[Federal Register Volume 59, Number 61 (Wednesday, March 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7315]


[[Page Unknown]]

[Federal Register: March 30, 1994]


_______________________________________________________________________

Part II





Department of the Interior





_______________________________________________________________________



Bureau of Indian Affairs



_______________________________________________________________________



25 CFR Part 225




Oil and Gas, Solid Mineral, and Geothermal Minerals Agreements; Final 
Rule
DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 225

RIN 1076-AD00

 
Oil and Gas, Solid Mineral, and Geothermal Minerals Agreements

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Indian Affairs (BIA) of the Department of the 
Interior (Department) is promulgating regulations implementing the 
Indian Mineral Development Act (IMDA) of 1982 (25 U.S.C. 2102 through 
2108). A new part 225 is added to govern solid-mineral, oil and gas, 
and geothermal minerals agreements entered into pursuant to the IMDA. 
The intent of these regulations is to ensure that Indian mineral owners 
wishing to develop their mineral resources are able to do so in a 
manner that maximizes their best economic interests and minimizes any 
adverse environmental or cultural impact. These regulations will assist 
Indian mineral owners entering into minerals agreements by allowing for 
greater responsibility, oversight, and flexibility in the control and 
development of their own resources.

EFFECTIVE DATE: April 29, 1994.

FOR FURTHER INFORMATION CONTACT: Richard N. Wilson (303) 231-5070 or 
Pete C. Aguilar (303) 231-5070.

SUPPLEMENTARY INFORMATION: This final rule is published in the exercise 
of the authority delegated by the Secretary of the Interior to the 
Assistant Secretary for Indian Affairs by 209 DM 8. The principal 
authors of this final rule are: Pete C. Aguilar, Division of Energy and 
Mineral Resources, Golden, Colorado; Karl E. Kiehn, Office of the 
Solicitor, Washington, DC; and Edwin Winstead, Office of the Solicitor, 
Albuquerque, New Mexico.
    Section 3 of the IMDA authorizes any Indian tribe to enter into 
joint ventures, leases, or other types of negotiated minerals 
agreements, subject to the approval of the Secretary of the Interior 
and any limitation or provision contained in the tribe's constitution 
or charter. The IMDA also permits individual Indians owning a 
beneficial or restricted interest in mineral resources to include their 
resources in a minerals agreement with an Indian tribe, subject to the 
concurrence of the parties and a finding by the Secretary that such 
participation is in the best interest of the individual Indian mineral 
owner. The IMDA does not supersede the Act of May 11, 1938 (25 U.S.C. 
396a), which governs the leasing of tribally-owned minerals, or the Act 
of March 3, 1909, as amended, (25 U.S.C. 396) which governs the mineral 
leasing of allotted lands. Instead, it supplements those acts by 
permitting Indian tribes to elect whether they wish to offer their 
mineral resources for lease by competitive bidding, enter into direct 
negotiations for a minerals agreement, or a combination of competitive 
bidding and negotiations.
    Pursuant to section 8 of the IMDA, the BIA published a notice of 
proposed rulemaking in the Federal Register on July 12, 1983 (48 FR 
31978). The proposed rulemaking included a revision and reorganization 
of the regulations governing mining and oil and gas leases adopted 
pursuant to the Act of May 11, 1938, which governs the leasing of 
tribally-owned minerals, and the Act of March 3, 1909, as amended, 
which governs the leasing of individually-owned minerals on allotted 
lands. On August 24, 1987, the BIA published final regulations (52 FR 
31916) which were scheduled to become effective on October 24, 1987. 
Then, in response to concerns expressed by the public, the regulations 
were amended and republished as proposed on October 21, 1987 (52 FR 
39332), and the public was notified that the regulations published on 
August 24, 1987 would not become effective.
    Public responses to these publications contained reasonable and 
compelling arguments for restructuring the format of the proposed 
regulations. Several commenters stated that the October 21, 1987 
proposed regulations were confusing and ambiguous. The proposed format 
combined regulations implementing the Acts of May 11, 1938 and March 3, 
1909, and the IMDA into two separate parts: (1) Part 211, contracts for 
prospecting and mining on Indian lands (except oil and gas and 
geothermal); and (2) Part 225, oil and gas and geothermal contracts. 
The most common major concern was whether provisions of the IMDA would 
supplant lease and regulatory conditions contained in lease contracts 
entered into under the authority of the 1909 and 1938 Acts. The format 
of the proposed rules created confusion about contract approval 
procedures for leasing tribal versus allotted lands. In addition, the 
format of the proposed rules created confusion between regulatory 
requirements for solid mineral versus fluid mineral contracts. The 
uncertainty expressed by Indian interests and industry on numerous 
issues convinced the Department that the regulations needed to be 
entirely reformatted and revised.
    The proposed regulations were then organized under a system which 
would be more familiar to both Indian mineral owners and industry. The 
proposed regulations were organized into three sections: (1) 25 CFR 
part 211 provided the procedures for obtaining and operating standard 
mineral leases, for both solid and fluid minerals, on tribal lands 
under the Act of May 11, 1938, as amended; (2) 25 CFR part 212 provided 
the procedures for obtaining and operating standard mineral leases, for 
both solid and fluid minerals, on allotted lands under the Act of March 
3, 1909, as amended; and (3) 25 CFR part 225 provided a new and 
separate section governing minerals agreements for development of 
Indian minerals under the IMDA.
    Along with the reformatting, many changes were made to individual 
sections. These changes reflected the Department's efforts to be 
responsive to the comments received in 1987, and to include the 
additional business and administrative experience that had been gained 
on several issues during the last few years. In reviewing all of the 
issues raised in the 1987 comments and in redrafting the regulations, 
the goal of the BIA is to ensure that the Department is able to fulfill 
its trust responsibility by providing adequate provisions to ensure the 
protection of the trust resources and at the same time benefit the 
Indian mineral owners by removing unnecessary regulatory barriers and 
complications which could make their minerals less attractive to 
industry and thus frustrate development. In addition, consistent with 
the policy on self-determination, the Department has attempted to 
provide the tribes as much freedom as possible to make their own 
determination on issues affecting the development of their minerals.
    In order to provide Indian mineral owners and Indian mineral 
operators full opportunity to review and comment on the reformatted and 
rewritten regulations, the Department determined that these regulations 
should be published as a proposed rather than a final rule, and that 
the public should be given 90 days to review the regulations and 
provide written comments. The proposed rulemaking was published in the 
Federal Register (56 FR 58734) on November 21, 1991. The closing date 
for submission of review comments on the proposed rulemaking was 
February 19, 1992. All comments received were considered in the 
preparation of the final rules.
    Currently, there are regulations governing the mineral leasing of 
Indian lands (25 CFR parts 211 and 212 as well as the regulations of 
other Federal agencies), but no specific regulations govern the 
disposition of the resources of the Indian mineral owner pursuant to 
the IMDA. Further, the IMDA is and has been utilized by tribes to 
participate in minerals agreements since 1982 without benefit of formal 
implementing regulations. To immediately implement the IMDA, the 
Department is publishing this final rule (25 CFR part 225) separately 
and restructuring the remainder of the proposed rulemaking (25 CFR 
parts 211 and 212). In response to the wishes and comments of the 
Indian tribes and the public, the comment period for Parts 211 and 212 
was reopened (57 FR 40298) for 60 days on September 2, 1992, and public 
hearings were held on September 25 in Denver, Colorado and on September 
28 in Albuquerque, New Mexico. The reopened comment period closed on 
November 2, 1992. Parts 211 and 212 are scheduled for future 
publication in the Federal Register and will include recognition and 
acknowledgement of the concerns and comments received during the latest 
comment period which closed November 2, 1992, as well as the concerns 
and comments received previously.
    This preamble provides a review of the comments received on the 
proposed 25 CFR part 225 regulations and the changes made to the 
proposed rule pursuant to these comments.

I. Changes Made to Proposed Rules

    The proposed rule is modified: (1) In response to comments 
received; (2) to enable the proposed rule to stand alone as a final 
rule after separation from 25 CFR parts 211 and 212 of proposed 
rulemaking (56 FR 58734); and (3) in recognition of prevailing and 
customary business and administrative practices which have developed 
since the passage and approval of the IMDA. This final rule and new CFR 
part 225 has appeared in this format as a proposed rule only once in 
the Federal Register (56 FR 58734) on November 21, 1991. As a result of 
the decision to publish part 225 separately as a final rule, it is no 
longer possible to incorporate the provisions of parts 211 and 212 by 
reference. Rather, minor modifications are made to part 225. The 
necessary sections of parts 211 and 212 which were incorporated by 
reference in the November 21, 1991 publication of 25 CFR part 225 have 
now been modified as necessary to reflect the concerns of commenters 
and to reflect current administrative and business practices and are 
included directly within part 225. The salient modifications to the 
proposed rule are here summarized by section. The section headings 
refer to the final rule.

Section 225.1. Purpose and Scope

    Several changes are made to this section to more clearly reflect 
the language used in the IMDA and to assure the Alaska native 
corporations that 25 CFR part 225 is applicable only to Indian mineral 
interests held in trust by the United States or subject to restriction 
against alienation imposed by the United States. In addition, a change 
is made to reflect current practices that permit the parties to 
minerals agreements, with the approval of the Secretary, to agree in 
negotiation to provisions which would replace some requirements 
contained in the regulations of the Minerals Management Service.

Section 225.3. Definitions

    The definitions section of part 225 is modified somewhat, partly in 
response to comments and partly because part 225 requires new 
definitions to describe principles and procedures. For example, the 
term ``minerals agreement'' is defined, instead of the term 
``agreement''; this change is necessary because the numerous agreements 
used in minerals industries (i.e., unit agreement, communitization 
agreement, operating agreement, etc.) must all be specified to prevent 
confusion. Also, the other agreements, as described in proposed 25 CFR 
parts 211 and 212, are no longer incorporated by reference, so must be 
properly identified within 25 CFR part 225. As a result, the word 
``agreement'' stands without modifiers only when used in the most 
general, non-specific sense. The necessary changes are:
    Agreement, is deleted and redefined under ``minerals agreement'' to 
conform with language of the IMDA and clearly separate the minerals 
agreement from other agreements in common use within the minerals 
industry.
    Assistant Secretary, is deleted and replaced by ``Assistant 
Secretary--Indian Affairs'' and modified to: (1) Recognize the 
statutory requirement of 25 U.S.C. 2103(d) that disapproval of minerals 
agreements may not be delegated lower than the Assistant Secretary--
Indian Affairs; (2) clarify that all other responsibilities, except for 
those under the statutory requirement of 25 U.S.C. 2103(d), may be 
delegated by the Secretary as a matter of policy; and (3) clarify that 
orders of cessation or minerals agreement cancellations issued by the 
Secretary or the Assistant Secretary--Indian Affairs are final orders 
of the Department.
    Assistant Secretary--Indian Affairs is added to replace the 
definition of ``Assistant Secretary'' (see above).
    Bureau is deleted from definitions because this word is no longer 
used in the regulations.
    Director's representative is added to bring OSMRE representatives 
formally into Part 225.
    In the best interest of the Indian mineral owner is modified to 
clarify that the Secretary shall consider any relevant factor in making 
a best interest determination, and to specifically include 
consideration by the Secretary of potential environmental, social and 
cultural effects.
    Lessor is deleted because this word is no longer used in these 
regulations.
    Minerals is modified to better define the scope and description of 
minerals which may be disposed under a minerals agreement.
    Minerals agreement is added to replace the definition of an 
``agreement'' in proposed rulemaking.
    Operator is modified to recognize that there is no operator until a 
minerals agreement is approved.
    Secretary is modified to recognize the statutory requirement of 25 
U.S.C. 2103(d) that disapproval of minerals agreements may not be 
delegated lower than the Assistant Secretary--Indian Affairs.
    Tar sand is deleted, but now defined as a mineral and included as a 
result of the modification of the definition of ``minerals.''

Section 225.4. Authority and Responsibility of the Bureau of Land 
Management (BLM)

    References are added to cite the BLM regulations concerning onshore 
oil and gas and geothermal unitization and communitization.

Section 225.6. Authority and Responsibility of the Minerals Management 
Service (MMS)

    This section was expanded to clarify that the Secretary may 
consider alternative provisions in a minerals agreement with respect to 
the requirements found in 30 CFR chapter II, subchapters A and C, if 
they are reasonable and adequately address the royalty functions 
governed by MMS regulations.

Section 225.20. Authority To Contract

    In response to comments, Sec. 225.20 is revised to indicate that 
the authority to contract covers those mineral resources in which a 
tribe or individual Indian owns a beneficial or restricted interest.

Section 225.21. Negotiation Procedures

    Paragraph 225.21(b) is modified to require that, in a minerals 
agreement, the Indian mineral owner shall, if applicable, address the 
provisions listed. Many of the provisions listed must necessarily be 
included in any agreement, and most must be addressed to permit the 
Secretary to properly discharge the trust responsibility pursuant to 25 
U.S.C. 2103(e). The paragraph at Sec. 225.21(b)(1) is expanded by 
adding to the phrase concerning the legal description of lands, ``to 
include rock intervals or thickness,'' in the event a minerals 
agreement is only for a specific interval (formation) or depth. At 
Sec. 225.21(b)(20), a paragraph is added to encourage the Indian 
mineral owner to address, during negotiation procedures, provisions for 
the protection of minerals agreement lands from drainage and/or 
unauthorized taking of mineral resources. Two paragraphs are modified 
to include procedures for mineral valuation and limitations on 
assignments of interest as items for consideration during negotiation. 
Other minor editorial changes are made, such as specifying in paragraph 
225.21(d) that the Superintendent or Area Director are the designees of 
the Secretary authorized to receive the minerals agreements executed by 
the tribes.

Section 225.22. Approval of Minerals Agreements

    Minor changes were made to clarify this provision. The statutory 
requirement that only the Secretary or Assistant Secretary--Indian 
Affairs may disapprove a minerals agreement is stated in definitions at 
Sec. 225.3. Paragraph 225.22(c) was modified to clarify that minerals 
agreements shall be approved if the minerals agreements are in 
compliance with all the requirements of the IMDA. Paragraph 225.22(d) 
was modified to clarify that the Secretary's decision to disapprove a 
minerals agreement shall be deemed a final Federal agency action (25 
U.S.C. 2103(d)).

Section 225.23. Economic Assessments

    This section was modified to clarify that the economic assessment 
is mandatory pursuant to the Secretary's obligation to consider the 
potential return to the tribe.

Section 225.24. Environmental Studies

    A change is made in this section to clarify that although 
compliance with all archeological and historic preservation statutes is 
required, the exhaustive, site-specific analyses and surveys demanded 
when operations begin at a specific site are not invariably required 
prior to approval of a minerals agreement.

Section 225.25. Resolution of Disputes

    This section was rewritten, in response to comments, to clarify the 
Secretary's role in dispute resolution. The revised section also 
removes the example dispute resolution mechanisms because several 
commenters assumed that the examples were mandatory methods of dispute 
resolution. This section now more clearly states the statutory 
requirements that the parties to a minerals agreement provide a 
mechanism for resolving disputes, and that the Secretary retains the 
responsibility and authority to protect Indian mineral owners in the 
event of violation of the provisions of a minerals agreement.

Section 225.26. Auditing and Accounting

    This section was modified to specify that the accounting and 
auditing standards applicable to the administration of minerals 
agreements will be the same standards currently applied by the Minerals 
Management Service.

Section 225.27. Forms and Reports

    This section was modified to clarify that prescribed forms (if 
applicable) for a minerals agreement may be obtained from the 
Superintendent or the Area Director, and that geothermal production 
reports are made to the BLM on forms prescribed by the BLM that are 
available from the Superintendent or the Authorized Officer.

Section 225.28. Approval of Amendments to Minerals Agreements

    A change in this section clarifies that an amendment, modification, 
or supplement to a minerals agreement may be approved by the Secretary 
if the underlying minerals agreement, as amended, modified, or 
supplemented, meets the Secretary's criteria (Sec. 225.22(c)) for 
approval.

Section 225.30. Bonds

    Section 225.30 is one of the sections requiring rewrite and 
inclusion because of the separation of part 225 from parts 211 and 212. 
Changes in this section emphasize that bonds payable to the Secretary 
or the Secretary's designee are negotiable within minerals agreements 
and provide minimal requirements for the bonding of operators holding 
minerals agreements. Current financial and business practices are now 
recognized in the regulations by providing for a variety of financial 
instruments to accompany a personal bond, so that a wide variety of 
assets may be used to secure the bond.

Section 225.31. Manner of Payments

    A change is made in this section to emphasize that, prior to 
production, all bonus and rental payments shall be made to the 
Superintendent or Area Director unless specified otherwise in the 
minerals agreement.

Section 225.34. Unitization and Communitization Agreements, and Well 
Spacing Requirements

    This section, along with the reference to the provisions of 
Sec. 211.28 of this chapter pertaining to unitization and 
communitization agreements and well spacing requirements, is removed to 
allow Indian mineral owners greater flexibility in the structuring of 
their minerals agreements. The removal of this section does not 
preclude the inclusion of unitization and communitization and well 
spacing provisions in a minerals agreement if, at the time of 
negotiation, it is determined that such provisions are desired to 
develop certain Indian lands within a minerals agreement where there is 
mixed land ownership.

Section 225.35. Inspection of Premises; Books and Accounts

    A short paragraph has been added to this section to recognize the 
role of the Office of Surface Mining Reclamation and Enforcement 
(OSMRE) Director's Representative for the purpose of inspection of 
properties.

Section 225.36. Minerals Agreement Cancellation; Bureau of Indian 
Affairs Notice of Noncompliance

    Minor changes are made in this section, including a change in the 
title of the section: (1) To formally include the OSMRE Director's 
Representative in the noncompliance and cancellation (if required) 
process; (2) to emphasize that the notice(s) of noncompliance and 
cancellation are those served by the Bureau of Indian Affairs; and (3) 
to clarify, by reorganization of paragraphs, noncompliance procedures 
and the cancellation (if required) process.

Section 225.37. Penalties

    This section was brought into 25 CFR part 225 from 25 CFR parts 211 
and 212 because of the decision to separate 25 CFR part 225 from the 
other parts for purposes of final rulemaking. The section was 
rewritten, including a change in the section title, and made specific 
to minerals agreements rather than being incorporated by reference, 
thus enabling 25 CFR part 225 to stand alone as a final rule. A 
penalties section within 225 is necessary, because without such a 
section the Secretary's only enforcement tool is the cancellation of a 
minerals agreement in the event of a violation of a minerals agreement. 
Also, there are no penalty provisions under any other Federal agency's 
regulations to provide for enforcement of minerals agreements which 
include solid minerals or other mineral commodities not covered by the 
Federal Oil and Gas Royalty Management Act of 1982 or the Surface 
Mining Control and Reclamation Act of 1977. In addition, changes are 
made to paragraphs 225.37(f)(2) and 225.37(f)(3) to clarify that this 
section does not apply to any action for which the BLM, MMS, or OSMRE 
have authority to impose a penalty. Therefore, this section will not 
result in multiple penalties being imposed for the same violation.

Section 225.39. Fees

    Provision is made for the Indian mineral owner to acquire an 
additional interest in minerals agreements without imposition of a 
filing fee, if provision for such an acquisition by the Indian mineral 
owner is made in the minerals agreement.

II. Comments Received on Proposed Rule

    The notice of Proposed Rulemaking was published in the Federal 
Register on November 21, 1991 (56 FR 58734). The proposed rule provided 
for a 90-day public comment period ending on February 19, 1992. During 
the comment period, 27 commenters submitted written comments. All 
comments were accepted for consideration in preparation of the final 
rule and are addressed in this section. All substantive comments 
applicable to sections of 25 CFR part 225, were considered whether 
directed to part 211, 212, or 225, because some commenters referenced 
their comments on other parts as applicable to part 225 and because 
some commenters made only general comments on the proposed regulations 
which were not directed by the commenter to any specific part.
    (1) Several commenters stated that the proposed regulations are 
unsatisfactory because: (1) Of the effects of the proposed rules on 
existing leases and operating agreements; (2) inadequate time was 
provided for review of the proposed rules; (3) the proposed rules 
should be subject to a negotiated rule-making process among interested 
tribes, industry, and the Bureau (of Indian Affairs); and (4) public 
hearings on the proposed rulemaking should be held at locations 
convenient to the Indian tribes.
    Response: As set forth in introductory remarks (above), the 
Secretary reopened the period for comment on 25 CFR parts 211 and 212 
and public hearings have been held in Denver, Colorado and Albuquerque, 
New Mexico. Regulations at 25 CFR part 225 are treated as final 
rulemaking because of the need for regulatory guidance for Indian 
mineral owners, industry, regulatory authorities, and the public. Also, 
the chief concerns of commenters center on the proposed amendments to 
25 CFR parts 211 and 212; part 225 is clearly less controversial than 
the other two parts. Therefore, the Secretary has decided to proceed 
with final publication of 25 CFR part 225.
    (2) One commenter indicates that the purpose of the proposed 
rulemaking is to make proposed regulations consistent with the 
regulations governing mineral leasing and development of Federal lands. 
The commenter stated that mineral leasing and development on Indian 
lands are not sufficiently similar to mineral leasing on Federal lands 
to justify uniformity.
    Response: One of the Department's purposes in reformatting and 
changing of the proposed rules is to make, when appropriate, these 
regulations consistent with the regulations governing mineral leasing 
and development of Federal lands (56 FR 58734). Appropriate consistency 
is desirable because many of the operating and reclamation regulations 
of other offices and bureaus of the Department are especially 
applicable in the day-to-day management of the mineral estate on tribal 
and allotted Indian lands subject to mineral leasing and disposition 
under 25 CFR parts 211 and 212. The commenter is correct in stating 
that where mineral leasing and development on Indian lands is 
dissimilar to leasing and development on Federal lands, different 
treatment is required of many issues. The consistency among the 
regulations of various offices and bureaus is de-emphasized in these 
regulations because the IMDA and these regulations provide the 
necessary latitude to adequately address the dissimilarities, and 
because the proposed 25 CFR parts 211 and 212 will now be issued as 
separate rules.
    (3) Several Alaska native corporations ask that a statement be made 
that lands conveyed pursuant to the Alaska Native Claims Settlement Act 
are not subject to 25 CFR part 225.
    Response: The requested assurance that the proposed regulations, 
and/or regulations in fact, do not apply to lands conveyed pursuant to 
the Alaska Native Claims Settlement Act is contained in 25 U.S.C. 
Sec. 2101 and 2102. Section 225.1 is changed to emphasize that 25 CFR 
part 225 is applicable only to lands that are held in trust by the 
United States or are subject to a restriction against alienation 
imposed by the United States.
    (4) Numerous commenters are generally concerned about the effect of 
the proposed rules on (1) fixed royalty rates more than 12\1/2\ 
percent, (2) terms and conditions of existing leases and operating 
agreements, (3) the imposition of arbitrary acreage limits on mineral 
leases, and (4) data gained under permit deemed by operators to be 
privileged and proprietary.
    Response: Most of the general concerns of commenters pertain to the 
proposed 25 CFR parts 211 and 212 and not to part 225, and will be 
addressed at the time of proposed or final rulemaking for 25 CFR parts 
211 and 212. The terms and conditions of existing leases and operating 
agreements are unaffected by part 225, unless the leases or agreements 
are renegotiated to become minerals agreements. Other concerns are 
negotiable among principals within the framework of a minerals 
agreement and at the time a minerals agreement is considered.
    (5) One commenter objects to the language of Sec. 225.1(a) as 
proposed which states:

as part of this greater flexibility, the tribe bears the 
responsibility for any business risks which may be inherent in the 
agreement. If the Secretary approves an agreement ***.

and urged that the language of the authorizing statute be retained in 
regulation to ensure that Congressional intent is honored.
    Response: The language of Sec. 225.1(a) is changed in final 
rulemaking to read:

as part of this greater flexibility, where the Secretary has 
approved a minerals agreement in compliance with the provisions of 
25 U.S.C. Chap. 23 and any other applicable provision of law, the 
United States shall not be liable for ***.

in keeping with the language of 25 U.S.C. 2103(e).
    (6) One commenter states that the language of Sec. 225.1(b) should 
more specifically state that existing minerals agreements are subject 
to new regulations except for minerals agreement terms concerning 
duration of the minerals agreement, the rate of royalty or financial 
consideration, rental, or acreage unless agreed to by all parties to 
the minerals agreement. Another commenter states that the provision in 
Sec. 225.1(b) that new regulations not affect certain provisions of 
existing minerals agreements is much too broad and unnecessary; that 
regulations affecting operations and becoming effective after lease 
approval will impact lease duration, and further compares the provision 
in the new regulations to those provisions found in the commenter's 
standard lease form; and requests that Sec. 225.1(b) be withdrawn.
    Response: Section 225.1(b) is specifically intended to clarify that 
these new regulations, and any future amendments to these regulations, 
apply to existing minerals agreements except as to certain key 
provisions in the minerals agreement, unless the parties agree to 
retroactive effect of these new regulations on these key provisions. 
The Secretary retains authority to implement or amend and then apply 
regulations which are deemed necessary to protect the Indian mineral 
owners and the trust resource. Therefore, no changes in response to 
these comments were deemed necessary.
    (7) One commenter is of the opinion that Sec. 225.1(c) duplicated 
Secs. 225.4 through 225.6 and asked that Sec. 225.1(c) be amended to 
clarify that the cited regulations do not apply if specifically stated 
otherwise in a minerals agreement. Another commenter asked that the 
supplemental regulations of Secs. 225.4 through 225.6 be subordinated 
in Sec. 225.1(c) if inconsistent with the terms of minerals agreements. 
Other commenters ask that paragraphs at Sec. 225.1(c) and 225.1(d) 
allow minerals agreement provisions inconsistent with regulations and 
that Sec. 225.1(c) allow principals to minerals agreements to exempt 
themselves from regulation by the Bureau of Land Management or the 
Minerals Management Service.
    Response: Sections 225.1(c) and 225.6 are amended to allow the 
parties greater flexibility in determining how the functions covered in 
the Minerals Management Service regulations should be handled in their 
minerals agreements. However, no such flexibility can be provided 
concerning the actual minerals operations procedures governed by other 
applicable regulations not expressly inconsistent with this part.
    (8) Two commenters state that Sec. 225.1(d) does not sufficiently 
recognize the regulatory authority of the tribe and applicability of 
tribal laws and regulations.
    Response: Section 225.1(d) specifically recognizes the lawful 
governmental authority of Indian tribes to regulate the conduct of 
persons and businesses within their territorial jurisdiction. No 
additional changes to Sec. 225.1(d) were deemed necessary.
    (9) Several commenters object to the definition of ``agreement'' 
(Sec. 225.3) and suggest changes ranging from (1) the inclusion of 
negotiated agreements under authority other than the IMDA to (2) the 
exclusion of contracts entered into under other available regulations. 
One commenter suggests that the word ``lease'' be deleted from the 
definition of an agreement to avoid confusion with standard leases. One 
commenter suggested that the definition should be that of a ``minerals 
agreement'' and not just that of an ``agreement.''
    Response: The definition of a minerals agreement is retained in the 
final rule under the definition of a ``minerals agreement,'' and the 
definition of ``agreement'' deleted from the final rule. The definition 
of ``minerals agreement'' is carried over from statute (25 U.S.C. 2102) 
and can include a mineral lease if so negotiated by the principals. 
Therefore the word ``lease'' is retained in the definition of 
``minerals agreement,'' with the clarification that existing leases and 
leasing options available under the Act of May 11, 1938 or the Act of 
March 3, 1909 are not included when ``lease'' is used in the definition 
of a ``minerals agreement'' in the final rule.
    (10) One commenter suggests that ``coal'' be defined because it is 
referenced in royalty considerations in 25 CFR part 211 as proposed.
    Response: The definition in final rulemaking of ``minerals'' is 
changed to be more inclusive and now includes coal and lignite of all 
ranks as well as all hydrocarbons. Also included are all other minerals 
such that any mineral or mineral fuel however categorized is a proper 
subject of minerals agreements. For example, peat, variously 
categorized as a soil conditioner, fertilizer, mineral fuel, and/or 
hydrocarbon is specifically included in definition as a mineral because 
it is a non-metalliferous, energy mineral and a non-metalliferous, non-
energy mineral.
    (11) Two commenters are of the opinion that coal-bed methane should 
be excluded from the definition of a ``gas'' and one would exclude 
substances found as constituent parts of other minerals.
    Response: The issues raised by commenters are currently being 
litigated. The definition of ``gas'' in these regulations is consistent 
with the position the Department of the Interior has taken in 
litigation and should not be taken as affecting any existing minerals 
agreement or lease or any pending litigation. If necessary, distinction 
among gases of various origin or association may be made by the use of 
suitable modifiers (e.g., coal-bed methane, natural gas, or carbon-
dioxide gas) during negotiation of minerals agreements by principals.
    (12) One commenter suggests that the definition of ``gas'' should 
also specify the meaning of ``ordinary temperature and pressure 
conditions'' because of perceived differences in ordinary temperature 
and pressure in subsurface contrasted with ordinary temperature and 
pressure at land surface.
    Response: Ordinary temperature and pressure generally means near 
room temperature and about one atmosphere pressure as commonly used in 
the calculation of and the handling of gases and in specified standards 
for the determination of quantities of materials. The specification of 
a standard, if required, should be included at the time of preparation 
of the minerals agreement.
    (13) One group of commenters concerned with the definition of ``in 
the best interest of the Indian mineral owner'' suggest that the BIA 
restrict its review to an examination of those factors delineated in 
the IMDA. Another group of commenters request that the definition be 
amended to state that the BIA shall consider any factor relevant to the 
best interests of the Indian mineral owner.
    Response: The IMDA provides that the Secretary shall consider, 
``among other things,'' those factors listed and thus the Secretary may 
consider factors not specifically delineated. The factors considered 
can only be those perceived to be relevant at the time of approval or 
disapproval of the minerals agreement and not those unknown factors 
judged relevant in retrospect. The definition is changed in final 
rulemaking to provide that in making a best interest determination the 
Secretary shall consider any relevant factor.
    (14) One commenter states that the definition of ``Indian lands'' 
should be changed to ``Indian mineral lands'' and that the interest 
owned in lands or minerals should be restricted to the interest owned 
in minerals. Another commenter states that the definition of Indian 
lands has surfaced mysteriously without explanation, may be in conflict 
with regulatory programs administered by other agencies, and that the 
BIA should withdraw the current proposal and consult with the Office of 
Surface Mining and Reclamation and Enforcement prior to initiating any 
future rulemaking activities on this issue.
    Response: The definition of Indian lands is necessary because the 
IMDA defines an Indian and an Indian tribe in terms of land ownership 
without respect to whether the land is deemed mineral or non-mineral. 
The definition is further clarified by defining ``Indian mineral 
owner'' and ``Indian surface owner.''
    (15) A commenter suggests that the definition of ``lessor'' be 
expanded to include one who is negotiating for or who has entered into 
a minerals agreement.
    Response: This definition has been deleted from the list of 
definitions because the word ``lessor'' is not used in the final 
rulemaking.
    (16) One commenter states that the inclusion of sand and gravel in 
the definition of ``minerals'' is beyond the statutory language of the 
IMDA and there is no basis in statute for inclusion of the common 
materials listed in the definition of ``minerals.''
    Response: At 25 U.S.C. 2102(a) reference is made to exploration 
for, or extraction, processing, or other development of other energy or 
non-energy mineral resources in which such Indian tribe owns a 
beneficial or restricted interest; a reference which includes mineral 
resources consisting of the common varieties of minerals. For purposes 
of clarity of definition several examples of common and/or uncommon 
varieties of minerals and mineral aggregates are listed to illustrate 
that all minerals and mineral resources on Indian lands are subject to 
disposition by minerals agreements. Therefore, the definition is 
unchanged in final rulemaking.
    (17) Two commenters object to the exclusion of materials from the 
definition of mining based on the type and volume of material 
considered for extraction.
    Response: Common varieties of mineral resources extracted in small 
amounts were excluded from the definition of mining, because the 
purpose of such extraction is often for local and/or tribal use. The 
Department's full regulatory program was not thought necessary for such 
minimal operations. Permits for these small operations are reviewed and 
approved at the local Superintendent's level. The Indian mineral owner 
still retains the option of disposing of such mineral resources in 
whatever types and quantities specified by minerals agreement, if so 
desired.
    (18) One commenter points out that the definitions of ``oil'' and 
``gas'' are at odds with the definitions used by the Minerals 
Management Service and suggests that the definitions of the two Federal 
agencies should be more compatible.
    Response: Definitions of ``oil'' and ``gas'' at Sec. 225.3 are 
reasonably in accord with the definitions used by the Bureau of Land 
Management in the management of mineral leasing and production. The 
Minerals Management Service definition is more closely tied to 
measurement and royalty concerns. In those instances where differences 
in the definitions threaten to confuse issues, the provisions of the 
minerals agreement should specifically address the problems of concern 
to the parties.
    (19) One commenter states that ``paying quantities'' should be 
defined in regulation because many elements of the regulations in force 
turn on such definition.
    Response: Although ``paying quantities'' may ultimately be defined 
in 25 CFR parts 211 and 212, in the context of a minerals agreement 
such a definition, if deemed necessary by the parties, is properly the 
subject of negotiation and should be included in the minerals 
agreement. Therefore, the definition is not included in 25 CFR part 
225.
    (20) One commenter states that the definition of ``tar sands'' and 
its placement in the proposed regulations seems to limit development to 
quarrying or mining and that the regulations should broaden the type of 
development covered by their terms.
    Response: The definition of ``tar sands'' is deleted and the 
definition of ``minerals'' broadened to include all hydrocarbons, solid 
minerals, or other energy or nonenergy minerals (including tar sands) 
without exception as properly subject to disposition by minerals 
agreement regardless of method of extraction.
    (21) One commenter suggests that an additional section in the 
regulation be included after Secs. 225.4 through 225.6 advising that 
Indian mineral owners may have also enacted laws and regulations which 
apply to many of the activities concurrently governed by Federal 
agencies, and that explicit mention of the Government's trust 
responsibility to Indians be included in the proposed regulations.
    Response: Provision in the regulation for the laws and regulations 
of the Indian mineral owners is made at Sec. 225.1(d) and further at 
Secs. 225.21(b)(4) and 225.21(b)(8). The trust responsibility is 
acknowledged at Sec. 225.1(a).
    (22) One commenter is of the opinion that although referenced, it 
should be specifically stated in Sec. 225.6 that the regulations of the 
Minerals Management Service apply to the calculation of royalty values.
    Response: The incorporation by reference of the authority and 
responsibility of the Minerals Management Service is sufficient to 
bring to bear the MMS regulations applicable to the calculation of 
royalty values. The parties may specify in the minerals agreement that 
an alternative method be used to calculate value for royalty purposes.
    (23) One commenter states that the word ``trust'' needs to be 
included in Sec. 225.20(b) together with the reference to the 
restricted interest. Another commenter suggests that the mineral lands 
and not the mineral resources be included under the authority to 
contract.
    Response: Section 225.20 is rewritten to contain the same 
terminology as the IMDA which applies to mineral resources in which the 
Indian mineral owner owns a ``beneficial or restricted interest.''
    (24) Three commenters express their dissatisfaction with proposed 
Sec. 225.21(a) which stipulates that upon the request of an Indian 
mineral owner advice, assistance and information be provided during the 
minerals agreement negotiation process to the extent of available 
resources. Commenters further state that the Department is obligated to 
have resources available to provide adequate technical and financial 
analyses and also state that availability (sic) of funds should be an 
excuse for not providing technical assistance only if the regulations 
require the Secretary periodically to determine the level of funding 
needed, report that need to Congress, and seek funding adequate to meet 
the established needs.
    Response: The obligation of the Secretary to ensure that upon 
request of an Indian tribe or individual Indian, such tribe or 
individual shall have available advice, assistance, and information 
during the negotiation of a minerals agreement is, in the IMDA, 
expressly conditioned on the extent of the Secretary's available 
resources (25 U.S.C. 2106). The future resource needs of the Secretary 
in the discharge of the trust responsibility and in determining if 
minerals agreements are in the best interests of the Indian mineral 
owners are routinely decided in the budget process as set forth in the 
governing BIA manuals and procedures. In the budget process the 
anticipated future resource needs are estimated based on current and 
past experience of the BIA. Therefore, Sec. 225.21(a) remains 
unchanged.
    (25) One commenter prefers that the listing in Sec. 225.21 be 
deleted and that the tribe decide what should or should not appear in a 
minerals agreement because it is felt that the listed provisions would 
lead to BIA requirements.
    Response: The listing, which is not intended to be all- inclusive, 
of provisions which, if applicable, shall be addressed consists of 
those items which the Secretary feels should be included in a minerals 
agreement (or most any business-like agreement dealing with minerals) 
such that the minerals agreement can be approved by the Secretary 
bearing in mind the Secretary's trust responsibility and determination 
of the best interest of the Indian mineral owner. Further, some of the 
provisions, if not addressed, allow regulation by default under rules 
presently in place and functional. For example, issues of (1) valuation 
of mineral product, (2) manner of payments, (3) accounting procedures, 
and (4) auditing procedures if not addressed in a minerals agreement, 
subsequently approved by the Secretary, will by default be regulated 
under the standard rules of 30 CFR chapter II, subchapters A and C.
    (26) One commenter points out that there may be additional 
provisions, not listed in Sec. 225.21(b) as proposed, which ought to be 
addressed in minerals agreements; and that all provisions should be 
optional and at the discretion of the Indian mineral owner.
    Response: Section 225.21(b) has been rewritten to include 
provisions other than those listed and to make it clear that the 
parties to minerals agreements can include provisions not listed. 
However, the minerals agreement must be sufficient in detail and 
completeness at the time of submittal so that it can be approved by the 
Secretary.
    (27) One commenter ventures that where the tribe is the decision 
maker or operator the listed elements (Sec. 225.21(b)) of a minerals 
agreement would require the tribe to recite how it intends to do 
business, and wishes to know if this is the Secretary's intent.
    Response: It is not the intent of the Secretary to intrude into the 
business practices of the Indian mineral owner. If a tribe is cast as 
an operator and a minerals agreement is the required or chosen 
instrument of conduct of business, then such minerals agreement must be 
approved by the Secretary. Under such conditions the tribe has recourse 
to 25 U.S.C. 2103(c), requiring the Department of the Interior to hold 
the terms and conditions, among other things, of minerals agreements as 
privileged proprietary information of the affected Indian or Indian 
tribe.
    (28) One commenter states that Sec. 225.21(b) should be expanded to 
pinpoint which rule in regulation would be established as the governing 
rule by default if a minerals agreement is silent on a particular 
issue, especially with regard to aspects of operations. This specific 
default listing would be used to determine if the Indian mineral owner 
should negotiate a provision in the minerals agreement different from 
the default rule.
    Response: Most Indian mineral owners negotiating or considering the 
negotiation of a minerals agreement have at least a modest familiarity 
with the operating regulations of the Federal agencies as identified in 
Secs. 225.4, 225.5, and 225.6. This familiarity, in addition to the 
advice, assistance, and information that can be provided by the 
Secretary during negotiations, and the independent legal and technical 
resources available to Indian mineral owners will allow for informed 
analysis and consideration of provisions to be included in a minerals 
agreement. A default listing, although likely of considerable value, 
does not lend itself well to inclusion in the regulation. A default 
listing is more properly subject to inclusion in a BIA manual, and is 
presently being considered for inclusion in manuals in preparation.
    (29) Two commenters find the word ``indemnifying'' in 
Sec. 225.21(b)(3) confusing and suggest change.
    Response: This section is rewritten to specify that in a minerals 
agreement a statement be made providing indemnity to the Indian mineral 
owner(s) and the United States from all claims, liabilities and causes 
of action that may be made by persons not a party to the minerals 
agreement.
    (30) One commenter points out that there is no mention of mineral 
valuation in proposed Sec. 225.21(b) and suggests that mineral 
valuation be included.
    Response: The inclusion is made at Sec. 225.21(b)(7) to include 
provisions establishing mineral valuation procedures.
    (31) One commenter suggests that Sec. 225.21(b)(10) would be more 
helpful if the kinds of bonds to be considered and the parties to be 
included were itemized.
    Response: The kinds and types of bonds to be considered and the 
amounts of bonds (if not Statewide or Nationwide bonds) are negotiable 
in the minerals agreement. Section 225.21(b)(10) is therefore unchanged 
in final rulemaking. However, Sec. 225.30 provides guidance as to the 
bond security acceptable to the Secretary and also provides guidance as 
to minimal bonding requirements in response to the provisions of a 
minerals agreement.
    (32) One commenter suggests that an addition be made at 
Sec. 225.21(b)(21) to establish limitations, if any, on assignments of 
interest.
    Response: The suggested provision as to assignments at 
Sec. 225.21(b)(9) is rewritten to suggest that any limitations on the 
right to assign the minerals agreement be considered during the 
negotiation of the minerals agreement.
    (33) One commenter points out that proposed Sec. 225.21(d) is 
unclear in describing minerals agreement handling after tribal 
preparation and approval.
    Response: The regulations at Sec. 225.21(d) are rewritten to 
clarify the handling of the minerals agreement after execution by the 
Indian mineral owner(s) and the prospective operator.
    (34) Several commenters believe that 180 days (or 60 days after 
compliance, if required, with the National Environmental Policy Act of 
1969) allowed for Secretarial approval or the disapproval of minerals 
agreements at Sec. 225.22(a) is much too long and recommended allowable 
times of 30 to 90 days for approval or disapproval.
    Response: It has been the experience of the Department that at 
times the full 180 days is required for the review and decision process 
to run its course partly because of the need to prepare and provide to 
the Indian minerals owners written findings forming the basis of 
Secretarial intent to approve or disapprove a minerals agreement. 
Therefore, the full time interval allowed in the IMDA (25 U.S.C. 
2103(a)) is retained in final rulemaking.
    (35) One commenter urges that minerals agreements presented to the 
Secretary as fully negotiated shall be approved if determined to be in 
compliance with the law. Another commenter suggests that the only basis 
for disapproval be that the minerals agreement is not in the best 
economic interest of the tribe.
    Response: The duties and responsibilities of the Secretary in the 
approval process, including, among other things, the factors to be 
considered, the extent of required study, and the prior notice of 
proposed findings, are specifically set forth in the IMDA (25 U.S.C. 
2103) and elsewhere. Therefore, the Secretary must and will approve or 
disapprove minerals agreements in compliance with existing laws and 
regulations, which allow the Secretary the discretion to weigh relevant 
factors and require the Secretary to make, on the basis of the 
Secretary's judgement, a best interest determination.
    (36) One commenter states that the regulations should specify that 
the time allowed for Secretarial approval or disapproval of a minerals 
agreement should begin at the time of first submittal of a minerals 
agreement for approval.
    Response: The time schedule for Secretarial approval or disapproval 
of a minerals agreement begins when the minerals agreement is first 
submitted for approval to the Secretary or the Secretary's designee, 
usually the appropriate Superintendent, or in the absence of a 
Superintendent, the Area Director.
    (37) A commenter suggests that Sec. 225.22(b) be rewritten to 
require the Secretary to call a meeting of interested parties to 
address the concerns the Secretary may have about a minerals agreement, 
and so facilitate any necessary amendments to the minerals agreement. 
Another commenter suggested that the word ``lessor'' be substituted for 
the words ``affected Indian mineral owners.''
    Response: The negotiation of a minerals agreement is completed by 
the Indian mineral owner(s) and the prospective operator(s) prior to 
submission of the minerals agreement for approval. The Secretary 
participates in the negotiation of a minerals agreement only at the 
request of the Indian mineral owner and only to the extent of giving 
advice, assistance, and information to the Indian mineral owner (25 
U.S.C. 2106) during the negotiation. The IMDA provides that the 
Secretary is to give the Indian mineral owner written findings forming 
the basis of the Secretary's intent to approve or disapprove a minerals 
agreement. The written findings can include recommendations for changes 
in the minerals agreements. These written findings serve the same 
purpose as the meeting suggested by the commenter. The words ``affected 
Indian mineral owners'' are retained in final rulemaking because not 
all minerals agreements will be in the form of a ``lease.''
    (38) One commenter suggests that proposed Sec. 225.22(b) be changed 
to agree with Sec. 225.23 in that the preparation of an economic 
assessment is to be mandatory.
    Response: The necessary changes have been made at Secs. 225.22(b) 
and 225.23.
    (39) One commenter indicates that the proposed Sec. 225.22(c) 
contains confusing language in the description of handling minerals 
agreements in the event disapproval is being considered.
    Response: Paragraphs 225.22(c) and 225.22(f) are rewritten and the 
definitions of ``Assistant Secretary'' and ``Secretary'' are changed at 
Sec. 225.3 to remove the confusion in the regulation. The ``Assistant 
Secretary'' of proposed rulemaking is now titled as the ``Assistant 
Secretary--Indian Affairs'' specifically defined to recognize the 
statutory authority of the Assistant Secretary--Indian Affairs to 
disapprove minerals agreements when so delegated by the Secretary.
    (40) One commenter advocates that proposed rulemaking be revised to 
provide that, at the request of the tribe, the Secretary must contract 
with the tribe, or an independent consultant selected by the tribe and 
approved by the Secretary, to prepare necessary economic and geologic 
evaluations and assessments.
    Response: The economic assessment must be prepared and made 
available to the Indian mineral owner during the 180-day approval 
period available to the Secretary and is designed to ensure that the 
Secretary adequately considers the potential economic return to the 
tribe from a negotiated minerals agreement. The conclusions contained 
in an economic assessment may well be based upon or include more 
elaborate economic and geologic evaluations completed through previous 
contracting by the Secretary and/or the tribe. The time available 
during the approval period is insufficient to permit elaborate studies, 
evaluations, contracting and subcontracting, transfers and 
disbursements of funds, and detailed studies of alternatives arising or 
which could arise from the consideration of a minerals agreement for 
approval. The contracting processes and evaluations envisioned by the 
commenter ordinarily would be completed and available prior to the 
commencement of the approval process and should be completed and 
available prior to or during the negotiation of a minerals agreement. 
Such contracting does occur under separate authority and is not 
properly part of these regulations dealing with minerals agreements for 
development of mineral resources.
    (41) One commenter prefers that deference be given to tribal 
conclusions based on expert analysis rather than an economic assessment 
prepared by the Secretary.
    Response: The Secretary will give appropriate weight and deference 
to all tribal conclusions and expert analysis available at the time of 
preparation of the economic assessment.
    (42) One commenter opposes the provisions of proposed Sec. 225.23 
because they would cause too much delay in the leasing process.
    Response: The preparation of the economic assessment must be 
completed within the 180-day time period allowed for the approval or 
disapproval of minerals agreements and therefore will not delay the 
approval process.
    (43) One commenter would like the regulations to specifically state 
that an economic assessment (Sec. 225.23) will include a review of 
whether, in the Secretary's view, the minerals agreement is likely to 
result in a profitable operation over time.
    Response: At 25 U.S.C. 2103(b) the Secretary is obligated to 
consider the potential economic return to the tribe (Indian mineral 
owner). The economic assessment is unlikely to contain an estimate of 
the likelihood of the profitability of an enterprise unless extensive 
and detailed information gathering and analysis bearing upon the 
profitability question has been completed prior to submittal of the 
minerals agreement for approval. In many instances, the information 
upon which to base a profitability estimate, especially for a specific 
operator, is not available or does not exist.
    (44) One commenter suggests that proposed Sec. 225.23(b) should be 
limited to minerals agreements that establish a royalty rate and not to 
other agreements that depend on the existence of such royalty 
agreements in order to be effective (operating agreements or farmouts).
    Response: Side agreements between the operator and a third party 
are not affected by the IMDA or these regulations unless by provision 
within the approved minerals agreement or unless such side agreement 
constitutes an amendment, modification, or supplement to the minerals 
agreement (See Sec. 225.28,) in which case the amendment, modification, 
or supplement must be approved in writing by all parties as well as the 
Secretary.
    (45) Two commenters state that proposed Sec. 225.23(c) should be 
amended to delete the last words ``when such a comparison can be 
readily made.''
    Response: In Sec. 225.23(c) the word ``readily'' has been changed 
to ``reasonably.'' Depending upon the mineral commodity and provisions 
of the minerals agreement such comparisons can, at times, not be 
reasonably made. Oil and gas leasing is widespread and frequently done 
by competitive bidding and the results are widely and completely 
reported, thus there may be information available to make such a 
comparison. However, in the case of a minerals agreement involving, for 
example, a deposit of single purpose clay subject to special processing 
and marketing by a single operator and supplier there may be 
insufficient or even an absence of competitive bidding, or other 
information, upon which to make a comparison.
    (46) One commenter is of the opinion that procedures apparently 
contemplated by Sec. 225.23(c) reflect the general practice within the 
Bureau that any geologic, economic or other technical analyses are 
performed by the Secretary, if at all, only after a minerals agreement 
has been negotiated; that this practice puts the cart before the horse; 
that technical evaluation work needs to be completed before the tribe 
begins negotiations (i.e., minerals inventories, seismic and geologic 
data analysis, production and revenue projections, etc.); that the 
Department's lack of commitment to perform adequate technical 
evaluations, is evidenced by the proposed FY 1993 budget for the BIA 
Division of Energy and Mineral Resources; that, that proposal 
eliminates all funding for mineral assessment and special project 
grants to the tribes; that those funds have been used in the past to 
conduct the technical analyses which are essential for adequate 
negotiations by the tribes and adequate review by the Department; that 
these regulations should be amended to strengthen the availability of 
technical assistance to the tribes at the beginning of the negotiation 
process, and not rely on Secretarial reviews after the negotiations are 
completed; and that this approach would enhance the negotiating 
position of the tribes and further full tribal self-determination in 
mineral development.
    Response: Sound business practices indicate that the detailed 
economic and technical analysis and evaluation should precede the 
submittal for approval of a minerals agreement by an Indian mineral 
owner. Such procedures aid both in negotiation of the minerals 
agreement and in the preparation of the economic assessment. As 
previously stated (above), the 180-day time interval during which the 
economic assessment must be completed, effectively prevents elaborate 
and/or time-consuming analysis and evaluation for inclusion in the 
economic assessment. Technical assistance to the Indian mineral owners 
is addressed at Sec. 225.21(a). Section 225.23(c) is left unchanged.
    (47) One commenter states that Sec. 225.24 as proposed requires 
environmental surveys prior to approval of the minerals agreement and 
another states that a cultural resources survey could be delayed until 
the commencement of operations and should be limited to the area 
disturbed by operations.
    Response: The Secretary is required to comply with the National 
Environmental Policy Act of 1969 and any other requirement of Federal 
law prior to the approval of a minerals agreement (25 U.S.C. 2103(a)). 
If the issuance of a minerals agreement does not have a significant 
impact on the human environment, then the agreement may be approved 
without extensive environmental study. The section at proposed 
Sec. 225.24 merely sets forth the authority and procedure for required 
compliance. Environmental requirements after approval of a minerals 
agreement are unaffected by the proposed rule.
    (48) One commenter states that the regulations should provide that 
the Bureau of Land Management have supervision of any required 
environmental surveys.
    Response: The Secretary is responsible for compliance with the 
National Environmental Policy Act of 1969 and all other applicable 
Federal law and as such may delegate authority as appropriate.
    (49) Several commenters state that the proposed Sec. 225.25 
requires or prefers dispute resolution by arbitration or mediation.
    Response: Change is made in final rulemaking to clarify that the 
minerals agreement shall provide for resolution of disputes and that 
the Secretary has a trust obligation to the Indian mineral owner(s). 
The specific mechanism is subject to negotiation among principals to 
minerals agreements.
    (50) One commenter states there should be no requirement for 
provision for a dispute resolution mechanism in minerals agreements.
    Response: In approving or disapproving a minerals agreement the 
Secretary is required to consider, among other things, provisions for 
resolving disputes that may arise between the parties to the minerals 
agreement (25 U.S.C. 2103(b)).
    (51) Several commenters express concern about the right of the 
Secretary to preempt the dispute resolution mechanism, the purpose of 
preemption, and lack of explanation of how such preemption shall take 
effect and what the effect of such preemption will be.
    Response: The Secretary's trust responsibility, an obligation 
reaffirmed at 25 U.S.C. 2103(e), leads to the inclusion of Secs. 225.36 
and 225.37 in the regulations. Although the dispute resolution 
provision to be included in the minerals agreement will provide the 
forum in which the Indian mineral owner and the operator can resolve 
any disputes that arise, Secs. 225.36 and 225.37 provide the Secretary 
with the means to deal with any violations of the terms and conditions 
of the minerals agreement, or applicable laws or regulations, that are 
not amenable to resolution through the forum chosen in the minerals 
agreement. Any action taken pursuant to Secs. 225. 36 and 225.37 will 
be at the discretion of the Secretary.
    (52) One commenter states that it is unclear in proposed regulation 
why the Secretary is not made a party to the dispute resolution 
mechanism.
    Response: Section 225.25 has been changed to delete the express 
prohibition on the Secretary being a party to the dispute resolution 
mechanism. However, the Secretary should not be made a party to the 
mechanism given the overall intent of these regulations to grant more 
responsibility and flexibility to the Indian mineral owner. The 
Secretary retains a role in the protection of the rights of the Indian 
mineral owner under Secs. 225.36 and 225.37.
    (53) One commenter questions the appropriateness of audit 
standards, as set forth in proposed Sec. 225.26, to all types of mining 
operations.
    Response: This section is changed in final rulemaking to set forth 
standards applicable to all mineral operations taking place as a result 
of minerals agreements.
    (54) One commenter points out that the terminology in Sec. 225.26 
used to describe those with payment obligations arising from a minerals 
agreement are inconsistent with definitions in Sec. 225.3.
    Response: The commenter is correct, however, the additional 
descriptives of payors are retained because any mineral commodity may 
be included in a minerals agreement and other Federal agencies 
variously describe in regulation such operators as payors, lessees, 
operators, etc.
    (55) One commenter suggests that the address of the Minerals 
Management Service be deleted at Sec. 225.27 because the address may be 
changed.
    Response: The commenter is correct in that the address may change 
in the future. Current language is retained in final rulemaking in an 
effort to make current regulations reflect current procedures.
    (56) One commenter expresses concern that proposed Sec. 225.28 is 
unwieldy, would be an impediment to successful development of Indian 
lands, and that amendments should be approved 30 days after submittal.
    Response: A minerals agreement or any amendment, modification, or 
supplement to a minerals agreement is subject to the approval of the 
Secretary (25 U.S.C. 2102(a)). In the discharge of the trust 
responsibility and in the best interest of the Indian mineral owner the 
Secretary cannot permit an approved minerals agreement to be 
substantially changed by an unapproved amendment, modification, or 
supplement to that minerals agreement. Provision is made in the final 
rulemaking for approval of an amendment, modification, or supplement 
separately providing that the underlying minerals agreement, as 
amended, modified, or supplemented meets the criteria of approval at 
Sec. 225.22.
    (57) One commenter points out that only a prospective operator 
which is a corporation should be required to comply with proposed 
Sec. 225.29(b)(2).
    Response: The necessary change is made in final rulemaking.
    (58) One commenter prefers that a section on bonds be included 
similar to that in proposed 25 CFR part 211; and that provision be made 
to require bonds specifically directed to the protection of the surface 
estate as well as the mineral estate, and that the payee be declared to 
be the Indian surface owner and/or the Indian mineral owner rather than 
the Secretary or the Bureau. Also, the commenter suggests that 
provisions permitting the use of Statewide and Nationwide bonds be 
deleted from the proposed regulations and that provision be made for 
the required amount of bonds to be increased in any particular case at 
the discretion of the Secretary, after consultation with the Indian 
mineral owner or the Indian surface owner; and that no bond be 
cancelled without the written approval of the Secretary, with 
concurrence of the Indian mineral owner or the Indian surface owner.
    Response: The rule at Sec. 225.30 is rewritten in recognition of 
the concerns of the commenter. The purpose of Sec. 225.30 in final 
rulemaking is to provide the minimal requirements for the bonding (or 
equivalent surety) of operators conducting mineral operations on Indian 
lands such that the Secretary may adequately and timely fulfill the 
trust responsibility. The final determination of the kinds and amounts 
(if not Statewide or Nationwide bonds) of bonds is a provision of 
minerals agreements subject to negotiation among principals to the 
minerals agreement. The Secretary remains the payee in all instances in 
order that bonds may be released or called timely in support of the 
trust responsibility. The Secretary encourages the consideration of 
bonds and bonding at the time of agreement at Sec. 225.21(b)(10).
    (59) One commenter states that proposed Sec. 225.31 should provide 
that the Minerals Management Service perform accounting, payment 
monitoring, and auditing functions under the Federal Oil and Gas 
Royalty Management Act of 1982 whether or not payments are made to the 
Minerals Management Service, or some other payee designated by the 
Indian mineral owner and approved by the Secretary, including private 
lock box arrangements with a tribe's bank.
    Response: Minerals Management Service regulations applicable to 
minerals agreements are contained in 30 CFR chapter II, subchapters A 
and C, and are incorporated in 25 CFR part 225 by reference at 
Secs. 225.1(c) and 225.6. Valuation, method of payment, accounting, 
auditing and monitoring functions of the MMS are thus applicable unless 
the minerals agreement provides alternatives as Sec. 225.(1)(c) and 
Sec. 225.6 authorize. The Federal Oil and Gas Royalty Management Act of 
1982 is concerned only with oil and gas and does not include solid 
minerals.
    (60) One commenter indicates that in the proposed rules the 
designation of method of payment should more properly be an agreement 
between the lessor and the Secretary.
    Response: The section at Sec. 225.31 is rewritten in final 
rulemaking to clarify the regulation. The prospective operator and the 
Indian mineral owner have the opportunity to negotiate the manner of 
payment as set forth in Secs. 225.21(b)(4) and 225.21(b)(6). Time of 
payment shall be in accordance with 30 CFR chapter II, subchapters A 
and C.
    (61) One commenter points out that under proposed Sec. 225.32(b) 
the operator is required to obtain drilling permits before commencement 
of operations and believes that the requirement for a drilling permit 
should be allowed to be waived by the parties to the minerals 
agreement.
    Response: The operating and reclamation rules and regulations of 
the Secretary governing the management of minerals operations and 
reclamation on Indian lands are applicable to minerals agreements. 
Therefore, drilling permits must be secured from the proper authority 
before commencement of operations, but the operating and reclamation 
regulations need not be written separately and in detail into each and 
every minerals agreement at the time the minerals agreement is 
submitted to the Secretary for approval. Detailed operating and 
reclamation requirements will be part of the approval process of oil 
and gas and mining operations.
    (62) One commenter states that the regulation at Sec. 225.33 should 
define an assignment to include any instrument or agreement which 
either makes a present conveyance of an interest in the minerals or 
obligates one party to convey any interest in the minerals to another 
party upon performance of some condition.
    Response: The suggested definition raises the possibility that 
under some conditions a minerals agreement could of itself be an 
assignment and the Secretary would be in the position of approving a 
minerals agreement conveying an interest that would be better conveyed 
by an instrument commonly perceived to be an assignment, leaving the 
underlying minerals agreement intact. Assignments, including the rights 
and conditions of assignment, are a subject of negotiation in minerals 
agreements and the principals are encouraged to establish these rights 
and conditions at Secs. 225.21(b)(4) and 225.21(b)(9).
    (63) One commenter states that the proposed section governing 
assignments should provide that no bond will be released until an audit 
has been conducted which confirms that the party to be released has 
paid the Indian mineral owner all amounts due under the minerals 
agreement.
    Response: Regulations at Sec. 225.33 provide that bonds may be 
released upon submission of satisfactory bonds by the assignee, and a 
determination that the assignor has satisfied all accrued obligations. 
It is anticipated that something less than a final audit will be 
required to make the determination that all accrued obligations have 
been satisfied. If an audit is desired, this item should be included in 
the minerals agreement. The proposed section is unchanged in final 
rulemaking.
    (64) One commenter proposes that proposed Sec. 225.33 be changed to 
state that an assignment of interest in a minerals agreement not be 
valid unless approved by the Indian mineral owner(s).
    Response: All minerals agreements thus far approved by the 
Secretary contain provisions for approval of assignment(s) by the 
Indian mineral owner(s). The inclusion of provisions which address 
approvals of assignments in minerals agreements is encouraged at 
Sec. 225.21(b)(9). The proposed change is not included in final 
rulemaking.
    (65) One commenter states that proposed Sec. 225.33 requires the 
assignor to have satisfied all accrued obligations before the 
assignor's bond may be released and suggests that the assignee be 
allowed to secure the assignor's obligations with the assignee's bond.
    Response: Subject to approval, the assignee may assume and/or 
discharge (by execution of bond if appropriate) the obligations of the 
assignor. However, the accrued obligations must be satisfied before the 
assignment will be approved.
    (66) A commenter believes that the requirement of proposed 
Sec. 225.33 that the assignment be filed with the Secretary immediately 
after the execution by all parties imposes an onerous burden on the 
parties and recommends a reasonable time period, such as within 60 days 
after execution, be allowed for filing.
    Response: The Secretary requires that assignments of interest be 
filed promptly because assignments can affect the payment and 
subsequent distribution of royalties to the Indian mineral owner. The 
proposed rule is changed to require the assignment to be filed with the 
Secretary within five (5) working days of execution by all parties.
    (67) One commenter points out that in proposed Sec. 211.28 tribal 
consent is not required for unitization unless tribal consent is 
required in the minerals agreement and suggests amending the proposed 
regulation to recognize that tribal consent can be required either by 
provisions in a minerals agreement or by tribal law.
    Response: The concerns of the commenter are valid. However, the 
question of tribal consent, as well as all other issues relating to 
unitizing and communitizing of lands, should be specified in the 
minerals agreement. The Secretary encourages consideration of the 
unitizing and communitizing of lands at Sec. 225.21(b)(19). Specific 
requirements for the content, effect, and handling of unitization and 
communitization agreements are not included in these regulations.
    (68) One commenter states there should be some provision in 
proposed Sec. 225.36 indicating that the Secretary's authority to 
cancel a minerals agreement is not exclusive and further, that the 
tribe should have independent authority to bring action in a court of 
competent jurisdiction for cancellation of a minerals agreement if 
adequate grounds exist under applicable law.
    Response: Under these regulations the Secretary has the exclusive 
right of cancellation by virtue of the sole right of approval of a 
minerals agreement. Therefore, the Secretary retains the right to 
cancel a minerals agreement in the face of a violation of the 
provisions of the minerals agreement or any applicable law, regulation, 
or order. There is no impairment of the independent authority of an 
Indian mineral owner to bring an action in a court of competent 
jurisdiction for cancellation of a minerals agreement if adequate 
grounds exist under applicable law.
    (69) One commenter believes that the words ``5 days'' should be 
changed to ``seven (7) days'' at proposed Sec. 225.36(c).
    Response: The language is changed in final rulemaking to read 
``five (5) working days.''
    (70) One commenter states that in proposed Sec. 225.36 there is no 
right to a hearing before the lease may be canceled, that only written 
responses are allowed, and that the right to a hearing should be 
restored.
    Response: Rights to hearings and/or dispute resolution may be 
contained in the provisions of minerals agreements. Further, the rights 
of the operator under 25 CFR part 2 (see Sec. 225.38) are not abridged. 
The suggested provisions are not incorporated at Sec. 225.36.
    (71) One commenter suggests that the word ``issue'' at proposed 
Sec. 225.36(a)(1) be changed to ``serve.''
    Response: The regulations at proposed Secs. 225.36(a) and 225.36(b) 
are clarified by reordering sentences to separate minimal content of 
notices clearly from the Secretary's authority to issue the notices.
    (72) One commenter indicates the words ``permittee'' or ``lessee'' 
at proposed Sec. 225.36(c) should be changed to ``operator.''
    Response: These changes have been made in final rulemaking.
    (73) One commenter states that proposed Sec. 225.37 needs to be 
corrected such that there is no limit to other remedies agreed to in a 
minerals agreement.
    Response: The rule has been rewritten and made specific to minerals 
agreements. As now written the commenters suggestion is incorporated in 
final rulemaking.
    (74) One commenter states that in the event an Indian tribe is the 
operator, penalties set by Sec. 225.37 will be assessed against the 
tribe and asks tribes be exempted from imposition of the Secretary's 
civil penalties.
    Response: In the event the tribe is or becomes the operator and a 
minerals agreement is the chosen instrument of conducting minerals 
operations on Indian lands, then the tribe and/or their designated 
operator will be subject to the regulations at Sec. 225.37.
    (75) One commenter states that filing fees under proposed 
Sec. 225.39 should not apply to assignments to the Indian mineral 
owner.
    Response: The concerns of the commenter have been addressed in the 
final rulemaking. Acquisition of an additional interest in an existing 
minerals agreement by the Indian mineral owner will not carry the 
filing-fee requirement, if provision for such acquisition is part of a 
minerals agreement approved by the Secretary prior to the acquisition.

III. Conclusion

    The scope and purpose of this part is to implement the IMDA which 
provides Indian mineral owners greater flexibility for the development 
and sale of their mineral resources. The objective of the IMDA is to 
permit Indian mineral owners to enter into minerals agreements which 
give the Indian mineral owners more responsibility in overseeing and 
greater flexibility in disposing of their mineral resources. Because of 
the wide range of minerals agreements which Indian mineral owners and 
industry may negotiate, the Department has drafted regulations which 
(1) fully implement the statutory procedures prescribed for obtaining a 
minerals agreement for development of Indian minerals, (2) provide 
sufficient guidance to both Indian mineral owners and operators as to 
what information will be required for the Secretary's review of 
minerals agreements, and what type of criteria will be applied to the 
review, and (3) specify how the minerals agreement will be monitored by 
the Department to ensure that the Indian mineral owner's resources are 
protected. Some of the provisions in the regulations are applicable 
unless the parties to the minerals agreement specifically agree 
otherwise. Some of the issues subject to 30 CFR chapter II, subchapters 
A and C are negotiable by parties entering into a minerals agreement. 
Specifically, issues of: (1) Valuation of mineral product, (2) manner 
of payments, (3) accounting procedures, and (4) auditing procedures are 
negotiable such that both the Indian mineral owner and designees of the 
Secretary may initiate and complete audit investigations and 
enforcement of negotiated minerals agreement provisions. Conversely, 
the operating regulations germane to minerals agreements under 43 CFR 
Groups 3100, 3200, 3400, and 3500 and 30 CFR part 750 are not 
negotiable. Thus, the regulations allow the parties great freedom to 
negotiate many issues and specify in the minerals agreement how they 
intend to address these issues. Specific regulatory provisions are 
mandatory only if applicable. However, most of the sections address 
issues which need to be addressed in a minerals agreement. Although the 
Department would not intend to dictate the terms of a minerals 
agreement, it does believe that minerals agreements which fail to 
address important issues and which may expose the Indian mineral owners 
to an unreasonable amount of risk may need to be changed prior to 
approval.

Executive Order No. 12866 and Regulatory Flexibility Act

    This rule has been reviewed under Executive Order 12866. In 
addition the Department of the Interior has determined that this rule 
will not have a significant economic effect on a substantial number of 
small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.).
    This final rulemaking will have equal impact on anyone desiring to 
engage in prospecting for or developing Indian-owned minerals, 
including oil and gas and geothermal resources. The promulgation of 
final rulemaking reduces the regulatory burden imposed on such persons 
in several instances. The final rulemaking will increase the filing fee 
(from $10.00 to $75.00) which must accompany each minerals agreement or 
an assignment thereof and is no different from the filing fees 
presently required when filing on Federal lands. This increase is 
necessary to partially compensate the United States for its costs of 
processing those documents, but experience shows that this increase is 
not an amount that will discourage or prevent any small business from 
contracting to engage in mineral development on Indian lands. This rule 
promotes economic growth by providing tribes and individual Indian 
mineral owners opportunity to negotiate minerals agreements which 
maximize their best economic interest and minimize any adverse 
environmental and cultural impact and at the same time enhance economic 
growth by allowing wise use of a portion of the National mineral 
reserve base which might not be otherwise available.

Executive Order No. 12612

    The Department has determined that this rule does not have 
significant federalism effects. This rule supports the goals of E.O. 
No. 12612 by enhancing self determination among the Indian communities 
by encouraging tribes to responsibly and independently achieve their 
personal, cultural, and economic objectives through their own efforts.

Executive Order No. 12630

    In accordance with E.O. 12630, the Department has determined that 
this rule does not have significant takings implications.

Executive Order No. 12778

    The Department has certified to the Office of Management and Budget 
that these final regulations meet the applicable standards provided in 
sections 2(a) and 2(b)(2) of Executive Order No. 12778.

National Environmental Policy Act of 1969

    The changes made by the final rulemaking are for the purpose of 
streamlining and updating implementation of the IMDA. These rules 
constitute an administrative action and do not impact on the physical 
environment. The approval of minerals agreements will require 
compliance with the provisions of the National Environmental Policy Act 
of 1969, including public participation in compliance with the 
regulations of the Council on Environmental Quality. In analyzing the 
alternatives to the changes in the initially proposed rulemaking which 
were made, the Bureau of Indian Affairs considered the changes to be of 
such minor variation and degree that the impacts were deemed equal to 
or less than the changes made by the initially proposed rulemaking. The 
Department of the Interior has determined therefore, that there will be 
no significant impact to the human environment.

Paperwork Reduction Act of 1980

    It has been determined by the Office of Management and Budget that 
the information Collection Requirements contained in Part 225 do not 
require review under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).

List of Subjects in 25 CFR Part 225

    Geothermal energy, Indian-lands, Mineral resources, Mines, Oil and 
gas exploration, Reporting and recordkeeping requirements.

Words of Issuance

    For the reasons set out in the preamble, part 225 of Title 25 
chapter I of the Code of Federal Regulations is added as set forth 
below.

PART 225--OIL AND GAS, GEOTHERMAL, AND SOLID MINERALS AGREEMENTS

Subpart A--General

Sec.
225.1  Purpose and scope.
225.2  Information collection.
225.3  Definitions.
225.4  Authority and responsibility of the Bureau of Land Management 
(BLM).
225.5  Authority and responsibility of the Office of Surface Mining 
Reclamation and Enforcement (OSMRE).
225.6  Authority and responsibility of the Minerals Management 
Service (MMS).

Subpart B--Minerals Agreements

225.20  Authority to contract.
225.21  Negotiation procedures.
225.22  Approval of minerals agreements.
225.23  Economic assessments.
225.24  Environmental studies.
225.25  Resolution of disputes.
225.26  Auditing and accounting.
225.27  Forms and reports.
225.28  Approval of amendments to minerals agreements.
225.29  Corporate qualifications and requests for information.
225.30  Bonds.
225.31  Manner of payments.
225.32  Permission to start operations.
225.33  Assignment of minerals agreements.
225.34  [Reserved]
225.35  Inspection of premises; books and accounts.
225.36  Minerals agreement cancellation; Bureau of Indian Affairs 
notice of noncompliance.
225.37  Penalties.
225.38  Appeals.
225.39  Fees.
225.40  Government employees cannot acquire minerals agreements.

    Authority: Indian Mineral Development Act of 1982, 25 U.S.C. 
2101-2108; and 25 U.S.C. 2 and 9.

Subpart A--General


Sec. 225.1  Purpose and scope.

    (a) The regulations in this part, administered by the Bureau of 
Indian Affairs under the direction of the Secretary of the Interior, 
govern minerals agreements for the development of Indian-owned minerals 
entered into pursuant to the Indian Mineral Development Act of 1982, 25 
U.S.C. 2101-2108 (IMDA). These regulations are applicable to the lands 
or interests in lands of any Indian tribe, individual Indian or Alaska 
native the title to which is held in trust by the United States or is 
subject to a restriction against alienation imposed by the United 
States. These regulations are intended to ensure that Indian mineral 
owners are permitted to enter into minerals agreements that will allow 
the Indian mineral owners to have more responsibility in overseeing and 
greater flexibility in disposing of their mineral resources, and to 
allow development in the manner which the Indian mineral owners believe 
will maximize their best economic interest and minimize any adverse 
environmental or cultural impact resulting from such development. 
Pursuant to section 4 of the IMDA (25 U.S.C. 2103(e)), as part of this 
greater flexibility, where the Secretary has approved a minerals 
agreement in compliance with the provisions of 25 U.S.C. chap. 23 and 
any other applicable provision of law, the United States shall not be 
liable for losses sustained by a tribe or individual Indian under such 
minerals agreement. However, as further stated in the IMDA, the 
Secretary continues to have a trust obligation to ensure that the 
rights of a tribe or individual Indian are protected in the event of a 
violation of the terms of any minerals agreement, and to uphold the 
duties of the United States as derived from the trust relationship and 
from any treaties, executive orders, or agreements between the United 
States and any Indian tribe.
    (b) The regulations in this part shall become effective and in full 
force on April 29, 1994, and shall be subject to amendment at any time 
by the Secretary; Provided, that no such regulation that becomes 
effective after the date of approval of any minerals agreement shall 
operate to affect the duration of the minerals agreement, the rate of 
royalty or financial consideration, rental, or acreage unless agreed to 
by all parties to the minerals agreement.
    (c) The regulations of the Bureau of Land Management, the Office of 
Surface Mining Reclamation and Enforcement, and the Minerals Management 
Service that are referenced in Secs. 225.4, 225.5, and 225.6 are 
supplemental to these regulations, and apply to minerals agreements for 
development of Indian mineral resources unless specifically stated 
otherwise in this part or in other Federal regulations. To the extent 
the parties to a minerals agreement are able to provide reasonable 
provisions satisfactorily addressing the issues of valuation, method of 
payment, accounting, and auditing, governed by the Minerals Management 
Service regulations, the Secretary may approve alternate provisions in 
a minerals agreement.
    (d) Nothing in these regulations is intended to prevent Indian 
tribes from exercising their lawful governmental authority to regulate 
the conduct of persons, businesses, or minerals operations within their 
territorial jurisdiction.


Sec. 225.2  Information collection.

    It has been determined by the Office of Management and Budget that 
the Information Collection Requirements contained in part 225 do not 
require review under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).


Sec. 225.3  Definitions.

    As used in this part, the following terms have the specified 
meaning except where otherwise indicated.
    Area Director means the Bureau of Indian Affairs Official in charge 
of an Area Office.
    Assistant Secretary--Indian Affairs means the Assistant Secretary--
Indian Affairs of the Department of the Interior, a designee of the 
Secretary of the Interior who may be specifically authorized by the 
Secretary to disapprove minerals agreements (25 U.S.C. 2103(d)) and to 
issue orders of cessation and/or minerals agreement cancellations as 
final orders of the Department.
    Authorized Officer means any employee of the Bureau of Land 
Management authorized by law or by lawful delegation of authority to 
perform the duties described herein and in 43 CFR parts 3160, 3180, 
3260, 3280, 3480 and 3590.
    Director's Representative means the Office of Surface Mining 
Reclamation and Enforcement Director's Representative authorized by law 
or by lawful delegation of authority to perform the duties described in 
30 CFR part 750 and 25 CFR part 216.
    Gas means any fluid, either combustible or noncombustible, that is 
produced in a natural state from the earth and that maintains a gaseous 
or rarefied state at ordinary temperature and pressure conditions.
    Geothermal resources means: (1) All products of geothermal 
processes, including indigenous steam, hot water, and hot brines;
    (2) Steam and other gases, hot water, and hot brines, resulting 
from water, gas, or other fluids artificially introduced into 
geothermal formations;
    (3) Heat or other associated energy found in geothermal formations; 
and
    (4) Any by-product derived therefrom.
    In the best interest of the Indian mineral owner refers to the 
standards to be applied by the Secretary in considering whether to take 
administrative action affecting the interests of an Indian mineral 
owner. In considering whether it is ``in the best interest of the 
Indian mineral owner'' to take a certain action (such as approval of a 
minerals agreement or a unitization or communitization agreement) the 
Secretary shall consider any relevant factor, including, but not 
limited to: economic considerations, such as date of lease or minerals 
agreement expiration; probable financial effects on the Indian mineral 
owner; need for change in the terms of the existing minerals agreement; 
marketability of mineral products; and potential environmental, social 
and cultural effects.
    Indian lands means any lands or interests in lands owned by any 
individual Indian or Alaska Native, Indian tribe, band, nation, pueblo, 
community, rancheria, colony, or other group, the title to which is 
held in trust by the United States or is subject to a restriction 
against alienation imposed by the United States.
    Indian mineral owner means any individual Indian or Alaska Native, 
or Indian tribe, band, nation, pueblo, community, rancheria, colony, or 
other group that owns a mineral interest in oil and gas, geothermal 
resources or solid minerals, title to which is held in trust by the 
United States or is subject to a restriction against alienation imposed 
by the United States.
    Indian surface owner means any individual Indian or Alaska Native, 
or Indian tribe, band, nation, pueblo, community, rancheria, colony, or 
other group that owns the surface estate in land the title to which is 
held in trust by the United States or is subject to a restriction 
against alienation imposed by the United States.
    Indian tribe means any Indian tribe, band, nation, pueblo, 
community, rancheria, colony, or other group that owns land or 
interests in land the title to which is held in trust by the United 
States or is subject to a restriction against alienation imposed by the 
United States.
    Individual Indian means any individual Indian or Alaska Native who 
owns land or interests in land the title to which is held in trust by 
the United States or is subject to a restriction against alienation 
imposed by the United States.
    Minerals includes both metalliferous and non-metalliferous 
minerals; all hydrocarbons, including oil and gas, coal and lignite of 
all ranks; geothermal resources; and includes but is not limited to 
sand, gravel, pumice, cinders, granite, building stone, limestone, 
clay, silt, or any other energy or non-energy mineral.
    Minerals Agreement means any joint venture, operating, production 
sharing, service, managerial, lease (other than a lease entered into 
pursuant to the Act of May 11, 1938, or the Act of March 3, 1909), 
contract, or other minerals agreement; or any amendment, supplement or 
other modification of such minerals agreement, providing for the 
exploration for, or extraction, processing, or other development of 
minerals in which an Indian mineral owner owns a beneficial or 
restricted interest, or providing for the sale or other disposition of 
the production or products of such minerals.
    Minerals Management Service Official means any employee of the 
Minerals Management Service authorized by law or by lawful delegation 
of authority to perform the duties described in 30 CFR chapter II, 
subchapters A and C.
    Mining means the science, technique, and business of mineral 
development, including, but not limited to: opencast work, underground 
work, in-situ leaching, or other methods directed to severance and 
treatment of minerals; however, when sand, gravel, pumice, cinders, 
granite, building stone, limestone, clay or silt is the subject 
mineral, an enterprise is considered ``mining'' only if the extraction 
of such a mineral exceeds 5,000 cubic yards in any given year.
    Oil means all non-gaseous hydrocarbon substances other than coal, 
oil shale, or gilsonite (including all vein-type solid hydrocarbons). 
Oil includes liquefiable hydrocarbon substances such as drip gasoline 
and other natural condensates recovered or recoverable in a liquid 
state from produced gas without resorting to a manufacturing process.
    Operator means a person, proprietorship, partnership, corporation, 
or other business entity that has entered into an approved minerals 
agreement under the authority of the Indian Mineral Development Act of 
1982, or who has been assigned an obligation to make royalty or other 
payments required by the minerals agreement.
    Secretary means the Secretary of the Interior or an authorized 
representative, except that as used in Sec. 225.22 (e) and (f) the 
authorized representative may only be the Assistant Secretary for 
Indian Affairs (25 U.S.C. 2103(d)).
    Solid minerals means all minerals excluding oil, gas, and 
geothermal resources.
    Superintendent means the Bureau of Indian Affairs official in 
charge of an agency office.


Sec. 225.4  Authority and responsibility of the Bureau of Land 
Management (BLM).

    The functions of the Bureau of Land Management are found in 43 CFR 
part 3160--Onshore Oil and Gas Operations, 43 CFR part 3180--Onshore 
Oil and Gas Unit Agreements: Unproven Areas, 43 CFR part 3260--
Geothermal Resources Operations, 43 CFR part 3280--Geothermal Resources 
Unit Agreements: Unproven Areas, 43 CFR part 3480--Coal Exploration and 
Mining Operations, and 43 CFR part 3590--Solid Minerals (other than 
coal) Exploration and Mining Operations. These functions include, but 
are not limited to, resource evaluation, approval of drilling permits, 
approval of mining, reclamation, and production plans, mineral 
appraisals, inspection and enforcement, and production verification. 
These regulations, as amended, apply to minerals agreements approved 
under this part.


Sec. 225.5  Authority and responsibility of the Office of Surface 
Mining, Reclamation, and Enforcement (OSMRE).

    The OSMRE is the regulatory authority for surface coal mining and 
reclamation operations on Indian lands pursuant to the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1201 et seq.). The 
relevant regulations for surface mining and reclamation operations are 
found in 30 CFR part 750 and 25 CFR part 216. These regulations, as 
amended, apply to minerals agreements approved under this part.


Sec. 225.6  Authority and responsibility of the Minerals Management 
Service (MMS).

    The functions of the MMS for reporting, accounting, and auditing 
are found in 30 CFR chapter II, subchapters A and C. These regulations, 
unless specifically stated otherwise in this part or in other 
regulations, apply to all minerals agreements approved under this part. 
To the extent the parties to a minerals agreement are able to provide 
reasonable provisions satisfactorily addressing the issues or functions 
governed by the MMS regulations relating to valuation of mineral 
product, method of payment, accounting procedures, and auditing 
procedures, the Secretary may approve alternate provisions in a 
minerals agreement.

Subpart B--Minerals Agreements


Sec. 225.20  Authority to contract.

    (a) Any Indian tribe, subject to the approval of the Secretary and 
any limitation or provision contained in its constitution or charter, 
may enter into a minerals agreement with respect to mineral resources 
in which the tribe owns a beneficial or restricted interest.
    (b) Any individual Indian owning a beneficial or restricted 
interest in mineral resources may include those resources in a tribal 
minerals agreement subject to the concurrence of the parties and a 
finding by the Secretary that inclusion of the resources is in the best 
interest of the individual Indian mineral owner.


Sec. 225.21  Negotiation procedures.

    (a) An Indian mineral owner that wishes to enter into a minerals 
agreement may ask the Secretary for advice, assistance, and information 
during the negotiation process. The Secretary shall provide advice, 
assistance, and information to the extent allowed by available 
resources.
    (b) No particular form of minerals agreement is prescribed. In 
preparing the minerals agreement the Indian mineral owner shall, if 
applicable, address provisions including, but not limited to, the 
following:
    (1) A general statement identifying the parties to the minerals 
agreement, the legal description of the lands, including, if 
applicable, rock intervals or thicknesses subject to the minerals 
agreement, and the purposes of the minerals agreement;
    (2) A statement setting forth the duration of the minerals 
agreement;
    (3) A statement providing indemnification to the Indian mineral 
owner(s) and the United States from all claims, liabilities and causes 
of action that may be made by persons not a party to the minerals 
agreement;
    (4) Provisions setting forth the obligations of the contracting 
parties;
    (5) Provisions describing the methods of disposition of production;
    (6) Provisions outlining the method of payment and amount of 
compensation to be paid;
    (7) Provisions establishing accounting and mineral valuation 
procedures;
    (8) Provisions establishing operating and management procedures;
    (9) Provisions establishing any limitations on assignment of 
interests, including any right of first refusal by the Indian mineral 
owner in the event of a proposed assignment;
    (10) Bond requirements;
    (11) Insurance requirements;
    (12) Provisions establishing audit procedures;
    (13) Provisions for resolving disputes;
    (14) A force majeure provision;
    (15) Provisions describing the rights of the parties to terminate 
or suspend the minerals agreement, and the procedures to be followed in 
the event of termination or suspension;
    (16) Provisions describing the nature and schedule of the 
activities to be conducted by the parties;
    (17) Provisions describing the proposed manner and time of 
performance of future abandonment, reclamation and restoration 
activities;
    (18) Provisions for reporting production and sales;
    (19) Provisions for unitizing or communitizing of lands included in 
a minerals agreement for the purpose of promoting conservation and 
efficient utilization of natural resources;
    (20) Provisions for protection of the minerals agreement lands from 
drainage and/or unauthorized taking of mineral resources; and
    (21) Provisions for record keeping.
    (c) In order to avoid delays in obtaining approval, the Indian 
mineral owner is encouraged to confer with the Secretary prior to 
formally executing the minerals agreement, and seek advice as to 
whether the minerals agreement appears to satisfy the requirements of 
Sec. 225.22, or whether additions or corrections may be required in 
order to obtain Secretarial approval.
    (d) The executed minerals agreement, together with a copy of a 
tribal resolution authorizing tribal officers to enter into the 
minerals agreement, shall be forwarded by the tribal representative to 
the appropriate Superintendent, or in the absence of a Superintendent 
to the Area Director, for approval.


Sec. 225.22  Approval of minerals agreements.

    (a) A minerals agreement submitted for approval pursuant to 
Sec. 225.21(d) shall be approved or disapproved within: (1) One hundred 
and eighty (180) days after submission or, (2) sixty (60) days after 
compliance, if required, with section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) or any other 
requirement of Federal law, whichever is later.
    (b) At least thirty (30) days prior to approval or disapproval of 
any minerals agreement, the affected Indian mineral owners shall be 
provided with written findings forming the basis of the Secretary's 
intent to approve or disapprove the minerals agreement.
    (1) The written findings shall include an environmental study which 
meets the requirements of Sec. 225.24 and an economic assessment, as 
described in Sec. 225.23.
    (2) The Secretary shall include in the written findings any 
recommendations for changes to the minerals agreement needed to qualify 
it for approval.
    (3) The 30-day period shall commence to run as of the date the 
written findings are received by the Indian mineral owner.
    (4) Notwithstanding any other law, such findings and all 
projections, studies, data or other information (other than the 
environmental study required by Sec. 225.24) possessed by the 
Department of the Interior regarding the terms and conditions of the 
minerals agreement; the financial return to the Indian parties thereto; 
the extent, nature, value or disposition of the mineral resources; or 
the production, products or proceeds thereof, shall be held by the 
Department of the Interior as privileged and proprietary information of 
the affected Indian mineral owners. The letter containing the written 
findings should be headed with: PRIVILEGED PROPRIETARY INFORMATION OF 
THE (names of Indian mineral owners).
    (c) A minerals agreement shall be approved if, at the Secretary's 
discretion, it is determined that the following conditions are met:
    (1) The minerals agreement is in the best interest of the Indian 
mineral owner;
    (2) The minerals agreement does not have adverse cultural, social, 
or environmental impacts sufficient to outweigh its expected benefits 
to the Indian mineral owners; and,
    (3) The minerals agreement complies with the requirements of this 
part and all other applicable regulations and the provisions of 
applicable Federal law.
    (d) The determinations required by paragraph (c) of this section 
shall be based on the written findings required by paragraph (b) and 
paragraphs (b)(1) through (b)(4), inclusive, of this section. The 
question of ``best interest'' within the meaning of paragraph (c)(1) of 
this section shall be determined by the Secretary based on information 
obtained from the parties, and any other information considered 
relevant by the Secretary, including, but not limited to, a review of 
comparable contemporary contractual arrangements or offers for the 
development of similar mineral resources received by Indian mineral 
owners, by non-Indian mineral owners, or by the Federal Government, 
insofar as that information is readily available.
    (e) If a Superintendent or Area Director believes that a minerals 
agreement should not be approved, a written statement of the reasons 
why the minerals agreement should not be approved shall be prepared and 
forwarded, together with the minerals agreement, the written findings 
required by paragraph (b) and subparagraphs (b)(1) through (b)(4), 
inclusive, of this section, and all other pertinent documents, to the 
Secretary for a decision with a copy to the affected Indian mineral 
owner.
    (f) The Secretary shall review any minerals agreement referred with 
a recommendation that it be disapproved, and the Secretary's decision 
to disapprove a minerals agreement shall be deemed a final Federal 
agency action (25 U.S.C. 2103(d)).


Sec. 225.23  Economic assessments.

    The Secretary shall prepare or cause to be prepared an economic 
assessment that shall address, among other things:
    (a) Whether there are assurances in the minerals agreement that 
operations shall be conducted with appropriate diligence;
    (b) Whether the production royalties or other form of return on 
mineral resources is adequate; and
    (c) Whether the minerals agreement is likely to provide the Indian 
mineral owner with a return on the production comparable to what the 
owner might otherwise obtain through competitive bidding, when such a 
comparison can reasonably be made.


Sec. 225.24  Environmental studies.

    (a) The Secretary shall ensure that all environmental studies are 
prepared as required by the National Environmental Policy Act of 1969 
(NEPA) and the regulations promulgated by the Council on Environmental 
Quality (CEQ) found at 40 CFR Parts 1500-1508.
    (b) The Secretary shall ensure that all necessary surveys are 
performed and clearances obtained in accordance with 36 CFR parts 60, 
63, and 800 and with the requirements of the Archaeological and 
Historic Preservation Act (16 U.S.C. 469 et seq.), the National 
Historic Preservation Act (16 U.S.C. 470 et seq.), the American Indian 
Religious Freedom Act (42 U.S.C. 1996), and Executive Order 11593 (3 
CFR 1971-1975 Comp., p. 559, May 13, 1971). If these surveys indicate 
that a mineral development will have an adverse effect on a property 
listed on or eligible for listing on the National Register of Historic 
Places, the Secretary shall:
    (1) Seek the comments of the Advisory Council on Historic 
Preservation, in accordance with 36 CFR part 800;
    (2) Ensure that the property is avoided, that the adverse effect is 
mitigated, or that appropriate excavations or other related research is 
conducted; and (3) Ensure that complete data describing the historic 
property is preserved.


Sec. 225.25  Resolution of disputes.

    A minerals agreement shall contain provisions for resolving 
disputes that may arise between the parties. However, no such provision 
shall limit the Secretary's authority or ability to ensure that the 
rights of an Indian mineral owner are protected in the event of a 
violation of the provisions of the minerals agreement by any other 
party to the minerals agreement.


Sec. 225.26  Auditing and accounting.

    The Secretary may conduct audits relating to the scope, nature and 
extent of compliance with the minerals agreement and with applicable 
regulations and orders to lessees, operators, revenue payors, and other 
persons with rental, royalty, net profit share and other payment 
requirements arising from the provisions of a minerals agreement. 
Procedures and standards used for accounting and auditing of minerals 
agreements will be in accordance with audit standards established by 
the Comptroller General of the United States, in ``Standards for 
Auditing of Governmental Organizations, Programs, Activities, and 
Functions, 1981,'' and standards established by the American Institute 
of Certified Public Accountants.


Sec. 225.27  Forms and reports.

    Any forms required to be filed pursuant to a minerals agreement may 
be obtained from the Superintendent or Area Director. Prescribed forms 
for filing geothermal production reports required by the BLM (43 CFR 
part 3260, Secs. 3264.1, 3264.2-4 and 3264.2-5) may be obtained from 
the Superintendent, Area Director, or the Authorized Officer. 
Applicable reports required by the MMS shall be filed using the forms 
prescribed in 30 CFR part 210, which are available from MMS. Guidance 
on how to prepare and submit required information, collection reports, 
and forms to MMS is available from: Minerals Management Service, 
Attention: Lessee (or Reporter) Contact Branch, P.O. Box 5760, Denver, 
Colorado 80217. Additional reporting requirements may be required by 
the Secretary.


Sec. 225.28  Approval of amendments to minerals agreements.

    An amendment, modification or supplement to a minerals agreement 
entered into pursuant to the regulations in this part, whether the 
minerals agreement was approved before or after the effective date of 
these regulations, must be approved in writing by all parties before 
being submitted to the Secretary for approval. The provisions of 
Sec. 225.22 apply to approvals of amendments, modifications, or 
supplements to minerals agreements entered into under the regulations 
in this part. However, amendments, modifications, or supplements that 
do not substantially alter or affect the factors listed in 
Sec. 225.22(c), may be approved by referencing materials previously 
submitted for the initial review and approval of the minerals 
agreement. The Secretary may approve an amendment, modification, or 
supplement if it is determined that the underlying minerals agreement, 
as amended, modified, or supplemented meets the criteria for approval 
set forth in Sec. 225.22(c).


Sec. 225.29  Corporate qualifications and requests for information.

    (a) The signing in a representative capacity of minerals agreements 
or assignments, bonds, or other instruments required by a minerals 
agreement or these regulations, constitutes certification that the 
individual signing (except a surety agent) is authorized to act in such 
a capacity. An agent for a surety shall furnish a power of attorney.
    (b) A prospective corporate operator proposing to acquire an 
interest in a minerals agreement shall have on file with the 
Superintendent a statement showing:
    (1) The State(s) in which the corporation is incorporated, and a 
notarized statement that the corporation is authorized to hold such 
interests in the State where the land described in the minerals 
agreement is situated; and
    (2) A notarized statement that it has power to conduct all business 
and operations as described in the minerals agreement.
    (c) The Secretary may, either before or after the approval of a 
minerals agreement, assignment, or bond, call for any reasonable 
additional information necessary to carry out the regulations in this 
part, or other applicable laws and regulations.


Sec. 225.30  Bonds.

    (a) Bonds required by provisions of a minerals agreement should be 
in an amount sufficient to ensure compliance with all of the 
requirements of the minerals agreement and the statutes and regulations 
applicable to the minerals agreement. Surety bonds shall be issued by a 
qualified company approved by the Department of the Treasury (see 
Department of the Treasury Circular No. 570).
    (b) An operator may file a $75,000 bond for all geothermal, mining, 
or oil and gas minerals agreements in any one State, which may also 
include areas on that part of an Indian reservation extending into any 
contiguous State. Statewide bonds shall be filed for approval with the 
Secretary.
    (c) An operator may file a $150,000 bond for full nationwide 
coverage to cover all geothermal or oil and gas minerals agreements 
without geographic or acreage limitation to which the operator is or 
may become a party. Nationwide bonds shall be filed for approval with 
the Secretary.
    (d) Personal bonds shall be accompanied by:
    (1) Certificate of deposit issued by a financial institution, the 
deposits of which are Federally insured, explicitly granting the 
Secretary full authority to demand immediate payment in case of default 
in the performance of the provisions and conditions of the minerals 
agreement. The certificate shall explicitly indicate on its face that 
Secretarial approval is required prior to redemption of the certificate 
of deposit by any party;
    (2) Cashier's check;
    (3) Certified check;
    (4) Negotiable Treasury securities of the United States of a value 
equal to the amount specified in the bond. Negotiable Treasury 
securities shall 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 provisions and conditions of a minerals agreement; 
or
    (5) Letter of credit issued by a financial institution authorized 
to do business in the United States and whose deposits are Federally 
insured, and identifying the Secretary as sole payee with full 
authority to demand immediate payment in the case of default in the 
performance of the provisions and conditions of a minerals agreement.
    (i) The letter of credit shall be irrevocable during its term.
    (ii) The letter of credit shall be payable to the Bureau of Indian 
Affairs on demand, in part or in full, upon receipt by the Secretary of 
a notice of attachment stating the basis thereof (e.g., default in 
compliance with the minerals agreement provisions and conditions or 
failure to file a replacement in accordance with subparagraph (d)(5)(v) 
of this section).
    (iii) The initial expiration date of the letter of credit shall be 
at least one (1) year following the date it is filed in the proper 
Bureau of Indian Affairs office.
    (iv) The letter of credit shall contain a provision for automatic 
renewal for periods of not less than one (1) year in the absence of 
notice to the proper Bureau of Indian Affairs office at least ninety 
(90) days prior to the originally stated or any extended expiration 
date.
    (v) A letter of credit used as security for any minerals agreement 
upon which operations have taken place and final approval for 
abandonment has not been given, or as security for a statewide or 
nationwide bond, shall be forfeited and shall be collected by the 
Secretary if not replaced by other suitable bond or letter of credit at 
least thirty (30) days before its expiration date.
    (e) The required amount of a bond may be increased in any 
particular case at the discretion of the Secretary.


Sec. 225.31  Manner of payments.

    Unless specified otherwise in the minerals agreement, after 
production has been established, all payments due for royalties, 
bonuses, rentals and other payments under a minerals agreement shall be 
made to the Secretary or such other party as may be designated, and 
shall be made at such time as provided in 30 CFR chapter II, 
subchapters A and C. Prior to production, all bonus and rental 
payments, shall be made to the Superintendent or Area Director.


Sec. 225.32  Permission to start operations.

    (a) No exploration, drilling, or mining operations are permitted on 
any Indian lands before the Secretary has granted written approval of 
the minerals agreement pursuant to the regulations. After a minerals 
agreement is approved, written permission to start operations must be 
secured by applying for the permits referred to in paragraph (b) of 
this section.
    (b) Applicable permits in accordance with rules and regulations in 
30 CFR part 750, 43 CFR parts 3160, 3260, 3480, 3590, and Orders or 
Notices to Lessees (NTL) issued thereunder shall be required before 
actual operations are conducted on the minerals agreement acreage.


Sec. 225.33  Assignment of minerals agreements.

    An assignment of a minerals agreement, or any interest therein, 
shall not be valid without the approval of the Secretary and, if 
required in the minerals agreement, the Indian mineral owner. The 
assignee must be qualified to hold the minerals agreement and shall 
furnish a satisfactory bond conditioned on the faithful performance of 
the covenants and conditions thereof as stipulated in the minerals 
agreement. A fully executed copy of the assignment shall be filed with 
the Secretary within five (5) working days after execution by all 
parties. The Secretary may permit the release of any bonds executed by 
the assignor upon submission of satisfactory bonds to the Bureau of 
Indian Affairs by the assignee, and a determination that the assignor 
has satisfied all accrued obligations.


Sec. 225.34  [Reserved]


Sec. 225.35  Inspection of premises; books and accounts.

    (a) Operators shall allow Indian mineral owners, their authorized 
representatives, or any authorized representatives of the Secretary to 
enter all parts of the minerals agreement area for the purpose of 
inspection. Operators shall keep a full and correct account of all 
operations and submit all related reports required by the minerals 
agreement and applicable regulations. Books and records shall be 
available for inspection during regular business hours.
    (b) Operators shall provide records to the Minerals Management 
Service (MMS) in accordance with MMS regulations and guidelines. All 
records pertaining to a minerals agreement shall be maintained by an 
operator in accordance with 30 CFR part 212.
    (c) Operators shall provide records to the Authorized Officer in 
accordance with BLM regulations and guidelines.
    (d) Operators shall provide records to the Director's 
Representative in accordance with OSMRE regulations and guidelines.


Sec. 225.36  Minerals agreement cancellation; Bureau of Indian Affairs 
notice of noncompliance.

    (a) If the Secretary determines that an operator has failed to 
comply with the regulations in this part; other applicable laws or 
regulations; the terms of the minerals agreement; the requirements of 
an approved exploration, drilling or mining plan; Secretarial orders; 
or the orders of the Authorized Officer, the Director's Representative, 
or the MMS Official, the Secretary may:
    (1) Serve a notice of noncompliance; or
    (2) Serve a notice of proposed cancellation.
    (b) The notice of noncompliance shall specify in what respect the 
operator has failed to comply with the requirements referenced in 
paragraph (a), and shall specify what actions, if any, must be taken to 
correct the noncompliance.
    (c) The notice of proposed cancellation shall set forth the reasons 
why cancellation is proposed.
    (d) The notice of proposed cancellation or noncompliance shall be 
served upon the operator by delivery in person or by certified mail to 
the operator at the operator's last known address. When certified mail 
is used, the date of service shall be deemed to be when received or 
five (5) working days after the date it is mailed, whichever is 
earlier.
    (e) The operator shall have thirty (30) days (or such longer time 
as specified in the notice) from the date that the Bureau of Indian 
Affairs notice of proposed cancellation or noncompliance is served to 
respond, in writing, to the Superintendent or Area Director actually 
issuing the notice.
    (f) If an operator fails to take any action that may be prescribed 
in the notice of proposed cancellation, fails to file a timely written 
response to the notice, or files a written response that does not, in 
the discretion of the Secretary, adequately justify the operator's 
failure to comply, then the Secretary may cancel the minerals 
agreement, specifying the basis for the cancellation. Cancellation of a 
minerals agreement shall not relieve the operator of any continuing 
obligation under the minerals agreement.
    (g) If an operator fails to take corrective action or to file a 
timely written response adequately justifying the operator's actions 
pursuant to a notice of noncompliance, the Secretary may issue an order 
of cessation. If the operator fails to comply with the order of 
cessation, or fails to timely file an appeal of the order of cessation 
pursuant to paragraph (k) of this section, the Secretary may issue an 
order of minerals agreement cancellation.
    (h) This section does not limit any other remedies of the Indian 
mineral owner as set forth in the minerals agreement.
    (i) Nothing in this section is intended to limit the authority of 
the Authorized Officer, the Director's Representative, or the MMS 
Official to take any enforcement action authorized pursuant to statute 
or regulation.
    (j) The Authorized Officer, the Director's Representative, the MMS 
Official, and the Superintendent or Area Director should consult with 
one another before taking any enforcement actions.
    (k) If orders of cessation or minerals agreement cancellation 
issued pursuant to this section are issued by a designee of the 
Secretary other than the Assistant Secretary for Indian Affairs, the 
orders may be appealed under 25 CFR part 2. If the orders are issued by 
the Secretary or the Assistant Secretary for Indian Affairs, and not 
one of their delegates or subordinates, the orders are the final orders 
of the Department.


Sec. 225.37  Penalties.

    (a) In addition to or in lieu of cancellation under Sec. 225.36, 
violations of the terms and conditions of any minerals agreement, the 
regulations in this part, other applicable laws or regulations, or 
failure to comply with a notice of noncompliance or a cessation order 
issued by the Secretary may subject an operator to a penalty of not 
more than $1,000 per day for each day that such a violation or 
noncompliance continues beyond the time limits prescribed for 
corrective action.
    (b) A notice of a proposed penalty shall be served on the operator 
either personally or by certified mail to the operator at the 
operator's last known address. The date of service by certified mail 
shall be deemed to be the date received or five (5) working days after 
the date mailed, whichever is earlier.
    (c) The notice shall specify the nature of the violation and the 
proposed penalty, and shall specifically advise the operator of the 
operator's right to either request a hearing within thirty (30) days of 
receipt of the notice or pay the proposed penalty. Hearings shall be 
held before the Superintendent or Area Director whose findings shall be 
conclusive, unless an appeal is taken pursuant to 25 CFR part 2. If 
within thirty (30) days of receipt of the notice of proposed penalty 
the operator has not requested a hearing or paid the amount of the 
proposed penalty, a final notice of penalty shall be served.
    (d) If the person served with a notice of proposed penalty requests 
a hearing, penalties shall accrue each day the violations or 
noncompliance set forth in the notice continue beyond the time limits 
presented for corrective action. The Secretary may issue a written 
suspension of the requirement to correct the violations pending 
completion of the hearings provided by this section only upon a 
determination, at the discretion of the Secretary, that such a 
suspension will not be detrimental to the Indian mineral owner and upon 
submission and acceptance of a bond deemed adequate to indemnify the 
Indian mineral owner from loss or damage. The amount of the bond must 
be sufficient to cover the cost of correcting the violations set forth 
in the notice or any disputed amounts plus accrued penalties and 
interest.
    (e) Payment of penalties in full more than ten (10) days after a 
final decision imposing a penalty shall subject the operator to late 
payment charges. Late payment charges shall be calculated on the basis 
of a percentage assessment rate of the amount unpaid per month for each 
month or fraction thereof until payment is received by the Secretary. 
In the absence of a specific minerals agreement provision prescribing a 
different rate, the interest rate on late payments and underpayments 
shall be a rate applicable under section 6621(a)(2) of the Internal 
Revenue Code of 1954. Interest shall be charged only on the amount of 
payment not received and only for the number of days the payment is 
late.
    (f) None of the provisions of this section shall be interpreted as:
    (1) Replacing or superseding the independent authority of the 
Authorized Officer, the Director's Representative, or the MMS Official 
to impose penalties under applicable statutory or regulatory 
authorities;
    (2) Replacing, superseding, or replicating any penalty provision in 
the terms and conditions of a minerals agreement approved by the 
Secretary pursuant to this part; or
    (3) Authorizing the imposition of a penalty for violations of 
minerals agreement provisions for which the Authorized Officer, 
Director's Representative, or MMS Official has either statutory or 
regulatory authority to assess a penalty.


Sec. 225.38  Appeals.

    Appeals from decisions of Officials of the Bureau of Indian Affairs 
under this part may be taken pursuant to 25 CFR part 2.


Sec. 225.39 Fees.

    (a) Unless otherwise authorized by the Secretary, each minerals 
agreement or assignment thereof, shall be accompanied by a filing fee 
of $75.00 at the time of filing.
    (b) An Indian mineral owner shall not be required to pay a filing 
fee if the Indian mineral owner, pursuant to a provision in the 
existing minerals agreement, acquires an additional interest in that 
minerals agreement.


Sec. 225.40  Government employees cannot acquire minerals agreements.

    U.S. Government employees are prevented from acquiring any 
interest(s) in minerals agreements by the provisions of 25 CFR part 140 
and 43 CFR part 20 pertaining to conflicts of interest and ownership of 
an interest in trust land.

    Dated: January 27, 1994.
Ada E. Deer,
Assistant Secretary--Indian Affairs.
[FR Doc. 94-7315 Filed 3-29-94; 8:45 am]
BILLING CODE 4310-02-P