possible in
situations where the interest of the United States in the oil and gas
deposit includes both a present and a future fractional interest in the
same tract containing a producing well.
PART 3130--OIL AND GAS LEASING: NATIONAL PETROLEUM RESERVE, ALASKA
0
5. The authority citation for part 3130 continues to read as follows:
Authority: 42 U.S.C. 6508, 43 U.S.C. 1733 and 1740.
0
6. Revise Sec. 3137.23 to read as follows:
Sec. 3137.23 NPR-A unitization application.
The unitization application must include:
(a) The proposed unit agreement;
(b) A map showing the proposed unit area;
(c) A list of committed tracts including, for each tract, the:
(1) Legal land description and acreage;
(2) Names of persons holding record title interest;
(3) Names of persons owning operating rights; and
(4) Name of the unit operator.
(d) A statement certifying:
(1) The operator invited all owners of oil and gas rights (leased
or unleased) and lease interests (record title and operating rights)
within the external boundary of the unit area described in the
application to join the unit;
(2) That there are sufficient tracts committed to the unit
agreement to reasonably operate and develop the unit area;
(3) The commitment status of all tracts within the area proposed
for unitization; and
(4) The operator accepts unit obligations under Sec. 3137.60 of
this subpart.
(e) Evidence of acceptable bonding;
(f) A discussion of reasonably foreseeable and significantly
adverse effects on the surface resources of the NPR-A and how unit
operations may reduce impacts compared to individual lease operations;
(g) A discussion of the proposed methodology for allocating
production among the committed tracts. If the unit includes non-Federal
oil and gas mineral estate, you must explain how the methodology takes
into account reservoir heterogeneity and area variation in reservoir
producibility; and
(h) Other documentation that the BLM may request. The BLM may
require additional copies of maps, plats, and other similar exhibits.
(i) The processing fee found in the fee schedule in Sec. 3000.120
of this chapter.
0
7. Revise Sec. 3137.61 to read as follows:
Sec. 3137.61 Change in unit operators.
(a) To change unit operators, the new unit operator must submit to
the BLM:
(1) Statements that:
(i) The new operator accepts unit obligations; and
(ii) The percentage of required interest owners consented to a
change of unit operator;
(2) Evidence of acceptable bonding (see Sec. 3137.60(b)); and
(3) The processing fee found in the fee schedule in Sec. 3000.120
of this chapter.
(b) The effective date of the change in unit operator is the date
the BLM approves the new unit operator.
0
8. Revise Sec. 3138.11 to read as follows:
Sec. 3138.11 Applications for a subsurface storage agreement.
(a) An application for a subsurface storage agreement must include:
(1) The reason for forming a subsurface storage agreement;
(2) A description of the area to be included in the subsurface
storage agreement;
(3) A description of the formation to be used for storage;
(4) The proposed storage fees or rentals. The fees or rentals must
be based on the value of the subsurface storage, injection, and
withdrawal volumes, and rental income or other income generated by the
operator for letting or subletting the storage facilities;
(5) The payment of royalty for native oil or gas (oil or gas that
exists in the formation before injection and that is produced when the
stored oil or gas is withdrawn);
(6) A description of how often and under what circumstances the
operator and the BLM intend to renegotiate fees and payments;
(7) The proposed effective date and term of the subsurface storage
agreement;
(8) Certification that all owners of mineral rights (leased or
unleased) and lease interests have consented to the gas storage
agreement in writing;
(9) An ownership schedule showing lease or land status;
(10) A schedule showing the participation factor for all parties to
the subsurface storage agreement;
(11) Supporting data (geologic maps showing the storage formation,
reservoir data, etc.) demonstrating the capability of the reservoir for
storage; and
(12) The processing fee found in the fee schedule in Sec. 3000.120
of this chapter.
(b) The BLM will negotiate the terms of a subsurface storage
agreement with the operator, including bonding, and reservoir
management.
(c) The BLM may request documentation in addition to that which the
operator provides under paragraph (a) of this section.
0
9. Revise part 3140 to read as follows:
PART 3140--LEASING IN SPECIAL TAR SAND AREAS
Subpart 3140--Conversion of Existing Oil and Gas Leases and Valid
Claims Based on Mineral Locations
Sec.
3140.1 Purpose.
3140.3 Authority.
3140.5 Definitions.
General Provisions
3140.11 Existing rights.
3140.12 Notice of intent to convert.
3140.13 Exploration plans.
3140.14 Other provisions.
Applications
3140.21 Forms.
3140.22 Who may apply.
3140.23 Application requirements.
Time Limitations
3140.31 Conversion applications.
3140.32 Action on an application.
Conversion
3140.41 Approval of plan of operations (and unit and operating
agreements).
[[Page 47639]]
3140.42 Issuance of the combined hydrocarbon lease.
3140.50 Duration of the lease.
3140.60 Use of additional lands.
3140.70 Lands within the National Park System.
Subpart 3141--Leasing in Special Tar Sand Areas
3141.1 Purpose.
3141.3 Authority.
3141.5 Definitions.
3141.8 Other applicable regulations.
3141.10 General.
Prelease Exploration Within Special Tar Sand Areas
3141.21 Geophysical exploration.
3141.22 Exploration licenses.
3141.30 Land use plans.
Consultation
3141.41 Consultation with the Governor.
3141.42 Consultation with others.
Leasing Procedures
3141.51 Economic evaluation.
3141.52 Term of lease.
3141.53 Royalties and rentals.
3141.54 Lease size.
3141.55 Dating of lease.
Sale Procedures
3141.61 Initiation of competitive lease offering.
3141.62 Publication of a notice of competitive lease offering.
3141.63 Conduct of sales.
3141.64 Qualifications.
3141.65 Rejection of bid.
3141.66 Consideration of next highest bid.
3141.70 Award of lease.
Subpart 3142--Paying Quantities/Diligent Development for Combined
Hydrocarbon and Tar Sand Leases
3142.1 Purpose.
3142.3 Authority.
3142.5 Definitions.
3142.10 Diligent development.
Minimum Production Levels
3142.21 Minimum production schedule.
3142.22 Advance royalties in lieu of production.
3142.30 Expiration.
Authority: 30 U.S.C. 181 et seq.; 30 U.S.C. 351-359; 43 U.S.C.
1701 et seq.; Pub. L. 97-78, 95 Stat. 1070; 42 U.S.C. 15801, unless
otherwise noted.
Subpart 3140--Conversion of Existing Oil and Gas Leases and Valid
Claims Based on Mineral Locations
Sec. 3140.1 Purpose.
The purpose of this subpart is to provide for the conversion of
existing oil and gas leases and valid claims based on mineral locations
within Special Tar Sand Areas to combined hydrocarbon leases.
Sec. 3140.3 Authority.
These regulations are issued under the authority of the Mineral
Lands Leasing Act of February 25, 1920 (30 U.S.C. 181 et seq.), the
Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), and the
Combined Hydrocarbon Leasing Act of 1981 (Pub. L. 97-78).
Sec. 3140.5 Definitions.
As used in this subpart, the term:
Combined hydrocarbon lease means a lease issued in a Special Tar
Sand Area for the removal of gas and nongaseous hydrocarbon substances
other than coal, oil shale or gilsonite.
Complete plan of operations means a plan of operations that is in
substantial compliance with the information requirements of 43 CFR part
3592 for both exploration plans and mining plans, as well as any
additional information required in this part and under 43 CFR part
3593, as may be appropriate.
Owner of an oil and gas lease means all of the record title holders
of an oil gas lease.
Owner of a valid claim based on a mineral location means all
parties appearing on the title records recognized as official under
State law as having the right to sell or transfer any part of the
mining claim, which was located within a Special Tar Sand Area prior to
January 21, 1926, for any hydrocarbon resource, except coal, oil shale
or gilsonite, leasable under the Combined Hydrocarbon Leasing Act.
Special Tar Sand Area means an area designated by the Department of
the Interior's orders of November 20, 1980 (45 FR 76800), and January
21, 1981 (46 FR 6077) referred to in those orders as Designated Tar
Sand Areas, as containing substantial deposits of tar sand.
Unitization means unitization as that term is defined in 43 CFR
part 3180.
General Provisions
Sec. 3140.11 Existing rights.
(a) The owner of an oil and gas lease issued prior to November 16,
1981, or the owner of a valid claim based on a mineral location
situated within a Special Tar Sand Area may convert that portion of the
lease or claim so situated to a combined hydrocarbon lease, provided
that such conversion is consistent with the provisions of this subpart.
The application time period ended on November 15, 1983.
(b) Owners of oil and gas leases in Special Tar Sand Areas who
elect not to convert their leases to a combined hydrocarbon lease do
not acquire the rights to any hydrocarbon resource except oil and gas
as those terms were defined prior to the enactment of the Combined
Hydrocarbon Leasing Act of 1981. The failure to file an application to
convert a valid claim based on a mineral location within the time
herein provided will have no effect on the validity of the mining claim
nor the right to maintain that claim.
Sec. 3140.12 Notice of intent to convert.
(a) Owners of oil and gas leases in Special Tar Sand Areas which
were scheduled to expire prior to November 15, 1983, could have
preserved the right to convert their leases to combined hydrocarbon
leases by filing a Notice of Intent to Convert with the BLM Utah State
Office.
(b) A letter, submitted by the lessee, notifying the BLM of the
lessee's intention to submit a plan of operations constituted a notice
of intent to convert a lease. The Notice of Intent must have contained
the lease number.
(c) The Notice of Intent must have been filed prior to the
expiration date of the lease. The notice would have preserved the
lessee's conversion rights only until November 15, 1983.
Sec. 3140.13 Exploration plans.
(a) The authorized officer may grant permission to holders of
existing oil and gas leases to gather information to develop, perfect,
complete or amend a plan of operations required for conversion upon the
approval of the authorized officer of an exploration plan developed in
accordance with 43 CFR 3592.1.
(b) The approval of an exploration plan in units of the National
Park System requires the consent of the Regional Director of the
National Park Service in accordance with Sec. 3140.70.
(c) The filing of an exploration plan alone will be insufficient to
meet the requirements of a complete plan of operations as set forth in
Sec. 3140.2-3.
Sec. 3140.14 Other provisions.
(a) A combined hydrocarbon lease will be for no more than 5,760
acres. Acreage held under a combined hydrocarbon lease in a Special Tar
Sand Area is not chargeable to State oil and gas limitations allowable
in 43 CFR 3101.2.
(b) The annual rental rate for all combined hydrocarbon leases will
be as stated in the lease. The rental rate for a combined hydrocarbon
lease will be payable upon conversion and annually, in advance,
thereafter.
(c)(1) The royalty rate for a combined hydrocarbon lease converted
from an oil and gas lease will be that provided for in the original oil
and gas lease.
(2) The royalty rate for a combined hydrocarbon lease converted
from a valid claim based on a mineral location will be 16.67 percent.
[[Page 47640]]
(3) A reduction of royalties may be granted either as provided in
Sec. 3103.40 or, at the request of the lessee and upon a review of
information provided by the lessee, prior to commencement of commercial
operations if the purpose of the request is to promote development and
the maximum production of tar sand. A reduction of royalties for the
tar sand will not apply to the oil and gas resource. A reduction of
royalties for the oil and gas will not apply to the tar sand resource.
(d)(1) Existing oil and gas leases and valid claims based on
mineral locations may be unitized prior to or after the lease or claim
has been converted to a combined hydrocarbon lease. The requirements of
43 CFR part 3180 will provide the procedures and general guidelines for
unitization of combined hydrocarbon leases. For leases within units of
the National Park System, unitization requires the consent of the
Regional Director of the National Park Service in accordance with Sec.
3140.41(b).
(2) If the plan of operations submitted for conversion is designed
to cover a unit, a fully executed unit agreement will be approved
before the plan of operations applicable to the unit may be approved
under Sec. 3140.20. The proposed plan of operations and the proposed
unit agreement may be reviewed concurrently. The approved unit
agreement will be effective after the leases or claims subject to it
are converted to combined hydrocarbon leases. The plan of operations
will explain how and when each lease included in the unit operation
will be developed.
(e) Except as provided for in this subpart, the regulations set out
in 43 CFR part 3100 are applicable, as appropriate, to all combined
hydrocarbon leases issued under this subpart.
Applications
Sec. 3140.21 Forms.
No special form is required for a conversion application.
Sec. 3140.22 Who may apply.
Only owners of oil and gas leases issued within Special Tar Sands
Areas, on or before November 16, 1981, and owners of valid claims based
on mineral locations within Special Tar Sands Areas, are eligible to
convert leases or claims to combined hydrocarbon leases in Special Tar
Sands Areas.
Sec. 3140.23 Application requirements.
(a) The BLM stopped accepting conversion applications on November
15, 1983. The applicant must have submitted to the BLM Utah State
Office, a written request for a combined hydrocarbon lease signed by
the owner of the lease or valid claim which must be accompanied by
three copies of a plan of operations which must meet the requirements
of 43 CFR 3592.1 and which must have provided for reasonable protection
of the environment and diligent development of the resources requiring
enhanced recovery methods of development or mining.
(b) A plan of operations may be modified or amended before or after
conversion of a lease or valid claim to reflect changes in technology,
slippages in schedule beyond the control of the lessee, new information
about the resource or the economic or environmental aspects of its
development, changes to or initiation of applicable unit agreements or
for other purposes. To obtain approval of a modification or amended
plan, the applicant must submit a written statement of the proposed
changes or supplements and the justification for the changes proposed.
Any modifications will be in accordance with 43 CFR 3592.1(c). The
approval of the modification or amendment is the responsibility of the
authorized officer. Changes or modification to the plan of operations
will have no effect on the primary term of the lease. The authorized
officer will, prior to approving any amendment or modification, review
the modification or amendment with the appropriate surface management
agency. For leases within units of the National Park System, no
amendment or modification will be approved without the consent of the
Regional Director of the National Park Service in accordance with Sec.
3140.70.
(c) The plan of operations may be for a single existing oil and gas
lease or valid claim or for an area of proposed unit operation.
(d) The plan of operations must identify by lease number all
Federal oil and gas leases proposed for conversion and identify valid
claims proposed for conversion by the recordation number of the mining
claim.
(e) The plan of operations must include any proposed designation of
operator or proposed operating agreement.
(f) The plan of operations may include an exploration phase, if
necessary, but it must include a development phase. Such a plan can be
approved even though it may indicate work under the exploration phase
is necessary to perfect the proposed plan for the development phase as
long as the overall plan demonstrates reasonable protection of the
environment and diligent development of the resources requiring
enhanced recovery methods of mining.
(g)(1) Upon determination that the plan of operations is complete,
the authorized officer will suspend the term of the Federal oil and gas
lease(s) as of the date that the complete plan was filed until the plan
is finally approved or rejected. Only the term of the oil and gas lease
will be suspended, not any operation and production requirements
thereunder.
(2) If the authorized officer determines that the plan of
operations is not complete, the applicant will be notified that the
plan is subject to rejection if not completed within the period
specified in the notice.
(3) The authorized officer may request additional data after the
plan of operations has been determined to be complete. This request for
additional information will have no effect on the suspension of the
running of the oil and gas lease.
Time Limitations
Sec. 3140.31 Conversion applications.
A plan of operations to convert an existing oil and gas lease or
valid claim based on a mineral location to a combined hydrocarbon lease
must have been filed on or before November 15, 1983, or prior to the
expiration of the oil and gas lease, whichever was earlier, except as
provided in Sec. 3140.12.
Sec. 3140.32 Action on an application.
The authorized officer will take action on an application for
conversion within 15 months of receipt of a proposed plan of
operations.
Conversion
Sec. 3140.41 Approval of plan of operations (and unit and operating
agreements).
(a) The owner of an oil and gas lease, or the owner of a valid
claim based on a mineral location will have such lease or claim
converted to a combined hydrocarbon lease when the plan of operations,
filed under Sec. 3140.23, is deemed acceptable and is approved by the
authorized officer.
(b) The conversion of a lease within a unit of the National Park
System will be approved only with the consent of the Regional Director
of the National Park Service in accordance with Sec. 3140.70.
(c) A plan of operations may not be approved in part but may be
approved where it contains an appropriately staged plan of exploration
and development operations.
[[Page 47641]]
Sec. 3140.42 Issuance of the combined hydrocarbon lease.
(a) After a plan of operations is found acceptable, and is
approved, the authorized officer will prepare and submit to the owner,
for execution, a combined hydrocarbon lease containing all appropriate
terms and conditions, including any necessary stipulations that were
part of the oil and gas lease being converted, as well as any
additional stipulations, such as those required to ensure compliance
with the plan of operations.
(b) The authorized officer will not sign the combined hydrocarbon
lease until it has been executed by the conversion applicant and the
lease or claim to be converted has been formally relinquished to the
United States.
(c) The effective date of the combined hydrocarbon lease will be
the first day of the month following the date that the authorized
officer signs the lease.
(d) The authorized officer will issue one combined hydrocarbon
lease to cover the existing contiguous oil and gas leases or valid
claims based on mineral locations which have been approved for
conversion within the special tar sand area.
Sec. 3140.50 Duration of the lease.
A combined hydrocarbon lease will be for a primary term of 10 years
and for so long thereafter as oil or gas is produced in paying
quantities. If the applicant withdraws the combined hydrocarbon lease
application or the BLM denies the conversion application, the
suspension on the oil and gas lease will be lifted and the term will be
extended by the time remaining on the term of the lease.
Sec. 3140.60 Use of additional lands.
(a) The authorized officer may noncompetitively lease additional
lands for ancillary facilities in a Special Tar Sand Area that are
needed to support any operations necessary for the recovery of tar
sand. Such uses include, but are not limited to, mill site or waste
disposal. Application for a lease or permit to use additional lands
must be filed under the provisions of 43 CFR part 2920 with the proper
BLM office having jurisdiction of the lands. The application for
additional lands may be filed at the time a plan of operations is
filed.
(b) A lease for the use of additional lands will not be issued when
the use can be authorized under 43 CFR parts 2800 and 2880. Such uses
include, but are not limited to, reservoirs, pipelines, electrical
generation systems, transmission lines, roads, and railroads.
(c) Within units of the National Park System, permits or leases for
additional lands will only be issued by the National Park Service.
Applications for such permits or leases must be filed with the Regional
Director of the National Park Service.
Sec. 3140.70 Lands within the National Park System.
The BLM stopped accepting conversion applications on November 15,
1983. Conversions of existing oil and gas leases and valid claims based
on mineral locations to combined hydrocarbon leases within units of the
National Park System will be allowed only where mineral leasing is
permitted by law and where the lands covered by the lease or claim
proposed for conversion are open to mineral resource disposition in
accordance with any applicable minerals management plan. (See 43 CFR
3100.3(h)(4)). In order to consent to any conversion or any subsequent
development under a combined hydrocarbon lease requiring further
approval, the Regional Director of the National Park Service must find
that there will be no resulting significant adverse impacts on the
resources and administration of such areas or on other contiguous units
of the National Park System in accordance with 43 CFR 3109.20(b).
Subpart 3141--Leasing in Special Tar Sand Areas
Sec. 3141.1 Purpose.
The purpose of this subpart is to provide for the competitive
leasing of lands and issuance of combined hydrocarbon leases, oil and
gas leases, or tar sand leases within special tar sand areas.
Sec. 3141.3 Authority.
The regulations in this subpart are issued under the authority of
the Mineral Leasing Act of February 25, 1920 (30 U.S.C. 181 et seq.),
the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), the
Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et
seq.), the Combined Hydrocarbon Leasing Act of 1981 (95 Stat. 1070),
and the Energy Policy Act of 2005 (Pub. L. 109-58).
Sec. 3141. 5 Definitions.
As used in this subpart, the term:
Combined hydrocarbon lease means a lease issued in a Special Tar
Sand Area for the removal of any gas and nongaseous hydrocarbon
substance other than coal, oil shale or gilsonite.
Oil and gas lease means a lease issued in a Special Tar Sand Area
for the exploration and development of oil and gas resources other than
tar sand.
Special Tar Sand Area means an area designated by the Department of
the Interior's Orders of November 20, 1980 (45 FR 76800), and January
21, 1981 (46 FR 6077), and referred to in those orders as Designated
Tar Sand Areas, as containing substantial deposits of tar sand.
Tar sand means any consolidated or unconsolidated rock (other than
coal, oil shale or gilsonite) that either:
(1) Contains a hydrocarbonaceous material with a gas-free
viscosity, at original reservoir temperature greater than 10,000
centipoise, or
(2) contains a hydrocarbonaceous material and is produced by mining
or quarrying.
Tar sand lease means a lease issued in a Special Tar Sand area
exclusively for the exploration for and extraction of tar sand.
Sec. 3141.8 Other applicable regulations.
(a) Combined hydrocarbon leases. (1) The following provisions of 43
CFR part 3100, as they relate to competitive leasing, apply to the
issuance and administration of combined hydrocarbon leases issued under
this part.
(i) All of 43 CFR subpart 3100;
(ii) The following sections of 43 CFR subpart 3101: Sec. Sec.
3101.11, 3101.21, 3101.22, 3101.24, 3101.25, 3101.61, 3101.62, and
3101.65;
(iii) All of 43 CFR subpart 3102;
(iv) All of 43 CFR subpart 3103, with the exception of Sec. Sec.
3103.21, and 3103.31-1 (a), (b), and (c);
(v) All of 43 CFR subpart 3104;
(vi) All of 43 CFR subpart 3105;
(vii) All of 43 CFR subpart 3106, with the exception of Sec.
3106.10(i);
(viii) All of 43 CFR subpart 3107;
(ix) All of 43 CFR subpart 3108; and
(x) All of 43 CFR subpart 3109, with special emphasis on Sec.
3109.20(b).
(2) Prior to commencement of operations, the lessee must develop
either a plan of operations as described in 43 CFR 3592.1 which ensures
reasonable protection of the environment or file an application for a
permit to drill as described in 43 CFR part 3160, whichever is
appropriate.
(3) The provisions of 43 CFR part 3180 will serve as general
guidance to the administration of combined hydrocarbon leases issued
under this part to the extent they may be included in unit or
cooperative agreements.
(b) Oil and gas leases. (1) All of the provisions of 43 CFR parts
3100, and 3120 apply to the issuance and administration of oil and gas
leases issued under this part.
[[Page 47642]]
(2) All of the provisions of 43 CFR parts 3160 and 3170 apply to
operations on an oil and gas lease issued under this part.
(3) The provisions of 43 CFR part 3180 apply to the administration
of oil and gas leases issued under this part.
(c) Tar sand leases. (1) The following provisions of 43 CFR part
3100, as they relate to competitive leasing, apply to the issuance of
tar sand leases issued under this part.
(i) All of 43 CFR subpart 3102;
(ii) All of 43 CFR subpart 3103 with the exception of Sec. Sec.
3103.21, 3103.22(d), and 3103.30;
(iii) All of 43 CFR 3120.50; and
(iv) All of 43 CFR 3120.60.
(2) Prior to commencement of operations, the lessee must develop a
plan of operations as described in 43 CFR 3592.1 which ensures
reasonable protection of the environment.
Sec. 3141.10 General.
(a) Combined hydrocarbons or tar sands within a Special Tar Sand
Area will be leased only by competitive bonus bidding.
(b) Oil and gas within a Special Tar Sand Area will be leased by
competitive bonus bidding as described in 43 CFR part 3120.
(c) The authorized officer may issue either combined hydrocarbon
leases, or oil and gas leases for oil and gas within such areas.
(d) The rights to explore for or develop tar sand deposits in a
Special Tar Sand Area may be acquired through either a combined
hydrocarbon lease or a tar sand lease.
(e) An oil and gas lease in a Special Tar Sand Area does not
include the rights to explore for or develop tar sand.
(f) A tar sand lease in a Special Tar Sand Area does not include
the rights to explore for or develop oil and gas.
(g) The minimum acceptable bid for a lease issued for tar sand will
be as specified in Sec. 3000.130 of this chapter.
(h) The acreage of combined hydrocarbon leases or tar sand leases
held within a Special Tar Sand Area will not be charged against acreage
limitations for the holding of oil and gas leases as provided in 43 CFR
3101.21.
(i)(1) The authorized officer may noncompetitively lease additional
lands for ancillary facilities in a Special Tar Sand Area that are
shown by an applicant to be needed to support any operations necessary
for the recovery of tar sand. Such uses include, but are not limited
to, mill siting or waste disposal. An application for a lease or permit
to use additional lands must be filed under the provisions of 43 CFR
part 2920 with the proper BLM office having jurisdiction of the lands.
The application for additional lands may be filed at the time a plan of
operations is filed.
(2) A lease for the use of additional lands will not be issued
under this part when the use can be authorized under 43 CFR part 2800.
Such uses include, but are not limited to, reservoirs, pipelines,
electrical generation systems, transmission lines, roads and railroads.
(3) Within units of the National Park System, permits or leases for
additional lands for any purpose will be issued only by the National
Park Service. Applications for such permits or leases must be filed
with the Regional Director of the National Park Service.
Prelease Exploration Within Special Tar Sand Areas
Sec. 3141.21 Geophysical exploration.
Geophysical exploration in Special Tar Sand Areas will be governed
by 43 CFR part 3150. Information obtained under a permit must be made
available to the BLM upon request.
Sec. 3141.22 Exploration licenses.
(a) Any person(s) responsible and qualified to hold a lease under
the provisions of 43 CFR subpart 3102 and this subpart may obtain an
exploration license to conduct core drilling and other exploration
activities to collect geologic, environmental and other data concerning
tar sand resources only on lands, the surface of which are under the
jurisdiction of the BLM, within or adjacent to a Special Tar Sand Area.
The application for such a license must be submitted to the proper BLM
office having jurisdiction over the lands. No drilling for oil or gas
will be allowed under an exploration license issued under this subpart.
No specific form is required for an application for an exploration
license.
(b) The application for an exploration license will be subject to
the following requirements:
(1) Each application must contain the name and address of the
applicant(s);
(2) Each application must be accompanied by a nonrefundable filing
fee based on the coal exploration license application fee found in the
fee schedule in Sec. 3000.120 of this chapter;
(3) Each application must contain a description of the lands
covered by the application according to section, township and range in
accordance with the official survey;
(4) Each application must include an exploration plan which
complies with the requirements of 43 CFR 4392.1(a); and
(5) An application must cover no more than 5,760 acres, which will
be as compact as possible. The authorized officer may grant an
exploration license covering more than 5,760 acres only if the
application contains a justification for an exception to the normal
limitation.
(c) The authorized officer may, if he/she determines it necessary
to avoid impacts resulting from duplication of exploration activities,
require applicants for exploration licenses to provide an opportunity
for other parties to participate in exploration under the license on a
pro rata cost sharing basis. If joint participation is determined
necessary, it will be conducted according to the following:
(1) Immediately upon the notification of a determination that
parties will be given an opportunity to participate in the exploration
license, the applicant must publish a ``Notice of Invitation,''
approved by the authorized officer, once every week for 2 consecutive
weeks in at least one newspaper of general circulation in the area
where the lands covered by the exploration license are situated. This
notice must contain an invitation to the public to participate in the
exploration license on a pro rata cost sharing basis. Copies of the
``Notice of Invitation'' must be filed with the authorized officer at
the time of publication by the applicant for posting in the proper BLM
office having jurisdiction over the lands covered by the application
for at least 30 days prior to the issuance of the exploration license.
(2) Any person seeking to participate in the exploration program
described in the Notice of Invitation must notify the authorized
officer and the applicant in writing of such intention within 30 days
after posting in the proper BLM office having jurisdiction over the
lands covered by the Notice of Invitation. The authorized officer may
require modification of the original exploration plan to accommodate
the legitimate exploration needs of the person(s) seeking to
participate and to avoid the duplication of exploration activities in
the same area, or that the person(s) should file a separate application
for an exploration license.
(3) An application to conduct exploration which could have been
conducted under an existing or recent exploration license issued under
this paragraph may be rejected.
(d) The authorized officer may accept or reject an exploration
license application. An exploration license will become effective on
the date specified by the authorized officer as the date when
exploration activities may begin. The exploration plan approved by the
[[Page 47643]]
BLM will be attached and made a part of each exploration license.
(e) An exploration license will be subject to these terms and
conditions:
(1) The license will be for a term of not more than 2 years;
(2) The annual rental rate for an exploration license will be as
stated in the license;
(3) The licensee must provide a bond in an amount determined by the
authorized officer, but not less than $5,000. The authorized officer
may accept bonds furnished under 43 CFR subpart 3104, if adequate. The
period of liability under the bond will be terminated only after the
authorized officer determines that the terms and conditions of the
license, the exploration plan and the regulations have been met;
(4) The licensee must provide to the BLM, upon request, all
required information obtained under the license. Any information
provided will be treated as confidential and proprietary, if
appropriate, at the request of the licensee, and will not be made
public until the areas involved have been leased or if the BLM
determines that public access to the data will not damage the
competitive position of the licensee.
(5) Operations conducted under a license will not unreasonably
interfere with or endanger any other lawful activity on the same lands,
must not damage any improvements on the lands, and will not result in
any substantial disturbance to the surface of the lands and their
resources;
(6) The authorized officer will include in each license
requirements and stipulations to protect the environment and associated
natural resources, and to ensure reclamation of the land disturbed by
exploration operations;
(7) When unforeseen conditions are encountered that could result in
an action prohibited by paragraph (e)(5) of this section, or when
warranted by geologic or other physical conditions, the authorized
officer may adjust the terms and conditions of the exploration license
and may direct adjustment in the exploration plan;
(8) The licensee may submit a request for modification of the
exploration plan to the authorized officer. Any modification will be
subject to the regulations in this section and the terms and conditions
of the license. The authorized officer may approve the modification
after any necessary adjustments to the terms and conditions of the
license that are accepted in writing by the licensee; and
(9) The license will be subject to termination or suspension as
provided in 43 CFR 2920.9-3.
Sec. 3141.30 Land use plans.
No lease will be issued under this subpart unless the lands have
been included in a land use plan which meets the requirements under 43
CFR part 1600 or an approved Minerals Management Plan of the National
Park Service. The decision to hold a lease sale and issue leases will
be in conformance with the appropriate plan.
Consultation
Sec. 3141.41 Consultation with the Governor.
The Secretary will consult with the Governor of the State in which
any tract proposed for sale is located. The Secretary will give the
Governor 30 days to comment before determining whether to conduct a
lease sale. The Secretary will seek the recommendations of the Governor
of the State in which the lands proposed for lease are located as to
whether or not to lease such lands and what alternative actions are
available and what special conditions could be added to the proposed
lease(s) to mitigate impacts. The Secretary will accept the
recommendations of the Governor if he/she determines that they provide
for a reasonable balance between the national interest and the State's
interest. The Secretary will communicate to the Governor in writing and
publish in the Federal Register the reasons for his/her determination
to accept or reject such Governor's recommendations.
Sec. 3141.42 Consultation with others.
(a) Where the surface is administered by an agency other than the
BLM, including lands patented or leased under the provisions of the
Recreation and Public Purposes Act, as amended (43 U.S.C. 869 et seq.),
all leasing under this subpart will be in accordance with the
consultation requirements of 43 CFR subpart 3100.
(b) The issuance of combined hydrocarbon leases, oil and gas
leases, and tar sand leases within special tar sand areas in units of
the National Park System will be allowed only where mineral leasing is
permitted by law and where the lands are open to mineral resource
disposition in accordance with any applicable Minerals Management Plan.
In order to consent to any issuance of a combined hydrocarbon lease,
oil and gas lease, tar sand lease, or subsequent development of
hydrocarbon resources within a unit of National Park System, the
Regional Director of the National Park Service will find that there
will be no resulting significant adverse impacts to the resources and
administration of the unit or other contiguous units of the National
Park System in accordance with 43 CFR 3109.20(b).
Leasing Procedures
Sec. 3141.51 Economic evaluation.
Prior to any lease sale for a combined hydrocarbon lease, the
authorized officer will request an economic evaluation of the total
hydrocarbon resource on each proposed lease tract exclusive of coal,
oil shale, or gilsonite.
Sec. 3141.52 Term of lease.
(a) Oil and gas leases in special tar sand areas will have a
primary term of 10 years and will remain in effect so long thereafter
as oil or gas is produced in paying quantities.
(b) Tar Sand leases will have a primary term of 10 years and will
remain in effect so long thereafter as tar sand is produced in paying
quantities.
Sec. 3141.53 Royalties and rentals.
(a) The royalty rate on all combined hydrocarbon leases or tar sand
leases is 16.67 percent of the value of production removed or sold from
a lease. The ONRR will be responsible for collecting and administering
royalties.
(b) The lessee may request the Secretary to reduce the royalty rate
applicable to a tar sand lease prior to commencement of commercial
operations in order to promote development and maximum production of
the tar sand resource in accordance with procedures established by the
BLM for oil shale leases and may request a reduction in the royalty
after commencement of commercial operations in accordance with 43 CFR
3103.41.
(c) The annual rental rate for a combined hydrocarbon lease will be
as stated in the lease.
(d) The annual rental rate for a tar sand lease will be as stated
in the lease.
(e) Except as explained in paragraphs (a) through (c) of this
section, all other provisions of 43 CFR 3103.20 and 3103.30 apply to
combined hydrocarbon leasing.
Sec. 3141.54 Lease size.
Combined hydrocarbon leases or tar sand leases in Special Tar Sand
Areas will not exceed 5,760 acres.
Sec. 3141.55 Dating of lease.
A combined hydrocarbon lease will be effective as of the first day
of the month following the date the lease is signed on behalf of the
United States, except where a prior written request is made, a lease
may be made effective on
[[Page 47644]]
the first of the month in which the lease is signed.
Sale Procedures
Sec. 3141.61 Initiation of competitive lease offering.
The BLM may, on its own motion, offer lands through competitive
bidding. A request or expression(s) of interest in tract(s) for
competitive lease offerings must be submitted in writing to the proper
BLM office.
Sec. 3141.62 Publication of a notice of competitive lease offering.
Combined Hydrocarbon Leases, Tar Sand Leases or Oil and Gas Leases.
At least 45 days prior to conducting a competitive auction, lands to be
offered for a competitive lease sale, as in a Notice of Competitive
Lease Sale, will be made available to the public. The notice will
specify the time and place of sale; the manner in which the bids may be
submitted; the description of the lands; the terms and conditions of
the lease, including the royalty and rental rates; the amount of the
minimum bid; and will state that the terms and conditions of the leases
are available for inspection and designate the proper BLM office where
bid forms may be obtained.
Sec. 3141.63 Conduct of sales.
(a) Oil and gas leases. Lease sales for oil and gas leases will be
conducted using the procedures for oil and gas leases in 43 CFR
3120.60.
(b) Combined hydrocarbon leases and tar sand leases. (1) Parcels
will be offered by competitive auction.
(2) The winning bid will be the highest bid by a responsible and
qualified bidder, equal to the minimum bonus bid amount as specified in
Sec. 3000.130 of this chapter or for hydrocarbon leases, the minimum
bonus bid amount determined under Sec. 3141.51, whichever is larger.
(3) Payments must be made as provided in 43 CFR 3120.62.
Sec. 3141.64 Qualifications.
Each bidder must submit with the bid a statement over the bidder's
signature with respect to compliance with 43 CFR subpart 3102.
Sec. 3141.65 Rejection of bid.
If the high bid is rejected for failure by the successful bidder to
execute the lease forms and pay the balance of the bonus bid, or
otherwise to comply with the regulations of this subpart, the minimum
bonus payment accompanying the bid will be forfeited.
Sec. 3141.66 Consideration of next highest bid.
The Department reserves the right to accept the next highest bid if
the highest bid is rejected. In no event will an offer be made to the
next highest bidder if the difference between that bid and the bid of
the rejected successful bidder is greater than the minimum bonus
payment forfeited by the rejected successful bidder.
Sec. 3141.70 Award of lease.
After determining the highest responsible and qualified bidder, the
authorized officer will send the lease on a form approved by the
Director, and any necessary stipulations, to the successful bidder. The
successful bidder must, not later than the 30th calendar day after
receipt of the lease, execute the lease, pay the balance of the bid and
the first year's rental, and file a bond as required in 43 CFR subpart
3104. Failure to comply with this section will result in rejection of
the lease.
Subpart 3142--Paying Quantities/Diligent Development for Combined
Hydrocarbon and Tar Sand Leases
Sec. 3142.1 Purpose.
This subpart provides definitions and procedures for meeting the
production in paying quantities and the diligent development
requirements for tar sand in all combined hydrocarbon leases and tar
sand leases.
Sec. 3142.3 Authority.
These regulations are issued under the authority of the Mineral
Leasing Act of 1920, as amended and supplemented (30 U.S.C. 181 et
seq.), the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351-359),
the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et
seq.) and the Combined Hydrocarbon Leasing Act of 1981 (95 Stat. 1070).
Sec. 3142.5 Definitions.
As used in this subpart, the term:
Production in paying quantities for combined hydrocarbon leases
means:
(1) Production, in compliance with an approved plan of operations
and by nonconventional methods, of oil and gas which can be marketed;
or
(2) Production of oil or gas by conventional methods as the term is
currently used in 43 CFR part 3160.
Production in paying quantities for oil and gas leases means
production of oil or gas by conventional methods that meets the
definition of ``production in paying quantities'' in 43 CFR 3160.0-5.
Production in paying quantities for tar sand leases means
production of shale oil quantities that provide a positive return after
all costs of production have been met, including the amortized costs of
the capital investment.
Sec. 3142.10 Diligent development.
A lessee will have met its diligent development obligation if:
(a) The lessee is conducting activity on the lease in accordance
with an approved plan of operations; and
(b) The lessee files with the authorized officer, not later than
the end of the eighth lease year, a supplement to the approved plan of
operations which must include the estimated recoverable tar sand
reserves and a detailed development plan for the next stage of
operations;
(c) The lessee has achieved production in paying quantities, as
that term is defined in Sec. 3142.5(a), by the end of the primary
term; and
(d) The lessee annually produces the minimum amount of tar sand
established by the authorized officer under the lease in the minimum
production schedule which will be made part of the plan of operations
or pays annually advance royalty in lieu of this minimum production.
Minimum Production Levels
Sec. 3142.21 Minimum production schedule.
(a) Upon receipt of the supplement to the plan of operations
described in Sec. 3142.10(b), the authorized officer will examine the
information furnished by the lessee and determine if the estimate of
the recoverable tar sand reserves is adequate and reasonable. In making
this determination, the authorized officer may request, and the lessee
must furnish, any information that is the basis of the lessee's
estimate of the recoverable tar sand reserves. As part of the
authorized officer's determination that the estimate of the recoverable
tar sand reserves is adequate and reasonable, he/she may consider, but
is not limited to, the following: ore grade, strip ratio, vertical and
horizontal continuity, extract process recoverability, and proven or
unproven status of extraction technology, terrain, environmental
mitigation factors, marketability of products and capital operations
costs. The authorized officer will then establish as soon as possible,
but prior to the beginning of the eleventh year, based upon the
estimate of the recoverable tar sand reserves, a minimum annual tar
sand production schedule for the lease or unit operations which will
start in the eleventh year of the lease. This minimum production level
will escalate in equal annual increments to a maximum of 1 percent of
the estimated recoverable tar sand reserves in the twentieth year of
the
[[Page 47645]]
lease and remain at 1 percent each year thereafter.
(b) The minimum annual tar sand production schedule for the lease
or unit operations will be set at a level for paying quantities. If the
operator or lessee cannot establish production in paying quantities,
the lease will terminate at the end of the lease's primary term.
Sec. 3142.22 Advance royalties in lieu of production.
(a) Failure to meet the minimum annual tar sand production schedule
level in any year will result in the assessment of an advance royalty
in lieu of production which will be credited to future production
royalty assessments applicable to the lease or unit.
(b) If there is no production during the lease year, and the lessee
has reason to believe that there will be no production during the
remainder of the lease year, the lessee must submit to the authorized
officer a request for suspension of production at least 90 days prior
to the end of that lease year and a payment sufficient to cover any
advance royalty due and owing as a result of the failure to produce.
Upon receipt of the request for suspension of production and the
accompanying payment, the authorized officer may approve a suspension
of production for that lease year and the lease will not expire during
that year for lack of production.
(c) If there is production on the lease or unit during the lease
year, but such production fails to meet the minimum production schedule
required by the plan of operations for that lease or unit, the lessee
must pay an advance royalty within 60 days of the end of the lease year
in an amount sufficient to cover the difference between such actual
production and the production schedule required by the plan of
operations for that lease or unit and the authorized officer may direct
a suspension of production for those periods during which no production
occurred.
Sec. 3142.30 Expiration.
Failure of the lessee to pay advance royalty within the time
prescribed by the authorized officer, or failure of the lessee to
comply with any other provisions of this subpart following the end of
the primary term of the lease, will result in the automatic expiration
of the lease as of the first of the month following notice to the
lessee of its failure to comply. The lessee will remain subject to the
requirement of applicable laws, regulations and lease terms which have
not been met at the expiration of the lease.
PART 3150--ONSHORE OIL AND GAS GEOPHYSICAL EXPLORATION
0
10. The authority citation for part 3150 continues to read as follows:
Authority: 16 U.S.C. 3150(b) and 668dd; 30 U.S.C. 189 and 359;
42 U.S.C. 6508; 43 U.S.C. 1201, 1732(b), 1733, 1734, 1740.
0
11. Revise subpart 3151 to read as follows:
Subpart 3151--Exploration Outside of Alaska
Sec.
3151.10 Notice of intent to conduct oil and gas geophysical
exploration operations.
3151.20 Notice of completion of operations.
3151.30 Collection and submission of data.
Subpart 3151--Exploration Outside of Alaska
Sec. 3151.10 Notice of intent to conduct oil and gas geophysical
exploration operations.
Parties wishing to conduct oil and gas geophysical exploration
outside of the State of Alaska must file a Notice of Intent to Conduct
Oil and Gas Exploration Operations, referred to herein as a notice of
intent. The notice of intent must include the filing fee required by 43
CFR 3000.120 and must be filed with the authorized officer of the
proper BLM office on the form approved by the Director. Within 5
business days of the filing date, the authorized officer will process
the notice of intent and notify the operator of practices and
procedures to be followed. If the notice of intent cannot be processed
within 5 business days of the filing date, the authorized officer will
promptly notify the operator as to when processing will be completed,
giving the reason for the delay. The operator must, within 5 business
days of the filing date, or such other time as may be convenient for
the operator, participate in a field inspection if requested by the
authorized officer. Signing of the notice of intent by the operator
will signify agreement to comply with the terms and conditions
contained therein and in this part, and with all practices and
procedures specified at any time by the authorized officer.
Sec. 3151.20 Notice of completion of operations.
Upon completion of exploration, the permitee must file with the
District Manager a Notice of Completion of Oil and Gas Exploration
Operations. Within 30 days after this filing, the authorized officer
will notify the permitee whether rehabilitation of the lands is
satisfactory or whether additional rehabilitation is necessary,
specifying the nature and extent of actions to be taken by the
permitee.
Sec. 3151.30 Collection and submission of data.
(a) The permittee must submit to the authorized officer all data
and information obtained in carrying out the exploration plan.
(b) All information submitted under this section is subject to 43
CFR part 2, which sets forth the rules of the Department of the
Interior relating to public availability of information contained in
Departmental records, as provided at Sec. 3100.40 of this chapter.
PART 3160--ONSHORE OIL AND GAS OPERATIONS
0
12. The authority citation for part 3160 continues to read as follows:
Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359,
and 1751; 43 U.S.C. 1732(b), 1733, 1740; and Sec. 107, Pub. L. 114-
74, 129 Stat. 599, unless otherwise noted.
0
13. Revise Sec. 3160.0-5 to read as follows:
Sec. 3160.0-5 Definitions.
As used in this part, the term:
Authorized representative means any entity or individual authorized
by the Secretary to perform duties by cooperative agreement, delegation
or contract.
Drainage means the migration of hydrocarbons, inert gases (other
than helium), or associated resources caused by production from other
wells.
Federal lands means all lands and interests in lands owned by the
United States which are subject to the mineral leasing laws, including
mineral resources or mineral estates reserved to the United States in
the conveyance of a surface or nonmineral estate.
Fresh water means water containing not more than 1,000 ppm of total
dissolved solids, provided that such water does not contain
objectionable levels of any constituent that is toxic to animal, plant
or aquatic life, unless otherwise specified in applicable notices or
orders.
Knowingly or willfully means a violation that constitutes the
voluntary or conscious performance of an act that is prohibited or the
voluntary or conscious failure to perform an act or duty that is
required. It does not include performances or failures to perform that
are honest mistakes or merely inadvertent. It includes, but does not
require, performances or failures to perform that result from a
criminal or evil intent or from a specific intent to violate the law.
The knowing or willful
[[Page 47646]]
nature of conduct may be established by plain indifference to or
reckless disregard of the requirements of the law, regulations, orders,
or terms of the lease. A consistent pattern of performance or failure
to perform also may be sufficient to establish the knowing or willful
nature of the conduct, where such consistent pattern is neither the
result of honest mistakes or mere inadvertency. Conduct that is
otherwise regarded as being knowing or willful is rendered neither
accidental nor mitigated in character by the belief that the conduct is
reasonable or legal.
Lease means any contract, profit-share arrangement, joint venture
or other agreement issued or approved by the United States under a
mineral leasing law that authorizes exploration for, extraction of, or
removal of oil or gas.
Lease site means any lands, including the surface of a severed
mineral estate, on which exploration for, or extraction and removal of,
oil or gas is authorized under a lease.
Lessee means any person holding record title or owning operating
rights in a lease issued or approved by the United States.
Lessor means the party to a lease who holds legal or beneficial
title to the mineral estate in the leased lands.
Major violation means noncompliance that causes or threatens
immediate, substantial, and adverse impacts on public health and
safety, the environment, production accountability, or royalty income.
Maximum ultimate economic recovery means the recovery of oil and
gas from leased lands which a prudent operator could be expected to
make from that field or reservoir given existing knowledge of reservoir
and other pertinent facts and utilizing common industry practices for
primary, secondary, or tertiary recovery operations.
Minor violation means noncompliance that does not rise to the level
of a major violation.
New or resumed production under section 102(b)(3) of the Federal
Oil and Gas Royalty Management Act means the date on which a well
commences production, or resumes production after having been off
production for more than 90 days, and is to be construed as follows:
(1) For an oil well, the date on which liquid hydrocarbons are
first sold or shipped from a temporary storage facility, such as a test
tank, or the date on which liquid hydrocarbons are first produced into
a permanent storage facility, whichever first occurs; and
(2) For a gas well, the date on which gas is first measured through
sales metering facilities or the date on which associated liquid
hydrocarbons are first sold or shipped from a temporary storage
facility, whichever first occurs.
Notice to lessees and operators (NTL) means a written notice issued
by the authorized officer. NTL's implement the regulations in this part
and operating orders, and serve as instructions on specific item(s) of
importance within a State, District, or Area.
Onshore oil and gas order means a formal numbered order issued by
the Director that implements and supplements the regulations in this
part.
Operating rights owner means a person who owns operating rights in
a lease. A record title holder may also be an operating rights owner in
a lease if it did not transfer all of its operating rights.
Operator means any person or entity including but not limited to
the lessee or operating rights owner, who has stated in writing to the
authorized officer that it is responsible under the terms and
conditions of the lease for the operations conducted on the leased
lands or a portion thereof.
Paying well means a well that is capable of producing oil or gas of
sufficient value to exceed direct operating costs and the costs of
lease rentals or minimum royalty.
Person means any individual, firm, corporation, association,
partnership, consortium or joint venture.
Production in paying quantities means production from a lease of
oil and/or gas of sufficient value to exceed direct operating costs and
the cost of lease rentals or minimum royalties.
Protective well means a well drilled or modified to prevent or
offset drainage of oil and gas resources from its Federal or Indian
lease.
Record title holder means the person(s) to whom BLM or an Indian
lessor issued a lease or approved the assignment of record title in a
lease.
Shut-in well means a nonoperational well that can physically and
mechanically operate by opening valves or activating existing
equipment.
Superintendent means the superintendent of an Indian Agency, or
other officer authorized to act in matters of record and law with
respect to oil and gas leases on restricted Indian lands.
Surface use plan of operations means a plan for surface use,
disturbance, and reclamation.
Temporarily abandoned well means a nonoperational well that is not
physically or mechanically capable of production or injection without
additional equipment or without servicing the well, but that may have
future beneficial use.
Waste of oil or gas means any act or failure to act by the operator
that is not sanctioned by the authorized officer as necessary for
proper development and production and which results in:
(1) A reduction in the quantity or quality of oil and gas
ultimately producible from a reservoir under prudent and proper
operations; or
(2) Avoidable surface loss of oil or gas.
0
14. Revise Sec. 3162.3-4 to read as follows:
Sec. 3162.3-4 Well abandonment.
(a) The operator must promptly plug and abandon, in accordance with
a plan first approved in writing or prescribed by the authorized
officer, each newly completed or recompleted well in which oil or gas
is not encountered in paying quantities or which, after being completed
as a producing well, is demonstrated to the satisfaction of the
authorized officer to be no longer capable of producing oil or gas in
paying quantities, unless the authorized officer approves the use of
the well as a service well for injection to recover additional oil or
gas or for subsurface disposal of produced water. In the case of a
newly drilled or recompleted well, the approval to abandon may be
written or oral with written confirmation.
(b) Completion of a well as plugged and abandoned may also include
conditioning the well as a water supply source for lease operations or
for use by the surface owner or appropriate Government Agency, when
authorized by the authorized officer. All costs over and above the
normal plugging and abandonment expense will be paid by the party
accepting the water well.
(c) No well may be temporarily abandoned for more than 30 days
without the prior approval of the authorized officer. The operator must
provide adequate and detailed justification for the abandonment, verify
the mechanical integrity of the well, and isolate the completed
interval(s) prior to abandonment. The authorized officer may authorize
a delay in the permanent abandonment of a well for a period of up to 1
year and the authorized officer may authorize additional delays, no one
of which may exceed an additional 1-year period. Except in
extraordinary circumstances, the maximum period of time for an operator
to delay permanent abandonment of a temporarily abandoned well will not
exceed 4 years. Upon the removal of drilling or producing equipment
from the site of a well which is to be permanently abandoned, the
surface of the lands disturbed in connection with the conduct of
operations must be
[[Page 47647]]
reclaimed in accordance with a plan first approved or prescribed by the
authorized officer.
(d) Operators of shut-in wells must:
(1) Notify the authorized officer of the well's shut-in status and
provide the date the well was shut-in within 90 days of well shut-in;
(2) Within 3 years of well shut-in, provide the authorized officer
with verification of the mechanical integrity of the well and
confirmation that the well remains capable of producing in paying
quantities; and
(3) Within 4 years of well shut-in, complete one of the following
actions:
(i) Permanently abandon the well;
(ii) Resume production in paying quantities; or
(iii) Provide the authorized officer with a detailed plan and
timeline for future beneficial use of the well. If the authorized
officer determines that there is a legitimate future beneficial use for
the well, the officer may allow the operator to delay permanent
abandonment by 1 year. The authorized officer may grant additional
delays in 1-year increments, provided that the operator confirms the
future beneficial use of the well and is making verifiable progress on
returning the well to a beneficial use.
0
15. Revise Sec. 3165.1 to read as follows:
Sec. 3165.1 Relief from operating and/or producing requirements.
(a) Applications for relief from either the operating or the
producing requirements of a lease, or both, must be filed with the
authorized officer, and must include a full statement of the
circumstances that render such relief necessary.
(b) The authorized officer will act on applications submitted for a
suspension of operations or production, or both, filed pursuant to 43
CFR 3103.42. The application for suspension must be filed with the
authorized officer prior to the expiration date of the lease; must be
executed by all operating rights owners or by the operator on behalf of
the operating rights owners; and must include a full statement of the
circumstances that makes such relief necessary.
(c) The authorized officer will not approve an application for a
suspension of a lease where the applicant cites, as the basis for the
suspension, a pending APD filed less than 90 calendar days prior to the
expiration date of the lease.
(d) If approved, a suspension of operations and production will be
effective on the first of the month in which the completed application
was filed or the date specified by the authorized officer in the
approval. Approved suspensions will not exceed 1 year. If the
circumstances warrant all operating rights owners, or the operator on
behalf of the operating rights owners, may submit a request to extend
the suspension prior to the end of the suspension.
(e) BLM-directed suspensions may exceed 1 year.
(f) Suspensions will lift when the basis provided for the
suspension no longer exists, when lifting the suspension is in the
public interest, or as otherwise stated by the authorized officer in
the approval letter.
PART 3170--ONSHORE OIL AND GAS PRODUCTION
0
16. The authority citation for part 3170 continues to read as follows:
Authority: 25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359,
and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.
0
17. Revise Sec. 3171.6 to read as follows:
Sec. 3171.6 Components of a complete APD package.
Operators are encouraged to consider and incorporate Best
Management Practices into their APDs because Best Management Practices
can result in reduced processing times and reduced number of Conditions
of Approval. An APD package must include the following information that
will be reviewed by technical specialists of the appropriate agencies
to determine the technical adequacy of the package:
(a) A completed Form 3160-3; and
(b) A well plat. Operators must include in the APD package a well
plat and geospatial database prepared by a registered surveyor
depicting the proposed location of the well and identifying the points
of control and datum used to establish the section lines or metes and
bounds. The purpose of this plat is to ensure that operations are
within the boundaries of the lease or agreement and that the depiction
of these operations is accurately recorded both as to location
(latitude and longitude) and in relation to the surrounding lease or
agreement boundaries (public land survey corner and boundary ties). The
registered surveyor should coordinate with the cadastral survey
division of the appropriate BLM State Office, particularly where the
lands have not been surveyed under the Public Land Survey System.
(1) The plat and geospatial database must describe the location of
operations in:
(i) Geographical coordinates generated by an electronic navigation
system, and document the datum referenced to generate these
coordinates; and
(ii) In feet and direction from the nearest two adjacent section
lines, or, if not within the Rectangular Survey System, the nearest two
adjacent property lines, generated from the BLM's current Geographic
Coordinate Data Base.
(2) The surveyor who prepared the plat must sign it, certifying
that the location has been staked on the ground as shown on the plat.
(3) Surveying and staking are necessary casual uses, typically
involving negligible surface disturbance. The operator is responsible
for making access arrangements with the appropriate Surface Managing
Agency (other than the BLM and the FS) or private surface owner. On
tribal or allotted lands, the operator must contact the appropriate
office of the BIA to make access arrangements with the Indian surface
owners. In the event that not all of the Indian owners consent or may
be located, but a majority of those who can be located consent, or the
owners of interests are so numerous that it would be impracticable to
obtain their consent and the BIA finds that the issuance of the APD
will cause no substantive injury to the land or any owner thereof, the
BIA may approve access. Typical off-road vehicular use, when conducted
in conjunction with these activities, is a necessary action for
obtaining a permit and may be done without advance approval from the
Surface Managing Agency, except for:
(i) Lands administered by the Department of Defense;
(ii) Other lands used for military purposes;
(iii) Indian lands; or
(iv) Where more than negligible surface disturbance is likely to
occur or is otherwise prohibited.
(4) No entry on split estate lands for surveying and staking should
occur without the operator first making a good faith effort to notify
the surface owner. Also, operators are encouraged to notify the BLM or
the FS, as appropriate, before entering private lands to stake for
Federal mineral estate locations.
0
18. Revise Sec. 3171.14 to read as follows:
Sec. 3171.14 Valid Period of Approved APD.
(a) An APD approval is ordinarily valid for 3 years from the date
that it is approved, or until lease expiration, whichever occurs first.
(b) Notwithstanding paragraph (a) of this section, if an APD
approval expires by reason other than lease expiration, the APD
approval shall remain valid if the operator or lessee:
[[Page 47648]]
(1) Has drilled the well to the approximate total depth in the
approved APD;
(2) Is drilling the well with a rig capable of drilling the well to
the proposed total depth in the approved APD; or
(3) Has submitted a plan, approved by the BLM prior to expiration
of the APD approval, for continuously drilling the well to reach the
proposed total depth in the approved APD.
(c) If, upon expiration of the approved APD, the operator created
surface disturbance or began drilling the well under the approved APD,
the operator or lessee must comply with all applicable plugging,
abandonment, and reclamation requirements.
(d) The operator is responsible for reclaiming any surface
disturbance that resulted from its actions, even if a well was not
drilled.
PART 3180--ONSHORE OIL AND GAS UNIT AGREEMENTS: UNPROVEN AREAS
0
19. The authority citation for part 3180 continues to read as follows:
Authority: 30 U.S.C. 189.
Sec. 3186.2 [Removed]
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20. Remove Sec. 3186.2.
Laura Daniel-Davis,
Principal Deputy Assistant Secretary, Land and Minerals Management.
[FR Doc. 2023-14287 Filed 7-21-23; 8:45 am]
BILLING CODE 4331-29-P
