[Federal Register Volume 89, Number 79 (Tuesday, April 23, 2024)]
[Rules and Regulations]
[Pages 30916-31005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08138]



[[Page 30915]]

Vol. 89

Tuesday,

No. 79

April 23, 2024

Part IV





Department of the Interior





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





Bureau of Land Management





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





43 CFR Parts 3000, 3100, 3110, et al.





Fluid Mineral Leases and Leasing Process; Final Rule

  Federal Register / Vol. 89 , No. 79 / Tuesday, April 23, 2024 / Rules 
and Regulations  

[[Page 30916]]


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

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160, 3170, 
and 3180

[BLM_HQ_FRN_MO4500176829]
RIN 1004-AE80


Fluid Mineral Leases and Leasing Process

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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

SUMMARY: The Bureau of Land Management (BLM) is revising its oil and 
gas leasing regulations. Among other changes, the final rule implements 
provisions of the Inflation Reduction Act (IRA) pertaining to royalty 
rates, rentals, and minimum bids; updates the bonding requirements for 
leasing, development, and production; and revises some operating 
requirements. The final rule will improve the BLM's leasing process by 
ensuring proper stewardship of public lands and resources.

DATES: The final rule is effective on June 22, 2024.

FOR FURTHER INFORMATION CONTACT: Yvette M. Fields, Division Chief, 
Fluid Minerals Division, telephone: 240-712-8358, email: 
[email protected], or by mail 1849 C St. NW, Washington, DC 20240, for 
information regarding the substance of this final rule.
    Individuals in the United States who are deaf, deafblind, hard of 
hearing, or have a speech disability may dial 711 (TTY, TDD, or 
TeleBraille) to access telecommunications relay services. Individuals 
outside the United States should use the relay services offered within 
their country to make international calls to the point-of-contact in 
the United States. For a summary of the final rule, please see the 
final rule summary document in docket BLM-2023-0005 on 
www.regulations.gov.

SUPPLEMENTARY INFORMATION: 

I. List of Acronyms
II. Executive Summary
III. Discussion of Public Comments on the Proposed Rule
IV. Overview of Modifications to the Proposed Rule
V. Procedural Matters

List of Acronyms

APD = Application for Permit to Drill
BLM = Bureau of Land Management
BOEM = Bureau of Ocean Energy Management
CA = Communitization Agreement
CD = Certificate of Deposit
CFR = Code of Federal Regulations
DOI = Department of the Interior
E.O. = Executive Order
EOI = Expression of Interest
FLPMA = Federal Land Policy and Management Act
GAO = Government Accountability Office
GHG = Greenhouse Gas
IBLA = Interior Board of Land Appeals
IIJA = Infrastructure Investment and Jobs Act of 2021
IM = Instruction Memoranda
IRA = Inflation Reduction Act of 2022
LOC = Letter of Credit
MLA = Mineral Leasing Act of 1920, as amended (MLA is also referred 
to as ``Act'' in the regulations.)
MLAAL = Mineral Leasing Act for Acquired Lands of 1947, as amended
MLRS = Mineral and Land Records System
NAICS = North American Industry Classification System
NEPA = National Environmental Policy Act
OIG = Office of the Inspector General
ONRR = Office of Natural Resources Revenue
PRA = Paperwork Reduction Act
RIA = Regulatory Impact Analysis
RMP = Resource management plan
ROW = Right-of-way
SBA = Small Business Administration
U.S.C. = United States Code

Executive Summary

    On July 24, 2023, the BLM published a proposed rule to amend the 
regulations in 43 CFR parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 
3160, 3170, and 3180 in the Federal Register (88 FR 47562), with a 60-
day comment period. Generally, the comments supported this rulemaking 
and expressed the view that the changes outlined by the proposed rule 
will be helpful. Comments on specific sections of the proposed 
rulemaking opposed certain provisions and recommended changes. Within 
this preamble, the BLM discusses those comments and the BLM's 
responses.
    Overall, this rule will enhance the BLM's administration of oil and 
gas-related activities on America's public lands and reflects 
Congress's changes to the oil and gas program in the IRA. Specifically, 
the rule will reflect requirements of the IRA by increasing royalty 
rates, rentals, and minimum bids for BLM-issued oil and gas leases, and 
by imposing a fee for the submittal of an expression of interest (EOI) 
for leasing Federal oil and gas. The rule also updates the bonding 
requirements for leasing, development, and production to address 
shortcomings identified in reports by the Government Accountability 
Office (GAO) and the Department of the Interior's (DOI's) Office of 
Inspector General (OIG). Collectively, the BLM proposed these changes 
to bring the regulations into compliance with the IRA and the 
Infrastructure Investment and Jobs Act (IIJA) mandates and to ensure 
that reclamation costs are not borne by the American public. The BLM is 
also adjusting its cost recovery mechanisms so that project applicants 
provide a more appropriate share of the BLM's up-front costs for 
processing these applications. Finally, the BLM is implementing several 
changes to focus leasing on areas with fewer resource conflicts. The 
BLM's final rule will be the first comprehensive update to the Federal 
onshore oil and gas program's regulatory framework since 1988.
    The Secretary of the Interior manages the Federal onshore oil and 
gas program pursuant to the requirements of various statutes, including 
the Federal Land Policy and Management Act of 1976, as amended (43 
U.S.C. 1701 et seq.) (FLPMA); the Mineral Leasing Act of 1920, as 
amended (30 U.S.C. 181 et seq.) (MLA or Act); and the Mineral Leasing 
Act for Acquired Lands of 1947, as amended (30 U.S.C. 351 et seq.) 
(MLAAL), as well as the recently enacted IRA (Pub. L. 117-169 (2022)) 
and IIJA (Pub. L. 117-58 (2021)). Under section 102 of FLPMA (43 U.S.C. 
1701(a)(7)), the BLM manages approximately 245 million acres of public 
lands and approximately 700 million acres of federally owned subsurface 
minerals ``on the basis of multiple use and sustained yield.'' FLPMA's 
definition of ``multiple use'' in section 103 (43 U.S.C. 1702(c)) 
requires the BLM to achieve ``a combination of balanced and diverse 
resource uses that takes into account the long-term needs of future 
generations for renewable and non-renewable resources.'' Oil and gas-
related activities are one of the multiple uses that FLPMA authorizes 
and which the BLM administers in accordance with the MLA and MLAAL. 
Both of those Acts govern the leasing of public lands to explore for 
and develop oil, natural gas, coal, and other hydrocarbons, amongst 
other mineral deposits.

Discussion of Public Comments on the Proposed Rule

    The public comment period for the proposed rule ended on September 
22, 2023. During the 60-day public comment period, the BLM received 
over 215,000 comments submitted by Federal, State, and local 
governments, local agencies, Tribal organizations, industry 
representatives, individuals, and other external stakeholders. The vast 
majority of submissions were form letters. Commenters also submitted 
roughly 1,000 unique letters. From all submissions, the BLM identified 
approximately 1,200 unique comments

[[Page 30917]]

raising specific issues on the proposed rule.
    The BLM carefully reviewed all comments received on the proposed 
rule. Certain comments suggesting that the BLM address issues outside 
the scope of this rulemaking are discussed in Section III.A.
    The BLM categorized the remaining comments received and provides an 
overview of those categories and associated responses in Section III.B. 
The BLM provides more detailed discussions of those comments in Section 
IV.B. The Federal Government posts all comments at the Federal 
eRulemaking portal: http://www.regulations.gov. To access the comments 
at that website, enter 1004-AE80 in the Search box and select the Fluid 
Mineral Leases and Leasing Process proposed rule.

A. Comments Outside the Scope of This Rulemaking

    The BLM received many comments directed at matters outside of the 
scope of this rulemaking, including those regarding: project-specific 
considerations; the BLM's existing website or computer application 
programs (e.g., Automated Fluid Mineral Support System, National Fluid 
Lease Sale System, etc.); additional rulemaking or programmatic 
environmental impact statements specific to greenhouse gas (GHG) 
emissions; geothermal or helium leasing activities; and additional 
operational provisions in 43 CFR part 3160 or additional unit 
provisions in 43 CFR part 3180 that were not part of the proposed rule. 
Other commenters recommended changes to national energy policies and 
priorities, such as to halt all oil and gas leasing activities due to 
climate change, or discussed matters not specific to the BLM's 
administration of oil and gas leasing. Many comments expressed general 
statements of support or opposition to the rule. The BLM has not 
responded to these comments in detail, because these myriad matters 
were not encompassed in the proposed rule and are best addressed, if at 
all, through future rulemakings.
    A commenter stated that the BLM failed to write this entire rule in 
a manner that is easily understood without providing any examples to 
support the assertion. When drafting the proposed and final rules, the 
BLM reviewed the rule text to identify areas where the regulations 
could be written more clearly and made changes as necessary.

B. Categorized Public Comments on the Proposed Rule

    This section of the preamble summarizes the major categories of 
public comments that the BLM received in response to the proposed rule, 
as well as the BLM's responses.
1. Comments Recommending Additional Oil and Gas Rulemaking, or Policy 
Development
    Summary of comments: Multiple commenters recommended that the BLM 
initiate additional rulemaking efforts or develop additional policy 
that are beyond the scope of this rulemaking. These recommendations 
include: (1) a rule to update the BLM's unitization process in part 
3180; (2) a rule to update the BLM's permitting process in 43 CFR part 
3160; (3) development of ``The Bureau of Land Management's Blueprint 
for 21st Century Outdoor Recreation''; (4) updated policy related to 
oil and gas lease suspension; (5) updated policy related to oil and gas 
unitization; (6) a similar joint rulemaking between the BLM and the 
Bureau of Indian Affairs; and (7) a bureau-wide review of its standard 
stipulation lists.
    Response: The BLM reviewed these comments and determined that the 
requested changes are outside the scope of this rulemaking. With 
respect to the comments recommending the BLM update the unitization 
portion of the regulations at part 3180, the BLM made changes to the 
final rule to implement the increased royalty rate mandated by Congress 
in the IRA but did not propose any changes to the remaining unitization 
provisions. As the BLM did not propose any changes in the proposed 
rule, the public was not provided with a chance to comment on any other 
changes to the regulations governing unitization. As it reviews its 
current policy in light of this rule's changes, the BLM will determine 
whether to implement any changes to its approval process for lease 
suspensions. Although a comment requested that the BLM review and 
standardize a list of lease stipulations, in addition to the terms and 
conditions in the BLM's standard form oil and gas lease, the BLM 
develops lease stipulations as part of its resource management planning 
process (which includes analysis under NEPA and other statutes), in 
which the public has opportunities to comment, and those stipulations 
apply to oil and gas leases issued within each RMP area. Any site-
specific concerns can be addressed through the NEPA process for a 
particular sale or through conditions of approval at the Application 
for Permit to Drill (APD) stage.
    During the comment period, the BLM received comments requesting 
additional updates to parts 3160 and 3170. As part of its review under 
Executive Order (E.O.) 14008, issued on January 27, 2021, the 
Department reviewed the onshore oil and gas leasing program and 
published the Report on the Federal Oil and Gas Leasing Program on 
November 26, 2021. The Report on the Federal Oil and Gas Leasing 
Program recommended that the BLM should reform its royalty rate, 
minimum bonus bids, rental rates, and bonding amounts; establish new 
requirements for bidders; and take steps to discourage nominations of 
low-potential lands. When the BLM drafted the proposed rule, the BLM 
considered any critical permitting or operational changes to parts 3160 
and 3170 that were needed in response to the Report's recommendation to 
reduce speculation but did not propose any changes to the remaining 
provisions. As the BLM did not propose any changes to parts 3160 and 
3170, outside of the limited changes in the proposed rule, the public 
was not provided with a chance to comment on any other changes to the 
regulations governing permitting or operations.
    As noted above in the summary of comments outside the scope of this 
rulemaking effort, the BLM received a comment requesting the 
development of a blueprint for outdoor recreation. Such a revision is 
beyond the scope of this rulemaking as it would involve revising 
regulations in Title 43 of the CFR, Subchapter H, and those regulations 
do not pertain to oil and gas leasing and development, which is the 
focus of this effort. Finally, a joint rulemaking between the BLM and 
the Bureau of Indian Affairs is outside the scope of this rulemaking 
effort.
2. Comments on Greenhouse Gas Emissions and Climate Change
    Summary of comments: In the proposed rule, the BLM requested 
comment on whether the preference criteria in Sec.  3120.34 or other 
portions of the proposed rule should be expanded, or new provisions 
added, to discuss analysis of GHG emissions and related decision making 
based on that analysis. The BLM received many comments recommending 
different approaches, including:
     Not changing the rule to address GHG emissions and climate 
change on the grounds that the NEPA review process at the project level 
provides a sufficient review for climate change issues, and that 
refraining from leasing Federal minerals will not change the demand for 
oil and gas production;

[[Page 30918]]

     Amending the rule to forgo future leasing based upon the 
need to avoid exceeding the world's pre-industrial global temperature 
level by 1.5 degree Celsius;
     Setting lease rates based on the Social Cost of Carbon 
calculated by the U.S. Environmental Protection Agency in November 2022 
at a discount rate of 1.5 percent;
     Aligning the oil and gas program with President Biden's 
climate goals;
     Limiting GHG emissions via emissions monitoring;
     Implementing a three-stage leasing process to prioritize 
lands for leasing with a final climate screening;
     Creating a carbon budget for the Federal onshore oil and 
gas program;
     Requiring climate change mitigation, analyzing climate 
impacts across BLM-managed lands, or implementing a rule to ensure 
climate protection for all new leasing and permitting decisions;
     Initiating a programmatic environmental impact statement 
for the onshore oil and gas program to assess the potential GHG 
impacts;
     Establishing a quantitative climate test tool to evaluate 
the relative impact and significance of GHG emissions at the project 
level; and
     Expanding the competitive leasing preference criteria for 
conformity with State policies on GHG emissions.
    Response: Climate change is a global process that is affected by 
the sum total of GHGs in the Earth's atmosphere. The BLM acknowledges 
the views and suggestions reflected in these comments and recognizes 
that GHG emissions from the Federal onshore oil and gas program 
contributes to climate change. After reviewing the comments received, 
the BLM did not make any changes to the final rule to address GHG 
emissions and climate change. In this rule, the BLM implements 
regulatory modifications required by Congress in the IRA and other 
revisions that aim to improve the leasing process and ensure proper 
management of public lands and resources. These reforms are not focused 
on climate change. For example, the majority of these regulations cover 
the administration of an oil and gas lease, such as changes to the 
fixed filing fees, the fiscal terms mandated by Congress, the type of 
lease the BLM can issue (eliminating noncompetitive leases as mandated 
by Congress), and the method by which the public requests lands to be 
considered for leasing (formal nominations vs. expressions of 
interest). In implementing the MLA's requirement to hold quarterly 
lease sales when lands are eligible and available, the BLM will 
continue to use the NEPA review process and guidance issued by the 
Council on Environmental Quality to evaluate GHG emissions that result 
from oil and gas leasing and development and its effects on climate 
change. The BLM understands the commenters' suggestions and may proceed 
with those suggestions in future rulemakings that more directly address 
GHG emissions. Further responses to comments related to the preference 
criteria specifically are addressed in section IV.B.12 of the preamble.
3. Comments Recommending the BLM Stop All Oil and Gas Lease Sales and 
Permitting
    Summary of comments: Multiple commenters recommended that the BLM 
stop, or phase out, all oil and gas lease sales, the issuance of 
leases, as well as permitting and development, due to climate change 
and the GHG emissions from oil and gas development.
    Response: Pursuant to the IRA, the BLM is required to conduct lease 
sales in order to permit wind and solar energy development projects on 
public lands. The approach suggested by the commenters thus would 
require the BLM to stop desirable wind and solar development. In 
implementing the MLA's requirement to hold quarterly lease sales when 
lands are eligible and available, the BLM will continue to use the NEPA 
review process to evaluate GHG emissions that result from oil and gas 
leasing and development and its effects on climate change.
4. Comments on Public Participation
    Summary of comments: Tribes, States, and local governments 
submitted comments requesting that the BLM update the rule to provide 
additional consultation and outreach to them on oil and gas leasing and 
development. Some comments encouraged the BLM to coordinate with the 
relevant State and county agencies when land-use actions are taken or 
if the BLM is considering leasing lands adjacent to State-owned or 
managed lands. Other comments requested that the BLM explore 
opportunities for Tribal cultural site protection and co-stewardship to 
ensure the BLM fully advances opportunities for the incorporation of 
Indigenous Knowledge, respect for Tribal sovereignty and treaty rights, 
and the protection of Tribal cultural sites. Comments also recommended 
that the BLM consult the State or local government's land use plans to 
ensure the BLM applies the appropriate provisions to responsibly manage 
natural resources, climate, and environmental quality issues during the 
decision making and planning efforts for oil and gas leasing.
    Response: The BLM will continue to engage with the public, Tribes, 
Federal, State, and local government partners on the BLM's management 
of its public lands, as appropriate. Subsequent actions that the BLM 
may take will be subject to the applicable policies, laws, and 
regulations pertaining to that action, including those for consultation 
and environmental review. The BLM added language into the competitive 
leasing process (see Sec.  3120.42) to include scoping, comment, and 
protest periods to ensure that the BLM provides adequate time to 
evaluate the views of a wide range of partners, stakeholders, and 
landowners in any future decisions. Furthermore, in formulating or 
amending its resource management plans (RMPs), the BLM complies with 
FLPMA, NEPA, and its regulations providing for public participation, 
coordination of planning efforts, and consistency. See 43 CFR 1610.2, 
1610.3-1, 1610.3-2. The RMPs serve as blueprints to enable the BLM to 
sustain the health, diversity, and productivity of public lands for the 
use and enjoyment of present and future generations. Under an RMP, the 
BLM will identify the lands closed to leasing of Federal oil and gas, 
the lands open to leasing of Federal oil and gas, and the appropriate 
stipulations to apply to a Federal oil and gas lease based upon the 
location of the lease. These decisions are not made as part of this 
rulemaking and will continue to be made through the BLM's land use 
planning process, which involves cooperating with State and local 
governments, consulting with Tribes, and robust public engagement.
    The BLM takes its responsibilities to Tribes seriously and respects 
Tribal sovereignty and treaty rights. Where there are such 
opportunities, the BLM is committed to exploring co-stewardship 
opportunities with Tribes. However, co-stewardship is outside the scope 
of this rulemaking.
5. Comments on the BLM's Discretion To Offer Parcels for Lease Sales
    Summary of comments: Multiple commenters stated that the rule 
improperly limits and discourages exploration or closes off lands to 
leasing outside of the NEPA process. These commenters pointed to 
different aspects of the rule to support their claim that the rule 
limits and discourages exploration. Some comments stated that the rule 
violates, or evades, the multiple-use mandate of FLPMA or exceeds the 
authority of the BLM under the MLA. Other comments stated that when a 
person requests the BLM

[[Page 30919]]

include certain lands in an upcoming competitive oil and gas lease sale 
(via EOI) the BLM should offer all lands described in the EOI in the 
next available sale based on and consistent with the management 
decisions made in the relevant RMPs. Multiple comments stated that the 
new preference criteria (see Sec.  3120.32) will create uncertainty, 
conflicts among stakeholders and uses, and will hinder the BLM's 
ability to achieve the congressional mandates such as offering enough 
acreage for oil and gas leasing in order to allow wind and solar right-
of-way (ROW) permit issuance.
    Response: With respect to contentions that the BLM's proposed 
regulations exceed the Secretary's authority to select lands for 
leasing, the BLM notes that the MLA, 30 U.S.C. 226(a), by providing 
that the Secretary ``may'' lease lands, necessarily provides the BLM 
with broad discretion in determining precisely which lands and parcels 
the BLM will offer at an oil and gas lease sale. Accordingly, the 
agency has, since at least 1988, consistently applied a public interest 
determination to any such decisions. See 53 FR 22828 (June 17, 1988) 
(``It is Bureau policy prior to offering the lands to determine whether 
leasing will be in the public interest.''). The MLA does not specify 
how and when this decision is to be made, and both the Supreme Court 
and the U.S. Court of Appeals for the Tenth Circuit have recognized the 
Secretary's discretion in this sphere. See Udall v. Tallman, 380 U.S. 
1, 4 (1965); W. Energy All. v. Salazar, 709 F.3d 1040, 1044 (10th Cir. 
2013).
    Comments asserting that the application of the preference criteria 
will result in the closure of any lands to oil and gas leasing are 
incorrect. The BLM has and will continue to make land use decisions at 
the land use planning stage and document those decisions in the 
applicable RMP. The preference criteria, on the other hand, were 
proposed consistent with the MLA to direct the BLM's administrative 
resources to leasing tracts most likely to be developed, to reduce 
conflicts between oil and gas development and other public land uses 
that were not resolved in the resource management plans, and to ``take[ 
] into account the long-term needs of future generations for renewable 
and nonrenewable resources,'' 43 U.S.C. 1702. These criteria may be 
considered on a case-by-case basis in light of specific circumstances. 
Even if the BLM were to apply such criteria and decide to defer 
including particular lands from any particular lease sale, nothing in 
this rule prevents those lands from being offered in future sales. The 
RMPs do not always resolve all conflicts, especially those that may be 
unforeseen or arise due to a change in circumstances. In many cases, 
this calls for a more specific site review, and the MLA provides the 
necessary discretion, apart from FLPMA, to engage in this type of site-
specific review.
6. Comments Recommending BLM Processes Should Be Addressed in Policy 
and Not Regulations
    Summary of comments: The BLM received multiple comments stating 
that many of the BLM processes in the proposed rule should instead be 
expressed in policy documents and that the rule goes beyond the 
authority of the BLM under the IRA and IIJA. Comments expressed the 
view that the function of regulations is to inform and instruct the 
public with regard to actions that they may or may not take while 
policy interprets those regulations and provides guidance to the agency 
in implementing them. The commenters stated that inserting existing 
policy guidance, which applies only to the BLM's actions, into the 
regulations, rather than leaving it in Instruction Memoranda (IM), is 
inappropriate. For example, commenters suggested that the preference 
criteria and the details regarding lease suspensions belong in BLM 
guidance documents and not in the regulations as these do not impose 
any requirements on the oil and gas industry. Finally, the commenters 
stated that the BLM does not need to update the existing regulations 
governing the BLM's discretionary functions under the existing 
regulations, since those regulations are adequate to protect the fiscal 
interests of the American public. These commenters recommended that the 
BLM only make the changes required by the IRA.
    Response: By incorporating provisions such as the preference 
criteria and lease suspensions into the regulations, the BLM makes 
those provisions legally binding and provides greater certainty and 
transparency to the public on the decision-making processes the BLM 
will use when it processes EOIs (see Sec.  3120.32) and the timeframes 
for lease suspensions (see Sec.  3165.1). These regulatory criteria may 
influence a person's decision-making when deciding whether they will 
submit an EOI or may influence lessees when they are deciding whether 
to seek a lease suspension. Therefore, the BLM declines to make any 
changes to the final rule based upon concerns that the changes could be 
characterized as guidance.
7. Comments on Environmental Justice
    Summary of comments: Multiple commenters stated that the BLM should 
ensure that the final rule includes environmental and social justice 
considerations as part of the oil and gas leasing process. Comments 
stated that many of the fluid mineral resources are located in 
underserved rural areas and on Tribal lands where the fluid mineral 
industry has a large economic impact. These comments alleged that the 
rule could undercut environmental justice goals by reducing the 
economic benefits that would otherwise flow to disadvantaged 
communities as a result of onshore Federal oil and gas activities. One 
comment stated that jobs in extractive industries, such as oil and gas 
development, are not going to the members of the communities burdened 
by the fossil fuel industry and therefore that the BLM should end the 
Federal fossil fuel leasing program. Another comment stated that the 
BLM should solicit the knowledge and experience of those in underserved 
communities and ensure that these communities' perspectives are 
meaningfully incorporated into and actively shape planning and 
decision-making, and the BLM should take into account community-driven 
and localized health impact assessments and relevant local health and 
demographic data as part of this process. Another comment recommended 
that the BLM incorporate environmental justice as part of Sec.  
3120.32.
    Response: The BLM reviewed the comments recommending changes to the 
rule to address environmental justice concerns and determined that no 
changes were necessary. The BLM believes environmental justice concerns 
are initially addressed through the land use planning process when the 
BLM is evaluating whether lands should be open to leasing and what 
stipulations should be imposed, and then at the more site-specific 
level when identified parcels are being evaluated for possible 
inclusion in a lease sale. Both of these processes also involve an 
evaluation under NEPA, which provides an opportunity for considering 
environmental justice concerns, which are dependent on the specific 
conditions and history pertaining to each area and the communities 
potentially impacted. In addition, the preference criteria that the BLM 
is including in this final rule will provide a tool for the BLM to 
assess environmental justice concerns through government-to-government 
consultation and through scoping comments received from the public. To 
the extent a

[[Page 30920]]

comment noted a specific environmental-justice-related concern with a 
particular section of the rule, the BLM has also addressed such 
comments in the following Section-by-Section Discussion.
8. Comments on the Impact of the Rule on Indian Leases
    Summary of comments: The BLM received a comment stating that the 
proposed rule preamble incorrectly stated that the rule ``will not 
impact the leasing of Indian minerals.'' The comment asserted that the 
rule would impact Indian interest, lands, and minerals, and that the 
BLM needs to clarify this in the final rule. The BLM also received 
comments stating that the rule should be revised to clarify that public 
lands managed by the BLM under FLPMA and do not include Indian lands; 
that the rule should eliminate BLM activities on Indian lands; and, 
that the BLM lacks authority to manage activities on Indian lands.
    Response: The BLM does not make leasing decisions for Indian lands. 
However, the BLM does make recommendations for oil and gas operations 
that may impact Indian lands. Existing regulations at 43 CFR part 3100 
outline the BLM's authority over offering lands to lease under the 
BLM's jurisdiction, which does not include Indian lands. The changes 
made in this rulemaking clearly fall within the BLM's existing 
statutory authorities. The BLM acknowledges that some of the proposed 
changes may affect Indian lands when the BLM makes recommendations for 
oil and gas operations to the Bureau of Indian Affairs under the 
Standard Operating Procedures between agencies for the leases they 
manage under their respective jurisdictions. While the majority of the 
changes in the final rule impact the leasing of Federal minerals and 
not Indian leases, there are some provisions that will apply to Indian 
leases: the operational changes for shut-in and temporarily abandoned 
wells at Sec.  3162.3-4 and the changes to the APD timeframe at Sec.  
3171.14. The BLM has also increased filing fees to account for 
inflation for applications such as APDs, as required by 30 U.S.C. 191. 
The BLM considers these updates critical for both Federal and Indian 
minerals because these changes will give the BLM the ability to 
complete operator-diligence reviews, ensure that wells are producing on 
Indian leases as required by law, and to recover its costs to process 
applications.
9. Comments on the Rule Potentially Discouraging Federal Exploration 
and Development
    Summary of comments: Multiple commenters expressed concerns that 
the proposed rule would discourage or eliminate future oil and gas 
exploration and development on Federal lands or would force production 
from Federal lands onto State or private lands. The BLM also received 
comments asserting that the combination of proposed Sec.  3120.32 
(reflecting the BLM's authority to defer certain parcels) and the 
increased fees, royalties, and bonding would result in the BLM 
violating its statutory requirements to prevent waste of the oil and 
gas resource. Specifically, the commenter claimed that provisions in 
this rule, such as the competitive leasing preference criteria at Sec.  
3120.32, could result in delays in or the complete exclusion of the 
development of non-Federal minerals in addition to the loss in Federal 
bonuses and royalties. These commenters also asserted that this rule 
fails to recognize studies indicating that the United States will 
continue to need fossil fuels for the foreseeable future. The 
commenters urged the BLM to look for ways to increase energy 
development. Commenters also stated that the proposed rule ignored the 
economic benefit provided by oil and gas development to local schools, 
hospitals, and infrastructure.
    Response: The GAO and the DOI OIG reviewed and audited the BLM's 
Federal onshore oil and gas program to identify problematic areas in 
this program and recommended actions to address them. Both the GAO's 
and OIG's audits \1\ highlighted weaknesses in the onshore program's 
fiscal framework and recommended that the BLM take steps to ensure that 
the American public receives a fair return from oil and gas activities 
on public lands. The DOI and the BLM concurred with these 
recommendations in the Report on the Federal Oil and Gas Leasing 
Program \2\ issued in November 2021.
---------------------------------------------------------------------------

    \1\ See, e.g., OIG, ``Inspector General's Statement Summarizing 
the Major Management and Performance Challenges Facing the U.S. 
Department of the Interior'' (Nov. 2022); GAO, ``OIL AND GAS 
LEASING--BLM Should Update Its Guidance and Review Its Fees'' (Nov. 
2021); GAO, ``OIL AND GAS--Onshore Competitive and Noncompetitive 
Lease Revenues'' (Nov. 2020); GAO, ``FEDERAL ENERGY DEVELOPMENT--
Challenges to Ensuring a Fair Return for Federal Energy Resources'' 
(Sept. 2019); GAO, ``OIL AND GAS--Bureau of Land Management Should 
Address Risk from Insufficient Bonds to Reclaim Wells'' (Sept. 
2019); GAO, ``OIL AND GAS LEASE MANAGEMENT--BLM Could Improve 
Oversight of Lease Suspensions with Better Data and Monitoring 
Procedures'' (June 2018); OIG, ``Bureau of Land Management's Idle 
Well Program'' (Jan. 2018).
    \2\ DOI, ``Report on the Federal Oil and Gas Leasing Program'' 
(Nov. 2021). https://www.doi.gov/sites/doi.gov/files/report-on-the-federal-oil-and-gas-leasing-program-doi-eo-14008.pdf.
---------------------------------------------------------------------------

    Accordingly, the BLM is adjusting its oil and gas bonding 
requirements, including by increasing minimum bond amounts for the 
first time in decades. The BLM is proposing to adjust its cost recovery 
mechanisms to account for changes in the leasing process since the fees 
were initially set in 2005. The BLM drafted the proposed rule to: (1) 
reflect the requirements of the IRA; and (2) enhance the administration 
of the onshore program, to direct leasing to lands with a higher 
development potential, and in response to the GAO's and OIG's numerous 
reports identifying shortcomings in the program, as discussed in the 
November 2021 Report on the Federal Oil and Gas Leasing Program.
    The BLM did not make any changes to the final rule based upon the 
comments expressing concerns that the increased bonding and fees could 
result in the potential movement of production from Federal to State or 
private lands. The royalty rates on State and private lands are often 
higher than those for Federal lands as are the rental rates.\3\ Given 
this, the BLM does not believe the increased rates will have the 
asserted affect and instead will bring the rates more in line with one 
another across jurisdictions. Moreover, Sec.  3120.32 does not affect 
longstanding BLM policies that prioritize leasing parcels subject to 
drainage (from adjacent State and private minerals); the BLM will 
continue to work towards leasing lands that will allow for logical 
development of the minerals by giving preference to lands after 
accounting for expected yields of oil and gas, fair return for U.S. 
taxpayers, and decisions embodied by the BLM's RMPs. This will provide 
for continued development of Federal, State, and private minerals.
---------------------------------------------------------------------------

    \3\ DOI, ``Report on the Federal Oil and Gas Leasing Program'' 
(Nov. 2021).
---------------------------------------------------------------------------

IV. Overview of Modifications to the Proposed Rule

A. Summary of Notable Changes

    The BLM made changes to the rule in response to comments and for 
accuracy, clarity, or grammar.
    The BLM received numerous comments on the proposed changes to the 
bonding regulations under subpart 3104, and in response to these 
comments, the BLM reinstated an operators' ability to post personal 
bonds secured with letters of credit (LOCs) and

[[Page 30921]]

certificates of deposit (CDs). The proposed rule requested comments on 
if and how the BLM should adjust the minimum bond amounts in the 
future. After review of the comments, bond amounts will be adjusted for 
inflation every 10 years so that the minimum bond amounts do not become 
outdated as they have in the past.
    The BLM deleted the existing and proposed sections governing the 
formal lease nomination process under part 3120.
    The BLM revised the final rule to clarify that it will consider the 
preference criteria in Sec.  3120.32 as part of the scoping process and 
will apply the criteria after the conclusion of scoping but before 
issuing the draft NEPA document for the lease sale, consistent with the 
BLM's existing policy and implementation of IM 2023-007, Evaluating 
Competitive Oil and Gas Lease Sale Parcels for Future Lease Sales.\4\
---------------------------------------------------------------------------

    \4\ https://www.blm.gov/policy/im-2023-007.
---------------------------------------------------------------------------

    The BLM also revised the final rule to extend an approved APD's 
term based on a lease suspension.
    These revisions are discussed in more detail in the Section-by-
Section Discussion.

B. Section-by-Section Discussion

    Sections that did not receive any comments, or that only received 
comments in support of the proposed changes, are not discussed in this 
Section-by-Section analysis and are adopted in the final rule as 
proposed. In addition, throughout the final rule, the BLM replaced the 
words ``he,'' ``she,'' or ``he/she'' with the appropriate title or 
entity to comply with Executive Order 13988, Preventing and Combating 
Discrimination on the Basis of Gender Identity or Sexual Orientation.
1. Section-by-Section Discussion for Changes to 43 CFR Part 3000
Section 3000.5 Definitions
    The BLM received a number of comments on the definition of the 
terms ``Acreage for which expressions of interest have been 
submitted,'' ``Person,'' and ``Surface Management Agency.''
    With respect to the phrase ``Acreage for which expressions of 
interest have been submitted,'' a comment stated the BLM should change 
the definition to ``acreage that is identified in an EOI on land 
eligible and available for leasing'' to ensure that the BLM accurately 
determines which EOIs have been properly submitted. No further changes 
are made to the final rule as the definition already states, ``and for 
which the BLM may lawfully issue an oil and gas lease.''
    Comments on the term ``Person'' recommended that the BLM use the 
definition in the Federal Oil and Gas Royalty Management Act, 30 U.S.C. 
1702, to avoid any unnecessary confusion. The BLM adopts this 
recommendation and has revised the definition of the term ``person'' in 
the final rule accordingly.
    Comments on the term ``surface management agency'' focused on the 
assertion that the definition improperly required the BLM to obtain 
consent from other agencies within the DOI in order to lease lands 
managed by those agencies, and therefore, that the BLM should not adopt 
the proposed changes to this definition. Based on these comments, the 
BLM made additional changes to Sec.  3101.51 to provide that public 
domain and acquired lands that are open to the operation of the Mineral 
Leasing Act will be leased only with the consent of the surface 
managing agency, which, upon receipt of a description of the lands from 
the authorized officer, can report to the authorized officer that it 
consents to leasing with stipulations, if any, or withholds consent or 
objects to leasing.
Section 3000.40 Appeals
    The existing Sec.  3000.4 details the appeal rights and exceptions 
for parts 3000 through 3930. The BLM received suggestions that this 
section be amended to include State Director Reviews, with an option to 
further appeal to the Interior Board of Land Appeals (IBLA). The 
commenters asserted that, without the intermediary appeal to the State 
Director, there would effectively be no opportunity to appeal in light 
of average times for IBLA decisions. The BLM does not believe any 
change to this section is needed. Decisions that are signed at the 
state office level, which are usually decisions that affect the 
administration of a lease under parts 3100 and 3120, are signed on 
behalf of the State Director, meaning that State Director review is not 
applicable. In addition, 43 CFR subpart 3165 already states that 
onshore oil and gas operational decisions made under the authority of 
part 3160 are subject to the State Director Review process and any 
decision of the State Director is appealable to the IBLA.
Section 3000.41 Severability
    This is a new section that the BLM has added in response to 
comments. The BLM received comments suggesting that it should include a 
severability clause in the final rule similar to that found in the 
BLM's realty regulations (43 CFR 2801.8). The final rulemaking adopts 
this recommendation by adding a new section addressing severability. 
This section will read, ``If a court holds any provisions of the 
regulations in parts 3000 through 3180 or their applicability to any 
person or circumstances invalid, the remainder of these rules and their 
applicability to other people or circumstances will not be affected.'' 
The BLM published the proposed rule, in large part, to address the 
changes required by the IRA, various reports by the GAO and OIG, and 
the Department's report in response to section 208 of E.O. 14008. Those 
sections implementing the IRA can and do function separately from those 
sections proposing new bonding amounts or the competitive leasing 
preference criteria.
    One commenter stated that the courts will determine if a provision 
is or is not severable from the rule. The comment is correct in that a 
court will ultimately determine whether portions of the rule can be 
severed from others in the event a court determines a provision was 
improperly promulgated. This section is designed to aid that review by 
demonstrating that the BLM intends the various components of the rule, 
with various provenances and independent functions, to continue to 
operate even if one or more of the provisions is declared unlawful.
Section 3000.50 Limitations on Time To Institute Suit To Challenge a 
Decision of the Secretary
    The existing Sec.  3000.5 reiterates the 90-day statute of 
limitations for judicial challenges to certain BLM decisions under the 
MLA. The BLM received comments on this section suggesting that the BLM 
clarify that the regulation does not apply to claims brought under 
statutes other than the MLA. The final rule does not adopt this 
recommendation, as this section also applies to other minerals 
management programs, such as mining claims, which are managed under the 
general mining laws (see part 3800).
Section 3000.60 Filing of Documents
    The existing Sec.  3000.6 specifies where and when documents filed 
under these regulations must be submitted and provides for filing by 
electronic means in addition to the hard copy or delivery service, as 
was previously authorized. Commenters generally supported the proposed 
changes to this section. Commenters suggested revising the provision to 
include a requirement that each BLM office designate an email address 
for filing, and that an e-filing should be deemed timely if it is

[[Page 30922]]

received by 11:59 p.m. local time in the appropriate BLM office. These 
changes were recommended to ensure that the appropriate official 
receives the e-filing and to avoid any risk of default as a result of 
e-filing with the wrong person in a BLM office. The BLM does not 
support the use of emails for electronic filings for many of the same 
reasons stated in the comment, i.e., the potential to be directed to 
the wrong person and/or wrong office. In addition, the BLM will not 
incorporate the recommendation to state a specific local time, since 
the time by which a filing needs to be made is already addressed in 43 
CFR 1821.11. The regulation at 43 CFR 1821.11 is entitled, ``During 
what hours may I file an application?'' and specifically states, ``You 
may file applications or other documents or inspect official records 
during BLM office hours. Each BLM office will prominently display a 
notice of the hours during which that particular office will be open. 
Except for offices which are open periodically, for example, every 
Wednesday or the 3rd Wednesday of the month, all offices will be open 
Monday through Friday, excluding Federal holidays, at least from 9 a.m. 
to 3 p.m., local time.'' Those instructions necessarily depend upon and 
encompass the local time at particular BLM offices.
Section 3000.100 Fees in General
    The existing Sec.  3000.10 provides general information on the 
types of fees the BLM may assess, how the fees are calculated, when the 
fees must be paid and how and when the BLM will adjust any fees. The 
BLM received a comment recommending a change to paragraph (c), which 
addresses adjustment of fees, recommending that any adjustments to 
fixed fees be subject to notice and comment. The BLM declines to make 
this change as further explained in the discussion of Sec.  3000.120 
below.
Section 3000.120 Fee Schedule for Fixed Fees
    The existing Sec.  3000.12 lists the fixed fees that must be paid 
for each transaction requiring a fixed fee and includes transactions 
that previously did not require a fee, such as the designation of a 
successor operator; unit agreement applications; subsurface storage 
agreement applications; unit agreement expansion applications; and 
formal lease nominations. The final rule removes the formal lease 
nominations process, consistent with the changes made under Sec.  3120. 
The BLM received several comments on this section. Some comments 
supported the BLM's proposal to incorporate processing fees for new 
actions that were not previously subject to a fee, stating that the 
fees were appropriate given the BLM's limited resources, or stating 
that the proposed fees were not sufficient to cover the BLM's costs. 
Other comments opposed the increased fees, asserting they were 
excessive, disproportionate, unwarranted, and designed to be a 
deterrent to Federal oil and gas leasing activities. In addition, some 
commenters stated that the analysis in the preamble to the proposed 
rule failed to comprehensively analyze the BLM's fee system, and, 
specifically, failed to compare the fees to the increased bonus bids, 
rentals, and bonding. Another comment objected to the application of 
the new filing fees, royalty, and rental provisions to leases sold 
before the enactment of the IRA but issued after the IRA.
    The preamble to the proposed rule outlined the processing steps 
considered by the BLM in calculating each of the fees. The general 
comments only criticized the processing steps associated with the BLM's 
review of a competitive lease application fee, as discussed below. No 
comments criticized the processing steps for the other application 
fees; therefore, the BLM will implement the proposed fixed filing fees 
as stated in the preamble to reimburse the BLM for its processing 
costs. With respect to the fixed filing fees, the preamble specifically 
stated that the BLM would not charge a new fixed filing fee under this 
rule for processing a document that the BLM received before the 
effective date of the rule. Documents submitted before the effective 
date of the final rule will be processed based on the fee that was in 
effect when the document was submitted.
    One comment recommended that the competitive lease application fee, 
which includes the cost for the BLM to undertake any necessary NEPA 
review, should not be a fixed fee and instead should be determined on a 
case-by-case basis under Sec.  3000.110, or, alternatively, that the 
cost should be fixed but that the applicant should have the option to 
request a case-by-case fee determination to establish a fee for a 
particular lease application. Although the BLM understands the impetus 
for suggesting that the fee be determined for a particular lease, the 
BLM cannot adopt the proposed change, because the NEPA analysis 
prepared for each lease sale covers all of the parcels offered in a 
given sale and is not for each individual parcel. Moreover, the 
competitive lease application fee is collected after the NEPA review 
has been completed, and after the lease sale has been held. Therefore, 
the applicant would not be able to help pay for the preparation of any 
BLM NEPA document before performing any case processing on a parcel-by-
parcel basis.
    Other comments stated that the BLM should charge fixed filing fees 
for compensatory royalty agreements and communitization agreements 
(CAs). The final rule includes a fixed fee for compensatory royalty 
agreements under ROW pursuant to subpart 3109 where the processing 
steps are the same for leases. The BLM added the following clarifying 
language to this provision in the final rule: ``Leasing and 
compensatory royalty agreements applications under right-of-way 
pursuant to subpart 3109.'' The BLM does not adopt the recommendation 
to require a fixed filing fee for CAs. The BLM explained in the 
preamble to the proposed rule that new fixed filing fees were 
considered for Federal CAs (Sec.  3105), Federal participating area 
applications (Sec.  3180), and royalty rate reduction applications 
(Sec.  3103), but it ultimately declined to propose these fees due to 
the low value and the public benefit related to these items.
    The BLM received suggestions that the Bureau clarify requirements 
for the fixed filing fee for designation of successor operator for 
Federal agreements, such that the fee would not be required when a 
successor operator is designated for contracted unit agreements that do 
not contain Federal lands. The BLM adopts the suggestion and has 
revised the Processing and Filing Fee table in this section of the 
final rule to include the following language: ``Designation of 
successor operator for all Federal agreements, except for contracted 
unit agreements that contain no Federal lands.''
    The BLM also received several comments stating the BLM erred in 
adding the fee for EOIs to the fixed filing fee table, because these 
fees are adjusted for inflation every year; and section 50262(d) of the 
IRA expressly authorizes the Secretary to only adjust the EOI fee ``not 
less frequently than every 4 years . . . to reflect the changes in 
inflation.'' The BLM concurs with this comment and has moved the EOI 
fee to the new Sec.  3103.1(a) where it will be adjusted based on 
inflation every 4 years.
    Another comment stated that the BLM did not explain its authority 
to impose an annual inflation adjustment and that for the annual 
inflation adjustment, the BLM must re-apply all of the factors set out 
in section 304(b) of FLPMA, make a new determination as to whether the 
fee warrants an adjustment, and similarly codify the determination via

[[Page 30923]]

rulemaking every time a fee is adjusted. A similar comment asked the 
BLM to consider the disproportionate impact continued increases have on 
the total cost to develop Federal minerals.
    Section 304 of FLPMA, 43 U.S.C. 1734, authorizes the BLM to 
establish fees intended to reimburse the government for reasonable 
costs and authorizes the Secretary to change or abolish such fees. The 
BLM establishes fees based upon the reasonableness factors at section 
304(b) of FLPMA, which include ``actual costs (exclusive of management 
overhead), the monetary value of the rights or privileges sought by the 
applicant, the efficiency to the government processing involved, that 
portion of the cost incurred for the benefit of the general public 
interest rather than for the exclusive benefit of the applicant, the 
public service provided, and other factors relevant to determining the 
reasonableness of the costs.'' Once the BLM establishes a fee, the BLM 
adjusts the fees for inflation annually to effectively keep fees in 
line with current costs. This process comports with the broad authority 
given to the BLM in section 304 to set reasonable fees. The BLM did not 
propose changes to this method, or how the fees are adjusted annually 
for inflation in this proposed rule. The BLM will not use an 
alternative method for annual fee adjustments as it would require 
collecting data periodically for each fee, which is inefficient, 
costly, and impractical. However, as recommended by the GAO,\5\ the BLM 
did review the six factors, commonly known as ``FLPMA reasonableness 
factors'' in section 304(b), to account for changes in the leasing 
process since the fees were initially set. For the proposed rule, the 
BLM: (1) contacted each office with this type of application (the 10 
state offices or all of the 40 field/district and state offices 
depending on the application type); (2) requested the offices to 
provide the average processing time for each type of application and 
the employee completing this work; (3) received the estimates from each 
office; (4) calculated the weighted average for each type of 
application; (5) reviewed the monetary value of the right or privilege 
that the applicant seeks; (6) evaluated how efficiently the BLM 
processes a document based upon the processing times; (7) reviewed the 
public benefit factor for the application; and (8) reviewed the public 
service factor for the application. The preamble to the proposed rule 
reflects this analysis of its fixed filing fees. Without the inflation 
adjustment that has existed since 2005, the BLM would instead be 
required to complete the same burdensome, eight step review under FLPMA 
for every subsequent update.
---------------------------------------------------------------------------

    \5\ GAO. GAO-22-103968: OIL AND GAS LEASING BLM Should Update 
Its Guidance and Review Its Fees. https://www.gao.gov/assets/gao-22-103968.pdf.
---------------------------------------------------------------------------

    Furthermore, to verify the accuracy of the BLM's method for 
determining fees, the BLM reviewed a common oil and gas fixed filing 
fee--assignments and transfers--which has not experienced changes to 
the process since 2005. The BLM intentionally selected the assignment 
and transfer fixed filing fee as the most representative filing fee to 
review because (1) assignments and transfers are the most common 
application received by the BLM; (2) the other applications that 
require filing fees are more rarely used; and 3) all state offices are 
familiar with the assignment and transfer application. After completing 
the review of the assignment and transfer fixed filing fee for the 
proposed rule, the BLM compared the outcome of that review with the 
inflation adjustments (86 FR 54636 (Oct. 4, 2021)). The review 
identified that the assignment and transfer fixed filing fee should be 
$100 in FY2022 based upon the FLPMA factors. This amount matched the 
inflation-adjusted fixed filing fee for FY2022, which was also $100. 
Therefore, the FY2022 inflation adjustment matched the calculated fixed 
filing fee based upon the FLPMA factors in FY2022. If the BLM's review 
process changes for an application, and thus there is the potential 
that reasonable costs may change outside of the cost of inflation, the 
BLM would update the fixed filing fees based upon the FLPMA factors and 
provide the opportunity for notice and comment.
    Finally, the BLM requested comments related to changing its current 
process, which requires publishing the annual fee adjustments as a 
final rule in the Federal Register and then incorporating the new fees 
in the Code of Federal Regulations (CFR). Instead, the BLM proposed to 
post the updated table on the BLM's web page with the historical fees 
posted in the same location.
    Commenters stated that since the fixed filing fees are not subject 
to appeal, the BLM should remove this provision; that adjustment of the 
fees should include a notice and comment period; and that the BLM 
should continue to publish the annual fee adjustments in the Federal 
Register.
    The BLM is updating the final rule to state that the BLM will 
``announce annually in the Federal Register'' revised fees, as well as 
posting the fees to the website. The BLM initially promulgated the 
fixed filing fees in 2005 after conducting a notice-and-comment 
rulemaking. Each year since, the fees have been adjusted for inflation 
through a final rule without further notice and comment. This is 
because the BLM included the method used to calculate inflation in its 
proposal in 2005, and the same method has been used for each subsequent 
increase. As stated in the proposed rule, the BLM will follow this same 
procedure for any new fees. For example, the BLM will: (1) publish a 
proposed rule with information on the proposed fee and propose to 
adjust the fee based on inflation; (2) review the comments received on 
the proposed rule for the new fixed filing; (3) publish a final rule 
with the new fixed filing fee; and (4) adjust the new fixed filing fee 
based upon inflation without notice and comment for any subsequent 
increases. This process negates the need for notice and comment every 
time the BLM adjusts the fee solely for inflation. These periodic 
inflation adjustments are not subject to appeal.
    Additionally, as stated above, if the BLM's review process for any 
application changes, and thus there is the potential that the BLM's 
reasonable costs may change outside of the cost of inflation, the BLM 
would review the FLPMA factors to update the fixed filing fees and 
provide the opportunity for notice and comment.
    The BLM adopts the proposed change to publish the fixed filing fees 
on the BLM's web page and to publish the adjusted fees each year in the 
Federal Register to provide additional public notice. The table in this 
section will still contain a list of the types of applications that 
require a fixed filing fee, but the fee itself will be removed from the 
table so it does not become outdated as each subsequent adjustment for 
inflation is made. In addition, the BLM modified the regulatory text to 
reflect that the table in 3000.120 does not include the actual fee 
amounts. When fees are added, deleted, or need to be adjusted due to 
changes in the processing steps for the application or a change to the 
method to calculate the inflation adjustment amount, the BLM will do so 
by a notice and comment rulemaking.
Section 3000.130 Fiscal Terms of New Leases
    The provisions within Sec.  3000.130 only apply to oil and gas 
leasing; therefore, the BLM moved the fiscal terms for new leases to a 
new section under subpart 3103 for Fees, Rentals and Royalty in the 
final rule in response to comments stating that failure to specify the 
rental amounts, within the context of the regulation on annual

[[Page 30924]]

rentals, would be a disservice, detracting from the regulations' value 
as an orderly source for basic information.
2. Section-by-Section Discussion for Changes to 43 CFR Subpart 3100
    The BLM received a recommendation to reference its legal authority 
and duties under FLPMA and NEPA in all authority citations in the 
regulation. The BLM concurred in part and added a full reference to 
FLPMA into the authority introduction to the regulatory text, which 
changes ``43 U.S.C. 1732(b), 1733, and 1740'' to now state, ``43 U.S.C. 
1701 et seq.'' This update was only made to part 3100 since the other 
authority references already include a reference to FLPMA. The BLM did 
not add NEPA into the authority section, as NEPA does not provide the 
BLM with any authority for leasing.
Section 3100.3 Authority
    The existing Sec.  3100.0-3 sets out the BLM's authority for 
leasing on various types of lands, such as public domain land and 
acquired lands. During the comment review period, the BLM decided to 
add clarifying language in the final rule on Wild and Scenic Rivers to 
comply with the Wild and Scenic Rivers Act (16 U.S.C. 1280). Therefore, 
the final rule makes the following adjustments to the language for the 
Wild and Scenic Rivers exceptions listed under both Public Domain and 
Acquired lands: ``subject to valid existing rights,'' is moved to the 
beginning of the sentence to clarify that this applies to all types of 
National Wild and Scenic Rivers Systems lands. The following clarifying 
language is added to the end of the sentence ``lands within designated 
Wild and Scenic Rivers System that constitute the bed or bank or are 
situated within one-quarter mile of the bank of certain rivers 
designated as scenic or recreational, and in some cases, designating 
legislation may apply a different boundary extent. Lands within the 
National Wild and Scenic Rivers System that constitute the bed or bank 
or are situated within one-half mile of the bank of any river 
designated a wild river by the Alaska National Interest Lands 
Conservation Act (16 U.S.C. 3148).''
    The BLM received a comment on paragraphs (a)(1) and (b)(1), 
suggesting that the BLM change the phrase ``are subject to lease'' to 
``may be subject to lease'' to align with the discretion afforded the 
Interior Secretary under the MLA, 30 U.S.C. 226(a), that lands ``may be 
leased.'' The final rule does not adopt this recommendation. In 1920, 
Congress enacted the MLA to facilitate the exploration and development 
of oil and gas and other federally owned minerals. The MLA specifies 
the lands that are subject to the statute, and then provides discretion 
to the Secretary to determine which of those lands may be leased. The 
first step in exercising that discretion is making decisions in the 
BLM's resource management plans under FLPMA. The BLM declines to change 
this phrase so as not to confuse this section on the authority to 
lease, including the exceptions listed under both public domain and 
acquired lands, where there is no discretion to lease ineligible lands.
    A comment recommended that paragraphs (a)(2) and (b)(2) rely solely 
on the subhead--Exceptions--to indicate what the provisions in the 
sections mean and, for clarity, that the BLM should consider inserting 
language to the effect of: ``The following lands are not subject to 
lease.'' The final rule adopts this recommendation.
    The BLM received a comment requesting that the BLM identify 
additional exceptions for both public domain and acquired lands. This 
exception would specify that the BLM cannot lease lands identified in 
the land use plans as unavailable for oil and gas leasing or otherwise 
determined by the authorized officer to be inappropriate for leasing to 
protect other multiple use resources and values. The final rule does 
not adopt this recommendation. As stated in the proposed rule, the 
purpose of this section is to describe lands subject to leasing, and 
changes proposed to this section were made to provide clarity and to 
conform the regulations to exceptions identified in various other laws. 
The change requested by the comment does not meet this requirement, as 
the comment addresses discretionary decisions regarding leasing. 
Moreover, the concerns represented by this comment are already 
addressed in the BLM's land use planning process, NEPA reviews, and 
other processes that identify suitable areas for leasing.
Section 3100.5 Definitions
    The existing Sec.  3100.0-5 sets out the definitions applicable to 
part 3100. The BLM added new proposed definitions for ``competitive 
auction,'' ``exception,'' ``modification,'' ``oil and gas agreement,'' 
``qualified bidder,'' ``qualified lessee,'' ``responsible bidder,'' 
``responsible lessee,'' and ``waiver.'' The BLM received several 
comments on this section requesting additional definitions for ``bad 
actors,'' ``current land use plan,'' ``exclusion area,'' 
``mitigation,'' ``permanent impairment,'' and ``preferred leasing 
area.'' Since these terms are not used in parts 3000, 3100, and 3120, 
the BLM has not adopted these recommendations.
    In addition, a comment recommended adding a definition for 
``restoration.'' The BLM declines to make this change given that Sec.  
3104.10, where this term is used, specifically states that the 
restoration is to be ``in accordance with, but not limited to, the 
standards and requirements set forth in 43 CFR 3162.3 and 3162.5 and 
orders issued by the authorized officer.'' This flexible definition 
does not warrant modification at this time.
    Some comments recommended that the BLM expand the definitions in 
this section to include the terms ``eligible'' and ``available.'' The 
BLM declines to define those terms by regulation at this time and may 
revisit the issue in future rulemakings.
    One commenter requested that the BLM remove the definition for 
``modification'' to avoid confusion where this term is used in contexts 
other than changes to lease stipulations. The BLM agrees there is a 
potential for confusion given the numerous different contexts in which 
the word ``modification'' is used and has therefore revised the 
definition to clarify that it only applies to lease stipulations. For 
similar reasons, the BLM has made changes to ``exception'' and 
``waiver'' in the final rule. Each definition now includes the phrase 
``as used for lease stipulations.''
    A comment recommended modifying the term ``oil and gas agreement'' 
to reflect the fact that an agreement may in some instances include 
unleased lands. The BLM adopts this recommendation.
    The BLM received a comment suggesting that the term ``operator'' 
should be revised to explicitly state that the operator holds operating 
rights and thus has the same obligations as the operating rights owners 
to plug wells and remediate the well sites. The BLM does not concur 
with the recommendation, as an operator could be a lessee and may or 
may not own operating rights. The current definition for ``operator'' 
states, ``including, but not limited to, the lessee or operating rights 
owner, who has stated in writing to the authorized officer that it is 
responsible under the terms and conditions of the lease for the 
operations conducted on the leased lands or a portion thereof.'' 
Therefore, the BLM kept the existing definition of ``operator'' in the 
final rule.
    The BLM received several comments on the proposed definitions for 
the terms ``qualified bidder,'' ``qualified lessee,'' ``responsible 
bidder,'' and ``responsible lessee.'' Those comments that supported the 
inclusion of these

[[Page 30925]]

new definitions suggested modifications that would also exclude from 
those terms anyone with a history of failing to make timely rental or 
royalty payments; failing to meet a diligent development obligation; 
maintaining a significant number of inactive wells; engaging in 
repeated or ongoing environmental, worker safety, or labor violations; 
violating State reclamation requirements on other leases; or engaging 
in lease speculation, such as failing to drill approved APDs, or 
holding large quantities of undeveloped leases.
    The BLM declines to include this language, which is too vague and 
overlooks existing enforcement tools. For example, when a company fails 
to make timely payments, such as rental payments, the Act already 
dictates that the lease will automatically terminate through operation 
of law. In addition, if a company fails to make royalty payments after 
being notified such payments are due and exhausting its legal remedies, 
the Office of Natural Resources Revenue (ONRR) may refer an entity to 
the Federal suspension and debarment list. It is the BLM's policy to 
check SAM.gov (the Federal suspension and debarment site) before 
issuing a lease or approving an entity to acquire a lease interest 
through an assignment or transfer of operating rights. The BLM may also 
take enforcement actions when lessees violate the terms of a lease, 
including environmental, worker safety, or labor standards. The BLM 
does not agree that a company's decision to not drill a well or develop 
leases should determine if they are responsible or qualified, because 
such fact-specific business decisions do not, by themselves, determine 
whether a lessee has acted irresponsibly or incompetently. The BLM 
generally lacks the capacity to investigate and evaluate State law 
reclamation violations; however, the current definition for responsible 
lessee provides for the lessee to be in compliance with statutes 
applicable to oil and gas development. While it is not the BLM's 
practice to investigate a person's compliance with State law 
reclamation requirements, the BLM would not ignore a person's 
noncompliance when it has been brought to the BLM's attention for 
consideration if a person is a responsible lessee prior to lease 
issuance.
    Other comments suggested that, in connection with these 
definitions, the BLM should: (1) create a public registry of 
individuals and companies currently identified as not being responsible 
bidders and/or lessees, and make the list of ``Entities in 
Noncompliance with Reclamation Requirements of section 17(g) of the 
MLA'' public and updated on a regular basis; (2) clarify, in Sec.  
3108.30, that leases are subject to cancellation if the lessee is found 
not to be a ``qualified lessee'' or a ``responsible lessee''; and (3) 
implement a system that allows States, local government, Tribal 
governments, and individuals to report behavior or conduct that 
warrants investigation.
    The BLM updates the list of ``Entities in Noncompliance with 
Reclamation Requirements of section 17(g) of the MLA'' on an as needed 
basis, and then forwards the names of the entities to the Federal 
Government's suspension and debarment program. SAM.gov is a publicly 
available website. In turn, when a company returns to compliance, the 
BLM notifies the suspension and debarment program that the entity 
should be removed from SAM.gov. The cancellation provisions in Sec.  
3108.30 contains language for entities that fail to comply with the 
laws and regulations. The BLM also notes that any entity or individual 
can contact the BLM to report behavior or conduct that warrants 
investigation, and the BLM declines to create a separate regulatory 
system for this purpose at this time.
    The BLM also received comments regarding the new definitions for 
``qualified bidder,'' ``qualified lessee,'' ``responsible bidder,'' and 
``responsible lessee.'' One comment suggested that the term ``qualified 
bidder'' does not take into account that brokers or non-operating 
partners bid on leases, and that the new term could substantially 
impede bidding if it were to mandate that bonding or similar bidder 
requirements that historically only applied to a lessee be in place 
prior to bidding. The BLM considered the involvement of brokers or non-
operating partners when it drafted these definitions, which is 
evidenced by the separate definitions for ``qualified bidder'' and 
``responsible bidder'', as well as to whom the lease is issued 
(``qualified lessee'' and ``responsible lessee''), since these may not 
be the same entities. In addition, there is no mandate, in either the 
proposed or final rules, for bonding or similar requirements prior to 
bidding.
    Another comment suggested that the BLM should clarify in the 
definitions (and in proposed Sec.  3102.51) that it will continue to 
adhere only to the factors in MLA section 17(g), 30 U.S.C. 226(g), in 
determining who may hold a lease. The BLM disagrees. The MLA, 30 U.S.C. 
226(b)(1)(A), refers to responsible qualified bidders and specifically 
states that: ``[a]ll lands to be leased which are not subject to 
leasing under paragraph (2) shall be leased as provided in this 
paragraph to the highest responsible qualified bidder by competitive 
bidding under general regulations in units of not more than 2,560 
acres, except in Alaska, where units shall be not more than 5,760 
acres.'' The MLA also states that ``[t]he Secretary shall accept the 
highest bid from a responsible qualified bidder which is equal to or 
greater than the national minimum acceptable bid, without evaluation of 
the value of the lands proposed for lease.'' The BLM's regulations 
reiterate and rely on these statutory terms. Specifically, because a 
person who bids on a lease is not necessarily the same person to whom 
the lease is issued, it is appropriate to include definitions for 
``qualified bidder'' and ``responsible bidder,'' as well as definitions 
for whom the lease is issued, i.e., ``qualified lessee'' and 
``responsible lessee.''
    Another comment on the definitions for ``responsible bidder'' and 
``responsible lessee'' questioned the inclusion of the phrase ``history 
of noncompliance'' with applicable regulations and lease terms, stating 
that the meaning of a ``history of noncompliance'' is unclear. The 
comment suggested that the phrase could be construed broadly to mean 
that, if a person ever was found to have been in noncompliance with the 
terms of its Federal oil and gas lease or applicable regulations, that 
person could be precluded from obtaining future Federal lease 
interests, even if they corrected the alleged noncompliance or disputed 
the alleged violation and won.
    The BLM agrees the term is imprecise and has revised the 
definitions by changing the phrase ``does not have a history of 
noncompliance'' to ``is in compliance.'' A lessee would not be 
precluded from obtaining future Federal lease interests if it corrected 
the noncompliance. A lessee's noncompliance ends: (1) when the entity 
has paid all civil penalties and performed the required reclamation; 
(2) the BLM accepts the required reclamation performed under contract, 
and the entity reimburses the U.S. for all costs associated with the 
required reclamation, including the costs associated with the BLM's 
issuing and overseeing the performance contract during its life; and 
(3) if the bond is collected and is insufficient to cover the total 
costs, the entity pays the entire amount due to the U.S. and the BLM 
accepts compliance. This is outlined in

[[Page 30926]]

the BLM handbook H-3120-1, Competitive Leases, Appendix 4.\6\
---------------------------------------------------------------------------

    \6\ https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_h3120.pdf.
---------------------------------------------------------------------------

    The BLM proposed to separate the definitions for ``assignment'' and 
``sublease'' from the current definition of ``transfer'' in the 
existing regulations. One comment stated that a greater understanding 
of the differences between assignment and transfer of operating rights 
is long overdue. Another comment stated that the BLM's definitions for 
``assignment'' and ``transfer'' have corresponding, but different, 
meanings; that the Bureau of Ocean Energy Management (BOEM) recently 
issued a proposed rule stating that the terms are interchangeable; and 
that the BLM should ensure consistency and clarity in use of these 
terms between the two bureaus regulating Federal oil and gas leasing 
onshore and on the Outer Continental Shelf. The BLM reviewed its 
definitions and believes the two terms are distinct and should remain 
separate. An assignment of record title conveys both record title and 
operating rights and is limited under Sec.  3106.10 to certain 
restrictions that do not apply to transfers. The BOEM regulations do 
not have this distinction, which is why the BLM is retaining the 
separate definitions.
    Comments recommended adding a definition for ``unnecessary or undue 
degradation.'' The BLM declines to define this phrase in this rule 
because it is used only once, in Sec.  3120.32, and such a definition 
would benefit from public input before promulgation. As used in Sec.  
3120.32, the phrase reflects the ordinary meaning of the terms used in 
section 302(b) of FLPMA.
Section 3100.22 Drilling and Production or Payment of Compensatory 
Royalty
    The existing Sec.  3100.2-2 addresses drainage protection, an 
express covenant of the lease agreement. Under the terms of Federal 
leases, the lessee has the obligation to protect the leased land from 
drainage by drilling and producing any well that is necessary to 
protect the lease from drainage, or, in lieu thereof and with the 
consent of the authorized officer, by paying a compensatory royalty 
assessment to the Federal government. The BLM did not propose changes 
to this section but did receive a comment stating that the BLM should 
consider using this opportunity to amend this section to (1) clarify 
when drainage involving two Federal leases with different fund 
distribution codes occurs; and (2) specify that the lessee may resolve 
drainage by creating a federally approved agreement for sharing 
production among the affected leases. These proposals already reflect 
current policy; refer to the BLM Manual Section 3160, Drainage 
Protection Manual.\7\ The Drainage Protection Manual provides 
guidelines, standards, and procedures to prevent the loss of oil and 
gas resources and any resulting loss of royalty revenues from drainage 
on leased and unleased public domain, acquired, and Indian lands. The 
BLM does not believe changes are needed to this section since these 
proposals are already allowed under the current regulations to address 
possible solutions to drainage.
---------------------------------------------------------------------------

    \7\ BLM. MS-3160, Drainage Protection Manual (Public). https://www.blm.gov/sites/blm.gov/files/uploads/mediacenter_blmpolicymanual3160.pdf.
---------------------------------------------------------------------------

Section 3100.40 Public Availability of Information
    The proposed rule stated that the BLM was considering adding 
language that would provide notice that names and addresses of the 
nominator, lessee, operating rights holders, and operators would be 
made public on the BLM's Mineral & Land Records System (MLRS). The 
BLM's lease and agreement case files are already public records, and 
any change to the existing Sec.  3100.4 would merely reflect the BLM's 
current practice. The BLM received comments supporting additional 
changes to this section, stating that it should be made clear to 
nominators, lessees, operating rights holders, and lessees that their 
identities will be made public through the MLRS rather than the current 
practice, which requires a member of the public to be at the BLM state 
office to submit a paper request to document the case file. The BLM 
will continue to release the names and addresses of nominators, 
lessees, operating rights holders, and lessees to the extent allowed by 
the Privacy Act to ensure there is a transparent onshore leasing 
process and does not believe any further changes to this section are 
needed. The names and addresses of individuals were redacted from all 
reports, including Serial Register Pages, as a result of a recent 
privacy review. The redacted information only applies to individuals 
(MLRS personal accounts) and not companies (MLRS business accounts). 
Specifically, the privacy review determined that all personal accounts 
regardless of type of case are considered to contain Personally 
Identifiable Information (PII). In order to release this PII--
specifically names and addresses that are collected of our applicants/
interest holders--the BLM must meet two requirements. First, the BLM 
must establish and disclose a routine use for the information--which, 
in other words, is establishing that the public need and benefit 
outweighs the need for the protection of the privacy information and 
notifies that the PII may potentially be released. This has been 
completed by disclosing the routine uses contained in BLM System of 
Records Notice (SORN) LLM32 in accordance with the Privacy Act. The 
SORN LLM32 is for Lands & Minerals Authorization Tracking System and 
covers the data from both LR2000 and MLRS. Most requests made in the 
Information Access Center at the state offices fall under routine use 
number ``(2) to Federal, State, or local agencies or a member of the 
general public in response to a specific request for pertinent 
information.'' Second, to meet Privacy Act requirements, the BLM must 
be able to track who received the information, when, and for what 
purpose to satisfy the Privacy Act's requirement that the information 
was released in accordance with a ``specific request for pertinent 
information.'' A member of the public can create an MLRS account to 
view unredacted information. This log in method allows for the BLM to 
meet this requirement through a logging system.
    The BLM received a comment stating that the BLM provides no 
justification for publishing information on all entities registered to 
bid during a lease sale, rather than providing this information only 
for issued leases. Publishing participants in oil and gas lease sales 
has been a long-standing Bureau policy to provide transparency in the 
competitive leasing process. Refer to H-3120-1 Competitive Leases 
handbook, published February 2013.\8\ This policy specifically states, 
``Names of bidders/high bidders remain confidential until the end of 
the sale.'' In addition, each Notice of Competitive Lease Sale provides 
adequate notice that the names and addresses of bidders will be 
released and no further changes to the lease sale process are needed.
---------------------------------------------------------------------------

    \8\ BLM: H-3120-1, Competitive Leases handbook. https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_h3120.pdf.
---------------------------------------------------------------------------

    Another comment stated that the final rule should also authorize 
researchers to use lease and production data to analyze market-level 
royalty, bid, and rental rates. The comment then stated that 
independent, professional analysis would provide the BLM with critical 
data on the appropriate market-level rates for Federal mineral charges. 
In addition, the commenter also stated that the final rule should 
authorize the BLM to provide a quarterly report to the

[[Page 30927]]

public on all revenues received from leasing and mineral production on 
Federal lands on a lease-by-lease basis, and as the ultimate owners of 
the lands and minerals being leased, the public has a right to know 
this information. The BLM makes lease information, including lease 
terms such as rental rates and royalty rates, available through the 
MLRS; however, because the amount of royalty is a function of 
production and proprietary data is confidential, the royalty amount the 
Federal government receives cannot be released on a lease-by-lease 
basis. The public may obtain general information on production data, 
rental, and royalty payments from the ONRR.
Section-by-Section Discussion for Changes to 43 CFR Subpart 3101
Section 3101.12 Surface Use Rights
    The proposed rule revised the existing Sec.  3101.1-2, which was 
originally promulgated in 1988, to provide that the BLM could impose 
reasonable measures under the lease terms to avoid, minimize, or 
mitigate adverse impacts to other resource values, land uses or users, 
federally recognized Tribes, and underserved communities. Those 
reasonable measures include site-specific minimum siting and timing 
parameters that the BLM may impose on lessees to protect the public 
interest.
    The BLM received numerous comments on this section, including: (1) 
support for the proposed changes, and statements that the changes are 
critical to mitigate impacts when the relevant RMP is outdated; (2) 
requests for clarification that leases are contingent on NEPA analysis 
and not a lessee's expectation; (3) requests for clarification that a 
lessee's surface use rights are subject to a land use plan's term, 
including terms provided for by land use plans either revised or 
amended after a lease is issued; and (4) requests for the BLM to 
clarify that the agency retains its full authority to condition 
development and production on leases after the lease is issued in order 
to respond to findings of site-specific NEPA analyses or changing 
conditions between the time a lease is issued and when it is developed. 
These changes are unwarranted as the BLM has the authority to impose 
measures that are more stringent than those in the regulations as long 
as they constitute reasonable measures to minimize adverse impacts, 
Yates Petroleum, 176 IBLA 144, 156 (2008). Therefore, the BLM is not 
revising this section further based on these comments, many of which 
request unwarranted or unnecessary clarification or specificity that 
would exceed the scope of this rulemaking.
    Some comments opposed the proposed changes to this section, 
including by asserting that: (1) distance/siting requirements could 
lead to the BLM exceeding its authority to regulate air quality; (2) 
the BLM did not reference a lease provision that grants the agency the 
proposed new authority to constrain or deny lease operations; and (3) 
the BLM should consider public welfare when determining which measures 
may be reasonable. The BLM has the authority to use terms and 
conditions under Section 6 of the standard lease form to control site-
specific environmental or public welfare impacts on leaseholds, as 
opposed to using lease-specific protective measures in lease 
stipulations from the RMPs.\9\ Section 6 of the standard lease form 
authorizes the BLM to require ``reasonable measures'' to the extent 
that such measures would be consistent with the lessee's lease rights. 
The existing regulation has been misconstrued as limiting the BLM's 
authority to establish reasonable measures to protect resources and to 
establish minimum parameters within which the BLM can specify site-
specific mitigating measures that are consistent with the lease rights 
granted a lessee.
---------------------------------------------------------------------------

    \9\ Stipulations are additional specific terms and conditions 
that change the manner in which operations may be conducted on a 
lease or modify the lease rights granted.
---------------------------------------------------------------------------

    Comments requested (1) the removal of language that arguably 
suggests that the BLM could require a lessee to ``avoid'' or 
``mitigate'' all adverse impacts of developing mineral rights; and (2) 
that the final rule specify how water sources will be protected. The 
BLM has revised this section by clarifying that not all surface impacts 
must be mitigated and by clarifying the distance the BLM may require 
operations to be moved. The final rule strikes the words ``avoid, 
minimize, or'' since this is not needed as avoidance and minimization 
are integral to mitigating adverse impacts.
    Some comments requested changes to require the relocation distances 
to be either a maximum of or be at least 1 mile and requested the BLM 
to prohibit new surface disturbing operations. The language in this 
section has been in place since at least 1988 and does not prohibit new 
surface disturbance. The BLM proposed to change only the minimum siting 
and timing parameters to account for changes in technology. The BLM 
declines to further increase or set a maximum parameter as this would 
not allow the flexibility that may be required to avoid resource 
conflict. The final rule amends the last sentence of the section to 
clarify the intent of the proposed rule. The proposed rule removed the 
phrase ``At a minimum'' from the existing regulations but retained the 
phrase ``by more than.'' The final rule is amended to state, ``At a 
minimum, modifications that are consistent with lease rights include, 
but are not limited to, requiring relocation of proposed operations by 
up to 800 meters,'', which allows the BLM to require a lessee to 
relocate proposed operations by up to 800 meters to avoid a resource 
conflict that may not have been identified at the time the BLM issued 
the lease. For example, the BLM may need to move operations to avoid a 
sage grouse lek, a contingency that may not be encompassed by standard 
lease terms. In that circumstance, this provision would allow the BLM 
to move the operations up to 800 meters to minimize the impacts to the 
sage grouse lek. As stated in the 1988 final rule preamble for the 
existing regulations, ``Similarly, the authority of the BLM to 
prescribe ``reasonable,'' but more stringent, protection measures is 
not affected by the final rulemaking,'' see 53 FR 17341 (May 16, 1988). 
This section does not apply to the protection of resource values that 
are already addressed in lease stipulations.
    Comments requested that the BLM strike the word ``specific'' as a 
modifier for ``nondiscretionary statutes'' that provide post-lease 
restrictions on surface use rights. The final rule adopts the 
recommendation to strike the word ``specific'' as a modifier to 
nondiscretionary statutes.
    Comments stated that the language explicitly allowing a BLM officer 
to restrict the development of a project to proactively avoid impacts 
to ``land users'' or ``underserved communities,'' is improper because, 
the commenter contended, such language is vague and would improperly 
expand the BLM's authority, potentially encroach upon a lessee's lease 
rights, and cause uncertainty. Other comments requested that the BLM 
add ``overburdened and'' before ``underserved communities'' in the 
final rule, and that the BLM better specify procedures the BLM could 
use to protect multiple use standards and Native Americans' land rights 
in areas near reservations. For the reasons explained below, the BLM 
does not agree with these comments and retains its proposed language to 
proactively avoid impacts to ``land users'' or ``underserved 
communities.''
    The term ``land users'' is already used in the existing 43 CFR 
3101.1-2 and is specifically included in Section 6 of the

[[Page 30928]]

standard lease form. This term identifies segments of the public that 
use the land for recreation or for economic growth in the community. 
Like the term, ``resource values''--which the BLM's regulations do not 
define--the term ``underserved communities'' has a straightforward and 
commonly understood meaning that would not benefit from elaboration 
here, and the BLM has an obligation under the MLA and APA to articulate 
a rational connection between underserved communities and the proposed 
operations, as modified by the BLM. Based on the above, the BLM 
declines to modify or remove either ``land users'' or ``underserved 
communities.''
Section 3101.13 Stipulations and Information Notices
    The BLM proposed to split the existing Sec.  3101.13 into two 
separate provisions and add a new paragraph (a), stating the BLM would 
consider the sensitivity and importance of a resource when developing 
stipulations without regard to the restrictiveness of the stipulation.
    One comment on this section recommended that the consideration of 
affected resources and potential uncertainty be made mandatory by 
substituting ``shall'' or ``must'' for ``may'' in the final rule text 
to remove any uncertainty. The BLM declines to make this change so as 
to maintain discretion when considering potential stipulations. The BLM 
requires this discretion because the BLM need not consider every 
potentially affected resource for each parcel. Instead, the BLM will 
use its discretion to determine, based on the sensitivity, importance, 
and any uncertainty, which resources should be considered, and will 
then assess whether those resources are adequately protected by 
stipulation.
    Some comments stated that the BLM should delete the proposed 
paragraph (a) \10\, arguing that the language is subjective and would 
allow the inclusion of new stipulations that were not addressed in the 
underlying planning documents. Some comments stated that proposed 
paragraph (a), and in particular the phrase ``without regard to the 
restrictiveness of the stipulation,'' disregards the principle of 
multiple use by elevating certain uses or allows the BLM to essentially 
prevent oil and gas operations. Another comment recommended changing 
the phrase ``without regard'' to ``along with consideration.''
---------------------------------------------------------------------------

    \10\ Proposed regulation text at 43 CFR 3101.13(a): ``The BLM 
may consider the sensitivity and importance of potentially affected 
resources and any uncertainty concerning the present or future 
condition of those resources and will assess whether a resource is 
adequately protected by stipulation without regard for the 
restrictiveness of the stipulation on operations.''
---------------------------------------------------------------------------

    As stated in the proposed rule, the BLM added this paragraph to 
more explicitly recognize its mandate to manage the Federal lands for 
multiple use. Stipulations do not prevent oil and gas operations from 
occurring under a lease. Rather, stipulations that allow, but control, 
surface use are a valuable management tool to achieve balanced multiple 
resource use, including oil and gas development. As stated above, the 
BLM retains discretion in this section and will rely on its expertise 
when making these site-specific decisions regarding stipulations. 
Consistent with these objectives, the BLM agrees that the bureau should 
consider the restrictiveness of a stipulation on operations. In the 
final rule, the BLM deletes the phrase ``without regard for'' and 
inserts instead ``while considering'' to recognize the BLM's mandate to 
manage the Federal lands for multiple use and to provide for the 
protection of the resources on those lands.
    The BLM also received a comment on proposed paragraph (c), which 
specified that the BLM may attach an information notice to the lease. 
That comment requested that the BLM remove the last sentence in the 
paragraph--which reads, ``Information notices may not be a basis for 
denial of lease operations''--because it undermines the BLM's 
management authority. Another comment recommended that this paragraph 
incorporate a requirement that information notices highlight potential 
conflicts with other resource values and be accompanied by full lease 
stipulations specifying how those conflicts will be resolved. The final 
rule does not adopt these recommendations, as the information notice is 
a method of informing lessees of requirements that may be imposed by an 
existing law or regulation, not of imposing new requirements.
    Finally, the BLM received comments recommending the development of 
specific stipulations and considerations for all leases, including a no 
surface occupancy within 2 miles of developed recreation sites and a 1-
mile no surface occupancy from key recreation areas. The BLM disagrees 
and declines to adopt one-size-fits-all stipulations for all leases. 
The BLM historically has identified the appropriate stipulations 
through RMPs, ensuring that the BLM ties the appropriate stipulations 
to the lease under consideration. That approach allows the BLM to 
develop and set forth lease stipulations in the land-use planning 
documents/RMPs so that the public is aware of the balance that will 
exist between environmental protection and opportunities for 
development of oil and gas resources in advance of offering the lands 
for lease.
Section 3101.14 Modification, Waiver, or Exception
    This section describes the standards that the BLM will use when 
evaluating modifications, waivers, or exceptions. The BLM proposed 
changes to the existing Sec.  3101.14 to more explicitly recognize its 
mandate to manage the Federal lands for multiple use and to provide for 
the protection of the resources on those lands. The proposed rule also 
split the existing provision into two components: one to address 
modifications prior to lease issuance and one for modifications after 
lease issuance.
    The BLM received multiple comments on the BLM's proposed approach. 
For example, comments: (1) expressed concern that the language 
broadened the ability of surface management agencies to object to the 
inclusion of parcels in an oil and gas lease sale; (2) requested a 
revision to paragraph (a) to state that requests for modification, 
waivers, or exceptions would not be posted for public comment; (3) 
suggested the BLM should clarify that this paragraph does not alter or 
affect criteria for modification, waivers, and exceptions of 
stipulations in the BLM's RMPs; (4) suggested that the proposed rule 
introduced new subjective standards, such as a ``major concern to the 
public;'' and (5) recommended that the BLM should not remove the 
language ``or if proposed operations would not cause unacceptable 
impacts,'', since, in the commentors' view, that edit would curtail the 
BLM's flexibility for addressing circumstances where the BLM's granting 
of the modification or waiver would not result in unacceptable impacts.
    After consideration of these comments, the final rule splits 
paragraph (a) into two paragraphs for clarity. The first sentence in 
proposed paragraph (a) now appears at the end of the section in new 
final paragraph (d), since modifications, waivers, and exceptions to a 
stipulation are considered later at the APD stage, not at the leasing 
stage. The restructuring of this provision addresses concerns that the 
paragraph alters or affects criteria for modification, waivers, and 
exceptions of stipulations in the BLM's RMPs.
    As stated in the proposed rule, the BLM removed the existing 
provision--allowing the granting of modifications, waivers, or 
exceptions to lease stipulations if the authorized officer

[[Page 30929]]

determines that the ``proposed operations would not cause unacceptable 
impacts''--because this authority has been overused \11\ and has 
potentially led to unnecessary adverse environmental impacts.
---------------------------------------------------------------------------

    \11\ See, e.g., GAO-17-307, https://www.gao.gov/products/gao-17-307.
---------------------------------------------------------------------------

    The BLM has concluded that it is appropriate to exempt situations 
based on time-sensitive information from the review requirement. For 
example, if a survey is completed for nesting raptors and it can be 
confirmed that there are no raptors present, then an exception from a 
timing stipulation based on the presence of nesting raptors would be 
appropriate. However, if the 30-day review period applied, the 
conditions would no longer be in effect to support the exception. Final 
paragraph (a), which applies to lease terms and stipulations, now 
states, ``If the authorized officer determines that a change to a lease 
term or stipulation is substantial or a stipulation involves an issue 
of major concern to the public, except time-sensitive exceptions based 
on verified data, the changes will be subject to public review for at 
least 30 calendar days.'' As stated in the proposed rule, the BLM would 
consider a change to the lease terms to be substantial if the change 
would have an important, considerable, consequential, major, or 
meaningful effect on the environment that was not previously 
considered, thus requiring public notification (30-day public review) 
of a lease term or stipulation.
    The language in this section does not broaden surface management 
agencies' ability to object to the inclusion of parcels in an oil and 
gas lease sale, because lands requiring the consent of other surface 
management agencies is addressed under Sec.  3101.51. This rulemaking 
does not introduce new subjective standards. Language such as a ``major 
concern to the public'' appears in existing regulations and has not 
caused issues.
    One commenter stated paragraph (b) presents potential disruption to 
the competitive lease sale process as all lease conditions or 
stipulations must be disclosed prior to a lease sale. The BLM revised 
this paragraph to reflect IBLA decisions, which have stated that if a 
lease is issued without prior notice of an additional stipulation, the 
stipulation is not binding on the potential lessee and is without 
effect in the absence of the potential lessee's acceptance of the 
stipulation, see Emery Energy, Inc, 64 IBLA 175 (1982). While this 
rarely occurs, the purpose of this section is to allow the BLM to 
correct errors made when preparing the Notice of Competitive Lease 
Sale. Moreover, the MLA vests the Secretary with broad discretion to 
decide, up until the time of lease issuance, whether particular parcels 
of Federal land ``may be leased'' for oil and gas development, see 30 
U.S.C. 226(a). Under the final rule, the BLM may decide not to issue a 
lease if the modification of a stipulation could increase the value of 
a parcel. For example, if the Notice of Competitive Lease Sale 
incorrectly listed a parcel as subject to a no-surface-occupancy 
stipulation, and it is then realized that the parcel should not have 
been subject to that limitation, but this mistake is not caught until 
after the sale, this could increase the value of the lease. To ensure a 
fair return to the public, the BLM would decline to issue the lease and 
would offer the parcel in a future lease sale. The competitive bidding 
process would ensure that the BLM receives the appropriate bid for the 
parcel with the modified stipulation.
    One comment on paragraph (c) recommended striking the phrase ``was 
inadvertently omitted,'' and adding ``to comply with a nondiscretionary 
legal requirement, or to address an adverse effect that was not 
reasonably foreseeable at the time of lease issuance or whose analysis 
was otherwise expressly deferred to the site-specific proposal stage,'' 
and changing ``may'' to ``will'' in reference to lease cancellation. 
These recommendations would substantially change the meaning of the 
paragraph, which was intended to address situations when the BLM 
inadvertently omits a stipulation when preparing parcels for a lease 
sale. The intent of the modified language is to reflect IBLA decisions 
on this issue. The BLM has not made any changes based on this comment.
Section 3101.21 Public Domain Lands
    The BLM did not propose any changes to the existing Sec.  3101.2-1; 
however, the BLM received a comment stating that the BLM should not 
only rely on the section title to convey to readers that the language 
in the section applies to public domain lands (whereas the next section 
applies to acquired lands). The BLM concurs with this recommendation 
and inserts in final paragraph (a) ``on public domain lands.''
Section 3101.22 Acquired Lands
    The BLM did not propose any changes to the existing Sec.  3101.2-2; 
however, the BLM received a comment stating that the BLM should not 
only rely on the section title to convey to readers that the language 
applies to acquired lands. Another comment stated that the BLM should 
specify that the acquired lands limitation is separate from, and in 
addition to, the limitation for public domain lands. The BLM concurs 
with these recommendations and inserts in final paragraph (a) ``on 
acquired lands'' as well as ``separate from, and in addition to, the 
limitation for public domain lands.''
Federal Lands Administered by an Agency Other Than the Bureau of Land 
Management
    Because of other proposed changes to part 3100, the BLM proposed to 
redesignate and consolidate the provisions under this heading. The BLM 
received several comments suggesting that the new definition for 
``surface management agency'' under Sec.  3000.5 of this chapter, which 
includes Interior agencies such as the Fish and Wildlife Service and 
the Bureau of Reclamation, conflicts with and causes confusion with the 
provisions under this heading. The BLM concurs and changes the title of 
this heading from ``Federal Lands Administered by an Agency Outside of 
the Department of the Interior'' to ``Federal Lands Administered by an 
Agency Other than the Bureau of Land Management.''
Section 3101.51 General Requirements and Section 3101.52 Action by the 
Bureau of Land Management
    The BLM received numerous comments on proposed revisions, which, 
collectively, would replicate several paragraphs in the existing 
regulations requiring the BLM to seek and, in some cases, obtain the 
consent of surface management agencies prior to leasing acquired or 
public domain lands into one paragraph. Some comments supported the 
change. Several comments opposed the change, asserting that it expands 
the authority of some surface managing agencies, such as the Fish and 
Wildlife Service and the Bureau of Reclamation, beyond that which is 
provided under the applicable statute.
    The BLM disagrees that the proposed change improperly expands the 
authority of certain surface management agencies, such as the Fish and 
Wildlife Service. Instead, this change merely consolidates and 
clarifies the BLM's duties with respect to prohibitions provided 
elsewhere in statute or regulation. The BLM has a longstanding practice 
of consultation with all Federal surface management agencies before 
authorizing subsurface mineral leasing. For example, the existing 
regulation at 43 CFR 3101.7-1 recognizes that in some cases the 
Secretary may lease over the objection of the surface management

[[Page 30930]]

agency and in other cases the Secretary may not. Moreover, even where 
consent is statutorily required, such as on Forest Service lands, the 
MLA directs that the Secretary of the Interior the Secretary of the 
Interior ultimately must apply their independent judgement before any 
leasing may occur. The proposed regulation merely supplies the BLM with 
the uniform procedures necessary to facilitate these preexisting 
prohibitions and grants of discretion; it does not enlarge or restrict 
the BLM's authority. The BLM has added a clause to Sec.  3101.52(b) to 
clarify that a lack of consent or concurrence will preclude leasing 
only where provided by law. The BLM has also made certain minor changes 
for clarity.
    Commentors stated that, under the MLAAL, 30 U.S.C. 352, only the 
head of an executive department has the authority to consent to leasing 
covered by that statute, such that it necessarily does not embrace 
``consent'' by subdivisions of the DOI. The BLM agrees, particularly 
because the Department's sub-agencies ordinarily enjoy their authority 
only be virtue of delegation from the Secretary. As set forth above, 
the proposed text does not alter the balance of authority and 
discretion among agencies within the Department, but instead simply 
clarifies that the BLM shall, as a procedural matter, confer with 
surface management agencies.
Section-by-Section Discussion for Changes to 43 CFR Subpart 3102
Section 3102.20 Non-U.S. Citizens
    The BLM proposed to revise the existing Sec.  3102.2 to remove the 
reference to the outdated term ``alien.'' The BLM received a comment 
stating that this section should be amended to include more stringent 
language that would require prospective, non-U.S. citizen bidders, 
lessees, or interest holders to submit to the BLM a certification of 
compliance with Federal foreign ownership laws and procedures, 
including the final rule from the Office of Investment Security, 
Department of the Treasury, implementing the provisions relating to 
real estate transactions in section 721 of the Defense Production Act 
of 1950, as amended by the Foreign Investment Risk Review Modernization 
Act of 2018, prior to the BLM granting such entities a lease. The BLM 
declines to adopt this change, which is unnecessary. In 1982, the BLM 
eliminated the requirement for entities to submit documents 
substantiating their qualifications to hold a lease or an interest in a 
lease and now requires entities to certify their compliance, including 
those relating to foreign investment in Federal land, on the lease or 
assignment application. Any false statements on these documents are 
subject to the criminal sanctions in 18 U.S.C. 1001 (see 47 FR 8544, 
February 28, 1982).
Section 3102.40 Signature
    The BLM proposed changes to the existing Sec.  3102.4 to clarify 
that it applies to all applications submitted to the BLM and to allow 
for electronic signatures. The BLM received a comment in support of the 
proposal to remove paragraph (b) from this section. The commenter also 
said the BLM erred, as the submission of three hard copies of any 
transfer of record title or operating rights is required by the MLA. 30 
U.S.C. 187a. The BLM agrees and makes the appropriate changes to the 
final Sec.  3106.41. The BLM declines to reinstate paragraph (b) in 
this section to avoid confusion when the BLM starts accepting transfers 
electronically.
Section 3102.51 Compliance
    The BLM proposed revising the existing Sec.  3102.5-1 to clarify 
who is entitled to hold a lease and that the reclamation obligations 
under the lease reside with the lessee, operating rights owners, and 
operators, and not the American taxpayer. The BLM received comments in 
support of the proposed changes to this section and a recommendation in 
a comment that the BLM publish and regularly update the list of 
entities that are not in noncompliance with reclamation requirements of 
section 17(g) of the MLA. Many comments opposed the proposed changes, 
citing a lack of due process, fairness, the BLM's ability to take 
enforcement actions to address any compliance deficiencies, and the 
need to provide entities the ability to remedy any alleged compliance 
issues before the BLM turns to cancelling a lease, among other 
concerns.
    To address the comments, the BLM is revising the phrase ``will be 
subject to cancellation'' to ``may be subject to cancellation'' to 
clarify that cancellation is only one of the enforcement tools the BLM 
could apply and allows for due process. As provided under Sec.  3000.40 
of this chapter, any decision issued by the BLM pursuant to this 
section would be subject to appeal. In addition, the BLM updates the 
list of ``Entities in Noncompliance with Reclamation Requirements of 
section 17(g) of the MLA'' on an as-needed basis, and then forwards the 
names of the entities to the Federal Government's suspension and 
debarment program. SAM.gov is a publicly available website that 
contains the list of suspended or debarred entities. Likewise, when a 
company returns to compliance, the BLM notifies the suspension and 
debarment program that the entity should be removed from SAM.gov. The 
BLM declines to publish a duplicate list of these entities. Thus, no 
further changes are warranted.
Section 3102.52 Certification of Compliance
    The BLM proposed a minor change to the existing Sec.  3102.5-2: the 
removal of the word ``offer'' to reflect Congress' elimination of the 
noncompetitive leasing process. The BLM received a comment on this 
section recommending additional language to explicitly state that any 
false certification is subject to the criminal penalties contained in 
18 U.S.C. 1001. The BLM declines to adopt this proposal, which is 
unnecessary. Section 3000.20 of this chapter already informs all 
entities that they are subject to criminal penalties if they provide 
false statements to the BLM. In addition, the standard forms used by 
the BLM under these regulations, such as the bid form (3000-002), 
assignment of record title form (3000-003) and the transfer of 
operating rights (3000-003a), and the lease form (3100-011), all 
include similar statements and references to 18 U.S.C. 1001 for any 
false statements.
5. Section-by-Section Discussion for Changes to 43 CFR Subpart 3103
Section 3103.1 Fiscal Terms
    The BLM removes the proposed Sec.  3000.130 from the final rule and 
moves the information in that section into final Sec.  3103.1, since 
this section addresses oil and gas fiscal terms and does not impact 
other minerals management programs. Therefore, the BLM determined that 
it is more appropriate to codify this section in subpart 3103 instead 
of part 3000. As a result of this change, the BLM updated all cross 
references in the final rule from Sec.  3000.130 to Sec.  3103.1.
    Based upon the comments received, the BLM also incorporates 
additional updates that include: (1) adding the EOI filing fee from the 
IRA to this section and (2) changing the timeframe that the BLM will 
adjust the fees for inflation from annually to once every 4 years.
    First, the BLM moved the new EOI filing fee, established by the 
IRA, from proposed Sec.  3000.120 to final Sec.  3103.1(a). The BLM 
cannot update the EOI fee annually. The MLA at 30 U.S.C. 226(q)(2)(B) 
states, ``The Secretary shall, by regulation, not less frequently than 
every 4 years, adjust the amount of the fee under subparagraph (A) to 
reflect the change in inflation.'' Therefore, the final

[[Page 30931]]

rule moves the EOI fee to paragraph (a). Second, the EOI fee will be 
adjusted every 4 years by way of a final rule as part of the new Fiscal 
Terms Table. The BLM also changed the adjustment for minimum bonus bids 
and rentals to be adjusted every 4 years for inflation by way of a 
final rule. This change will allow the final rule to update these terms 
to occur at the same time and minimize the public's costs for these 
inflation adjustments. The BLM also renamed the title of this section 
from ``Fiscal terms of new leases'' to ``Fiscal terms.''
    One commenter stated that the BLM should tie all costs and returns 
associated with oil and gas leasing to an inflation index. The BLM did 
not make any changes in response to this comment, as all fees in Sec.  
3000.120, the fiscal terms in Sec.  3103.1, and the minimum bond 
amounts are tied to changes in the Implicit Price Deflator for Gross 
Domestic Product, which is published quarterly by the U.S. Department 
of Commerce. Finally, a comment stated that the BLM should clarify that 
the inflation adjustment as described in this section will include 
adjustments for inflation occurring over any period of multiple years 
after August 16, 2022, during which bid and rental rates were left 
unchanged despite inflation. The BLM concurs with this recommendation, 
which is reflected in the existing regulations and its use of the 
Implicit Price Deflator for Gross Domestic Product.
    Another commentor stated that the proposed rule references no 
authority that would support annual inflation adjustments for the 
rental and bonus as the IRA precludes the adjustment of these fiscal 
terms until after August 16, 2032. The BLM agrees that the rental and 
minimum bonus bids must remain at the current rate until August 16, 
2032; however, after this date, the IRA changes these amounts to 
minimums. Therefore, the BLM proposed and is implementing inflation 
adjustments for rental amounts and minimum bonus bids after August 16, 
2032. To reduce confusion, the BLM updates paragraph (a) by adding the 
sentence, ``Per the Inflation Reduction Act, the BLM will not adjust 
the rental nor the minimum bonus bids until after August 16, 2032.''
Section 3103.12 Where Remittance is Submitted
    The BLM proposed to update the existing Sec.  3103.1-2 to clarify 
that fees set out in the fee schedule in Sec.  3000.120 of this chapter 
and all first-year rentals and bonuses for leases issued under 43 CFR 
part 3100 must be paid to the proper BLM office. This final section 
also removes outdated references to the former Minerals Management 
Service and mailing address for payments. The BLM received a related 
comment on lease reinstatements, in which the commenter stated that 
references in the BLM regulations to rental payments through the ONRR's 
online system should also acknowledge ONRR's continuing practice of 
accepting non-electronic rental payments in some circumstances. The BLM 
concurs and changes the language in paragraph (a)(2) from ``through its 
online system'' to ``refer to 30 CFR 1218.51'' that lists the methods 
by which lessees and operators may submit payments to the ONRR.
Section 3103.21 Rental Requirements
    The BLM requested comments on adding a new requirement for diligent 
development obligations.
    Comments that supported a diligent development provision included 
recommendations that the BLM: (1) implement further leasing reforms, 
such as increasing production from existing leases by ensuring diligent 
development, implementing specific diligent operations standards, and 
adopting a mechanism to hold private companies accountable when they 
fail to meet the requirements; (2) tie the diligent development 
requirement to the definitions of ``qualified lessee,'' ``responsible 
bidder,'' and ``responsible lessee;'' and (3) impose a diligent 
operator standard with reporting requirements, and absent a rental rate 
increase, clarify what consequences an operator may face when it fails 
to operate diligently including lease termination. Comments also 
asserted that the proposed lease rentals are insufficient and leases 
that are not pursued for development within 5 years should be 
permanently revoked and should not be transferable to another entity.
    Comments that opposed a diligent development provision included 
statements that: (1) failure to act diligently to develop a lease has 
no adverse impacts on the environment; (2) adding diligent development 
obligations would result in additional work for the BLM and an 
unnecessary burden on lessees; (3) the increased rental rates 
prescribed by Congress in the IRA and adopted in the final regulations 
will encourage diligent development on their own and encourage prudent 
development or lease surrender; (4) the diligent development 
obligations would impact business decisions that are based on markets, 
investment capital, supply chains, labor and equipment availability, 
and other factors; (5) geophysical exploration does not always result 
in lease development; (6) new diligent development terms would impose 
large cost increases on many leases and inhibit operator flexibility to 
properly evaluate and commence operations in a responsible 
developmental situation and economic manner consistent with lease 
requirements; (7) a diligent development requirement could exacerbate 
the climate crisis; (8) the BLM should consider delays that are out of 
an operator's control, such as the time certain Federal processes or 
lawsuits can take; (9) the proposed rule's list of alternatives is 
overly lenient and promotes speculative ventures; and (10) the BLM 
should not apply too broad an interpretation of diligent development.
    After careful consideration of the comments received, the BLM did 
not implement a diligent development requirement with an escalating 
rental rate in the final rule. The BLM believes the existing increasing 
rental rates prescribed by Congress in the IRA will encourage diligent 
development on their own by incentivizing lessees and operators to 
develop a lease to avoid the increased costs. The BLM will continue to 
assess the oil and gas leasing program, and if the BLM determines 
Congress' rental rate increases are not as effective as expected at 
encouraging diligent development, the BLM may consider additional 
rulemaking. The BLM further clarifies final paragraph (a) by adding, 
``for that lease'' after the words ``total acreage'' to clarify the 
basis for calculating the first-year rental. No further changes have 
been made to this section.
Section 3103.22 Annual Rental Payments
    The BLM proposed changes to the existing Sec.  3103.2-2 to 
implement changes made by Congress in the IRA and clarify what 
constitutes a timely payment of rental by tying the payment to the 
lease anniversary date. The BLM received numerous comments on this 
section. The comments encouraged the BLM to: (1) set out the actual 
required rental amounts, as provided by the current regulations, rather 
than referring to the lease terms; (2) set a policy determining when 
rental rates should be higher than the statutory minimums; (3) 
implement the regular rate increases; and (4) further increase the 
rental rates, on the theory that the rental rates in the IRA are too 
low.
    In the IRA, Congress set rentals at $3 per acre, or fraction 
thereof, for lease years 1 and 2; $5 per acre, or fraction thereof, for 
years 3 through 8; and $15 per acre, or fraction thereof, thereafter. 
Ten years after the enactment of the

[[Page 30932]]

IRA, those rental rates become minimums and are subject to increase, as 
discussed in Sec.  3103.1. The BLM agrees with the comments that the 
section in the proposed rule was not clear and adds the following 
clause at the end of paragraph (a) ``the annual rental for all new 
leases will be as specified in 43 CFR 3103.1.'' 43 CFR 3103.1 sets out 
the actual required rental rate, provides details on when the BLM will 
increase the rental rate, and implements a rate increase every 4 years. 
The BLM cannot increase the rental until August 16, 2032, based upon 
Congress' direction in the IRA.
    Another comment objected to the application of these rentals to 
leases sold before the passage of the IRA but issued after the IRA was 
signed into law. The commenter explained that companies bid on those 
parcels relying on the rental and royalty rates that were in effect at 
the time of the lease sale and contended that lease issuance was only 
delayed due to the BLM's failure to timely resolve protests.
    As explained in the preamble to the proposed rule, the IRA amended 
the rental rate for all new oil and gas leases issued in the next 10 
years. Because the statute ties the new rates to lease issuance, the 
BLM does not have the authority to exempt leases sold but not issued 
prior to the enactment of the IRA from its terms.
Section 3103.31 Royalty on Production
    The BLM proposed changes to the existing Sec.  3103.3-1 to 
implement the requirements of the IRA and received numerous comments.
    Supportive comments recommended that the final rule address plans, 
specify criteria, or include a procedure for increasing the royalty 
rate after 2032. These comments suggested various ways to implement 
this recommendation, including codifying a higher royalty rate of at 
least 18.75 percent, or 20 percent; increasing the royalty rate 
consistent with the previous 10-years' worth of inflation, but not 
deflation, and indexing the royalty rate to raise at prescribed 
intervals; or adjusting all rates to market levels on a regular basis 
to better ensure fair return. Supportive comments also requested a 
termination provision, similar to that for failure to pay rentals, for 
the failure to pay royalties. Other supportive comments stated that the 
BLM should limit changes to just those required by the IRA, as the new 
rate could affect the competitiveness of the U.S. minerals program.
    Comments that opposed the changes included statements that: (1) 
higher royalty rates have consistently led to increased revenues 
without discouraging oil and gas development and the new rate of 16.67 
percent is still well below the rate that is charged for offshore 
drilling in Federal waters (18.75 percent) and imposed by leading oil-
and gas-producing States, including Texas (20-25 percent), Colorado (20 
percent), and New Mexico (18.75 to 20 percent); (2) the final rule 
should refrain from setting a minimum rate because the cost of 
operating on Federal lands is higher than on State or private lands, 
and a higher royalty will make it uneconomic to operate on most Federal 
lands; (3) the higher minimum, and any increased royalty rate, will 
disincentivize operations on Federal lands, harming small business, 
local governments, and States; (4) the BLM failed to provide a 
justification for making the royalty rate the minimum, and the bureau 
should consider establishing 16.67 percent as the maximum with a 
mechanism for determining a lower rate when the 10-year statutory 
requirement expires; (5) the BLM should not comply with the IRA's 
mandate or adopt a permanent royalty relief rule for onshore 
production; (6) raising oil and gas royalty rates will directly reduce 
well operators' revenue margins, risking well closures and deliberate 
attempts to devalue oil fields; (7) higher royalty rates affect long 
term project economics by reducing the expected revenue and making them 
less financially feasible; (8) higher rates will deter small operators 
from investing in expensive enhanced oil recovery methods that can 
extend the productive life of a well; and (9) raising the Federal 
royalty rate encourages cheating and requires greater Federal 
investment in compliance enforcement at taxpayer expense.
    As stated in the proposed rule, the BLM updated this section to 
implement IRA section 50262, which set royalty rates at 16.67 percent 
for the 10 years following the Act's enactment. Final paragraph (a)(3) 
of the regulation states that for leases issued after the 10-year 
period following the passage of the IRA, the royalty rate will be not 
less than 16.67 percent, which is the rate Congress required in the 
IRA. The BLM declines to set post-2032 rates now (or to implement 
associated procedures) so far in advance of any authorized increase. 
However, the BLM may consider further adjustments after 2032. The BLM 
also declines the suggestion to implement an automatic termination 
provision for the nonpayment of royalties. The procedures for lease 
forfeiture and cancellation are set forth in section 31(a) of the Act 
(30 U.S.C. 188) and Sec.  3108.30(b) of the regulations. The BLM adopts 
this section into the final rule without any further changes.
Section 3103.41 Royalty Reductions
    The BLM proposed revising the existing Sec.  3103.4-1 to clarify 
that production in paying quantities is a prerequisite to obtaining 
royalty relief under this section. The BLM also solicited feedback to 
improve the royalty rate reduction section.
    Comments recommended that the BLM: (1) describe the specific 
circumstances for justifying a reduction and clarify that the 
reductions will terminate as soon as the conditions justifying the 
reduction have passed; (2) explicitly state that a royalty rate 
reduction would transfer to the new lessee when a lease is assigned; 
(3) provide specific criteria for lowering the rate; (4) set a limit on 
the lower end of the reduced rate; (5) limit the period for the 
reduction to apply; (6) specify that reduced royalties transfer to 
assignees only on a case-by-case basis; (7) extend royalty relief to 
all producers at any point of production; (8) extend the royalty relief 
to any field where operators are seeking to conduct or are conducting 
waterfloods or other enhanced oil recovery methods; (9) not set a floor 
for royalty reductions because a universal rate, even a low one, cannot 
account for the varying productivity within a formation; (10) determine 
the royalty relief by the field productivity and the crude grade 
produced; (11) determine the appropriate royalty rate reductions based 
upon a critical review of the economic data for reasonableness and 
clearly enumerate the costs that are allowed for the economic 
evaluation to ensure operators send unbiased data; (12) closely monitor 
any approved royalty reduction; (13) clearly define under what 
circumstance/criteria royalty reduction terminates; (14) revise the 
phrase ``royalty reductions at the discretion of the Secretary'' to 
convey that reductions are the exception, not the norm; and (15) add 
language to require notification to the State when royalty reductions 
take place, given the State's interest in the royalty rate and the 
economic health of the industry and local communities.
    The BLM rarely grants royalty rate reductions, and after careful 
review of the comments, has decided against making any further changes. 
The regulation states that the Secretary may waive, suspend, or reduce 
the rental or royalty upon a ``determination that it is necessary to 
promote development or that the leases cannot be produced in paying 
quantities under the terms provided therein.'' Thus, the BLM only

[[Page 30933]]

grants a reduction in royalty rate if the operating costs exceed the 
gross income. Otherwise, the BLM would deny the royalty rate reduction. 
The regulatory requirements reflecting these parameters come directly 
from the statutory authorization for royalty reductions at 30 U.S.C. 
209. Additionally, if the operating costs would still exceed the gross 
income with a royalty rate reduction, the BLM must consider terminating 
the lease for no longer being capable of production in paying 
quantities under 43 CFR 3107.22.
    The factors the BLM considers when evaluating a reduction are case-
specific, and the BLM must review each application. Given this and the 
exceptional nature of circumstances that may warrant royalty 
reductions, the BLM declines to further specify the circumstances or 
specific criteria for lowering a royalty rate in the regulation in 
order to retain the discretion of the authorized officer to address 
case specific situations that may occur. The BLM is committed to 
adhering to the existing rules and policy and will ensure that they are 
consistently and faithfully applied to future royalty relief 
applications.
    Second, the BLM declines to codify language stating that a royalty 
rate reduction would transfer to a new lessee when a lessee assigns its 
lease. The operating costs for the lease may change with the new 
lessee; therefore, the BLM would need to complete a new review to 
determine if the royalty rate reduction is appropriate.
    Third, some commenters opposed and some supported implementing a 
lower limit for royalty reductions, but no lower limit was proposed. 
The BLM has decided not to implement a lower limit and will instead 
continue to rely on the economics of each lease to determine the 
appropriate royalty reduction, if warranted.
    Fourth, the BLM will not provide royalty relief based only upon 
operators conducting or seeking to conduct waterfloods or other 
enhanced oil recovery methods. These operations will return a profit to 
the operators and in most cases a royalty reduction would not be 
appropriate as the gross income exceeds the operating costs.
    Fifth, the requirements to monitor royalty rate reductions or to 
send notice to States are better suited to be addressed through policy 
as these requirements would apply only to the BLM and not the regulated 
community. The BLM already tracks royalty rate reductions in MLRS and 
will continue to closely monitor reductions. Given how rare royalty 
rate reductions are, the BLM has not established a requirement to 
notify the States. The BLM will consider whether a notification to the 
States should become a matter of policy in the future.
    Sixth, the existing regulations and Bureau policy reserve the BLM's 
right to terminate a royalty reduction, re-adjust the amount of 
reduction, or restore the royalty rate to the rate required by the 
lease terms and/or regulations at any time for the entire lease or for 
any portion thereof. Given that the grant of a royalty rate reduction 
is uncommon, the BLM is declining to add any blanket provisions to the 
regulations that would remove this flexibility. For example, the BLM 
may need to terminate relief retroactively if such relief was based on 
manipulation of normal production or adulteration of oil sold.
Sections 3103.42 Stripper Well Royalty Reductions and 3103.4-3 Heavy 
Oil Royalty Reductions
    The BLM proposed to eliminate both of Sec. Sec.  3103.4-2 and 
3103.4-3 in their entirety because they are obsolete for the reasons 
described below. The BLM received a comment stating the BLM's removal 
for obsolescence ignores the fact that over the next decade, the number 
of stripper wells on Federal lands will rise along with necessary oil 
exploration and production.
    As stated in the proposed rule, the BLM revised both sections on 
October 6, 2010 (75 FR 61624), to eliminate these types of royalty 
relief, because Congress enacted separate relief in section 343 of the 
Energy Policy Act of 2005 (42 U.S.C. 15903). However, the BLM retained 
the regulations because, while these types of royalty relief were no 
longer available for current production, prior production subject to 
this relief continued to be subject to audits. This is no longer the 
case; therefore, these provisions serve no purpose. To the extent 
relief is required in the future, the BLM would promulgate any 
necessary regulations under section 343 of the Energy Policy Act of 
2005 rather than relying on these provisions. In addition, the BLM has 
the authority under section 39 of the MLA to waive, suspend, or reduce 
the royalty for a lease.
Section 3103.42 Suspension of Operations and/or Production
    The BLM proposed redesignating this section from 43 CFR 3103.4-4 to 
43 CFR 3103.42 and clarifying how a lease term will be adjusted once 
the suspension ends.
    The BLM received a comment on paragraph (a) stating that the BLM 
should broaden the circumstances for which a lease would be eligible 
for a suspension of operations only or a suspension of production only 
beyond force majeure, or at a minimum should acknowledge that the BLM's 
own delays constitute such a force majeure for the purposes of these 
types of suspensions. The regulations clarify that a force majeure is 
``matters beyond the reasonable control of the lessee.'' Because this 
encompasses an administrative delay, the BLM already takes such delays 
into consideration when evaluating a suspension. The BLM is not 
revising the regulation to further specify instances that may be 
considered force majeure; BLM Manual 3160-10, Suspension of Operations 
and or Production, provides further examples of acts constituting force 
majeure.
    Some comments stated that lease suspensions, whether requested by 
the lessee or directed by the BLM, should be made public as soon as 
they are submitted and should be subject to public review and comment 
in accordance with NEPA. The BLM disagrees with this recommendation. 
NEPA is only triggered if there is a proposal for a major Federal 
action that potentially affects the environment. Although the approval 
or direction of a suspension is a Federal action, lease suspensions are 
categorically excluded from NEPA review as administrative actions taken 
on an already existing authorized lease. See the BLM's National 
Environmental Policy Act Handbook H-1790-1, Appendix 4.\12\
---------------------------------------------------------------------------

    \12\ https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_Handbook_h1790-1.pdf.
---------------------------------------------------------------------------

    Some comments stated that the BLM should clarify that both the 
suspension request and the decision by the BLM must be made in writing 
and published on a BLM website, and that the proposed rule fails to 
provide the transparency and public access to information about lease 
suspensions that is guaranteed by the Administrative Procedure Act. The 
BLM disagrees with this comment, as suspension decisions have always 
been publicly available through review of the case file located in the 
relevant BLM state offices or through the BLM's reporting application 
at https://reports.blm.gov/reports/MLRS.
    Another comment stated that the BLM should clarify in paragraph (d) 
that any lease production is prohibited while a suspension of 
operations and production is in effect. The BLM agrees, and it is BLM 
policy that production from a lease is prohibited if there is a 
suspension of operations and production. See BLM Manual Section 3160-
10, Suspension of Operations

[[Page 30934]]

and/or Production.\13\ The rule provides that ``if there is any 
production sold or removed during the suspension, the lessee must pay 
royalty on that production.'' This statement covers instances where 
there are no operations or production, but the operator sells already 
existing product captured prior to when the suspension went into 
effect; it does not supersede the ordinary bar on production during 
suspensions, and merely ensures the lessees pay royalty on that sold 
production.
---------------------------------------------------------------------------

    \13\ https://www.blm.gov/sites/default/files/docs/2022-03/MS-3160-10%20Rel.%203-150.pdf.
---------------------------------------------------------------------------

    Multiple commenters stated that the BLM should: (1) clarify that 
lease suspensions are the exception and not the rule; (2) provide 
limited and specific criteria that would justify a suspension; and (3) 
offer guidance on how the BLM plans to deal with existing lease 
suspensions. The BLM declines to modify the regulations as detailed in 
the three comments above. The MLA provides direction, and the BLM has 
set guidance on when a lease suspension is appropriate. First, the BLM 
currently has approximately 3,000 suspended leases of the over 33,000 
authorized onshore oil and gas leases. While suspensions are not a 
common occurrence, the number of lease suspensions has increased based 
upon the large number of leases litigated in court after lease issuance 
over the past decade. Second, the BLM declines to provide limited and 
specific criteria in the regulations. The BLM provides guidance to its 
employees in IMs and MS-3160-10, Suspension of Operations and/or 
Production.\14\ The BLM declines to make this change at this time to 
retain the discretion of the authorized officer to address unique 
situations that may occur. Third, the BLM already established guidance 
on how the BLM plans to deal with existing lease suspensions in 
Permanent IM 2019-007, Monitoring and Review of Lease Suspensions; \15\ 
therefore, the BLM declines to add this information into the 
regulations. The existing regulations require evaluation of lease 
suspensions on a lease-by-lease basis. Reviews of existing lease 
suspensions are currently addressed in the BLM's policy IM 2023-012, 
Suspension of Operations and/or Production \16\. No changes have been 
made in the final rule to avoid limiting the discretion of the 
authorized officer to address unique situations that may occur. For 
example, litigation or actions of Federal or State agencies that 
prevent commencement or continuation of operations may be applied to 
suspensions granted under section 17(i) or section 39 of the MLA 
depending on the unique circumstances of the case.
---------------------------------------------------------------------------

    \14\ https://www.blm.gov/sites/default/files/docs/2022-03/MS-3160-10%20Rel.%203-150.pdf.
    \15\ https://www.blm.gov/policy/pim-2019-007.
    \16\ https://www.blm.gov/policy/im-2023-012.
---------------------------------------------------------------------------

    A commenter was concerned that changing the word ``terminating'' in 
existing paragraph (e) to ``lifting'' in final paragraph (g) will be 
interpreted by lessees and others to require the BLM to take 
affirmative action to end a suspension. The comment states that a lease 
suspension should lift automatically--without any subsequent 
administrative action by the BLM--when certain regulatory events occur 
or as otherwise stated in the approval letter, and the BLM should avoid 
any change that would increase the administrative burden on the agency. 
The BLM disagrees with this comment. While it is true that, in some 
cases, the BLM's decision to suspend a lease will document a particular 
event or action that will eventually lift a suspension, the BLM always 
issues a decision for the official record when lifting a suspension, 
allowing for the expiration date of the lease to be properly adjusted 
and facilitating any reconciliation of the rental amount that may be 
due, see C.W. Trainer, 69 I.D. 81 (1962). A copy of that decision is 
sent to ONRR to notify it of a change in the status of the lease. The 
final rule did not change this process. Based upon a review of the 
comments received, the BLM did not make any changes for this section 
from the proposed rule: the process described above is consistent with 
the term ``lifting'' as the term avoids confusion and leads to an 
understanding that the BLM takes an action to end a suspension.
Section-by-Section Discussion for Changes to 43 CFR Subpart 3104
    In subpart 3104, the BLM proposed to revise its bonding regulations 
by increasing the minimum amount of bonds, removing nationwide and unit 
operator bonds, adding surface owner protection bonds, and removing 
letters of credit (LOCs) and CDs as options that lessees can use to 
secure the required bond amounts. The BLM received several comments on 
the proposed bond amounts. Some comments supported the higher amounts, 
with some stating these amounts do not reflect the full reclamation 
costs of oil and gas wells. Other commenters recommended the final rule 
establish a full-liability, individual lease bond or tie the bond 
amount to the number of wells covered by a bond. The MLA does not 
require the BLM to impose full cost reclamation bonds but does require 
the Secretary to ensure the bonding is adequate to ensure reclamation. 
Requiring a full liability bond would require increased staffing at the 
field and state offices to manage increased workloads for the review of 
changing conditions and the adjudication of additional bond riders to 
either raise or reduce the bond amount. In addition, the BLM's APD 
processing time would slow due to waits for additional bond riders. The 
BLM has opted to keep to a higher minimum bond amount and depend upon 
its policy guidance and future adjudications for increasing the bond 
amount for specific operations that pose additional risk, which will 
allow the BLM to direct its limited resources to where they can have 
the most impact.
    Comments also recommended that the BLM review its average costs for 
reclaiming orphaned wells, noting that the States have identified a 
higher average cost for their orphaned wells. The BLM reviewed its 
costs related to cleaning up orphaned wells that were plugged since the 
BLM calculated the average cost as part of this rulemaking effort. Due 
to the limited number of additional orphaned wells that have been 
plugged in that time, there is not enough additional data to warrant a 
recalculation. Therefore, the BLM did not adjust the minimum bond 
amount based on a new average orphaned well cost.
    Some comments stated the BLM should not have used the median number 
of wells to determine the new minimum bond amounts but rather should 
have considered the probability of the number of wells to be orphaned. 
The BLM is unable to predict whether any particular well will become an 
orphan well due to many factors that can lead to a well becoming 
orphaned (e.g., operator's revenue stream, operator's cost stream, 
current regulatory framework within the State, remaining oil and gas 
reserves, etc.) and the lack of data for each of these factors. 
Therefore, the BLM lacks the necessary information to determine the 
probability of a well to become orphaned and thus did not use it as a 
basis to calculate bond costs.
    Several comments opposed the higher minimum bond amounts and 
requested that the BLM remove the proposed bonding changes, explaining 
that the BLM rarely needs to access a bond to plug a well. Comments 
also asserted that the BLM's own statistics do not justify the bonding 
provisions in light of the MLA's requirement for an adequate bond. As 
stated in the proposed rule, the minimum bond amounts have not been 
increased since 1951 (for statewide and nationwide bonds) and 1960 (for 
lease bonds), have been repeatedly

[[Page 30935]]

found inadequate by the GAO and the OIG, and are no longer adequate to 
provide the requisite funding for reclamation when a lessee defaults on 
its obligations.
    The BLM received several comments stating that the higher minimum 
bond amounts will be a significant financial burden on operators and 
small businesses, because sureties often require companies to post cash 
or security collateral. The BLM disagrees. The Small Business 
Administration (SBA) helps small businesses guarantee performance bonds 
issued by certain surety companies, which allows the companies to offer 
surety bonds to small businesses that might not meet the criteria for 
other sureties. The SBA's website states that all performance bond 
guarantees require small businesses to pay SBA a fee of 0.6% of the 
contract price. The operator would need to make a payment of $900 for 
an individual bond or $3,000 for a statewide bond to SBA, which would 
allow the small entity to obtain a surety bond without requiring the 
company to post cash or security collateral. The BLM encourages small 
businesses and operators to reach out to the resources available to 
them including those provided by the SBA and visit their web page: 
https://www.sba.gov/funding-programs/surety-bonds.
    In addition, the BLM conducted a review of small entities operating 
on Federal oil and gas leases based upon public data. If these 
companies paid sureties 3% of the additional bonding cost annually, 
their overall cost-to-revenue ratios would increase by less than one-
tenth of one percent. If these companies instead chose to fund the full 
bonding amount out of revenues, their cost-to-revenue ratio would 
increase by at most 1.4% for one year. Based upon our analysis, the BLM 
certifies that there will not be a significant economic impact on small 
entities in the RFA; refer to section V.B. Please also review the RIA 
for more information.
Section 3104.1 Bond Amounts
    Based upon the comments received, the BLM decided to implement 
inflation adjustments for minimum bond amounts. The BLM completed this 
action by (1) adding the minimum bond amounts to this section to 
provide for inflation adjustments; (2) moving the phase-in period for 
lease and statewide bonds into this section; (3) providing a longer 
implementation for small operators to increase or replace their bonds; 
and (4) providing information to operators on the penalties they could 
incur if they fail to increase or replace existing bonds that do not 
meet the new minimum bond amounts.
    First, the BLM requested comments on whether it should adjust the 
minimum bond amounts to keep up with inflation. The BLM received 
multiple comments recommending the BLM periodically adjust the minimum 
bond amounts to better protect the taxpayer's interests in adequate 
reclamation. The BLM agrees with these comments and updates the final 
rule to include inflation adjustments to bond amounts by way of a final 
rule and titled this Sec.  3104.1 ``Bond amounts.'' This update will 
allow the BLM to periodically update bond amounts based upon the rates 
of inflation.
    Second, the BLM moved the phase-in period for statewide and 
individual bonds from proposed Sec.  3104.90 to final Sec.  3104.1(c). 
The phase-in period for lessees to replace unit and nationwide bonds 
remains in final Sec.  3104.90. This change allows the BLM to easily 
update the phase-in periods for individual or lease bonds and statewide 
bonds upon adjusting the minimum bond amounts for inflation. The BLM 
anticipates that when the minimum bond amounts are adjusted for 
inflation in the future, the phase-in periods will occur over 2 years:
     One year for statewide bonds, and
     Two years for individual bonds.
    This phase-in follows the initial proposed timeframes. The BLM has 
calculated the staffing needs required to process all bond increases 
for a 1-year phase-in period and concluded the BLM will require 2 years 
to provide sufficient time to ensure all bonds are brought into 
compliance.
    Third, the BLM considered comments regarding the impact to small 
operators from increasing the minimum bond amounts. Larger companies 
usually hold nationwide or statewide bonds, while smaller companies 
usually hold individual bonds. Initially, the BLM proposed to require 
individual bond holders to come into compliance with the new bond 
amounts first. Commenters expressed concerns that the higher minimum 
bond amounts may force small operators out of business. To alleviate 
some of the concerns expressed by commenters with respect to the impact 
on small operators and given the large number of individual bonds, the 
BLM has revised the final paragraph (c) to give those with individual 
bonds more time by phasing in this requirement over a 3-year period, 
instead of over a 2-year period. The longer phase-in period for 
individual bonds will provide more time for smaller operators, who 
predominantly rely on individual bonds, to research and obtain the 
appropriate bond amount. When minimum statewide and individual bond 
amounts are adjusted for inflation in the future, the BLM anticipates 
the shorter phase-in periods (2 years for individual bonds) will be 
sufficient for all bond holders to come into compliance because the 
bond amount increase will not be as significant a change.
    A comment expressed concern regarding which penalties could accrue 
to lessees who do not increase the bond amounts within the time 
allowed. The BLM reviewed its existing regulations and added a new 
paragraph (d) to this section to address this comment. Paragraph (d) 
now refers to the existing regulations that the BLM may use if an 
operator fails to increase or replace an existing bond as required by 
the regulations. The potential penalties include shut down of 
operations under 43 CFR 3163.1(a)(3), lease cancellation under 43 CFR 
3108.30, or referral of the obligor or principal to the Department's 
Suspension and Debarment Program under 2 CFR part 1400.
    The BLM considered shorter timeframes for inflation adjustments to 
the minimum bond amounts, including annual adjustments, but concluded 
that shorter timeframes are unworkable given the BLM's workload 
associated with possible enforcement. Instead, the BLM has opted to 
update the minimum bond amounts in the final Sec.  3104.1 table every 
10 years. The final rule for the updated bond amounts in the 3104.1 
table will also indicate the new deadlines for compliance. This 10-year 
timeframe will provide sufficient time for entities to come into 
compliance, for adjudication of the financial assurances, and for the 
BLM to ensure such compliance prior to the implementation of new 
minimum bond amounts.
    The BLM received other comments related to adjusting the fiscal 
terms for inflation. One commenter stated that the BLM should not 
attempt to automatically adjust existing bonds for inflation without 
the surety's consent. The phase-in periods will provide time for the 
bonded principal to work with the surety to increase the amount or 
replace the bond. Another commenter recommended that the BLM conduct 
annual reviews and commit to increases in line with larger economic 
trends and not just inflation. The BLM will move forward with updating 
the minimum bond amounts based upon inflation every 10 years as part of 
the final rule; however, the BLM maintains the right to conduct reviews 
of bonds to determine if additional increases are necessary and in the 
public interest.

[[Page 30936]]

Section 3104.10 Bond Obligations
    The BLM requested comments on the proposed revisions to Sec.  
3104.1 along with any supporting information on whether the final rule 
should provide for any other types of financial arrangements that the 
BLM should consider.
    The BLM received several comments stating the BLM should not 
eliminate CDs and LOCs from the options available to satisfy bonding 
requirements, reasoning that the elimination would impose an 
unwarranted burden on lessees and operators, particularly small 
operators, and that the BLM should provide more options to post the 
bonds rather than eliminating options.
    Based on the comments, the BLM has decided to reinstate CDs and 
LOCs as acceptable forms of security for a personal bond. To resolve 
some of the issues that led the BLM to propose eliminating the 
securities, the BLM made changes to the regulations for CDs and LOCs. 
Given that CDs are now issued electronically by banks, they do not meet 
the existing requirement that Secretarial approval be indicated on the 
face of the document. Therefore, the BLM modifies paragraph (c)(1) for 
CDs by inserting ``or through assignment'' to provide for Secretarial 
approval prior to any redemption.
    The BLM modifies paragraph (c)(5) for LOCs to change ``shall'' to 
``must'' or ``will'' as appropriate and consistent with the similar 
changes made in the proposed rule. The BLM also removes the language 
``the deposits of which are federally insured,'' as this phrase in the 
existing regulation has caused confusion to both operators submitting a 
bond and BLM staff who review bonds and their associated securities. 
The $250,000 Federal deposit insurance limit for deposits that a person 
may have with a financial institution does not apply to LOCs, because 
the guarantee of payment under a LOC is made by the financial 
institution directly to the BLM by demand, see 31 CFR part 28.204-3(b). 
LOCs are not depositor accounts to which the Federal Deposit Insurance 
Corporation (FDIC) insurance applies. Therefore, the BLM is not 
concerned with FDIC insurance when the amount of a LOC exceeds the FDIC 
limit.
    Paragraph (c)(5)(ii) is modified to appropriately reference the 
types of bonds as ``an individual lease or statewide bond,'' and to 
change the term ``attachment'' to ``collection'' for clarity.
    Paragraph (c)(5)(v) is modified to state, ``In the event the BLM is 
notified of the financial institution's intent not to renew the letter 
of credit, the principal must extend the letter of credit or provide an 
adequate replacement bond with an assumption of liability rider. If the 
BLM does not receive an adequate notice or replacement bond with rider, 
the BLM will collect the letter of credit within 30 days of the 
expiration without further notification to the obligor.'' The BLM is 
including this language to ease the administrative burden that results 
if an entity fails to maintain the LOC. Previously, when an entity 
failed to pay the premiums to the bank, the BLM, in turn, had to notify 
the obligor (the bonded party) to replace the bond within 60 days; 
monitor the timeframes to ensure the LOC is extended or replaced; 
adjudicate an acceptable form of replacement security or bond; and send 
a demand to collect on the letter of credit when all else fails. The 
new language will reduce the BLM's workload by obviating the initial 
notice to the obligor to replace the bond. To be clear, the BLM will 
send a demand to the bank to collect the funds from the LOC 30 days 
prior to the expiration date without further notice of the action from 
the BLM when the obligor fails to take corrective action on their own 
accord.
    For other types of financial guarantees, one commenter recommended 
that the oil and gas program review the bonding requirements and 
language of the BLM's solar and wind energy regulations in 43 CFR 
2801.5(b) for consistency, especially language regarding whether 
corporate guarantees are an acceptable or unacceptable bond instrument. 
Another commenter stated that alternative financial arrangements could 
include insurance policies as both an alternative and to complement 
surety bonds such as insurance accounts to pre-fund decommissioning 
costs, where sureties direct a portion of their annual premiums and 
payouts could be made to the operator or the BLM upon default.
    The BLM carefully considered the comments and other forms of 
financial assurance to secure bonding and is declining to include any 
other forms of financial assurance because the BLM believes the current 
list, with the retention of LOCs and CDs, is sufficient. The BLM 
reviewed BOEM regulations, which provide for corporate guarantees, 
insurance, decommissioning accounts, and other forms of security 
approved by the Regional Director. The BLM also reviewed the solar and 
wind energy regulations, which provide for the same financial 
assurances listed in this final rule as well as insurance. As discussed 
below, the BLM has decided not to allow corporate guarantees and 
insurance as means to satisfy the bond requirements. The BLM has 
determined that corporate guarantees are not an acceptable form of bond 
security given the need to continually confirm the viability of the 
corporate guarantee. The BLM does not have the staff or expertise to 
perform this function, and, without the ability to closely monitor the 
financial stability of the corporation providing the guarantee, there 
is a risk the company may default or go bankrupt during the term of a 
lease, before plugging and reclamation of the existing well(s) and 
disturbance. To secure a replacement bond at that time would be 
difficult, if not impossible, thereby potentially leaving the Federal 
taxpayer to foot the bill for any necessary reclamation.
    While insurance is an acceptable form of bond security used in 
other BLM programs, the BLM declines to use insurance for the oil and 
gas program given the risks and increased administrative workload for 
the following reasons.
    First, the basic principle of insurance is the transfer of risk. It 
transfers the risk of financial losses as a result of specified but 
unpredictable events to an insurer in return for a fee or premium. 
While insurance is acceptable for unforeseen events such as spills or 
accidents, the BLM's performance bond secures the promise to fulfill a 
known, contractual obligation an entity has undertaken to perform at 
some point in the future.
    Second, an insurance policy is usually a written contract between 
two parties, the policyholder (the person or company that gets the 
policy) and the insurer (the insurance company). The BLM would be a 
third-party beneficiary under this scheme, and considered appropriate 
language to that effect, but this arrangement is still significantly 
different from surety bonds where there is a contract between three 
parties (the BLM, the principal (or bonded party), and the surety where 
the BLM is a party to the agreement). Therefore, the BLM would hold 
more risk because it is not a party to the insurance.
    Third, generally, either party to an insurance contract may cancel 
the contract unilaterally. To address this, the BLM considered 
regulatory language stating, e.g., that policy must be non-cancellable. 
However, this could cause confusion with cancellation of a bond since 
existing Sec.  3104 does not provide for canceling or releasing oil and 
gas bonds and the only time a bond is canceled is by a court order. The 
regulations only provide for terminating the period of liability on the 
bond.
    The BLM believes the revised regulations provide sufficient options

[[Page 30937]]

for the regulated community to meet the bonding requirements, and, for 
all the reasons stated above, the BLM has determined not to rely on 
insurance for bonding.
    As mentioned above, BOEM's bonding regulations at 30 CFR 556.900 
allow for the provision of ``Another form of security approved by the 
Regional Director.'' 30 CFR 556.902(e)(3). The BLM recognizes this 
option provides a level of flexibility that is not present in the BLM's 
regulations. However, the BLM has decided to refrain from including a 
similar provision in its regulations because the BLM does not have 
staff to implement such a provision. As of May 1, 2021, BOEM managed 
about 2,287 active oil and gas leases on approximately 12.1 million 
acres, while the BLM managed 35,871 leases on approximately 24.9 
million acres. The BLM manages significantly more leases and 
significantly more bonds with no staff solely dedicated to bond 
adjudication. Instead, the BLM staff adjudicate both bonds and post-
leasing actions. Therefore, the BLM does not have the staff nor 
expertise to implement a provision similar to 30 CFR 556.900.
    The BLM considered decommissioning, abandonment, or trust accounts 
that can only be drawn upon to cover decommissioning expenses. Similar 
to corporate guarantees, allowing the use of these types of accounts 
would require continual review of constantly changing conditions and 
the expertise that BLM staff lack.
    Some comments stated the BLM should require additional criteria for 
surety companies to ensure that bonded amounts will be available to the 
regulator if, and when, the operator defaults. The commenter 
recommended that the BLM should adopt additional criteria that (1) 
consider a surety's existing aggregate risk when determining whether 
that surety qualifies for certification, and (2) impose an underwriting 
limitation on the aggregate risk of all bonds issued by a surety. The 
BLM declines to make this change because the Department of Treasury 
already reviews the underwriting limitation and requires an excess risk 
reinsurance to protect the Federal Government. Please see Department of 
the Treasury Circular 570 for more information.
Section 3104.20 Lease Bond
    For the existing Sec.  3104.2, the BLM proposed changing the 
specifications regarding who must post a bond to state that the 
operator must be covered by a bond in its name as principal or obligor. 
The BLM received a comment urging the BLM to analyze the bonding regime 
of the host State jurisdiction and decline further bond requirements 
where that State provides for bonding inclusive of Federal leases and 
wells. The BLM declines to adopt this proposal. Including such a 
provision in the BLM's rules would require the BLM to execute separate 
agreements between the BLM and the State to allow the BLM to access any 
funds available. Moreover, for such arrangements to work, the State 
bonding requirements must, at a minimum, cover all of the terms and 
conditions of a Federal lease, including the amount of uncollected 
royalties due to ONRR, plus the amount of money owed to the BLM, as the 
lessor, due to previous violations remaining outstanding. In the BLM's 
experience, these characteristics are uncommon. The BLM would be in 
favor of such an alternate bonding option if any State is interested in 
pursuing adequate arrangements, but the BLM cannot make or assume the 
existence of such commitments in this rulemaking.
    A commenter stated that the BLM should modify this section because 
it is inconsistent with other sections and is confusing. For example, 
Sec.  3104.10 states that, before the start of any surface disturbing 
activities, the lessee, operating rights owner, or operator must submit 
a bond, whereas this section states only that the operator must provide 
a bond in its name. The comment then stated that the BLM's primary 
concern should be that at least one person post the required financial 
assurance for a lease, and should leave it to the operator, lessee, and 
operating rights owner to determine among themselves who will provide 
the required bonding for a particular lease. The BLM concurs that its 
primary concern is that at least one person must post the required 
financial assurance for a lease and that the proposed changes to this 
section may cause confusion. Therefore, the BLM revised final Sec.  
3104.20 to be consistent with final Sec.  3104.10, so that an operator, 
a lessee, or an owner of operating rights (sublessee) must be covered 
by a bond in its own name as principal or obligor. In order to be 
consistent with existing Sec.  3171.9(a), the BLM added the following 
sentence to the final rule Sec.  3104.20: ``The operator shall be 
covered by a bond in his/her own name as principal, or a bond in the 
name of the lessee or sublessee, provided that a consent of the surety, 
or the obligor in the case of a personal bond, to include the operator 
under the coverage of the bond is furnished to the BLM office 
maintaining the bond.''
    One commenter expressed concern that the proposed rule did not 
consider related operators or subsidiaries operating under a parent 
company and could cause a parent company to be required to provide 
multiple bonds with significantly greater total bonding. The BLM 
disagrees. Under the existing and final regulations, the BLM allows for 
co-principals to submit a bond or to be added through bond riders. Bond 
riders can accompany the original bond or be filed subsequent to the 
acceptance of the bond. Therefore, the BLM is not making any changes to 
the final rule based on this comment.
    A commenter urged the BLM to require that an individual lease bond 
be increased if it is to cover more than two wells, and, in determining 
the lease bond amount to be posted, that the BLM must take into account 
a number of variables including the well depth, the presence of other 
resources, the number of wells, the number of low-producing or inactive 
wells, the capability of any responsible party to carry out the 
reclamation, the anticipated condition of the well site, the extent of 
reclamation and remediation to be required, and compliance with the 
laws. The BLM declines to make any changes based on this comment, 
which, if accepted, would require the BLM to calculate each bond amount 
based on constantly changing conditions. That practice is unworkable 
given the number of bonds the BLM is required to maintain. The BLM 
already prescribes when a bond will be increased in Sec.  3104.50.
Section 3104.30 Statewide Bonds
    In the proposed rule, the BLM renamed the existing Sec.  3104.3 due 
to the proposed elimination of nationwide bonds and proposed increase 
in the amount of statewide bonds to $500,000. The BLM received numerous 
comments suggesting a larger statewide bond amount if the bond: (a) 
covers more than seven wells; (b) is based on a number of variables; or 
(c) should be a set amount for each additional well. Another commenter 
recommended eliminating both nationwide and statewide bonds. The BLM 
declines to adopt these suggestions, which would require the BLM to 
calculate each bond amount based on constantly changing conditions; 
that practice is unworkable given the number of bonds the BLM is 
required to maintain. The regulations in Sec.  3104.50 already specify 
when an increase might be required and provides the BLM with sufficient 
authority to review and ensure bond amounts are adequate.

[[Page 30938]]

Nationwide Bonds
    The BLM proposed to remove nationwide bonding as an option due to 
the administrative burden they impose on the agency.
    The BLM received comments supporting the removal of nationwide 
bonds. Those comments generally asserted that no nationwide option can 
fulfill the purposes of incentivizing operator reclamation and ensuring 
availability of adequate funds. Comments that opposed the removal of 
nationwide bonding stated there are benefits to continuing the 
nationwide tier for companies. Comments asserted that this change would 
deprive lessees and operators of a financial tool currently available 
to mitigate bonding costs by spreading them over a larger universe of 
leases and that the BLM's analysis that these bonds are 
administratively inefficient is not by itself a reason to remove 
nationwide bonds. Commenters pointed to language in a draft version of 
the IRA bill that included nationwide bonds, which Congress ultimately 
removed before the law was enacted.
    The majority of the commenters who wanted the BLM to maintain 
nationwide bonds did not understand why the BLM considered nationwide 
bonds more difficult to manage and why the BLM proposed eliminating 
nationwide bonds. As stated in the proposed rule, for bond adequacy 
reviews, the BLM state office, which manages the nationwide bond, must 
coordinate with every field and state office with wells covered by this 
type of bond. The BLM administrative state office will usually contact 
between 4 (2 field offices and 2 state offices) and 40 (32 field 
offices and 8 state offices) offices and request these offices to 
conduct a bond adequacy review, which entails pulling the operator's 
well and inspection records. This is needed as the environmental and 
development situations may vary between offices. The administrative 
state office, while familiar with its field offices, would not be 
familiar with field offices in other administrative state offices. This 
will result in staff spending approximately 1 hour per office 
conducting the bond adequacy review and the administrative state office 
spending approximately 10 hours consolidating the reviews. With 
coordination required with between 4 and 40 offices, this would result 
in approximately $700 to $2,500 per bond adequacy review (assuming $50 
hourly cost). Annually, this results in total costs of $33,740 to 
$120,500.
    With this change, the BLM will no longer manage nationwide bonds 
and instead will have additional statewide bonds. The BLM estimates 
that the 243 nationwide bonds would become approximately 143 additional 
statewide bonds (see the Regulatory Impact Analysis for more 
information).\17\ The BLM estimates that each administrative state 
office would be able to review one statewide bond using 10 hours of 
staff time ($500 per bond adequacy review). The administrative state 
office requires less time to compile the review from the field offices 
as there will be fewer field office reviews to compile, so any time 
needed by field offices within the state office would come out of the 
assumed 10 hours of staff time. This would result in an annual cost of 
$14,300, which is a reduction of $19,440 to $106,200 annually. Overall, 
the BLM sees significant administrative benefits with the elimination 
of nationwide bonds.
---------------------------------------------------------------------------

    \17\ The BLM reviewed its bonds and found many bonds tied to no 
existing liability or operations. The BLM expects to terminate the 
period of liability for many of the nationwide bonds without 
liability, which is why the 243 nationwide bonds would become 
approximately 143 statewide bonds.
---------------------------------------------------------------------------

    Additionally, the elimination of nationwide bonding in favor of the 
proposed increase in the amount of the statewide and lease bonds will 
allow the agency to focus on specific areas and fields to ensure the 
bonds are adequate to cover reclamation costs in the event an operator 
fails to complete proper plugging and abandonment. As of March 1, 2024, 
the BLM has identified 35 unplugged orphaned wells that were covered by 
nationwide bonds. The bonds covering these wells were insufficient, so 
the BLM must seek funds under the IIJA to plug these wells. Localized 
bonding to the individual or statewide level will allow the agency to 
ensure improved bonding reviews, reduces the administrative burden, and 
the BLM anticipates additional environmental benefits from this 
regulatory change. As discussed in the RIA, the BLM expects that the 
expedited timing for reclamation of orphaned wells from increased 
bonding could provide benefits related to wildlife, vegetation, soil 
erosion, climate change (reduced greenhouse gas emissions from 
unplugged orphaned wells), visual and aesthetic resources, ground 
water, and allowing the surface land to be utilized for other uses 
sooner (for example, for grazing purposes). The BLM cannot currently 
quantify these benefits using the information available to the BLM.
    Finally, the BLM reviewed the concerns from some commenters that 
eliminating nationwide bonds would deprive lessees and operators of one 
financial tool for mitigating bonding costs. No additional data or 
support was provided beyond a statement that nationwide bonds mitigate 
bonding costs by spreading these costs over a larger number of leases. 
The BLM does not anticipate a large impact to lessees and operators 
from this change, given the other options available, such as 
reinstating CDs and LOCs. The RIA provides additional details on the 
impact of eliminating nationwide bonds.
    Therefore, the BLM does not adopt the recommendation to reinstate 
nationwide bonds and is not making any further changes to this section. 
As stated in the proposed rule, the BLM will be able to better tailor 
statewide bond amounts to the local conditions and State-specific 
requirements when reviewing a bond for adequacy.
Section 3104.4 Unit Operator's Bond
    The BLM proposed eliminating operator bonds because they are seldom 
used and because the bonds are obsolete. The BLM has been treating and 
managing these bonds like statewide bonds and eliminating them would 
create efficiencies in the program. The BLM received several comments 
that supported the elimination of unit operator bonds for the reasons 
the BLM provided. The BLM also received a comment stating the BLM 
should keep unit operator bonds without providing a reason why these 
should be kept. The final rule eliminates unit operator bonds.
Section 3104.40 Surface Owner Protection Bond
    The BLM proposed adding this new surface owner protection bond 
section, which is cross-referenced to 43 CFR 3171.19, to provide for an 
additional type of acceptable bond that can be submitted when the 
operator is unable to reach a surface access agreement with the surface 
owner. The BLM requested comments on whether the BLM should increase 
the minimum bond amount. The BLM received numerous comments on Sec.  
3104.40.
    The BLM received comments opposing the inclusion of this provision 
on the basis that it duplicates State law and should only apply to 
lands where the surface is private, or that the BLM also should address 
the interplay between existing Sec.  3171.19(b)(2) that allows for an 
``agreement'' with the surface owner in lieu of bonding, noting such an 
agreement does not necessarily require payment of ``compensatory 
damages'' as proposed in Sec.  3104.40. Comments also stated the BLM 
should clarify that such bonds are not intended to cover reclamation, 
but rather only compensate a surface owner for inadvertent, limited 
purpose,

[[Page 30939]]

``reasonable and foreseeable damages to crops and tangible 
improvements,'' as stated in the proposed rule.
    Some comments supported the proposed $1,000 minimum bond amount, 
while others stated the minimum bond amount must be raised to at least 
$10,000 per well to support adequate remediation, plus an additional 
$2,000 per acre of disturbed land, and the impacts covered under the 
surface owner protection bond must be expanded beyond ``the reasonable 
and foreseeable damages to crops and tangible improvements.''
    As stated in the proposed rule, the BLM promulgated the current 
requirements for surface owner protection bonds through Onshore Order 1 
in 2007 and subsequently codified these requirements in 43 CFR subpart 
3171. This bond is for the limited purpose of ensuring a private 
surface owner's crops and other tangible improvements are protected. In 
response to comments, the BLM has revised final paragraph (a) to remove 
the phrase ``to pay compensatory damages to the surface owner,'' to 
clarify the purpose of these bonds and added the phrase ``under 43 CFR 
3171.19'' to encompass the situation where an agreement is reached with 
the surface owner. The BLM reviewed the surface owner protection bond 
amount and determined it appropriate for the narrow purposes of the 
bond. This bond covers ``the payment of such damages to the crops or 
tangible improvements (i.e., agricultural, residential and commercial 
improvements, including improvements made by residential subdividers) 
of the entryman or owner.'' See 43 U.S.C. 299(a). The BLM has not made 
any changes to the minimum bond amount. Paragraph I provides a process 
to increase the bond if the surface owner objects to the sufficiency of 
the bond. This mechanism adequately addresses the unique cases where 
the minimum bond amount may need to be increased.
    Finally, the BLM declines to incorporate a provision that requires 
the BLM to defer to State bonding requirements for surface owner 
protection bonds. First, not all States require a surface owner 
protection bond if the surface owner and Federal lessee cannot complete 
a surface use agreement for operations. In addition, a State's surface 
owner protection bond provisions may not provide the same coverage as 
required in the BLM's surface owner protection bond because the State 
bonds are required under the State's law and not under Federal law. See 
Wyoming Stat Ann. section 30-5-402, Colorado Code Regs. section 404-1-
704, or New Mexico Stat. section 70-12-6. Therefore, the BLM declines 
to incorporate a provision that requires the BLM to defer to State 
bonding requirements for surface owner protection bonds.
Section 3104.50 Increased Amount of Bonds
    Although the BLM did not propose any changes to the existing Sec.  
3104.5, it did receive the following comments and recommendations for 
the BLM to: (1) require an increase in the bond amount when the wells 
covered by the bond exceeds the number of wells that the BLM originally 
used to determine the new minimum bond amounts; (2) incorporate the 
BLM's bond adequacy review policy into the regulations; (3) require a 
bond review when an operator temporarily abandons or shuts-in a Federal 
well; (4) change or expand the risk factors described in paragraph (b); 
(5) state that an operator may satisfy a demand for an increased bond 
amount by providing another form of security; (6) state that any person 
aggrieved by a decision to increase bond amounts may seek review of a 
decision through State Director review and appeal to the IBLA; (7) 
remove ``uncollected royalties due,'' alleging that the bond amount 
should not include amounts demanded, payment of which is stayed pending 
appeals under 30 CFR part 1243; (8) explicitly state that operators do 
not need to provide a full liability bond; and (9) require bonds from 
record title and operating rights holders for unpaid royalty payments.
    The MLA requires the Secretary to ensure that bonding is adequate, 
and, after review of the comments, the BLM has determined that no 
changes are needed to this section at this time. The BLM's proposed 
changes and additions in 43 CFR 3104.1 and existing regulations are 
sufficient to ensure compliance with the lease terms. Bonds given to 
the BLM are performance bonds to guarantee performance of the lease 
requirements. The performance bond protects the BLM, and ultimately the 
taxpayers, from financial loss should the operator fail to perform and 
comply with the regulations and laws governing lease operations. This 
financial loss includes unpaid royalty amounts; however, the BLM will 
first use the funds to address all outstanding plugging and reclamation 
costs. The BLM did not make any changes to the appeal language that 
already exists in the regulations and provides for both IBLA appeals in 
43 CFR 3000.40 and State Director review when BLM staff recommend 
increased bond amounts pursuant to 43 CFR 3165.3(b).
    In the proposed rule, the BLM requested comments on whether to 
require a bond adequacy review when a well is temporarily abandoned. 
The BLM received comments in support and opposition to this proposal. 
After reviewing the comments, the BLM has decided not to require a bond 
adequacy review for a change in well status, including temporary 
abandonment of a well. The BLM can review the adequacy of a bond at any 
time, and the new reporting and operational requirements for operators 
of temporarily abandoned wells will allow enhanced oversight of these 
wells. The BLM considers the discretionary authority to review a bond, 
combined with the new reporting and operational requirements, 
sufficient to effectively manage any risks to the environment 
associated with these types of wells without needing to require a bond 
adequacy review.
    The BLM declines to change or expand the risk factors described in 
paragraph (b). The BLM considers the existing risk factors to provide 
an adequate basis for reviewing and identifying the appropriate bond 
amount. In addition, the BLM may consider additional risk factors on a 
case-by-case basis due to the language, which states, ``including, but 
not limited to,'' in the existing regulations and in the final rule.
    Further, the BLM may need to require an entity to provide a full 
liability bond. It is the BLM's responsibility to take proactive 
measures to minimize the liability associated with high-risk operators. 
To mitigate the public's risk with a high-risk operator, the BLM may 
need to require a full liability bond on a case-by-case basis; 
therefore, the BLM declines to explicitly state that operators do not 
need to provide a full liability bond.
    The BLM also declines to require bonds from record title and 
operating rights holders, in addition to operators, for unpaid royalty 
payments. The BLM's bonds required for operations cover both 
environmental liabilities and unpaid royalty payments. At one point, 
the BLM did require bonds from lessees; however, the BLM moved away 
from this practice in the 1980's due to the administrative burden 
related to requiring lessees and operators to maintain a bond. The BLM 
declines to require bonds from record title and operating rights 
holders, in addition to operators, for unpaid royalty payments.
    While the BLM used the median number of wells to determine the new 
minimum bond amounts, an increase to the bond based solely on the 
number of wells is unwarranted. The BLM will capture the need for any 
bond increases

[[Page 30940]]

based on its bond adequacy reviews. It is the BLM's responsibility to 
take proactive measures to minimize the liability associated with high-
risk operators, which may include full liability bonding in certain 
circumstances. The current BLM policy outlined in IM 2024-014, Oil and 
Gas Bonds Adequacy Reviews,\18\ supplements the requirements in this 
section by directing reviews of existing Federal bond amounts and 
requesting increases to the bond amounts based on the potential risk or 
liability posed by the operators. As stated in the proposed rule, 
similar bond adequacy review policy has been in place for the past 
decade, and the BLM has periodically revised that policy to account for 
changing risk factors including, critically, the status of the well(s) 
and the operator's compliance history. The BLM declines to incorporate 
risk factors into the regulation in order to retain flexibility in bond 
reviews and allow it to adapt guidance more quickly to changing needs. 
If the BLM issues a decision requiring an increase in the bond amount, 
the regulations do not prohibit the operator from satisfying this by 
providing another form of security.
---------------------------------------------------------------------------

    \18\ https://www.blm.gov/policy/im-2024-014.
---------------------------------------------------------------------------

Section 3104.70 Default
    To improve clarity, the BLM proposed to divide the existing Sec.  
3104.7 into three separate paragraphs and included language to address 
what happens in the event a party fails to comply with the 
requirements. The BLM received a comment objecting to paragraph (b)(2), 
stating that the paragraph effectuates the equivalent of suspension or 
debarment even if the BLM does not pursue that route--with its 
corresponding procedural protections--under paragraph (b)(3). The BLM 
is not proceeding with proposed paragraph (b)(2), which refers to 
preventing the bonded principal from acquiring additional Federal 
leases, at this time. The BLM prefers to continue to address this 
situation through policy, as an operator can still come back into 
compliance even after the bond is collected once all reclamation has 
been completed and all monies owed the U.S. have been paid.
    Because the BLM is deleting the proposed paragraph (b)(2), proposed 
(b)(3) is now redesignated as (b)(2) in the final rule.
Section 3104.80 Termination of Period of Liability
    The BLM did not propose any changes to existing Sec.  3104.8 but 
did receive comments urging the BLM to revise the section to clarify 
that any new bond supersedes and replaces any prior bonds, and that the 
liability of the prior surety is terminated. The current language 
addresses this comment by stating the period of liability for a 
previous bond will terminate once the BLM receives a new bond meeting 
the regulatory requirements.
Section 3104.90 Unit Operator and Nationwide Bonds Held Prior to June 
22, 2024
    The BLM proposed this new section to address the elimination of 
unit operator and nationwide bonds and to provide the timeline by which 
entities must comply with the new bonding requirements. The BLM 
received a number of comments recommending that the BLM adjust the 
minimum bond amounts for inflation. The BLM has addressed comments 
directed at increasing bond amounts for inflation in Sec.  3104.1.
    A comment asked how the BLM plans to terminate the liability of 
sureties under unit operator and nationwide bonds that are being 
eliminated. After the final rules goes into effect, the BLM will send a 
notice to the principals maintaining the bond explaining the new 
requirement to replace their bond. Once an acceptable replacement bond 
is received, the period of liability will be terminated on the prior 
bond under Sec.  3104.80. A replacement bond is not considered 
acceptable unless it also has an assumption of liability rider which 
assumes any outstanding liability accrued by the prior bond.
    Multiple commenters requested that the BLM exempt existing 
operations and bond amounts as part of the final rule or provide more 
time to meet the increased bond amounts. The BLM declines to exempt 
existing bond amounts. The BLM, GAO, and OIG have concluded that the 
BLM's current bond amounts are inadequate to protect the Federal 
resources. If the BLM were to exempt those bonds covering existing 
operations, the problems identified by the GAO and the OIG would 
persist. The GAO, in report GAO-11-292, Oil and Gas Bonds: BLM Needs a 
Comprehensive Strategy to Better Manage Potential Oil and Gas Well 
Liability,\19\ recommended that the BLM develop a strategy to increase 
the regulatory minimum bonding amounts over time and to more clearly 
define the conditions that warrant a bond increase beyond the minimum 
bond amounts. The BLM implemented these recommendations in policy; 
however, the GAO, in report GAO-19-615, Oil and Gas: Bureau of Land 
Management Should Address Risks from Insufficient Bonds to Reclaim 
Wells,\20\ went on to recommend that the BLM should take steps to 
adjust bond levels, for all bonds, to more closely reflect expected 
reclamation costs. Reading these two reports, it is clear that the BLM 
should not exempt bonds covering existing operations. Similarly, the 
OIG, in Report No. OI-OG-12-0085-I, BLM Oil and Gas Bonding 
Procedures,\21\ recommended that the BLM conduct and support bond 
adequacy reviews and bond increases periodically and do so before 
problems arise. If the BLM exempted the increased bond amounts for 
existing operations, the BLM would not be able to increase the bonds 
before problems arise for the existing operations. Further, increasing 
the bonds for all operators maintains a level playing field.
---------------------------------------------------------------------------

    \19\ https://www.gao.gov/products/gao-11-292.
    \20\ https://www.gao.gov/products/gao-19-615.
    \21\ https://www.doioig.gov/sites/default/files/2021-migration/BLM%2520Oil%2520and%2520Gas%2520Bonding%2520Procedures.pdf.
---------------------------------------------------------------------------

    While the BLM declines to expand the phase-in periods overall, 
swapping them in final Sec.  3104.1 to give individual bonds the longer 
phase-in periods will allow additional time for smaller operators with 
individual bonds to come into compliance. The holders of nationwide 
bonds are larger companies, which have increased staff and can more 
easily comply with the updated phase-in period to convert their 
nationwide bonds to statewide and/or individual bonds. The BLM updated 
the phase-in period in the final rule by requiring lessees and 
operators that currently use nationwide and unit bonds to come into 
compliance within 1 year of the effective date of the final rule. This 
phase-in period provides time for the BLM and its staff to process the 
increased and new bond amounts expected. The BLM has a total of 3,234 
bonds: 975 individual or lease bonds, 1,987 statewide bonds, 19 
collective (unit) bonds, and 253 nationwide bonds. Upon identifying 
that the majority of the bonds are statewide and individual bonds, the 
BLM determined that it made more sense to revise the phase-in period by 
requiring current nationwide bonds to be brought into compliance first 
and the others as follows:
     1 year for nationwide and unit bonds,
     2 years for statewide bonds, and
     3 years for individual bonds.
    Specifically, this phase-in period will provide individual lease 
bond holders--the majority of those affected by the provision of the 
rule, many of which are small businesses--more time to prepare

[[Page 30941]]

for compliance, and, likewise, will allow the BLM to prepare for the 
associated workload.
Section-by-Section Discussion for Changes to 43 CFR Subpart 3105
Communitization Agreements
Section 3105.21 Where Filed
    The BLM proposed to remove the requirement in the existing Sec.  
3105.2-1 to file the agreement in triplicate and to specify the minimum 
contents for such an agreement. The BLM received comments on this 
section stating that the BLM should include a fixed filing fee for CAs. 
As previously stated, the BLM considered proposing new fixed filing 
fees for Federal CAs but ultimately declined to add a fee due to the 
public benefit of allowing Federal and State minerals that might 
otherwise be wasted to be developed.
    A commenter stated that paragraph (c), which recommends that an 
application be submitted at least 90 days prior to first production, 
overlooks that CAs are commonly submitted only after production has 
been obtained, and are usually effective retroactively to the date of 
first production. The BLM's proposed language did consider this fact, 
which is why the proposed section says ``should'' instead of ``must.''
    The final rule does not make further changes in response to these 
comments. The final rule did remove the acronym ``CA'' from the final 
regulatory text and replace it with ``communitization agreement'' for 
clarity and consistency.
Subsurface Storage of Oil and Gas
Section 3105.42 Purpose
    The BLM revised the existing the existing Sec.  3105.4-2 to clarify 
that gas storage agreement applications must include a bond. The BLM 
received a comment stating that such agreements should also be subject 
to a significant rental fee and bond. No additional changes are 
warranted in response to this comment because this section already 
covers the rental and bonding requirements. A fee is also required in 
Sec.  3105.41.
Section-by-Section Discussion for Changes to 43 CFR Subpart 3106
    The BLM proposed to add one section, remove two sections, and 
update the headings of each section to remove the outdated question and 
answer format that appears in the existing regulations. The BLM 
received a comment on this subpart stating the BLM should, as a matter 
of transparency, codify the policies and procedures that the authorized 
officer is required to follow with regard to approving and overseeing 
lease transfers. The BLM did not make any changes to this subpart based 
on this comment. The BLM has a handbook, H-3106-1, Transfers by 
Assignment, Sublease, or Otherwise, that provides the necessary 
guidance to the BLM to adjudicate these transfers. The public may 
obtain copies of this handbook, which is not currently available 
online, from any BLM state office.
Section 3106.10 Transfers, General
    The BLM proposed splitting the existing Sec.  3106.1 paragraph (a) 
to provide clarity, added a new paragraph (b) clarifying that the BLM 
will deny a transfer in certain situations, and added a new paragraph 
(c) limiting the transfer of operating rights. The BLM received a 
comment recommending the BLM address the impact of the severance of 
operating rights from record title interest. The BLM agrees with this 
comment. The BLM receives a multitude of transfers of operating rights 
that are unnecessary because those rights have never been severed from 
the record title. The final rule includes a new paragraph (b) to state 
that a record title assignment conveys both record title and operating 
rights unless operating rights have been previously severed. The 
remaining paragraphs are redesignated accordingly.
    The BLM received comments on the proposed paragraph (b), which is 
final paragraph (c). The BLM added this paragraph to state an 
assignment of a separate zone, deposit, depth, formation, specific 
well, or of part of a legal subdivision, will be denied. One commenter 
supported this language, while another commenter stated that wellbore 
assignments are not ambiguous, because wellbores have API numbers that 
include bottom hole data and that are within approved drilling and 
spacing units specifying the acreage being drained by the wellbore. 
Wellbore rights are private agreements between private parties and need 
not be reported to the BLM. If the intent is to transfer a specific 
legal surface area and/or depth of the operating rights for a lease, a 
legal description of that area and depth is required.
    A commenter stated that the language in the proposed paragraph (c), 
which is final paragraph (d), providing that operating rights interests 
may only be divided with respect to legal subdivisions is ill-advised, 
as it implicitly would preclude transfers of operating rights as to 
parts of legal subdivisions. The BLM disagrees with this comment. The 
paragraph must be read in conjunction with paragraph (a) that 
specifically states, ``Leases may be transferred by assignment or 
sublease as to all or part of the acreage in the lease or as to either 
a divided or undivided interest therein.'' The final rule adopts the 
proposed paragraph unchanged.
Section 3106.20 Qualifications of Assignees and Transferees
    The BLM proposed revisions to the existing Sec.  3106.2 to clarify 
that entities to whom record title or operating rights are being 
transferred must be qualified to hold a lease. The BLM received one 
comment on this section, requesting that the BLM revise the section to 
clarify that the new bonding requirements apply only to operators and 
not all lessees, assignees, and transferees. The BLM is not making any 
changes to the section in the final rule, because the bonding 
requirements may apply to any entity to whom an interest is being 
transferred and not just an operator.
Forms
Section 3106.41 Transfers of Record Title and of Operating Rights 
(Subleases)
    The BLM proposed revising the existing Sec.  3106.4-1 to require 
the use of an approved form to accomplish these transfers and to reduce 
the required number of copies the transferee must file with the BLM 
from three to two. The BLM received a comment on this section stating 
the BLM could not change from triplicate to duplicate filings as laid 
out in the proposed rule, because the required number of originally 
executed transfer forms is fixed at three by statute.
    The BLM proposed this change in accordance with the Government 
Paperwork Elimination Act (GPEA), Public Law 105-227. Section 1707 of 
the GPEA specifically states, ``Electronic records submitted or 
maintained in accordance with procedures developed under this title, or 
electronic signatures or other forms of electronic authentication used 
in accordance with such procedures, must not be denied legal effect, 
validity, or enforceability because such records are in electronic 
form.'' After reviewing the comment and 30 U.S.C. 187a, the BLM 
determined that it should reinstate the triplicate filing until the BLM 
implements an electronic filing method. At that time, the BLM would 
only require one electronic filing per the GPEA. Therefore, the BLM 
reinstated the triplicate-filing requirement in this final section; 
however, the final rule also states the BLM will not require triplicate 
copies of the assignment or transfer when it is electronically 
submitted.

[[Page 30942]]

Section 3106.42 Transfers of Other Interests, Including Royalty 
Interests and Production Payments
    The BLM proposed revising the existing Sec.  3106.4-2 to require 
transfers of overriding royalty interest to be submitted on the BLM's 
approved form. The BLM received a comment asserting that the use of a 
BLM-approved form should not be required, since the transfer is not 
subject to BLM approval.
    Although transfers of overriding royalty interest do not require 
the BLM's approval, an overriding royalty interest is an interest in a 
Federal oil and gas lease. By requiring such transfers to be on an 
approved BLM form, the transferee is certifying that they are qualified 
to hold the interest. The BLM adopts this section in the final rule 
without further changes.
Section 3106.60 Bond Requirements
    The BLM proposed changes to existing Sec.  3106.6 to clarify that 
an entity to whom an interest in the lease is being transferred has the 
requisite level of bonding. The BLM received a comment questioning 
why--if the previous lessee is only transferring a portion of its 
leases--the transferee must maintain the same level of bonding in cases 
where the previous entity had many more leases and other reasons for an 
increased bond amount. A commenter stated, for example, that the 
proposed rule provision would result in a new lessee, record title 
owner, or operating rights owner being required to maintain a full 
statewide bond when the assignor or transferor only transferred a 
portion of its Federal wells.
    The BLM does not intend to require such results. Therefore, the 
final rule removes the phrase ``(including a statewide bond)'' as a 
statewide bond may not be necessary. When a lessee or operating rights 
owner maintains a bond for a lease, the BLM expects the transferee or 
assignee to maintain the same level of bonding for operations on the 
transferred lease(s). If previous lessees or operating rights owners 
held a statewide bond, the BLM will work with the new owner to identify 
the appropriate level of bonding for that lease.
    The BLM received a comment recommending a revision to this 
provision to include the following language: ``to the same extent as 
the assignor's or transferor's bond, or to a greater amount if deemed 
necessary following a bond adequacy review.'' This addition was 
recommended to ensure the adequacy of bonds at the time of lease 
transfer. The commenter also requested that the BLM adopt additional 
requirements expressly requiring bond adequacy review at the time of 
transfer. The comment went on to state that such a rule should require 
the assignor or transferor to furnish the BLM with information on the 
number, type, and depth of all wells existing on the lease to be 
transferred, and should require the BLM to use this information--and 
any other relevant information--to assess whether the existing bond 
amount is adequate to ensure prompt and complete reclamation of all 
existing wells and any new wells that may be drilled by the assignee or 
transferee.
    The BLM received a comment stating the BLM should harmonize this 
section with Sec.  3104.20, which places the bonding obligation for a 
lease on the operator. The BLM primarily requires bonds from the 
operator instead of the lease interest owners (record title or 
operating rights owner). However, the BLM will require a bond from the 
lessees when the operator's bond is insufficient.
    The BLM received a comment stating the BLM should include a 
requirement that the assignee's or transferee's bond be in place prior 
to the approval of the assignment or transfer. The BLM concurs and 
already requires the bond to be in place prior to approving the 
assignment or transfer and therefore sees no need for the change.
    The BLM received a comment recommending that the BLM examine and 
certify the transferee's or assignee's financial viability before 
approving the transfer or assignment. This recommendation is not 
adopted in the final rulemaking as the BLM does not currently have the 
staff or expertise to perform this function.
Approval of Transfer or Assignment
Section 3106.72 Continuing Obligation of an Assignor or Transferor
    The BLM proposed revising the existing Sec.  3106.7-2 by removing 
the question-and-answer format in the title and clarifying the 
responsibilities of the assignee or transferee. The BLM received a 
comment recommending that the BLM change the language in paragraph (b) 
to delete the references to ``operating rights'' and make it clear that 
in the case of the transfer of any interest in a lease, the transferor 
must maintain financial assurances subsequent to the approval of the 
transfer and that all transferors should be required to maintain 
financial assurances for a predetermined suitable period after a 
transfer is approved.
    The BLM is not making any changes to the final rule based on this 
comment, as the proposed regulations already address the concerns 
expressed by the commenter. Under Sec.  3104.80, when the BLM 
terminates the ``period of liability'' on a bond, this action sets an 
exact date after which no new liability may accrue under that bond. In 
addition, the BLM prefers to keep the phrases ``assignment or 
transfer,'' so it is clear this section applies to both.
    The BLM received a comment on paragraph (b) requesting 
clarification on the obligations described. The BLM has revised this 
paragraph in the final rule to clarify the obligations of the assignor 
or transferor once the BLM approves an assignment or transfer. The last 
sentence in paragraph (b) now states ``It also includes responsibility 
for plugging wells drilled and removing facilities installed or used 
before the effective date of the assignment or transfer.'' The BLM has 
added this sentence to provide a more comprehensive list of lease 
obligations; however, this is not a complete list. The assignor or 
transferor will continue to be responsible for other lease obligations, 
not limited to the items enumerated in Sec.  3106.72(b).
Section 3106.73 Lease Account Status
    The BLM proposed changes to the existing Sec.  3106.7-3 to remove 
the passive voice and to clarify that the lease account must be in good 
standing with all royalties paid and lease obligations met. The BLM 
received a comment recommending a change to this provision by providing 
60 days to allow a transferor whose account is delinquent to remedy the 
delinquency before the BLM rejects a transfer.
    This recommendation is not adopted in the final rule. While some 
state offices suffer from a backlog of transfers, the BLM aims to 
adjudicate transfers within 60 days as required by the MLA. Adding the 
suggested language would prolong the time it takes the BLM to 
adjudicate an assignment or transfer. The denial of a transfer for this 
reason does not preclude the assignor or transferor from filing a new 
transfer with the appropriate filing fee after the lease account has 
been brought into good standing.
Section 3106.76 Obligations of Assignee or Transferee
    The BLM proposed changes to the existing Sec.  3106.7-6 to remove 
the question-and-answer format in the title and to update the language 
to be consistent with other changes being proposed. The BLM received a 
comment stating the regulation should also mandate the maintenance of 
financial assurances by the assignor of record and the transferor of 
operating rights for a

[[Page 30943]]

suitable amount of time after the transfer or assignment to ensure the 
continued protection of the Federal resource: (1) during the transition 
to a new lessee or operator; and (2) in the event of a latent issue 
that was not reasonably identified at the time of the transfer or 
assignment and for which the transferee or assignee refuses to accept 
responsibility.
    No changes to the rule are necessary because an assignor or 
transferor remains liable for reclamation of wells during the period of 
liability. The period of liability is fixed under Sec.  3104.80, when 
the BLM terminates the ``period of liability'' on a bond. After this 
date, which is an exact date, no new liability may accrue under the 
bond. Even if the liability is not apparent at the time the liability 
terminates, the assignor or transferor would remain liable.
Other Types of Transfers
Section 3106.81 Heirs and Devisees
    The BLM proposed to split the existing Sec.  3106.8-1 paragraph (a) 
into two separate paragraphs for clarity and included a reference to 
the new filing fee in paragraph (b). The BLM received a comment on the 
proposed Sec.  3106.81 stating the proposed rule should be revised to 
state that the deceased party's rights will be assigned or transferred 
to the appropriate successors, which implies an affirmative act--
whereas such a transfer in fact takes place by operation of law, and so 
the term ``assignment'' is misused in this context.
    The BLM agrees and has revised the final paragraph (a) to update 
the phrase ``their rights will be assigned'' and inserts instead 
``their rights would be assigned.'' The BLM also removed the word 
``assignment'' from paragraph (b) and inserted ``transfer'' instead.
Section 3106.83 Corporate Mergers and Dissolution of Corporations, 
Partnerships, and Trusts
    The BLM proposed to revise and update the title of the existing 
Sec.  3106.8-3 and proposed splitting the existing paragraph into three 
to improve clarity. The BLM received a comment on Sec.  3106.83 stating 
the requirement for a filing fee is noted only as to corporate mergers, 
whereas the fee schedule in the proposed rules under Sec.  3000.120 of 
this title lists a fee that covers corporate merger and corporate 
dissolution.
    The BLM agrees with this comment and in the final rule has updated 
the phrase in paragraph (d) from ``the processing fee for corporate 
merger'' to ``the processing fee for corporate merger or dissolution of 
corporation, partnership, or trust.''
9. Section-by-Section Discussion for Changes to 43 CFR Subpart 3107
Section 3107.10 Extension by Drilling
    The proposed rule revised the existing Sec.  3107.1 for clarity by 
splitting the first paragraph into two and adding a new paragraph to 
address directional or horizontal wells drilled off lease. One 
commenter stated language should be added to confirm that a lease is 
held by production from a directional or horizontal well.
    The BLM has not made any changes based on this comment, because 
this application is already clear. As stated in Sec.  3107.21, a 
``lease will be extended so long as oil or gas is being produced in 
paying quantities.'' This language is clear that production on and 
attributed to any lease will be held by production from a directional 
or horizontal well. In addition, the BLM's Handbook H-3107-1, 
Continuation, Extension, or Renewal of Leases, states that ``for a 
lease to be continued by production, it must contain a well capable of 
producing oil and/or gas in paying quantities.'' The public may obtain 
copies of this handbook, which is not currently available online, from 
any BLM state office. This direction will include all leases that the 
directional or horizontal wells drilled into and producing from a 
Federal lease.
Production
Section 3107.22 Cessation of Production
    The BLM proposed changes to the existing Sec.  3107.2-2 in response 
to IBLA decisions holding that the section conflicted with the MLA. In 
this final rule, the section now states that a lease in its extended 
term expires 60 days after production ceases, and not after the lessee 
receives notice from the BLM. A comment expressed concern that this 
change may cause confusion and unintended consequences, as the operator 
of the well may not be the same as the record title owner and timely 
notice of a cessation of production may not be received to remedy the 
non-production and preserve the lease.
    The BLM understands this concern; however, as explained in the 
preamble to the proposed rule, multiple IBLA cases have held that the 
existing regulation directly conflicts with section 17(i) of the MLA 
(30 U.S.C. 226(i)).
    The BLM received a comment stating the last sentence in this 
paragraph should be amended to clarify this section. The BLM agrees and 
has revised the final rule by inserting the word ``paying'' prior to 
``production''.
Extension of Leases Within Agreements
    The BLM received a comment stating that the undesignated center 
heading that appeared immediately above proposed Sec.  3107.31 is 
misleading and could easily be interpreted to mean the extension of 
agreement terms as opposed to the extension of leases within 
agreements.
    The BLM agrees and the final rule adopts this recommendation and 
changes the heading from ``Extension for Terms of Agreements'' to 
``Extension of Leases Within Agreements.''
Section 3107.31 Leases Committed to an Agreement
    The BLM proposed to update the title of the existing Sec.  3107.3-
1, remove a reference to a provision that is no longer applicable, and 
add a new paragraph to address IBLA decisions pertaining to production 
in paying quantities. A comment stated the rule should clarify that 
unitized leases in an extended term cannot be further extended unless 
it is through production. The comment requested that the BLM clarify 
that the mere commitment of a lease to an agreement would not extend 
the Federal lease. No further changes are warranted to the final rule, 
because paragraph (a) already states ``provided, that there is 
production of oil or gas in paying quantities under the agreement prior 
to the expiration date of such lease.''
    Finally, the BLM deleted the second ``for'' to clarify that both 
conditions must exist for the leases to continue to receive the 
extension. For the leases to receive this extension, (1) the leases 
must be committed to the authorized unit agreement and (2) the well 
must continue to be capable of production in leasing paying quantities 
(able to pay out the operating costs of the well).
Other Extension Types
    A comment stated that the undesignated center heading that appeared 
immediately above proposed Sec.  3107.71 is meaningless and should be 
changed. The final rule adopts this recommendation and changes the 
title from ``Other Types'' to ``Other Extension Types.''
10. Section-by-Section Discussion for Changes to 43 CFR Subpart 3108
Termination by Operation of Law and Reinstatement
Section 3108.21 Automatic Termination
    The BLM proposed changes to the existing Sec.  3108.2-1 to reflect 
policy changes by ONRR and to address IBLA decisions. The changes 
included adding a new paragraph (c) clarifying when the

[[Page 30944]]

automatic lease termination would apply. Some comments supported the 
addition of paragraph (c). Other comments stated the preamble to the 
proposed rule included a misleading example referencing lease 
suspensions that may require additional rentals when they are lifted 
that could result in conflict and confusion if left uncorrected.
    That criticism is misplaced for the reasons discussed in the 
context of Sec.  3103.42 in this preamble. To be clear, such a notice 
will depend on the timing of the lifting of the suspension in relation 
to the lease anniversary date. Consider the following hypothetical 
example: A lease is issued effective 7/1/90 with a five-year primary 
term, so it will expire on 6/30/95. The lessee paid the rental timely 
for the fourth lease year which ended on 6/30/94. The BLM granted a 
suspension of operations and production effective 4/1/94. The 
suspension was lifted effective 9/1/94. The revised expiration date of 
the lease is therefore 11/30/95, because the lease is extended an 
additional five months to account for the five months in which the 
suspension was in place. The rental paid for the 1993-94 lease year 
covers the remaining three-month period of the fourth lease year from 
9/1/94 to 11/30/94. The prorated rental is to be requested from the 
lessee for the seven months from 12/1/94 through 6/30/95 (to bring the 
regular rental due date back to the lease anniversary date). No changes 
were made to the final rule based on this comment.
Section 3108.22 Reinstatement at Existing Rental and Royalty Rates: 
Class I Reinstatements
    The BLM proposed changes to the existing Sec.  3108.2-2 to reflect 
the fact that ONRR accepts rental payments through its online system. 
The BLM received a comment on paragraph (a)(2), asserting the change in 
this subparagraph would narrow the definition of ``reasonable 
diligence'' to include only rental payments made through ONRR's online 
system on or before the lease anniversary date and disregards ONRR's 
continuing practice of accepting non-electronic rental payments in some 
circumstances that would effectively eliminate reasonable diligence as 
grounds for Class I reinstatement. The BLM agrees and has revised the 
final rule by removing the phrase ``through its online rental payment 
system'' from paragraph (a)(2).
    The BLM received a comment on paragraph (a)(3) stating that 
increasing the filing fee for Class I reinstatements from $90 to $1,260 
is disproportionate to the administrative fee for Class II 
reinstatements which would remain at $500. As stated in the preamble to 
the proposed rule, the BLM considered moving the existing fee for Class 
II reinstatements to Sec.  3000.120 for inclusion alongside the other 
fixed filing fees, increasing the fee to reflect the processing costs, 
and then adjusting the fee annually for inflation. However, the MLA, at 
30 U.S.C. 188(e), specifically states for Class II lease reinstatements 
that ``[t]he lessee of a reinstated lease shall reimburse the Secretary 
for the administrative costs of reinstating the lease, but not to 
exceed $500.'' Accordingly, the BLM does not have the authority to 
increase this fee. The BLM also considered reducing the Class I 
reinstatement fee to $500 for parity with the Class II reinstatement 
fee and concluded that doing so would be insufficient to cover the 
BLM's administrative costs.
Section 3108.30 Cancellation
    The BLM proposed revising the existing Sec.  3108.3 to remove 
language in paragraph (a) that repeatedly called for the BLM to provide 
notice to the lessee prior to cancellation. The BLM received a comment 
stating that a provision should be added stating leases are subject to 
cancellation if the lessee is found not to be a ``qualified lessee'' or 
a ``responsible lessee.'' No changes have been made to the final rule 
as the BLM does not have the authority under the MLA to cancel a lease 
for these reasons. 30 U.S.C. 188. Further, the existing requirements at 
Sec.  3102 would be applied prior to the issuance of a lease, and these 
requirements address this concern.
11. Section-by-Section Discussion for Changes to 43 CFR Subpart 3109
Section 3109.15 Compensatory Royalty Agreement or Lease
    The BLM revised the existing Sec.  3109.1-5 to align the terms of a 
lease issued under a ROW to those for a competitive lease. A commenter 
caught a technical error in subparagraph (c)(1) of the provisions of 43 
CFR part 3100, where the BLM referenced a regulatory section number 
that does not exist (Sec.  3101.20). The BLM proposed and is removing 
the regulatory section numbers for headings that have no text 
associated with them, which included Sec.  3101.2 in the previous 
regulations, and changed these sections to undesignated center 
headings. Therefore, the final rule makes a minor technical change to 
correct this error. The statement of ``except Sec.  3101.20'' in 
paragraph (c)(1) has changed to ``except Sec. Sec.  3101.21, 3101.22, 
3101.23, 3101.24, and 3101.25.''
Sections 3109.21-3109.22 [Reserved]
    In the final rule, the BLM removes the existing reserved Sec. Sec.  
3109.2-1 and 3109.2-2 as these sections do not need to be reserved. In 
the previous regulations, the BLM reserved Sec.  3109.2-1 for the 
``Authority to lease'' and Sec.  3109.2-2 for the ``Area subject to 
lease.'' The BLM incorporated the authority to lease in 43 CFR 3100.3 
and provides the area to lease in Sec.  3109.20; therefore, the BLM no 
longer needs to reserve these sections in the final rule.
12. Section-by-Section Discussion for Changes to 43 CFR Part 3110
    The final rule removes the existing 43 CFR part 3110 in its 
entirety. Multiple commenters expressed support for the elimination of 
43 CFR 3110 to comply with Congress' repeal in the IRA of 
noncompetitive leasing for Federal onshore oil and gas minerals.
13. Section-by-Section Discussion for Changes to 43 CFR Part 3120
    The BLM proposed to add two new sections and remove four sections 
from part 3120 to provide clarity and to ensure these provisions are 
consistent with other changes being made. The BLM received several 
comments on part 3120. Some comments specifically requested that the 
BLM not issue new leases in certain areas of the country. Some comments 
recommended additional paragraphs such as including denial criteria 
based on consideration of localized conditions and lands already 
subject to various types of adverse impacts. These comments are 
directed at the land use planning process, which is when the BLM 
evaluates whether lands should be open or not to leasing. Because these 
regulations govern the leasing and development process, these comments 
are outside the scope of this rulemaking.
Section 3120.11 Lands Available for Competitive Bidding
    The BLM proposed changes to the existing Sec.  3120.1-1 to reflect 
Congress' repeal of noncompetitive leasing in the IRA and revised the 
language in the introductory paragraph such that it more closely aligns 
with the Act.
    Some comments argued that the proposed changes give the BLM more 
discretion for leasing than granted by the MLA; however, these 
arguments were made in reference to the timing of holding quarterly 
lease sales and not with respect to the BLM's discretion regarding what 
lands may be offered for lease. The introductory paragraph in

[[Page 30945]]

this section states, ``All lands eligible and available for leasing may 
be offered for competitive auction.'' The BLM changed the ``shall'' to 
``may'' to clarify that the Secretary retains the discretion to decide, 
even after lands have been determined to be eligible and available, 
what lands will ultimately be offered for lease. Timing of any lease 
sales is addressed in final Sec.  3120.12(a) which was modified to 
state, ``Each BLM state office will hold sales at least quarterly if 
eligible lands are available for competitive leasing.''
    One commenter objected to the addition of the term ``eligible'' to 
this section. The BLM has not made any changes based on this comment as 
the proposed language merely reflects the language in the MLA at 30 
U.S.C 226(a) and (b).
    Another comment recommended that the BLM consider issuing a 
protective lease covering open Federal acreage located in an existing 
drilling block to provide a mechanism for a unit operator to develop 
its drilling block, including the unleased Federal minerals. The BLM 
cannot issue a protective lease, as proposed in the comment, under the 
MLA. The BLM may only issue a protective lease through a competitive 
lease sale based upon the law at 30 U.S.C. 226 and due to drainage of 
the Federal minerals (see 43 U.S.C. 1457; see also Attorney General's 
Opinion of April 2, 1941 (Vol. 40 Op. Atty. Gen. 41)). The BLM did not 
make any changes to the final rule based on this comment.
    One commenter recommended removing ``including but not limited to'' 
from the introductory paragraph and inserting a new subparagraph (a) to 
state ``lands that have been identified as preferred leasing areas in a 
current land use plan as well as lands identified as exclusion areas in 
a current land use plan shall not be available for leasing.'' The BLM 
did not make any changes to this section of the final rule. The BLM 
already identifies the lands closed to leasing or open to leasing in 
its land use plans. In addition, the BLM does not identify ``preferred 
leasing areas'' within its land use plans. Since the BLM did identify 
that the lands must be available for leasing at the beginning of the 
statement, the BLM declines to make the changes proposed by the 
comment.
Section 3120.12 Requirements
    The BLM proposed changes to the existing Sec.  3120.1-2 to reflect 
current practices in holding lease sales via the internet, a new 
paragraph (c) to strengthen and revise the bidding process, the 
redesignation of paragraph (c) to (d), and inclusion of the new minimum 
bid amount. One comment recommended that the BLM add language 
clarifying that the BLM's discretion also applies to the timing of 
lease sales, and, specifically, that a sale need not be held if there 
are no eligible or available lands. The BLM has not made any changes to 
the final rule based on this comment, because paragraph (a) already 
states ``Each BLM state office will hold sales at least quarterly if 
eligible lands are available for competitive leasing.''
    The BLM received a comment stating that paragraph (d) should state 
the minimum bid amount instead of referring to the BLM's website and 
changes to the bid amount should be made through the regulatory 
process. The final rule does not adopt this recommendation, as the 
minimum is stated in regulation: the BLM has moved the minimum bid 
amount required to the Fiscal Terms Table at Sec.  3103.1, and all of 
the fiscal terms will be adjusted every 4 years through the regulatory 
process. Please note that the BLM will not adjust the minimum bonus bid 
until the amount set by the IRA becomes a minimum after August 16, 
2032.
Section 3120.30 Nomination Process
    The BLM requested comments on whether the formal nomination process 
should be retained in regulations and, if so, what changes to the 
formal nomination process should be made. The BLM received comments 
supporting the retention of the nomination process to promote leasing 
in areas with greater potential for fluid minerals to be produced. The 
BLM received comments stating the BLM should implement a single 
nominations process that combines elements of formal nominations and 
expressions of interest. These commenters contended that, by exercising 
its authority at the front end regarding what public lands it will 
consider for leasing, the BLM would reduce land speculation, save time 
and resources, and create greater certainty for all parties. The BLM 
received comments supporting the elimination of Sec.  3120.30 stating 
this section is unclear, confusing, would only be used to limit lease 
areas, and that the BLM does not have the level of technical expertise 
required to adequately analyze lands for expected yields of oil and 
gas.
    The final rule removes the formal nomination, existing Sec. Sec.  
3120.3 through 3120.3-7 and proposed Sec. Sec.  3120.30 through 
3120.33, which the BLM has never used and which generally increases the 
time and resources necessary to hold lease sales.
Expression of Interest
    The BLM proposed adding a new section to address the process for 
EOIs, which previously had not been codified in regulation. The 
proposed rule also included the new filing fee requirement for EOIs in 
paragraph (d) as required by Congress in the IRA (see also the Fiscal 
Terms Table in final Sec.  3103.1). The final rule redesignates the 
citation numbers throughout this section consistent with the removal of 
sections that pertained to the nomination process. The BLM received 
several comments on this section. Based on the BLM's review of the 
comments, the final rule splits the proposed Sec.  3120.41 into two new 
sections. The first section describes the requirements for an EOI 
(proposed paragraphs (a) through (e), and (g)) and a new section is 
created for the preference criteria (proposed paragraph (f)).
Section 3120.31 Expression of Interest Process
    The final rule renames the proposed section from ``Process'' to 
``Expression of interest process'' and redesignates Sec.  3120.31 from 
proposed Sec.  3120.41 to final Sec.  3120.31 as doing so will provide 
consistency with the previous regulations. This section contains 
paragraphs (a) through (d) of the proposed Sec.  3120.41. Proposed 
paragraph (g) has been redesignated as paragraph (e).
    One comment objected to the requirement that, for split estate 
lands under paragraph (b)(6), an EOI submitter must submit the private 
surface owner's name and address, even though there is no explicit and 
corresponding statutory requirement, and even though the information is 
often difficult and time consuming for submitters to obtain. The BLM 
has not made any changes to the regulation based on this comment. Under 
section 1835 of the Energy Policy Act of 2005 (43 U.S.C. 15801), 
Congress directed the Secretary of the Interior to review current 
policies and practices with respect to management of Federal subsurface 
oil and gas development activities and their effects on the privately 
owned surface. The Split Estate Report to Congress, submitted in 
December 2006, documents the findings resulting from consultation on 
the split estate issue with affected private surface owners, the oil 
and gas industry, and other interested parties. In the Report, the BLM 
identified in Issue 4 that ``surface owners would like to be contacted 
when the BLM is leasing Federal mineral estate underlying their 
property. Notification is requested when parcels are nominated and 
offered on a

[[Page 30946]]

competitive lease sale.'' As a result of work done to implement 
portions of the Energy Policy Act of 2005 relating to split estate 
lands, the BLM asked individuals submitting EOIs to provide the name of 
the private surface owner. This is outlined in BLM Handbook H-3120-1, 
Competitive Leases.\22\ This information allows the BLM to notify the 
surface owner when the BLM initiates a lease sale that contains a 
parcel with minerals underlying the owner's surface. The BLM will 
require this information under paragraph (b)(6) to ensure the BLM 
provides adequate outreach to the private surface owners overlying 
Federal minerals.
---------------------------------------------------------------------------

    \22\ https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_h3120.pdf.
---------------------------------------------------------------------------

    The BLM received a number of comments on paragraph (d), which 
requires payment of the per acre fee required by Congress in the IRA. 
Some commenters recommended that the BLM should require the fee to be 
payable by the winning bidder instead of the individual that submitted 
the EOI or that the fee should be refunded if: (1) the lands are not 
included in a sale; (2) the individual that submitted the EOI does not 
obtain the parcel at the lease sale; or (3) the individual submitted an 
EOI covering lands already submitted on a prior EOI submittal. The BLM 
cannot make any of these changes as Congress did not provide the 
Secretary with this discretion in the IRA. That Act requires the 
assessment of a nonrefundable fee payable by any person submitting an 
EOI.
    In proposed paragraph (e), the BLM included language allowing the 
BLM to include lands in a sale on its own initiative. The BLM received 
comments objecting to the provision, asserting it would allow the BLM 
to include lands it knows to be unattractive and does not account for 
the BLM's policy on unleased lands within CAs. That policy directs the 
BLM to offer such lands for competitive leasing as soon as possible, 
such that the lands should not be subject to nomination limitations or 
EOI criteria set forth in the proposed rule. After reviewing these 
comments, the BLM is removing proposed paragraph (e) from the final 
rule. That paragraph is unnecessary because Sec.  3120.11(f) already 
gives the BLM the option to include lands selected by the authorized 
officer in a sale. The removal of paragraph (e) from this section 
clarifies that Bureau motions are not considered or counted as EOIs for 
purposes of calculating the percent of EOI acreage offered on oil and 
gas lease sales during the past year for renewable development under 43 
U.S.C. 3006.
    As a final note, the BLM is clarifying that it only self-nominates 
lands to protect the Federal minerals and the public interest. The BLM 
calls self-nominated lands a Bureau motion. The BLM creates a Bureau 
motion to protect the Federal mineral estate from drainage or when 
there are unleased Federal minerals within an approved oil and gas 
agreement. The BLM tracks information on which parcels originate from 
an EOI or a Bureau motion within the BLM's National Fluid Lease Sale 
System. As of December 14, 2023, approximately 92 percent of the lands 
under review came from an EOI. The BLM identified that from the 
nominations received in calendar year 2023, the BLM has a total of 
83,917.23 acres of pending lands under review with only 6,815.36 acres 
created from Bureau motions. The remaining 77,101.87 acres under review 
for future oil and gas leasing are created from EOIs.
    The proposed paragraph (g) has been redesignated to paragraph (e) 
in the final rule and reflects the BLM's long-standing authority to 
determine which lands will ultimately be offered for sale. Therefore, 
the BLM makes no changes to this paragraph.
Section 3120.32 Expression of Interest Leasing Preference
    The BLM revised the final rule by creating new Sec.  3120.32, which 
had appeared in proposed Sec.  3120.41(f). Both the proposed and final 
sections address the preference criteria that the BLM may use when 
determining whether, when, and in what order certain lands specified in 
an EOI should be processed and offered in a lease sale. Creating the 
new section required certain redesignations and reorganizations.
    The BLM received many comments on this proposed section. Most of 
the comments were generally supportive of the preference criteria, 
though some commenters were opposed to the use of the criteria. Some 
comments that expressed support for the preference criteria requested 
additional criteria be considered or requested an expansion of the 
proposed criteria to include greater specificity. As discussed in 
Section III.B.2 and III.B.7 of this preamble, these comments 
recommended revising the criteria to better account for impacts on GHG 
emissions and climate change, environmental justice, the environment 
(often suggesting criteria for specific habitat, natural resource 
areas, land or aquatic conditions, species, or other factors), cultural 
and Tribal resources, specific recreational uses, and protected areas 
such as special conservation areas, parks, and wilderness areas.
    Other comments opposed the consideration of any criteria by: (1) 
stating that adding preference criteria to preliminary leasing 
decisions will lead to delays, create uncertainty, and detract from the 
predictability of the process; (2) expressing concern that the 
application of the preference criteria would exclude lands that would 
be considered exploratory and that such exploratory actions benefit the 
public at large; and (3) stating that the proposed criteria process was 
duplicative of other statutory processes, such as those under the 
Endangered Species Act and FLPMA.
    Many commenters also expressed views on the proposed process for 
considering criteria before offering parcels. Some comments stated the 
application of the criteria is not a transparent process or could be 
subjective. Some commenters expressed concern that the BLM lacks the 
technical expertise and resources needed to apply some of the 
preference criteria and sought clarifying language to ensure consistent 
consideration of the criteria by BLM offices, including identifying the 
sources of information that offices are expected to use. Specifically, 
for example, some comments stated that the proposed rule does not 
explain how the criteria will be used when conflicts between 
development and other uses occur or how the preferences will be 
weighted. Commenters offered varied approaches for how the criteria 
should be applied. For example, some comments stated that lands with a 
low preference should be excluded from leasing, and other commenters 
suggested that an EOI should represent compelling evidence of some 
potential for development. Additionally, some comments stated the 
preference criteria should not be applied to lands administered by 
another Federal agency.
    After careful consideration of the comments received, the BLM is 
clarifying in the regulatory text that the BLM will consider the 
preference criteria as part of the scoping process for leasing. During 
the leasing process, the BLM will apply the criteria after the 
conclusion of the scoping process but before issuing a draft NEPA 
document for a lease sale. As such, the BLM has revised the last 
sentence in the introductory paragraph. The BLM is inserting the phrase 
``In evaluating the lands to be offered, as part of the scoping 
process.''
    Applying the preference criteria after scoping but before 
publication of the NEPA document allows the BLM to consider public 
comment on the environmental analysis for the lease sale

[[Page 30947]]

at the outset of the leasing process and to better manage its workload 
by directing its resources towards tracts that are most likely to be 
developed. Since BLM New Mexico's May 25, 2023, oil and gas lease sale, 
the BLM has been applying the preference criteria in this way through 
the BLM's policy IM 2023-007, Evaluating Competitive Oil and Gas Lease 
Sale Parcels for Future Lease Sales.\23\ This process enables the BLM 
to conduct preference criteria review while the public and industry 
provides scoping comments, which the BLM will incorporate into its 
determination in the NEPA compliance documentation.
---------------------------------------------------------------------------

    \23\ https://www.blm.gov/policy/im-2023-007.
---------------------------------------------------------------------------

    This procedural clarification also addresses many of the comments 
received. First, considering the criteria at the conclusion of the 
scoping process will allow the public to provide input that the BLM 
should consider when applying the criteria to the preliminary list of 
lands for a lease sale. Consistent with Sec.  3120.42, the BLM will 
provide at least 30 calendar days for public comment on the preliminary 
parcel list as part of the scoping process. During this public scoping 
period, commenters can raise site-specific considerations that should 
be considered in selecting parcels. These could include many of the 
concerns commenters raised as potential additional criteria, such as 
the potential for development, environmental justice considerations, 
and other important uses or resources like watershed vitality. Public 
input also will help ensure that the BLM has the necessary data and 
information to evaluate the criteria. In response to public input, the 
BLM will be able to consider new information raised and announce its 
initial conclusions on the preference criteria in the draft NEPA 
document. Second, these steps provide transparency for the public to 
see how the BLM is considering the criteria on a case-by-case basis. 
For example, in some scenarios, it may allow the public to understand 
why low preference parcels are being offered for leasing or to 
recognize when there is a conflict between resources. This increased 
transparency and ability for public input are responsive to the 
comments received, including those that urged the BLM to add additional 
criteria that should be considered for the localized area and those 
that expressed concern that the process lacked clarity or transparency. 
At the same time, the BLM will more efficiently manage the process by 
applying the criteria before publishing the draft NEPA document. If the 
BLM applied the criteria to the parcels after publishing the draft NEPA 
document, the BLM may need to re-work or apply amendments and changes 
to both the draft NEPA documents and the competitive lease sale notice.
    The BLM moved the statement ``at minimum'' to the end of the final 
sentence in Sec.  3120.32. Consistent with the original wording in the 
proposed rule that directed the BLM to consider ``at a minimum'' the 
listed criteria, this language allows the BLM's authorized officer to 
consider other unenumerated criteria specific to local circumstances, 
including those raised in public comments. As such, the BLM declines to 
add, modify, or remove the preference criteria that were proposed. On a 
case-by-case basis, stakeholders and the public will be able to provide 
the BLM with pertinent information on the criteria or additional 
criteria to consider.
    In addition, the BLM will not promulgate a specific weighting for 
the different criteria within Sec.  3120.32 as the weighting will 
depend on the specific location and conditions in relation to local 
circumstances. Instead, the BLM will use the scoping process to inform 
the weighting for the different criteria. This will allow the BLM to 
incorporate public feedback on the parcels to be offered on the sale 
and ensure the BLM appropriately weighs the critical uses or resources. 
This will also allow the BLM to move forward with parcels that could be 
considered exploratory. The operator for the area can inform the BLM 
during the scoping period that it is interested in exploring for oil 
and gas in this area, which would provide for the BLM to weight the 
potential development criteria lower. The BLM disagrees that 
consideration of the preference criteria increases uncertainty or will 
lead to delays; rather, considering the criteria at the beginning of 
the leasing process will allow the BLM to more efficaciously select 
parcels for which to conduct environmental analysis and to offer at the 
lease sale. Ultimately, this will increase certainty and efficiency in 
the leasing process by decreasing the number of parcels offered that 
would not be leased, and relatedly, the number of parcels that are 
leased but never developed. By considering parcels that make the most 
sense to lease in terms of expected yields of oil and gas, the BLM is 
addressing concerns expressed in GAO's report, GAO 21-138, Onshore 
Competitive and Noncompetitive Lease Revenues.\24\ The improved 
management of agency workflow will better use the BLM's time and 
resources and will not result in delay.
---------------------------------------------------------------------------

    \24\ https://www.gao.gov/products/gao-21-138.
---------------------------------------------------------------------------

    Additionally, rather than duplicating provisions under other 
statutes, the preference criteria will provide the BLM with an 
additional tool, consistent with the Secretary's broad discretion to 
lease lands for oil and gas development, to direct leasing and better 
avoid or manage conflicting uses of public lands at the outset of the 
leasing process. Because scoping is part of the NEPA process, 
application of the criteria will not be duplicative of the NEPA 
process.
    The MLA vests the Secretary with broad discretion to decide, up 
until the time of lease issuance, whether particular parcels of Federal 
land ``may be leased'' for oil and gas development, see 30 U.S.C. 
226(a). The MLA does not specify how and when this decision is to be 
made, and courts have consistently recognized the Secretary's 
discretion. E.g., Udall v. Tallman, 380 U.S. 1, 4 (1965) (``The [MLA] 
gave the Secretary of the Interior broad power to issue oil and gas 
leases on public lands'')  United States ex rel. McLennan v. Wilbur, 
283 U.S. 414, 419 (1931) (``there is ground for a plausible, if not 
conclusive, argument that so far as it relates to the leasing of oil 
lands [the MLA] goes no further than to empower the Secretary to 
execute leases which, exercising a reasonable discretion, he may think 
would promote the public welfare''). The preference criteria fit 
squarely within this discretion by aiding the BLM in directing leasing 
towards areas that are more likely to produce oil and gas and that are 
less likely to have conflicts with other uses.
    Additionally, some comments sought clarification regarding the 
BLM's policy in IM 2023-007, Evaluating Competitive Oil and Gas Lease 
Sale Parcels for Future Lease Sales.\25\ The BLM will continue to use 
this policy to guide the BLM's consideration of the preference criteria 
to evaluate parcels for competitive lease sales. The BLM's application 
of the IM as part of scoping has worked well for the 13 sales held in 
calendar year 2023, which resulted in over $158 million of total 
receipts.
---------------------------------------------------------------------------

    \25\ https://www.blm.gov/policy/im-2023-007.
---------------------------------------------------------------------------

    During the BLM's review of the final rule, the BLM identified an 
error in the proposed rule for Sec.  3120.32(c). The language in the 
proposed rule described the evaluation of ``the presence of historic 
properties, sacred sites, and other high value leasing lands, giving 
preference to lands that would not impair the cultural significance of 
such resources.'' In its guidance, however, the BLM described the 
evaluation of ``the presence of historic properties, sacred sites, or 
other high value cultural resources, giving preference to lands

[[Page 30948]]

that do not contribute to the cultural significance of such 
resources.'' To avoid any implication that ``high value leasing lands'' 
were akin to historic properties, rather than an independent 
consideration, ``other high value leasing lands,'' the BLM has changed 
Sec.  3120.32(c) to read ``other high value cultural resources.''
    Finally, the BLM concurs that the other surface management agencies 
will have extensive knowledge on the relevant parcels and the BLM 
should give deference to those agencies. Therefore, the BLM is not 
changing the language in the regulation; however, the BLM's policy 
going forward will be for the BLM to provide its proposed application 
of the preference criteria to the surface management agency when 
requesting consent. The surface management agency can use the 
information provided by the BLM to determine if it will grant consent. 
For a parcel with the surface management agency's consent, the BLM may 
move forward to offer the parcels on a lease sale, irrespective of the 
preference the BLM would otherwise afford the parcels. As noted above, 
the Secretary retains full authority under the Mineral Leasing Act to 
determine which parcels are offered for sale.
Section 3120.33 Agency Inventory of Leasing
    The BLM proposed this new Sec.  3120.33 (redesignated from Sec.  
3120.42 in the proposed rule) to address the IRA's requirement (section 
50265 \26\) that the Department offer leases for a certain amount of 
land for oil and gas development as a prerequisite to permitting any 
new solar or wind energy projects. Some of the comments supported the 
inclusion of this section, stating it is essential that the BLM take 
this leasing inventory to determine compliance with the IRA.
---------------------------------------------------------------------------

    \26\ https://www.congress.gov/bill/117th-congress/house-bill/5376/text.
---------------------------------------------------------------------------

    Some comments noted the new provision provides no calculation 
method and requested that the BLM consider codifying some of the 
calculation process set forth in IM 2023-006, Implementation of section 
50265 in the Inflation Reduction Act for Expressions of Interest for 
Oil and Gas Lease Sales.\27\ Others requested that the BLM should not 
rely upon IM 2023-006 for the calculation method. The BLM has not made 
any changes to this provision in the final rule and will continue to 
rely on the policy as set forth in IM 2023-006 to calculate the 
acreage.
---------------------------------------------------------------------------

    \27\ https://www.blm.gov/policy/im-2023-006.
---------------------------------------------------------------------------

    Some comments suggested the rule be revised to require calculations 
to be performed on a quarterly basis, rather than leaving it unclear in 
the rule when to run such calculations. These comments asserted 
quarterly calculations would allow the BLM to determine the amount of 
public land acreage needed to be offered to allow wind and solar ROW 
permit issuance on an ongoing basis. Further, the comments suggested 
the BLM should only allow parcels receiving a low preference to be 
leased to allow wind or solar ROW issuance if additional acreage was 
needed based on the quarterly calculations. These calculations are only 
required on the day that the BLM would issue a wind or solar energy 
right-of-way; therefore, the BLM has not made any changes to the final 
rule based on this comment. The BLM will look at providing a mechanism 
for both the BLM and the public to generate reports and such 
calculations on demand.
    Multiple comments stated the BLM should clarify in the final 
regulation that ``the 1-year period refers to the year before the wind 
or solar energy right-of-way is issued.'' The final rule adopts this 
recommendation and clarified that the 1-year period refers to the year 
before the BLM issues the wind or solar energy right-of-way in the 
final rule.
    One comment stated the BLM should require that, before offering any 
parcel that receives a low preference designation for lease, the agency 
demonstrate that doing so is necessary to allow issuance of wind or 
solar ROW permits to comply with the IRA's provisions. The BLM declines 
to make any changes to the final rule based on this comment as it would 
needlessly restrict the BLM's discretion to determine which parcels to 
offer.
Notice of Competitive Lease Sale
    The BLM did not receive comments on its proposal to redesignate the 
following two sections based on the other changes made in the proposed 
rule.
Section 3120.42 Posting Timeframes
    The BLM proposed changes to the existing Sec.  3120.4-2 to clarify 
its process for identifying parcels for a sale, the public's comment 
opportunities, and the timing of the BLM's posting of a notice prior to 
a sale.
    Some comments recommended that the rule should: (1) require NEPA 
compliance documents to be made publicly available at the time the 
Notice of Competitive Lease Sale is posted; (2) specify that comment 
periods close at 11:59:59 p.m. (local time) on the last day of the 
comment period; (3) require key documents and information be translated 
into those languages that are the primary languages of communities 
impacted by the particular lease sale; (4) revise the rule to provide 
schedules for making data and information available to the public; and 
(5) require parcels to be in a format that both geographic information 
system (GIS) users and non-GIS users can easily understand. The BLM 
does not adopt these recommendations as these are provisions best 
addressed in a handbook as BLM policy guidance. The BLM will continue 
to allow the BLM state offices to manage the lease sales in a manner 
that works best for each office. The BLM already implements some of 
these recommendations and is committed to posting and making the NEPA 
compliance documents publicly available online. In addition, the BLM is 
continuing to develop the MLRS such that it will be capable of 
providing information spatially. Mapped views of the parcels are also 
displayed from the BLM's internet auction provider.
    One commenter stated the key component of environmental justice is 
meaningful involvement of those most affected by a proposed project, 
agency action, or decision, while other commenters expressed the 
opinion that these changes are unwarranted and only serve to invite 
additional rounds of protests further delaying the leasing process. One 
commenter stated the BLM should issue the final NEPA documents prior to 
the lease sale to allow protests to be lodged before leases are sold. 
The BLM has not made any changes based on these comments. The BLM 
believes its codification of the opportunities for public comment on 
parcels to be included in a lease will allow for the meaningful 
involvement of those potentially most affected. Rather than providing 
for an additional round of protests, the changes to the regulation 
merely codify the BLM's current policy.
    The final rule makes a minor technical change to include ``or 
appeals'' at the end of paragraph (a), which is consistent with the 
text of paragraph (b), and replaces the acronym ``NEPA'' with 
``National Environmental Policy Act'' to assist readability of the 
final rule.
Competitive Auction
    The final rule redesignated the following section numbers 
consistent with the removal of the nomination process from the final 
rule.

[[Page 30949]]

Section 3120.51 Competitive Auction
    The BLM proposed changes to the existing Sec.  3120.5-1 paragraph 
(a) to remove references to formal nominations, and to delete paragraph 
(c) for the same reason. The first sentence in paragraph (a) has been 
rewritten from ``Parcels shall be offered by oral or internet-based 
bidding'' to ``Parcels will be offered by competitive auction'' in the 
final rule. One commenter recommended that the BLM change its online 
auction format to allow parcels to remain open until bidding ceases, as 
under the current system the parcel is awarded to the highest bidder at 
the time the parcel times out.
    The final rule does not adopt this recommendation. In the online 
bidding process, bidders are given ample time to review the parcels 
before a sale period opens for bidding. The bidding time is published, 
which will vary from sale to sale depending on the number of parcels 
offered, however the bid open and close time is clearly stated 
throughout the sale notice and in the auction. In the BLM's experience, 
most of the bidding occurs in the last few minutes of a parcel closing 
regardless of how long the bidding window is open. The BLM has found no 
data to support the assertion that the BLM will receive higher bids if 
the auction is allowed to run longer. Those bidding have a maximum 
amount they are willing to spend for a parcel and the amount of time 
allowed for bidding whether online or in person does not affect this.
Section 3120.52 Payments Required
    The BLM proposed changes to the existing Sec.  3120.5-2 to reflect 
changes enacted by Congress in the IRA and to be consistent with other 
changes made. The BLM received a comment recommending a change to 
paragraph (b) to clarify that the authorized officer can select a date 
other than the day of the sale for the payment.
    The final rule adopts this recommendation and moves the phrase ``on 
the day of the sale for the parcel'' to earlier in the sentence to 
provide clarity. The final paragraph (b) now reads, ``Each winning 
bidder must submit, by the close of official business hours on the day 
of the sale for the parcel, or such other time as may be specified by 
the authorized officer.''
    Some comments expressed the belief that the minimum bid was still 
too low or should be at least $20 per acre. The final rule does not 
adopt this recommendation. As previously explained, the minimum bid was 
changed to reflect the IRA, which requires $10 per acre.
    The final rule makes a technical change to the cross reference for 
the minimum bonus bid in paragraph (b)(1) consistent with other changes 
in this rulemaking.
Section 3120.53 Award of Lease
    The BLM proposed changes to the existing Sec.  3120.5-3 to remove 
references to the noncompetitive lease process. The BLM received a 
comment recommending the BLM revise paragraph (b) to state that a 
``lease will be awarded to the highest responsible and qualified bidder 
unless contrary to the public interest.'' The final rule does not adopt 
this recommendation. The BLM has historically used a public interest 
requirement in its oil and gas agreements, which require a drilling of 
a well into the target formation for a CA or drilling of the obligation 
well for an exploratory unit agreement. Adding a public interest 
requirement to this section may cause confusion related to the use of 
this same phrase with agreements. The Secretary still has the 
discretion to consider the public interest in the ultimate decision of 
which lands to lease.
    A commenter stated that paragraph (d) should be revised to state 
that the lease will not be issued until all appeals are resolved in 
addition to the resolution of all protests. The final rule does not 
adopt this recommendation, because the MLA requires all leases to be 
issued within 60 days following the payment of any remaining bonus bid 
and rentals for the first year.
    Comments opposing the inclusion of paragraph (e) stated that the 
BLM should not reject a lease offer without the bidder's consent if the 
protest is not timely resolved. In this section of the regulations, the 
BLM may reject a bid if the BLM cannot issue the lease within 60 days 
as required under 30 U.S.C. 226(b)(1)(A). However, the BLM concurs that 
it should not reject the bid without the successful bidder confirming 
that it would prefer its bid to be rejected rather than waiting longer 
than 60-days for the lease to be issued. Based on this comment, the BLM 
has revised this section in the final rule by inserting the phrase 
``with the consent of the bidder'' to clarify the BLM's intent.
14. Section-by-Section Discussion for Changes to 43 CFR Subpart 3137
    The final rule does not make any revisions to the section 
designations or the headings that appeared in the proposed 43 CFR 
subpart 3137 regulations. The BLM did not receive any comments on these 
sections and adopts the proposed changes in the final rule.
15. Section-by-Section Discussion for Changes to 43 CFR Subpart 3138
    The final rule does not make any revisions to the section 
designations or the headings from the proposed rule for the 43 CFR 
subpart 3138 regulations. The BLM did not receive any comments on these 
sections and adopts the proposed changes in the final rule.
16. Section-by-Section Discussion for Changes to 43 CFR Subpart 3140
    The final rule does not make any revisions to the section headings 
in the existing 43 CFR subpart 3140 regulations. It does redesignate 
the sections to make them conform to current Office of the Federal 
Register (OFR) Document Drafting Handbook requirements.
Section 3140.13 Exploration Plans
    The BLM identified that paragraph (c) contained a technical error 
and referenced an outdated section number of the regulations. The final 
rule corrects the reference to Sec.  3140.23. The BLM did not receive 
any comments on Sec.  3140.13 and did not make any other changes to the 
final rule.
Section 3140.14 Other Provisions
    The BLM proposed changes to the existing Sec.  3140.1-4 to update 
the rental and royalty provisions. The BLM identified that existing 
paragraph (a) contained a technical error and referenced an outdated 
section of the regulations. The final rule corrects the references to 
43 CFR 3101.21 and 3101.22. One comment suggested that the current rule 
set out the actual required rental amounts to ensure the regulations 
serve as an orderly source for basic information. The BLM revised 
paragraph (b) to provide this reference.
    The BLM received a comment on paragraph (d) referencing the 
unitization provisions in 43 CFR part 3180. The commenter recommended 
that the BLM revise the final rule to provide that a lease, or part of 
a leasehold, having been made part of a unitized area will not be 
sufficient to extend the primary term of the entire leasehold and if 
the lessee fails to take actions to extend those portions of the lease 
outside of the unitized portion of the leased lands, the lease should 
expire as to those excluded lands. The BLM reviewed this comment and 
determined the suggested revision is unnecessary as it is already 
addressed inf 43 CFR 3107.32.
17. Section-by-Section Discussion for Changes to 43 CFR Subpart 3141
    The final rule does not make any revisions to section headings in 
the existing 43 CFR subpart 3141

[[Page 30950]]

regulations. It does redesignate the sections to make them conform to 
current OFR Document Drafting Handbook requirements.
Section 3141.8 Other Applicable Regulations
    The BLM did not receive any comments on the existing Sec.  3141.0-
8. However, when the BLM reviewed the regulations during drafting of 
the final rule, it identified that it needed to update Sec.  
3141.8(a)(1)(ii) to reflect the provisions in Sec.  3140.14(a). Under 
30 U.S.C. 226(b)(2)(A)(iv), ``no lease issued under this paragraph 
shall be included in any chargeability limitation associated with oil 
and gas leases.'' Therefore, the BLM updated this paragraph after 
reviewing the law and the applicable Federal Register notices that 
established these two sections of the regulations. See 48 FR 7420 
(February 18, 1983), 47 FR 25720 (June 14, 1982), 47 FR 8734 (March 1, 
1982), and 47 FR 22474 (May 24, 1982). Paragraph (ii) contained a 
technical error as it incorrectly applied the chargeable acreage and 
acreage limitations to combined hydrocarbon leases. Therefore, the BLM 
revises Sec.  3141.8(a)(1)(ii) in the final rule to provide that all of 
43 CFR 3101 applies to combined hydrocarbon leases, except for the 
chargeability limitation associated with oil and gas leases.
    In addition, the BLM corrected an incorrect cross reference in 
proposed Sec.  3141.8(a)(1)(iv). This final rule changes the cross 
references in this section to Sec. Sec.  3103.21, and 3103.31(a), (b), 
and (c).
    In addition, the BLM updated the cross reference in Sec.  
3141.8(a)(1)(vii) because the final rule adds another paragraph, which 
changed the reference to Sec.  3106.10(j).
    Finally, the BLM updated the cross reference in Sec.  
3141.8(c)(1)(ii) because the proposed rule referenced an incorrect 
citation. The final rule will correct the references to Sec. Sec.  
3103.31 and 3103.32 instead of Sec.  3103.30.
Section 3141.53 Royalties and Rentals
    The BLM proposed changes to the existing Sec.  3141.5-3 mainly to 
address changes required by Congress in the IRA. One commenter objected 
to royalty rate reductions for tar sand leases and recommended that the 
royalty rate not be reduced. The BLM understands the concern but cannot 
make this change as the reduction is allowed by the statute, see 30 
U.S.C. 226(b)(2)(D).
Section 3141.63 Conduct of Sales
    The BLM proposed eliminating paragraph (a) and updating (b) to 
provide a consistent approach for combined hydrocarbon leases and tar 
sand leases. One commenter objected to the noncompetitive leasing of 
additional lands for tar sand development. The BLM can no longer issue 
noncompetitive tar sand leases after the passage of the IRA \28\ and 
does not include a provision in the final rule that provides for 
noncompetitive leasing; therefore, the BLM did not make any changes to 
the final rule based upon this comment.
---------------------------------------------------------------------------

    \28\ Inflation Reduction Act, Section 50262(e), https://www.congress.gov/bill/117th-congress/house-bill/5376/text.
---------------------------------------------------------------------------

18. Section-by-Section Discussion for Changes to 43 CFR Subpart 3142
    The final rule does not make any revisions to the numbering or 
section headings from the proposed rule for the 43 CFR 3142 
regulations. The BLM did not receive any comments on these sections and 
adopts the proposed changes in the final rule.
19. Section-by-Section Discussion for Changes to 43 CFR Subpart 3151
    The final rule does not revise the proposed section designations or 
their headings in the 43 CFR subpart 3151 regulations.
Section 3151.30 Collection and Submission of Data
    The BLM proposed revising the existing Sec.  3151.30 to require a 
permittee to submit to the BLM all data and information collected under 
a geophysical exploration permit. A commenter expressed concern related 
to the potential release of geophysical exploration data to competitors 
through a Freedom of Information Act (FOIA) request. The BLM 
understands the concern that geologic data be kept confidential. 
Geological and geophysical data is exempt from release under FOIA 
pursuant to exemption 9, 5 U.S.C. 552(b)(9). Although exemption 9 under 
FOIA would allow this information to be exempt from release, the BLM 
also updated the final regulations to ensure it is clear that the BLM 
would not release this information to the public by including new 
paragraph (b), which adds the statement that all information submitted 
under this section ``is presumptively confidential business 
information.''
    The commenter also stated that the BLM provided no basis for why 
the BLM needs this information, how it will be used, or with whom it 
will be shared. Such data will support the BLM's review and analysis of 
oil and gas agreement applications and oil and gas leasing decisions. 
The BLM will use this data to inform an area's oil and gas development 
potential. In addition, the geophysical exploration data will allow the 
BLM to make better decisions related to an exploratory unit agreement's 
boundary by ensuring that the unit area encompasses only those lands 
necessary for the proper development of the unitized resources. This 
information is exempt from release to the public under exemption 9 of 
FOIA, and the BLM will respect and maintain the confidentiality of the 
information.
20. Section-by-Section Discussion for Changes to 43 CFR Subpart 3160
    The final rule does not make any revisions to the section 
designations or their headings in the existing 43 CFR subpart 3160 
regulations.
Section 3160.0-5 Definitions
    The BLM proposed revising existing definitions and added some new 
definitions. The final rule does not make any changes from the proposed 
rule for the definitions within the existing Sec.  3160.0-5.
    One commenter requested that the BLM defer to the definitions and 
analysis from State regulatory bodies for what constitutes temporarily 
abandoned and shut-in wells, because the proposed regulations do not 
match State standards and could lead to inconsistency and confusion, 
particularly on Federal wells that are communitized with State or fee 
leases. The BLM understands the concern; however, the BLM declines to 
adopt this change because the BLM's definitions are in keeping with its 
statutory authority. For example, 30 U.S.C. 226(i) states that a lease 
will not expire if it contains a well capable of producing oil or gas 
in paying quantities. The BLM's proposed definition reflects this 
statutory requirement by defining ``temporary abandoned well'' as ``a 
nonoperational well that is not physically or mechanically capable of 
production or injection without additional equipment or without 
servicing the well, but that may have future beneficial use.'' Thus, a 
temporarily abandoned well would not be considered capable of 
production. This differs from, for example, the Wyoming Oil and Gas 
Conservation Commission's definition for ``temporarily abandoned'' that 
would not comport with the statutory framework. That definition is ``a 
well in which the completion interval has been isolated from the 
wellbore above and the surface. The completion interval may be isolated 
by a retainer, bridge

[[Page 30951]]

plug, cement plug, tubing and packer with tubing plug, or any 
combination thereof.'' In addition, each State has different 
definitions for temporarily abandoned wells and shut-in wells. If the 
BLM deferred to State regulatory body definitions, the BLM would have 
internal inconsistencies related to well status definitions, which 
would result in inconsistent regulatory and policy implementation based 
on different definitions for temporarily abandoned wells and shut-in 
wells. Therefore, the BLM declines to adopt this recommendation.
    A commenter requested that the rule provide a definition of 
``temporarily abandoned well'' that includes a reference to a well that 
may have ``future beneficial use'' and provided a recommended 
definition of ``a well that has the potential to produce oil and 
natural gas in the future as deemed by a reasonable operator including 
after recompletion, workover, and other maintenance activities. It also 
includes wells that have potential for geothermal, carbon management, 
scientific applications, technological advances, or other exploration 
and production related activities.'' The BLM declines to provide the 
definition as proposed by the commenter in the final rule and notes 
that reuse or conversion of wells for other purposes is not the subject 
of this rule. Moreover, the commenter's proposed definition varies 
significantly from the BLM's current policy regarding whether a well is 
producing or is abandoned, as found in Attachment 4 of IM 2020-006, 
Idled Well Reviews and Data Entry,\29\ which provides guidance to BLM 
personnel about whether they should take any action with respect to 
wells that are not currently producing in an effort to prevent such 
wells from becoming orphan wells. Attachment 4 states the BLM ``will 
consider a well to have future beneficial use if the operator will be 
able to use the well to generate royalties in lease paying quantities 
or will support the operator's efforts to generate royalties from other 
wells on the lease.'' Therefore, the BLM did not make any changes to 
the definitions based upon this comment.
---------------------------------------------------------------------------

    \29\ https://www.blm.gov/policy/im-2020-006.
---------------------------------------------------------------------------

    Another commenter recommended that the BLM define idled well, 
orphaned well, and inactive wells. The BLM declines to define these 
terms because the BLM does not use these in the regulations. In 
addition, the law defines both idled wells at 42 U.S.C. 15907(a)(2) and 
orphaned wells at 42 U.S.C. 15907(a)(5).
    Finally, a comment recommended updating the definition of maximum 
ultimate economic recovery to include references to the BLM's 
responsibilities under FLPMA. The BLM declines to update this 
definition at this time. The BLM uses this definition in parts 3160 and 
3170 to identify the maximum amount of oil and gas that could be 
produced from the reservoir using existing technology. This definition 
already is used in conjunction with the FLPMA requirements in part 3160 
(see 43 CFR 3162.1(a)). In part 3170, the term is used to determine if 
a variance is appropriate (see 43 CFR 3173.14(b)(4)) and in relation to 
off-lease measurement. Based upon a review of the usage of the maximum 
ultimate economic recovery in the regulations, the BLM determined that 
it was unnecessary to include references to the BLM's responsibilities 
under FLPMA as part of this definition.
21. Section-by-Section Discussion for Changes to 43 CFR Subpart 3162
    The final rule does not make any revisions to the section 
designations or their headings in the existing 43 CFR 3162 regulations.
Section 3162.3-4 Well Abandonment
    The BLM received many comments both in support of and expressing 
concern on the proposed revision of the requirements for operators to 
monitor, track, and report on shut-in and temporarily abandoned wells. 
After reviewing the comments, the BLM has made the following changes:
    (1) Reorganized paragraphs (c) and (d) pertaining to temporarily 
abandoned wells to ensure they are easy to read;
    (2) Matched the plugging requirement between shut-in and 
temporarily abandoned wells in paragraph (d);
    (3) Clarified in paragraph (e) that an onshore operator will only 
need to report a well as shut-in if the well will be shut-in for 90 
consecutive days; and
    (4) Required mechanical integrity tests every 3 years after a well 
is shut-in or temporarily abandoned in paragraph (f).
    For paragraph (b), one commenter objected to the requirement that 
``[a]ll costs over and above the normal plugging and abandonment 
expense will be paid by the party accepting the water well.'' The 
commenter recommended that the BLM revise this paragraph to allow the 
operator of the well, the State, a grazing association, or any other 
non-Federal entity to pay the additional costs if a well is being 
conditioned into a water supply source. The BLM did not propose any 
changes to this paragraph and disagrees with the commenter. If the 
operator does not need the water well and it is not supporting on-lease 
activity, the BLM cannot require the operator to cover any additional 
costs related to setting up the well as a water well. If the operator 
of the well, the State, a grazing association, or any other non-Federal 
entity agrees to pay the additional costs for a well to be conditioned 
into a water supply source, the BLM will work with the funding entity 
and the party accepting the water well. In general, this would be a 
private arrangement between the party accepting the water well and the 
other entity. The BLM did not make any changes to the final rule based 
upon this comment.
    In reviewing the final rule for clarity, the BLM identified that 
the requirements for temporarily abandoned wells were included in a 
single paragraph at paragraph (c) in the proposed rule and were 
difficult to follow. Therefore, the BLM split paragraph (c) into two 
paragraphs (c) and (d) in the final rule and re-structured paragraph 
(d) to match the format for the requirements for shut-in wells in the 
final rule with the format for the requirements for temporarily 
abandoned wells.
    Although a few commenters expressed support for the 4-year 
requirement to plug temporarily abandoned wells, one commenter 
recommended a 2-year requirement, and other commenters expressed 
concerns that the 4 years proposed was too short. The BLM reviewed 
these comments and identified that there are legitimate reasons why a 
well may need to remain temporarily abandoned for longer than 4 years. 
For example, an operator may be looking at converting a field for 
enhanced recovery. Until the operator has constructed the 
infrastructure to support the operations, multiple wells may need to be 
temporarily abandoned since they will not be used until the operator 
starts injections. Based upon this scenario and other considerations 
expressed in the comments, the BLM updated the final rule in paragraph 
(d) (paragraph (c) in the proposed rule) to match the requirements for 
shut-in wells and temporarily abandoned wells for final abandonment. 
The final rule now provides an option to ``provide the authorized 
officer with a detailed plan and timeline for future beneficial use of 
the well. If the authorized officer determines that there is a 
legitimate future beneficial use for the well, the officer may allow 
the operator to delay permanent abandonment by an additional 1 year. 
The authorized officer may grant additional delays in 1-year 
increments, provided that the operator confirms the future beneficial 
use of the well and is making verifiable progress

[[Page 30952]]

on returning the well to a beneficial use.'' This language matches the 
requirements for shut-in wells.
    In revising the regulation to allow a well to be temporarily 
abandoned for longer than 4 years, the BLM determined that it needed to 
ensure that these nonoperational wells maintain their mechanical 
integrity. Therefore, the BLM added paragraph (f) to require mechanical 
integrity tests every 3 years, after the first mechanical integrity 
test is done. This section states, ``All wells that are temporarily 
abandoned or shut-in must have mechanical integrity verified as 
required in (d)(1) and (e)(2) and must ensure that mechanical integrity 
is verified every 3 years thereafter. The operator must submit the 
results of each verification of mechanical integrity to the Authorized 
Officer within 30 days of the mechanical integrity test.''
    One commenter requested that a provision be added to the 
regulations that allows recreational access to the reclaimed locations. 
Once the lands have been reclaimed and the BLM has accepted an 
abandonment notice, the public may use the lands for recreation, 
provided the applicable RMP allows for such use.
    One commenter expressed concerns related to the proposed rule's 
requirement that ``no well may be temporarily abandoned for more than 
30 days without the prior approval of the authorized officer.'' The 
commenter requested that the BLM extend the temporary abandonment 
period for which a notice and prior approval is required from 30 days 
to 90 days. The thirty-day period has been in place since 1988, and the 
BLM is unaware of evidence showing that it or operators have 
experienced hardship from the period. Therefore, the BLM kept the 
current requirement of 30 days for notice and prior approval.
    The BLM requested comments on whether to require a bond adequacy 
review when a well is temporarily abandoned. The BLM received comments 
in support and opposition to this proposal. After reviewing the 
comments, the BLM has decided not to require a bond adequacy review for 
a change in well status, including temporary abandonment of a well. The 
BLM can review the adequacy of a bond at any time, and the new 
reporting and operational requirements for operators of temporarily 
abandoned wells will allow enhanced oversight of these wells. The BLM 
considers the discretionary authority to review a bond, combined with 
the new reporting and operational requirements, sufficient to 
effectively manage any risks to the environment associated with these 
types of wells without needing to require a bond adequacy review.
    Commenters expressed concerns that the extra administrative 
requirements related to temporarily abandoned and shut-in wells will 
become overly burdensome for the BLM to administer and will result in 
contradictory guidance and confusion for operators balancing between 
State and Federal regulations. One commenter also mentioned the number 
of orphaned wells that have been identified on Federal lands. Another 
commenter suggested the BLM should not require operators to report a 
well status change to the BLM because ONRR requires operators to report 
on ONRR Form-4054 (``OGOR'') the well status (Well Status codes 12 
(OSI) and 13 (GSI)) beginning with the last month of drilling and 
continuing until the operator abandons the well. Another commenter 
stated that the BLM should accept all sundry notices for temporarily 
abandoned or shut-in wells as prima facia rationale and timing 
parameters for these nonoperational wells. After reviewing the 
comments, the BLM identified that paragraph (d)(1) in the proposed rule 
required operators to report whenever a well is shut-in. The BLM did 
not intend for an operator to report each time a well is shut-in. 
Instead, the BLM need only be notified if the well would be shut-in for 
90 consecutive days. Therefore, the BLM revised this section to state, 
``Notify the authorized officer of the well's shut-in status, if the 
well will be shut-in for 90 or more consecutive days, and provide the 
date the well was shut-in within 90 days of well shut-in.'' As for the 
administrative burden concerns, the BLM has reduced the operator's 
administrative burden with this change since the operator would not 
need to submit a notice for each shut-in well. Instead, the operator 
will only submit a notice for each well shut-in for 90 or more 
consecutive days. The final rule will also reduce the BLM's burden as 
the BLM can use the notifications to update well status instead of 
requiring the BLM to inspect wells or review ONRR or State agency data 
on well status. The BLM will review notification of shut-in or 
temporarily abandoned status to determine if the rationale for 
shutting-in or temporarily abandoning the well are supported by the 
information provided in the notice. The BLM will accept the sundry 
notice and update the well status in its system; however, the BLM will 
not provide a guarantee that it will consider each sundry notice as 
prima facia rationale for the status change. The BLM has a 
responsibility to the American public to ensure that unplugged non-
operational wells are still necessary to support lease operations. If 
the unplugged non-operational well will not support future lease 
production, then the BLM will request that the operator plug and 
abandon the well.
    Finally, the BLM reorganized this section in the final rule. The 
BLM removed the requirements for temporarily abandoned wells from 
paragraph (d) and left the reclamation requirements for all wells 
permanently abandoned within paragraph (c). The BLM reorganized 
paragraph (d) for temporarily abandoned wells to add subparagraphs and 
ensure the language in the final rule was clear. The BLM redesignated 
the section for shut-in wells to paragraph (e). The BLM also added 
paragraph (f) to cover the requirements for mechanical integrity tests. 
The BLM makes these changes in the final rule to more clearly inform 
the regulated community of the requirements.
22. Section-by-Section Discussion for Changes to 43 CFR Subpart 3164
    The final rule does not make any revisions to the section 
designations or their headings in the existing 43 CFR subpart 3164 
regulations.
Section 3164.1 Onshore Oil and Gas Orders
    The BLM changed the existing paragraph (b) to clarify that there 
are no Onshore Oil and Gas Orders currently in effect. Since the BLM 
codified the Onshore Oil and Gas Orders in 43 CFR part 3170,\30\ the 
BLM wants to ensure the regulated community is aware that they must 
follow 43 CFR subpart 3171. Therefore, the BLM removes the references 
to the Onshore Orders in this section. All of the Onshore Oil and Gas 
Orders are now codified in 43 CFR subparts 3171, 3172, 3176, and 3177. 
See 88 FR 39514 (June 16, 2023).
---------------------------------------------------------------------------

    \30\ Onshore Oil and Gas Operations; Federal and Indian Oil and 
Gas Leases; Codification of Onshore Orders 1, 2, 6, and 7 (88 FR 
39514, June 16, 2023). https://www.federalregister.gov/documents/2023/06/16/2023-11742/onshore-oil-and-gas-operations-federal-and-indian-oil-and-gas-leases-codification-of-onshore-orders.
---------------------------------------------------------------------------

23. Section-by-Section Discussion for Changes to 43 CFR Subpart 3165
    The proposed rule revised the heading for 43 CFR 3165.1 from 
``Relief from operating and producing requirements'' to ``Relief from 
operating and/or producing requirements.'' The BLM did not receive any 
comments on this change and did not make any other changes in the final 
rule.

[[Page 30953]]

Section 3165.1 Relief From Operating and/or Producing Requirements
    The BLM revised the existing Sec.  3165.1 to encourage diligent 
development of leased lands and to ensure that any lease suspensions 
are justified and have a clearly stated end date. The BLM received many 
comments on the proposed rule related to changes to oil and gas lease 
suspensions. The final rule revises paragraph (c) to add the word 
``only'' before ``cites'' and replace the acronym ``APD'' with 
``application for permit to drill.''
    A commenter expressed concerns regarding the proposed changes in 
light of the BLM's own delays in processing APDs and lease suspensions 
and with agency policy against ``premature suspensions.'' The commenter 
asked the BLM to clarify its intent so that lessees can clearly 
understand the appropriate time by which they should submit any 
requests for suspensions. The BLM agrees and drafted paragraph (c) to 
specify the timeframe for a submission of an APD such that a lessee 
could seek a suspension based upon a pending APD. The BLM does not 
believe any other changes are necessary.
    For paragraphs (a) and (b), one commenter recommended that the 
final rule should require the ``full statement'' to include a showing 
of leaseholder diligence, 2and absent a showing of diligence, the BLM 
would be required to deny the request for relief. The BLM's existing 
policy in Manual Section 3160-10, Suspension of Operations and/or 
Production,\31\ already suggests the BLM ensures that a lessee is 
diligently developing its lease prior to granting a suspension. The 
manual states, ``Suspension of operations may be directed or consented 
to by the authorized officer in cases where a lessee is prevented from 
operating on the lease, despite the exercise of care and diligence, by 
reason of force majeure, that is, by matters beyond the reasonable 
control of the lessee.'' (Emphasis added). The manual has similar 
guidance for suspensions of production. In addition, the BLM also not 
infrequently grants suspensions when litigation precludes development 
on an undeveloped lease. In these cases, the lessee could not provide a 
showing of leaseholder diligence when requesting a lease suspension 
because the BLM recently issued the lease. Therefore, the BLM did not 
make any changes in the final rule further specifying requirements for 
the full statement.
---------------------------------------------------------------------------

    \31\ https://www.blm.gov/sites/default/files/docs/2022-03/MS-3160-10%20Rel.%203-150.pdf.
---------------------------------------------------------------------------

    One commenter stated that the BLM should not add paragraph (c) into 
the final regulations, but instead leave the substance of the paragraph 
in guidance. Additionally, multiple commenters claimed that the 
authorized officer should have flexibility to approve a lease 
suspension in spite of the timing of the APD, if the officer believes 
it would be appropriate given the circumstances. The commenter then 
stated that the BLM should not push the operator towards diligent 
development, as the submission of an APD is a business decision based 
on markets, investment capital, supply chains, labor and equipment 
availability, and other factors and that the failure to act 
``diligently'' to develop a lease has no adverse impacts on the 
environment. This is outlined in existing policy at Instruction 
Memorandum 2023-012, Suspensions of Operations and/or Production,\32\ 
and the BLM agrees that the submission of an APD is a business decision 
for the lessee. The BLM has opted to incorporate this requirement in 
regulation, however, to ensure that BLM offices apply this requirement 
in the same way to promote fairness to all operators. The proposed 
changes provide definitive notice to operators and the BLM's authorized 
officers on processing these types of lease suspension, and therefore, 
the BLM did not make any changes based upon this comment.
---------------------------------------------------------------------------

    \32\ https://www.blm.gov/policy/im-2023-012.
---------------------------------------------------------------------------

    Other commenters stated that the 90-day threshold proposed by the 
BLM is arbitrary, because there is no recorded evidence that the BLM 
can approve an APD in 90 days. The BLM proposed the 90 days based upon 
the BLM's average processing time for an APD across all BLM offices. 
The BLM provided this information in the preamble. In fiscal year 2022, 
the BLM's average processing time did increase to 162 days; however, 
the BLM decided to keep with the 90-day limit as it represents an 
average over a period of 3 years.
    The commenters also recommended that instead of a set timeframe, 
the BLM should deny suspension requests based on a proposed action 
necessitating NEPA analysis, which cannot reasonably be completed prior 
to the lease expiration date; based on events the lessee could have and 
should have foreseen or avoided; and based on unknown, speculative, and 
or future events. Finally, the commenters recommended that the BLM 
should deny suspensions based upon adjacent unleased lands as the 
commenter considered these types of suspensions ripe for abuse and 
mismanagement. The BLM declines to make any changes to the rule based 
on these recommendations given the existing discretion of the 
authorized officer. For example, if the operator nominates adjacent 
unleased lands that are needed for development and are scheduled to be 
offered on an upcoming lease sale within the few months, the BLM does 
not see this as an unreasonable request.
    Comments demonstrated confusion with the application of paragraph 
(c), seemingly believing that the APD submission requirement applies to 
all suspensions. This provision only applies when the applicant cites 
the pending APD as the sole basis for the suspension. If a lease needs 
to be suspended in the interest of conservation or for force majeure 
due to reasons other than a pending APD, then the BLM will not require 
an APD to be filed at least 90 calendar days prior to the expiration 
date of the lease. To remove the confusion, the BLM modifies the final 
rule by inserting the word ``only'' prior to the word ``cites.'' In 
addition, to increase readability, the BLM replaced the acronym ``APD'' 
with the words ``application for permit to drill'' as the BLM has not 
defined the acronym ``APD'' in part 3160.
    In addition, one commenter stated that approving suspensions for 
only 1 year is arbitrary. The 1-year time frame ensures that 
suspensions are not granted for a longer period than necessary, and it 
provides a clear and easily trackable timeframe for both the BLM and 
lessees, which allows both parties to ensure compliance with applicable 
lease terms, such as the resumption of paying rentals or royalties. The 
BLM implemented an annual review of lease suspensions in Permanent 
Instruction Memorandum 2019-007, Monitoring and Review of Lease 
Suspensions,\33\ after receiving GAO's recommendations in report GAO-
18-411, Oil and Gas Lease Management: BLM Could Improve Oversight of 
Lease Suspensions with Better Data and Monitoring Procedures.\34\ The 
BLM determined the 1-year timeframe was appropriate in this rulemaking 
because it conforms with BLM's existing policy. If, after a year, there 
is still a valid need for a suspension, a lessee may request a further 
extension.
---------------------------------------------------------------------------

    \33\ https://www.blm.gov/policy/pim-2019-007.
    \34\ https://www.gao.gov/products/gao-18-411.
---------------------------------------------------------------------------

    Other commenters supported approving suspensions for 1 year; 
however, they also recommended that the BLM modify the final 
regulations to allow for only one extension to an oil and gas lease 
suspension. One commenter stated that the BLM should

[[Page 30954]]

only grant additional suspensions in those situations where the lessee 
or operator is prevented from operating or producing due to force 
majeure. The BLM declines to accept this suggestion to limit 
suspensions to those based on force majeure because the MLA allows for 
suspensions of operations and production in the interest of 
conservation. The BLM will evaluate requests for suspension extensions 
to ensure the bases for the suspension remain valid, the operator has 
met any diligence requirements or other conditions of approval in the 
original approval, and the suspension is authorized by the MLA.
    The BLM received several comments on paragraph (e) urging the BLM 
to modify this provision to only allow a directed suspension to last 1 
year. The commenters claimed that long-term suspensions do not further 
the public interest or properly conserve natural resources and instead 
encumber public lands by making them unavailable for other uses and for 
other potential leaseholders, as well as fail to provide taxpayers with 
a fair return for the lease of public lands. The BLM declines to make 
this change. Given the reasons for which the BLM is authorized to issue 
a directed suspension, such as a court order, the suspension must 
remain in effect until the court allows operations.
24. Section-by-Section Discussion for Changes to 43 CFR Subpart 3171
    The final rule does not make any revisions to the section 
designations or their headings in the existing 43 CFR subpart 3171 
regulations.
Section 3171.14 Valid Period of Approved APD
    The BLM received many comments on the proposed rule related to 
changing the term of an approved APD from the current 2 years with an 
optional 2-year extension to a 3-year term without extensions. The BLM 
received comments both in support and with concerns related to the 
proposed changes. After reviewing the comments, the BLM has made the 
following changes: (1) omitted the word ``ordinarily'' from paragraph 
(a); (2) clarified that the APD term in the regulations only applies to 
APDs approved after the effective date of the final rule; (3) clarified 
that the well must be drilled to total measured depth in paragraph (b); 
(4) clarified that paragraph (b)(1) includes wells drilled to 
approximate total measured depth and not yet completed; (5) stated that 
paragraph (b)(3) will only apply if the operator set the surface casing 
for the well and submits a plan to finish drilling and complete the 
well; (6) provided that the plan in paragraph (b)(3) must include the 
timeframe for continuously drilling and completing the well and any 
extenuating circumstances that may delay the continuous drilling and 
completion of the well; (7) specified that earthwork for reclamation 
must be completed within 6 months of the approved APD's expiration; and 
(8) added paragraph (e) to provide for the extension of an APD's term 
when the underlying lease is suspended.
    Many commenters supported the BLM's proposal to extend the initial 
term of an approved APD from 2 to 3 years; however, multiple commenters 
recommended that the BLM establish a 4-year term for approved APDs. 
Commenters stated that a 4-year term for an approved APD would enable 
the BLM to process APDs efficiently and would provide consistency for 
industry. The BLM rejected this change, since approximately 95 percent 
of the approved APDs drilled under the existing regulations have been 
drilled within 3 years from the date of approval. By providing a set 
term without the option to extend, the BLM is providing more certainty 
for the industry to allow it to properly plan any operations. The 
remaining five percent may submit a new APD. Given the small percentage 
of operators who do not normally drill a well within 3 years of 
approval of an APD, the BLM believes the administrative burden on an 
operator of filing a new APD is justified in light of the BLM's 
interest in ensuring the public lands subject to an oil and gas lease 
are diligently developed.
    One commenter encouraged the BLM to modify the rule and keep the 
current 2-year period for an approved APD with allowable extensions, 
stating the rule would have negative effects by increasing the BLM's 
administrative burden and requiring additional environmental review. 
The BLM disagrees. Currently, the BLM spends approximately 3,800 hours 
annually on processing APD extension requests. In some cases, the NEPA 
analysis is stale, and the BLM must complete a new analysis on the APD 
to verify that the impacts identified have not changed. This rule will 
reduce the administrative burden on both the BLM and the operator as 
extension requests would no longer be needed. The burden on the BLM 
would be further reduced by obviating the need for any potential 
additional NEPA analysis to support an extension. In addition, the 3 
years in which to use an APD will provide sufficient time for 95 
percent of the operators. Therefore, the BLM did not make any changes 
based upon this comment.
    A commenter stated that changing the term of an approved APD from 2 
years to 3 years without the possibility of an extension would kill 
many oil and gas projects before they ever get off the ground. The 
commenter supported this statement citing the length of time required 
to comply with NEPA. Without recourse to an extension, an operator is 
left without any means to maintain a lease. Often an operator is 
prevented from drilling due to circumstances completely out of their 
control. The comment encouraged the BLM to examine the negative effects 
the rule will have in this regard. The BLM believes the comment is 
confusing oil and gas lease suspensions and approved APD extensions. 
The BLM will still grant lease suspensions, which will allow an 
operator to maintain its lease if the suspension requirements are met, 
and which toll the running of the term of any previously issued permit 
to drill. This provision only addresses extensions for APDs. Moreover, 
even if a well is not drilled within the 3-year time period, as noted 
above, an operator can submit a new APD.
    Another commenter recommended that the BLM omit the word 
``ordinarily'' from paragraph (a) to avoid confusion. The comment 
stated that since ``ordinarily'' implies there is an exception, it is 
unnecessary with the ``notwithstanding'' clause, which is already 
addressed in paragraph (b). The BLM concurred with this recommendation 
and deleted the word ``ordinarily'' from paragraph (a).
    In addition, one commenter requested that any change in terms to 
approved APDs only apply to the APDs approved and issued subsequent to 
the publication of a final rule. The BLM concurs with this 
recommendation. The BLM modified the final rule to clarify that the 3-
year term only applies to APDs approved after the effective date of the 
rule. Consistent with general principles of retroactivity, any APD 
approved prior to the effective date of this rule will be eligible for 
a 2-year extension in accordance with the regulations in place when the 
BLM approved the APD.
    For paragraph (b), a commenter requested that the rule specify 
either total vertical depth or total measured depth in the final rule. 
The BLM specifies total measured depth in the final rule as measured 
depths matches the requirements in an approved APD. A horizontal well 
drilled to total vertical depth would likely not be productive in 
paying quantities and would not meet the plans in the approved APD.

[[Page 30955]]

    For paragraph (b)(1), a commenter requested that the BLM specify in 
the regulations that drilling, but not completing, would provide for 
the APD approval to remain valid. The BLM intended as much and has 
clarified the final rule by adding the statement ``including wells 
drilled to approximate total measured depth and not yet completed'' to 
paragraph (b)(1).
    For paragraphs (b)(1) and (b)(2), a commenter recommended that the 
BLM set a time limit of one-year for any extensions beyond the initial 
term of the APD based on the criteria outlined in the proposed 
regulation. The BLM declines to provide for a further extension of an 
APD under either (b)(1) or (b)(2). In both of these scenarios, a well 
has already been drilled to the approximate total measured depth as 
authorized by the APD. Instead, the BLM will administer the wells as 
shut-in or temporarily abandoned if the well is not yet producing at 
the expiration of the APD. This allows the BLM to track and manage 
these wells under 43 CFR 3162.3-4. Therefore, there is no need to set a 
limit of one-year for paragraphs (b)(1) and (b)(2) in this section.
    The BLM received multiple comments on paragraph (b)(3). Some 
commenters considered the requirement for the plan to be vague and that 
the regulatory language leaves the authorized officer with no guidance 
for approving such a plan. A separate comment recommended that the BLM 
accept reasonable plans to complete drilling any well to total depth if 
the operator has set surface casing prior to the APD expiring. The BLM 
reviewed the many comments on the plan required by this section and 
recognized that more information on the plan should be added to the 
regulations. Based on these comments, the BLM has revised paragraph 
(b)(3) to specify that the ``plan must include the timeframe for 
continuously drilling and completing the well and any extenuating 
circumstances that may delay the continuous drilling and completion of 
the well.''
    In addition, multiple commenters encouraged the BLM to delete 
paragraph (b)(3). They asserted that paragraph (b)(3) would allow APD 
extensions based only on submission of a drilling plan to the BLM, with 
no requirement that on-the-ground activity have taken place, 
undermining the goal of diligent development. They further contended it 
may risk further waste of public lands and resources. The BLM concurs 
that the operator should be pursing diligent development with a showing 
of on-the-ground activity. The BLM modified paragraph (b)(3) to require 
that on-the-ground activity has taken place to ensure the operator has 
started development under the APD. For the final rule, the BLM updated 
paragraph (b)(3) to require the operator to have set the surface casing 
for the well and to have submitted a plan. This will ensure the 
operator is working towards developing its lease with a real effort to 
begin development. In addition, as noted above, one comment recommended 
the BLM accept reasonable plans to complete drilling any well to total 
depth if the operator has set surface casing prior to the APD expiring. 
Therefore, the BLM considered requiring surface casing for the BLM to 
consider a plan as a reasonable approach for paragraph (b)(3).
    For paragraph (c), a commenter expressed concern that an operator 
may not be able to submit an APD to finish drilling the well during the 
time allowed under the proposed regulations, and the regulations would 
then require the operator to immediately comply with all applicable 
plugging, abandonment, and reclamation requirements. This was not the 
intent in the proposed rule; therefore, the BLM updated the final rule 
to provide two options for an expired APD. The ``operator or lessee 
must either comply with all applicable plugging, abandonment, and 
reclamation requirements or submit a new APD covering the existing 
disturbance.''
    The BLM received a comment on paragraph (d) suggesting that the BLM 
should specify the timeframe by which reclamation must start once an 
APD expires. The BLM's existing regulations require earthwork for 
reclamation to begin within 6-months of well completion or well 
plugging under 43 CFR 3171.25(b)(2). To be consistent with 43 CFR 
3171.25(b)(2), the final rule updates paragraph (d) to state, 
``Earthwork for reclamation must be completed within 6 months of APD 
expiration (weather permitting).''
    Multiple commenters expressed concern that the BLM proposes to no 
longer grant extensions to an APD's term. Some commenters expressed a 
concern that the lack of an APD extension would disadvantage project 
proponents in situations where drilling was delayed for a variety of 
on-the-ground reasons and there is not a way to seek an APD extension. 
Another commenter mentioned the need for extensions when there is 
litigation challenging the NEPA compliance for the lease or APD because 
the BLM cannot take any action on an APD when there is ongoing 
litigation. Upon review of the comments, the BLM recognizes that there 
is a valid concern related to litigation challenging the issuance of 
leases; therefore, the BLM added paragraph (e), which will allow the 
BLM to adjust an APD's term when the lease is suspended. The new 
paragraph (e) states, ``The valid period for an approved APD on a lease 
suspended under subpart 3103 will be adjusted to account for the 
suspension. Beginning on the date the suspension is lifted, the valid 
period of the approved APD will be extended by the time that was 
remaining on the term of the approved APD on the effective date of the 
suspension.'' This addition will allow the BLM to extend the term of an 
approved APD based upon an oil and gas lease suspension of operations 
and/or production. The BLM will not grant general extensions as the 3-
year APD term will provide sufficient time for the Federal operator to 
drill a well under an approved APD.
25. Section-by-Section Discussion for Changes to 43 CFR Subpart 3181
    The BLM identified that 43 CFR 3181.5 should be updated to 
recognize the changes to royalty made by the IRA. The BLM has revised 
the existing Sec.  3181.5 in the final rule to reflect the increased 
royalty rate.
    Finally, the rule will not make any revisions to the section 
designations or their headings in the existing 43 CFR subpart 3181 
regulations.
Section 3181.5 Compensatory Royalty Payment for Unleased Federal Land
    During the public comment period, the BLM discovered that Sec.  
3181.5 of the current regulations still references a royalty rate of 
12.5 percent. As discussed earlier, in the IRA, Congress changed the 
royalty rate for onshore Federal oil and gas leases to 16.67 percent, a 
rate that will last until August 2032, at which time, the royalty rate 
becomes not less than 16.67 percent and subject to further increases. 
Therefore, the BLM is replacing the 12.5 percent royalty in Sec.  
3181.5 with the language ``the current royalty percentage for leases 
offered on onshore oil and gas lease sales.'' This will allow BLM 
offices to enter the appropriate royalty rate based upon the latest 
onshore oil and gas lease sales for the area.
26. Section-by-Section Discussion for Changes to 43 CFR Subpart 3186
    During the comment period, BLM employees identified that a section 
in the model onshore unit agreement for unproven areas should be 
updated to recognize the changes Congress made to royalty rates in the 
IRA.

[[Page 30956]]

Section 3186.1 Model Onshore Unit Agreement for Unproven Areas
    Section 17(b) of the model onshore unit agreement for unproven 
areas still references the old royalty rate of 12.5 percent. Because 
Congress changed the royalty rate in the IRA for onshore Federal oil 
and gas leases to 16.67 percent, the BLM is replacing the 12.5 percent 
royalty in Section 17(b) of the model onshore unit agreement for 
unproven areas with the language ``(current royalty for leases offered 
on onshore oil and gas lease sales).'' This will allow BLM offices to 
enter the appropriate royalty rate based upon the latest onshore oil 
and gas leases.
    The BLM is republishing the revised model onshore unit agreement 
for unproven areas in the final rule in its entirety because the OFR is 
unable to make a piecemeal edit to the document. The document is not 
regulatory and, in conformance with current OFR Document Drafting 
Handbook requirements, cannot be given section numbers. Instead, the 
model onshore unit agreement for unproven areas must be redesignated in 
the final rule as Appendix A to Part 3180. The BLM uses this model form 
to identify where new unit agreements do not match the model form and 
ensures any differences from the model form are in the public interest.
    Likewise, at the direction of the OFR, the BLM is redesignating 
four other models and exhibits that comprise the remainder of existing 
subpart 3186. These items will appear in the final rule as follows: (1) 
Sec.  3186.1-1 Model ``Exhibit A'' will appear as Appendix B to Part 
3180; (2) Sec.  3186.1-2 Model ``Exhibit B'' will appear as Appendix C 
to Part 3180; (3) Sec.  3186.3 Model for designation of successor unit 
operator by working interest owners will appear as Appendix D to Part 
3180; and (4) Sec.  3186.4 Model for change in unit operator by 
assignment will appear as Appendix E to Part 3180. The final rule does 
not revise the contents of Appendices B through E.
    Cross refences in Sec. Sec.  3107.10(a), 3181.1 and 3183.4(a) are 
revised in the final rule to reflect the redesignated appendices.

Procedural Matters

A. Regulatory Planning and Review (E.O. 12866, E.O. 14094, E.O. 13563)

    E.O. 12866, as amended by E.O. 14094, provides that the Office of 
Information and Regulatory Affairs (OIRA) within the Office of 
Management and Budget (OMB) will review all significant rules. OIRA has 
determined that this final rule constitutes a ``significant regulatory 
action'' within the scope of section 3(f)(1) of E.O. 12866, as amended 
by E.O. 14094.
    During the comment period for the proposed rule, some commenters 
suggested that the proposed rule would cause adverse effects on the 
economy, the energy sector of the economy, and all communities that 
rely on fluid mineral development as their major economic driver. 
Commenters pointed to the language in the preference criteria for 
leasing under Sec.  3120.42, asserting it could severely restrict the 
amount of oil and gas leasing on Federal lands. The BLM disagrees. 
Codifying the preference criteria will ensure that oil and gas leasing 
on public lands focuses development where there is the most potential 
for recovery and allows the agency to manage public lands for other 
uses. The BLM completed an RIA and determined that the net costs to the 
economy range from a cost of $8.0 million to a cost of $13.2 million, 
depending on the cost of bonds (1 percent or 2 percent) and the number 
of wells the BLM reclaims (15 wells or 24 wells). As discussed in the 
RIA, the BLM expects that the expedited timing for reclamation of 
orphaned wells from increased bonding could provide benefits related to 
wildlife, vegetation, soil erosion, climate change (reduced greenhouse 
gas emissions from unplugged orphaned wells), visual and aesthetic 
resources, ground water, and allowing the surface land to be utilized 
for other uses sooner (for example, for grazing purposes). The BLM 
cannot currently quantify these benefits using the information 
available to the BLM.
    Other benefits of the final rule include ensuring that costs reside 
with oil and gas lessees, operating rights owners, and operators, and 
not the American public. This includes adjusting the BLM's cost 
recovery mechanisms so that project applicants provide a more equitable 
share of the BLM's up-front costs for processing these applications. 
Finally, the BLM implements several changes to provide a transparent 
leasing process that focuses leasing on areas with a greater likelihood 
of being developed with fewer resource conflicts and ensuring 
transparency in these processes. Overall, shifting the financial 
responsibility for leasing to industries and ensuring transparency in 
the decision-making process will result in a more effective, fair, and 
accountable regulatory framework that benefits both businesses and 
society as a whole.
    E.O. 13563 reaffirms the principles of E.O. 12866 while calling for 
improvements in the Nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome tools for achieving regulatory ends. 
The E.O. directs agencies to consider regulatory approaches that reduce 
burdens and maintain flexibility and freedom of choice for the public 
where these approaches are relevant, feasible, and consistent with 
regulatory objectives. E.O. 13563 emphasizes further that regulations 
must be based on the best available science and that the rulemaking 
process must allow for public participation and an open exchange of 
ideas.
    This final rule replaces the BLM's current rules governing oil and 
gas leasing, which are contained in 43 CFR 3100 through 3140, and 
revises some regulations governing oil and gas operations, which are 
contained in 43 CFR 3150 through 3171.
    For any regulatory action that OIRA determines is a significant 
regulatory action under section 3(f)(1) of E.O. 12866, section 
6(a)(3)(C) of E.O. 12866 requires Federal agencies to provide an 
assessment, including the underlying analysis, of costs and benefits of 
potentially effective and reasonably feasible alternatives to the 
planned regulation, identified by the agencies or the public (including 
improving the current regulation and reasonably viable non-regulatory 
actions), and an explanation why the planned regulatory action is 
preferable to the identified potential alternatives. 58 FR 51735, 
51741. The BLM developed this final rule in a manner consistent with 
the requirements in E.O. 12866 and E.O. 13563.
    For more detailed information on the BLM's analysis, as required by 
the referenced Executive Orders, see the RIA prepared for this final 
rule. The RIA has been posted in the docket for the final rule on the 
Federal eRulemaking Portal: https://www.regulations.gov. In the 
Searchbox, enter ``RIN 1004-AE80'', click the ``Search'' button, open 
the Docket Folder, and look under Supporting Documents.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
requires that Federal agencies prepare a regulatory flexibility 
analysis for rules subject to the notice-and-comment rulemaking 
requirements under the Administrative Procedure Act (5 U.S.C. 500 et 
seq.), if the rule would have a significant economic impact, whether 
detrimental or beneficial, on a substantial number of small entities. 
See 5 U.S.C. 601-612. Congress enacted the RFA to ensure that 
government regulations do not unnecessarily or disproportionately 
burden small entities. Small entities

[[Page 30957]]

include small businesses, small governmental jurisdictions, and small 
not-for-profit enterprises.
    The BLM reviewed the Small Business Administration's (SBA) size 
standards for small businesses and the number of entities fitting those 
size standards as reported by the U.S. Census Bureau in the Economic 
Census. The number of small businesses in States where there are 
existing Federal oil and gas leases is estimated to be 20,975 for the 
Crude Petroleum Extraction and Natural Gas Extraction industries (North 
American Industry Classification System (NAICS) codes 211120 and 21130, 
respectively). The BLM concludes that the vast majority of entities 
operating in the relevant sectors are small businesses as defined by 
the SBA. As such, the final rule will likely affect a substantial 
number of small entities.
    In addition, the rule will have a distributional and positive 
impact on the Direct Property and Casualty Insurance Carriers Industry 
(NAICS 524126). Additional premiums will be paid by lessees in the oil 
and natural gas extraction industries to surety companies who will be 
providing the coverage to meet the proposed bonding requirements. The 
number of small businesses in the oil and gas industry in States where 
there are existing Federal oil and gas leases is estimated to be 
476,687. This is because the SBA defines a small business for purposes 
of the Crude Petroleum Extraction and Natural Gas Extraction industries 
(NAICS codes 211120 and 21130, respectively) as one which has 1,250 or 
fewer employees.
    Finally, the BLM received multiple comments expressing concerns 
related to impacts that the proposed rule would have on small entities. 
Specifically, the comments stated that: (1) the BLM should have 
included the changes from the IRA in its analysis for the Regulatory 
Flexibility Act (RFA); (2) the BLM should have mailed notification of 
the proposed rule to the affected small businesses under the RFA; (3) 
the BLM should have considered alternatives as required by the RFA; and 
(4) this rule requires the preparation of an initial and final 
Regulatory Flexibility Analysis. The BLM reviewed the final rule and 
has determined that, although the final rule will likely affect a 
substantial number of small entities, that effect will not be 
significant. The basis for this determination is explained in more 
detail in the RIA.
    Because the increased royalty amounts, bonus bids, and rentals, and 
the EOI fee, are non-discretionary, the BLM is not required to include 
these increases in its evaluation of the impacts on small businesses. 
Congress passed the RFA ``to establish as a principle of regulatory 
issuance that agencies shall endeavor, consistent with the objectives 
of the rule and of applicable statutes, to fit regulatory and 
informational requirements to the scale of the businesses, 
organizations, and governmental jurisdictions subject to regulation. To 
achieve this principle, agencies are required to solicit and consider 
flexible regulatory proposals and to explain the rationale for their 
actions to assure that such proposals are given serious 
consideration.'' Public Law 96-354, section 2(b), 94 Stat. 1164 (1980). 
The RFA requires agencies to analyze alternatives to their rules with 
an eye towards minimizing significant impacts on small entities. 5 
U.S.C. 603(c), 604(a)(6). In this case, the BLM cannot consider 
alternatives to mandatory instructions in the IRA. The nondiscretionary 
changes include the increased minimum bonus bid, rental, and royalty 
rate, and the new EOI fee. The only discretionary cost increases at 
issue in this final rule are the increased bonding amounts and filing 
fees, which are fully analyzed. Aside from assessing alternatives to 
the statutorily mandated provisions of this rule, however, the BLM has 
provided the analysis the RFA requires.
    Based on the BLM's review of the costs associated with the 
increased bonding, the BLM has determined that the incremental costs 
that a company must pay to meet the increased bonding amounts are 
unlikely to deter a company from obtaining a lease and developing it. 
As discussed in the RIA, sureties offer both new and existing operators 
the ability to cover the increased bond amount at an estimated cost of 
only 1 to 2 percent per year of the additional bond amount.
    While there were multiple comments stating that small operators 
will be forced to shut in wells, will be at higher risk of going 
bankrupt, or will go bankrupt due to the increased costs, the comments 
did not provide the well- or lease-level financial information needed 
to support these claims. The BLM reviewed available data and reported 
statistics on the sensitivity of low-producing wells to changes in 
wellhead prices and concluded that, given the range of recent and 
expected oil prices, even low-producing wells generate sufficient 
revenue to fund the increased level of bonding. The economic data 
provided from the public comment period did not provide the necessary 
detail to support a more detailed analysis. For example, one commenter 
provided a report on the economic benefits of oil and gas leasing. This 
report supported our baseline in the RIA; however, it did not change 
the BLM's estimates of the impacts from this rule.
    Notably, the BLM has only limited access to financial data of the 
small businesses themselves, since most of those small businesses are 
privately held and are not required to report their financial 
information to the BLM or any other public forum. Even if a company is 
public, those covered under the NAICS codes for Crude Petroleum and 
Natural Gas Extraction are often partnerships or limited liability 
companies, which frequently merge and split, making it difficult to 
determine if a firm composed of partners and subsidiaries are 
sufficiently affiliated to be considered small businesses or if they 
are functionally a subsidiary of a larger firm. Even when financial 
statements are available for review, those statements are designed to 
standardize overall reporting of an entity's finances and do not 
specify income and expenditures associated with production from Federal 
wells. Nor is it possible to obtain the requisite information on both 
Federal production volume and the production costs of this Federal 
production from any Federal database. For example, ONRR reports 
production volumes but not production costs. Constructing the needed 
data on Federal production and financial costs requires cross-
referencing several data sources that are not readily available.
    Therefore, based on the BLM's review, the BLM lacks the data to 
determine whether the rule will impact small businesses in the manner 
the commenters assert. Nor is such information reasonably available to 
the BLM such that it could undertake such analysis. The BLM has, 
nevertheless, reaffirmed its finding that the rule will not have a 
significant impact on a substantial number of small entities for the 
reasons described above in this section.
    In summary, the per-entity, annualized compliance costs associated 
with this final rule are estimated to represent only a small fraction 
of the annual net incomes of the companies likely to be impacted. 
Because the final rule will not have a ``significant economic impact on 
a substantial number of small entities,'' neither an initial nor a 
final regulatory flexibility analysis is required.
    The Secretary of the Interior certifies under 5 U.S.C. 605(b) that 
this rule will not have a significant economic impact on a substantial 
number of small entities.

[[Page 30958]]

C. Congressional Review Act

    The Congressional Review Act (5 U.S.C. 804(2)) requires certain 
procedures for ``any rule that the Administrator of the Office of 
Information and Regulatory Affairs of the Office of Management and 
Budget finds has resulted in or is likely to result in--
    a. an annual effect on the economy of $100 million or more;
    b. a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions;
    c. significant adverse effects on competition, employment, 
investment, productivity, innovation, or the ability of United States-
based enterprises to compete with foreign-based enterprises in domestic 
and export markets.
    DOI will report to Congress on the promulgation of this rule prior 
to its effective date. The report will state that the Office of 
Information and Regulatory Affairs has determined that this rule meets 
the criteria set forth in 5 U.S.C. 804(2).

D. Unfunded Mandates Reform Act (UMRA)

    The final rule will not have a significant or unique effect on 
State, local, or Tribal governments or the private sector. The rule 
contains no requirements that apply to State, local, or Tribal 
governments. The rule revises requirements that otherwise apply to the 
private sector participation in a voluntary Federal program. The 
compliance costs associated with the rule are below the monetary 
threshold established at 2 U.S.C. 1532(a). The rule updates the BLM's 
existing regulations to reflect the IRA's changes to lease terms. Those 
provisions (which became effective with the enactment of the IRA and 
which the BLM has no discretion to modify) will result in additional 
transfer payments made from the private sector to the U.S. Treasury, 
which then distributes portions to State governments and various funds, 
such as the Land and Water Conservation Fund. The BLM estimates the 
transfer payments will total $210 million per year, but these payments 
are not a result of action taken by the BLM and are instead 
Congressionally mandated. Since the discretionary provisions of the 
rule impose compliance costs that are below the $100,000,000 threshold 
established at 2 U.S.C. 1532(a), a statement containing the information 
required by the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531 et 
seq.) is not required for the final rule. This final rule is also not 
subject to the requirements of section 203 of UMRA because it contains 
no regulatory requirements that might significantly or uniquely affect 
small governments, because it contains no requirements that apply to 
such governments, nor does it impose obligations upon them. In any 
event, this rule and the accompanying Regulatory Impact Analysis 
provide all the information the UMRA requires.

E. Governmental Actions and Interference With Constitutionally 
Protected Property Right--Takings (E.O. 12630)

    This final rule will not effect a taking of private property or 
otherwise have taking implications under E.O. 12630; therefore, a 
takings implication assessment is not required. The final rule replaces 
the BLM's current rules governing oil and gas leasing, which are 
contained in 43 CFR 3100 through 3140, and some governing oil and gas 
operations, which are contained in 43 CFR 3160 and 3171. Therefore, the 
rule will impact future leases on Federal land; however, it will not 
impact current leases. All other terms in the regulations are not 
considered a taking of private property as such operations are subject 
to the existing lease terms which expressly require that subsequent 
lease activities be conducted in compliance with subsequently adopted 
Federal laws and regulations.
    This final rule conforms to the terms of the existing leases and 
applicable statutes and, as such, the rule is not a government action 
capable of interfering with constitutionally protected property rights. 
Therefore, the BLM has determined that the rule will not cause a taking 
of private property or require further discussion of takings 
implications under E.O. 12630.

F. Federalism (E.O. 13132)

    Under the criteria in section 1 of E.O. 13132, this final rule does 
not have any federalism implications to warrant the preparation of a 
federalism summary impact statement.
    The final rule will not have a substantial direct effect on the 
States, on the relationship between the Federal Government and the 
States, or on the distribution of power and responsibilities among the 
levels of government. It does not apply to States or local governments 
or State or local governmental entities. The rule will affect the 
relationship between operators, lessees, and the BLM, but it does not 
directly impact the States. Therefore, in accordance with E.O. 13132, 
the BLM has determined that this final rule does not have sufficient 
federalism implications to warrant preparation of a Federalism 
Assessment.
    Several commenters suggested that the BLM should make substantial 
changes to the rule to allow for better cooperation with States and 
local governments when their jurisdictions overlap. For example, one 
comment stated that the BLM must respect local governments' regulatory 
authority over State, private, and trust mineral and water resources 
within each State. Another comment stated that the proposed rule would 
have significant direct impacts on the States and local communities, 
and that, if the BLM does not offer Federal lands for lease, that 
omission will prevent State and private lessees from developing their 
leases due to the mixed ownership for horizontal wells. Some comments 
stated the rule is inconsistent with State laws that expedite the 
processing, granting, and streamlining of mineral and energy leases and 
permits.
    The BLM developed this rule based on its statutory authority to 
offer federally owned lands and minerals for oil and gas leasing and 
development. The BLM has evaluated the federalism implications of this 
rule as required by E.O. 13132. Although the final rule will affect the 
relationship between operators, lessees, and the BLM, it will not 
directly impact the States' leasing ability. Local governments and the 
public may submit information to the BLM on how the development of 
nominated lands may affect the development of adjacent non-Federal 
lands when the BLM is considering lands for leasing. This could occur 
either when the EOI is submitted or during the scoping and public 
comment periods for the lease sales.

G. Civil Justice Reform (E.O. 12988)

    This final rule complies with the requirements of E.O. 12988. More 
specifically, this final rule meets the criteria of section 3(a), which 
requires agencies to review all regulations to eliminate errors and 
ambiguity and to write all regulations to minimize litigation. This 
final rule also meets the criteria of section 3(b)(2), which requires 
agencies to write all regulations in clear language with clear legal 
standards.

H. Consultation and Coordination With Indian Tribal Governments (E.O. 
13175 and Departmental Policy)

    The Department strives to strengthen its government-to-government 
relationship with Indian Tribes through a commitment to consultation 
with Indian Tribes and recognition of their

[[Page 30959]]

right to self-governance and tribal sovereignty.
    The BLM evaluated this final rule under the Department's 
consultation policy and under the criteria in E.O. 13175 to identify 
possible effects of the rule on federally recognized Indian Tribes. 
Since the changes to leasing only apply to Federal lands, the final 
rule will not impact the leasing of Indian minerals. The final rule 
could impact Tribal minerals as the BLM will require operators on both 
Federal and Tribal minerals to comply with the requirements within 
Parts 3160 and 3170, including the changes for shut-in and temporarily 
abandoned wells and approved APDs.
    In August of 2021, the BLM sent a letter to each registered Tribe 
informing them of certain rulemaking efforts, including the development 
of this final rule. The letter offered Tribes the opportunity for 
individual government-to-government consultation regarding the 
rulemaking.
    In June 2023, the BLM sent another letter to each registered Tribe 
informing them of the proposed rule. During the comment period for the 
proposed rule, a commenter, who is not from a Tribe, stated that the 
BLM should fulfill its Federal trust obligation to Tribes to protect 
their interest and further the government-to-government relationships 
with Tribes. The BLM concurs and worked to inform the Tribes of the 
changes proposed in this rulemaking. The BLM did receive comments from 
a Tribe as previously discussed in Section III.B.4. and III.B.8. of 
this preamble.

I. Paperwork Reduction Act

    The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) generally 
provides that an agency may not conduct or sponsor, and not 
withstanding any other provision of law, a person is not required to 
respond to a collection of information, unless it displays a currently 
valid OMB control number. Collections of information include any 
request or requirement that persons obtain, maintain, retain, or report 
information to an agency, or disclose information to a third party or 
to the public (44 U.S.C. 3502(3) and 5 CFR 1320.3(c)).
    This final rule contains information-collection requirements that 
are subject to review by OMB under the PRA. OMB has generally approved 
the existing information collection requirements contained in the 
regulations that will be affected by this final rule under the 
following OMB Control Numbers:
     43 CFR 3100, 3120, and subpart 3162--OMB Control Number 
1004-0185;
     43 CFR 3106--OMB Control Number 1004-0034;
     43 CFR part 3130--OMB Control Number 1004-0196;
     43 CFR 3150--OMB Control Number 1004-0162; and
     43 CFR 3160--OMB Control Number 1004-0137.
    The BLM plans to transfer the information collection requirements 
contained in 43 CFR 3106 from OMB control number 1004-0034 to OMB 
Control Number 1004-0185 in order to keep similar information 
collections requirements together under the same OMB Control Number. 
Additionally, the BLM plans to transfer information collection 
requirements contained in 43 CFR 3160 from OMB Control Number 1004-0137 
to a new OMB Control Number. Once approved by OMB, the new OMB Control 
Number will be 1004-0220. The new and revised information collection 
requirements are discussed as follows, along with the resulting changes 
in public burdens.
1. Changes Impacting Information Collections Previously Under OMB 
Control Number 1004-0137
    The final rule will result in new information collection 
requirements that will require OMB approval under a new OMB control 
number (previously, 1004-0137). This final rule is estimated to result 
in 33,621 annual responses, 260,928 annual burden hours, $35,400,000 
non-hour cost burdens under this new OMB Control Number.
    The new information collection requirements are described as 
follows.
    43 CFR 3162.3-4 Well Abandonment. The final rule requires that no 
well may be abandoned for more than 30 days unless the operator 
provides adequate and detailed justifications and verification of the 
mechanical integrity of the wells and isolation of the perforations. 
The new information collection requirements include:
     Justification for Temporary Well Abandonment--43 CFR 
3162.3-4(d);
     Reporting Shut-in Status--43 CFR 3162.3-4(e);
     Verification of Mechanical Integrity--43 CFR 3162.3-
4(e)(2) and 3162.3-4(f); and
     Plan and Timeline for Future Beneficial Use--43 CFR 
3162.3-4(e)(3)(iii).
    The BLM believes these new requirements with yearly interval checks 
will help operators stay on top of shut-in wells, thus preventing them 
from becoming orphaned in the future. The addition of these information 
collection requirements will result in an addition of 5,500 annual 
responses, 52,000 annual burden hours.
    Currently, there are 301,663 annual responses, 1,835,888 annual 
burden hours, and $31,080,000 annual non-hour cost burdens inventoried 
under the OMB Control Number 1004-0137. This final rule will create a 
new OMB Control Number and moves 28,121 annual responses, 208,298 
annual burden hours, and $31,080,000 annual non-hour cost burdens 
inventoried under OMB Control Number 1004-0137 into this OMB Control 
Number.
    In addition, there is an adjustment of $4.3 million in annual non-
hour cost burdens (from $31 million to 35.4 million). This adjustment 
results from the annual inflation adjustment of filing fees and do not 
result from the final rule. The resulting new estimated total burdens 
for this new OMB Control Number are provided as follows.
    Title of Collection: Onshore Oil and Gas Operations and Production 
(43 CFR parts 3160 and 3170).
    OMB Control Number: 1004-0220.
    Form Numbers: BLM Form 3160-003; BLM Form 3160-004; and BLM Form 
3160-005 (these forms will not change).
    Type of Review: Revision of a currently approved collection of 
information.
    Respondents/Affected Public: Oil and gas operators on public lands 
and some Indian lands.
    Total Estimated Number of Annual Respondents: 7,500.
    Total Estimated Number of Annual Responses: 33,621.
    Estimated Completion Time per Response: Varies from 4 to 32 hours, 
depending on activity.
    Total Estimated Number of Annual Burden Hours: 260,928.
    Respondent's Obligation: Required to obtain or retain a benefit.
    Frequency of Collection: On occasion; One-time; and Monthly.
    Annual Burden Cost: $35,400,000.
2. Changes Impacting OMB Control Number 1004-0162
    Currently, there are 68 annual responses, 26 annual burden hours, 
and $25 annual non-hour cost burdens inventoried under OMB Control 
Number 1004-0162. It is not anticipated that the final rule will change 
the results to the annual responses, annual burden hours, or non-hour 
cost burdens under this OMB Control Number. The revised information 
collection requirement is described as follows.
    43 CFR 3151.30--Collection and submission of data. The final rule 
adds a new requirement for the permittee to provide the BLM with all 
data and

[[Page 30960]]

information obtained in carrying out the exploration plan, matching the 
requirement for geophysical exploration permits in Alaska. This does 
not change the existing burden for what applicants to submit to the 
BLM.
    Title of Collection: Onshore Geophysical Exploration (43 CFR part 
3150 and 36 CFR parts 228 and 251).
    OMB Control Number: 1004-0162.
    Form Number: BLM 3150-4/FS 2800-16; BLM 3150-5/FS 2816a (these 
forms will not change).
    Type of Review: Revision of a currently approved collection of 
information.
    Respondents/Affected Public: The respondents for this collection of 
information are businesses that seek to conduct geophysical exploration 
on Federal lands.
    Respondent's Obligation: Required to Obtain or Retain a Benefit.
    Frequency of Collection: On occasion.
    Estimated Completion Time per Response: Varies from 20 minutes to 1 
hour, depending on activity.
    Number of Respondents: 68.
    Annual Responses: 68.
    Annual Burden Hours: 26.
    Annual Burden Cost: $1,150.
3. Changes Impacting OMB Control Number 1004-0185
    Currently, there are 9,132 annual responses, 37,695 annual burden 
hours, and $751,415 annual non-hour cost burdens inventoried under OMB 
Control Number 1004-0185. This final rule is estimated to result in 
16,340 annual responses, 29,410 annual burden hours, $3,766,184, non-
hour cost burdens under this OMB Control Number. The final rule will 
result in new, revised, and removed information collection 
requirements. Additionally, as discussed earlier, the BLM will also be 
transferring certain information collection requirements, along with 
the associated burdens from OMB Control Number 1004-0034 to OMB Control 
Number 1004-0185. These changes are discussed blow.
Revised Information Collection Requirements
    43 CFR 3100.31(b)--Option Enforceability. The final rule revises 
this requirement to clarify that a statement of the number of acres and 
the type and percentage of interest to be conveyed and retained by the 
parties to the option. This does not change the burden requirement. The 
existing regulation already states the interest to be conveyed and 
retained in exercise of the option. The BLM needs to understand if the 
type of interest is referring to record title or operating rights and 
the percentage to be conveyed and retained by the option holder.
    43 CFR 3105.21--Where to File Communitization Agreements. The final 
rule removes the triplicate filing requirement. The final rule adds a 
new paragraph (b) to this section to require that all applications to 
form a CA be filed with a statement as to whether the proposed CA 
deviates from the BLM's current model CA form, and a certification that 
the applicant received the required signatures. Further, all 
applications to form a CA shall include an Exhibit A displaying a map 
of the agreement and the separate agreement tracts and all applications 
to form a CA shall include an Exhibit B displaying the separate tracts 
and ownership. The new paragraph (c) states that all applications to 
form a CA should be submitted at least 90 calendar days prior to first 
production to ensure correct reporting to the ONRR. These requirements 
codify existing policy requirements and does not change the existing 
burden for what applicants to submit to the BLM. The information is 
needed to understand all the parties that share in the production of a 
well due to State spacing orders.
    43 CFR 3105.31--Where filed. (Operating, Drilling or Development 
Contracts). The final rule removes the requirement for five copies of 
an operating, drilling or development contract to be submitted when 
these contracts are submitted to the BLM for approval. This reduces the 
burden to respondents.
    43 CFR 3105.41--Where filed. (Subsurface storage application 
(previously, 3105.5)). The final rule designates the existing 43 CFR 
3105.5 for gas storage agreements to the redesignated 43 CFR 3105.41. 
This redesignation is due to the elimination of the section on the 
combination for joint operations or for transportation of oil. The 
final rule updates paragraph (a) to include designation of successor 
operators for gas storage agreements among the applications to be filed 
in the proper BLM office. The final rule updates paragraph (b) to 
remove the requirement for five copies of a gas storage agreement to be 
submitted when these are filed with the BLM. A new paragraph (c) 
requires that all applications for a gas storage agreement or a 
designation of a successor operator must include the new processing fee 
found in the fee schedule in 43 CFR 3000.120. The new processing fee is 
intended to reimburse the BLM for processing the applications.
    43 CFR 3105.50--Consolidation of Leases (formerly, 3105.6). Leases 
may be consolidated upon written request of the lessee filed with the 
proper BLM identify each lease involved by serial number and shall 
explain the factors that justify the consolidation and requires that 
each request for a consolidation of leases the processing fee found in 
the fee schedule in 43 CFR 3000.120. The final rule splits the single 
paragraph under this section into several paragraphs for clarity, 
however these are not new requirements and does not change the existing 
burden.
    43 CFR 3106.81--Heirs and devisees. The updates this information 
collection requirement to state that the lease interest will be 
transferred to the heirs, devisees, executor or administrator of the 
estate, as appropriate, upon the filing of a court order, death 
certificate, or other legal document demonstrating that transferee is 
to be recognized as the successor of the deceased. These requirements 
codify existing policy requirements and does not change the existing 
burden for what applicants currently submit to the BLM to show proof on 
how the lease interest transferred to another party.
    43 CFR 3106.82--Change of name. The current regulation requires a 
notice of the name change to be accompanied by a list of the serial 
numbers of the leases affected by the name change. This requirement is 
removed as it is outdated and unenforceable. This lessens the burden to 
respondents. In practice, the BLM generates a report of the leases 
affected by the name change and returns that list to the lessee with a 
notice that recognizes the name change that occurred through operation 
of law. This section is updated to require that, for a corporate name 
change, the request should include the Secretary of State's Certificate 
of Name Change along with the Articles of Incorporation, or Amendment, 
if available. This is consistent with the BLM's current approach for 
processing these types of documents. These requirements codify existing 
policy requirements and does not change the existing burden for what 
applicants currently submit to the BLM to show proof on how the lease 
interest transferred to another party.
    43 CFR 3106.83--Corporate mergers and dissolution of corporations, 
partnerships and trusts. The final rule updates the title of this 
section from ``Corporate merger'' to ``Corporate mergers and 
dissolution of corporations, partnerships and trust''. The goal of the 
renaming of this section is to incorporate these other types of 
transfers that have the same process. The current regulation requires a 
notification of merger to be accompanied by a list of the serial 
numbers of the leases affected by the

[[Page 30961]]

merger. This requirement is eliminated as it is outdated and 
unenforceable. This lessens the burden to respondents. In practice, the 
BLM does not rely on a list of leases provided by a lessee and instead 
generates its own report of the leases affected by the merger. The BLM 
returns that list to the lessee with a notice that recognizes the 
merger that occurred through operation of State law. This section is 
updated to require that, for a merger, the request should include the 
Secretary of State's Certificate of Merger along with the Articles of 
Incorporation, or Amendment, if available. This is consistent with the 
BLM's current approach for processing these types of documents. These 
requirements codify existing policy requirements and does not change 
the existing burden for what applicants currently submit to the BLM to 
show proof on how the lease interest transferred to another party.
    43 CFR 3108.23--Reinstatement at higher rental and royalty rates: 
Class II reinstatements. The final rule eliminates the existing 
paragraph (b)(1) in its entirety. This provision addresses the 
timeliness of Class II reinstatement petitions for leases that 
terminated on or before August 8, 2005, and is no longer applicable. 
This does not change an existing burden since a petition to reinstate a 
lease that terminated on or before August 8, 2005, would have already 
been received by an applicant.
    43 CFR 3109.12--Application. The final rule also adds a new 
requirement that the applicant must include a map of the applicable 
lands which will support the bidding process related to the lease or 
compensatory royalty agreement. These requirements codify existing 
policy requirements and does not change the existing burden for what 
applicants to submit to the BLM.
New Information Collection Requirements
    43 CFR 3106.84--Sheriff's sale/deed. The final rule adds a new 
section under other types of transfers to include sheriff's sales. The 
BLM accepts these types of transfers to recognize lease interests 
transferred to other parties through foreclosure actions. The final 
rule states that where a notice of sale of the leasehold interest is 
published pursuant to State law applicable to the execution of sales of 
real property, the purchaser shall submit a copy of the Sheriff's 
Certificate of Sale after any redemption period has passed to the 
proper BLM office. Additional paragraphs under this new section include 
a filing fee requirement, a qualification statement, and bonding 
requirements. These requirements are consistent with the BLM's current 
approach for processing these types of documents. These documents are 
already submitted and recognized by the BLM when changes in ownership 
of interests in Federal oil and gas leases occur without any intention 
by the holder of interest to assign or transfer interest. The addition 
of this information collection will result in an addition of 1 annual 
response, 1 annual burden hour, and $55.80 annual non-hour cost 
burdens.
    43 CFR 3120.31--Expression of Interest (EOI) Process. The final 
rule adds a new section titled ``Expression of Interest'' to codify the 
current process of receiving EOIs for competitive leasing to the BLM's 
online leasing system. An EOI is a description of lands that an 
applicant seeks to include in a competitive auction. The expression 
must provide a description of the lands identified by legal land 
description and identify the U.S. mineral ownership percentage. This 
information collection will result in an addition of 395 annual 
responses (average of 1,000 acres per response), 3,160 annual burden 
hours, and $1,975,000 annual non-hour cost burdens (calculated by 
average acreage per response).
Removed Information Collection Requirements
    43 CFR 3101.2-6--Ad Hoc Acreage Statement. At any time, the BLM may 
require a lessee or operator to file a statement showing as of the 
specified date, the serial number and the date of each lease in which 
the lessee or operator has any interest, in the particular State, 
setting forth the acreage covered thereby. The BLM uses the information 
to determine whether or not a lessee is in compliance with the law with 
respect to statutory acreage limitations. This revision results in the 
reduction of 1 response and 1 burden hour, annually.
    43 CFR 3105.4--Combination for joint operations or for 
transportation of oil. The final rule eliminates the section on the 
combination for joint operations or for transportation of oil. These 
provisions are not used by the BLM or operators and are outdated. This 
revision results in the reduction of 1 response and 1 burden hour, 
annually.
    43 CFR 3107.8--Renewal leases. The final rule eliminates the 
provisions on renewal leases in their entirety because they are 
outdated. Renewal leases that had an expiration date after November 15, 
1990, were eligible for one last renewal under the provisions of the 
November 15, 1990, Act, i.e., for 10 years, and for so long thereafter 
as oil and gas is produced in paying quantities. If a lease was renewed 
after the 1990 amendment and was not producing oil or gas at the end of 
its 10-year renewal term, the lease expired with no further option for 
renewal. The removal of this information collection will result in a 
reduction of 1 annual response, 1 annual burden hour, and $475 annual 
non-hour cost burdens.
    Class III reinstatement petition (43 CFR 3108.2-4). The requirement 
is removed from the final rule resulting in a reduction of one annual 
response and one burden hour as well as $651 in non-hour cost burden.
Information Collection Requirements Transferred From OMB Control Number 
1004-0034
    The following two information collections will be moved into OMB 
Control Number 1004-0185 to keep information collection requirements in 
subpart 3106 under the same OMB Control Number:
    1. 43 CFR 3106.41, Transfers of record title and of operating 
rights (subleases) and 3106.42, Transfers of other interests, including 
royalty interests and production payments. This transfer will result in 
3,852 annual responses, 1,926 annual burden hours, and $404,460 non-
hours cost burdens being added to this OMB Control Number.
    2. 43 CFR 3106.43 Mass transfers. This transfer will result in 
4,944 annual responses, 2,472 annual burden hours, and $519,120 non-
hours cost burdens being added to this OMB Control Number.
    The resulting new estimated total burdens for OMB Control Number 
1004-0185 are provided as follows.
    Title of Collection: Onshore Oil and Gas Leasing, and Drainage 
Protection (43 CFR parts 3100, 3120, and 3150, and subpart 3162).
    OMB Control Number: 1004-0185.
    Form Number: None.
    Type of Review: Revision of a currently approved collection of 
information.
    Respondents/Affected Public: Holders of onshore oil and gas lease 
and public lands and Indian lands (except on the Osage Reservation), 
operators of such leases, and holders of operating rights on such 
leases.
    Respondent's Obligation: Required to Obtain or Retain a Benefit.
    Frequency of Collection: Varies from 1 hour to 24 hours per 
response, depending on activity.
    Number of Respondents: 16,339.
    Annual Responses: 16,340.
    Annual Burden Hours: 29,410.
    Annual Burden Cost: $3,766,184.

[[Page 30962]]

4. Changes Impacting OMB Control Number 1004-0196
    Currently, there are there are 21 annual responses and 220 annual 
burden hours associated with this OMB control number. There are also no 
non-hours cost burden currently associated with this OMB control 
number. The final rule is not projected to result in any new annual 
responses. The additional requirements in 43 CFR 3170.80(b) include 
description of the anticipated PA(s) size and define the proposed PAs 
in the unit designation agreements required by 43 CFR 3137.21, and 
3137.23 is not projected to result in additional burden for that 
information collection.
    43 CFR 3000.120 introduces new filing fees for the following 
information collections, resulting in a new total estimated annual non-
hour burden cost of $1,320;
     $120 for Statement of change of unit operator (43 CFR 
3137.61); and
     $1,200 for Application for storage agreement (43 CFR 
3138.11);
    Additionally, the existing 43 CFR 3137.86, New information 
demonstrating that the participating area should be larger or smaller 
than previously determined, contains the following three information 
collection requirements for which the burden has not been previously 
captured in this OMB control number:
     Information demonstrating that a participating area should 
be larger than previously determined (43 CFR 3137.86(a)(1));
     Application to enlarge participating area outside of 
existing boundaries (43 CFR 3137.86(a)(2)); and
     Statement for additional committed tract or tracts are 
added to the unit under paragraph (a)(2) (43 CFR 3137.86(a)(3)).
    The resulting new estimated total burdens for OMB Control Number 
1004-0196 are provided as follows.
    Title of Collection: Oil and Gas Leasing: National Petroleum 
Reserve--Alaska (43 CFR part 3130).
    OMB Control Number: 1004-0196.
    Form Number: None.
    Type of Review: Revision of a currently approved collection of 
information.
    Respondents/Affected Public: Participants within the oil and gas 
leasing program within the National Petroleum Reserve--Alaska.
    Respondent's Obligation: Required to Obtain or Retain a Benefit.
    Frequency of Collection: On occasion.
    Estimated Completion Time per Response: Varies from 15 minutes to 
80 hours, depending on activity.
    Number of Respondents: 24.
    Annual Responses: 24.
    Annual Burden Hours: 223.
    Annual Burden Cost: $1,320.
    If you want to comment on the information-collection requirements 
in this rule, please send your comments and suggestions on this 
information-collection request within 30 days of publication of this 
final rule in the Federal Register to OMB at www.reginfo.gov. Click on 
the link, ``Currently under Review--Open for Public Comments.''

J. National Environmental Policy Act

    The BLM received comments on this section. One commenter stated the 
BLM properly issues the rule pursuant to a categorical exclusion. Other 
comments recommended that the BLM use an environmental assessment for 
the rule. Commenters stated the rule affects decisions in RMPs, because 
the preference criteria would guide the BLM's decision making and 
direct oil and gas leasing to appropriate locations. Another commenter 
stated that the economic burden that the proposed rule would cause for 
oil and gas operators and State economies would require the BLM to 
perform a NEPA analysis on the portions of the proposed rule that are 
beyond the scope of changes required by Congress in the IRA. As 
previously stated, this rule does not close additional lands for oil 
and gas leasing and the MLA has vested the Secretary with broad 
discretion to decide, up until the time of lease issuance, whether 
particular parcels of Federal land ``may be leased'' for oil and gas 
development, see 30 U.S.C. 226(a). The BLM completed an RIA and an 
extraordinary circumstances review and determined that the BLM can 
issue this rule under the applicable Departmental categorical 
exclusion.
    A detailed environmental analysis under NEPA is not required, 
because the final rule is covered by a categorical exclusion (see 43 
CFR 46.205). This final rule meets the criteria set forth at 43 CFR 
46.210(i) for a Departmental categorical exclusion in that this final 
rule is ``of an administrative, financial, legal, technical, or 
procedural nature.'' The BLM also has determined that the final rule 
does not involve any of the extraordinary circumstances listed in 43 
CFR 46.215 that would require further analysis under NEPA.

K. Actions Concerning Regulations That Significantly Affect Energy 
Supply, Distribution, or Use (E.O. 13211)

    Under E.O. 13211, agencies are required to prepare and submit to 
OMB a Statement of Energy Effects for significant energy actions. This 
statement is to include a detailed statement of ``any adverse effects 
on energy supply, distribution, or use (including a shortfall in 
supply, price increases, and increase use of foreign supplies)'' for 
the action and reasonable alternatives and their effects.
    Section 4(b) of E.O. 13211 defines a ``significant energy action'' 
as ``any action by an agency (normally published in the Federal 
Register) that promulgates or is expected to lead to the promulgation 
of a final rule or regulation, including notices of inquiry, advance 
notices of proposed rulemaking, and notices of proposed rulemaking: 
(1)(i) that is a significant regulatory action under E.O. 12866 or any 
successor order, and (ii) is likely to have a significant adverse 
effect on the supply, distribution, or use of energy; or (2) that is 
designated by OIRA as a significant energy action.''
    The BLM believes that the final rule may affect the locations that 
operators choose for future oil or gas development but will have little 
impact on an entity's decision to invest in energy development, the 
size of that development, or the production from that development. As a 
result of this rule, an entity holding existing nonproducing leases may 
choose to shift more future development to those existing leases or to 
develop non-Federal acreage instead of securing new Federal leases, and 
some entities may be relatively less likely to choose a new Federal 
lease to a comparable non-Federal lease. Also, any incremental changes 
in oil or gas production estimated to result from the rule's enactment 
would constitute a small fraction of total U.S. gas production, and any 
potential and temporary deferred production of oil would likewise 
constitute a small fraction of total U.S. oil production. Some 
commenters disagreed and pointed to the preference criteria as 
increasing the risk for litigation, which could shift development off 
Federal land and increase the cost to produce gas or oil. The BLM 
disagrees. The preference criteria under Sec.  3120.32 support the 
BLM's existing policy and direction to make a public interest 
determination, which has existed at least since 1988. See 53 FR 22828 
(June 17, 1988) (``It is Bureau policy prior to offering the lands to 
determine whether leasing will be in the public interest and to 
identify stipulation requirements, obtain surface management agency 
leasing recommendations and consent where applicable and required by 
law''). It will not have the impact stated in these comments. For these 
reasons, we do not

[[Page 30963]]

expect that the final rule will significantly impact the supply, 
distribution, or use of energy. As such, the rulemaking is not a 
``significant energy action'' as defined in E.O. 13211.

VI. Authors

    The principal authors of this final rule include: Peter Cowan, 
Senior Mineral Leasing Specialist in BLM Headquarters; Jennifer 
Spencer, Mineral Leasing Specialist in BLM Headquarters; William 
Lambert, Petroleum Engineer in BLM Headquarters; Natalie Eades, 
Attorney Advisor in DOI Office of the Solicitor. Technical support 
provided by: Scott Rickard, Economist in BLM Headquarters; Travis Kern, 
Program Analyst in BLM Headquarters; and Erik Vernon, Air Resources 
Program Lead in BLM Utah State Office. Assisted by: Duane Spencer, 
Deputy State Director of Minerals and Land in BLM Wyoming State Office; 
JulieAnn Serrano, Supervisory Land Law Examiner in BLM New Mexico State 
Office; and Darrin King, Senior Regulatory Analyst in BLM Headquarters.

List of Subjects

43 CFR Part 3000

    Public lands-mineral resources, Reporting and recordkeeping 
requirements.

43 CFR Part 3100

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

43 CFR Part 3110

    Government contracts, Oil and gas exploration, Public lands-mineral 
resources, Reporting and recordkeeping requirements.

43 CFR Part 3120

    Government contracts, Oil and gas exploration, Public lands-mineral 
resources, Reporting and recordkeeping requirements.

43 CFR Part 3130

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

43 CFR Part 3140

    Government contracts, Hydrocarbons, Mineral royalties, Oil and gas 
exploration, Public lands-mineral resources, Reporting and 
recordkeeping requirements.

43 CFR Part 3150

    Administrative practice and procedure, Alaska, Oil and gas 
exploration, Public lands-mineral resources, Reporting and 
recordkeeping requirements, Surety bonds.

43 CFR Part 3160

    Administrative practice and procedure, Government contracts, 
Indians-lands, Mineral royalties, Oil and gas exploration, Penalties, 
Public lands-mineral resources, Reporting and recordkeeping 
requirements.

43 CFR Part 3170

    Administrative practice and procedure, Flaring, Immediate 
assessments, Indians-lands, Mineral royalties, Oil and gas exploration, 
Oil and gas measurement, Public lands-mineral resources, Reporting and 
record keeping requirements, Royalty-free use, Venting.

43 CFR Part 3180

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

    For the reasons set out in the preamble, the Bureau of Land 
Management amends 43 CFR parts 3000, 3100, 3110, 3120, 3130, 3140, 
3150, 3160, 3170, and 3180 as follows:

0
1. Revise part 3000 to read as follows:

PART 3000--MINERALS MANAGEMENT: GENERAL

Sec.
3000.5 Definitions.
3000.10 Nondiscrimination.
3000.20 False statements.
3000.30 Unlawful interests.
3000.40 Appeals.
3000.41 Severability.
3000.50 Limitations on time to institute suit to challenge a 
decision of the Secretary.
3000.60 Filing of documents.
3000.70 Multiple development.
3000.80 Management of Federal minerals from reserved mineral 
estates.
3000.90 Enforcement actions under the United States Code.
3000.100 Fees in general.
3000.110 Processing fees on a case-by-case basis.
3000.120 Fee schedule for fixed fees.

PART 3000--MINERALS MANAGEMENT: GENERAL

    Authority:  16 U.S.C. 3101 et seq.; 30 U.S.C. 181 et seq., 301-
306, 351-359, and 601 et seq.; 31 U.S.C. 9701; 40 U.S.C. 471 et 
seq.; 42 U.S.C. 6508; 43 U.S.C. 1701 et seq.; and Pub. L. 97-35, 95 
Stat. 357.


Sec.  3000.5  Definitions.

    As used in 43 CFR parts 3000 and 3100, the term:
    Acquired lands means lands which the United States obtained by deed 
through purchase or gift, or through condemnation proceedings, 
including lands previously disposed of under the public land laws 
including the mining laws.
    Acreage for which expressions of interest have been submitted means 
acreage that is identified in an expression of interest received by the 
BLM, that has not been proposed for leasing in any pending sale or 
other expression of interest pending BLM disposition, and for which the 
BLM may lawfully issue an oil and gas lease.
    Acres offered for lease means all acres that the BLM has offered 
for oil and gas lease, regardless of whether those acres are acreage 
for which expressions of interest have been submitted.
    Act or MLA means the Mineral Leasing Act of 1920, as amended and 
supplemented (30 U.S.C. 181 et seq.).
    Anniversary date means the same day and month in succeeding years 
as that on which the lease became effective.
    Authorized officer means any BLM employee authorized to perform the 
duties described in parts 3000 and 3100.
    BLM or Bureau means the Bureau of Land Management.
    Director means the Director of the Bureau of Land Management.
    Gas means any fluid, either combustible or noncombustible, which is 
produced in a natural state from the earth and which maintains a 
gaseous or rarefied state at ordinary temperatures and pressure 
conditions.
    Interest means ownership in a lease, or prospective lease, of all 
or a portion of the record title, working interest, operating rights, 
overriding royalty, payments out of production, carried interests, net 
profit share or similar instrument for participation in the benefit 
derived from a lease. An interest may be created by direct or indirect 
ownership, including options. Interest does not mean stock ownership, 
stockholding or stock control in an application, offer, competitive bid 
or lease, except for purposes of acreage limitations in 43 CFR 3101.20 
and qualifications of lessees in 43 CFR subpart 3102.
    Oil means all nongaseous hydrocarbon substances other than those 
substances leasable as coal, oil shale or gilsonite (including all 
vein-type solid hydrocarbons).
    ONRR means the Office of Natural Resources Revenue.
    Party in interest means a party who is or will be vested with any 
interest under

[[Page 30964]]

the lease as defined in this section. No one is a sole party in 
interest with respect to an application, offer, competitive bid or 
lease in which any other party has an interest.
    Person means any individual, firm, corporation, association, 
partnership, consortium, or joint venture.
    Proper BLM office means the Bureau of Land Management state office 
having jurisdiction over the lands subject to the regulations in parts 
3000 and 3100.
    (See 43 CFR 1821.10 for office location and area of jurisdiction of 
Bureau of Land Management offices.)
    Properly filed means a document or form submitted to the proper BLM 
office with all necessary information and payments, as provided in 43 
CFR subpart 1822.
    Public domain lands means lands, including mineral estates, which 
never left the ownership of the United States, lands which were 
obtained by the United States in exchange for public domain lands, 
lands which have reverted to the ownership of the United States through 
the operation of the public land laws and other lands specifically 
identified by the Congress as part of the public domain.
    Secretary means the Secretary of the Interior.
    Surface managing agency means any Federal agency, other than the 
BLM, having management responsibility for the surface resources that 
overlay federally owned minerals.


Sec.  3000.10  Nondiscrimination.

    Any person acquiring a lease under this chapter must comply fully 
with the equal opportunity provisions of Executive Order 11246 dated 
September 24, 1965, as amended, and the rules, regulations and relevant 
orders of the Secretary of Labor (41 CFR part 60 and 43 CFR part 17).


Sec.  3000.20  False statements.

    As provided in 18 U.S.C. 1001, it is a crime punishable by 
imprisonment or a fine, or both, for any person knowingly and willfully 
to submit or cause to be submitted to any agency of the United States 
any false or fraudulent statement(s) as to any matter within the 
agency's jurisdiction.


Sec.  3000.30  Unlawful interests.

    No member of, or delegate to, Congress, or Resident Commissioner, 
and no employee of the Department of the Interior, except as provided 
in 43 CFR part 20, is allowed or entitled to acquire or hold any 
Federal lease, or interest therein. (Officer, agent or employee of the 
Department--see 43 CFR part 20; Member of Congress--see R.S. 3741; 41 
U.S.C. 22; 18 U.S.C. 431-433.)


Sec.  3000.40  Appeals.

    Except as provided in 43 CFR 3000.120, 3101.53(b), 3103.1, 3165.4, 
and 3427.2, any party adversely affected by a decision of the 
authorized officer made pursuant to the provisions of 43 CFR parts 3000 
or 3100 has a right of appeal pursuant to 43 CFR part 4.


Sec.  3000.41  Severability.

    If a court holds any section or its paragraphs of the regulations 
in parts 3000 through 3180 or their applicability to any person or 
circumstance invalid, the remainder of these rules and their 
applicability to other persons or circumstances will not be affected.


Sec.  3000.50  Limitations on time to institute suit to challenge a 
decision of the Secretary.

    No action challenging a decision of the Secretary involving any oil 
or gas lease (including decisions on offers or applications to lease) 
can be maintained unless such action is commenced or taken within 90 
days after the final decision of the Secretary relating to such matter.


Sec.  3000.60  Filing of documents.

    All necessary documents must be filed in the proper BLM office. 
Documents may be submitted to the BLM using hard-copy delivery 
services, in-person delivery, or by electronic filing. When using hard-
copy delivery services or in-person delivery, the document will be 
considered filed only when received during regular business hours in 
the proper BLM office. See 43 CFR part 1820, subpart 1822.


Sec.  3000.70  Multiple development.

    The granting of a permit or lease for the prospecting, development 
or production of deposits of any one mineral does not preclude the 
issuance of other permits or leases for the same lands for deposits of 
other minerals with suitable stipulations for simultaneous operation, 
nor the allowance of applicable entries, locations or selections of 
leased lands with a reservation of the mineral deposits to the United 
States.


Sec.  3000.80  Management of Federal minerals from reserved mineral 
estates.

    Where nonmineral public land disposal statutes provide that in 
conveyances of title all or certain minerals are reserved to the United 
States together with the right to prospect for, mine and remove the 
minerals under applicable law and regulations as the Secretary may 
prescribe, the lease or sale, and administration and management of the 
use of such minerals will be accomplished under the regulations of 43 
CFR parts 3000 and 3100. Such mineral estates include, but are not 
limited to, those that have been or will be reserved under the 
authorities of the Small Tract Act of June 1, 1938, as amended (43 
U.S.C. 682(b)) and the Federal Land Policy and Management Act of 1976 
(43 U.S.C. 1701 et seq.).


Sec.  3000.90  Enforcement actions under the United States Code.

    The United States Department of Justice is the agency responsible 
for the enforcement actions described in 30 U.S.C. 195, which makes it 
unlawful for any person to organize or participate in any scheme, 
arrangement, plan, or agreement to circumvent or defeat the provisions 
of the MLA or its implementing regulations; or to seek to obtain or to 
obtain any money or property by means of false statements of material 
facts or by failing to state materials facts concerning the:
    (a) Value of any lease or portion thereof issued or to be issued 
under the MLA;
    (b) Availability of any land for leasing under the MLA;
    (c) Ability of any person to obtain leases under the MLA; or
    (d) Provisions of the MLA and its implementing regulations.


Sec.  3000.100  Fees in general.

    (a) Setting fees. Fees may be statutorily set fees, relatively 
nominal filing fees, or processing fees intended to reimburse the BLM 
for its reasonable processing costs. For processing fees, the BLM takes 
into account the factors in section 304(b) of the Federal Land Policy 
and Management Act of 1976 (FLPMA) (43 U.S.C. 1734(b)) before deciding 
a fee. The BLM considers the factors for each type of document when the 
processing fee is a fixed fee and for each individual document when the 
fee is decided on a case-by-case basis, as explained in Sec.  3000.110.
    (b) Conditions for filing. The BLM will not accept a document that 
the applicant submits without the proper filing or processing fee 
amounts except for documents where the BLM sets the fee on a case-by-
case basis. Fees are not refundable except as provided for case-by-case 
fees in Sec.  3000.110. The BLM will keep the fixed filing or 
processing fee as a service charge even if the BLM does not approve the 
application or the applicant withdraws it completely or partially.
    (c) Periodic adjustment. The BLM will periodically adjust fees 
established in this subchapter according to changes in

[[Page 30965]]

the Implicit Price Deflator for Gross Domestic Product, which is 
published quarterly by the U.S. Department of Commerce. Because the fee 
recalculations are simply based on a mathematical formula, the BLM will 
change the fees in final rules without opportunity for notice and 
comment.
    (d) Timing of fee applicability. (1) For a document that the BLM 
received before June 22, 2024, the BLM will not charge a fixed fee or a 
case-by-case fee under this subchapter for processing that document, 
except for fees applicable under then-existing regulations.
    (2) For a document that the BLM receives on or after June 22, 2024, 
the applicant must include the required fixed fees with the documents 
filed, as provided in Sec.  3000.120(a) of this chapter, and the 
applicant is subject to case-by-case processing fees as provided in 
Sec.  3000.110 and under other provisions of this chapter.


Sec.  3000.110  Processing fees on a case-by-case basis.

    (a) Fees in this subchapter are designated either as case-by-case 
fees or as fixed fees. The fixed fees are established in this 
subchapter for specified types of documents. However, if the BLM 
decides at any time that a particular document designated for a fixed 
fee will have a unique processing cost, such as the preparation of an 
Environmental Impact Statement, the BLM may set the fee under the case-
by-case procedures in this section.
    (b) For case-by-case fees, the BLM measures the ongoing processing 
cost for each individual document and considers the factors in section 
304(b) of FLPMA on a case-by-case basis according to the following 
procedures:
    (1) The applicant may request the BLM's approval to do all or part 
of any study or other activity according to standards the BLM 
specifies, thereby reducing the BLM's costs for processing the 
document, in accordance with all other applicable laws and regulations.
    (2) Before performing any case processing, the BLM will give the 
applicant a written estimate of the proposed fee for reasonable 
processing costs after the BLM considers the FLPMA section 304(b) 
factors.
    (3) The applicant may comment on the proposed fee.
    (4) The BLM will then give the applicant the final estimate of the 
processing fee amount after considering the applicant's comments and 
any BLM-approved work that the applicant will do.
    (i) If the BLM encounters higher or lower processing costs than 
anticipated, the BLM will re-estimate the reasonable processing costs 
following the procedure in paragraphs (b)(1) through (4) of this 
section, but the BLM will not stop ongoing processing unless the 
applicant does not pay in accordance with paragraph (b)(5) of this 
section.
    (ii) If the fee the applicant would pay under this paragraph (b)(4) 
is less than the BLM's actual costs as a result of consideration of the 
FLPMA section 304(b) factors, and the BLM is not able to process the 
document promptly because of the unavailability of funding or other 
resources, the applicant will have the option to pay the BLM's actual 
costs to process the document.
    (iii) Once processing is complete, the BLM will refund to the 
applicant any money that the BLM did not spend on processing costs.
    (5)(i) The BLM will periodically estimate what its reasonable 
processing costs will be for a specific period and will bill the 
applicant for that period. Payment is due to the BLM 30 days after the 
applicant receives its bill. The BLM will stop processing the document 
if the applicant does not pay the bill by the date payment is due.
    (ii) If a periodic payment turns out to be more or less than the 
BLM's reasonable processing costs for the period, the BLM will adjust 
the next billing accordingly or make a refund. Do not deduct any amount 
from a payment without the BLM's prior written approval.
    (6) The applicant must pay the entire fee before the BLM will issue 
the final document.
    (7) The applicant may appeal the BLM's estimated processing costs 
in accordance with the regulations in 43 CFR part 4, subpart E. The 
applicant may also appeal any determination the BLM makes under 
paragraph (a) of this section that a document designated for a fixed 
fee will be processed as a case-by-case fee. The BLM will not process 
the document further until the appeal is resolved, in accordance with 
paragraph (b)(5)(i) of this section, unless the applicant pays the fee 
under protest while the appeal is pending. If the appeal results in a 
decision changing the proposed fee, the BLM will adjust the fee in 
accordance with paragraph (b)(5)(ii) of this section.


Sec.  3000.120  Fee schedule for fixed fees.

    (a) The table in this section lists the services that require 
payment of fixed fees to the BLM. The fixed fee amounts are posted on 
the BLM website (https://www.blm.gov) and published in a Federal 
Register notice. These fees are nonrefundable and must be included with 
documents filed under this chapter. Fees will be adjusted annually 
according to the change in the Implicit Price Deflator for Gross 
Domestic Product since the previous adjustment and will subsequently be 
posted on the BLM website (https://www.blm.gov) and announced annually 
in the Federal Register before October 1 each year. Revised fees are 
effective each year on October 1.

        Table 1 to Paragraph (a)--Processing and Filing Fee Table
------------------------------------------------------------------------
                             Document/action
-------------------------------------------------------------------------
Oil & Gas (parts 3100, 3110, 3120, 3130, 3150, 3160, and 3180):
    Competitive lease application
    Leasing and compensatory royalty agreements under right-of-way
     pursuant to subpart 3109.
    Lease consolidation
    Assignment and transfer of record title or operating rights
    Overriding royalty transfer, payment out of production
    Name change; corporate merger; sheriff's deed; dissolution of
     corporation, partnership, or trust; or transfer to heir/devisee
    1Lease reinstatement, Class I
    Geophysical exploration permit application--all states
    Renewal of exploration permit--Alaska
    Final application for Federal unit agreement approval, Federal unit
     agreement expansion, and Federal subsurface gas storage application
    Designation of successor operator for all Federal agreements, except
     for contracted unit agreements that contain no Federal lands.
Geothermal (part 3200):
    Noncompetitive lease application
    Competitive lease application
    Assignment and transfer of record title or operating rights

[[Page 30966]]

 
    Name change, corporate merger or transfer to heir/devisee
    Lease consolidation
    Lease reinstatement
    Nomination of lands
    plus per acre nomination fee
    Site license application
    Assignment or transfer of site license
Coal (parts 3400, 3470):
    License to mine application
    Exploration license application
    Lease or lease interest transfer
Leasing of Solid Minerals Other Than Coal and Oil Shale (parts 3500,
 3580):
    Applications other than those listed below
    Prospecting permit application amendment
    Extension of prospecting permit
    Lease modification or fringe acreage lease
    Lease renewal
    Assignment, sublease, or transfer of operating rights
    Transfer of overriding royalty
    Use permit
    Shasta and Trinity hardrock mineral lease
    Renewal of existing sand and gravel lease in Nevada
Public Law 359; Mining in Powersite Withdrawals: General (part 3730):
    Notice of protest of placer mining operations
Mining Law Administration (parts 3800, 3810, 3830, 3860, 3870):
    Application to open lands to location
    Notice of location *
    Amendment of location
    Transfer of mining claim/site
    Recording an annual FLPMA filing
    Deferment of assessment work
    Recording a notice of intent to locate mining claims on Stockraising
     Homestead Act lands
    Mineral patent adjudication
    Adverse claim
    Protest
Oil Shale Management (parts 3900, 3910, 3930):
    Exploration license application
    Application for assignment or sublease of record title or overriding
     royalty
Onshore Oil and Gas Operations and Production (parts 3160, 3170):
    Application for Permit to Drill
------------------------------------------------------------------------
* To record a mining claim or site location, this processing fee along
  with the initial maintenance fee and the one-time location fee
  required by statute 43 CFR part 3833 must be paid.

    (b) The amount of a fixed fee is not subject to appeal to the 
Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E.

0
2. Revise part 3100 to read as follows:

PART 3100--OIL AND GAS LEASING

Subpart 3100--Oil and Gas Leasing: General
Sec.
3100.3 Authority.
3100.5 Definitions.
3100.9 Information collection.
3100.10 Helium.

Drainage

3100.21 Compensation for drainage.
3100.22 Drilling and production or payment of compensatory royalty.

Options

3100.31 Enforceability.
3100.32 Effect of option on acreage.
3100.33 Option statements.
3100.40 Public availability of information.
Subpart 3101--Issuance of Leases

Lease Terms and Conditions

3101.11 Lease form.
3101.12 Surface use rights.
3101.13 Stipulations and information notices.
3101.14 Modification, waiver, or exception.

Acreage Limitations

3101.21 Public domain lands.
3101.22 Acquired lands.
3101.23 Excepted acreage.
3101.24 Excess acreage.
3101.25 Computation.
3101.30 Leases within unit areas, joinder evidence required.
3101.40 Terminated leases.

Federal Lands Administered by an Agency Other Than the Bureau of Land 
Management

3101.51 General requirements.
3101.52 Action by the Bureau of Land Management.
3101.53 Appeals.
3101.60 State's or charitable organization's ownership of surface 
overlying federally owned minerals.
Subpart 3102--Qualifications of Lessees
3102.10 Who may hold leases.
3102.20 Non-U.S. Citizens.
3102.30 Minors.
3102.40 Signature.

Compliance, Certification of Compliance and Evidence

3102.51 Compliance.
3102.52 Certification of compliance.
3102.53 Evidence of compliance.
Subpart 3103--Fees, Rentals, and Royalty
3103.1 Fiscal terms.

Payments

3103.11 Form of remittance.
3103.12 Where remittance is submitted.

Rentals

3103.21 Rental requirements.
3103.22 Annual rental payments.

[[Page 30967]]

Royalties

3103.31 Royalty on production.
3103.32 Minimum royalties.

Production Incentives

3103.41 Royalty reductions.
3103.42 Suspension of operations and/or production.
Subpart 3104--Bonds
3104.1 Bond amounts.
3104.10 Bond obligations.
3104.20 Lease bond.
3104.30 Statewide bonds.
3104.40 Surface owner protection bond.
3104.50 Increased amount of bonds.
3104.60 Where filed and number of copies.
3104.70 Default.
3104.80 Termination of period of liability.
3104.90 Unit operator and nationwide bonds held prior to June 22, 
2024.
Subpart 3105--Cooperative Conservation Provisions
3105.10 Cooperative or unit agreement.

Communitization Agreements

3105.21 Where filed.
3105.22 Purpose.
3105.23 Requirements.
3105.24 Communitization agreement terms.

Operating, Drilling, or Development Contracts

3105.31 Where filed.
3105.32 Purpose.
3105.33 Requirements.

Subsurface Storage of Oil and Gas

3105.41 Where filed.
3105.42 Purpose.
3105.43 Requirements.
3105.44 Extension of lease term.
3105.50 Consolidation of leases.
Subpart 3106--Transfers by Assignment, Sublease, or Otherwise
3106.10 Transfers, general.
3106.20 Qualifications of assignees and transferees.
3106.30 Fees.

Forms

3106.41 Transfers of record title and of operating rights 
(subleases).
3106.42 Transfers of other interests, including royalty interests 
and production payments.
3106.43 Mass transfers.
3106.50 Description of lands.
3106.60 Bond requirements.

Approval of Transfer or Assignment

3106.71 Failure to qualify.
3106.72 Continuing obligation of an assignor or transferor.
3106.73 Lease account status.
3106.74 Effective date of transfer.
3106.75 Effect of transfer.
3106.76 Obligations of assignee or transferee.

Other Types of Transfers

3106.81 Heirs and devisees.
3106.82 Change of name.
3106.83 Corporate mergers and dissolution of corporations, 
partnerships, and trusts.
3106.84 Sheriff's sale/deed.
Subpart 3107--Continuation and Extension
3107.10 Extension by drilling.

Production

3107.21 Continuation by production.
3107.22 Cessation of production.
3107.23 Leases capable of production.

Extension of Leases Within Agreements

3107.31 Leases committed to an agreement.
3107.32 Segregation of leases committed in part.
3107.40 Extension by elimination.

Extension of Leases Segregated by Assignment

3107.51 Extension after discovery on other segregated portions.
3107.52 Undeveloped parts of leases in their extended term.
3107.53 Undeveloped parts of producing leases.
3107.60 Extension of reinstated leases.

Other Extension Types

3107.71 Payment of compensatory royalty.
3107.72 Subsurface storage of oil and gas.
Subpart 3108--Relinquishment, Termination, Cancellation
3108.10 Relinquishment.

Termination by Operation of Law and Reinstatement

3108.21 Automatic termination.
3108.22 Reinstatement at existing rental and royalty rates: Class I 
reinstatements.
3108.23 Reinstatement at higher rental and royalty rates: Class II 
reinstatements.
3108.30 Cancellation.
3108.40 Bona fide purchasers.
3108.50 Waiver or suspension of lease rights.
Subpart 3109--Leasing Under Special Acts

Rights-of-Way

3109.11 Generally.
3109.12 Application.
3109.13 Notice.
3109.14 Award of lease or compensatory royalty agreement.
3109.15 Compensatory royalty agreement or lease.
3109.20 Units of the National Park System.
3109.30 Shasta and Trinity Units of the Whiskeytown-Shasta-Trinity 
National Recreation Area.

    Authority:  25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, 
and 1751; 43 U.S.C. 1701 et seq.; and 42 U.S.C. 15801.

Subpart 3100--Onshore Oil and Gas Leasing: General


Sec.  3100.3  Authority.

    (a)(1) Public domain. Oil and gas in public domain lands and lands 
returned to the public domain under 43 CFR part 2370 are subject to 
lease under the Mineral Leasing Act of 1920, as amended and 
supplemented (30 U.S.C. 181 et seq.), by acts, including, but not 
limited to, section 1009 of the Alaska National Interest Lands 
Conservation Act (16 U.S.C. 3148).
    (2) Exceptions. The following lands are not subject to lease.
    (i) Units of the National Park System, including lands withdrawn by 
section 206 of the Alaska National Interest Lands Conservation Act, 
except as provided in paragraph (g)(4) of this section;
    (ii) Indian reservations;
    (iii) Incorporated cities, towns and villages;
    (iv) Naval petroleum and oil shale reserves;
    (v) Lands north of 68 degrees north latitude and east of the 
western boundary of the National Petroleum Reserve--Alaska;
    (vi) Lands recommended for wilderness allocation by the surface 
managing agency;
    (vii) Lands within the BLM's wilderness study areas;
    (viii) Lands designated by Congress as wilderness study areas, 
except where oil and gas leasing is specifically allowed to continue by 
the statute designating the study area;
    (ix) Lands within areas allocated for wilderness or further 
planning in Executive Communication 1504, Ninety-Sixth Congress (House 
Document numbered 96-119), unless such lands are allocated to uses 
other than wilderness by a land and resource management plan or have 
been released to uses other than wilderness by an Act of Congress;
    (x) Lands within the National Wilderness Preservation System, 
subject to valid existing rights under section 4(d)(3) of the 
Wilderness Act (16 U.S.C. 1133) established before midnight, December 
31, 1983, unless otherwise provided by law;
    (xi) Subject to valid existing rights, lands within the National 
Wild and Scenic Rivers System and that constitute the bed or bank or 
are situated within one-quarter mile of the bank of any river 
designated as a wild river under the Wild and Scenic Rivers Act (16 
U.S.C. 1280), lands within the National Wild and Scenic Rivers System 
that constitute the bed or bank or are situated within one-quarter mile 
of the bank of certain rivers designated as scenic or recreational, and 
in some cases, designating legislation may apply a different boundary 
extent. Lands within the National Wild and Scenic Rivers System that 
constitute the bed or bank or are situated within one-half mile of the 
bank of any river designated a wild river by the Alaska National 
Interest Lands Conservation Act (16 U.S.C. 3148); and

[[Page 30968]]

    (xii) Wildlife refuge lands, which are those lands embraced in a 
withdrawal of lands of the United States for the protection of all 
species of wildlife within a particular area. Sole and complete 
jurisdiction over such lands for wildlife conservation purposes is 
vested in the Fish and Wildlife Service even though such lands may be 
subject to prior rights for other public purposes or, by the terms of 
the withdrawal order, may be subject to mineral leasing. No expressions 
of interest covering wildlife refuge lands will be considered for oil 
and gas leasing, except as provided by applicable law.
    (b)(1) Acquired lands. Oil and gas in acquired lands are subject to 
lease under the Mineral Leasing Act for Acquired Lands of August 7, 
1947, as amended (30 U.S.C. 351 et seq.).
    (2) Exceptions. The following lands are not subject to lease.
    (i) Units of the National Park System, except as provided in 
paragraph (g)(4) of this section;
    (ii) Incorporated cities, towns and villages;
    (iii) Naval petroleum and oil shale reserves;
    (iv) Tidelands or submerged coastal lands within the continental 
shelf adjacent or littoral to lands within the jurisdiction of the 
United States;
    (v) Lands acquired by the United States for development of helium, 
fissionable material deposits or other minerals essential to the 
defense of the country, except oil, gas and other minerals subject to 
leasing under the Act;
    (vi) Lands reported as excess under the Federal Property and 
Administrative Services Act of 1949;
    (vii) Lands acquired by the United States by foreclosure or 
otherwise for resale;
    (viii) Lands recommended for wilderness allocation by the surface 
managing agency;
    (ix) Lands within the BLM's wilderness study areas;
    (x) Lands designated by Congress as wilderness study areas, except 
where oil and gas leasing is specifically allowed to continue by the 
statute designating the study area;
    (xi) Lands within areas allocated for wilderness or further 
planning in Executive Communication 1504, Ninety-Sixth Congress (House 
Document numbered 96-119), unless such lands are allocated to uses 
other than wilderness by a land and resource management plan or have 
been released to uses other than wilderness by an Act of Congress;
    (xii) Lands within the National Wilderness Preservation System, 
subject to valid existing rights under section 4(d)(3) of the 
Wilderness Act (16 U.S.C. 1133) established before midnight, December 
31, 1983, unless otherwise provided by law;
    (xiii) Subject to valid existing rights, lands within the National 
Wild and Scenic Rivers System and that constitute the bed or bank or 
are situated within one-quarter mile of the bank of any river 
designated as a wild river under the Wild and Scenic Rivers Act (16 
U.S.C. 1280), lands within the National Wild and Scenic Rivers System 
that constitute the bed or bank or are situated within one-quarter mile 
of the bank of certain rivers designated as scenic or recreational, and 
in some cases, designating legislation may apply a different boundary 
extent. Lands within the National Wild and Scenic Rivers System that 
constitute the bed or bank or are situated within one-half mile of the 
bank of any river designated a wild river by the Alaska National 
Interest Lands Conservation Act (16 U.S.C. 3148); and
    (xiv) Wildlife refuge lands, which are those lands embraced in a 
withdrawal of lands of the United States for the protection of all 
species of wildlife within a particular area. Sole and complete 
jurisdiction over such lands for wildlife conservation purposes is 
vested in the Fish and Wildlife Service even though such lands may be 
subject to prior rights for other public purposes or, by the terms of 
the withdrawal order, may be subject to mineral leasing. No expressions 
of interest for wildlife refuge lands will be considered except as 
provided in applicable law.
    (c) National Petroleum Reserve--Alaska is subject to lease under 
the Department of the Interior Appropriations Act, Fiscal Year 1981 (42 
U.S.C. 6508).
    (d) Where oil or gas is being drained from lands otherwise 
unavailable for leasing, there is implied authority in the agency 
having jurisdiction of those lands to grant authority to the BLM to 
lease such lands (see 43 U.S.C. 1457; also Attorney General's Opinion 
of April 2, 1941 (Vol. 40 Op. Atty. Gen. 41)).
    (e) Where lands previously withdrawn or reserved from the public 
domain are no longer needed by the agency for which the lands were 
withdrawn or reserved and such lands are retained by the General 
Services Administration, or where acquired lands are declared as excess 
to or surplus by the General Services Administration, authority to 
lease such lands may be transferred to the Department in accordance 
with the Federal Property and Administrative Services Act of 1949 and 
the Mineral Leasing Act for Acquired Lands, as amended.
    (f) The Act of May 21, 1930 (30 U.S.C. 301-306), authorizes the 
leasing of oil and gas deposits under certain rights-of-way to the 
owner of the right-of-way or any assignee.
    (g)(1) Certain lands in Nevada. The Act of May 9, 1942 (56 Stat. 
273), as amended by the Act of October 25, 1949 (63 Stat. 886), 
authorizes leasing on certain lands in Nevada.
    (2) Lands patented to the State of California. The Act of March 3, 
1933 (47 Stat. 1487), as amended by the Act of June 5, 1936 (49 Stat. 
1482) and the Act of June 29, 1936 (49 Stat. 2026), authorizes leasing 
on certain lands patented to the State of California.
    (3) National Forest Service Lands in Minnesota. The Act of June 30, 
1950 (16 U.S.C. 508(b)) authorizes leasing on certain National Forest 
Service Lands in Minnesota.
    (4) Units of the National Park System. The Secretary is authorized 
to permit mineral leasing in the following units of the National Park 
System if the Secretary finds that such disposition would not have 
significant adverse effects on the administration of the area and if 
lease operations can be conducted in a manner that will preserve the 
scenic, scientific and historic features contributing to public 
enjoyment of the area, pursuant to the following authorities:
    (i) Lake Mead National Recreation Area--The Act of October 8, 1964 
(16 U.S.C. 460n et seq.).
    (ii) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National 
Recreation Area--The Act of November 8, 1965 (79 Stat. 1295; 16 U.S.C. 
460q et seq.).
    (iii) Ross Lake and Lake Chelan National Recreation Areas--The Act 
of October 2, 1968 (82 Stat. 926; 16 U.S.C. 90 et seq.).
    (iv) Glen Canyon National Recreation Area--The Act of October 27, 
1972 (86 Stat. 1311; 16 U.S.C. 460dd et seq.).
    (5) Shasta and Trinity Units of the Whiskeytown-Shasta-Trinity 
National Recreation Area. Section 6 of the Act of November 8, 1965 
(Pub. L. 89-336; 79 Stat. 1295), authorizes the Secretary of the 
Interior to permit the removal of leasable minerals from lands (or 
interest in lands) within the recreation area under the jurisdiction of 
the Secretary of Agriculture in accordance with the Mineral Leasing Act 
of February 25, 1920, as amended (30 U.S.C. 181 et seq.), or the 
Acquired Lands Mineral Leasing Act of August 7, 1947 (30 U.S.C. 351 et 
seq.), if the Secretary finds that such disposition would not have

[[Page 30969]]

significant adverse effects on the purpose of the Central Valley 
project or the administration of the recreation area.
    (h) Under the Recreation and Public Purposes Act, as amended (43 
U.S.C. 869 et seq.), all lands within Recreation and Public Purposes 
leases and patents are subject to lease under the provisions of this 
part, subject to such conditions as the Secretary deems appropriate.
    (i)(1) Coordination lands are those lands withdrawn or acquired by 
the United States and made available to the States by cooperative 
agreements entered into between the Fish and Wildlife Service and the 
game commissions of the various States, in accordance with the Fish and 
Wildlife Coordination Act (16 U.S.C. 661), or by long-term leases or 
agreements between the Department of Agriculture and the game 
commissions of the various States pursuant to the Bankhead-Jones Farm 
Tenant Act (50 Stat. 525), as amended, where such lands were 
subsequently transferred to the Department of the Interior, with the 
Fish and Wildlife Service as the custodial agency of the United States.
    (2) Representatives of the BLM and the Fish and Wildlife Service 
will, in cooperation with the authorized members of the various State 
game commissions, confer for the purpose of determining by agreement 
those coordination lands which will not be subject to oil and gas 
leasing. Coordination lands not closed to oil and gas leasing may be 
subject to leasing on the imposition of such stipulations as are agreed 
upon by the State Game Commission, the Fish and Wildlife Service and 
the BLM.
    (j) No lands within a refuge in Alaska open to leasing will be 
available until the Fish and Wildlife Service has first completed 
compatibility determinations.


Sec.  3100.5  Definitions.

    As used in this part, the term:
    Actual drilling operations includes not only the physical drilling 
of a well, but also the testing, completing or equipping of such well 
for production.
    Assignment means a transfer of all or a portion of the lessee's 
record title interest in a lease.
    Bid means an amount of remittance offered as partial compensation 
for a lease equal to or in excess of the national minimum acceptable 
bonus bid set by statute or by the Secretary, submitted by a person for 
a lease parcel in a competitive lease sale. For leases or compensatory 
royalty agreements issued under 43 CFR subpart 3109, ``bid'' means an 
amount or percent of royalty or compensatory royalty that the owner or 
lessee must pay for the extraction of the oil and gas underlying the 
right-of-way.
    Competitive auction means an in-person or internet-based bidding 
process where leases are offered to the highest bidder.
    Exception means (as used for lease stipulations) a limited 
exemption, for a particular site within the leasehold, to a 
stipulation.
    Lessee means a person holding record title in a lease issued by the 
United States.
    Modification means (as used for lease stipulations) a change to the 
provisions of a lease stipulation for some or all sites within the 
leasehold and either temporarily or for the term of the lease.
    National Wildlife Refuge System Lands means lands and water, or 
interests therein, administered by the Secretary as wildlife refuges, 
areas for the protection and conservation of fish and wildlife that are 
threatened with extinction; wildlife management areas; or waterfowl 
production areas.
    Oil and gas agreement means an agreement between lessees and the 
BLM to govern the development and allocation of production for existing 
leases and unleased lands, including, but not limited to, 
communitization agreements, compensatory royalty agreements, unit 
agreements, secondary recovery agreements, and gas storage agreements.
    Operating right (working interest) means the interest created out 
of a lease authorizing the holder of that right to enter upon the 
leased lands to conduct drilling and related operations, including 
production of oil or gas from such lands in accordance with the terms 
of the lease. Operating rights include the obligation to comply with 
the terms of the original lease, as it applies to the area or horizons 
for the interest acquired, including the responsibility to plug and 
abandon all wells that are no longer capable of producing, reclaim the 
lease site, and remedy environmental problems.
    Operating rights owner means a person holding operating rights in a 
lease issued by the United States. A lessee also may be an operating 
rights owner if the operating rights in a lease or portion thereof have 
not been severed from record title.
    Operator means any person, including, but not limited to, the 
lessee or operating rights owner, who has stated in writing to the 
authorized officer that it is responsible under the terms and 
conditions of the lease for the operations conducted on the leased 
lands or a portion thereof.
    Primary term of lease subject to section 4(d) of the Act prior to 
the revision of 1960 (30 U.S.C. 226-1(d)) means all periods of the life 
of the lease prior to its extension by reason of production of oil and 
gas in paying quantities; and
    Primary term of all other leases means the initial term of the 
lease, which is 10 years.
    Qualified bidder means any person in compliance with the laws and 
regulations governing a bid.
    Qualified lessee means any person in compliance with the laws and 
regulations governing the BLM issued leases held by that person.
    Record title means a lessee's interest in a lease, which includes 
the obligation to pay rent and the ability to assign and relinquish the 
lease. Record title includes the obligation to comply with the lease 
terms, including requirements relating to well operations and 
abandonment. Overriding royalty and operating rights are severable from 
record title interests.
    Responsible bidder means any person who has not defaulted on the 
payment of winning bids for BLM-issued oil and gas leases, is capable 
of fulfilling the requirements of onshore BLM oil and gas leases, and 
is in compliance with statutes and regulations applicable to oil and 
gas development or with the terms of a BLM-issued oil and gas lease. 
The term ``responsible bidder'' does not include persons who bid with 
no intention of paying a winning bid or persons who default on a 
winning bid.
    Responsible lessee means any person who has not defaulted on 
previous winning bids, is capable of fulfilling the requirements of 
onshore Federal oil and gas leases, and is in compliance with statutes 
applicable to oil and gas development or the terms of a BLM-issued oil 
and gas lease.
    Sublease means a transfer of a non-record title interest in a 
lease, i.e., a transfer of operating rights is normally a sublease, and 
a sublease also is a subsidiary arrangement between the lessee 
(sublessor) and the sublessee, but a sublease does not include a 
transfer of a purely financial interest, such as overriding royalty 
interest or payment out of production, nor does it affect the 
relationship imposed by a lease between the lessee(s) and the United 
States.
    Transfer means any conveyance of an interest in a lease by 
assignment, sublease or otherwise. This definition includes the terms: 
Assignment and Sublease.
    Unit operator means the person authorized under the unit agreement 
approved by the Department of the

[[Page 30970]]

Interior to conduct operations within the unit.
    Waiver means (as used for lease stipulations) a permanent exemption 
from a lease stipulation.


Sec.  3100.9  Information collection.

    (a) Authority: 44 U.S.C. 3501-3520
    (b)(1) Purpose. The Paperwork Reduction Act of 1995 generally 
provides that an agency may not conduct or sponsor, and notwithstanding 
any other provision of law, a person is not required to respond to a 
collection of information, unless the collection displays a currently 
valid Office of Management and Budget (OMB) Control Number. This part 
displays OMB control numbers assigned to information collection 
requirements contained in the BLM's regulations at 43 CFR part 3100. 
This section aids in fulfilling the requirements of the Paperwork 
Reduction Act to display current OMB Control Numbers for these 
information collection requirements. Interested persons should consult 
https://www.reginfo.gov for the most current information on these OMB 
control numbers; including among other things, the justification for 
the information collection requirements, description of likely 
respondents, estimated burdens, and current expiration dates.
    (2) Table 1 to Paragraph (b)--OMB control number assigned pursuant 
to the Paperwork Reduction Act.

------------------------------------------------------------------------
                                                            OMB control
                 43 CFR part or section                         No.
------------------------------------------------------------------------
Sec.  Sec.   3100, 3103.41, 3120, and Subpart 3162......       1004-0185
Sec.  Sec.   3106, 3135, and 3216.......................       1004-0034
Part 3130...............................................       1004-0196
Subpart 3195............................................       1004-0179
Sec.   3150.............................................       1004-0162
Sec.  Sec.   3160,* 3171, 3176, and 3177................       1004-0220
Sec.  Sec.   3172, 3173, 3174, 3175.....................       1004-0137
Sec.  Sec.   3162.3-1, 3178.5, 3178.7, 3178.8, 3178.9          1004-0211
 and Subpart 3179 *.....................................
------------------------------------------------------------------------
* Information collection requirements for onshore oil and gas operations
  are generally accounted for under OMB Control Number 1004-0220;
  however, information collection requirements pertaining to particular
  to waste prevention, production subject to royalties, and resource
  conservation are accounted for under OMB Control Number 1004-0211.

Sec.  3100.10  Helium.

    The ownership of and the right to extract helium from all gas 
produced from lands leased or otherwise disposed of under the Act have 
been reserved to the United States.

Drainage


Sec.  3100.21  Compensation for drainage.

    Upon a determination by the authorized officer that lands owned by 
the United States are being drained of oil or gas by wells drilled on 
adjacent lands, the authorized officer may execute agreements with the 
owners of adjacent lands whereby the United States and its lessees will 
be compensated for such drainage. Such agreements must be made with the 
consent of any lessee affected by an agreement. Such lands may also be 
offered for lease in accordance with 43 CFR part 3120.


Sec.  3100.22  Drilling and production or payment of compensatory 
royalty.

    Where lands in any leases are being drained of their oil or gas 
content by wells either on a Federal lease issued at a lower rate of 
royalty or on non-Federal lands, the lessee must both drill and produce 
all wells necessary to protect the leased lands from drainage. In lieu 
of drilling necessary wells, the lessee may, with the consent of the 
authorized officer, pay compensatory royalty in accordance with 43 CFR 
3162.2-4.

Options


Sec.  3100.31  Enforceability.

    (a) No option to acquire any interest in a lease is enforceable if 
entered into for a period of more than 3 years (including any renewal 
period that may be provided for in the option).
    (b) No option or renewal thereof is enforceable until a signed copy 
or notice of the option has been filed in the proper BLM office. Each 
such signed copy or notice must include:
    (1) The names and addresses of the parties thereto;
    (2) The serial number of the lease to which the option is 
applicable;
    (3) A statement of the number of acres and the type and percentage 
of interests to be conveyed and retained by the parties to the option, 
including the date and expiration date of the option.
    (c) The signatures of all parties to the option or their duly 
authorized agents. The signed copy or notice of the option required by 
this paragraph must contain or be accompanied by a signed statement by 
the holder of the option that entity is the sole party in interest in 
the option; if not, the entity must set forth the names and provide a 
description of the interest therein of the other interested parties, 
and provide a description of the agreement between them, if oral, and a 
copy of such agreement, if written.


Sec.  3100.32  Effect of option on acreage.

    The acreage to which the option is applicable will be charged both 
to the grantor of the option and the option holder. The acreage covered 
by an unexercised option remains charged during its term until notice 
of its relinquishment or surrender has been filed in the proper BLM 
office.


Sec.  3100.33  Option statements.

    Each option holder must file in the proper BLM office within 90 
days after June 30 and December 31 of each year a statement showing:
    (a) Any changes to the statements submitted under Sec.  3100.31(b); 
and
    (b) The number of acres covered by each option and the total 
acreage of all options held in each State.


Sec.  3100.40  Public availability of information.

    (a) All data and information concerning Federal and Indian minerals 
submitted under this part 3100 and parts 3120 through 3190 of this 
chapter are subject to 43 CFR part 2, except as provided in paragraph 
(c) of this section. 43 CFR part 2 includes the regulations of the 
Department of the Interior covering the public disclosure of data and 
information contained in Department of the Interior records. Certain 
mineral information not protected from public disclosure under 43 CFR 
part 2 may be made available for inspection without a Freedom of 
Information Act (FOIA) (5 U.S.C. 552) request.
    (b) When you submit data and information under this part 3100 and 
parts 3120 through 3190 of this chapter that you believe to be exempt 
from disclosure to the public, you must clearly mark each page that you 
believe includes confidential information. The BLM will keep all such 
data and information confidential to the extent allowed by 43 CFR 2.26.
    (c) Under the Indian Mineral Development Act of 1982 (IMDA) (25 
U.S.C. 2101 et seq.), the Department of the Interior will hold as 
privileged proprietary information of the affected Indian or Indian 
Tribe--
    (1) All findings forming the basis of the Secretary's intent to 
approve or disapprove any Minerals Agreement under IMDA; and
    (2) All projections, studies, data, or other information concerning 
a Minerals Agreement under IMDA, regardless of the date received, 
related to:
    (i) The terms, conditions, or financial return to the Indian 
parties;
    (ii) The extent, nature, value, or disposition of the Indian 
mineral resources; or
    (iii) The production, products, or proceeds thereof.

[[Page 30971]]

    (d) For information concerning Indian minerals not covered by 
paragraph (c) of this section:
    (1) The BLM will withhold such records as may be withheld under an 
exemption to FOIA when it receives a request for information related to 
tribal or Indian minerals held in trust or subject to restrictions on 
alienation;
    (2) The BLM will notify the Indian mineral owner(s) identified in 
the records of the Bureau of Indian Affairs (BIA) and give them a 
reasonable period of time to state objections to disclosure, using the 
standards and procedures of 43 CFR 2.28, before making a decision about 
the applicability of FOIA exemption 4 to:
    (i) Information obtained from a person outside the United States 
Government; when
    (ii) Following consultation with a submitter under 43 CFR 2.28, the 
BLM determines that the submitter does not have an interest in 
withholding the records that can be protected under FOIA; but
    (iii) The BLM has reason to believe that disclosure of the 
information may result in commercial or financial injury to the Indian 
mineral owner(s) but is uncertain that such is the case.

Subpart 3101--Issuance of Leases

Lease Terms and Conditions


Sec.  3101.11  Lease form.

    A lease will be issued only on the standard form approved by the 
Director.


Sec.  3101.12  Surface use rights.

    A lessee will have the right to use only so much of the leased 
lands as is necessary to explore for, drill for, mine, extract, remove 
and dispose of all the leased resource in a leasehold subject to 
applicable requirements, including stipulations attached to the lease, 
restrictions deriving from nondiscretionary statutes, and such 
reasonable measures as may be required and detailed by the authorized 
officer to mitigate adverse impacts to other resource values, land uses 
or users, federally recognized Tribes, and underserved communities. 
Such reasonable measures may include, but are not limited to, 
relocation or modification to siting or design of facilities, timing of 
operations, specification of interim and final reclamation measures, 
and specification of rates of development and production in the public 
interest. At a minimum, modifications that are consistent with lease 
rights include, but are not limited to, requiring relocation of 
proposed operations by up to 800 meters and prohibiting new surface 
disturbing operations for a period of up to 90 days in any lease year.


Sec.  3101.13  Stipulations and information notices.

    (a) The BLM may consider the sensitivity and importance of 
potentially affected resources and any uncertainty concerning the 
present or future condition of those resources and will assess whether 
a resource is adequately protected by stipulation while considering the 
restrictiveness of the stipulation on operations.
    (b) The authorized officer may require stipulations as conditions 
of lease issuance. Stipulations will become part of the lease and will 
supersede inconsistent provisions of the standard lease form. Any party 
submitting a bid under part 3120 will be deemed to have agreed to 
stipulations applicable to the specific parcel as indicated in the 
Notice of Competitive Lease Sale available from the proper BLM office.
    (c) The BLM may attach an information notice to the lease. An 
information notice has no legal consequences, except to give notice of 
existing requirements, and may be attached to a lease by the authorized 
officer at the time of lease issuance to convey certain operational, 
procedural or administrative requirements relative to lease management 
within the terms and conditions of the standard lease form. Information 
notices may not be a basis for denial of lease operations.
    (d) Where the surface managing agency is the Fish and Wildlife 
Service, leases will be issued subject to stipulations prescribed by 
the Fish and Wildlife Service as to the time, place, nature and 
condition of such operations in order to minimize impacts to fish and 
wildlife populations and habitat and other refuge resources on the 
areas leased. The specific conduct of lease activities on any refuge 
lands will be subject to site-specific stipulations prescribed by the 
Fish and Wildlife Service.


Sec.  3101.14  Modification, waiver, or exception.

    (a) If the authorized officer determines that a change to a lease 
term or stipulation is substantial or a stipulation involves an issue 
of major concern to the public, except for changes to stipulations 
governing time of year restrictions (such as those related to protected 
species) supported by data showing that the restrictions are 
unnecessary, the changes will be subject to public review for at least 
30 calendar days.
    (b) Prior to lease issuance, if the BLM determines that an 
additional stipulation will be added to the lease or a modification to 
an existing stipulation is required, the potential lessee must be given 
an opportunity to accept the additional or modified stipulation. If the 
potential lessee does not accept the additional or modified 
stipulation, the BLM may reject the bid, and may include the lands in 
the next Notice of Competitive Lease Sale. If the change in 
stipulation(s) increases the value of the parcel, the BLM will reject 
the bid, and will include the lands in the next Notice of Competitive 
Lease Sale.
    (c) After lease issuance, if a lessee does not accept an additional 
or modified stipulation, that additional or modified stipulation is not 
binding on the lessee and is without effect. When a stipulation is 
required by the relevant Resource Management Plan, or surface 
management agency land management plan, and was inadvertently omitted, 
a lessee's failure to sign and accept changes in the stipulations when 
requested by the authorized officer may subject the lease to 
cancellation.
    (d) A stipulation included in an oil and gas lease will be subject 
to modification, waiver, or exception if the authorized officer 
determines, in conjunction with the applicable surface management 
agency, that the factors leading to its inclusion in the lease have 
changed sufficiently to make the specific protections provided by the 
stipulation no longer justified.

Acreage Limitations


Sec.  3101.21  Public domain lands.

    (a) No person may take, hold, own or control more than 246,080 
acres of Federal oil and gas leases on public domain lands in any one 
State at any one time. No more than 200,000 acres of such acres may be 
held under option.
    (b) In Alaska, the acreage that can be taken, held, owned or 
controlled is limited to 300,000 acres in the northern leasing district 
and 300,000 acres in the southern leasing district, of which no more 
than 200,000 acres may be held under option in each of the two leasing 
districts. The boundary between the two leasing districts in Alaska 
begins at the northeast corner of the Tetlin National Wildlife Refuge 
as established by section 302(8) of the Alaska National Interest Lands 
Conservation Act, at a point on the boundary between the United States 
and Canada, then northwesterly along the northern boundary of the 
refuge to the left limit of the Tanana River (63[deg]9'38'' north 
latitude, 142[deg]20'52'' west longitude), then westerly along the left 
limit to the confluence of the Tanana and Yukon Rivers, and then along 
the left limit of

[[Page 30972]]

the Yukon River from said confluence to its principal southern mouth.


Sec.  3101.22  Acquired lands.

    Separate from, and in addition to, the limitation for public domain 
lands, no person may take, hold, own or control more than 246,080 acres 
of Federal oil and gas leases on acquired lands in any one State at any 
one time. No more than 200,000 acres of such acres may be held under 
option. Where the United States owns only a fractional interest in the 
mineral resources of the lands involved in a lease, only that part 
owned by the United States will be charged as acreage holdings. The 
acreage embraced in a future interest lease will not be charged as 
acreage holdings until the lease for the future interest becomes 
effective.


Sec.  3101.23  Excepted acreage.

    (a) The following acreage will not be included in computing acreage 
limitations:
    (1) Acreage under any lease any portion of which is committed to 
any federally approved oil and gas agreement;
    (2) Acreage under any lease for which royalty (including 
compensatory royalty or royalty in-kind) was paid in the preceding 
calendar year; and
    (3) Acreage under leases subject to an operating, drilling or 
development contract approved by the Secretary, as provided in 43 CFR 
3105.30.
    (b) Acreage subject to offers to lease, overriding royalties and 
payments out of production will not be included in computing acreage 
limitations.


Sec.  3101.24  Excess acreage.

    (a) Where, as the result of the termination or contraction of an 
oil and gas agreement or the elimination of a lease from an operating, 
drilling, or development contract, a party holds or controls excess 
accountable acreage, that party will have 90 calendar days from the 
date of termination, contraction or elimination, to reduce the holdings 
to the prescribed limitation and to file proof of the reduction in the 
proper BLM office. Where, as a result of a merger or the purchase of 
the controlling interest in a corporation, a party acquired acreage in 
excess of the amount permitted, the party holding the excess acreage 
will have 180 calendar days from the date of the merger or purchase to 
divest the excess acreage. If additional time is required to complete 
the divestiture of the excess acreage, a petition requesting additional 
time, along with a full justification for the additional time, may be 
filed with the authorized officer prior to the termination of the 180 
days provided herein.
    (b) If any person is found to hold accountable acreage in violation 
of the provisions of these regulations, lease(s) or interests therein 
will be subject to cancellation or forfeiture in their entirety, until 
sufficient acreage has been eliminated to comply with the acreage 
limitation. Excess acreage or interest will be cancelled in the inverse 
order of acquisition.


Sec.  3101.25  Computation.

    The accountable acreage of a party owning an undivided interest in 
a lease will be the party's proportionate part of the total lease 
acreage.


Sec.  3101.30  Leases within unit areas, joinder evidence required.

    Before issuance of a lease for lands within an approved unit, the 
lease offeror must file evidence with the proper BLM office that it has 
joined in the unit agreement and unit operating agreement or a 
statement giving satisfactory reasons for its failure to enter into 
such agreement. If such statement is satisfactory to the authorized 
officer, the lessee may be permitted to operate independently but will 
be required to conform to the terms and provisions of the unit 
agreement with respect to such operations.


Sec.  3101.40  Terminated leases.

    (a) The authorized officer will not issue a lease for lands which 
have been covered by a lease which terminated automatically until 90 
calendar days after the date of termination.
    (b) The authorized officer will not, after the receipt of a 
petition for reinstatement, issue a new lease affecting any of the 
lands covered by the terminated lease until all action on the petition 
is final.

Federal Lands Administered by an Agency Other Than the Bureau of Land 
Management


Sec.  3101.51  General requirements.

    Public domain and acquired lands will be leased only after seeking 
concurrence from the surface managing agency, which, upon receipt of a 
description of the lands from the authorized officer, may report to the 
authorized officer that it consents to leasing with stipulations, if 
any, or withholds consent or objects to leasing.


Sec.  3101.52  Action by the Bureau of Land Management.

    (a) Where the surface managing agency has consented to leasing with 
required stipulations, and the Secretary decides to issue a lease, the 
authorized officer will incorporate the stipulations into any lease 
which it may issue. The authorized officer may add other appropriate 
stipulations.
    (b) The authorized officer will not issue a lease on lands to which 
the surface managing agency objects or withholds consent and for which 
consent or concurrence is required by law.
    (c) The authorized officer will review all recommendations of the 
surface managing agency and will accept all reasonable recommendations.
    (d) Where the surface managing agency is the Fish and Wildlife 
Service, there will be no drilling or prospecting under any lease 
heretofore or hereafter issued on lands within a wildlife refuge, 
except with the consent and approval of the Secretary with the 
concurrence of the Fish and Wildlife Service as to the time, place and 
nature of such operations in order to give complete protection to 
wildlife populations and wildlife habitat on the areas leased, and all 
such operations must be conducted in accordance with BLM stipulations.


Sec.  3101.53  Appeals.

    (a) The decision of the authorized officer to reject an offer to 
lease or to issue a lease with stipulations recommended by the surface 
managing agency may be appealed to the Interior Board of Land Appeals 
under 43 CFR part 4.
    (b) Where, as provided by statute, the surface managing agency has 
required that certain stipulations be included in a lease or has 
consented, or objected or refused to consent to leasing, any appeal by 
an affected lease offeror will be subject to the administrative 
remedies if provided for by the particular surface managing agency.


Sec.  3101.60  State's or charitable organization's ownership of 
surface overlying federally owned minerals.

    Where the United States has conveyed title to, or otherwise 
transferred the control of the surface of lands to any State or 
political subdivision, agency, or instrumentality thereof, or a college 
or any other educational corporation or association, or a charitable or 
religious corporation or association, with reservation of the oil and 
gas rights to the United States, such party will be given an 
opportunity to suggest any lease stipulations deemed necessary for the 
protection of existing surface improvements or uses, to set forth the 
facts supporting the necessity of the stipulations and also to file any 
objections it may have to the issuance of a lease. Where a party 
controlling the surface opposes the issuance of a lease

[[Page 30973]]

or wishes to place such restrictive stipulations upon the lease that it 
could not be operated upon or become part of a drilling unit and hence 
is without mineral value, the facts submitted in support of the 
opposition or request for restrictive stipulations may be given 
consideration and each case will be decided on its merits. The 
opposition to lease or necessity for restrictive stipulations expressed 
by the party controlling the surface affords no legal basis or 
authority to refuse to issue the lease or to issue the lease with the 
requested restrictive stipulations for the reserved minerals in the 
lands; in such case, the final determination whether to issue and with 
what stipulations, or not to issue the lease depends upon whether or 
not the interests of the United States would best be served by the 
issuance of the lease.

Subpart 3102--Qualifications of Lessees


Sec.  3102.10  Who may hold leases.

    Leases or interests therein may be acquired and held only by 
citizens of the United States; associations (including partnerships and 
trusts) of such citizens; corporations organized under the laws of the 
United States or of any State or Territory thereof; and municipalities.


Sec.  3102.20  Non-U.S. Citizens.

    (a) Leases or interests therein may be acquired and held by non-
U.S. Citizens only through stock ownership, holding or control in a 
present or potential lessee that is incorporated under the laws of the 
United States or of any State or territory thereof, and only if the 
laws, customs or regulations of their country do not deny similar or 
like privileges to citizens or corporations of the United States. If it 
is determined that a country has denied similar or like privileges to 
citizens or corporations of the United States, it would be placed on a 
list available from any BLM State office.
    (b) The Committee on Foreign Investment in the United States is 
authorized to review covered real estate transactions and to mitigate 
any risk to the national security of the United States that arises as a 
result of such transactions. Covered real estate transactions may 
include certain transactions involving the Federal mineral estate (see 
31 CFR part 802).


Sec.  3102.30  Minors.

    Leases must not be acquired or held by someone considered to be a 
minor under the laws of the State in which the lands are located, but 
leases may be acquired and held by legal guardians or trustees of 
minors on their behalf. Such legal guardians or trustees must be 
citizens of the United States or otherwise meet the provisions of 43 
CFR 3102.10.


Sec.  3102.40  Signature.

    Signatures on all applications and BLM forms certify acceptance of 
lease terms and stipulations, as well as compliance with the 
regulations under 43 CFR part 3100. Refer to Sec.  3102.50 for 
certification of compliance and evidence. The BLM also accepts 
electronic signatures and submissions.
    (a) A bid to lease must be made on a current form approved by the 
Director. Copies must be exact reproductions of the official approved 
form, without additions, omissions, or other changes. When the bid is 
filed in person at the proper BLM office, the bid must be typed or 
printed plainly, signed, and dated by the offeror or an authorized 
agent on behalf of the present or potential lessee. Bids may be made to 
the BLM by other arrangements, such as electronically signed and filed, 
when specifically authorized by the BLM.
    (b) Documents signed by any party other than the present or 
potential lessee must be rendered in a manner to reveal the name of the 
present or potential lessee, the name of the signatory and their 
relationship. A signatory who is a member of the organization that 
constitutes the present or potential lessee (e.g., officer of a 
corporation, partner of a partnership, etc.) may be requested by the 
authorized officer to clarify his/her relationship, when the 
relationship is not shown on the documents filed.

Compliance, Certification of Compliance and Evidence


Sec.  3102.51  Compliance.

    Only responsible and qualified bidders and lessees may own, hold, 
or control an interest in a lease or prospective lease. Responsible and 
qualified bidders and lessees, including corporations, and all members 
of associations, including partnerships of all types, will, without 
exception, be qualified and in compliance with the Act. Compliance 
means that the persons are:
    (a) Citizens of the United States (see Sec.  3102.10) or non-U.S. 
citizens who own stock in a corporation organized under State or 
Federal law (see Sec.  3102.20);
    (b) In compliance with the Federal acreage limitations (see Sec.  
3101.20);
    (c) Not minors (see Sec.  3102.30);
    (d) Except for an assignment or transfer under 43 CFR subpart 3106, 
in compliance with section 2(a)(2)(A) of the Act (30 U.S.C. 201(2)(A)), 
in which case the signature on a bid or lease constitutes evidence of 
compliance. A lease issued to any person in violation of this paragraph 
(d) will be subject to the cancellation provisions of 43 CFR 3108.30.
    (e) Not in violation of the provisions of section 41 of the Act (30 
U.S.C. 195); and
    (f) In compliance with section 17(g) of the Act (30 U.S.C. 226(g)), 
in which case the signature on an offer, lease, assignment, or transfer 
constitutes evidence of compliance that the signatory and any 
subsidiary, affiliate, or person, association, or corporation 
controlled by or under common control with the signatory, as defined in 
43 CFR 3400.0-5(rr), has not failed or refused to comply with 
reclamation requirements with respect to all leases and operations 
thereon in which such person has an interest. A person is noncompliant 
with section 17(g) of the Act when they fail to comply with their 
reclamation obligations or other standards established under 30 U.S.C. 
226 in the time specified in a notice from the BLM. A lease issued, or 
an assignment or transfer approved, to any such person in violation of 
this paragraph (f) may be subject to the cancellation provisions of 43 
CFR 3108.30, notwithstanding any administrative or judicial appeals 
that may be pending with respect to violations or penalties assessed 
for failure to comply with the prescribed reclamation standards on any 
lease holdings. Noncompliance will end upon a determination by the 
authorized officer that all required reclamation has been completed and 
that the United States has been fully reimbursed for any costs incurred 
due to the required reclamation.
    (g) In compliance with 43 CFR 3106.10(d) and section 30A of the Act 
(30 U.S.C. 187(a)). The authorized officer may accept the signature on 
a request for approval of an assignment of less than 640 acres outside 
of Alaska (2,560 acres within Alaska) as acceptable certification that 
the assignment would further the development of oil and gas, or the 
authorized officer may apply the provisions of 43 CFR 3102.53.
    (h) Not excluded or disqualified from participating in a 
transaction covered by Federal non-procurement debarment and suspension 
(2 CFR parts 180 and 1400), unless the Department explicitly approves 
an exception for a transaction pursuant to the regulations in those 
parts.


Sec.  3102.52  Certification of compliance.

    Any party(s) seeking to obtain an interest in a lease must certify 
that it is

[[Page 30974]]

in compliance with the Act as set forth in 43 CFR 3102.51. A 
corporation or publicly traded association, including a publicly traded 
partnership, must certify that constituent members of the corporation, 
association or partnership holding or controlling more than 10 percent 
of the instruments of ownership of the corporation, association or 
partnership are in compliance with the Act. Execution and submission of 
a competitive bid form or request for approval of a transfer of record 
title or of operating rights (sublease), constitutes certification of 
compliance.


Sec.  3102.53  Evidence of compliance.

    The authorized officer may request at any time further evidence of 
compliance and qualification from any party holding or seeking to hold 
an interest in a lease. Failure to comply with the request of the 
authorized officer will result in adjudication of the action based on 
the incomplete submission.

Subpart 3103--Fees, Rentals and Royalty


Sec.  3103.1  Fiscal terms.

    (a) The table in this section shows the fiscal terms, that the BLM 
will adjust every 4 years by a final rule. The BLM will adjust the 
amounts according to the change in the Implicit Price Deflator for 
Gross Domestic Product since the previous adjustment. The fiscal terms 
displayed below are effective on June 22, 2024. Per the Inflation 
Reduction Act, the BLM will not adjust the rental nor the minimum bonus 
bids until after August 16, 2032.

              Table 1 to Paragraph (a)--Fiscal Terms Table
------------------------------------------------------------------------
   Oil and gas (parts 3100, 3110, 3120, 3130,
                     3140):                             Fiscal term
------------------------------------------------------------------------
Competitive oil and gas, tar sand, and combined   Rental of $3 per acre,
 hydrocarbon leases.                               or fraction thereof,
                                                   per year during the
                                                   first 2-year period
                                                   beginning upon lease
                                                   issuance, $5 per acre
                                                   per year, or fraction
                                                   thereof, for the
                                                   following 6 years,
                                                   and then $15 per
                                                   acre, or fraction
                                                   thereof, per year
                                                   thereafter.
Competitive lease reinstatement, Class II.......  Rental of $20 per
                                                   acre, or fraction
                                                   thereof.
Competitive combined hydrocarbon leases.........  Minimum bonus bids of
                                                   $25 per acre, or
                                                   fraction thereof.
Competitive oil and gas and tar sand leases.....  Minimum bonus bids of
                                                   $10 per acre, or
                                                   fraction thereof.
Expression of interest filing fee...............  $5 per acre.
------------------------------------------------------------------------

    (b) The amounts in the fiscal terms table are not subject to appeal 
to the Interior Board of Land Appeals pursuant to 43 CFR part 4, 
subpart E.

Payments


Sec.  3103.11  Form of remittance.

    All remittances must be by personal check, cashier's check, 
certified check, or money order, and must be made payable to the 
Department of the Interior--Bureau of Land Management or the Department 
of the Interior--Office of Natural Resources Revenue, as appropriate. 
Payments made to the BLM may be made by other arrangements such as by 
electronic funds transfer or credit card when specifically authorized 
by the BLM. In the case of payments made to the ONRR, such payments may 
also be made by electronic funds transfer.


Sec.  3103.12  Where remittance is submitted.

    (a)(1) All processing fees for the respective lease applications, 
nominations, or requests for approval of a transfer found in the fee 
schedule in Sec.  3000.120 of this chapter and all first-year rentals 
and bonuses for leases issued under 43 CFR part 3100 must be paid to 
the proper BLM office.
    (2) All second year and subsequent rentals, except for leases 
specified in paragraph (b) of this section, must be paid to the ONRR, 
refer to 30 CFR 1218.51.
    (b) All rentals and royalties on producing leases, communitized 
leases in producing spacing units, unitized leases in producing unit 
areas, leases on which compensatory royalty is payable and all payments 
under subsurface storage agreements must be paid to the ONRR.

Rentals


Sec.  3103.21  Rental requirements.

    (a) Each competitive bid submitted in response to a Notice of 
Competitive Lease Sale must be accompanied by full payment of the first 
year's rental based on the total acreage for that lease in the Notice 
of Competitive Lease Sale.
    (b) If the acreage is incorrectly indicated in a Notice of 
Competitive Lease Sale, payment of the rental based on the error is 
curable within 15 calendar days of receipt of notice from the 
authorized officer of the error.
    (c) Rental will not be prorated for any lands in which the United 
States owns an undivided fractional interest and must be paid for the 
full acreage in such lands.


Sec.  3103.22  Annual rental payments.

    Rentals must be paid on or before the lease anniversary date. A 
full year's rental must be submitted even when less than a full year 
remains in the lease term, except as provided in 43 CFR 3103.42(d). 
Failure to make the required payment on or before the lease anniversary 
date will cause a lease to terminate automatically by operation of law. 
If the designated ONRR office is not open on the anniversary date, 
payment received on the next day the designated ONRR office is open to 
the public will be deemed to be timely made. Payments made to an 
improper BLM or ONRR office will be returned and will not be forwarded 
to the designated ONRR office. Rental must be paid at the following 
rates:
    (a) The annual rental for all leases is as stated in the lease, and 
the annual rental for all new leases will be as specified in 43 CFR 
3103.1;
    (b) Rental will not be due on acreage for which royalty or minimum 
royalty is being paid, except on nonproducing leases when compensatory 
royalty has been assessed in which case annual rental as established in 
the lease will be due in addition to compensatory royalty;

[[Page 30975]]

    (c) For leases that are reinstated under Sec.  3108.23, the annual 
rental will be as specified in 43 CFR 3103.1 beginning with the 
termination date upon the filing of a petition to reinstate a lease; 
and
    (d) Each succeeding time a specific lease is reinstated under Sec.  
3108.23, the annual rental on that lease will increase by an additional 
$10 per acre or fraction thereof.

Royalties


Sec.  3103.31  Royalty on production.

    (a) Royalty on production will be payable only on the mineral 
interest owned by the United States. Royalty must be paid in the amount 
or value of the production removed or sold as follows:
    (1) For leases issued before August 16, 2022, the rate prescribed 
in the lease or in applicable regulations at the time of lease 
issuance;
    (2) For leases issued between August 16, 2022, and August 16, 2032, 
the royalty rate will be 16.67 percent;
    (3) For leases issued on or after August 16, 2032, a rate of not 
less than 16.67 percent on all leases issued under the Act;
    (4) A minimum of 16.67 percent on all leases issued under 43 CFR 
subpart 3109;
    (5) For reinstated leases, the rate used for royalty determination 
that applies to new leases at the time of the reinstatement plus 4 
percentage points, plus an additional 2 percentage points for each 
succeeding reinstatement. In no case will royalties on the reinstated 
lease be less than 20 percent.
    (b) Leases that qualify under specific provisions of the Act of 
August 8, 1946 (30 U.S.C. 226c) may apply for a limitation of a 12\1/2\ 
percent royalty rate.
    (c) The average production per well per day for oil and gas will be 
determined pursuant to 43 CFR 3162.7-4.
    (d) Payment of a royalty on the helium component of gas will not 
convey the right to extract the helium from the gas stream. 
Applications for the right to extract helium from the gas stream will 
be made under 43 CFR part 16.


Sec.  3103.32  Minimum royalties.

    (a) A minimum royalty must be paid at the expiration of each lease 
year beginning on or after a discovery of oil or gas in paying 
quantities on the lands leased, except on unitized leases that lack 
production, the minimum royalty must be paid only on the participating 
acreage, at the following rates:
    (1) On leases issued on or after August 8, 1946, and on those 
issued prior thereto if the lessee files an election under section 15 
of the Act of August 8, 1946, a minimum royalty of $1 per acre or 
fraction thereof in lieu of rental, except as provided in paragraph 
(a)(2) of this section; and
    (2) On leases issued from offers filed after December 22, 1987, and 
on competitive leases issued after December 22, 1987, a minimum royalty 
in lieu of rental of not less than the amount of rental which otherwise 
would be required for that lease year.
    (b) Minimum royalties will not be prorated for any lands in which 
the United States owns a fractional interest and must be paid on the 
full acreage of the lease.
    (c) Minimum royalties and rentals on non-participating acreage must 
be paid to the ONRR.
    (d) The minimum royalty provisions of this section are applicable 
to leases reinstated under 43 CFR 3108.23.
    (e) If the royalty paid during any year aggregates to less than the 
minimum royalty, then the lessee must pay the difference at the end of 
the lease year.

Production Incentives


Sec.  3103.41  Royalty reductions.

    (a) In order to encourage the greatest ultimate recovery of oil or 
gas and in the interest of conservation, the Secretary, upon a 
determination that it is necessary to promote development or that the 
leases cannot be produced in paying quantities under the terms provided 
therein, may waive, suspend or reduce the rental or minimum royalty or 
reduce the royalty on an entire leasehold, or any portion thereof.
    (b)(1) An application for the benefits under paragraph (a) of this 
section must be filed by the operator/payor in the proper BLM office. 
The application must contain the serial number of the leases, the names 
of the record title holders, operating rights owners (sublessees), and 
operators for each lease, the description of lands by legal subdivision 
and a description of the relief requested.
    (2) Each application must show the number, location and status of 
each well drilled, a tabulated statement for each month covering a 
period of not less than 6 months prior to the date of filing the 
application of the aggregate amount of oil or gas subject to royalty, 
the number of wells counted as producing each month and the average 
production per well per day.
    (3) Every application must contain a detailed statement of expenses 
and costs of operating the entire lease, the income from the sale of 
any production and all facts tending to show whether the wells can be 
produced in paying quantities upon the fixed royalty or rental. Where 
the application is for a reduction in royalty, complete information 
must be furnished as to whether overriding royalties, payments out of 
production, or similar interests are paid to others than the United 
States, the amounts so paid and efforts made to reduce them. The 
applicant must also file agreements of the holders to a reduction of 
all other royalties or similar payments from the leasehold to an 
aggregate not in excess of one-half the royalties due the United 
States.
    (c) Petition may be made for a reduction of royalty for leases 
reinstated under 43 CFR 3108.23. Petitions to waive, suspend or reduce 
rental or minimum royalty for leases reinstated under 43 CFR 3108.23 
may be made under this section.


Sec.  3103.42  Suspension of operations and/or production.

    (a) A suspension of all operations and production may be directed 
or consented to by the authorized officer only in the interest of 
conservation of natural resources. A suspension of operations only or a 
suspension of production only may be directed or consented to by the 
authorized officer in cases where the lessee is prevented from 
operating on the lease or producing from the lease, despite the 
exercise of due care and diligence, by reason of force majeure, that 
is, by matters beyond the reasonable control of the lessee. 
Applications for any suspension must be filed in the proper BLM office. 
Complete information showing the necessity of such relief must be 
furnished.
    (b) The term of any lease will be adjusted to account for the 
suspension. Beginning on the date the suspension is lifted, the term 
will be extended by the time that was remaining on the term of the 
lease on the effective date of the suspension. No lease will expire 
during any suspension.
    (c) A suspension will take effect as of the time specified in the 
direction or assent of the authorized officer, in accordance with the 
provisions of 43 CFR 3165.1.
    (d) Rental and minimum royalty payments will be suspended during 
any period of suspension of all operations and production directed or 
assented to by the authorized officer beginning with the first day of 
the lease month in which the suspension of all operations and 
production becomes effective, or if the suspension of all operations 
and production becomes effective on any date other than the first day 
of a lease month, beginning with the first day of

[[Page 30976]]

the lease month following such effective date. However, if there is any 
production sold or removed during the suspension, the lessee must pay 
royalty on that production.
    (e) Rental and minimum royalty payments will resume on the first 
day of the lease month in which the suspension of all operations and 
production is lifted. Where rentals are creditable against royalties 
and have been paid in advance, proper credit may be allowed on the next 
rental or royalty due under the terms of the lease.
    (f) Rental and minimum royalty payments will not be suspended 
during any period of suspension of operations only or suspension of 
production only.
    (g) Where all operations and production are suspended on a lease on 
which there is a well capable of producing in paying quantities and the 
authorized officer approves resumption of operations and production, 
such resumption will be regarded as lifting the suspension, including 
the suspension of rental and minimum royalty payments, as provided in 
paragraph (e) of this section.
    (h) The relief authorized under this section also may be obtained 
for any Federal lease included within an approved oil and gas 
agreement. Oil and gas agreement obligations will not be suspended by 
relief obtained under this section but will be suspended only in 
accordance with the terms and conditions of the specific agreement.

Subpart 3104--Bonds


Sec.  3104.1  Bond amounts.

    (a) The table in this section shows the minimum bond amounts, that 
the BLM will adjust every 10 years by a final rule. The BLM will adjust 
the amounts according to the change in the Implicit Price Deflator for 
Gross Domestic Product since the previous adjustment. The minimum bond 
amounts displayed below are effective on June 22, 2024.

           Table 1 to Paragraph (a)--Minimum Bond Amount Table
------------------------------------------------------------------------
                                                           Minimum bond
    Oil and gas (parts 3100, 3110, 3120, 3130, 3140):         amount
------------------------------------------------------------------------
Lease Bond..............................................        $150,000
Statewide Bond..........................................         500,000
------------------------------------------------------------------------

    (b) The Minimum Bond Amount are not subject to appeal to the 
Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E.
    (c) Principals must increase or replace all bonds not meeting the 
appropriate minimum bond amount in paragraph (a) by:
    (1) June 22, 2026, for statewide; and
    (2) June 22, 2027, for lease bonds.
    (d) Failure to increase or replace an existing bond that does not 
meet the minimum bond amount may:
    (1) Subject all wells covered by the bond(s) to shut down under the 
provisions of 43 CFR 3163.1(a)(3);
    (2) Subject all leases covered by the bond(s) to cancellation under 
the provisions of 43 CFR 3108.30; and
    (3) Result in the BLM referring the bond obligor or principal to 
the Department's Suspension and Debarment Program under 2 CFR part 1400 
to determine if the person will be suspended or debarred from doing 
business with the Federal Government.


Sec.  3104.10  Bond obligations.

    (a) Prior to the commencement of surface disturbing activities 
related to drilling operations, the lessee, operating rights owner 
(sublessee), or operator must submit a surety or a personal bond, 
conditioned upon compliance with all of the terms and conditions of the 
entire leasehold(s) covered by the bond, as described in this subpart. 
The bond amounts must be not less than the minimum amounts described in 
this subpart in order to ensure compliance with the Act, including 
complete and timely plugging of the well(s), reclamation of the lease 
area(s), and the restoration of any lands or surface waters adversely 
affected by lease operations after the abandonment or cessation of oil 
and gas operations on the lease(s) in accordance with, but not limited 
to, the standards and requirements set forth in 43 CFR 3162.3 and 
3162.5 and orders issued by the authorized officer.
    (b) Surety bonds must be issued by qualified surety companies 
approved by the Department of the Treasury (see Department of the 
Treasury Circular No. 570).
    (c) Personal bonds must be accompanied by a:
    (1) 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 terms and conditions of the lease. The 
certificate will explicitly indicate on its face, or through 
assignment, that Secretarial approval is required prior to redemption 
of the certificate of deposit by any party;
    (2) Cashier's check;
    (3) Certified check; or
    (4) Negotiable Treasury securities of the United States of a value 
equal to the amount specified in the bond. Negotiable Treasury 
securities must be accompanied by a proper conveyance to the Secretary 
of full authority to sell such securities in case of default in the 
performance of the terms and conditions of a lease.
    (5) Irrevocable letter of credit issued by a financial institution, 
for a specific term, identifying the secretary as sole payee with full 
authority to demand immediate payment in the case of default in the 
performance of the terms and conditions of a lease. Letters of credit 
must be subject to the following conditions:
    (i) The letter of credit must be issued only by a financial 
institution organized or authorized to do business in the United 
States;
    (ii) The letter of credit must be irrevocable during its term. A 
letter of credit used as security for any lease upon which drilling has 
taken place and final approval of all abandonment has not been given, 
or as security for an individual lease or statewide bond, will be 
forfeited and will be collected by the authorized officer if not 
replaced by other suitable bond or letter of credit at least 30 days 
before its expiration date;
    (iii) The letter of credit must be payable to the Bureau of Land 
Management upon demand, in part or in full, upon receipt from the 
authorized officer of a notice of collection stating the basis 
therefore, e.g., default in compliance with the lease terms and 
conditions or failure to file a replacement in accordance with 
paragraph (c)(5)(ii) of this section;
    (iv) The initial expiration date of the letter of credit must be at 
least 1 year following the date it is filed in the proper BLM office; 
and
    (v) The letter of credit must contain a provision for automatic 
renewal for periods of not less than 1 year in the absence of notice to 
the proper BLM office at least 90 days prior to the

[[Page 30977]]

originally stated or any extended expiration date. In the event the BLM 
is notified of the financial institution's intent not to renew the 
letter of credit, the principal must extend the letter of credit or 
provide an adequate replacement bond with an assumption of liability 
rider. If the BLM does not receive an adequate notice or replacement 
bond with rider, the BLM will collect the letter of credit within 30 
days of the expiration without further notification to the obligor.


Sec.  3104.20  Lease bond.

    The operator, a lessee, or an owner of operating rights (sublessee) 
must be covered by a bond in its own name as principal or obligor in an 
amount of not less than the amount specified in 43 CFR 3104.1 for each 
lease conditioned upon compliance with all of the terms of the lease. 
Where two or more lease interest holders have interests in different 
formations or portions of the lease, separate bonds may be posted. The 
operator shall be covered by a bond in his/her own name as principal, 
or a bond in the name of the lessee or sublessee, provided that a 
consent of the surety, or the obligor in the case of a personal bond, 
to include the operator under the coverage of the bond is furnished to 
the BLM office maintaining the bond.


Sec.  3104.30  Statewide bonds.

    In lieu of lease bonds, lessees, owners of operating rights 
(sublessees), or operators may furnish a bond in an amount of not less 
than the amount specified in 43 CFR 3104.1 covering all leases and 
operations in any one State.


Sec.  3104.40  Surface owner protection bond.

    (a) If a good-faith effort by the Federal lessee, its operator, or 
representatives has not resulted in an agreement with the surface owner 
under 43 CFR 3171.19, the authorized officer will require an adequate 
surface owner protection bond in an amount sufficient to indemnify the 
surface owner against the reasonable and foreseeable damages to crops 
and tangible improvements from the proposed operations that would not 
otherwise be covered by a bond held by the BLM. This surface owner 
protection bond is not part of the bond obligations under lease or 
statewide bonds.
    (b) The surface owner protection bond must be provided on a BLM-
approved form.
    (c) The surface owner protection bond may be a personal or surety 
bond and must be not less than $1,000.
    (d) The BLM will notify the surface owner of the proposed surface 
owner protection bond amount.
    (e) If the surface owner objects to the sufficiency of the surface 
owner protection bond, the BLM authorized officer will determine the 
sufficiency of the bond necessary to indemnify the surface owner for 
the reasonable and foreseeable damages to crops and tangible 
improvements.


Sec.  3104.50  Increased amount of bonds.

    (a) When an operator desiring approval of an APD has caused the 
BLM, or a surface management agency, to make a demand for payment under 
a bond or other financial guarantee within the 5-year period prior to 
submission of the APD, due to failure to plug a well or reclaim lands 
completely in a timely manner, the authorized officer will require, 
prior to approval of the APD, a bond in an amount equal to the costs, 
when higher than the minimum bond amounts, as estimated by the 
authorized officer of plugging the well and reclaiming the disturbed 
area involved in the proposed operation, or in the minimum amount as 
prescribed in this subpart, whichever is greater.
    (b) The authorized officer may require an increase in the amount of 
any bond whenever it is determined that the operator poses a risk due 
to factors, including, but not limited to, a history of previous 
violations, a notice from the ONRR that there are uncollected royalties 
due, or the total cost of plugging existing wells and reclaiming lands 
exceeds the present bond amount based on the estimates determined by 
the authorized officer. The increase in bond amount may be to any level 
specified by the authorized officer, but in no circumstances will it 
exceed the total of the estimated costs of plugging and reclamation, 
the amount of uncollected royalties due to the ONRR, plus the amount of 
money owed to the lessor due to previous violations remaining 
outstanding.


Sec.  3104.60  Where filed and number of copies.

    All bonds must be filed in the proper BLM office on a current form 
approved by the Director. A single copy executed by the principal or, 
in the case of surety bonds, by both the principal and an acceptable 
surety is sufficient. A bond filed on a form not currently in use will 
be acceptable, unless such form has been declared obsolete by the 
Director prior to the filing of such bond. For purposes of 43 CFR 
3104.20 and 3104.30, bonds or bond riders must be filed in the BLM 
State office having jurisdiction over the lease or operations covered 
by the bond or rider.


Sec.  3104.70  Default.

    (a) Where, upon a default, the surety makes a payment to the United 
States of an obligation incurred under a lease, the face amount of the 
surety bond or personal bonds and the surety's liability thereunder 
will be reduced by the amount of such payment.
    (b) After default, where the obligation in default equals or is 
less than the face amount of the bond(s), the principal must either 
post a new bond or restore the existing bond(s) to the amount 
previously held or a larger amount as determined by the authorized 
officer. In lieu thereof, the principal may file separate bonds for 
each lease covered by the deficient bond(s). Where the obligation 
incurred exceeds the face amount of the bond(s), the principal must 
make full payment to the United States for all obligations incurred 
that are in excess of the face amount of the bond(s) and must post a 
new bond in the amount previously held or such larger amount as 
determined by the authorized officer. The restoration of a bond or 
posting of a new bond must be made within 6 months or less after 
receipt of notice from the authorized officer. Failure to comply with 
these requirements may:
    (1) Subject all leases covered by such bond(s) to cancellation 
under the provisions of 43 CFR 3108.30; and
    (2) Result in the bond obligor or principal being referred to the 
Department's Suspension and Debarment Program under 2 CFR part 1400 to 
determine if the person will be suspended or debarred from doing 
business with the Federal Government.


Sec.  3104.80  Termination of period of liability.

    The authorized officer will not give consent to termination of the 
period of liability of any bond unless an acceptable replacement bond 
has been filed or until all the terms and conditions of the lease have 
been met.


Sec.  3104.90  Unit Operator and nationwide bonds held prior to June 
22, 2024.

    Unit operator and nationwide bonds accepted by the BLM prior to 
June 22, 2024, must be replaced with individual lease or statewide 
bonds by June 22, 2025. The BLM will not accept any new unit operator 
or nationwide bonds.

Subpart 3105--Cooperative Conservation Provisions


Sec.  3105.10  Cooperative or unit agreement.

    (a) The suggested contents of such an agreement and the procedures 
for

[[Page 30978]]

obtaining approval are contained in 43 CFR part 3180.
    (b) An application to form a unit agreement, a unit expansion, or a 
designation of a successor operator must include the processing fee 
found in the fee schedule in Sec.  3000.120 of this chapter.

Communitization Agreements


Sec.  3105.21  Where filed.

    (a) An application to form a communitization agreement or modify an 
existing agreement must be filed with the proper BLM office for final 
approval.
    (b) An application for a communitization agreement must include:
    (1) A statement as to whether the proposed communitization 
agreement deviates from the BLM's current model communitization 
agreement form, and a certification that the applicant received the 
required signatures;
    (2) An Exhibit A displaying a map of the area covered by the 
proposed agreement and the separate agreement tracts; and
    (3) An Exhibit B displaying the separate tracts and ownership;
    (c) To ensure accurate reporting to ONRR, an application for a 
communitization agreement should be submitted at least 90 calendar days 
prior to first production.
    (d) An application for designations of successor operator for a 
communitization agreement must include the processing fee found in the 
fee schedule in Sec.  3000.120 of this chapter.


Sec.  3105.22  Purpose.

    When a lease or a portion thereof cannot be independently developed 
and operated in conformity with an established well-spacing or well-
development program, the authorized officer may approve a 
communitization agreement for such lands with other lands, whether or 
not owned by the United States, upon a determination that it is in the 
public interest. Operations or production under such an agreement will 
be deemed to be operations or production as to each lease committed 
thereto.


Sec.  3105.23  Requirements.

    (a) The communitization agreement must describe the separate tracts 
comprising the drilling or spacing unit, must show the apportionment of 
the production or royalties to the several parties, the name of the 
operator, and contain adequate provisions for the protection of the 
interests of the United States. The agreement must be signed by or on 
behalf of all necessary parties and must be filed prior to the 
expiration of the Federal lease(s) involved in order to confer the 
benefits of the agreement upon such lease(s).
    (b) The agreement will be effective as to the Federal lease(s) 
involved only if approved by the authorized officer. Approved 
communitization agreement are considered effective from the date of the 
agreement or from the date of the onset of production from the 
communitized formation, whichever is earlier, except when the spacing 
unit is subject to a State pooling order after the date of first sale, 
then the effective date of the agreement will be the effective date of 
the order.
    (c) The public interest requirement for an approved communitization 
agreement will be satisfied only if the well dedicated thereto has been 
completed for production in the communitized formation at the time the 
agreement is approved or, if not, that the operator thereafter 
commences and/or diligently continues drilling operations to a depth 
sufficient to test the communitized formation or establishes to the 
satisfaction of the authorized officer that further drilling of the 
well would be unwarranted or impracticable. If an application is 
received for voluntary termination of a communitization agreement 
during its fixed term or such an agreement automatically expires at the 
end of its fixed term without the public interest requirement having 
been satisfied, the approval of that agreement by the authorized 
officer will be invalid and no Federal lease included in the 
communitization agreement will be eligible for an extension under 43 
CFR 3107.40.


Sec.  3105.24  Communitization agreement terms.

    The communitization agreement will remain in effect for a period of 
2 years from the effective date or approval date, whichever is later, 
and so long thereafter as communitized substances may be produced in 
paying quantities, or as otherwise specified in the agreement.

Operating, Drilling, or Development Contracts


Sec.  3105.31  Where filed.

    A contract submitted for approval under this section must be filed 
with the proper BLM office.


Sec.  3105.32  Purpose.

    Approval of operating, drilling or development contracts will be 
granted only to permit operators or pipeline companies to enter into 
contracts with a number of lessees sufficient to justify operations on 
a scale large enough to justify the discovery, development, production 
or transportation of oil or gas and to finance the same.


Sec.  3105.33  Requirements.

    The contract must be accompanied by a statement showing all the 
interests held by the contractor in the area or field and the proposed 
or agreed plan for development and operation of the field. All the 
contracts held by the same contractor in the area or field must be 
submitted for approval at the same time and full disclosure of the 
projects made.

Subsurface Storage of Oil and Gas


Sec.  3105.41  Where filed.

    (a) Applications for subsurface storage or designations of 
successor operator must be filed in the proper BLM office.
    (b) The final gas storage agreement signed by all the parties in 
interest must be submitted to the BLM.
    (c) Applications for subsurface storage agreements or designations 
of successor operator must include the processing fee found in the fee 
schedule in Sec.  3000.120 of this chapter.


Sec.  3105.42  Purpose.

    To avoid waste and to promote conservation of natural resources, 
the Secretary, upon application by the interested parties, may 
authorize the subsurface storage of oil and gas, whether or not 
produced from lands owned by the United States. Such authorization will 
provide for the payment of such storage fee or rental on the stored oil 
or gas as may be determined adequate in each case, or, in lieu thereof, 
for a royalty other than that prescribed in the lease when such stored 
oil or gas is produced in conjunction with oil or gas not previously 
produced. The BLM will require a bond as provided under Sec.  3104 for 
operations conducted in a subsurface storage agreement.


Sec.  3105.43  Requirements.

    The agreement must disclose the ownership of the lands involved, 
the parties in interest, the storage fee, rental or royalty offered to 
be paid for such storage and all information demonstrating such storage 
would avoid waste and promote the conservation of natural resources.


Sec.  3105.44  Extension of lease term.

    Any lease used for the storage of oil or gas will be extended for 
the period of storage under an approved agreement. The obligation to 
pay annual lease rent continues during the extended period.

[[Page 30979]]

Sec.  3105.50  Consolidation of leases.

    (a) Leases may be consolidated upon written request of the lessee 
filed with the proper BLM office. The request must identify each lease 
involved by serial number and justify the consolidation. Each request 
for a consolidation of leases must include the processing fee found in 
the fee schedule in Sec.  3000.120 of this chapter.
    (b) All parties holding any undivided interest in any lease 
involved in the consolidation must agree to enter into the same lease 
consolidation.
    (c) Leases containing different types of lands (public domain lands 
vs. acquired lands), mixed fractional mineral interest, or provisions 
required by law that cannot be reconciled, will not be consolidated.
    (d) Consolidation of leases will not exceed acreage limits of 2,560 
acres for competitive leases and 10,240 acres for noncompetitive 
leases.
    (e) The effective date, the anniversary date, and the primary term 
of the consolidated lease will be those of the oldest original lease 
included in the consolidation. The term of a consolidated lease may be 
extended beyond the primary lease term under subpart 3107.
    (f) The highest royalty and rental rates of the each of the leases 
to be consolidated will apply to the consolidated lease.
    (g) Lease stipulations and other terms and conditions of each 
original lease, except as noted in paragraphs (e) and (f) of this 
section, will continue to apply to that lease or any portion thereof 
regardless of the lease becoming a part of a consolidated lease.

Subpart 3106--Transfers by Assignment, Sublease, or Otherwise


Sec.  3106.10  Transfers, general.

    (a) Leases may be transferred by assignment or sublease as to all 
or part of the acreage in the lease or as to either a divided or 
undivided interest therein.
    (b) An assignment of the record title conveys both record title and 
operating rights, unless operating rights have been severed from the 
record title through an approved transfer of operating rights. 
Thereafter, the operating rights and record title may each be subject 
to further transfers.
    (c) An assignment of a separate zone, deposit, depth, formation, 
specific well, or of part of a legal subdivision, will be denied.
    (d) Within the boundaries of a Federal lease, operating rights may 
only be divided with respect to legal subdivisions, depth ranges, and 
formations.
    (e) An assignment of less than 640 acres outside Alaska or of less 
than 2,560 acres within Alaska will be denied unless the assignment 
constitutes the entire lease or is demonstrated to further the 
development of oil and gas to the satisfaction of the authorized 
officer. Reference 43 CFR 3102.51(g) for certification of compliance.
    (f) The rights of the transferee to a lease or an interest therein 
will not be recognized by the Department until the transfer has been 
approved by the authorized officer.
    (g) A transfer may be withdrawn in writing, signed by the 
transferor and the transferee, if the transfer has not been approved by 
the authorized officer.
    (h) A request for approval of a transfer of a lease or interest in 
a lease must be filed within 90 days from the date of its execution. 
The 90-day filing period will begin on the date the transferor signs 
and dates the transfer. If the transfer is filed after the 90th day, 
the authorized officer may require verification that the transfer is 
still in force and effect.
    (i) A transfer of production payments or overriding royalty or 
other similar payments, arrangements, or interests must be filed in the 
proper BLM office but will not require approval.
    (j) No transfer of an offer to lease or interest in a lease will be 
approved prior to the issuance of the lease.


Sec.  3106.20  Qualifications of assignees and transferees.

    Assignees and transferees must comply with the provisions of 43 CFR 
subpart 3102 and post any bond that may be required. Only responsible 
and qualified lessees may own, hold, or control an interest in a lease.


Sec.  3106.30  Fees.

    (a) Each transfer of record title or of operating rights (sublease) 
for each lease must include payment of the processing fee for 
assignments and transfers found in the fee schedule in Sec.  3000.120 
of this chapter.
    (b) Each transfer of overriding royalty or payment out of 
production must include payment of the processing fee for overriding 
royalty transfers or payments out of productions found in the fee 
schedule in Sec.  3000.120 of this chapter for each lease to which it 
applies.

Forms


Sec.  3106.41  Transfers of record title and of operating rights 
(subleases).

    Each transfer of record title or of an operating right (sublease) 
must be filed with the proper BLM office on a current form approved by 
the Director. A separate form for each transfer, in triplicate, must be 
filed for each lease out of which a transfer is made. The BLM does not 
require triplicate copies of the assignment or transfer when it is 
electronically submitted. Copies of documents other than the current 
form approved by the Director must not be submitted. However, 
reference(s) to other documents containing information affecting the 
terms of the transfer may be made on the submitted form.


Sec.  3106.42  Transfers of other interests, including royalty 
interests and production payments.

    (a) Each transfer of overriding royalty interest, payment out of 
production or similar interests created or reserved must be described 
for each lease on the current assignment or transfer form when filed.
    (b) A single executed copy of each such transfer of other interests 
for each lease must be filed with the proper BLM office.


Sec.  3106.43  Mass transfers.

    (a) A mass transfer may be utilized in lieu of the provisions of 43 
CFR 3106.41 and 3106.42 when an assignor or transferor transfers 
interests of any type in more than one Federal lease to the same 
assignee or transferee.
    (b) The mass transfer must be filed with each proper BLM office 
administering any lease affected by the mass transfer. The transfer 
must be on a current form approved by the Director with an exhibit 
attached to each copy listing the following for each lease:
    (1) The serial number;
    (2) The type and percent of interest being conveyed; and
    (3) A description of the lands affected by the transfer in 
accordance with 43 CFR 3106.50.
    (c)(1) One duplicate copy of the form must be filed with the proper 
BLM office for each lease involved in the mass transfer. A copy of the 
exhibit for each lease may be limited to line items pertaining to 
individual leases as long as that line item includes the information 
required by paragraph (b) of this section. The BLM does not require a 
duplicate copy of the assignment or transfer when it is electronically 
submitted.
    (2) When the BLM does not receive the requisite number of copies, 
the applicant must reimburse the BLM for the full costs incurred to 
make the required number of copies. The BLM will waive fees under one 
dollar.
    (d) A mass transfer must include the processing fee for assignments 
and transfers found in the fee schedule in Sec.  3000.120 of this 
chapter for each such interest transferred for each lease.

[[Page 30980]]

Sec.  3106.50  Description of lands.

    Each assignment of record title must describe the lands involved in 
the same manner as the lands are described in the lease, except no land 
description is required when 100 percent of the entire area encompassed 
within a lease is conveyed.


Sec.  3106.60  Bond requirements.

    Where the lessee or operating rights owner (sublessee) maintains a 
bond covering the lease, the assignee of record title interest or 
transferee of operating rights in such lease must furnish, if bond 
coverage continues to be required, a proper bond that will cover any 
obligations arising under the lease to the same extent as the 
assignor's or transferor's bond.

Approval of Transfer or Assignment


Sec.  3106.71  Failure to qualify.

    The BLM will not approve any assignment of record title or transfer 
of operating rights (sublease) if any party in interest is not a 
qualified lessee, or if the bond is insufficient. The BLM approves 
assignments and transfers for administrative purposes only. Approval 
does not warrant or certify that either party to a transfer holds legal 
or equitable title to a lease.


Sec.  3106.72  Continuing obligation of an assignor or transferor.

    (a) The lessee or sublessee remains responsible for performing all 
obligations under the lease until the date the BLM approves an 
assignment of record title interest or transfer of operating rights.
    (b) After the BLM approves the assignment or transfer, the assignor 
or transferor will continue to be responsible for lease obligations 
that accrued before the approval date, whether or not such obligations 
were identified at the time of the assignment or transfer. This 
includes paying compensatory royalties for drainage. It also includes 
responsibility for plugging wells drilled and removing facilities 
installed or used before the effective date of the assignment or 
transfer.


Sec.  3106.73  Lease account status.

    The BLM will not approve a transfer if the lease account is 
delinquent with respect to: royalty payments; lease obligations, such 
as, but not limited to, rent and minimum royalty; or production 
reporting to ONRR for a lease in non-terminable status.


Sec.  3106.74  Effective date of transfer.

    The signature of the authorized officer on the official form will 
constitute approval of the assignment of record title or transfer of 
operating rights (sublease) which will take effect as of the first day 
of the lease month following the date of filing in the proper BLM 
office of all documents and statements required by this subpart and an 
appropriate bond, if one is required.


Sec.  3106.75  Effect of transfer.

    An assignment of record title to 100 percent of a portion of the 
lease segregates the transferred portion and the retained portion into 
separate leases. Each resulting lease retains the anniversary date and 
the terms and conditions of the original lease. An assignment of record 
title to less than 100 percent of a portion of the lease or a transfer 
of operating rights (sublease) will not segregate the transferred and 
retained portions into separate leases.


Sec.  3106.76  Obligations of assignee or transferee.

    (a) The assignee of record title agrees to comply with the terms of 
the original lease during the lease tenure. The assignee assumes the 
responsibility to plug and abandon all wells which are no longer 
capable of producing, reclaim the lease site, and remedy all 
environmental problems in existence and that a purchaser exercising 
reasonable diligence should have known existed at the time of the 
transfer. When required, the record title holder must also maintain an 
adequate bond to ensure performance of these responsibilities.
    (b) The transferee of operating rights agrees to comply with the 
terms of the original lease as it applies to the area or horizons for 
the interest acquired. The transferee assumes the responsibility to 
plug and abandon all wells that are no longer capable of producing, 
reclaim the lease site, and remedy all environmental problems in 
existence and that a purchaser exercising reasonable diligence should 
have known existed at the time of the transfer. When required, the 
operating rights holder must also maintain an adequate bond to ensure 
performance of these responsibilities.

Other Types of Transfers


Sec.  3106.81  Heirs and devisees.

    (a) If an offeror, applicant, lessee or transferee dies, their 
rights would be assigned or transferred to the heirs, devisees, 
executor or administrator of the estate, as appropriate, upon the 
filing of legal documents demonstrating that the assignee or transferee 
is recognized as the successor of the deceased.
    (b) The filing must include the processing fee for the transfer to 
an heir/devisee found in the fee schedule in Sec.  3000.120 of this 
chapter with the request to assign lease rights.
    (c) The filing must include a qualification statement demonstrating 
qualification to hold an interest in a lease in accordance with 43 CFR 
subpart 3102. Any ownership or interest otherwise forbidden by the 
regulations in this part which may be acquired by descent, will, 
judgment or decree may be held for a period not to exceed 2 years after 
its acquisition. Any such forbidden ownership or interest held for a 
period of more than 2 years after acquisition may be subject to 
cancellation.
    (d) A bond rider or replacement bond may be required for any 
bond(s) previously furnished by the decedent.


Sec.  3106.82  Change of name.

    (a) A legally recognized change of name of a lessee or sublessee 
must be reported to the proper BLM office. The notice of name change 
must be submitted in writing with adequate information concerning the 
name change. For a corporate name change, the request must include the 
Secretary of State's Certificate of Name Change, along with the 
Articles of Incorporation, or Amendment, if available.
    (b) An entity must include with the notice of name change the 
required processing fee listed in the fee schedule in Sec.  3000.120 of 
this chapter.
    (c) If a bond(s) has been furnished, a change of name on the bond 
may be made by surety consent or a rider to the original bond or by a 
replacement bond.


Sec.  3106.83  Corporate mergers and dissolution of corporations, 
partnerships, and trusts.

    (a) In the event a corporate merger affects leases where property 
of the dissolving corporation to the surviving corporation is 
accomplished by operation of law, an assignment of any affected lease 
interest is not required. An entity must notify the BLM of the merger 
and provide copies of the Secretary of State's Certificate of Merger, 
along with the Articles of Incorporation, or Amendment, if available, 
to the BLM.
    (b) The BLM will not recognize any transfers provided by the 
Articles of Dissolution unless an entity has filed with the BLM a 
Certificate of Dissolution of an incorporated entity, certified as 
accepted by the State where the entity was incorporated.
    (c) An entity must file with the BLM a dissolution of a partnership 
or trust through an order or decree that authorizes settlement, 
discharge, and distribution of the lease holdings and/or interests for 
official recognition of the assignment of lease interests.

[[Page 30981]]

    (d) An entity must include the processing fee for corporate merger 
or dissolution of corporation, partnership, or trust found in the fee 
schedule in Sec.  3000.120 of this chapter.
    (e) The authorized officer may require a bond rider or replacement 
bond for all affected corporations, partnerships or trusts.


Sec.  3106.84  Sheriff's sale/deed.

    (a) Where a notice of sale of the leasehold interest is published 
pursuant to State law applicable to the execution of sales of real 
property, the purchaser must submit a copy of the Sheriff's Certificate 
of Sale to the proper BLM office after any redemption period has 
passed.
    (b) When submitting the certificate described in paragraph (a), an 
entity must include the processing fee for sheriff's deed found in the 
fee schedule in Sec.  3000.120 of this chapter.
    (c) The purchaser(s) must file a qualification statement to hold an 
interest in a lease in accordance with 43 CFR subpart 3102. Failure to 
provide a qualification statement after 2 years will result in the BLM 
cancelling the lease or interest.
    (d) If a bond has been furnished by the previous interest holder, 
the authorized officer may require a new bond.

Subpart 3107--Continuation and Extension


Sec.  3107.10  Extension by drilling.

    (a) Any lease on which actual drilling operations were commenced 
prior to the end of its primary term and are being diligently 
prosecuted at the end of the primary term or any lease which is part of 
an approved oil and gas agreement upon which such drilling takes place, 
will be extended for 2 years subject to the rental being timely paid as 
required by 43 CFR 3103.20, and subject to the provisions of 43 CFR 
3105.23 and appendix A to part 3180, if applicable. The BLM will not 
grant a drilling extension for a lease in its extended term.
    (b) Actual drilling operations must be conducted in a manner that a 
reasonable person seriously looking for oil or gas could be expected to 
make in that particular area, given the existing knowledge of geologic 
and other pertinent facts. In drilling a new well on a lease or for the 
benefit of a lease under the terms of an approved agreement, it must be 
taken to a depth sufficient to penetrate at least one formation 
recognized in the area as potentially productive of oil or gas, or 
where an existing well is reentered, it must be taken to a depth 
sufficient to penetrate at least one new and deeper formation 
recognized in the area as potentially productive of oil or gas. The 
authorized officer may determine that further drilling is unwarranted 
or impracticable.
    (c) When a BLM-approved directional or horizontal well is drilled 
within the leased area from an off-lease location with the intent to 
produce from the leased area, the BLM will consider drilling to have 
commenced on the leased area when drilling is commenced at the off-
lease location.

Production


Sec.  3107.21  Continuation by production.

    A lease will be extended so long as oil or gas is being produced in 
paying quantities.


Sec.  3107.22  Cessation of production.

    A lease in its extended term because of production (and lacking a 
well capable of production in paying quantities) will not expire upon 
cessation of production, if, within 60 calendar days of cessation of 
production, reworking or drilling operations on the leasehold are 
commenced and are thereafter conducted with reasonable diligence during 
the period of nonproduction. If these reworking or drilling operations 
fail to result in production in paying quantities, the lease will 
expire by operation of law, effective as of the date paying production 
ceased.


Sec.  3107.23  Leases capable of production.

    No lease for lands on which there is a well capable of producing 
oil or gas in paying quantities will expire because the lessee fails to 
produce the same, unless the lessee fails to place the lease in 
production within a period of not less than 60 calendar days as 
specified by the authorized officer after receipt of notice by 
certified mail from the authorized officer to do so. Such production 
must be continued unless and until suspension of production is granted 
by the authorized officer.

Extension of Leases Within Agreements


Sec.  3107.31  Leases committed to an agreement.

    (a) Any lease or portion of a lease committed to an oil and gas 
agreement that contains a general provision for allocation of oil or 
gas will continue in effect so long as the lease or portion thereof 
remains subject to the agreement; provided, that there is production of 
oil or gas in paying quantities under the agreement prior to the 
expiration date of such lease.
    (b) A well that is drilled and completed on a lease committed to a 
unit agreement, and that is capable of production in paying quantities 
on a lease basis, will extend the term of all expiring Federal leases 
committed to the unit agreement for the term of the unit agreement and 
so long as the well is capable of production in paying quantities.


Sec.  3107.32  Segregation of leases committed in part.

    (a) Any lease committed after July 29, 1954, to any unit agreement, 
which covers lands within and lands outside the area covered by the 
agreement, will be segregated, as of the effective date of commitment 
to the unit, into separate leases; one covering the lands committed to 
the agreement, the other lands not committed to the agreement. For 
unproven areas, such segregation will occur only when the public 
interest requirement is satisfied pursuant to 43 CFR 3183.4(b). Upon 
satisfaction of the public interest requirement, the BLM will deem the 
segregation to have been effective as of the date of commitment of the 
lands to the unit.
    (b)(1) The segregated lease covering the non-unitized portion of 
the lands will continue in force and effect for the term of the lease 
or for 2 years from the date of segregation, whichever is longer.
    (2) If a partially committed lease is in an extended term because 
of production, the segregated, non-producing lease will continue in 
effect so long as the producing lease exists and rentals are paid, and 
so long thereafter as oil or gas is produced from the committed lease.


Sec.  3107.40  Extension by elimination.

    Any lease eliminated from any approved or prescribed oil and gas 
agreement authorized by the Act and any lease in effect at the 
termination of such agreement, unless relinquished, will continue in 
effect for the original term of the lease or for 2 years after its 
elimination from the agreement or after the termination of the plan or 
agreement, whichever is longer, and for so long thereafter as oil or 
gas is produced in paying quantities. No lease will be extended if the 
public interest requirement for an approved oil and gas agreement has 
not been satisfied, as determined by the authorized officer.

Extension of Leases Segregated by Assignment


Sec.  3107.51  Extension after discovery on other segregated portions.

    Any lease segregated by assignment, including the retained portion, 
will continue in effect for the primary term

[[Page 30982]]

of the original lease, or for 2 years after the date a well capable of 
production in paying quantities is established upon any other portion 
of the original lease, whichever is the longer period.


Sec.  3107.52  Undeveloped parts of leases in their extended term.

    Undeveloped parts of leases retained or assigned out of leases 
which are in their extended term will continue in effect for 2 years 
after the effective date of assignment, provided the parent lease was 
issued prior to September 2, 1960.


Sec.  3107.53  Undeveloped parts of producing leases.

    Undeveloped parts of leases retained or assigned out of leases 
which are extended by production, actual or suspended, or the payment 
of compensatory royalty will continue in effect for 2 years after the 
effective date of assignment and for so long thereafter as oil or gas 
is produced in paying quantities.


Sec.  3107.60  Extension of reinstated leases.

    Where a reinstatement of a terminated lease is granted under 43 CFR 
3108.20 and the authorized officer finds that the reinstatement will 
not afford the lessee a reasonable opportunity to continue operations 
under the lease, the authorized officer may extend the term of such 
lease for a period sufficient to give the lessee such an opportunity. 
Any extension will be subject to the following conditions:
    (a) No extension will exceed a period equal to the unexpired 
portion of the lease or any extension thereof remaining at the date of 
termination.
    (b) When the reinstatement occurs after the expiration of the term 
or extension thereof, the lease may be extended from the date the 
authorized officer grants the petition, but in no event for more than 2 
years from the date the reinstatement is authorized and so long 
thereafter as oil or gas is produced in paying quantities.

Other Extension Types


Sec.  3107.71  Payment of compensatory royalty.

    The payment of a compensatory royalty will extend the term of any 
lease for the period during which such compensatory royalty is paid and 
for a period of 1 year from the discontinuance of such payments.


Sec.  3107.72  Subsurface storage of oil and gas.

    Any lease used for the storage of oil or gas will be extended for 
the period of storage under an approved agreement.

Subpart 3108--Relinquishment, Termination, Cancellation


Sec.  3108.10  Relinquishment.

    The lessee(s) may relinquish the lease or any legal subdivision of 
the lease at any time. The lessee(s) must file a written relinquishment 
with the BLM State Office with jurisdiction over the lease. All lessees 
holding record title interests in the lease must sign the 
relinquishment. A relinquishment takes effect on the date the lessee 
filed it with the BLM. However, the lessee(s) and the party that issued 
the bond will continue to be obligated to:
    (a) Make payments of all accrued rentals and royalties, including 
payments of compensatory royalty due for all drainage that occurred 
before the relinquishment;
    (b) Place all wells to be relinquished in condition for suspension 
or abandonment as the BLM requires; and
    (c) Complete reclamation of the leased sites after stopping or 
abandoning oil and gas operations on the lease, under a plan approved 
by the BLM or the appropriate surface management agency.

Termination by Operation of Law and Reinstatement


Sec.  3108.21  Automatic termination.

    (a) Except as provided in paragraph (b) of this section, any lease 
on which there is no well capable of producing oil or gas in paying 
quantities will automatically terminate by operation of law (30 U.S.C. 
188) if the lessee fails to pay the rental at the designated ONRR 
office on or before the lease anniversary date. However, if the 
designated ONRR office is closed on the anniversary date, a rental 
payment received on the next business day the ONRR office is open to 
the public will be considered timely made.
    (b) If the rental payment due under a lease is paid on or before 
its anniversary date but the amount of the payment is deficient and the 
deficiency is nominal as defined in this section, or the amount of 
payment made was determined in accordance with the rental or acreage 
figure stated in a decision rendered by the authorized officer, and 
such figure is found to be in error resulting in a deficiency, such 
lease will not have automatically terminated unless the lessee fails to 
pay the deficiency within the period prescribed in the Notice of 
Deficiency provided for in this section. A deficiency will be 
considered nominal if it is not more than $100 or more than 5 percent 
of the total payment due, whichever is less. The designated ONRR office 
will send a Notice of Deficiency to the lessee. The Notice will allow 
the lessee 15 days from the date of receipt or until the due date, 
whichever is later, to submit the full balance due to the designated 
ONRR office. If the payment required by the Notice is not paid within 
the time allowed, the lease will have terminated by operation of law as 
of its anniversary date.
    (c) The automatic termination provision does not apply where, due 
to other contingencies, additional rental is due on a date other than 
the lease anniversary date and where the lessee did not receive notice 
that the obligation had accrued, unless the lessee fails to pay the 
rental within the period prescribed in the BLM Notice.


Sec.  3108.22  Reinstatement at existing rental and royalty rates: 
Class I reinstatements.

    (a) Except as hereinafter provided, the authorized officer may 
reinstate a lease which has terminated for failure to pay on or before 
the anniversary date the full amount of rental due, provided that:
    (1) Such rental was paid or tendered within 20 days after the 
anniversary date; and
    (2) It is shown to the satisfaction of the authorized officer that 
the failure to timely submit the full amount of the rental due was 
either justified or not due to a lack of reasonable diligence on the 
part of the lessee (reasonable diligence includes a rental payment that 
is paid to the ONRR on or before the lease anniversary date. If the 
designated ONRR office or payment system is not operational on the 
anniversary date, payment received on the next business day in which 
the designated ONRR office or payment system is operational to the 
public will be deemed timely); and
    (3) A petition for reinstatement and the processing fee for lease 
reinstatement, Class I, found in the fee schedule in Sec.  3000.120 of 
this chapter, are filed with the proper BLM office within 60 days after 
receipt of Notice of Termination of Lease due to late payment of 
rental. If a terminated lease becomes productive prior to the time the 
lease is reinstated, all required royalty that has accrued must be paid 
to the ONRR.
    (b) The burden of showing that the failure to pay on or before the 
anniversary date was justified or not due to lack of reasonable 
diligence is on the lessee.
    (c) Under no circumstances will a terminated lease be reinstated 
if:
    (1) A valid oil and gas lease has been issued prior to the filing 
of a petition for reinstatement affecting any of the lands covered by 
that terminated lease; or

[[Page 30983]]

    (2) The oil and gas interests of the United States in the lands 
have been disposed of or otherwise have become unavailable for leasing.


Sec.  3108.23  Reinstatement at higher rental and royalty rates: Class 
II reinstatements.

    (a) The authorized officer may, if the requirements of this section 
are met, reinstate a competitive oil and gas lease which was terminated 
by operation of law for failure to pay rental timely when the rental 
was not paid or tendered within 20 calendar days of the termination 
date, and it is shown to the satisfaction of the authorized officer 
that such failure was justified or not due to a lack of reasonable 
diligence, or no matter when the rental was paid, it is shown to the 
satisfaction of the authorized officer that such failure was 
inadvertent.
    (b)(1) Such leases may be reinstated if the required back rental 
and royalty at the increased rates accruing from the date of 
termination, together with a petition for reinstatement, are filed on 
or before the earlier of:
    (i) Sixty calendar days after the last date that any lessee of 
record received Notice of Termination by certified mail; or
    (ii) Twenty-four months after termination of the lease.
    (2) After determining that the requirements for filing of the 
petition for reinstatement have been timely met, the authorized officer 
may reinstate the lease if:
    (i) No valid lease has been issued prior to the filing of the 
petition for reinstatement affecting any of the lands covered by the 
terminated lease, whether such lease is still in effect or not;
    (ii) The oil and gas interests of the United States in the lands 
have not been disposed of or have not otherwise become unavailable for 
leasing;
    (iii) Payment of all back rentals and royalties at the rates 
established for the reinstated lease has been made;
    (iv) An agreement has been signed by the lessee and attached to and 
made a part of the lease specifying future rentals at the applicable 
rates specified for reinstated leases in 43 CFR 3103.22 and future 
royalties at the rates set in 43 CFR 3103.31 for all production removed 
or sold from such lease or shared by such lease from production 
allocated to the lease by virtue of its participation in an oil and gas 
agreement;
    (v) A notice of the proposed reinstatement of the terminated lease 
and the terms and conditions of reinstatement has been published in the 
Federal Register at least 30 days prior to the date of reinstatement 
for which the lessee must reimburse the BLM for the full costs incurred 
in the publishing of said notice; and
    (vi) The lessee has paid the BLM a nonrefundable administrative fee 
of $500.
    (c) The authorized officer will furnish to the Chairpersons of the 
Committee on Natural Resources of the House of Representatives and of 
the Committee on Energy and Natural Resources of the Senate, at least 
30 days prior to the date of reinstatement, a copy of the notice, 
together with information concerning rental, royalty, volume of 
production, if any, and any other matter which the authorized officer 
considers significant in making the determination to reinstate.
    (d) If the authorized officer reinstates the lease, the 
reinstatement will be effective as of the date of termination, for the 
unexpired portion of the original lease or any extension thereof 
remaining on the date of termination, and so long thereafter as oil or 
gas is produced in paying quantities. Where a lease is reinstated under 
this section and the authorized officer finds that the reinstatement of 
such lease either:
    (1) Occurs after the expiration of the primary term or any 
extension thereof; or
    (2) Will not afford the lessee a reasonable opportunity to continue 
operations under the lease, the authorized officer may extend the term 
of the reinstated lease for such period as determined reasonable, but 
in no event for more than 2 years from the date of the reinstatement 
and so long thereafter as oil or gas is produced in paying quantities.


Sec.  3108.30  Cancellation.

    (a) Whenever the lessee fails to comply with any of the provisions 
of the law, the regulations issued thereunder, or the lease, the lease 
may be canceled by the Secretary, if the leasehold does not contain a 
well capable of production of oil or gas in paying quantities, or if 
the lease is not committed to an approved oil and gas agreement that 
contains a well capable of production of unitized substances in paying 
quantities. The lease may be canceled only if the default continues for 
30 calendar days after a notice of default has been delivered in 
accordance with 43 CFR 1810.2.
    (b) Whenever the lessee fails to comply with any of the provisions 
of the law, the regulations issued thereunder, or the lease, and if the 
leasehold contains a well capable of production of oil or gas in paying 
quantities, or if the lease is committed to an approved oil and gas 
agreement that contains a well capable of production of unitized 
substances in paying quantities, the lease may be canceled only by 
court order in the manner provided by section 31(a) of the Act (30 
U.S.C. 188).
    (c) If any interest in any lease is owned or controlled, directly 
or indirectly, by means of stock or otherwise, in violation of any of 
the provisions of the Act, the lease may be canceled, or the interest 
so owned may be forfeited, or the person so owning or controlling the 
interest may be compelled to dispose of the interest, only by court 
order in the manner provided by section 27(h)(1) of the Act (30 U.S.C. 
184).
    (d) Leases will be subject to cancellation if improperly issued.


Sec.  3108.40  Bona fide purchasers.

    A lease or interest therein may not be cancelled to the extent that 
such action adversely affects the title or interest of a bona fide 
purchaser even though such lease or interest, when held by a 
predecessor in title, may have been subject to cancellation. All 
purchasers will be charged with constructive notice as to all pertinent 
regulations and all BLM records pertaining to the lease and the lands 
covered by the lease. Prompt action may be taken to dismiss as a party 
to any proceedings with respect to a violation by a predecessor of any 
provisions of the Act, any person who shows the holding of an interest 
as a bona fide purchaser without having violated any provisions of the 
Act. No hearing will be necessary upon such showing unless prima facie 
evidence is presented that the purchaser is not a bona fide purchaser.


Sec.  3108.50  Waiver or suspension of lease rights.

    If, during any proceeding with respect to a violation of any 
provision of the regulations in 43 CFR parts 3000 and 3100 or the Act, 
a party thereto files a waiver of his/her rights under the lease to 
drill or to assign his/her lease interests, or if such rights are 
suspended by order of the Secretary pending a decision, payments of 
rentals and the running of time against the term of the lease involved 
will be suspended as of the first day of the month following the filing 
of the waiver or the Secretary's suspension until the first day of the 
month following the final decision in the proceeding or the revocation 
of the waiver or suspension.

[[Page 30984]]

Subpart 3109--Leasing under Special Acts

Rights-of-Way


Sec.  3109.11  Generally.

    The Act of May 21, 1930 (30 U.S.C. 301-306), authorizes either the 
leasing of oil and gas deposits under railroad and other rights-of-way 
to the owner of the right-of-way or the entering of a compensatory 
royalty agreement with adjoining landowners. This authority will be 
exercised only with respect to railroad rights-of-way and easements 
issued pursuant either to the Act of March 3, 1875 (43 U.S.C.934 et 
seq.), or pursuant to earlier railroad right-of-way statutes, and with 
respect to rights-of-way and easements issued pursuant to the Act of 
March 3, 1891 (43 U.S.C. 946 et seq.). The oil and gas underlying any 
other right-of-way or easement is included within any oil and gas lease 
issued pursuant to the Act which covers the lands within the right-of-
way, subject to the limitations on use of the surface, if any, set out 
in the statute under which, or permit by which, the right-of-way or 
easement was issued, and such oil and gas will not be leased under the 
Act of May 21, 1930.


Sec.  3109.12  Application.

    (a) No approved form is required for an application to lease oil 
and gas deposits underlying a right-of-way.
    (b) The right-of-way owner or his/her transferee must file the 
application in the proper BLM office.
    (c) Include the processing fee for leasing under right-of-way found 
in the fee schedule in Sec.  3000.120 of this chapter.
    (d) An application must include:
    (1) Facts as to the ownership of the right-of-way, and of the 
transfer if the application is filed by a transferee;
    (2) An executed transfer of the right to obtain a lease, if 
necessary;
    (3) A description of the development of oil or gas in adjacent or 
nearby lands, the location and depth of the wells, the production and 
the probability of drainage of the deposits in the right-of-way;
    (4) A description of each legal subdivision through which a portion 
of the right-of-way desired to be leased traverses; however, a 
description by metes and bounds of the right-of-way is not required; 
and
    (5) A map of the applicable lands.


Sec.  3109.13  Notice.

    After the BLM has determined that a lease of a right-of-way or any 
portion thereof is consistent with the public interest, either upon 
consideration of an application for lease or on its own motion, the 
authorized officer will serve notice on the owner or lessee of the oil 
and gas rights of the adjoining lands. The adjoining landowner or 
lessee will be allowed a reasonable time, as provided in the notice, 
within which to submit a bid for the percent of compensatory royalty, 
the owner or lessee must pay for the extraction of the oil and gas 
underlying the right-of-way through wells on such adjoining lands. The 
owner of the right-of-way will be given the same time period to submit 
a bid for the lease.


Sec.  3109.14  Award of lease or compensatory royalty agreement.

    Award of lease to the owner of the right-of-way, or a contract for 
the payment of compensatory royalty by the owner or lessee of the 
adjoining lands will be made to the bidder whose offer is determined by 
the authorized officer to be to the best advantage of the United 
States, considering the amount of royalty to be received and the better 
development under the respective means of production and operation.


Sec.  3109.15  Compensatory royalty agreement or lease.

    (a) The lease or compensatory royalty agreement will be on a form 
approved by the Director.
    (b) The primary term of the lease will be for a period of 10 years.
    (c) The following provisions of 43 CFR part 3100 apply to the 
issuance and administration of leases for oil and gas deposits 
underlying a right-of-way issued under this part:
    (1) All of subpart 3101, except Sec. Sec.  3101.21, 3101.22, 
3101.23, 3101.24, and 3101.25; and
    (2) All of subparts 3102 through 3108;


Sec.  3109.20  Units of the National Park System.

    (a) Oil and gas leasing in units of the National Park System will 
be governed by 43 CFR part 3100 and all operations conducted on a lease 
or permit in such units will be governed by 43 CFR parts 3160 and 3180.
    (b) Any lease or permit respecting minerals in units of the 
National Park System may be issued or renewed only with the consent of 
the Regional Director, National Park Service. Such consent will only be 
granted upon a determination by the Regional Director that the activity 
permitted under the lease or permit will not have significant adverse 
effect upon the resources or administration of the unit pursuant to the 
authorizing legislation of the unit. Any lease or permit issued will be 
subject to such conditions as may be prescribed by the Regional 
Director to protect the surface and significant resources of the unit, 
to preserve their use for public recreation, and to the condition that 
site specific approval of any activity on the lease will only be given 
upon concurrence by the Regional Director. All lease applications 
received for reclamation withdrawn lands will also be submitted to the 
Bureau of Reclamation for review.
    (c) The units subject to the regulations in this part are those 
units of land and water which are shown on the following maps on file 
and available for public inspection in the office of the Director of 
the National Park Service and in the Superintendent's Office of each 
unit. The boundaries of these units may be revised by the Secretary as 
authorized in the Acts.
    (1) Lake Mead National Recreation Area--The map identified as 
``boundary map, 8360-80013B, revised February 1986.
    (2) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National 
Recreation Area--The map identified as ``Proposed Whiskeytown-Shasta-
Trinity National Recreation Area,'' numbered BOR-WST 1004, dated July 
1963.
    (3) Ross Lake and Lake Chelan National Recreation Areas--The map 
identified as ``Proposed Management Units, North Cascades, 
Washington,'' numbered NP-CAS-7002, dated October 1967.
    (4) Glen Canyon National Recreation Area--the map identified as 
``boundary map, Glen Canyon National Recreation Area,'' numbered GLC-
91,006, dated August 1972.
    (d) The following excepted units will not be open to mineral 
leasing:
    (1) Lake Mead National Recreation Area. (i) All waters of Lakes 
Mead and Mohave and all lands within 300 feet of those lakes measured 
horizontally from the shoreline at maximum surface elevation;
    (ii) All lands within the unit of supervision of the Bureau of 
Reclamation around Hoover and Davis Dams and all lands outside of 
resource utilization zones as designated by the Superintendent on the 
map (602-2291B, dated October 1987) of Lake Mead National Recreation 
Area which is available for inspection in the Office of the 
Superintendent.
    (2) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National 
Recreation Area. (i) All waters of Whiskeytown Lake and all lands 
within 1 mile of that lake measured from the shoreline at maximum 
surface elevation;
    (ii) All lands classified as high-density recreation, general 
outdoor recreation, outstanding natural and historic, as shown on the 
map numbered 611-20,004B, dated April

[[Page 30985]]

1979, entitled ``Land Classification, Whiskeytown Unit, Whiskeytown-
Shasta-Trinity National Recreation Area.'' This map is available for 
public inspection in the Office of the Superintendent;
    (iii) All lands within section 34 of Township 33 north, Range 7 
west, Mt. Diablo Meridian.
    (3) Ross Lake and Lake Chelan National Recreation Areas. (i) All of 
Lake Chelan National Recreation Area;
    (ii) All lands within \1/2\ mile of Gorge, Diablo and Ross Lakes 
measured from the shoreline at maximum surface elevation;
    (iii) All lands proposed for or designated as wilderness;
    (iv) All lands within \1/2\ mile of State Highway 20;
    (v) Pyramid Lake Research Natural Area and all lands within \1/2\ 
mile of its boundaries.
    (4) Glen Canyon National Recreation Area. Those units closed to 
mineral disposition within the natural zone, development zone, cultural 
zone and portions of the recreation and resource utilization zone as 
shown on the map numbered 80,022A, dated March 1980, entitled ``Mineral 
Management Plan--Glen Canyon National Recreation Area.'' This map is 
available for public inspection in the Office of the Superintendent and 
the office of the BLM State Offices, Arizona and Utah.


Sec.  3109.30  Shasta and Trinity Units of the Whiskeytown-Shasta-
Trinity National Recreation Area.

    Section 6 of the Act of November 8, 1965 (Pub. L. 89-336), 
authorizes the Secretary to permit the removal of oil and gas from 
lands within the Shasta and Trinity Units of the Whiskeytown-Shasta-
Trinity National Recreation Area in accordance with the Act or the 
Mineral Leasing Act for Acquired Lands. Subject to the determination by 
the Secretary of Agriculture that removal will not have significant 
adverse effects on the purposes of the Central Valley project or the 
administration of the recreation area.

PART 3110 [REMOVED]

0
3. Under the authority of 30 U.S.C. 189, part 3110 is removed.

0
4. Revise part 3120 to read as follows:

PART 3120--COMPETITIVE LEASES

Sec.

General

3120.11 Lands available for competitive leasing.
3120.12 Requirements.
3120.13 Protests.

Lease Terms

3120.21 Duration of lease.
3120.22 Dating of leases.
3120.23 Lease size.

Expressions of Interest

3120.31 Expression of interest process.
3120.32 Expression of interest leasing preference.
3120.33 Agency inventory of leasing.

Notice of Competitive Lease Sale

3120.41 General.
3120.42 Posting timeframes.

Competitive Auction

3120.51 Competitive auction.
3120.52 Payments required.
3120.53 Award of lease.
3120.60 Parcels not bid on at auction.

Future Interest

3120.71 Expression of interest to make lands available for 
competitive lease.
3120.72 Future interest terms and conditions.
3120.73 Compensatory royalty agreements.

PART 3120--COMPETITIVE LEASES

    Authority:  16 U.S.C. 3101 et seq.; 30 U.S.C. 181 et seq. and 
351-359; 40 U.S.C. 471 et seq.; 43 U.S.C. 1701 et seq.; Pub. L. 113-
291, 128 Stat. 3762; and the Attorney General's Opinion of April 2, 
1941 (40 Op. Atty. Gen. 41).

General


Sec.  3120.11  Lands available for competitive leasing.

    All lands eligible and available for leasing may be offered for 
competitive auction under this subpart, including but not limited to:
    (a) Lands that were covered by previously issued oil and gas leases 
that have terminated, expired, been cancelled or relinquished;
    (b) Lands for which authority to lease has been delegated from the 
General Services Administration;
    (c) If, in proceeding to cancel a lease, interest in a lease, 
option to acquire a lease or an interest therein, acquired in violation 
of any of the provisions of the Act, an underlying lease, interest or 
option in the lease is cancelled or forfeited through a bankruptcy or 
otherwise to the United States and there are valid interests therein 
that are not subject to cancellation, forfeiture, or compulsory 
disposition, such underlying lease, interest, or option may be sold to 
the highest responsible and qualified bidder by competitive bidding 
under this subpart, subject to all outstanding valid interests therein 
and valid options pertaining thereto. If less than the whole interest 
in the lease, interest, or option is cancelled or forfeited, such 
partial interest may likewise be sold by competitive bidding. If no 
satisfactory bid is obtained as a result of the competitive offering of 
such whole or partial interests, such interests may be sold in 
accordance with 30 U.S.C. 184(h)(2) by such other methods as the 
authorized officer deems appropriate, but on terms no less favorable to 
the United States than those of the best competitive bid received. 
Interest in outstanding leases(s) so sold will be subject to the terms 
and conditions of the existing lease(s);
    (d) Lands which are otherwise unavailable for leasing but which are 
subject to drainage (protective leasing);
    (e) Lands included in any expression of interest submitted to the 
authorized officer;
    (f) Lands selected by the authorized officer; and
    (g) Lands that were offered on a previous sale for which no bid was 
accepted or received.


Sec.  3120.12  Requirements.

    (a) Each BLM state office will hold sales at least quarterly if 
eligible lands are available for competitive leasing.
    (b) Lease sales will be conducted by a competitive auction process.
    (c) The BLM may issue a lease only to the highest responsible and 
qualified bidder. If a person does not pay the minimum monies owed the 
day of the sale, the BLM may refer that person to the Department of the 
Interior's Office of the Inspector General, Administrative Remedies 
Division, for appropriate action, including potential suspension and 
debarment.
    (d) The national minimum acceptable bid will be as specified in 
Sec.  3103.1 of this chapter and payable on the gross acreage and will 
not be prorated for any lands in which the United States owns a 
fractional interest.


Sec.  3120.13  Protests.

    (a) No action pursuant to the regulations in this subpart will be 
suspended under 43 CFR 4.21(a) due to a protest from a notice by the 
authorized officer to hold a lease sale.
    (b) Notwithstanding paragraph (a) of this section, the authorized 
officer may suspend the offering of a specific parcel while considering 
a protest against its inclusion in a Notice of Competitive Lease Sale.
    (c) Only the Assistant Secretary for Land and Minerals Management 
may suspend a lease sale for good cause after reviewing the reason(s) 
for a protest.

Lease Terms


Sec.  3120.21  Duration of lease.

    Competitive leases will be issued for a primary term of 10 years.

[[Page 30986]]

Sec.  3120.22  Dating of leases.

    All competitive leases will be considered issued when signed by the 
authorized officer. Competitive leases, except future interest leases 
issued under Sec.  3120.80, will be effective as of the first day of 
the month following the date the leases are signed on behalf of the 
United States. A lease may be made effective on the first day of the 
month within which it is issued if a written request is made prior to 
the date of signature of the authorized officer. Leases for future 
interest will be effective as of the date the mineral interests vest in 
the United States.


Sec.  3120.23  Lease size.

    Lands may be offered in leasing units of not more than 2,560 acres 
outside Alaska, or 5,760 acres within Alaska, which may be as nearly 
compact in form as possible.

Expressions of Interest


Sec.  3120.31  Expression of interest process.

    (a) A party submitting an expression of interest in leasing land 
available for disposition under section 17 of the Mineral Leasing Act 
must include the submitter's name and address and must submit the 
expression of interest through the BLM's online leasing system.
    (b) The expression must provide a description of the lands 
identified by legal land description, as follows:
    (1) For lands surveyed under the public land survey system, 
describe the lands to the nearest aliquot part within the legal 
subdivision, section, township, range, and meridian;
    (2) For unsurveyed lands, describe the lands by metes and bounds, 
giving courses and distances, and tie this information to an official 
corner of the public land surveys, or to a prominent topographic 
feature;
    (3) For approved protracted surveys, include an entire section, 
township, range, and meridian. Do not divide protracted sections into 
aliquot parts;
    (4) For lands that have water boundaries, describe the lands based 
on the initial survey or deed acquiring ownership;
    (5) For fractional interest lands, identify the United States 
mineral ownership by percentage;
    (6) For split estate lands, where the surface rights are in private 
ownership and the rights to develop the oil and gas are managed by the 
Federal Government, submit the private surface owner's name and 
address.
    (7) For lands where the acquiring agency has assigned an 
acquisition or tract number covering the lands applied, submit the 
number in addition to any description otherwise required by this 
section. If the authorized officer determines that the acquisition or 
tract number, together with identification of the State and county, 
constitutes an adequate description, the authorized officer may allow 
the description in this manner in lieu of other descriptions required 
by this section.
    (c) A submitter may submit more than one expression of interest, so 
long as each expression separately satisfies the requirements of 
paragraph (b) of this section.
    (d) Each expression of interest must include a filing fee, as found 
in the fee schedule in Sec.  3103.1 of this chapter.
    (e) The BLM may offer for sale all or some of the lands specified 
in an expression of interest and may offer those lands as part of a 
parcel that includes lands not specified in the expression of interest.


Sec.  3120.32  Expression of interest leasing preference.

    When determining whether the BLM should offer lands specified in an 
expression of interest at lease sales, the BLM will evaluate the 
Secretary's obligations to manage public lands for multiple use and 
sustained yield and to take any action required to prevent unnecessary 
or undue degradation of the lands and their resources, along with other 
applicable legal requirements. In evaluating the lands to be offered, 
as part of the scoping process, the BLM will consider, at minimum:
    (a) Proximity to oil and gas development existing at the time of 
the BLM's evaluation, giving preference to lands upon which a prudent 
operator would seek to expand existing operations;
    (b) The presence of important fish and wildlife habitats or 
connectivity areas, giving preference to lands that would not impair 
the proper functioning of such habitats or corridors;
    (c) The presence of historic properties, sacred sites, and other 
high value cultural resources, giving preference to lands that would 
not impair the cultural significance of such resources;
    (d) The presence of recreation and other important uses or 
resources, giving preference to lands that would not impair the value 
of such uses or resources; and
    (e) The potential for oil and gas development, giving preference to 
lands with high potential for development.


Sec.  3120.33  Agency inventory of leasing.

    Until August 16, 2032, the BLM will from time to time calculate, 
for the preceding 1-year period before it issues a wind or solar energy 
right-of-way, the acreage for which expressions of interest have been 
submitted to the BLM and the sum total of acres offered for lease.

Notice of Competitive Lease Sale


Sec.  3120.41  General.

    (a) The lands available for competitive lease sale under this 
subpart will be described in a Notice of Competitive Lease Sale.
    (b) The time, date, and place of the competitive lease sale will be 
stated in the notice.
    (c) The notice will include an identification of, and a copy of, 
stipulations applicable to each parcel.


Sec.  3120.42  Posting timeframes.

    (a) After identifying a preliminary list of lands for a lease sale, 
the BLM will provide a scoping period, of not less than 30 calendar 
days, for public comment on the preliminary parcel list for the 
upcoming lease sale. The preliminary parcel list is not subject to 
protests or appeals.
    (b) After drafting a National Environmental Policy Act document for 
a lease sale, the BLM will provide a comment period, of not less than 
30 calendar days, for public comment on the National Environmental 
Policy Act document for the upcoming lease sale. The draft National 
Environmental Policy Act document is not subject to protests or 
appeals.
    (c) At least 60 calendar days prior to conducting a competitive 
auction, the BLM will make available to the public a list of lands to 
be offered for competitive lease sale in a Notice of Competitive Lease 
Sale.
    (d) After posting the Notice of Competitive Lease Sale notice, the 
BLM will provide a protest period, of not less than 30 calendar days, 
for public input on the upcoming lease sale.
    (e) The BLM will make available the final National Environmental 
Policy Act compliance documents prior to issuing a lease from the lease 
sale.

Competitive Auction


Sec.  3120.51  Competitive auction.

    (a) Parcels will be offered by competitive auction.
    (b) A winning bid will be the highest bid by a responsible and 
qualified bidder, equal to or exceeding the national minimum acceptable 
bid. The decision of the auctioneer will be final.


Sec.  3120.52  Payments required.

    (a) Payments must be made in accordance with 43 CFR 3103.11.
    (b) Each winning bidder must submit, by the close of official 
business hours on

[[Page 30987]]

the day of the sale for the parcel, or such other time as may be 
specified by the authorized officer:
    (1) The minimum bonus bid as specified in Sec.  3103.1 of this 
chapter;
    (2) The total amount of the first year's rental; and
    (3) The processing fee for competitive lease applications found in 
the fee schedule in Sec.  3000.120 of this chapter for each parcel.
    (c) The winning bidder must submit the balance of the bonus bid to 
the proper BLM office within 10 business days after the last day of the 
competitive auction.


Sec.  3120.53  Award of lease.

    (a) A bid will not be withdrawn and will constitute a legally 
binding commitment to execute the lease bid form and accept a lease, 
including the obligation to pay the bonus bid, first year's rental, and 
processing fee. Execution by the high bidder of a competitive lease bid 
form approved by the Director constitutes certification of compliance 
with 43 CFR subpart 3102, will constitute a binding lease offer, 
including all terms and conditions applicable thereto, and must be 
submitted when payment is made in accordance with Sec.  3120.62(b). 
Failure to comply with Sec.  3120.62(c) will result in rejection of the 
bid and forfeiture of the monies submitted under Sec.  3120.62(b).
    (b) A lease will be awarded to the highest responsible and 
qualified bidder. A copy of the lease will be provided to the lessee 
after signature by the authorized officer.
    (c) If a bid is rejected, the land may be reoffered competitively 
under this subpart.
    (d) The BLM will not issue a lease until it resolves all protests 
covering the lands to be leased.
    (e) Leases will be issued within 60 calendar days, following 
payment by the successful bidder of the remainder of the bonus bid, if 
any, and the annual rental for the first lease year. If the BLM cannot 
issue the lease within 60 days, the BLM, with the consent of the 
bidder, may reject the offer.


Sec.  3120.60  Parcels not bid on at auction.

    Lands offered at the competitive auction that received no bids may 
be offered in a future competitive auction.

Future Interest


Sec.  3120.71  Expression of interest to make lands available for 
competitive lease.

    An expression of interest for a future interest lease must be filed 
in accordance with this subpart.


Sec.  3120.72  Future interest terms and conditions.

    (a) No rental or royalty will be due to the United States prior to 
the vesting of the oil and gas rights in the United States. However, 
the future interest lessee must agree that if, he/she is or becomes the 
holder of any present interest operating rights in the lands:
    (1) The future interest lessee transfers all or a part of the 
lessee's present oil and gas interests, such lessee must file in the 
proper BLM office an assignment or transfer, in accordance with 43 CFR 
subpart 3106, of the future interest lease of the same type and 
proportion as the transfer of the present interest; and
    (2) The future interest lessee's present lease interests are 
relinquished, cancelled, terminated, or expired, the future interest 
lease rights with the United States also will cease and terminate to 
the same extent.
    (b) Upon vesting of the oil and gas rights in the United States, 
the future interest lease rental and royalty will be as for any 
competitive lease issued under this subpart, as provided in 43 CFR 
subpart 3103, and the acreage will be chargeable in accordance with 43 
CFR 3101.20.


Sec.  3120.73  Compensatory royalty agreements.

    The terms and conditions of compensatory royalty agreements 
involving acquired lands in which the United States owns a future or 
fractional interest will be established on an individual case basis. 
Such agreements may be required when leasing is not possible in 
situations where the interest of the United States in the oil and gas 
deposit includes both a present and a future fractional interest in the 
same tract containing a producing well.

PART 3130--OIL AND GAS LEASING: NATIONAL PETROLEUM RESERVE ALASKA

0
5. The authority citation for part 3130 continues to read as follows:

    Authority:  42 U.S.C. 6508, 43 U.S.C. 1733 and 1740.


0
6. Revise Sec.  3137.23 to read as follows:


Sec.  3137.23  NPR-A unitization application.

    The unitization application must include:
    (a) The proposed unit agreement;
    (b) A map showing the proposed unit area;
    (c) A list of committed tracts including, for each tract, the:
    (1) Legal land description and acreage;
    (2) Names of persons holding record title interest;
    (3) Names of persons owning operating rights; and
    (4) Name of the unit operator.
    (d) A statement certifying:
    (1) The operator invited all owners of oil and gas rights (leased 
or unleased) and lease interests (record title and operating rights) 
within the external boundary of the unit area described in the 
application to join the unit;
    (2) That there are sufficient tracts committed to the unit 
agreement to reasonably operate and develop the unit area;
    (3) The commitment status of all tracts within the area proposed 
for unitization; and
    (4) The operator accepts unit obligations under Sec.  3137.60 of 
this subpart.
    (e) Evidence of acceptable bonding;
    (f) A discussion of reasonably foreseeable and significantly 
adverse effects on the surface resources of the NPR-A and how unit 
operations may reduce impacts compared to individual lease operations;
    (g) A discussion of the proposed methodology for allocating 
production among the committed tracts. If the unit includes non-Federal 
oil and gas mineral estate, you must explain how the methodology takes 
into account reservoir heterogeneity and area variation in reservoir 
producibility; and
    (h) Other documentation that the BLM may request. The BLM may 
require additional copies of maps, plats, and other similar exhibits.
    (i) The processing fee found in the fee schedule in Sec.  3000.120 
of this chapter.

0
7. Revise Sec.  3137.61 to read as follows:


Sec.  3137.61  Change in unit operators.

    (a) To change unit operators, the new unit operator must submit to 
the BLM:
    (1) Statements that:
    (i) The new operator accepts unit obligations; and
    (ii) The percentage of required interest owners consented to a 
change of unit operator;
    (2) Evidence of acceptable bonding (see Sec.  3137.60(b)); and
    (3) The processing fee found in the fee schedule in Sec.  3000.120 
of this chapter.
    (b) The effective date of the change in unit operator is the date 
the BLM approves the new unit operator.

0
8. Revise Sec.  3138.11 to read as follows:


Sec.  3138.11  Applications for a subsurface storage agreement.

    (a) An application for a subsurface storage agreement must include:
    (1) The reason for forming a subsurface storage agreement;
    (2) A description of the area to be included in the subsurface 
storage agreement;

[[Page 30988]]

    (3) A description of the formation to be used for storage;
    (4) The proposed storage fees or rentals. The fees or rentals must 
be based on the value of the subsurface storage, injection, and 
withdrawal volumes, and rental income or other income generated by the 
operator for letting or subletting the storage facilities;
    (5) The payment of royalty for native oil or gas (oil or gas that 
exists in the formation before injection and that is produced when the 
stored oil or gas is withdrawn);
    (6) A description of how often and under what circumstances the 
operator and the BLM intend to renegotiate fees and payments;
    (7) The proposed effective date and term of the subsurface storage 
agreement;
    (8) Certification that all owners of mineral rights (leased or 
unleased) and lease interests have consented to the gas storage 
agreement in writing;
    (9) An ownership schedule showing lease or land status;
    (10) A schedule showing the participation factor for all parties to 
the subsurface storage agreement;
    (11) Supporting data (geologic maps showing the storage formation, 
reservoir data, etc.) demonstrating the capability of the reservoir for 
storage; and
    (12) The processing fee found in the fee schedule in Sec.  3000.120 
of this chapter.
    (b) The BLM will negotiate the terms of a subsurface storage 
agreement with the operator, including bonding, and reservoir 
management.
    (c) The BLM may request documentation in addition to that which the 
operator provides under paragraph (a) of this section.

0
9. Revise part 3140 to read as follows:

PART 3140--LEASING IN SPECIAL TAR SAND AREAS

Subpart 3140--Conversion of Existing Oil and Gas Leases and Valid 
Claims Based on Mineral Locations
Sec.
3140.1 Purpose.
3140.3 Authority.
3140.5 Definitions.

General Provisions

3140.11 Existing rights.
3140.12 Notice of intent to convert.
3140.13 Exploration plans.
3140.14 Other provisions.

Applications

3140.21 Forms.
3140.22 Who may apply.
3140.23 Application requirements.

Time Limitations

3140.31 Conversion applications.
3140.32 Action on an application.

Conversion

3140.41 Approval of plan of operations (and unit and operating 
agreements).
3140.42 Issuance of the combined hydrocarbon lease.
3140.50 Duration of the lease.
3140.60 Use of additional lands.
3140.70 Lands within the National Park System.
Subpart 3141--Leasing in Special Tar Sand Areas
3141.1 Purpose.
3141.3 Authority.
3141.5 Definitions.
3141.8 Other applicable regulations.
3141.10 General.

Prelease Exploration Within Special Tar Sand Areas

3141.21 Geophysical exploration.
3141.22 Exploration licenses.
3141.30 Land use plans.

Consultation

3141.41 Consultation with the Governor.
3141.42 Consultation with others.

Leasing Procedures

3141.51 Economic evaluation.
3141.52 Term of lease.
3141.53 Royalties and rentals.
3141.54 Lease size.
3141.55 Dating of lease.

Sale Procedures

3141.61 Initiation of competitive lease offering.
3141.62 Publication of a notice of competitive lease offering.
3141.63 Conduct of sales.
3141.64 Qualifications.
3141.65 Rejection of bid.
3141.66 Consideration of next highest bid.
3141.70 Award of lease.
Subpart 3142--Paying Quantities/Diligent Development for Combined 
Hydrocarbon and Tar Sand Leases
3142.1 Purpose.
3142.3 Authority.
3142.5 Definitions.
3142.10 Diligent development.

Minimum Production Levels

3142.21 Minimum production schedule.
3142.22 Advance royalties in lieu of production.
3142.30 Expiration.

PART 3140--LEASING IN SPECIAL TAR SAND AREAS

    Authority:  30 U.S.C. 181 et seq.; 30 U.S.C. 351-359; 43 U.S.C. 
1701 et seq.; Pub. L. 97-78, 95 Stat. 1070; 42 U.S.C. 15801, unless 
otherwise noted.

Subpart 3140--Conversion of Existing Oil and Gas Leases and Valid 
Claims Based on Mineral Locations


Sec.  3140.1  Purpose.

    The purpose of this subpart is to provide for the conversion of 
existing oil and gas leases and valid claims based on mineral locations 
within Special Tar Sand Areas to combined hydrocarbon leases.


Sec.  3140.3  Authority.

    These regulations are issued under the authority of the Mineral 
Lands Leasing Act of February 25, 1920 (30 U.S.C. 181 et seq.), the 
Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), and the 
Combined Hydrocarbon Leasing Act of 1981 (Pub. L. 97-78).


Sec.  3140.5  Definitions.

    As used in this subpart, the term:
    Combined hydrocarbon lease means a lease issued in a Special Tar 
Sand Area for the removal of gas and nongaseous hydrocarbon substances 
other than coal, oil shale or gilsonite.
    Complete plan of operations means a plan of operations that is in 
substantial compliance with the information requirements of 43 CFR part 
3592 for both exploration plans and mining plans, as well as any 
additional information required in this part and under 43 CFR part 
3593, as may be appropriate.
    Owner of an oil and gas lease means all of the record title holders 
of an oil and gas lease.
    Owner of a valid claim based on a mineral location means all 
parties appearing on the title records recognized as official under 
State law as having the right to sell or transfer any part of the 
mining claim, which was located within a Special Tar Sand Area prior to 
January 21, 1926, for any hydrocarbon resource, except coal, oil shale 
or gilsonite, leasable under the Combined Hydrocarbon Leasing Act.
    Special Tar Sand Area means an area designated by the Department of 
the Interior's orders of November 20, 1980 (45 FR 76800), and January 
21, 1981 (46 FR 6077) referred to in those orders as Designated Tar 
Sand Areas, as containing substantial deposits of tar sand.
    Unitization means unitization as that term is defined in 43 CFR 
part 3180.

General Provisions


Sec.  3140.11  Existing rights.

    (a) The owner of an oil and gas lease issued prior to November 16, 
1981, or the owner of a valid claim based on a mineral location 
situated within a Special Tar Sand Area may convert that portion of the 
lease or claim so situated to a combined hydrocarbon lease, provided 
that such conversion is consistent with the provisions of this subpart. 
The application time period ended on November 15, 1983.

[[Page 30989]]

    (b) Owners of oil and gas leases in Special Tar Sand Areas who 
elect not to convert their leases to a combined hydrocarbon lease do 
not acquire the rights to any hydrocarbon resource except oil and gas 
as those terms were defined prior to the enactment of the Combined 
Hydrocarbon Leasing Act of 1981. The failure to file an application to 
convert a valid claim based on a mineral location within the time 
herein provided will have no effect on the validity of the mining claim 
nor the right to maintain that claim.


Sec.  3140.12  Notice of intent to convert.

    (a) Owners of oil and gas leases in Special Tar Sand Areas which 
were scheduled to expire prior to November 15, 1983, could have 
preserved the right to convert their leases to combined hydrocarbon 
leases by filing a Notice of Intent to Convert with the BLM Utah State 
Office.
    (b) A letter, submitted by the lessee, notifying the BLM of the 
lessee's intention to submit a plan of operations constituted a notice 
of intent to convert a lease. The Notice of Intent must have contained 
the lease number.
    (c) The Notice of Intent must have been filed prior to the 
expiration date of the lease. The notice would have preserved the 
lessee's conversion rights only until November 15, 1983.


Sec.  3140.13  Exploration plans.

    (a) The authorized officer may grant permission to holders of 
existing oil and gas leases to gather information to develop, perfect, 
complete or amend a plan of operations required for conversion upon the 
approval of the authorized officer of an exploration plan developed in 
accordance with 43 CFR 3592.1.
    (b) The approval of an exploration plan in units of the National 
Park System requires the consent of the Regional Director of the 
National Park Service in accordance with Sec.  3140.70.
    (c) The filing of an exploration plan alone will be insufficient to 
meet the requirements of a complete plan of operations as set forth in 
Sec.  3140.23.


Sec.  3140.14  Other provisions.

    (a) A combined hydrocarbon lease will be for no more than 5,760 
acres. Acreage held under a combined hydrocarbon lease in a Special Tar 
Sand Area is not chargeable to State oil and gas limitations allowable 
in 43 CFR 3101.21 or 3101.22.
    (b) The annual rental rate for all combined hydrocarbon leases will 
be as stated in the lease, and the annual rental for all new leases 
will be as specified in 43 CFR 3103.1. The rental rate for a combined 
hydrocarbon lease will be payable upon conversion and annually, in 
advance, thereafter.
    (c)(1) The royalty rate for a combined hydrocarbon lease converted 
from an oil and gas lease will be that provided for in the original oil 
and gas lease.
    (2) The royalty rate for a combined hydrocarbon lease converted 
from a valid claim based on a mineral location will be 16.67 percent.
    (3) A reduction of royalties may be granted either as provided in 
Sec.  3103.40 or, at the request of the lessee and upon a review of 
information provided by the lessee, prior to commencement of commercial 
operations if the purpose of the request is to promote development and 
the maximum production of tar sand. A reduction of royalties for the 
tar sand will not apply to the oil and gas resource. A reduction of 
royalties for the oil and gas will not apply to the tar sand resource.
    (d)(1) Existing oil and gas leases and valid claims based on 
mineral locations may be unitized prior to or after the lease or claim 
has been converted to a combined hydrocarbon lease. The requirements of 
43 CFR part 3180 will provide the procedures and general guidelines for 
unitization of combined hydrocarbon leases. For leases within units of 
the National Park System, unitization requires the consent of the 
Regional Director of the National Park Service in accordance with Sec.  
3140.41(b).
    (2) If the plan of operations submitted for conversion is designed 
to cover a unit, a fully executed unit agreement will be approved 
before the plan of operations applicable to the unit may be approved 
under Sec.  3140.20. The proposed plan of operations and the proposed 
unit agreement may be reviewed concurrently. The approved unit 
agreement will be effective after the leases or claims subject to it 
are converted to combined hydrocarbon leases. The plan of operations 
will explain how and when each lease included in the unit operation 
will be developed.
    (e) Except as provided for in this subpart, the regulations set out 
in 43 CFR part 3100 are applicable, as appropriate, to all combined 
hydrocarbon leases issued under this subpart.

Applications


Sec.  3140.21  Forms.

    No special form is required for a conversion application.


Sec.  3140.22  Who may apply.

    Only owners of oil and gas leases issued within Special Tar Sands 
Areas, on or before November 16, 1981, and owners of valid claims based 
on mineral locations within Special Tar Sands Areas, are eligible to 
convert leases or claims to combined hydrocarbon leases in Special Tar 
Sands Areas.


Sec.  3140.23  Application requirements.

    (a) The BLM stopped accepting conversion applications on November 
15, 1983. The applicant must have submitted to the BLM Utah State 
Office, a written request for a combined hydrocarbon lease signed by 
the owner of the lease or valid claim which must be accompanied by 
three copies of a plan of operations which must meet the requirements 
of 43 CFR 3592.1 and which must have provided for reasonable protection 
of the environment and diligent development of the resources requiring 
enhanced recovery methods of development or mining.
    (b) A plan of operations may be modified or amended before or after 
conversion of a lease or valid claim to reflect changes in technology, 
slippages in schedule beyond the control of the lessee, new information 
about the resource or the economic or environmental aspects of its 
development, changes to or initiation of applicable unit agreements or 
for other purposes. To obtain approval of a modification or amended 
plan, the applicant must submit a written statement of the proposed 
changes or supplements and the justification for the changes proposed. 
Any modifications will be in accordance with 43 CFR 3592.1(c). The 
approval of the modification or amendment is the responsibility of the 
authorized officer. Changes or modification to the plan of operations 
will have no effect on the primary term of the lease. The authorized 
officer will, prior to approving any amendment or modification, review 
the modification or amendment with the appropriate surface management 
agency. For leases within units of the National Park System, no 
amendment or modification will be approved without the consent of the 
Regional Director of the National Park Service in accordance with Sec.  
3140.70.
    (c) The plan of operations may be for a single existing oil and gas 
lease or valid claim or for an area of proposed unit operation.
    (d) The plan of operations must identify by lease number all 
Federal oil and gas leases proposed for conversion and identify valid 
claims proposed for conversion by the recordation number of the mining 
claim.
    (e) The plan of operations must include any proposed designation of

[[Page 30990]]

operator or proposed operating agreement.
    (f) The plan of operations may include an exploration phase, if 
necessary, but it must include a development phase. Such a plan can be 
approved even though it may indicate work under the exploration phase 
is necessary to perfect the proposed plan for the development phase as 
long as the overall plan demonstrates reasonable protection of the 
environment and diligent development of the resources requiring 
enhanced recovery methods of mining.
    (g)(1) Upon determination that the plan of operations is complete, 
the authorized officer will suspend the term of the Federal oil and gas 
lease(s) as of the date that the complete plan was filed until the plan 
is finally approved or rejected. Only the term of the oil and gas lease 
will be suspended, not any operation and production requirements 
thereunder.
    (2) If the authorized officer determines that the plan of 
operations is not complete, the applicant will be notified that the 
plan is subject to rejection if not completed within the period 
specified in the notice.
    (3) The authorized officer may request additional data after the 
plan of operations has been determined to be complete. This request for 
additional information will have no effect on the suspension of the 
running of the oil and gas lease.

Time Limitations


Sec.  3140.31  Conversion applications.

    A plan of operations to convert an existing oil and gas lease or 
valid claim based on a mineral location to a combined hydrocarbon lease 
must have been filed on or before November 15, 1983, or prior to the 
expiration of the oil and gas lease, whichever was earlier, except as 
provided in Sec.  3140.12.


Sec.  3140.32  Action on an application.

    The authorized officer will take action on an application for 
conversion within 15 months of receipt of a proposed plan of 
operations.

Conversion


Sec.  3140.41  Approval of plan of operations (and unit and operating 
agreements).

    (a) The owner of an oil and gas lease, or the owner of a valid 
claim based on a mineral location will have such lease or claim 
converted to a combined hydrocarbon lease when the plan of operations, 
filed under Sec.  3140.23, is deemed acceptable and is approved by the 
authorized officer.
    (b) The conversion of a lease within a unit of the National Park 
System will be approved only with the consent of the Regional Director 
of the National Park Service in accordance with Sec.  3140.70.
    (c) A plan of operations may not be approved in part but may be 
approved where it contains an appropriately staged plan of exploration 
and development operations.


Sec.  3140.42  Issuance of the combined hydrocarbon lease.

    (a) After a plan of operations is found acceptable, and is 
approved, the authorized officer will prepare and submit to the owner, 
for execution, a combined hydrocarbon lease containing all appropriate 
terms and conditions, including any necessary stipulations that were 
part of the oil and gas lease being converted, as well as any 
additional stipulations, such as those required to ensure compliance 
with the plan of operations.
    (b) The authorized officer will not sign the combined hydrocarbon 
lease until it has been executed by the conversion applicant and the 
lease or claim to be converted has been formally relinquished to the 
United States.
    (c) The effective date of the combined hydrocarbon lease will be 
the first day of the month following the date that the authorized 
officer signs the lease.
    (d) The authorized officer will issue one combined hydrocarbon 
lease to cover the existing contiguous oil and gas leases or valid 
claims based on mineral locations which have been approved for 
conversion within the special tar sand area.


Sec.  3140.50  Duration of the lease.

    A combined hydrocarbon lease will be for a primary term of 10 years 
and for so long thereafter as oil or gas is produced in paying 
quantities. If the applicant withdraws the combined hydrocarbon lease 
application or the BLM denies the conversion application, the 
suspension on the oil and gas lease will be lifted and the term will be 
extended by the time remaining on the term of the lease.


Sec.  3140.60  Use of additional lands.

    (a) The authorized officer may noncompetitively lease additional 
lands for ancillary facilities in a Special Tar Sand Area that are 
needed to support any operations necessary for the recovery of tar 
sand. Such uses include, but are not limited to, mill site or waste 
disposal. Application for a lease or permit to use additional lands 
must be filed under the provisions of 43 CFR part 2920 with the proper 
BLM office having jurisdiction of the lands. The application for 
additional lands may be filed at the time a plan of operations is 
filed.
    (b) A lease for the use of additional lands will not be issued when 
the use can be authorized under 43 CFR parts 2800 and 2880. Such uses 
include, but are not limited to, reservoirs, pipelines, electrical 
generation systems, transmission lines, roads, and railroads.
    (c) Within units of the National Park System, permits or leases for 
additional lands will only be issued by the National Park Service. 
Applications for such permits or leases must be filed with the Regional 
Director of the National Park Service.


Sec.  3140.70  Lands within the National Park System.

    The BLM stopped accepting conversion applications on November 15, 
1983. Conversions of existing oil and gas leases and valid claims based 
on mineral locations to combined hydrocarbon leases within units of the 
National Park System will be allowed only where mineral leasing is 
permitted by law and where the lands covered by the lease or claim 
proposed for conversion are open to mineral resource disposition in 
accordance with any applicable minerals management plan. (See 43 CFR 
3100.3(h)(4)). In order to consent to any conversion or any subsequent 
development under a combined hydrocarbon lease requiring further 
approval, the Regional Director of the National Park Service must find 
that there will be no resulting significant adverse impacts on the 
resources and administration of such areas or on other contiguous units 
of the National Park System in accordance with 43 CFR 3109.20(b).

Subpart 3141--Leasing in Special Tar Sand Areas


Sec.  3141.1  Purpose.

    The purpose of this subpart is to provide for the competitive 
leasing of lands and issuance of combined hydrocarbon leases, oil and 
gas leases, or tar sand leases within special tar sand areas.


Sec.  3141.3  Authority.

    The regulations in this subpart are issued under the authority of 
the Mineral Leasing Act of February 25, 1920 (30 U.S.C. 181 et seq.), 
the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), the 
Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et 
seq.), the Combined Hydrocarbon Leasing Act of 1981 (95 Stat. 1070), 
and the Energy Policy Act of 2005 (Pub. L. 109-58).

[[Page 30991]]

Sec.  3141. 5  Definitions.

    As used in this subpart, the term:
    Combined hydrocarbon lease means a lease issued in a Special Tar 
Sand Area for the removal of any gas and nongaseous hydrocarbon 
substance other than coal, oil shale or gilsonite.
    Oil and gas lease means a lease issued in a Special Tar Sand Area 
for the exploration and development of oil and gas resources other than 
tar sand.
    Special Tar Sand Area means an area designated by the Department of 
the Interior's Orders of November 20, 1980 (45 FR 76800), and January 
21, 1981 (46 FR 6077), and referred to in those orders as Designated 
Tar Sand Areas, as containing substantial deposits of tar sand.
    Tar sand means any consolidated or unconsolidated rock (other than 
coal, oil shale or gilsonite) that either:
    (1) Contains a hydrocarbonaceous material with a gas-free 
viscosity, at original reservoir temperature greater than 10,000 
centipoise, or
    (2) contains a hydrocarbonaceous material and is produced by mining 
or quarrying.
    Tar sand lease means a lease issued in a Special Tar Sand area 
exclusively for the exploration for and extraction of tar sand.


Sec.  3141.8  Other applicable regulations.

    (a) Combined hydrocarbon leases. (1) The following provisions of 43 
CFR part 3100, as they relate to competitive leasing, apply to the 
issuance and administration of combined hydrocarbon leases issued under 
this part.
    (i) All of 43 CFR subpart 3100;
    (ii) All of 43 CFR subpart 3101, with the exception of Sec. Sec.  
3101.21, 3101.22, 3101.23, 3101.24, and 3101.25;
    (iii) All of 43 CFR subpart 3102;
    (iv) All of 43 CFR subpart 3103, with the exception of Sec. Sec.  
3103.21, and 3103.31(a), (b), and (c);
    (v) All of 43 CFR subpart 3104;
    (vi) All of 43 CFR subpart 3105;
    (vii) All of 43 CFR subpart 3106, with the exception of Sec.  
3106.10(j);
    (viii) All of 43 CFR subpart 3107;
    (ix) All of 43 CFR subpart 3108; and
    (x) All of 43 CFR subpart 3109, with special emphasis on Sec.  
3109.20(b).
    (2) Prior to commencement of operations, the lessee must develop 
either a plan of operations as described in 43 CFR 3592.1 which ensures 
reasonable protection of the environment or file an application for a 
permit to drill as described in 43 CFR part 3160, whichever is 
appropriate.
    (3) The provisions of 43 CFR part 3180 will serve as general 
guidance to the administration of combined hydrocarbon leases issued 
under this part to the extent they may be included in unit or 
cooperative agreements.
    (b) Oil and gas leases. (1) All of the provisions of 43 CFR parts 
3100, and 3120 apply to the issuance and administration of oil and gas 
leases issued under this part.
    (2) All of the provisions of 43 CFR parts 3160 and 3170 apply to 
operations on an oil and gas lease issued under this part.
    (3) The provisions of 43 CFR part 3180 apply to the administration 
of oil and gas leases issued under this part.
    (c) Tar sand leases. (1) The following provisions of 43 CFR part 
3100, as they relate to competitive leasing, apply to the issuance of 
tar sand leases issued under this part.
    (i) All of 43 CFR subpart 3102;
    (ii) All of 43 CFR subpart 3103 with the exception of Sec. Sec.  
3103.21, 3103.22(d), 3103.31, and 3103.32;
    (iii) All of 43 CFR 3120.50; and
    (iv) All of 43 CFR 3120.60.
    (2) Prior to commencement of operations, the lessee must develop a 
plan of operations as described in 43 CFR 3592.1 which ensures 
reasonable protection of the environment.


Sec.  3141.10  General.

    (a) Combined hydrocarbons or tar sands within a Special Tar Sand 
Area will be leased only by competitive bonus bidding.
    (b) Oil and gas within a Special Tar Sand Area will be leased by 
competitive bonus bidding as described in 43 CFR part 3120.
    (c) The authorized officer may issue either combined hydrocarbon 
leases, or oil and gas leases for oil and gas within such areas.
    (d) The rights to explore for or develop tar sand deposits in a 
Special Tar Sand Area may be acquired through either a combined 
hydrocarbon lease or a tar sand lease.
    (e) An oil and gas lease in a Special Tar Sand Area does not 
include the rights to explore for or develop tar sand.
    (f) A tar sand lease in a Special Tar Sand Area does not include 
the rights to explore for or develop oil and gas.
    (g) The minimum acceptable bid for a lease issued for tar sand will 
be as specified in Sec.  3103.1 of this chapter.
    (h) The acreage of combined hydrocarbon leases or tar sand leases 
held within a Special Tar Sand Area will not be charged against acreage 
limitations for the holding of oil and gas leases as provided in 43 CFR 
3101.21.
    (i)(1) The authorized officer may noncompetitively lease additional 
lands for ancillary facilities in a Special Tar Sand Area that are 
shown by an applicant to be needed to support any operations necessary 
for the recovery of tar sand. Such uses include, but are not limited 
to, mill siting or waste disposal. An application for a lease or permit 
to use additional lands must be filed under the provisions of 43 CFR 
part 2920 with the proper BLM office having jurisdiction of the lands. 
The application for additional lands may be filed at the time a plan of 
operations is filed.
    (2) A lease for the use of additional lands will not be issued 
under this part when the use can be authorized under 43 CFR part 2800. 
Such uses include, but are not limited to, reservoirs, pipelines, 
electrical generation systems, transmission lines, roads and railroads.
    (3) Within units of the National Park System, permits or leases for 
additional lands for any purpose will be issued only by the National 
Park Service. Applications for such permits or leases must be filed 
with the Regional Director of the National Park Service.

Prelease Exploration Within Special Tar Sand Areas


Sec.  3141.21  Geophysical exploration.

    Geophysical exploration in Special Tar Sand Areas will be governed 
by 43 CFR part 3150. Information obtained under a permit must be made 
available to the BLM upon request.


Sec.  3141.22  Exploration licenses.

    (a) Any person(s) responsible and qualified to hold a lease under 
the provisions of 43 CFR subpart 3102 and this subpart may obtain an 
exploration license to conduct core drilling and other exploration 
activities to collect geologic, environmental and other data concerning 
tar sand resources only on lands, the surface of which are under the 
jurisdiction of the BLM, within or adjacent to a Special Tar Sand Area. 
The application for such a license must be submitted to the proper BLM 
office having jurisdiction over the lands. No drilling for oil or gas 
will be allowed under an exploration license issued under this subpart. 
No specific form is required for an application for an exploration 
license.
    (b) The application for an exploration license will be subject to 
the following requirements:
    (1) Each application must contain the name and address of the 
applicant(s);
    (2) Each application must be accompanied by a nonrefundable filing 
fee based on the coal exploration license application fee found in the 
fee schedule in Sec.  3000.120 of this chapter;
    (3) Each application must contain a description of the lands 
covered by the application according to section,

[[Page 30992]]

township and range in accordance with the official survey;
    (4) Each application must include an exploration plan which 
complies with the requirements of 43 CFR 4392.1(a); and
    (5) An application must cover no more than 5,760 acres, which will 
be as compact as possible. The authorized officer may grant an 
exploration license covering more than 5,760 acres only if the 
application contains a justification for an exception to the normal 
limitation.
    (c) The authorized officer may, if the authorized officer 
determines it necessary to avoid impacts resulting from duplication of 
exploration activities, require applicants for exploration licenses to 
provide an opportunity for other parties to participate in exploration 
under the license on a pro rata cost sharing basis. If joint 
participation is determined necessary, it will be conducted according 
to the following:
    (1) Immediately upon the notification of a determination that 
parties will be given an opportunity to participate in the exploration 
license, the applicant must publish a ``Notice of Invitation,'' 
approved by the authorized officer, once every week for 2 consecutive 
weeks in at least one newspaper of general circulation in the area 
where the lands covered by the exploration license are situated. This 
notice must contain an invitation to the public to participate in the 
exploration license on a pro rata cost sharing basis. Copies of the 
``Notice of Invitation'' must be filed with the authorized officer at 
the time of publication by the applicant for posting in the proper BLM 
office having jurisdiction over the lands covered by the application 
for at least 30 days prior to the issuance of the exploration license.
    (2) Any person seeking to participate in the exploration program 
described in the Notice of Invitation must notify the authorized 
officer and the applicant in writing of such intention within 30 days 
after posting in the proper BLM office having jurisdiction over the 
lands covered by the Notice of Invitation. The authorized officer may 
require modification of the original exploration plan to accommodate 
the legitimate exploration needs of the person(s) seeking to 
participate and to avoid the duplication of exploration activities in 
the same area, or that the person(s) should file a separate application 
for an exploration license.
    (3) An application to conduct exploration which could have been 
conducted under an existing or recent exploration license issued under 
this paragraph may be rejected.
    (d) The authorized officer may accept or reject an exploration 
license application. An exploration license will become effective on 
the date specified by the authorized officer as the date when 
exploration activities may begin. The exploration plan approved by the 
BLM will be attached and made a part of each exploration license.
    (e) An exploration license will be subject to these terms and 
conditions:
    (1) The license will be for a term of not more than 2 years;
    (2) The annual rental rate for an exploration license will be as 
stated in the license;
    (3) The licensee must provide a bond in an amount determined by the 
authorized officer, but not less than $5,000. The authorized officer 
may accept bonds furnished under 43 CFR subpart 3104, if adequate. The 
period of liability under the bond will be terminated only after the 
authorized officer determines that the terms and conditions of the 
license, the exploration plan and the regulations have been met;
    (4) The licensee must provide to the BLM, upon request, all 
required information obtained under the license. Any information 
provided will be treated as confidential and proprietary, if 
appropriate, at the request of the licensee, and will not be made 
public until the areas involved have been leased or if the BLM 
determines that public access to the data will not damage the 
competitive position of the licensee.
    (5) Operations conducted under a license will not unreasonably 
interfere with or endanger any other lawful activity on the same lands, 
must not damage any improvements on the lands, and will not result in 
any substantial disturbance to the surface of the lands and their 
resources;
    (6) The authorized officer will include in each license 
requirements and stipulations to protect the environment and associated 
natural resources, and to ensure reclamation of the land disturbed by 
exploration operations;
    (7) When unforeseen conditions are encountered that could result in 
an action prohibited by paragraph (e)(5) of this section, or when 
warranted by geologic or other physical conditions, the authorized 
officer may adjust the terms and conditions of the exploration license 
and may direct adjustment in the exploration plan;
    (8) The licensee may submit a request for modification of the 
exploration plan to the authorized officer. Any modification will be 
subject to the regulations in this section and the terms and conditions 
of the license. The authorized officer may approve the modification 
after any necessary adjustments to the terms and conditions of the 
license that are accepted in writing by the licensee; and
    (9) The license will be subject to termination or suspension as 
provided in 43 CFR 2920.9-3.


Sec.  3141.30  Land use plans.

    No lease will be issued under this subpart unless the lands have 
been included in a land use plan which meets the requirements under 43 
CFR part 1600 or an approved Minerals Management Plan of the National 
Park Service. The decision to hold a lease sale and issue leases will 
be in conformance with the appropriate plan.

Consultation


Sec.  3141.41  Consultation with the Governor.

    The Secretary will consult with the Governor of the State in which 
any tract proposed for sale is located. The Secretary will give the 
Governor 30 days to comment before determining whether to conduct a 
lease sale. The Secretary will seek the recommendations of the Governor 
of the State in which the lands proposed for lease are located as to 
whether or not to lease such lands and what alternative actions are 
available and what special conditions could be added to the proposed 
lease(s) to mitigate impacts. The Secretary will accept the 
recommendations of the Governor if the Secretary determines that they 
provide for a reasonable balance between the national interest and the 
State's interest. The Secretary will communicate to the Governor in 
writing and publish in the Federal Register the reasons for his/her 
determination to accept or reject such Governor's recommendations.


Sec.  3141.42  Consultation with others.

    (a) Where the surface is administered by an agency other than the 
BLM, including lands patented or leased under the provisions of the 
Recreation and Public Purposes Act, as amended (43 U.S.C. 869 et seq.), 
all leasing under this subpart will be in accordance with the 
consultation requirements of 43 CFR subpart 3100.
    (b) The issuance of combined hydrocarbon leases, oil and gas 
leases, and tar sand leases within special tar sand areas in units of 
the National Park System will be allowed only where mineral leasing is 
permitted by law and where the lands are open to mineral resource 
disposition in accordance with any applicable Minerals Management Plan. 
In order to consent to any issuance

[[Page 30993]]

of a combined hydrocarbon lease, oil and gas lease, tar sand lease, or 
subsequent development of hydrocarbon resources within a unit of the 
National Park System, the Regional Director of the National Park 
Service will find that there will be no resulting significant adverse 
impacts to the resources and administration of the unit or other 
contiguous units of the National Park System in accordance with 43 CFR 
3109.20(b).

Leasing Procedures


Sec.  3141.51  Economic evaluation.

    Prior to any lease sale for a combined hydrocarbon lease, the 
authorized officer will request an economic evaluation of the total 
hydrocarbon resource on each proposed lease tract exclusive of coal, 
oil shale, or gilsonite.


Sec.  3141.52  Term of lease.

    (a) Oil and gas leases in special tar sand areas will have a 
primary term of 10 years and will remain in effect so long thereafter 
as oil or gas is produced in paying quantities.
    (b) Tar Sand leases will have a primary term of 10 years and will 
remain in effect so long thereafter as tar sand is produced in paying 
quantities.


Sec.  3141.53  Royalties and rentals.

    (a) The royalty rate on all combined hydrocarbon leases or tar sand 
leases is 16.67 percent of the value of production removed or sold from 
a lease. The ONRR will be responsible for collecting and administering 
royalties.
    (b) The lessee may request the Secretary to reduce the royalty rate 
applicable to a tar sand lease prior to commencement of commercial 
operations in order to promote development and maximum production of 
the tar sand resource in accordance with procedures established by the 
BLM for oil shale leases and may request a reduction in the royalty 
after commencement of commercial operations in accordance with 43 CFR 
3103.41.
    (c) The annual rental rate for a combined hydrocarbon lease will be 
as stated in the lease.
    (d) The annual rental rate for a tar sand lease will be as stated 
in the lease.
    (e) Except as explained in paragraphs (a) through (c) of this 
section, all other provisions of 43 CFR 3103.20 and 3103.30 apply to 
combined hydrocarbon leasing.


Sec.  3141.54  Lease size.

    Combined hydrocarbon leases or tar sand leases in Special Tar Sand 
Areas will not exceed 5,760 acres.


Sec.  3141.55  Dating of lease.

    A combined hydrocarbon lease will be effective as of the first day 
of the month following the date the lease is signed on behalf of the 
United States, except where a prior written request is made, a lease 
may be made effective on the first of the month in which the lease is 
signed.

Sale Procedures


Sec.  3141.61  Initiation of competitive lease offering.

    The BLM may, on its own motion, offer lands through competitive 
bidding. A request or expression(s) of interest in tract(s) for 
competitive lease offerings must be submitted in writing to the proper 
BLM office.


Sec.  3141.62  Publication of a notice of competitive lease offering.

    Combined Hydrocarbon Leases, Tar Sand Leases or Oil and Gas Leases. 
At least 45 days prior to conducting a competitive auction, lands to be 
offered for a competitive lease sale, as in a Notice of Competitive 
Lease Sale, will be made available to the public. The notice will 
specify the time and place of sale; the manner in which the bids may be 
submitted; the description of the lands; the terms and conditions of 
the lease, including the royalty and rental rates; the amount of the 
minimum bid; and will state that the terms and conditions of the leases 
are available for inspection and designate the proper BLM office where 
bid forms may be obtained.


Sec.  3141.63  Conduct of sales.

    (a) Oil and gas leases. Lease sales for oil and gas leases will be 
conducted using the procedures for oil and gas leases in 43 CFR 
3120.60.
    (b) Combined hydrocarbon leases and tar sand leases. (1) Parcels 
will be offered by competitive auction.
    (2) The winning bid will be the highest bid by a responsible and 
qualified bidder, equal to the minimum bonus bid amount as specified in 
Sec.  3103.1 of this chapter or for hydrocarbon leases, the minimum 
bonus bid amount determined under Sec.  3141.51, whichever is larger.
    (3) Payments must be made as provided in 43 CFR 3120.62.


Sec.  3141.64  Qualifications.

    Each bidder must submit with the bid a statement over the bidder's 
signature with respect to compliance with 43 CFR subpart 3102.


Sec.  3141.65  Rejection of bid.

    If the high bid is rejected for failure by the successful bidder to 
execute the lease forms and pay the balance of the bonus bid, or 
otherwise to comply with the regulations of this subpart, the minimum 
bonus payment accompanying the bid will be forfeited.


Sec.  3141.66  Consideration of next highest bid.

    The Department reserves the right to accept the next highest bid if 
the highest bid is rejected. In no event will an offer be made to the 
next highest bidder if the difference between that bid and the bid of 
the rejected successful bidder is greater than the minimum bonus 
payment forfeited by the rejected successful bidder.


Sec.  3141.70  Award of lease.

    After determining the highest responsible and qualified bidder, the 
authorized officer will send the lease on a form approved by the 
Director, and any necessary stipulations, to the successful bidder. The 
successful bidder must, not later than the 30th calendar day after 
receipt of the lease, execute the lease, pay the balance of the bid and 
the first year's rental, and file a bond as required in 43 CFR subpart 
3104. Failure to comply with this section will result in rejection of 
the lease.

Subpart 3142--Paying Quantities/Diligent Development for Combined 
Hydrocarbon and Tar Sand Leases


Sec.  3142.1  Purpose.

    This subpart provides definitions and procedures for meeting the 
production in paying quantities and the diligent development 
requirements for tar sand in all combined hydrocarbon leases and tar 
sand leases.


Sec.  3142.3  Authority.

    These regulations are issued under the authority of the Mineral 
Leasing Act of 1920, as amended and supplemented (30 U.S.C. 181 et 
seq.), the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351-359), 
the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701 et 
seq.) and the Combined Hydrocarbon Leasing Act of 1981 (95 Stat. 1070).


Sec.  3142.5  Definitions.

    As used in this subpart, the term:
    Production in paying quantities for combined hydrocarbon leases 
means:
    (1) Production, in compliance with an approved plan of operations 
and by nonconventional methods, of oil and gas which can be marketed; 
or
    (2) Production of oil or gas by conventional methods as the term is 
currently used in 43 CFR part 3160.
    Production in paying quantities for oil and gas leases means 
production of oil

[[Page 30994]]

or gas by conventional methods that meets the definition of 
``production in paying quantities'' in 43 CFR 3160.0-5.
    Production in paying quantities for tar sand leases means 
production of shale oil quantities that provide a positive return after 
all costs of production have been met, including the amortized costs of 
the capital investment.


Sec.  3142.10  Diligent development.

    A lessee will have met its diligent development obligation if:
    (a) The lessee is conducting activity on the lease in accordance 
with an approved plan of operations; and
    (b) The lessee files with the authorized officer, not later than 
the end of the eighth lease year, a supplement to the approved plan of 
operations which must include the estimated recoverable tar sand 
reserves and a detailed development plan for the next stage of 
operations;
    (c) The lessee has achieved production in paying quantities, as 
that term is defined in Sec.  3142.5(a), by the end of the primary 
term; and
    (d) The lessee annually produces the minimum amount of tar sand 
established by the authorized officer under the lease in the minimum 
production schedule which will be made part of the plan of operations 
or pays annually advance royalty in lieu of this minimum production.

Minimum Production Levels


Sec.  3142.21  Minimum production schedule.

    (a) Upon receipt of the supplement to the plan of operations 
described in Sec.  3142.10(b), the authorized officer will examine the 
information furnished by the lessee and determine if the estimate of 
the recoverable tar sand reserves is adequate and reasonable. In making 
this determination, the authorized officer may request, and the lessee 
must furnish, any information that is the basis of the lessee's 
estimate of the recoverable tar sand reserves. As part of the 
authorized officer's determination that the estimate of the recoverable 
tar sand reserves is adequate and reasonable, the authorized officer 
may consider, but is not limited to, the following: ore grade, strip 
ratio, vertical and horizontal continuity, extract process 
recoverability, and proven or unproven status of extraction technology, 
terrain, environmental mitigation factors, marketability of products 
and capital operations costs. The authorized officer will then 
establish as soon as possible, but prior to the beginning of the 
eleventh year, based upon the estimate of the recoverable tar sand 
reserves, a minimum annual tar sand production schedule for the lease 
or unit operations which will start in the eleventh year of the lease. 
This minimum production level will escalate in equal annual increments 
to a maximum of 1 percent of the estimated recoverable tar sand 
reserves in the twentieth year of the lease and remain at 1 percent 
each year thereafter.
    (b) The minimum annual tar sand production schedule for the lease 
or unit operations will be set at a level for paying quantities. If the 
operator or lessee cannot establish production in paying quantities, 
the lease will terminate at the end of the lease's primary term.


Sec.  3142.22  Advance royalties in lieu of production.

    (a) Failure to meet the minimum annual tar sand production schedule 
level in any year will result in the assessment of an advance royalty 
in lieu of production which will be credited to future production 
royalty assessments applicable to the lease or unit.
    (b) If there is no production during the lease year, and the lessee 
has reason to believe that there will be no production during the 
remainder of the lease year, the lessee must submit to the authorized 
officer a request for suspension of production at least 90 days prior 
to the end of that lease year and a payment sufficient to cover any 
advance royalty due and owing as a result of the failure to produce. 
Upon receipt of the request for suspension of production and the 
accompanying payment, the authorized officer may approve a suspension 
of production for that lease year and the lease will not expire during 
that year for lack of production.
    (c) If there is production on the lease or unit during the lease 
year, but such production fails to meet the minimum production schedule 
required by the plan of operations for that lease or unit, the lessee 
must pay an advance royalty within 60 days of the end of the lease year 
in an amount sufficient to cover the difference between such actual 
production and the production schedule required by the plan of 
operations for that lease or unit and the authorized officer may direct 
a suspension of production for those periods during which no production 
occurred.


Sec.  3142.30  Expiration.

    Failure of the lessee to pay advance royalty within the time 
prescribed by the authorized officer, or failure of the lessee to 
comply with any other provisions of this subpart following the end of 
the primary term of the lease, will result in the automatic expiration 
of the lease as of the first of the month following notice to the 
lessee of its failure to comply. The lessee will remain subject to the 
requirement of applicable laws, regulations and lease terms which have 
not been met at the expiration of the lease.

PART 3150--ONSHORE OIL AND GAS GEOPHYSICAL EXPLORATION

0
10. The authority citation for part 3150 continues to read as follows:

    Authority:  16 U.S.C. 3150(b) and 668dd; 30 U.S.C. 189 and 359; 
42 U.S.C. 6508; 43 U.S.C. 1201, 1732(b), 1733, 1734, 1740.


0
11. Revise subpart 3151 to read as follows:
Subpart 3151--Exploration Outside of Alaska
3151.10 Notice of intent to conduct oil and gas geophysical 
exploration operations.
3151.20 Notice of completion of operations.
3151.30 Collection and submission of data.

Subpart 3151--Exploration Outside of Alaska


Sec.  3151.10  Notice of intent to conduct oil and gas geophysical 
exploration operations.

    Parties wishing to conduct oil and gas geophysical exploration 
outside of the State of Alaska must file a Notice of Intent to Conduct 
Oil and Gas Exploration Operations, referred to herein as a notice of 
intent. The notice of intent must include the filing fee required by 43 
CFR 3000.120 and must be filed with the authorized officer of the 
proper BLM office on the form approved by the Director. Within 5 
business days of the filing date, the authorized officer will process 
the notice of intent and notify the operator of practices and 
procedures to be followed. If the notice of intent cannot be processed 
within 5 business days of the filing date, the authorized officer will 
promptly notify the operator as to when processing will be completed, 
giving the reason for the delay. The operator must, within 5 business 
days of the filing date, or such other time as may be convenient for 
the operator, participate in a field inspection if requested by the 
authorized officer. Signing of the notice of intent by the operator 
will signify agreement to comply with the terms and conditions 
contained therein and in this part, and with all practices and 
procedures specified at any time by the authorized officer.


Sec.  3151.20  Notice of completion of operations.

    Upon completion of exploration, the permittee must file with the 
District

[[Page 30995]]

Manager a Notice of Completion of Oil and Gas Exploration Operations. 
Within 30 days after this filing, the authorized officer will notify 
the permittee whether rehabilitation of the lands is satisfactory or 
whether additional rehabilitation is necessary, specifying the nature 
and extent of actions to be taken by the permittee.


Sec.  3151.30  Collection and submission of data.

    (a) The permittee must submit to the authorized officer all data 
and information obtained in carrying out the exploration plan.
    (b) All information submitted under this section is presumptively 
confidential business information and is subject to 43 CFR part 2, 
which sets forth the rules of the Department of the Interior relating 
to public availability of information contained in Departmental 
records, as provided at Sec.  3100.40 of this chapter.

PART 3160--ONSHORE OIL AND GAS OPERATIONS

0
12. The authority citation for part 3160 continues to read as follows:

    Authority:  25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, 
and 1751; 43 U.S.C. 1732(b), 1733, 1740; and Sec. 107, Pub. L. 114-
74, 129 Stat. 599, unless otherwise noted.


0
13. Revise Sec.  3160.0-5 to read as follows:


Sec.  3160.0-5  Definitions.

    As used in this part, the term:
    Authorized representative means any entity or individual authorized 
by the Secretary to perform duties by cooperative agreement, delegation 
or contract.
    Drainage means the migration of hydrocarbons, inert gases (other 
than helium), or associated resources caused by production from other 
wells.
    Federal lands means all lands and interests in lands owned by the 
United States which are subject to the mineral leasing laws, including 
mineral resources or mineral estates reserved to the United States in 
the conveyance of a surface or nonmineral estate.
    Fresh water means water containing not more than 1,000 ppm of total 
dissolved solids, provided that such water does not contain 
objectionable levels of any constituent that is toxic to animal, plant 
or aquatic life, unless otherwise specified in applicable notices or 
orders.
    Knowingly or willfully means a violation that constitutes the 
voluntary or conscious performance of an act that is prohibited or the 
voluntary or conscious failure to perform an act or duty that is 
required. It does not include performances or failures to perform that 
are honest mistakes or merely inadvertent. It includes, but does not 
require, performances or failures to perform that result from a 
criminal or evil intent or from a specific intent to violate the law. 
The knowing or willful nature of conduct may be established by plain 
indifference to or reckless disregard of the requirements of the law, 
regulations, orders, or terms of the lease. A consistent pattern of 
performance or failure to perform also may be sufficient to establish 
the knowing or willful nature of the conduct, where such consistent 
pattern is neither the result of honest mistakes or mere inadvertency. 
Conduct that is otherwise regarded as being knowing or willful is 
rendered neither accidental nor mitigated in character by the belief 
that the conduct is reasonable or legal.
    Lease means any contract, profit-share arrangement, joint venture 
or other agreement issued or approved by the United States under a 
mineral leasing law that authorizes exploration for, extraction of, or 
removal of oil or gas.
    Lease site means any lands, including the surface of a severed 
mineral estate, on which exploration for, or extraction and removal of, 
oil or gas is authorized under a lease.
    Lessee means any person holding record title or owning operating 
rights in a lease issued or approved by the United States.
    Lessor means the party to a lease who holds legal or beneficial 
title to the mineral estate in the leased lands.
    Major violation means noncompliance that causes or threatens 
immediate, substantial, and adverse impacts on public health and 
safety, the environment, production accountability, or royalty income.
    Maximum ultimate economic recovery means the recovery of oil and 
gas from leased lands which a prudent operator could be expected to 
make from that field or reservoir given existing knowledge of reservoir 
and other pertinent facts and utilizing common industry practices for 
primary, secondary, or tertiary recovery operations.
    Minor violation means noncompliance that does not rise to the level 
of a major violation.
    New or resumed production under section 102(b)(3) of the Federal 
Oil and Gas Royalty Management Act means the date on which a well 
commences production, or resumes production after having been off 
production for more than 90 days, and is to be construed as follows:
    (1) For an oil well, the date on which liquid hydrocarbons are 
first sold or shipped from a temporary storage facility, such as a test 
tank, or the date on which liquid hydrocarbons are first produced into 
a permanent storage facility, whichever first occurs; and
    (2) For a gas well, the date on which gas is first measured through 
sales metering facilities or the date on which associated liquid 
hydrocarbons are first sold or shipped from a temporary storage 
facility, whichever first occurs.
    Notice to lessees and operators (NTL) means a written notice issued 
by the authorized officer. NTLs implement the regulations in this part 
and operating orders, and serve as instructions on specific item(s) of 
importance within a State, District, or Area.
    Onshore oil and gas order means a formal numbered order issued by 
the Director that implements and supplements the regulations in this 
part.
    Operating rights owner means a person who owns operating rights in 
a lease. A record title holder may also be an operating rights owner in 
a lease if it did not transfer all of its operating rights.
    Operator means any person or entity including but not limited to 
the lessee or operating rights owner, who has stated in writing to the 
authorized officer that it is responsible under the terms and 
conditions of the lease for the operations conducted on the leased 
lands or a portion thereof.
    Paying well means a well that is capable of producing oil or gas of 
sufficient value to exceed direct operating costs and the costs of 
lease rentals or minimum royalty.
    Person means any individual, firm, corporation, association, 
partnership, consortium or joint venture.
    Production in paying quantities means production from a lease of 
oil and/or gas of sufficient value to exceed direct operating costs and 
the cost of lease rentals or minimum royalties.
    Protective well means a well drilled or modified to prevent or 
offset drainage of oil and gas resources from its Federal or Indian 
lease.
    Record title holder means the person(s) to whom the BLM or an 
Indian lessor issued a lease or approved the assignment of record title 
in a lease.
    Shut-in well means a nonoperational well that can physically and 
mechanically operate by opening valves or activating existing 
equipment.
    Superintendent means the superintendent of an Indian Agency, or 
other officer authorized to act in matters of record and law with 
respect to oil and gas leases on restricted Indian lands.

[[Page 30996]]

    Surface use plan of operations means a plan for surface use, 
disturbance, and reclamation.
    Temporarily abandoned well means a nonoperational well that is not 
physically or mechanically capable of production or injection without 
additional equipment or without servicing the well, but that may have 
future beneficial use.
    Waste of oil or gas means any act or failure to act by the operator 
that is not sanctioned by the authorized officer as necessary for 
proper development and production and which results in:
    (1) A reduction in the quantity or quality of oil and gas 
ultimately producible from a reservoir under prudent and proper 
operations; or
    (2) Avoidable surface loss of oil or gas.


0
14. Revise Sec.  3162.3-4 to read as follows:


Sec.  3162.3-4  Well abandonment.

    (a) The operator must promptly plug and abandon, in accordance with 
a plan first approved in writing or prescribed by the authorized 
officer, each newly completed or recompleted well in which oil or gas 
is not encountered in paying quantities or which, after being completed 
as a producing well, is demonstrated to the satisfaction of the 
authorized officer to be no longer capable of producing oil or gas in 
paying quantities, unless the authorized officer approves the use of 
the well as a service well for injection to recover additional oil or 
gas or for subsurface disposal of produced water. In the case of a 
newly drilled or recompleted well, the approval to abandon may be 
written or oral with written confirmation.
    (b) Completion of a well as plugged and abandoned may also include 
conditioning the well as a water supply source for lease operations or 
for use by the surface owner or appropriate Government Agency, when 
authorized by the authorized officer. All costs over and above the 
normal plugging and abandonment expense will be paid by the party 
accepting the water well.
    (c) Upon the removal of drilling or production equipment from the 
well site which is to be permanently abandoned, the surface of the 
lands disturbed in connection with the conduct of operations must be 
reclaimed in accordance with a plan first approved or prescribed by the 
authorized officer.
    (d) Operators of temporarily abandoned wells must:
    (1) Receive prior approval from the authorized officer for any well 
temporarily abandoned for more than 30 days. The authorized officer may 
authorize a delay in the permanent abandonment of a well for a period 
of up to 1 year. The operator must provide:
    (i) Adequate and detailed justification for the temporary 
abandonment;
    (ii) Verification of the mechanical integrity of the well; and
    (iii) Isolate the completed interval(s) prior to temporary 
abandonment.
    (2) Receive prior approval from the authorized officer for any 
additional delays to permanently abandon a well beyond 1 year. The 
authorized officer may authorize additional delays, none of which may 
exceed an additional 1-year period. Each request for additional delay 
must provide adequate and detailed justification for continued 
temporary abandonment.
    (3) Within 4 years of temporary abandonment of a well, complete one 
of the following actions:
    (i) Permanently abandon the well;
    (ii) Resume production in paying quantities or commence using the 
well for injection or disposal;
    (iii) Provide the authorized officer with a detailed plan and 
timeline for future beneficial use of the well. If the authorized 
officer determines that there is a legitimate future beneficial use for 
the well, the officer may allow the operator to delay permanent 
abandonment by 1 additional year. The authorized officer may grant 
additional delays in 1-year increments, provided that the operator 
confirms the future beneficial use of the well and is making verifiable 
progress on returning the well to a beneficial use.
    (e) Operators of shut-in wells must:
    (1) Notify the authorized officer of the well's shut-in status, if 
the well will be shut-in for 90 or more consecutive days, and provide 
the date the well was shut-in within 90 days of well shut-in;
    (2) Within 3 years of well shut-in, provide the authorized officer 
with verification of the mechanical integrity of the well and 
confirmation that the well remains capable of producing in paying 
quantities; and
    (3) Within 4 years of well shut-in, complete one of the following 
actions:
    (i) Permanently abandon the well;
    (ii) Resume production in paying quantities; or
    (iii) Provide the authorized officer with a detailed plan and 
timeline for future beneficial use of the well. If the authorized 
officer determines that there is a legitimate future beneficial use for 
the well, the officer may allow the operator to delay permanent 
abandonment by 1 year. The authorized officer may grant additional 
delays in 1-year increments, provided that the operator confirms the 
future beneficial use of the well and is making verifiable progress on 
returning the well to a beneficial use.
    (f) All wells that are temporarily abandoned or shut-in must have 
mechanical integrity verified as required in paragraphs (d)(1) and 
(e)(2) of this section and must ensure that mechanical integrity is 
verified every 3 years thereafter. The operator must submit the results 
of each verification of mechanical integrity to the authorized officer 
within 30 days of the mechanical integrity test.


0
15. Revise Sec.  3164.1 to read as follows:


Sec.  3164.1  Onshore Oil and Gas Orders.

    (a) The Director is authorized to issue Onshore Oil and Gas Orders 
when necessary to implement and supplement the regulations in the part. 
All orders will be published in final form in the Federal Register.
    (b) These Orders are binding on operating rights owners and 
operators, as appropriate, of Federal and restricted Indian oil and gas 
leases which have been, or may hereafter be, issued. There are no 
current Onshore Oil and Gas Orders currently in effect.
    Note: Numbers to be assigned sequentially by the Washington Office 
as proposed Orders are prepared for publication.


0
16. Revise Sec.  3165.1 to read as follows:


Sec.  3165.1  Relief from operating and/or producing requirements.

    (a) Applications for relief from either the operating or the 
producing requirements of a lease, or both, must be filed with the 
authorized officer, and must include a full statement of the 
circumstances that render such relief necessary.
    (b) The authorized officer will act on applications submitted for a 
suspension of operations or production, or both, filed pursuant to 43 
CFR 3103.42. The application for suspension must be filed with the 
authorized officer prior to the expiration date of the lease; must be 
executed by all operating rights owners or by the operator on behalf of 
the operating rights owners; and must include a full statement of the 
circumstances that makes such relief necessary.
    (c) The authorized officer will not approve an application for a 
suspension of a lease where the applicant only cites, as the basis for 
the suspension, a pending application for permit to drill filed less 
than 90 calendar days prior to the expiration date of the lease.
    (d) If approved, a suspension of operations and production will be 
effective on the first of the month in which the completed application 
was

[[Page 30997]]

filed or the date specified by the authorized officer in the approval. 
Approved suspensions will not exceed 1 year. If the circumstances 
warrant all operating rights owners, or the operator on behalf of the 
operating rights owners, may submit a request to extend the suspension 
prior to the end of the suspension.
    (e) BLM-directed suspensions may exceed 1 year.
    (f) Suspensions will lift when the basis provided for the 
suspension no longer exists, when lifting the suspension is in the 
public interest, or as otherwise stated by the authorized officer in 
the approval letter.

PART 3170--ONSHORE OIL AND GAS PRODUCTION

0
17. The authority citation for part 3170 continues to read as follows:

    Authority:  25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, 
and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.


0
18. Revise Sec.  3171.6 to read as follows:


Sec.  3171.6  Components of a complete APD package.

    Operators are encouraged to consider and incorporate Best 
Management Practices into their APDs because Best Management Practices 
can result in reduced processing times and reduced number of Conditions 
of Approval. An APD package must include the following information that 
will be reviewed by technical specialists of the appropriate agencies 
to determine the technical adequacy of the package:
    (a) A completed Form 3160-3; and
    (b) A well plat. Operators must include in the APD package a well 
plat and geospatial database prepared by a registered surveyor 
depicting the proposed location of the well and identifying the points 
of control and datum used to establish the section lines or metes and 
bounds. The purpose of this plat is to ensure that operations are 
within the boundaries of the lease or agreement and that the depiction 
of these operations is accurately recorded both as to location 
(latitude and longitude) and in relation to the surrounding lease or 
agreement boundaries (public land survey corner and boundary ties). The 
registered surveyor should coordinate with the cadastral survey 
division of the appropriate BLM state office, particularly where the 
lands have not been surveyed under the Public Land Survey System.
    (1) The plat and geospatial database must describe the location of 
operations in:
    (i) Geographical coordinates generated by an electronic navigation 
system, and document the datum referenced to generate these 
coordinates; and
    (ii) In feet and direction from the nearest two adjacent section 
lines, or, if not within the Rectangular Survey System, the nearest two 
adjacent property lines, generated from the BLM's current Geographic 
Coordinate Data Base.
    (2) The surveyor who prepared the plat must sign it, certifying 
that the location has been staked on the ground as shown on the plat.
    (3) Surveying and staking are necessary casual uses, typically 
involving negligible surface disturbance. The operator is responsible 
for making access arrangements with the appropriate Surface Managing 
Agency (other than the BLM and the FS) or private surface owner. On 
tribal or allotted lands, the operator must contact the appropriate 
office of the BIA to make access arrangements with the Indian surface 
owners. In the event that not all of the Indian owners consent or may 
be located, but a majority of those who can be located consent, or the 
owners of interests are so numerous that it would be impracticable to 
obtain their consent and the BIA finds that the issuance of the APD 
will cause no substantive injury to the land or any owner thereof, the 
BIA may approve access. Typical off-road vehicular use, when conducted 
in conjunction with these activities, is a necessary action for 
obtaining a permit and may be done without advance approval from the 
Surface Managing Agency, except for:
    (i) Lands administered by the Department of Defense;
    (ii) Other lands used for military purposes;
    (iii) Indian lands; or
    (iv) Where more than negligible surface disturbance is likely to 
occur or is otherwise prohibited.
    (4) No entry on split estate lands for surveying and staking should 
occur without the operator first making a good faith effort to notify 
the surface owner. Also, operators are encouraged to notify the BLM or 
the FS, as appropriate, before entering private lands to stake for 
Federal mineral estate locations.


0
19. Revise Sec.  3171.14 to read as follows:


Sec.  3171.14  Valid Period of Approved APD.

    (a) For APDs approved after June 22, 2024, an APD approval is valid 
for 3 years from the date that it is approved, or until lease 
expiration, whichever occurs first.
    (b) Notwithstanding paragraph (a) of this section, if an APD 
approval expires by reason other than lease expiration, the APD 
approval shall remain valid if the operator or lessee:
    (1) Has drilled the well to the approximate total measured depth in 
the approved APD, including wells drilled to the approximate total 
measured depth and not yet completed;
    (2) Is drilling the well with a rig capable of drilling the well to 
the proposed total measured depth in the approved APD; or
    (3) Has set the surface casing for the well and has submitted a 
plan, approved by the BLM prior to expiration of the APD approval, for 
continuously drilling the well to reach the proposed total measured 
depth in the approved APD. The plan must include the timeframe for 
continuously drilling and completing the well and any extenuating 
circumstances that may delay the continuous drilling and completion of 
the well.
    (c) If, upon expiration of the approved APD, the operator created 
surface disturbance or began drilling the well under the approved APD, 
the operator or lessee must either comply with all applicable plugging, 
abandonment, and reclamation requirements or submit a new APD covering 
the existing disturbance.
    (d) The operator is responsible for reclaiming any surface 
disturbance that resulted from its actions, even if a well was not 
drilled. Earthwork for reclamation must be completed within 6 months of 
APD expiration (weather permitting).
    (e) The valid period for an approved APD on a lease suspended under 
subpart 3103 will be adjusted to account for the suspension. Beginning 
on the date the suspension is lifted, the valid period of the approved 
APD will be extended by the time that was remaining on the term of the 
approved APD on the effective date of the suspension.

PART 3180--ONSHORE OIL AND GAS UNIT AGREEMENTS: UNPROVEN AREAS

0
20. The authority citation for part 3180 continues to read as follows:

    Authority:  30 U.S.C. 189.


Sec.  3181.1  [Amended]

0
21. Amend Sec.  3181.1 by removing the phrase ``Sec.  3186.1 of this 
title'' wherever it appears and adding in its place the phrase 
``appendix A to this part''.


0
22. Revise Sec.  3181.5 to read as follows:

[[Page 30998]]

Sec.  3181.5  Compensatory royalty payment for unleased Federal land.

    The unit agreement submitted by the unit proponent for approval by 
the authorized officer will provide for payment to the Federal 
Government of the current royalty percentage for leases offered on 
onshore oil and gas lease sales on production that would be 
attributable to unleased Federal lands in a PA of the unit if said 
lands were leased and committed to the unit agreement. The value of 
production subject to compensatory royalty payment will be determined 
pursuant to 30 CFR part 206, provided that no additional royalty will 
be due on any production subject to compensatory royalty under this 
provision.


Sec.  3183.4  [Amended]

0
23. Amend Sec.  3183.4 in paragraph (a) by removing the phrase ``Sec.  
3186.1 of this title'' and adding in its place the phrase ``appendix A 
to this part''.


Sec.  3186.1  [Redesignated as Appendix A to Part 3180]

0
24. Redesignate Sec.  3186.1 as appendix A to part 3180 and revise it 
to read as follows:

Appendix A to Part 3180--Model onshore unit agreement for unproven 
areas.

Introductory Section

1 Enabling Act and Regulations.
2 Unit Area.
3 Unitized Land and Unitized Substances.
4 Unit Operator.
5 Resignation or Removal of Unit Operator.
6 Successor Unit Operator.
7 Accounting Provisions and Unit Operating Agreement.
8 Rights and Obligations of Unit Operator.
9 Drilling to Discovery.
10 Plan of Further Development and Operation.
11 Participation After Discovery.
12 Allocation of Production.
13 Development or Operation of Nonparticipating Land or Formations.
14 Royalty Settlement.
15 Rental Settlement.
16 Conservation.
17 Drainage.
18 Leases and Contracts Conformed and Extended.
19 Covenants Run with Land.
20 Effective Date and Term.
21 Rate of Prospecting, Development, and Production.
22 Appearances.
23 Notices.
24 No Waiver of Certain Rights.
25 Unavoidable Delay.
26 Nondiscrimination.
27 Loss of Title.
28 Nonjoinder and Subsequent Joinder.
29 Counterparts.
30 Surrender.\[1]\
31 Taxes.\[1]\
32 No Partnership.\[1]\
Concluding Section in witness whereof.
General Guidelines.
Certification--Determination.

Unit Agreement for the Development and Operation of the

Unit area--------------------------------------------------------------
County of--------------------------------------------------------------
State of---------------------------------------------------------------
No.--------------------------------------------------------------------

    This agreement, entered into as of the __ day of ____ , 19__ by 
and between the parties subscribing, ratifying, or consenting 
hereto, and herein referred to as the ``parties hereto,''
    Witnesseth:
    Whereas, the parties hereto are the owners of working, royalty, 
or other oil and gas interests in the unit area subject to this 
agreement; and
    Whereas, the Mineral Leasing Act of February 25, 1920, 41 Stat. 
437, as amended, 30 U.S.C. 181 et seq., authorizes Federal lessees 
and their representatives to unite with each other, or jointly or 
separately with others, in collectively adopting and operating under 
a unit plan of development or operations of any oil and gas pool, 
field, or like area, or any part thereof for the purpose of more 
properly conserving the natural resources thereof whenever 
determined and certified by the Secretary of the Interior to be 
necessary or advisable in the public interest; and
    Whereas, the parties hereto hold sufficient interests in the __ 
Unit Area covering the land hereinafter described to give reasonably 
effective control of operations therein; and
    Whereas, it is the purpose of the parties hereto to conserve 
natural resources, prevent waste, and secure other benefits 
obtainable through development and operation of the area subject to 
this agreement under the terms, conditions, and limitations herein 
set forth;
    Now, therefore, in consideration of the premises and the 
promises herein contained, the parties hereto commit to this 
agreement their respective interests in the below-defined unit area, 
and agree severally among themselves as follows:
    1. ENABLING ACT AND REGULATIONS. The Mineral Leasing Act of 
February 25, 1920, as amended, supra, and all valid pertinent 
regulations including operating and unit plan regulations, 
heretofore issued thereunder or valid, pertinent, and reasonable 
regulations hereafter issued thereunder are accepted and made a part 
of this agreement as to Federal lands, provided such regulations are 
not inconsistent with the terms of this agreement; and as to non-
Federal lands, the oil and gas operating regulations in effect as of 
the effective date hereof governing drilling and producing 
operations, not inconsistent with the terms hereof or the laws of 
the State in which the non-Federal land is located, are hereby 
accepted and made a part of this agreement.
    2. UNIT AREA. The area specified on the map attached hereto 
marked Exhibit A is hereby designated and recognized as constituting 
the unit area, containing __ acres, more or less.
    Exhibit A shows, in addition to the boundary of the unit area, 
the boundaries and identity of tracts and leases in said area to the 
extent known to the Unit Operator. Exhibit B attached hereto is a 
schedule showing to the extent known to the Unit Operator, the 
acreage, percentage, and kind of ownership of oil and gas interests 
in all lands in the unit area. However, nothing herein or in 
Exhibits A or B shall be construed as a representation by any party 
hereto as to the ownership of any interest other than such interest 
or interests as are shown in the Exhibits as owned by such party. 
Exhibits A and B shall be revised by the Unit Operator whenever 
changes in the unit area or in the ownership interests in the 
individual tracts render such revision necessary, or when requested 
by the Authorized Officer, hereinafter referred to as AO and not 
less than four copies of the revised Exhibits shall be filed with 
the proper BLM office.
    The above-described unit area shall when practicable be expanded 
to include therein any additional lands or shall be contracted to 
exclude lands whenever such expansion or contraction is deemed to be 
necessary or advisable to conform with the purposes of this 
agreement. Such expansion or contraction shall be effected in the 
following manner:
    (a) Unit Operator, on its own motion (after preliminary 
concurrence by the AO), or on demand of the AO, shall prepare a 
notice of proposed expansion or contraction describing the 
contemplated changes in the boundaries of the unit area, the reasons 
therefor, any plans for additional drilling, and the proposed 
effective date of the expansion or contraction, preferably the first 
day of a month subsequent to the date of notice.
    (b) Said notice shall be delivered to the proper BLM office, and 
copies thereof mailed to the last known address of each working 
interest owner, lessee and lessor whose interests are affected, 
advising that 30 days will be allowed for submission to the Unit 
Operator of any objections.
    (c) Upon expiration of the 30-day period provided in the 
preceding item (b) hereof, Unit Operator shall file with the AO 
evidence of mailing of the notice of expansion or contraction and a 
copy of any objections thereto which have been filed with Unit 
Operator, together with an application in triplicate, for approval 
of such expansion or contraction and with appropriate joinders.
    (d) After due consideration of all pertinent information, the 
expansion or contraction shall, upon approval by the AO, become 
effective as of the date prescribed in the notice thereof or such 
other appropriate date.
    (e) All legal subdivisions of lands (i.e., 40 acres by 
Government survey or its nearest lot or tract equivalent; in 
instances of irregular surveys, unusually large lots or tracts shall 
be considered in multiples of 40 acres or the nearest aliquot 
equivalent thereof), no parts of which are in or entitled to be in a 
participating area on or before the fifth anniversary of the 
effective date of the first initial participating area established 
under this unit agreement, shall be eliminated automatically from 
this agreement, effective as of said fifth anniversary, and such 
lands shall no longer be a part of the unit area and

[[Page 30999]]

shall no longer be subject to this agreement, unless diligent 
drilling operations are in progress on unitized lands not entitled 
to participation on said fifth anniversary, in which event all such 
lands shall remain subject hereto for so long as such drilling 
operations are continued diligently, with not more than 90-days time 
elapsing between the completion of one such well and the 
commencement of the next such well. All legal subdivisions of lands 
not entitled to be in a participating area within 10 years after the 
effective date of the first initial participating area approved 
under this agreement shall be automatically eliminated from this 
agreement as of said tenth anniversary. The Unit Operator shall, 
within 90 days after the effective date of any elimination 
hereunder, describe the area so eliminated to the satisfaction of 
the AO and promptly notify all parties in interest. All lands 
reasonably proved productive of unitized substances in paying 
quantities by diligent drilling operations after the aforesaid 5-
year period shall become participating in the same manner as during 
said first 5-year period. However, when such diligent drilling 
operations cease, all nonparticipating lands not then entitled to be 
in a participating area shall be automatically eliminated effective 
as the 91st day thereafter.
    Any expansion of the unit area pursuant to this section which 
embraces lands theretofore eliminated pursuant to this subsection 
2(e) shall not be considered automatic commitment or recommitment of 
such lands. If conditions warrant extension of the 10-year period 
specified in this subsection, a single extension of not to exceed 2 
years may be accomplished by consent of the owners of 90 percent of 
the working interest in the current nonparticipating unitized lands 
and the owners of 60 percent of the basic royalty interests 
(exclusive of the basic royalty interests of the United States) in 
nonparticipating unitized lands with approval of the AO, provided 
such extension application is submitted not later than 60 days prior 
to the expiration of said 10-year period.
    3. UNITIZED LAND AND UNITIZED SUBSTANCES. All land now or 
hereafter committed to this agreement shall constitute land referred 
to herein as ``unitized land'' or ``land subject to this 
agreement.'' All oil and gas in any and all formations of the 
unitized land are unitized under the terms of this agreement and 
herein are called ``unitized substances.''
    4. UNIT OPERATOR. ____ is hereby designated as Unit Operator and 
by signature hereto as Unit Operator agrees and consents to accept 
the duties and obligations of Unit Operator for the discovery, 
development, and production of unitized substances as herein 
provided. Whenever reference is made herein to the Unit Operator, 
such reference means the Unit Operator acting in that capacity and 
not as an owner of interest in unitized substances, and the term 
``working interest owner'' when used herein shall include or refer 
to Unit Operator as the owner of a working interest only when such 
an interest is owned by it.
    5. RESIGNATION OR REMOVAL OF UNIT OPERATOR. Unit Operator shall 
have the right to resign at any time prior to the establishment of a 
participating area or areas hereunder, but such resignation shall 
not become effective so as to release Unit Operator from the duties 
and obligations of Unit Operator and terminate Unit Operator's 
rights as such for a period of 6 months after notice of intention to 
resign has been served by Unit Operator on all working interest 
owners and the AO and until all wells then drilled hereunder are 
placed in a satisfactory condition for suspension or abandonment, 
whichever is required by the AO, unless a new Unit Operator shall 
have been selected and approved and shall have taken over and 
assumed the duties and obligations of Unit Operator prior to the 
expiration of said period.
    Unit Operator shall have the right to resign in like manner and 
subject to like limitations as above provided at any time after a 
participating area established hereunder is in existence, but in all 
instances of resignation or removal, until a successor Unit Operator 
is selected and approved as hereinafter provided, the working 
interest owners shall be jointly responsible for performance of the 
duties of Unit Operator, and shall not later than 30 days before 
such resignation or removal becomes effective appoint a common agent 
to represent them in any action to be taken hereunder.
    The resignation of Unit Operator shall not release Unit Operator 
from any liability for any default by it hereunder occurring prior 
to the effective date of its resignation.
    The Unit Operator may, upon default or failure in the 
performance of its duties or obligations hereunder, be subject to 
removal by the same percentage vote of the owners of working 
interests as herein provided for the selection of a new Unit 
Operator. Such removal shall be effective upon notice thereof to the 
AO.
    The resignation or removal of Unit Operator under this agreement 
shall not terminate its right, title, or interest as the owner of 
working interest or other interest in unitized substances, but upon 
the resignation or removal of Unit Operator becoming effective, such 
Unit Operator shall deliver possession of all wells, equipment, 
materials, and appurtenances used in conducting the unit operations 
to the new duly qualified successor Unit Operator or to the common 
agent, if no such new Unit Operator is selected to be used for the 
purpose of conducting unit operations hereunder. Nothing herein 
shall be construed as authorizing removal of any material, 
equipment, or appurtenances needed for the preservation of any 
wells.
    6. SUCCESSOR UNIT OPERATOR. Whenever the Unit Operator shall 
tender his or its resignation as Unit Operator or shall be removed 
as hereinabove provided, or a change of Unit Operator is negotiated 
by the working interest owners, the owners of the working interests 
according to their respective acreage interests in all unitized land 
shall, pursuant to the Approval of the Parties requirements of the 
unit operating agreement, select a successor Unit Operator. Such 
selection shall not become effective until:
    (a) a Unit Operator so selected shall accept in writing the 
duties and responsibilities of Unit Operator, and
    (b) the selection shall have been approved by the AO.
    If no successor Unit Operator is selected and qualified as 
herein provided, the AO at his election may declare this unit 
agreement terminated.
    7. ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT. If the 
Unit Operator is not the sole owner of working interests, costs and 
expenses incurred by Unit Operator in conducting unit operations 
hereunder shall be paid and apportioned among and borne by the 
owners of working interests, all in accordance with the agreement or 
agreements entered into by and between the Unit Operator and the 
owners of working interests, whether one or more, separately or 
collectively. Any agreement or agreements entered into between the 
working interest owners and the Unit Operator as provided in this 
section, whether one or more, are herein referred to as the ``unit 
operating agreement.'' Such unit operating agreement shall also 
provide the manner in which the working interest owners shall be 
entitled to receive their respective proportionate and allocated 
share of the benefits accruing hereto in conformity with their 
underlying operating agreements, leases, or other independent 
contracts, and such other rights and obligations as between Unit 
Operator and the working interest owners as may be agreed upon by 
Unit Operator and the working interest owners; however, no such unit 
operating agreement shall be deemed either to modify any of the 
terms and conditions of this unit agreement or to relieve the Unit 
Operator of any right or obligation established under this unit 
agreement, and in case of any inconsistency or conflict between this 
agreement and the unit operating agreement, this agreement shall 
govern. Two copies of any unit operating agreement executed pursuant 
to this section shall be filed in the proper BLM office prior to 
approval of this unit agreement.
    8. RIGHTS AND OBLIGATIONS OF UNIT OPERATOR. Except as otherwise 
specifically provided herein, the exclusive right, privilege, and 
duty of exercising any and all rights of the parties hereto which 
are necessary or convenient for prospecting for, producing, storing, 
allocating, and distributing the unitized substances are hereby 
delegated to and shall be exercised by the Unit Operator as herein 
provided. Acceptable evidence of title to said rights shall be 
deposited with Unit Operator and, together with this agreement, 
shall constitute and define the rights, privileges, and obligations 
of Unit Operator. Nothing herein, however, shall be construed to 
transfer title to any land or to any lease or operating agreement, 
it being understood that under this agreement the Unit Operator, in 
its capacity as Unit Operator, shall exercise the rights of 
possession and use vested in the parties hereto only for the 
purposes herein specified.
    9. DRILLING TO DISCOVERY. Within 6 months after the effective 
date hereof, the Unit Operator shall commence to drill an

[[Page 31000]]

adequate test well at a location approved by the AO, unless on such 
effective date a well is being drilled in conformity with the terms 
hereof, and thereafter continue such drilling diligently until the 
__ formation has been tested or until at a lesser depth unitized 
substances shall be discovered which can be produced in paying 
quantities (to wit: quantities sufficient to repay the costs of 
drilling, completing, and producing operations, with a reasonable 
profit) or the Unit Operator shall at any time establish to the 
satisfaction of the AO that further drilling of said well would be 
unwarranted or impracticable, provided, however, that Unit Operator 
shall not in any event be required to drill said well to a depth in 
excess of __ feet. Until the discovery of unitized substances 
capable of being produced in paying quantities, the Unit Operator 
shall continue drilling one well at a time, allowing not more than 6 
months between the completion of one well and the commencement of 
drilling operations for the next well, until a well capable of 
producing unitized substances in paying quantities is completed to 
the satisfaction of the AO or until it is reasonably proved that the 
unitized land is incapable of producing unitized substances in 
paying quantities in the formations drilled hereunder. Nothing in 
this section shall be deemed to limit the right of the Unit Operator 
to resign as provided in Section 5, hereof, or as requiring Unit 
Operator to commence or continue any drilling during the period 
pending such resignation becoming effective in order to comply with 
the requirements of this section.
    The AO may modify any of the drilling requirements of this 
section by granting reasonable extensions of time when, in his 
opinion, such action is warranted.
    \[2]\ 9a. MULTIPLE WELL REQUIREMENTS. Notwithstanding anything 
in this unit agreement to the contrary, except Section 25, 
UNAVOIDABLE DELAY, __ wells shall be drilled with not more than 6-
months time elapsing between the completion of the first well and 
commencement of drilling operations for the second well and with not 
more than 6-months time elapsing between completion of the second 
well and the commencement of drilling operations for the third well, 
. . . regardless of whether a discovery has been made in any well 
drilled under this provision. Both the initial well and the second 
well must be drilled in compliance with the above specified 
formation or depth requirements in order to meet the dictates of 
this section; and the second well must be located a minimum of __ 
miles from the initial well in order to be accepted by the AO as the 
second unit test well, within the meaning of this section. The third 
test well shall be diligently drilled, at a location approved by the 
AO, to test the __ formation or to a depth of __ feet, whichever is 
the lesser, and must be located a minimum of __ miles from both the 
initial and the second test wells. Nevertheless, in the event of the 
discovery of unitized substances in paying quantities by any well, 
this unit agreement shall not terminate for failure to complete the 
__ well program, but the unit area shall be contracted 
automatically, effective the first day of the month following the 
default, to eliminate by subdivisions (as defined in Section 2(e) 
hereof) all lands not then entitled to be in a participating area.
    Until the establishment of a participating area, the failure to 
commence a well subsequent to the drilling of the initial obligation 
well, or in the case of multiple well requirements, if specified, 
subsequent to the drilling of those multiple wells, as provided for 
in this (these) section(s), within the time allowed including any 
extension of time granted by the AO, shall cause this agreement to 
terminate automatically. Upon failure to continue drilling 
diligently any well other than the obligation well(s) commenced 
hereunder, the AO may, after 15-days' notice to the Unit Operator, 
declare this unit agreement terminated. Failure to commence drilling 
the initial obligation well, or the first of multiple obligation 
wells, on time and to drill it diligently shall result in the unit 
agreement approval being declared invalid ab initio by the AO. In 
the case of multiple well requirements, failure to commence drilling 
the required multiple wells beyond the first well, and to drill them 
diligently, may result in the unit agreement approval being declared 
invalid ab initio by the AO;
    10. PLAN OF FURTHER DEVELOPMENT AND OPERATION. Within 6 months 
after completion of a well capable of producing unitized substances 
in paying quantities, the Unit Operator shall submit for the 
approval of the AO an acceptable plan of development and operation 
for the unitized land which, when approved by the authorized 
officer, shall constitute the further drilling and development 
obligations of the Unit Operator under this agreement for the period 
specified therein. Thereafter, from time to time before the 
expiration of any existing plan, the Unit Operator shall submit for 
the approval of the AO a plan for an additional specified period for 
the development and operation of the unitized land. Subsequent plans 
should normally be filed on a calendar year basis not later than 
March 1 each year. Any proposed modification or addition to the 
existing plan should be filed as a supplement to the plan.
    Any plan submitted pursuant to this section shall provide for 
the timely exploration of the unitized area, and for the diligent 
drilling necessary for determination of the area or areas capable of 
producing unitized substances in paying quantities in each and every 
productive formation. This plan shall be as complete and adequate as 
the AO may determine to be necessary for timely development and 
proper conservation of the oil and gas resources in the unitized 
area and shall:
    (a) Specify the number and locations of any wells to be drilled 
and the proposed order and time for such drilling; and
    (b) Provide a summary of operations and production for the 
previous year.
    Plans shall be modified or supplemented when necessary to meet 
changed conditions or to protect the interests of all parties to 
this agreement. Reasonable diligence shall be exercised in complying 
with the obligations of the approved plan of development and 
operation. The AO is authorized to grant a reasonable extension of 
the 6-month period herein prescribed for submission of an initial 
plan of development and operation where such action is justified 
because of unusual conditions or circumstances.
    After completion of a well capable of producing unitized 
substances in paying quantities, no further wells, except such as 
may be necessary to afford protection against operations not under 
this agreement and such as may be specifically approved by the AO, 
shall be drilled except in accordance with an approved plan of 
development and operation.
    11. PARTICIPATION AFTER DISCOVERY. Upon completion of a well 
capable of producing unitized substances in paying quantities, or as 
soon thereafter as required by the AO, the Unit Operator shall 
submit for approval by the AO, a schedule, based on subdivisions of 
the public-land survey or aliquot parts thereof, of all land then 
regarded as reasonably proved to be productive of unitized 
substances in paying quantities. These lands shall constitute a 
participating area on approval of the AO, effective as of the date 
of completion of such well or the effective date of this unit 
agreement, whichever is later. The acreages of both Federal and non-
Federal lands shall be based upon appropriate computations from the 
courses and distances shown on the last approved public-land survey 
as of the effective date of each initial participating area. The 
schedule shall also set forth the percentage of unitized substances 
to be allocated, as provided in Section 12, to each committed tract 
in the participating area so established, and shall govern the 
allocation of production commencing with the effective date of the 
participating area. A different participating area shall be 
established for each separate pool or deposit of unitized substances 
or for any group thereof which is produced as a single pool or zone, 
and any two or more participating areas so established may be 
combined into one, on approval of the AO. When production from two 
or more participating areas is subsequently found to be from a 
common pool or deposit, the participating areas shall be combined 
into one, effective as of such appropriate date as may be approved 
or prescribed by the AO. The participating area or areas so 
established shall be revised from time to time, subject to the 
approval of the AO, to include additional lands then regarded as 
reasonably proved to be productive of unitized substances in paying 
quantities or which are necessary for unit operations, or to exclude 
lands then regarded as reasonably proved not to be productive of 
unitized substances in paying quantities, and the schedule of 
allocation percentages shall be revised accordingly. The effective 
date of any revision shall be the first of the month in which the 
knowledge or information is obtained on which such revision is 
predicated; provided, however, that a more appropriate effective 
date may be used if justified by Unit Operator and approved by the 
AO. No land shall be excluded from a participating area on account 
of depletion of its unitized substances, except that any 
participating area established under the provisions of this unit 
agreement shall terminate automatically whenever all

[[Page 31001]]

completions in the formation on which the participating area is 
based are abandoned.
    It is the intent of this section that a participating area shall 
represent the area known or reasonably proved to be productive of 
unitized substances in paying quantities or which are necessary for 
unit operations; but, regardless of any revision of the 
participating area, nothing herein contained shall be construed as 
requiring any retroactive adjustment for production obtained prior 
to the effective date of the revision of the participating area.
    In the absence of agreement at any time between the Unit 
Operator and the AO as to the proper definition or redefinition of a 
participating area, or until a participating area has, or areas 
have, been established, the portion of all payments affected thereby 
shall, except royalty due the United States, be impounded in a 
manner mutually acceptable to the owners of committed working 
interests. Royalties due the United States shall be determined by 
the AO and the amount thereof shall be deposited, as directed by the 
AO, until a participating area is finally approved and then adjusted 
in accordance with a determination of the sum due as Federal royalty 
on the basis of such approved participating area.
    Whenever it is determined, subject to the approval of the AO, 
that a well drilled under this agreement is not capable of 
production of unitized substances in paying quantities and inclusion 
in a participating area of the land on which it is situated is 
unwarranted, production from such well shall, for the purposes of 
settlement among all parties other than working interest owners, be 
allocated to the land on which the well is located, unless such land 
is already within the participating area established for the pool or 
deposit from which such production is obtained. Settlement for 
working interest benefits from such a nonpaying unit well shall be 
made as provided in the unit operating agreement.
    12. ALLOCATION OF PRODUCTION. All unitized substances produced 
from a participating area established under this agreement, except 
any part thereof used in conformity with good operating practices 
within the unitized area for drilling, operating, and other 
production or development purposes, or for repressuring or recycling 
in accordance with a plan of development and operations that has 
been approved by the AO, or unavoidably lost, shall be deemed to be 
produced equally on an acreage basis from the several tracts of 
unitized land and unleased Federal land, if any, included in the 
participating area established for such production. Each such tract 
shall have allocated to it such percentage of said production as the 
number of acres of such tract included in said participating area 
bears to the total acres of unitized land and unleased Federal land, 
if any, included in said participating area. There shall be 
allocated to the working interest owner(s) of each tract of unitized 
land in said participating area, in addition, such percentage of the 
production attributable to the unleased Federal land within the 
participating area as the number of acres of such unitized tract 
included in said participating area bears to the total acres of 
unitized land in said participating area, for the payment of the 
compensatory royalty specified in section 17 of this agreement. 
Allocation of production hereunder for purposes other than for 
settlement of the royalty, overriding royalty, or payment out of 
production obligations of the respective working interest owners, 
including compensatory royalty obligations under section 17, shall 
be prescribed as set forth in the unit operating agreement or as 
otherwise mutually agreed by the affected parties. It is hereby 
agreed that production of unitized substances from a participating 
area shall be allocated as provided herein, regardless of whether 
any wells are drilled on any particular part or tract of the 
participating area. If any gas produced from one participating area 
is used for repressuring or recycling purposes in another 
participating area, the first gas withdrawn from the latter 
participating area for sale during the life of this agreement shall 
be considered to be the gas so transferred, until an amount equal to 
that transferred shall be so produced for sale and such gas shall be 
allocated to the participating area from which initially produced as 
such area was defined at the time that such transferred gas was 
finally produced and sold.
    13. DEVELOPMENT OR OPERATION OF NONPARTICIPATING LAND OR 
FORMATIONS. Any operator may with the approval of the AO, at such 
party's sole risk, costs, and expense, drill a well on the unitized 
land to test any formation provided the well is outside any 
participating area established for that formation, unless within 90 
days of receipt of notice from said party of his intention to drill 
the well, the Unit Operator elects and commences to drill the well 
in a like manner as other wells are drilled by the Unit Operator 
under this agreement.
    If any well drilled under this section by a non-unit operator 
results in production of unitized substances in paying quantities 
such that the land upon which it is situated may properly be 
included in a participating area, such participating area shall be 
established or enlarged as provided in this agreement and the well 
shall thereafter be operated by the Unit Operator in accordance with 
the terms of this agreement and the unit operating agreement.
    If any well drilled under this section by a non-unit operator 
that obtains production in quantities insufficient to justify the 
inclusion of the land upon which such well is situated in a 
participating area, such well may be operated and produced by the 
party drilling the same, subject to the conservation requirements of 
this agreement. The royalties in amount or value of production from 
any such well shall be paid as specified in the underlying lease and 
agreements affected.
    14. ROYALTY SETTLEMENT. The United States and any State and any 
royalty owner who is entitled to take in kind a share of the 
substances now unitized hereunder shall be hereafter be entitled to 
the right to take in kind its share of the unitized substances, and 
Unit Operator, or the non-unit operator in the case of the operation 
of a well by a non-unit operator as herein provided for in special 
cases, shall make deliveries of such royalty share taken in kind in 
conformity with the applicable contracts, laws, and regulations. 
Settlement for royalty interest not taken in kind shall be made by 
an operator responsible therefor under existing contracts, laws and 
regulations, or by the Unit Operator on or before the last day of 
each month for unitized substances produced during the preceding 
calendar month; provided, however, that nothing in this section 
shall operate to relieve the responsible parties of any land from 
their respective lease obligations for the payment of any royalties 
due under their leases.
    If gas obtained from lands not subject to this agreement is 
introduced into any participating area hereunder, for use in 
repressuring, stimulation of production, or increasing ultimate 
recovery, in conformity with a plan of development and operation 
approved by the AO, a like amount of gas, after settlement as herein 
provided for any gas transferred from any other participating area 
and with appropriate deduction for loss from any cause, may be 
withdrawn from the formation into which the gas is introduced, 
royalty free as to dry gas, but not as to any products which may be 
extracted therefrom; provided that such withdrawal shall be at such 
time as may be provided in the approved plan of development and 
operation or as may otherwise be consented to by the AO as 
conforming to good petroleum engineering practice; and provided 
further, that such right of withdrawal shall terminate on the 
termination of this unit agreement.
    Royalty due the United States shall be computed as provided in 
30 CFR Group 200 and paid in value or delivered in kind as to all 
unitized substances on the basis of the amounts thereof allocated to 
unitized Federal land as provided in Section 12 at the rates 
specified in the respective Federal leases, or at such other rate or 
rates as may be authorized by law or regulation and approved by the 
AO; provided, that for leases on which the royalty rate depends on 
the daily average production per well, said average production shall 
be determined in accordance with the operating regulations as though 
each participating area were a single consolidated lease.
    15. RENTAL SETTLEMENT. Rental or minimum royalties due on leases 
committed hereto shall be paid by the appropriate parties under 
existing contracts, laws, and regulations, provided that nothing 
herein contained shall operate to relieve the responsible parties of 
the land from their respective obligations for the payment of any 
rental or minimum royalty due under their leases. Rental or minimum 
royalty for lands of the United States subject to this agreement 
shall be paid at the rate specified in the respective leases from 
the United States unless such rental or minimum royalty is waived, 
suspended, or reduced by law or by approval of the Secretary or his 
duly authorized representative.
    With respect to any lease on non-Federal land containing 
provisions which would terminate such lease unless drilling 
operations are commenced upon the land covered thereby within the 
time therein specified or rentals are paid for the privilege

[[Page 31002]]

of deferring such drilling operations, the rentals required thereby 
shall, notwithstanding any other provision of this agreement, be 
deemed to accrue and become payable during the term thereof as 
extended by this agreement and until the required drilling 
operations are commenced upon the land covered thereby, or until 
some portion of such land is included within a participating area.
    16. CONSERVATION. Operations hereunder and production of 
unitized substances shall be conducted to provide for the most 
economical and efficient recovery of said substances without waste, 
as defined by or pursuant to State or Federal law or regulation.
    17. DRAINAGE. (a) The Unit Operator shall take such measures as 
the AO deems appropriate and adequate to prevent drainage of 
unitized substances from unitized land by wells on land not subject 
to this agreement, which shall include the drilling of protective 
wells and which may include the payment of a fair and reasonable 
compensatory royalty, as determined by the AO.
    (b) Whenever a participating area approved under section 11 of 
this agreement contains unleased Federal lands, the value of __ 
(current royalty for leases offered on Federal onshore oil and gas 
lease sales) __ percent of the production that would be allocated to 
such Federal lands under section 12 of this agreement, if such lands 
were leased, committed, and entitled to participation, shall be 
payable as compensatory royalties to the Federal Government. Parties 
to this agreement holding working interests in committed leases 
within the applicable participating area shall be responsible for 
such compensatory royalty payment on the volume of production 
reallocated from the unleased Federal lands to their unitized tracts 
under section 12. The value of such production subject to the 
payment of said royalties shall be determined pursuant to 30 CFR 
part 206. Payment of compensatory royalties on the production 
reallocated from unleased Federal land to the committed tracts 
within the participating area shall fulfill the Federal royalty 
obligation for such production, and said production shall be subject 
to no further royalty assessment under section 14 of this agreement. 
Payment of compensatory royalties as provided herein shall accrue 
from the date the committed tracts in the participating area that 
includes unleased Federal lands receive a production allocation, and 
shall be due and payable monthly by the last day of the calendar 
month next following the calendar month of actual production. If 
leased Federal lands receiving a production allocation from the 
participating area become unleased, compensatory royalties shall 
accrue from the date the Federal lands become unleased. Payment due 
under this provision shall end when the unleased Federal tract is 
leased or when production of unitized substances ceases within the 
participating area and the participating area is terminated, 
whichever occurs first.
    18. LEASES AND CONTRACTS CONFORMED AND EXTENDED. The terms, 
conditions, and provisions of all leases, subleases, and other 
contracts relating to exploration, drilling, development or 
operation for oil or gas on lands committed to this agreement are 
hereby expressly modified and amended to the extent necessary to 
make the same conform to the provisions hereof, but otherwise to 
remain in full force and effect; and the parties hereto hereby 
consent that the Secretary shall and by his approval hereof, or by 
the approval hereof by his duly authorized representative, does 
hereby establish, alter, change, or revoke the drilling, producing, 
rental, minimum royalty, and royalty requirements of Federal leases 
committed hereto and the regulations in respect thereto to conform 
said requirements to the provisions of this agreement, and, without 
limiting the generality of the foregoing, all leases, subleases, and 
contracts are particularly modified in accordance with the 
following:
    (a) The development and operation of lands subject to this 
agreement under the terms hereof shall be deemed full performance of 
all obligations for development and operation with respect to each 
and every separately owned tract subject to this agreement, 
regardless of whether there is any development of any particular 
tract of this unit area.
    (b) Drilling and producing operations performed hereunder upon 
any tract of unitized lands will be accepted and deemed to be 
performed upon and for the benefit of each and every tract of 
unitized land, and no lease shall be deemed to expire by reason of 
failure to drill or produce wells situated on the land therein 
embraced.
    (c) Suspension of drilling or producing operations on all 
unitized lands pursuant to direction or consent of the AO shall be 
deemed to constitute such suspension pursuant to such direction or 
consent as to each and every tract of unitized land. A suspension of 
drilling or producing operations limited to specified lands shall be 
applicable only to such lands.
    (d) Each lease, sublease, or contract relating to the 
exploration, drilling, development, or operation for oil or gas of 
lands other than those of the United States committed to this 
agreement which, by its terms might expire prior to the termination 
of this agreement, is hereby extended beyond any such term so 
provided therein so that it shall be continued in full force and 
effect for and during the term of this agreement.
    (e) Any Federal lease committed hereto shall continue in force 
beyond the term so provided therein or by law as to the land 
committed so long as such lease remains subject hereto, provided 
that production of unitized substances in paying quantities is 
established under this unit agreement prior to the expiration date 
of the term of such lease, or in the event actual drilling 
operations are commenced on unitized land, in accordance with 
provisions of this agreement, prior to the end of the primary term 
of such lease and are being diligently prosecuted at that time, such 
lease shall be extended for 2 years, and so long thereafter as oil 
or gas is produced in paying quantities in accordance with the 
provisions of the Mineral Leasing Act, as amended.
    (f) Each sublease or contract relating to the operation and 
development of unitized substances from lands of the United States 
committed to this agreement, which by its terms would expire prior 
to the time at which the underlying lease, as extended by the 
immediately preceding paragraph, will expire is hereby extended 
beyond any such term so provided therein so that it shall be 
continued in full force and effect for and during the term of the 
underlying lease as such term is herein extended.
    (g) The segregation of any Federal lease committed to this 
agreement is governed by the following provision in the fourth 
paragraph of sec. 17(m) of the Mineral Leasing Act, as amended by 
the Act of September 2, 1960 (74 Stat. 781-784) (30 U.S.C. 226(m)):
    ``Any [Federal] lease heretofore or hereafter committed to any 
such [unit] plan embracing lands that are in part within and in part 
outside of the area covered by any such plan shall be segregated 
into separate leases as to the lands committed and the lands not 
committed as of the effective date of unitization: Provided, 
however, That any such lease as to the nonunitized portion shall 
continue in force and effect for the term thereof but for not less 
than 2 years from the date of such segregation and so long 
thereafter as oil or gas is produced in paying quantities.''
    If the public interest requirement is not satisfied, the 
segregation of a lease and/or extension of a lease pursuant to 43 
CFR 3107.32 and 43 CFR 3107.40, respectively, shall not be 
effective.
    [3] (h) Any lease, other than a Federal lease, having 
only a portion of its lands committed hereto shall be segregated as 
to the portion committed and the portion not committed, and the 
provisions of such lease shall apply separately to such segregated 
portions commencing as of the effective date hereof. In the event 
any such lease provides for a lump-sum rental payment, such payment 
shall be prorated between the portions so segregated in proportion 
to the acreage of the respective tracts.
    19. COVENANTS RUN WITH LAND. The covenants herein shall be 
construed to be covenants running with the land with respect to the 
interests of the parties hereto and their successors in interest 
until this agreement terminates, and any grant, transfer or 
conveyance of interest in land or leases subject hereto shall be and 
hereby is conditioned upon the assumption of all privileges and 
obligations hereunder by the grantee, transferee, or other successor 
in interest. No assignment or transfer of any working interest, 
royalty, or other interest subject hereto shall be binding upon Unit 
Operator until the first day of the calendar month after Unit 
Operator is furnished with the original, photostatic, or certified 
copy of the instrument of transfer.
    20. EFFECTIVE DATE AND TERM. This agreement shall become 
effective upon approval by the AO and shall automatically terminate 
5 years from said effective date unless:
    (a) Upon application by the Unit Operator such date of 
expiration is extended by the AO, or
    (b) It is reasonably determined prior to the expiration of the 
fixed term or any extension

[[Page 31003]]

thereof that the unitized land is incapable of production of 
unitized substances in paying quantities in the formations tested 
hereunder, and after notice of intention to terminate this agreement 
on such ground is given by the Unit Operator to all parties in 
interest at their last known addresses, this agreement is terminated 
with the approval of the AO, or
    (c) A valuable discovery of unitized substances in paying 
quantities has been made or accepted on unitized land during said 
initial term or any extension thereof, in which event this agreement 
shall remain in effect for such term and so long thereafter as 
unitized substances can be produced in quantities sufficient to pay 
for the cost of producing same from wells on unitized land within 
any participating area established hereunder. Should production 
cease and diligent drilling or reworking operations to restore 
production or new production are not in progress within 60 days and 
production is not restored or should new production not be obtained 
in paying quantities on committed lands within this unit area, this 
agreement will automatically terminate effective the last day of the 
month in which the last unitized production occurred, or
    (d) It is voluntarily terminated as provided in this agreement. 
Except as noted herein, this agreement may be terminated at any time 
prior to the discovery of unitized substances which can be produced 
in paying quantities by not less than 75 per centum, on an acreage 
basis, of the working interest owners signatory hereto, with the 
approval of the AO. The Unit Operator shall give notice of any such 
approval to all parties hereto. If the public interest requirement 
is not satisfied, the approval of this unit by the AO shall be 
invalid.
    21. RATE OF PROSPECTING, DEVELOPMENT, AND PRODUCTION. The AO is 
hereby vested with authority to alter or modify from time to time, 
in his discretion, the quantity and rate of production under this 
agreement when such quantity and rate are not fixed pursuant to 
Federal or State law, or do not conform to any Statewide voluntary 
conservation or allocation program which is established, recognized, 
and generally adhered to by the majority of operators in such State. 
The above authority is hereby limited to alteration or modifications 
which are in the public interest. The public interest to be served 
and the purpose thereof, must be stated in the order of alteration 
or modification. Without regard to the foregoing, the AO is also 
hereby vested with authority to alter or modify from time to time, 
in his discretion, the rate of prospecting and development and the 
quantity and rate of production under this agreement when such 
alteration or modification is in the interest of attaining the 
conservation objectives stated in this agreement and is not in 
violation of any applicable Federal or State law.
    Powers is the section vested in the AO shall only be exercised 
after notice to Unit Operator and opportunity for hearing to be held 
not less than 15 days from notice.
    22. APPEARANCES. The Unit Operator shall, after notice to other 
parties affected, have the right to appear for and on behalf of any 
and all interests affected hereby before the Department of the 
Interior and to appeal from orders issued under the regulations of 
said Department, or to apply for relief from any of said 
regulations, or in any proceedings relative to operations before the 
Department, or any other legally constituted authority; provided, 
however, that any other interested party shall also have the right 
at its own expense to be heard in any such proceeding.
    23. NOTICES. All notices, demands, or statements required 
hereunder to be given or rendered to the parties hereto shall be in 
writing and shall be personally delivered to the party or parties, 
or sent by postpaid registered or certified mail, to the last-known 
address of the party or parties.
    24. NO WAIVER OF CERTAIN RIGHTS. Nothing contained in this 
agreement shall be construed as a waiver by any party hereto of the 
right to assert any legal or constitutional right or defense as to 
the validity or invalidity of any law of the State where the 
unitized lands are located, or of the United States, or regulations 
issued thereunder in any way affecting such party, or as a waiver by 
any such party of any right beyond his or its authority to waive.
    25. UNAVOIDABLE DELAY. All obligations under this agreement 
requiring the Unit Operator to commence or continue drilling, or to 
operate on, or produce unitized substances from any of the lands 
covered by this agreement, shall be suspended while the Unit 
Operator, despite the exercise of due care and diligence, is 
prevented from complying with such obligations, in whole or in part, 
by strikes, acts of God, Federal, State, or municipal law or 
agencies, unavoidable accidents, uncontrollable delays in 
transportation, inability to obtain necessary materials or equipment 
in the open market, or other matters beyond the reasonable control 
of the Unit Operator, whether similar to matters herein enumerated 
or not.
    26. NONDISCRIMINATION. In connection with the performance of 
work under this agreement, the Unit Operator agrees to comply with 
all the provisions of section 202 (1) to (7) inclusive, of E.O. 
11246 (30 FR 12319), as amended, which are hereby incorporated by 
reference in this agreement.
    27. LOSS OF TITLE. In the event title to any tract of unitized 
land shall fail and the true owner cannot be induced to join in this 
unit agreement, such tract shall be automatically regarded as not 
committed hereto, and there shall be such readjustment of future 
costs and benefits as may be required on account of the loss of such 
title. In the event of a dispute as to title to any royalty, working 
interest, or other interests subject thereto, payment or delivery on 
account thereof may be withheld without liability for interest until 
the dispute is finally settled; provided, that, as to Federal lands 
or leases, no payments of funds due the United States shall be 
withheld, but such funds shall be deposited as directed by the AO, 
to be held as unearned money pending final settlement of the title 
dispute, and then applied as earned or returned in accordance with 
such final settlement.
    Unit Operator as such is relieved from any responsibility for 
any defect or failure of any title hereunder.
    28. NONJOINDER AND SUBSEQUENT JOINDER. If the owner of any 
substantial interest in a tract within the unit area fails or 
refuses to subscribe or consent to this agreement, the owner of the 
working interest in that tract may withdraw the tract from this 
agreement by written notice delivered to the proper BLM office and 
the Unit Operator prior to the approval of this agreement by the AO. 
Any oil or gas interests in lands within the unit area not committed 
hereto prior to final approval may thereafter be committed hereto by 
the owner or owners thereof subscribing or consenting to this 
agreement, and, if the interest is a working interest, by the owner 
of such interest also subscribing to the unit operating agreement. 
After operations are commenced hereunder, the right of subsequent 
joinder, as provided in this section, by a working interest owner is 
subject to such requirements or approval(s), if any, pertaining to 
such joinder, as may be provided for in the unit operating 
agreement. After final approval hereof, joinder by a nonworking 
interest owner must be consented to in writing by the working 
interest owner committed hereto and responsible for the payment of 
any benefits that may accrue hereunder in behalf of such nonworking 
interest. A nonworking interest may not be committed to this unit 
agreement unless the corresponding working interest is committed 
hereto. Joinder to the unit agreement by a working interest owner, 
at any time, must be accompanied by appropriate joinder to the unit 
operating agreement, in order for the interest to be regarded as 
committed to this agreement. Except as may otherwise herein be 
provided, subsequent joinders to this agreement shall be effective 
as of the date of the filing with the AO of duly executed 
counterparts of all or any papers necessary to establish effective 
commitment of any interest and/or tract to this agreement.
    29. COUNTERPARTS. This agreement may be executed in any number 
of counterparts, no one of which needs to be executed by all 
parties, or may be ratified or consented to by separate instrument 
in writing specifically referring hereto and shall be binding upon 
all those parties who have executed such a counterpart, 
ratification, or consent hereto with the same force and effect as if 
all such parties had signed the same document, and regardless of 
whether or not it is executed by all other parties owning or 
claiming an interest in the lands within the above-described unit 
area.
    [4] 30. SURRENDER. Nothing in this agreement shall 
prohibit the exercise by any working interest owner of the right to 
surrender vested in such party by any lease, sublease, or operating 
agreement as to all or any part of the lands covered thereby, 
provided that each party who will or might acquire such working 
interest by such surrender or by forfeiture as hereafter set forth, 
is bound by the terms of this agreement.
    If as a result of any such surrender, the working interest 
rights as to such lands become vested in any party other than the 
fee owner of the unitized substances, said party may forfeit such 
rights and further benefits from operations hereunder as to said 
land to

[[Page 31004]]

the party next in the chain of title who shall be and become the 
owner of such working interest.
    If as the result of any such surrender or forfeiture working 
interest rights become vested in the fee owner of the unitized 
substances, such owner may:
    (a) Accept those working interest rights subject to this 
agreement and the unit operating agreement; or
    (b) Lease the portion of such land as is included in a 
participating area established hereunder subject to this agreement 
and the unit operating agreement; or
    (c) Provide for the independent operation of any part of such 
land that is not then included within a participating area 
established hereunder.
    If the fee owner of the unitized substances does not accept the 
working interest rights subject to this agreement and the unit 
operating agreement or lease such lands as above provided within 6 
months after the surrendered or forfeited, working interest rights 
become vested in the fee owner; the benefits and obligations of 
operations accruing to such lands under this agreement and the unit 
operating agreement shall be shared by the remaining owners of 
unitized working interests in accordance with their respective 
working interest ownerships, and such owners of working interests 
shall compensate the fee owner of unitized substances in such lands 
by paying sums equal to the rentals, minimum royalties, and 
royalties applicable to such lands under the lease in effect when 
the lands were unitized.
    An appropriate accounting and settlement shall be made for all 
benefits accruing to or payments and expenditures made or incurred 
on behalf of such surrendered or forfeited working interests 
subsequent to the date of surrender or forfeiture, and payment of 
any moneys found to be owing by such an accounting shall be made as 
between the parties within 30 days.
    The exercise of any right vested in a working interest owner to 
reassign such working interest to the party from whom obtained shall 
be subject to the same conditions as set forth in this section in 
regard to the exercise of a right to surrender.
    [4] 31. TAXES. The working interest owners shall 
render and pay for their account and the account of the royalty 
owners all valid taxes on or measured by the unitized substances in 
and under or that may be produced, gathered and sold from the land 
covered by this agreement after its effective date, or upon the 
proceeds derived therefrom. The working interest owners on each 
tract shall and may charge the proper proportion of said taxes to 
royalty owners having interests in said-tract, and may currently 
retain and deduct a sufficient amount of the unitized substances or 
derivative products, or net proceeds thereof, from the allocated 
share of each royalty owner to secure reimbursement for the taxes so 
paid. No such taxes shall be charged to the United States or the 
State of ____ or to any lessor who has a contract with his lessee 
which requires the lessee to pay such taxes.
    [4] 32. NO PARTNERSHIP. It is expressly agreed that 
the relation of the parties hereto is that of independent 
contractors and nothing contained in this agreement, expressed or 
implied, nor any operations conducted hereunder, shall create or be 
deemed to have created a partnership or association between the 
parties hereto or any of them.
    In witness whereof, the parties hereto have caused this 
agreement to be executed and have set opposite their respective 
names the date of execution.

Unit Operator----------------------------------------------------------
Working Interest Owners------------------------------------------------
Other Interest Owners--------------------------------------------------

General Guidelines

    1. Executed agreement to be legally complete.
    2. Agreement submitted for approval must contain Exhibit A and B 
in accordance with models shown in Appendix B to part 3180 and 
Appendix C to part 3180.
    3. Consents should be identified (in pencil) by tract numbers as 
listed in Exhibit B and assembled in that order as far as practical. 
Unit agreements submitted for approval shall include a list of the 
overriding royalty interest owners who have executed ratifications 
of the unit agreement. Subsequent joinders by overriding royalty 
interest owners shall be submitted in the same manner, except each 
must include or be accompanied by a statement that the corresponding 
working interest owner has consented in writing to such joinder. 
Original ratifications of overriding royalty owners will be kept on 
file by the Unit Operator or his designated agent.
    4. All leases held by option should be noted on Exhibit B with 
an explanation as to the type of option, i.e., whether for operating 
rights only, for full leasehold record title, or for certain 
interests to be earned by performance. In all instances, optionee 
committing such interests is expected to exercise option promptly.
    5. All owners of oil and gas interests must be invited to join 
the unit agreement, and statement to that effect must accompany 
executed agreement, together with summary of results of such 
invitations. A written reason for all interest owners who have not 
joined shall be furnished by the unit operator.
    6. In the event fish and wildlife lands are included, add the 
following as a separate section:
    ``Wildlife Stipulation. Nothing in this unit agreement shall 
modify the special Federal lease stipulations applicable to lands 
under the jurisdiction of the United States Fish and Wildlife 
Service.''
    7. In the event National Forest System lands are included within 
the unit area, add the following as a separate section:
    ``Forest Land Stipulation. Notwithstanding any other terms and 
conditions contained in this agreement, all of the stipulations and 
conditions of the individual leases between the United States and 
its lessees or their successors or assigns embracing lands within 
the unit area included for the protection of lands or functions 
under the jurisdiction of the Secretary of Agriculture shall remain 
in full force and effect the same as though this agreement had not 
been entered into, and no modification thereof is authorized except 
with the prior consent in writing of the Regional Forester, United 
States Forest Service, __, ____.''
    8. In the event National Forest System lands within the Jackson 
Hole Area of Wyoming are included within the unit area, additional 
``special'' stipulations may be required to be included in the unit 
agreement by the U.S. Forest Service, including the Jackson Hole 
Special Stipulation.
    9. In the event reclamation lands are included, add the 
following as a new separate section:
    ``Reclamation Lands. Nothing in this agreement shall modify the 
special, Federal lease stipulations applicable to lands under the 
jurisdiction of the Bureau of Reclamation.''
    10. In the event a powersite is embraced in the proposed unit 
area, the following section should be added:
    ``Powersite. Nothing in this agreement shall modify the special, 
Federal lease stipulations applicable to lands under the 
jurisdiction of the Federal Energy Regulatory Commission.''
    11. In the event special surface stipulations have been attached 
to any of the Federal oil and gas leases to be included, add the 
following as a separate section:
    ``Special surface stipulations. Nothing in this agreement shall 
modify the special Federal lease stipulations attached to the 
individual Federal oil leases.''
    12. In the event State lands are included in the proposed unit 
area, add the appropriate State Lands Section as separate section. 
(See Sec.  3181.4(a)).
    13. In the event restricted Indian lands are involved, consult 
the AO regarding appropriate requirements under Sec.  3181.4(b).

Certification--Determination

    Pursuant to the authority vested in the Secretary of the 
Interior, under the Act approved February 25, 1920, 41 Stat. 437, as 
amended, 30 U.S.C. 181, et seq., and delegated to (the appropriate 
Name and Title of the authorized officer, BLM) under the authority 
of 43 CFR part 3180, I do hereby:
    A. Approve the attached agreement for the development and 
operation of the __, Unit Area, State of ____. This approval shall 
be invalid ab initio if the public interest requirement under Sec.  
3183.4(b) is not met.
    B. Certify and determine that the unit plan of development and 
operation contemplated in the attached agreement is necessary and 
advisable in the public interest for the purpose of more properly 
conserving the natural resources.
    C. Certify and determine that the drilling, producing, rental, 
minimum royalty, and royalty requirements of all Federal leases 
committed to said agreement are hereby established altered, changed, 
or revoked to conform with the terms and conditions of this 
agreement.

Dated _____.
(Name and Title of authorized officer of the Bureau of Land 
Management)

Notes

    [1] Optional sections (in addition the penultimate 
paragraph of Section 9 is to be included only when more than one

[[Page 31005]]

obligation well is required and paragraph (h) of section 18 is to be 
used only when applicable).
    [2] Provisions to be included only when a multiple 
well obligation is required.
    [3] Optional paragraph to be used only when 
applicable.
    [4] Optional sections and subsection. (Agreements 
submitted for final approval should not identify section or 
provision as ``optional.'')


Sec.  3186.1-1  [Redesignated as Appendix B to Part 3180]

0
25. Redesignate Sec.  3186.1-1 as appendix B to part 3180.


Sec.  3186.1-2  [Redesignated as Appendix C to Part 3180]

0
26. Redesignate Sec.  3186.1-2 as appendix C to part 3180.


Sec.  3186.2  [Removed]

0
27. Remove Sec.  3186.2.


Sec.  3186.3  [Redesignated as Appendix D to part 3180]

0
28. Redesignate Sec.  3186.3 as appendix D to part 3180.


Sec.  3186.4  [Redesignated as Appendix E to part 3180]

0
29. Redesignate Sec.  3186.4 as appendix E to part 3180.
    This action by the Principal Deputy Assistant Secretary is taken 
pursuant to an existing delegation of authority.

Steven H. Feldgus,
Principal Deputy Assistant Secretary, Land and Minerals Management.
[FR Doc. 2024-08138 Filed 4-22-24; 8:45 am]
BILLING CODE 4331-29-P