[Federal Register Volume 71, Number 57 (Friday, March 24, 2006)]
[Rules and Regulations]
[Pages 14821-14823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-2848]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3100

[WO-310-1310-PP-241A]
RIN 1004-AD83


Oil and Gas Lease Acreage Limitation Exemptions and Reinstatement 
of Oil and Gas Leases

AGENCY: Bureau of Land Management, Department of the Interior.

ACTION: Final rule.

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SUMMARY: The Bureau of Land Management (BLM) is issuing this final rule 
to amend its regulations to conform to provisions of the Energy Policy 
Act of 2005 (EPAct) that changed oil and gas lease acreage limitations 
and oil and gas lease reinstatement provisions. Section 352 of the 
EPAct expands the types of lease holdings that are exempt from the 
lease acreage holding limitations. Section 371 of the EPAct extends the 
time to file a lease reinstatement petition from 15 months to 24 
months.

DATES: This final rule is effective March 24, 2006.

FOR FURTHER INFORMATION CONTACT: Jay Douglas in the Fluid Minerals 
Group at (202) 452-0336. For assistance in reaching Mr. Douglas, 
persons who use a telecommunications device for the deaf (TDD) may call 
the Federal Information Relay Service (FIRS) at 1-800-877-8339, 24 
hours a day, 7 days a week.

SUPPLEMENTARY INFORMATION:

I. Background
II. Discussion of the Final Rule
III. Procedural Matters

I. Background

    Section 184(d) of the Mineral Leasing Act of 1920 limited the 
amount of acreage a Federal oil and gas lessee may hold in any one 
state to 246,080 acres. That section also provides that certain types 
of acreage holdings are exempt from those limitations. Section 352 of 
the EPAct amended the Mineral Leasing Act to expand the types of 
acreage holdings that are exempt from the limitations imposed by the 
Act.
    Section 188(d) of the Mineral Leasing Act of 1920 provides for 
reinstatement, under certain circumstances, of Federal oil and gas 
leases that were terminated for nonpayment of rental. Section 371 of 
the EPAct amended that section of the Act by extending the maximum time 
for a lessee to submit a petition for reinstatement to the BLM.
    The BLM finds good cause to omit the general notice of proposed 
rulemaking required by 5 U.S.C. 553(b). The notice and comment are 
unnecessary because the terms of the EPAct are very clear and provide 
no room for interpretation. Both changes are required by the EPAct, are 
not discretionary on the part of the Secretary of the Interior, and 
would implement clear and mandatory provisions of a recently enacted 
statute. For all the reasons noted above, the BLM further finds good 
cause to waive the delay in effectiveness in 5 U.S.C. 553(d). In 
addition, the provisions of the revised regulations do not require any 
change in conduct by the public and have been known to the public since 
the EPAct's enactment in August 2005.

II. Discussion of the Final Rule

    This final rule will implement the changes to the 43 CFR Part 3100 
regulations that are required because of amendments Sections 352 and 
371 of the EPAct made to the Mineral Leasing Act. A section-by-section 
discussion of the changes follows:

Section 3101.2-3 Excepted Acreage

    This section is revised to add the following to the list of acreage 
that will

[[Page 14822]]

not be included in computing accountable acreage:
    (A) Communitization agreements; and
    (B) Acreage in leases for which royalty (including compensatory 
royalty or royalty in-kind) was paid in the preceding calendar year.
    This section previously stated that acreage in a communitization 
agreement should not be exempted and the section did not include leases 
for which royalty (including compensatory royalty or royalty in-kind) 
was paid in the preceding calendar year. The other categories of 
excepted acreage, such as acreage subject to an operating, drilling, or 
development contract, are renumbered but not changed.

Section 3108.2-3 Reinstatement at Higher Rental and Royalty Rates: 
Class II Reinstatements

    Paragraph (b)(1) of this section is revised by limiting its 
application to leases that terminated on or before August 8, 2005, the 
date of enactment of EPAct. Under this new section, if a lease 
terminated on or before August 8, 2005, any form of actual notice, 
including a return of a check, constitutes notice of termination. The 
provisions of this paragraph are not changed except as to the period to 
which it applies, i.e. leases that terminated for underpayment of 
rental, before August 8, 2005.
    This section is further revised by adding a new paragraph (b)(2) 
that addresses the timing of submission of petitions for reinstatement 
for leases that terminated after August 8, 2005. Under this new 
section, if a lease terminated after August 8, 2005, the BLM can 
reinstate the lease if the lessee submitted a petition for 
reinstatement and the required back rental and royalty at the increased 
rate accruing from the date of termination by the earlier of:
    (A) Sixty days after the last date that any lessee of record 
received Notice of Termination by certified mail; or
    (B) Twenty four months after termination of the lease.
    This provision is similar to previous section 3108.2-3(b)(1) except 
that it increases the maximum amount of time to submit a petition for 
reinstatement from 15 months to 24 months.

III. Procedural Matters

Executive Order 12866, Regulatory Planning and Review

    These final regulations are not a significant regulatory action and 
are not subject to review by Office of Management and Budget under 
Executive Order 12866. These final regulations will not have an effect 
of $100 million or more on the economy. They will not adversely affect 
in a material way the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities. These final regulations will not create a 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency. These final regulations do not alter the 
budgetary effects of entitlements, grants, user fees, or loan programs 
or the right or obligations of their recipients; nor do they raise 
novel legal or policy issues.
    This final rule expands the types of lease holdings that are exempt 
from the lease acreage holding limitations and extends the time to file 
a lease reinstatement petition from 15 months to 24 months. These 
provisions are administrative in nature and have the potential for only 
minor economic impacts, however, the economic impact is not a result of 
this rulemaking, as both changes are required by the EPAct and are not 
discretionary on the part of the Secretary of the Interior.

National Environmental Policy Act

    The BLM has determined that this final rule is essentially 
administrative in nature. This qualifies for a categorical exclusion 
under 516 Departmental Manual (DM) Chapter 2, Appendix 1.10. Therefore, 
it is categorically excluded from environmental review under section 
102(2)(C) of the National Environmental Policy Act (NEPA), pursuant to 
516 DM, Chapter 2, Appendix 1. In addition, the final rule does not 
meet any of the 10 criteria for exceptions to categorical exclusions 
listed in 516 DM, Chapter 2, Appendix 2. Pursuant to Council on 
Environmental Quality regulations (40 CFR 1508.4) and the environmental 
policies and procedures of the Department of the Interior, the term 
``categorical exclusions'' means a category of actions which do not 
individually or cumulatively have a significant effect on the human 
environment and that have been found to have no such effect in 
procedures adopted by a Federal agency and for which neither an 
environmental assessment nor an environmental impact statement is 
required.

Regulatory Flexibility Act

    Congress enacted the Regulatory Flexibility Act (RFA) of 1980, as 
amended, 5 U.S.C. 601-612, to ensure that Government regulations do not 
unnecessarily or disproportionately burden small entities. The RFA 
requires a regulatory flexibility analysis if a rule would have a 
significant economic impact, either detrimental or beneficial, on a 
substantial number of small entities. The final regulations will have 
no effect on any small entities. These provisions are administrative in 
nature and have the potential for only minor economic impacts, however, 
the economic impact is not a result of this rulemaking, as both changes 
are required by the EPAct and are not discretionary on the part of the 
Secretary of the Interior. Therefore, the BLM has determined under the 
RFA that this final rule would not have a significant economic impact 
on a substantial number of small entities.

Small Business Regulatory Enforcement Fairness Act

    These final regulations are not a ``major rule'' as defined at 5 
U.S.C. 804(2). These provisions are administrative in nature and have 
the potential for only minor economic impacts, however, the economic 
impact is not a result of this rulemaking, as both changes are required 
by the EPAct and are not discretionary on the part of the Secretary of 
the Interior.

Unfunded Mandates Reform Act

    These final regulations do not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year; nor do these final regulations have a significant or 
unique effect on State, local, or tribal governments or the private 
sector. The final rule will not impose any mandate on State, local, or 
tribal governments or the private sector. The regulations implement 
clear and mandatory provisions of a recently enacted statute. These 
provisions are administrative in nature and have the potential for only 
minor economic impacts, however, the economic impact is not a result of 
this rulemaking, as both changes are required by the EPAct and are not 
discretionary on the part of the Secretary of the Interior. Therefore, 
the BLM is not required to prepare a statement containing the 
information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 
et seq.).

Executive Order 12630, Governmental Actions and Interference With 
Constitutionally Protected Property Rights (Takings)

    The final rule does not represent a government action capable of 
interfering with constitutionally protected property rights. The final 
rule has no effects that could be considered a taking. The final 
regulation is essentially administrative in nature, and assists rather 
than restricts the continued holding of leases by their current private 
owners, by relaxing acreage holding limitations and

[[Page 14823]]

giving a longer period of time to seek reinstatement of lapsed leases. 
Therefore, the Department of the Interior has determined that the rule 
would not cause a taking of private property or require further 
discussion of takings implications under this Executive Order.

Executive Order 13132, Federalism

    The final rule will not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. The final rule will have no effect on the 
States, on the relationship between the national government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. The final regulation is essentially 
administrative in nature, merely expanding the types of lease holdings 
that are exempt from the lease acreage holding limitations and 
extending the maximum time to file a lease reinstatement petition from 
15 months to 24 months. Therefore, in accordance with Executive Order 
13132, the BLM has determined that this final rule does not have 
sufficient Federalism implications to warrant preparation of a 
Federalism Assessment.

Executive Order 12988, Civil Justice Reform

    Under Executive Order 12988, the Office of the Solicitor has 
determined that this final rule would not unduly burden the judicial 
system and that it meets the requirements of sections 3(a) and 3(b)(2) 
of the Order.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    In accordance with Executive Order 13175, the BLM has determined 
that this rule has no impact on Tribal lands because the BLM's part 
3100 regulations do not apply to Tribal lands.

Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    In accordance with Executive Order 13211, the BLM has determined 
that the final rule will not have substantial direct effects on the 
energy supply, distribution or use, including a shortfall in supply or 
price increase. This rule does not represent the exercise of agency 
discretion. Congress' mandate to expand the types of holdings that are 
exempt from the acreage holding limitations and to increase the maximum 
amount of time to petition for lease reinstatement in certain 
circumstances may result in an increase in oil and gas production of 
unknown amounts. It does not impose a regulatory burden on any lessee.

Executive Order 13352, Facilitation of Cooperative Conservation

    In accordance with Executive Order 13352, the BLM has determined 
that this final rule is administrative in nature, merely expanding the 
types of lease holdings that are exempt from the lease acreage holding 
limitations and extending the maximum time to file a lease 
reinstatement petition from 15 months to 24 months. This rule does not 
impede facilitating cooperative conservation; takes appropriate account 
of and considers the interests of persons with ownership or other 
legally recognized interests in land or other natural resources; has no 
effect on local participation in the Federal decision-making process; 
and does not affect programs, projects, and activities having to do 
with protecting public health and safety.

Paperwork Reduction Act

    The BLM has determined that this rulemaking does not contain any 
new information collection requirements that the Office of Management 
and Budget (OMB) must approve under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.). The OMB has approved the information 
collection requirements in the regulations under OMB control number 
1004-0185 which expires June 30, 2006.

Author

    The principal author of this rule is Jay Douglas of BLM's Fluid 
Minerals Group (WO320) assisted by Ian Senio of BLM's Regulatory 
Affairs Group and Dennis Daugherty, Office of the Solicitor, Department 
of the Interior.

List of Subjects in 43 CFR Part 3100

    Government contracts; Mineral royalties; Oil and gas exploration; 
Public lands--mineral resources; Reporting and recordkeeping 
requirements; Surety bonds.

    Dated: March 10, 2006.
Chad Calvert,
Acting, Assistant Secretary, For Land and Minerals Management.


0
Accordingly, BLM amends 43 CFR part 3100, as set forth below:

PART 3100--OIL AND GAS LEASING

0
1. Revise the authority citation for part 3100 to read as follows:

    Authority: 30 U.S.C. 189 and 359; 43 U.S.C. 1732(b), 1733, and 
1740; and the Energy Policy Act of 2005 (Pub. L. 109-58).

0
2. Amend Sec.  3101.2-3 by designating the first sentence of the 
section as paragraph (a) and the second sentence of the section as 
paragraph (b) and by revising newly designated paragraph (a) to read as 
follows:


Sec.  3101.2-3  Excepted acreage.

    (a) The following acreage shall not be included in computing 
accountable acreage:
    (1) Acreage under any lease any portion of which is committed to 
any Federally approved unit or cooperative plan or communitization 
agreement;
    (2) Acreage under any lease for which royalty (including 
compensatory royalty or royalty in-kind) was paid in the preceding 
calendar year; and
    (3) Acreage under leases subject to an operating, drilling or 
development contract approved by the Secretary.
* * * * *

0
3. Amend Sec.  3108.2-3 by redesignating paragraph (b)(1) and (b)(2) as 
paragraphs (b)(2) and (b)(3), respectively, adding a new paragraph 
(b)(1), and revising newly designated paragraph (b)(2) to read as 
follows:


Sec.  3108.2-3  Reinstatement at higher rental and royalty rates: Class 
II reinstatements.

* * * * *
    (b)(1) Leases that terminate on or before August 8, 2005, may be 
reinstated if the required back rental and royalty at the increased 
rates accruing from the date of termination, together with a petition 
for reinstatement, are filed on or before the earlier of:
    (i) Sixty days after the receipt of the Notice of Termination sent 
to the lessee of record, whether by return of check or any form of 
actual notice; or
    (ii) Fifteen months after termination of the lease.
    (2) Leases that terminate after August 8, 2005 may be reinstated if 
the required back rental and royalty at the increased rates accruing 
from the date of termination, together with a petition for 
reinstatement, are filed on or before the earlier of:
    (i) Sixty days after the last date that any lessee of record 
received Notice of Termination by certified mail; or
    (ii) Twenty four months after termination of the lease.
* * * * *
[FR Doc. 06-2848 Filed 3-23-06; 8:45 am]
BILLING CODE 4310-84-P