Oil and Gas Leasing Regulations CFR by ForestService

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									                                § 3000.9                                                              43 CFR Ch. II (10–1–04 Edition)

                                § 3000.9     Enforcement.                                   Subpart 3102—Qualifications of Lessees
                                  Provisions of section 41 of the Act                     3102.1 Who may hold leases.
                                shall be enforced by the United States                    3102.2 Aliens.
                                Department of Justice.                                    3102.3 Minors.
                                                                                          3102.4 Signature.
                                [53 FR 22835, June 17, 1988]                              3102.5 Compliance, certification of compli-
                                                                                              ance and evidence.
                                PART 3100—OIL AND GAS LEASING                             3102.5–1 Compliance.
                                                                                          3102.5–2 Certification of compliance.
                                                                                          3102.5–3 Evidence of compliance.
                                    Subpart 3100—Oil and Gas Leasing:
                                                 General                                   Subpart 3103—Fees, Rentals and Royalty
                                Sec.                                                      3103.1 Payments.
                                3100.0–3 Authority.                                       3103.1–1 Form of remittance.
                                3100.0–5 Definitions.                                     3103.1–2 Where submitted.
                                3100.0–9 Information collection.                          3103.2 Rentals.
                                3100.1 Helium.                                            3103.2–1 Rental requirements.
                                3100.2 Drainage.                                          3103.2–2 Annual rental payments.
                                3100.2–1 Compensation for drainage.                       3103.3 Royalties.
                                3100.2–2 Drilling and production or payment               3103.3–1 Royalty on production.
                                    of compensatory royalty.                              3103.3–2 Minimum royalties.
                                3100.3 Options.                                           3103.4 Production incentives.
                                3100.3–1 Enforceability.                                  3103.4–1 Royalty reductions.
                                3100.3–2 Effect of option on acreage.                     3103.4–2 Stripper well royalty reductions.
                                3100.3–3 Option statements.                               3103.4–3 Heavy oil royalty reductions.
                                3100.4 Public availability of information.                3103.4–4 Suspension of operations and/or
                                                                                              production.
                                     Subpart 3101—Issuance of Leases
                                3101.1 Lease terms and conditions.
                                                                                                       Subpart 3104—Bonds
                                3101.1–1 Lease form.                                      3104.1 Bond obligations.
                                3101.1–2 Surface use rights.                              3104.2 Lease bond.
                                3101.1–3 Stipulations and information no-                 3104.3 Statewide and nationwide bonds.
                                    tices.                                                3104.4 Unit operator’s bond.
                                3101.1–4 Modification or waiver of lease                  3104.5 Increased amount of bonds.
                                    terms and stipulations.                               3104.6 Where filed and number of copies.
                                3101.2 Acreage limitations.                               3104.7 Default.
                                3101.2–1 Public domain lands.                             3104.8 Termination of period of liability.
                                3101.2–2 Acquired lands.
                                3101.2–3 Excepted acreage.                                 Subpart 3105—Cooperative Conservation
                                3101.2–4 Excess acreage.                                                 Provisions
                                3101.2–5 Computation.
                                3101.2–6 Showing required.                                3105.1 Cooperative or unit agreement.
                                3101.3 Leases within unit areas.                          3105.2 Communitization or drilling agree-
                                3101.3–1 Joinder evidence required.                           ments.
                                3101.3–2 Separate leases to issue.                        3105.2–1 Where filed.
                                3101.4 Lands covered by application to close              3105.2–2 Purpose.
                                    lands to mineral leasing.                             3105.2–3 Requirements.
                                3101.5 National Wildlife Refuge System                    3105.3 Operating, drilling or development
                                    lands.                                                    contracts.
                                3101.5–1 Wildlife refuge lands.                           3105.3–1 Where filed.
                                3101.5–2 Coordination lands.                              3105.3–2 Purpose.
                                3101.5–3 Alaska wildlife areas.                           3105.3–3 Requirements.
                                3101.5–4 Stipulations.                                    3105.4 Combination for joint operations or
                                3101.6 Recreation and public purposes lands.                  for transportation of oil.
                                3101.7 Federal lands administered by an                   3105.4–1 Where filed.
                                    agency outside of the Department of the               3105.4–2 Purpose.
                                    Interior.                                             3105.4–3 Requirements.
                                3101.7–1 General requirements.                            3105.4–4 Rights-of-way.
                                3101.7–2 Action by the Bureau of Land Man-                3105.5 Subsurface storage of oil and gas.
                                    agement.                                              3105.5–1 Where filed.
                                3101.7–3 Appeals.                                         3105.5–2 Purpose.
                                3101.8 State’s or charitable organization’s               3105.5–3 Requirements.
                                    ownership of surface overlying Feder-                 3105.5–4 Extension of lease term.
                                    ally-owned minerals.                                  3105.6 Consolidation of leases.

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                                Bureau of Land Management, Interior                                                            § 3100.0–3

                                  Subpart 3106—Transfers by Assignment,                          Subpart 3108—Relinquishment,
                                          Sublease or Otherwise                                    Termination, Cancellation
                                3106.1 Transfers, general.                                3108.1 As a lessee, may I relinquish my
                                3106.2 Qualifications of transferees.                         lease?
                                3106.3 Filing fees.                                       3108.2 Termination by operation of law and
                                3106.4 Forms.                                                 reinstatement.
                                3106.4–1 Transfers of record title and of op-             3108.2–1 Automatic termination.
                                    erating rights (subleases).                           3108.2–2 Reinstatement at existing rental
                                3106.4–2 Transfers of other interests, includ-                and royalty rates: Class I reinstate-
                                    ing royalty interests and production pay-                 ments.
                                    ments.                                                3108.2–3 Reinstatement at higher rental and
                                3106.4–3 Mass transfers.                                      royalty rates: Class II reinstatements.
                                3106.5 Description of lands.                              3108.2–4 Conversion of unpatented oil placer
                                3106.6 Bonds.                                                 mining claims: Class III reinstatements.
                                3106.6–1 Lease bond.                                      3108.3 Cancellation.
                                3106.6–2 Statewide/nationwide bond.                       3108.4 Bona fide purchasers.
                                3106.7 Approval of transfer.                              3108.5 Waiver or suspension of lease rights.
                                3106.7–1 Failure to qualify.
                                3106.7–2 If I transfer my lease, what is my                Subpart 3109—Leasing Under Special Acts
                                    continuing obligation?                                3109.1 Rights-of-way.
                                3106.7–3 Lease account status.                            3109.1–1 Generally.
                                3106.7–4 Effective date of transfer.                      3109.1–2 Application.
                                3106.7–5 Effect of transfer.                              3109.1–3 Notice.
                                3106.7–6 If I acquire a lease by an assign-               3109.1–4 Award of lease or compensatory
                                    ment or transfer, what obligations do I                   royalty agreement.
                                    agree to assume?                                      3109.1–5 Compensatory royalty agreement
                                3106.8 Other types of transfers.                              or lease.
                                3106.8–1 Heirs and devisees.                              3109.2 Units of the National Park System.
                                3106.8–2 Change of name.                                  3109.2–1 Authority to lease. [Reserved]
                                3106.8–3 Corporate merger.                                3109.2–2 Area subject to lease. [Reserved]
                                                                                          3109.3 Shasta and Trinity Units of the
                                Subpart 3107—Continuation, Extension or                       Whiskeytown-Shasta-Trinity       National
                                              Renewal                                         Recreation Area.
                                3107.1 Extension by drilling.                               AUTHORITY: 30 U.S.C. 189 and 359; 43 U.S.C.
                                3107.2 Production.                                        1732(b), 1733, and 1740; and 40 Opinion of the
                                3107.2–1 Continuation by production.                      Attorney General 41.
                                3107.2–2 Cessation of production.                           SOURCE: 48 FR 33662, July 22, 1983, unless
                                3107.2–3 Leases capable of production.                    otherwise noted.
                                3107.3 Extension for terms of cooperative or
                                    unit plan.
                                3107.3–1 Leases committed to plan.                          Subpart 3100—Onshore Oil and
                                3107.3–2 Segregation of leases committed in                     Gas Leasing: General
                                    part.
                                3107.3–3 20-year lease or any renewal there-              § 3100.0–3    Authority.
                                    of.                                                     (a) Public domain. (1) Oil and gas in
                                3107.4 Extension by elimination.                          public domain lands and lands returned
                                3107.5 Extension of leases segregated by as-
                                    signment.
                                                                                          to the public domain under section 2370
                                3107.5–1 Extension after discovery on other               of this title are subject to lease under
                                    segregated portions.                                  the Mineral Leasing Act of 1920, as
                                3107.5–2 Undeveloped parts of leases in their             amended and supplemented (30 U.S.C.
                                    extended term.                                        181 et seq.), by acts, including, but not
                                3107.5–3 Undeveloped parts of producing                   limited to, section 1009 of the Alaska
                                    leases.                                               National Interest Lands Conservation
                                3107.6 Extension of reinstated leases.                    Act (16 U.S.C. 3148).
                                3107.7 Exchange leases: 20-year term.                       (2) Exceptions. (i) Units of the Na-
                                3107.8 Renewal leases.
                                                                                          tional Park System, including lands
                                3107.8–1 Requirements.
                                3107.8–2 Application.                                     withdrawn by section 206 of the Alaska
                                3107.8–3 Approval.                                        National Interest Lands Conservation
                                3107.9 Other types.                                       Act, except as provided in paragraph
                                3107.9–1 Payment of compensatory royalty.                 (g)(4) of this section;
                                3107.9–2 Subsurface storage of oil and gas.                 (ii) Indian reservations;

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                                § 3100.0–3                                                            43 CFR Ch. II (10–1–04 Edition)

                                  (iii) Incorporated cities, towns and                    country, except oil, gas and other min-
                                villages;                                                 erals subject to leasing under the Act;
                                  (iv) Naval petroleum and oil shale re-                    (vi) Lands reported as excess under
                                serves and the National Petroleum Re-                     the Federal Property and Administra-
                                serve—Alaska.                                             tive Services Act of 1949;
                                  (v) Lands north of 68 degrees north                       (vii) Lands acquired by the United
                                latitude and east of the western bound-                   States by foreclosure or otherwise for
                                ary of the National Petroleum Re-                         resale.
                                serve—Alaska;                                               (viii) Lands recommended for wilder-
                                  (vi) Arctic National Wildlife Refuge                    ness allocation by the surface man-
                                in Alaska.                                                aging agency;
                                  (vii) Lands recommended for wilder-                       (ix) Lands within Bureau of Land
                                ness allocation by the surface man-                       Management wilderness study areas;
                                aging agency:                                               (x) Lands designated by Congress as
                                  (viii) Lands within Bureau of Land                      wilderness study areas, except where
                                Management wilderness study areas;                        oil and gas leasing is specifically al-
                                                                                          lowed to continue by the statute desig-
                                  (ix) Lands designated by Congress as
                                                                                          nating the study area;
                                wilderness study areas, except where
                                                                                            (xi) Lands within areas allocated for
                                oil and gas leasing is specifically al-
                                                                                          wilderness or further planning in Exec-
                                lowed to continue by the statute desig-
                                                                                          utive Communication 1504, Ninety-
                                nating the study area;
                                                                                          Sixth Congress (House Document num-
                                  (x) Lands within areas allocated for
                                                                                          bered 96–119), unless such lands are al-
                                wilderness or further planning in Exec-
                                                                                          located to uses other than wilderness
                                utive Communication 1504, Ninety-
                                                                                          by a land and resource management
                                Sixth Congress (House Document num-
                                                                                          plan or have been released to uses
                                bered 96–119), unless such lands are al-
                                                                                          other than wilderness by an Act of
                                located to uses other than wilderness
                                                                                          Congress; and
                                by a land and resource management
                                                                                            (xii) Lands within the National Wil-
                                plan or have been released to uses
                                                                                          derness Preservation System, subject
                                other than wilderness by an Act of
                                                                                          to valid existing rights under section
                                Congress; and
                                                                                          4(d)(3) of the Wilderness Act estab-
                                  (xi) Lands within the National Wil-                     lished before midnight, December 31,
                                derness Preservation System, subject                      1983, unless otherwise provided by law.
                                to valid existing rights under section                      (c) National Petroleum Reserve—
                                4(d)(3) of the Wilderness Act estab-                      Alaska is subject to lease under the De-
                                lished before midnight, December 31,                      partment of the Interior Appropria-
                                1983, unless otherwise provided by law.                   tions Act, Fiscal Year 1981 (42 U.S.C.
                                  (b) Acquired lands. (1) Oil and gas in                  6508).
                                acquired lands are subject to lease                         (d) Where oil or gas is being drained
                                under the Mineral Leasing Act for Ac-                     from lands otherwise unavailable for
                                quired Lands of August 7, 1947, as                        leasing, there is implied authority in
                                amended (30 U.S.C. 351–359).                              the agency having jurisdiction of those
                                  (2) Exceptions. (i) Units of the Na-                    lands to grant authority to the Bureau
                                tional Park System, except as provided                    of Land Management to lease such
                                in paragraph (g)(4) of this section;                      lands (see 43 U.S.C. 1457; also Attorney
                                  (ii) Incorporated cities, towns and                     General’s Opinion of April 2, 1941 (Vol.
                                villages;                                                 40 Op. Atty. Gen. 41)).
                                  (iii) Naval petroleum and oil shale re-                   (e) Where lands previously withdrawn
                                serves and the National Petroleum Re-                     or reserved from the public domain are
                                serve—Alaska;                                             no longer needed by the agency for
                                  (iv) Tidelands or submerged coastal                     which the lands were withdrawn or re-
                                lands within the continental shelf adja-                  served and such lands are retained by
                                cent or littoral to lands within the ju-                  the General Services Administration,
                                risdiction of the United States;                          or where acquired lands are declared as
                                  (v) Lands acquired by the United                        excess to or surplus by the General
                                States for development of helium, fis-                    Services Administration, authority to
                                sionable material deposits or other                       lease such lands may be transferred to
                                minerals essential to the defense of the                  the Department in accordance with the

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                                Bureau of Land Management, Interior                                                            § 3100.0–5

                                Federal Property and Administrative                       of Agriculture in accordance with the
                                Services Act of 1949 and the Mineral                      Mineral Leasing Act of February 25,
                                Leasing Act for Acquired Lands, as                        1920, as amended (30 U.S.C. 181 et seq.),
                                amended.                                                  or the Acquired Lands Mineral Leasing
                                  (f) The Act of May 21, 1930 (30 U.S.C.                  Act of August 7, 1947 (30 U.S.C. 351–359),
                                301–306), authorizes the leasing of oil                   if he finds that such disposition would
                                and gas deposits under certain rights-                    not have significant adverse effects on
                                of-way to the owner of the right-of-way                   the purpose of the Central Valley
                                or any assignee.                                          project or the administration of the
                                  (g)(1)The Act of May 9, 1942 (56 Stat.                  recreation area.
                                273), as amended by the Act of October                    [48 FR 33662, July 22, 1983, as amended at 49
                                25, 1949 (63 Stat. 886), authorizes leasing               FR 2113, Jan. 18, 1984; 53 FR 17351, 17352, May
                                on certain lands in Nevada.                               16, 1988; 53 FR 22835, June 17, 1988; 53 FR
                                  (2) The Act of March 3, 1933 (47 Stat.                  31958, Aug. 22, 1988]
                                1487), as amended by the Act of June 5,
                                1936 (49 Stat. 1482) and the Act of June                  § 3100.0–5 Definitions.
                                29, 1936 (49 Stat. 2026), authorizes leas-                   As used in this part, the term:
                                ing on certain lands patented to the                         (a) Operator means any person or en-
                                State of California.                                      tity, including, but not limited to, the
                                  (3) The Act of June 30, 1950 (16 U.S.C.                 lessee or operating rights owner, who
                                508(b)) authorizes leasing on certain                     has stated in writing to the authorized
                                National Forest Service Lands in Min-                     officer that it is responsible under the
                                nesota.                                                   terms and conditions of the lease for
                                  (4) Units of the National Park System.                  the operations conducted on the leased
                                The Secretary is authorized to permit                     lands or a portion thereof.
                                mineral leasing in the following units                       (b) Unit operator means the person au-
                                of the National Park System if he/she                     thorized under the agreement approved
                                finds that such disposition would not                     by the Department of the Interior to
                                have significant adverse effects on the                   conduct operations within the unit.
                                administration of the area and if lease                      (c) Record title means a lessee’s inter-
                                operations can be conducted in a man-                     est in a lease which includes the obli-
                                ner that will preserve the scenic, sci-                   gation to pay rent, and the rights to
                                entific and historic features contrib-                    assign and relinquish the lease. Over-
                                uting to public enjoyment of the area,                    riding royalty and operating rights are
                                pursuant to the following authorities:                    severable from record title interests.
                                  (i) Lake Mead National Recreation                          (d) Operating right (working interest)
                                Area—The Act of October 8, 1964 (16                       means the interest created out of a
                                U.S.C. 460n et seq.).                                     lease authorizing the holder of that
                                  (ii)    Whiskeytown      Unit    of   the               right to enter upon the leased lands to
                                Whiskeytown-Shasta-Trinity         National               conduct drilling and related oper-
                                Recreation Area—The Act of November                       ations, including production of oil or
                                8, 1965 (79 Stat. 1295; 16 U.S.C. 460q et                 gas from such lands in accordance with
                                seq.).                                                    the terms of the lease.
                                  (iii) Ross Lake and Lake Chelan Na-                        (e) Transfer means any conveyance of
                                tional Recreation Areas—The Act of Oc-                    an interest in a lease by assignment,
                                tober 2, 1968 (82 Stat. 926; 16 U.S.C. 90 et              sublease or otherwise. This definition
                                seq.).                                                    includes the terms: Assignment which
                                  (iv) Glen Canyon National Recreation                    means a transfer of all or a portion of
                                Area—The Act of October 27, 1972 (86                      the lessee’s record title interest in a
                                Stat. 1311; 16 U.S.C. 460dd et seq.).                     lease; and sublease which means a
                                  (5) Shasta and Trinity Units of the                     transfer of a non-record title interest
                                Whiskeytown-Shasta-Trinity         National               in a lease, i.e., a transfer of operating
                                Recreation Area. Section 6 of the Act of                  rights is normally a sublease and a sub-
                                November 8, 1965 (Pub. L. 89–336; 79                      lease also is a subsidiary arrangement
                                Stat. 1295), authorizes the Secretary of                  between the lessee (sublessor) and the
                                the Interior to permit the removal of                     sublessee, but a sublease does not in-
                                leasable minerals from lands (or inter-                   clude a transfer of a purely financial
                                est in lands) within the recreation area                  interest, such as overriding royalty in-
                                under the jurisdiction of the Secretary                   terest or payment out of production,

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                                § 3100.0–9                                                            43 CFR Ch. II (10–1–04 Edition)

                                nor does it affect the relationship im-                   owner may obtain a reduction in the
                                posed by a lease between the lessee(s)                    royalty rate. Response is required to
                                and the United States.                                    obtain a benefit in accordance with 30
                                  (f) National Wildlife Refuge System                     U.S.C. 181, et seq., and 30 U.S.C. 351–359.
                                Lands means lands and water, or inter-                      (2) Public reporting burden for the in-
                                ests therein, administered by the Sec-                    formation collections assigned clear-
                                retary as wildlife refuges, areas for the                 ance number 1004–0145 is estimated to
                                protection and conservation of fish and                   average 1 hour per response, including
                                wildlife that are threatened with ex-                     the time for reviewing instructions,
                                tinction, wildlife management areas or                    searching existing data sources, gath-
                                waterfowl production areas.                               ering and maintaining the data needed,
                                  (g) Actual drilling operations includes                 and completing and reviewing the col-
                                not only the physical drilling of a well,                 lection of information. Send comments
                                but the testing, completing or equip-                     regarding this burden estimate or any
                                ping of such well for production.                         other aspect of this collection of infor-
                                  (h)(1) Primary term of lease subject to                 mation, including suggestions for re-
                                section 4(d) of the Act prior to the revi-                ducing the burden, to the Information
                                sion of 1960 (30 U.S.C. 226–1(d)) means                   Collection Clearance Officer (783), Bu-
                                all periods of the life of the lease prior                reau of Land Management, Wash-
                                to its extension by reason of produc-                     ington, DC 20240, and the Office of Man-
                                tion of oil and gas in paying quantities;                 agement and Budget, Paperwork Re-
                                and                                                       duction Project, 1004–0145, Washington,
                                  (2) Primary term of all other leases                    DC 20503.
                                means the initial term of the lease. For                    (b)(1) The collections of information
                                competitive leases, except those within                   contained in § 3103.4–1(c) and (d) have
                                the National Petroleum Reserve—Alas-                      been approved by the Office of Manage-
                                ka, this means 5 years and for non-                       ment and Budget under 44 U.S.C. 3501 et
                                competitive leases this means 10 years.                   seq. and assigned clearance number
                                  (i) Lessee means a person or entity                     1010–0090. The information will be used
                                holding record title in a lease issued by                 to determine whether an oil and gas
                                the United States.                                        lessee may obtain a reduction in the
                                  (j) Operating rights owner means a                      royalty rate. Response is required to
                                person or entity holding operating                        obtain a benefit in accordance with 30
                                rights in a lease issued by the United                    U.S.C. 181, et seq., and 30 U.S.C. 351–359.
                                States. A lessee also may be an oper-
                                                                                            (2) Public reporting burden for this
                                ating rights owner if the operating
                                                                                          information is estimated to average 1⁄2
                                rights in a lease or portion thereof
                                                                                          hour per response, including the time
                                have not been severed from record
                                                                                          for reviewing instructions, searching
                                title.
                                                                                          existing data sources, gathering and
                                  (k) Bid means an amount of remit-
                                                                                          maintaining the data needed, and com-
                                tance offered as partial compensation
                                                                                          pleting and reviewing the collection of
                                for a lease equal to or in excess of the
                                                                                          information. Send comments regarding
                                national minimum acceptable bonus
                                                                                          this burden estimate or any other as-
                                bid set by statute or by the Secretary,
                                                                                          pect of this collection of information,
                                submitted by a person or entity for a
                                                                                          including suggestions for reducing the
                                lease parcel in a competitive lease sale.
                                                                                          burden, to the Information Collection
                                [48 FR 33662, July 22, 1983, as amended at 53             Clearance Officer, Minerals Manage-
                                FR 17352, May 16, 1988; 53 FR 22836, June 17,             ment Service (Mail Stop 2300), 381
                                1988]                                                     Elden Street, Herndon, VA 22070–4817,
                                                                                          and the Office of Management and
                                § 3100.0–9 Information collection.
                                                                                          Budget, Paperwork Reduction Project,
                                   (a)(1) The collections of information                  1010–0090, Washington, DC 20503.
                                contained in § 3103.4–1(b) have been ap-
                                proved by the Office of Management                        [57 FR 35973, Aug. 11, 1992]
                                and Budget under 44 U.S.C. 3501 et seq.
                                and are among the collections assigned                    § 3100.1    Helium.
                                clearance number 1004–0145. The infor-                      The ownership of and the right to ex-
                                mation will be used to determine                          tract helium from all gas produced
                                whether an oil and gas operator or                        from lands leased or otherwise disposed

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                                Bureau of Land Management, Interior                                                              § 3100.4

                                of under the Act have been reserved to                    to the option, including the date and
                                the United States.                                        expiration date of the option; and
                                                                                            (4) The interest to be conveyed and
                                § 3100.2     Drainage.                                    retained in exercise of the option. Such
                                                                                          notice shall be signed by all parties to
                                § 3100.2–1     Compensation for drainage.                 the option or their duly authorized
                                  Upon a determination by the author-                     agents. The signed copy or notice of op-
                                ized officer that lands owned by the                      tion required by this paragraph shall
                                United States are being drained of oil                    contain or be accompanied by a signed
                                or gas by wells drilled on adjacent                       statement by the holder of the option
                                lands, the authorized officer may exe-                    that he/she is the sole party in interest
                                cute agreements with the owners of ad-                    in the option; if not, he/she shall set
                                jacent lands whereby the United States                    forth the names and provide a descrip-
                                and its lessees shall be compensated for                  tion of the interest therein of the other
                                such drainage. Such agreements shall                      interested parties, and provide a de-
                                be made with the consent of any lessee                    scription of the agreement between
                                affected by an agreement. Such lands                      them, if oral, and a copy of such agree-
                                may also be offered for lease in accord-                  ment, if written.
                                ance with part 3120 of this title.
                                                                                          [48 FR 33662, July 22, 1983, as amended at 53
                                                                                          FR 17352, May 16, 1988. Redesignated at 53 FR
                                § 3100.2–2 Drilling and production or                     22836, June 17, 1988]
                                    payment of compensatory royalty.
                                  Where lands in any leases are being                     § 3100.3–2    Effect of option on acreage.
                                drained of their oil or gas content by                      The acreage to which the option is
                                wells either on a Federal lease issued                    applicable shall be charged both to the
                                at a lower rate of royalty or on non-                     grantor of the option and the option
                                Federal lands, the lessee shall both                      holder. The acreage covered by an
                                drill and produce all wells necessary to                  unexercised option remains charged
                                protect the leased lands from drainage.                   during its term until notice of its relin-
                                In lieu of drilling necessary wells, the                  quishment or surrender has been filed
                                lessee may, with the consent of the au-                   in the proper BLM office.
                                thorized officer, pay compensatory roy-
                                alty in the amount determined in ac-                      [48 FR 33662, July 22, 1983. Redesignated at 53
                                cordance with § 3162.2(a) of this title.                  FR 22836, June 17, 1988]

                                [48 FR 33662, July 22, 1983, as amended at 53             § 3100.3–3    Option statements.
                                FR 17352, May 16, 1988]
                                                                                            Each option holder shall file in the
                                § 3100.3     Options.                                     proper BLM office within 90 days after
                                                                                          June 30 and December 31 of each year a
                                § 3100.3–1     Enforceability.                            statement showing as of the prior June
                                  (a) No option to acquire any interest                   30 and December 31, respectively:
                                in a lease shall be enforceable if en-                      (a) Any changes to the statements
                                tered into for a period of more than 3                    submitted under § 3100.3–1(b) of this
                                years (including any renewal period                       title, and
                                that may be provided for in the option)                     (b) The number of acres covered by
                                without the approval of the Secretary.                    each option and the total acreage of all
                                  (b) No option or renewal thereof shall                  options held in each State.
                                be enforceable until a signed copy or                     [53 FR 17352, May 16, 1988. Redesignated and
                                notice of option has been filed in the                    amended at 53 FR 22836, June 17, 1988]
                                proper BLM office. Each such signed
                                copy or notice shall include:                             § 3100.4 Public availability of informa-
                                  (1) The names and addresses of the                          tion.
                                parties thereto;                                            (a) All data and information con-
                                  (2) The serial number of the lease to                   cerning Federal and Indian minerals
                                which the option is applicable;                           submitted under this part 3100 and
                                  (3) A statement of the number of                        parts 3110 through 3190 of this chapter
                                acres covered by the option and of the                    are subject to part 2 of this title, ex-
                                interests and obligations of the parties                  cept as provided in paragraph (c) of

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                                § 3101.1                                                              43 CFR Ch. II (10–1–04 Edition)

                                this section. Part 2 of this title in-                    fore making a decision about the appli-
                                cludes the regulations of the Depart-                     cability of FOIA exemption 4 to:
                                ment of the Interior covering the pub-                      (i) Information obtained from a per-
                                lic disclosure of data and information                    son outside the United States Govern-
                                contained in Department of the Inte-                      ment; when
                                rior records. Certain mineral informa-                      (ii) Following consultation with a
                                tion not protected from public disclo-                    submitter under § 2.15(d) of this title,
                                sure under part 2 of this title may be                    BLM determines that the submitter
                                made available for inspection without                     does not have an interest in with-
                                a Freedom of Information Act (FOIA)                       holding the records that can be pro-
                                (5 U.S.C. 552) request.                                   tected under FOIA; but
                                   (b) When you submit data and infor-                      (iii) BLM has reason to believe that
                                mation under this part 3100 and parts
                                                                                          disclosure of the information may re-
                                3110 through 3190 of this chapter that
                                                                                          sult in commercial or financial injury
                                you believe to be exempt from disclo-
                                sure to the public, you must clearly                      to the Indian mineral owner(s), but is
                                mark each page that you believe in-                       uncertain that such is the case.
                                cludes confidential information. BLM                      [63 FR 52952, Oct. 1, 1998]
                                will keep all such data and information
                                confidential to the extent allowed by
                                § 2.13(c) of this title.
                                                                                           Subpart 3101—Issuance of Leases
                                   (c) Under the Indian Mineral Devel-                    § 3101.1    Lease terms and conditions.
                                opment Act of 1982 (IMDA) (25 U.S.C.
                                2101 et seq.), the Department of the In-                  § 3101.1–1    Lease form.
                                terior will hold as privileged propri-
                                                                                            A lease shall be issued only on the
                                etary information of the affected In-
                                                                                          standard form approved by the Direc-
                                dian or Indian tribe—
                                                                                          tor.
                                   (1) All findings forming the basis of
                                the Secretary’s intent to approve or                      [53 FR 17352, May 16, 1988]
                                disapprove any Minerals Agreement
                                under IMDA; and                                           § 3101.1–2    Surface use rights.
                                   (2) All projections, studies, data, or                   A lessee shall have the right to use so
                                other information concerning a Min-                       much of the leased lands as is nec-
                                erals Agreement under IMDA, regard-                       essary to explore for, drill for, mine,
                                less of the date received, related to—                    extract, remove and dispose of all the
                                   (i) The terms, conditions, or financial                leased resource in a leasehold subject
                                return to the Indian parties;                             to: Stipulations attached to the lease;
                                   (ii) The extent, nature, value, or dis-                restrictions deriving from specific,
                                position of the Indian mineral re-                        nondiscretionary statutes; and such
                                sources; or                                               reasonable measures as may be re-
                                   (iii) The production, products, or pro-                quired by the authorized officer to min-
                                ceeds thereof.                                            imize adverse impacts to other re-
                                   (d) For information concerning In-                     source values, land uses or users not
                                dian minerals not covered by para-                        addressed in the lease stipulations at
                                graph (c) of this section—
                                                                                          the time operations are proposed. To
                                   (1) BLM will withhold such records as                  the extent consistent with lease rights
                                may be withheld under an exemption
                                                                                          granted, such reasonable measures may
                                to FOIA when it receives a request for
                                                                                          include, but are not limited to, modi-
                                information related to tribal or Indian
                                                                                          fication to siting or design of facilities,
                                minerals held in trust or subject to re-
                                strictions on alienation;                                 timing of operations, and specification
                                   (2) BLM will notify the Indian min-                    of interim and final reclamation meas-
                                eral owner(s) identified in the records                   ures. At a minimum, measures shall be
                                of the Bureau of Indian Affairs (BIA),                    deemed consistent with lease rights
                                and BIA, and give them a reasonable                       granted provided that they do not: re-
                                period of time to state objections to                     quire relocation of proposed operations
                                disclosure, using the standards and                       by more than 200 meters; require that
                                procedures of § 2.15(d) of this title, be-                operations be sited off the leasehold; or

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                                Bureau of Land Management, Interior                                                            § 3101.2–2

                                prohibit new surface disturbing oper-                     ations would not cause unacceptable
                                ations for a period in excess of 60 days                  impacts. If the authorized officer has
                                in any lease year.                                        determined, prior to lease issuance,
                                                                                          that a stipulation involves an issue of
                                [53 FR 17352, May 16, 1988]
                                                                                          major concern to the public, modifica-
                                § 3101.1–3 Stipulations            and    informa-        tion or waiver of the stipulation shall
                                    tion notices.                                         be subject to public review for at least
                                                                                          a 30-day period. In such cases, the stip-
                                  The authorized officer may require                      ulation shall indicate that public re-
                                stipulations as conditions of lease                       view is required before modification or
                                issuance. Stipulations shall become                       waiver. If subsequent to lease issuance
                                part of the lease and shall supersede in-                 the authorized officer determines that
                                consistent provisions of the standard                     a modification or waiver of a lease
                                lease form. Any party submitting a bid                    term or stipulation is substantial, the
                                under subpart 3120 of this title, or an                   modification or waiver shall be subject
                                offer under § 3110.1(b) of this title dur-                to public review for at least a 30-day
                                ing the period when use of the parcel                     period.
                                number is required pursuant to § 3110.5–
                                1 of this title, shall be deemed to have                  [53 FR 22836, June 17, 1988; 53 FR 31958, Aug.
                                                                                          22, 1988]
                                agreed to stipulations applicable to the
                                specific parcel as indicated in the List                  § 3101.2    Acreage limitations.
                                of Lands Available for Competitive
                                Nominations or the Notice of Competi-                     § 3101.2–1 Public domain lands.
                                tive Lease Sale available from the                           (a) No person or entity shall take,
                                proper BLM office. A party filing a                       hold, own or control more than 246,080
                                noncompetitive offer in accordance                        acres of Federal oil and gas leases in
                                with § 3110.1(a) of this title shall be                   any one State at any one time. No
                                deemed to have agreed to stipulations                     more than 200,000 acres of such acres
                                applicable to the specific parcel as in-                  may be held under option.
                                dicated in the List of Lands Available                       (b) In Alaska, the acreage that can be
                                for Competitive Nominations or the                        taken, held, owned or controlled is lim-
                                Notice of Competitive Lease Sale, un-                     ited to 300,000 acres in the northern
                                less the offer is withdrawn in accord-                    leasing district and 300,000 acres in the
                                ance with § 3110.6 of this title. An infor-               southern leasing district, of which no
                                mation notice has no legal con-                           more than 200,000 acres may be held
                                sequences, except to give notice of ex-                   under option in each of the 2 leasing
                                isting requirements, and may be at-                       districts. The boundary between the 2
                                tached to a lease by the authorized of-                   leasing districts in Alaska begins at
                                ficer at the time of lease issuance to                    the northeast corner of the Tetlin Na-
                                convey certain operational, procedural                    tional Wildlife Refuge as established on
                                or administrative requirements rel-                       December 2, 1980 (16 U.S.C. 3101), at a
                                ative to lease management within the                      point on the boundary between the
                                terms and conditions of the standard                      United States and Canada, then north-
                                lease form. Information notices shall                     westerly along the northern boundary
                                not be a basis for denial of lease oper-                  of the refuge to the left limit of the
                                ations.                                                   Tanana River (63°9′38″ north latitude,
                                [53 FR 17352, May 16, 1988, as amended at 53              142°20′52″ west longitude), then westerly
                                FR 22836, June 17, 1988]                                  along the left limit to the confluence
                                                                                          of the Tanana and Yukon Rivers, and
                                § 3101.1–4 Modification or waiver of                      then along the left limit of the Yukon
                                    lease terms and stipulations.                         River from said confluence to its prin-
                                  A stipulation included in an oil and                    cipal southern mouth.
                                gas lease shall be subject to modifica-                   [48 FR 33662, July 22, 1983, as amended at 53
                                tion or waiver only if the authorized                     FR 17352, May 16, 1988]
                                officer determines that the factors
                                leading to its inclusion in the lease                     § 3101.2–2 Acquired lands.
                                have changed sufficiently to make the                        An acreage limitation separate from,
                                protection provided by the stipulation                    but equal to the acreage limitation for
                                no longer justified or if proposed oper-                  public domain lands described in

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                                § 3101.2–3                                                            43 CFR Ch. II (10–1–04 Edition)

                                § 3101.2–1 of this title, applies to ac-                  their entirety, until sufficient acreage
                                quired lands. Where the United States                     has been eliminated to comply with the
                                owns only a fractional interest in the                    acreage limitation. Excess acreage or
                                mineral resources of the lands involved                   interest shall be cancelled in the in-
                                in a lease, only that part owned by the                   verse order of acquisition.
                                United States shall be charged as acre-                   [48 FR 33662, July 22, 1983, as amended at 53
                                age holdings. The acreage embraced in                     FR 17353, May 16, 1988]
                                a future interest lease shall not be
                                charged as acreage holdings until the                     § 3101.2–5 Computation.
                                lease for the future interest becomes                        The accountable acreage of a party
                                effective.                                                owning an undivided interest in a lease
                                § 3101.2–3 Excepted acreage.                              shall be the party’s proportionate part
                                                                                          of the total lease acreage. The account-
                                   Leases committed to any unit or co-                    able acreage of a party who is the bene-
                                operative plan approved or prescribed                     ficial owner of more than 10 percent of
                                by the Secretary and leases subject to                    the stock of a corporation which holds
                                an operating, drilling or development                     Federal oil and gas leases shall be the
                                contract approved by the Secretary,                       party’s proportionate part of the cor-
                                other than communitization agree-                         poration’s accountable acreage. Parties
                                ments, shall not be included in com-                      to a contract for development of leased
                                puting accountable acreage. Acreage                       lands and co-parties, except those oper-
                                subject to offers to lease, overriding                    ating, drilling or development con-
                                royalties and payments out of produc-                     tracts subject to § 3101.2–3 of this title,
                                tion shall not be included in computing                   shall be charged with their propor-
                                accountable acreage.                                      tionate interests in the lease. No hold-
                                [48 FR 33662, July 22, 1983, as amended at 53             ing of acreage in common by the same
                                FR 17352, May 16, 1988]                                   persons in excess of the maximum
                                                                                          acreage specified in the laws for any
                                § 3101.2–4 Excess acreage.                                one party shall be permitted.
                                   (a) Where, as the result of the termi-                 [48 FR 33662, July 22, 1983, as amended at 49
                                nation or contraction of a unit or coop-                  FR 2113, Jan. 18, 1984; 53 FR 17353, May 16,
                                erative plan, the elimination of a lease                  1988]
                                from an operating, drilling or develop-
                                ment contract a party holds or con-                       § 3101.2–6 Showing required.
                                trols excess accountable acreage, said                       At any time the authorized officer
                                party shall have 90 days from that date                   may require any lessee or operator to
                                to reduce the holdings to the pre-                        file with the Bureau of Land Manage-
                                scribed limitation and to file proof of                   ment a statement showing as of speci-
                                the reduction in the proper BLM office.                   fied date the serial number and the
                                Where as a result of a merger or the                      date of each lease in which he/she has
                                purchase of the controlling interest in                   any interest, in the particular State,
                                a corporation, acreage in excess of the                   setting forth the acreage covered
                                amount permitted is acquired, the                         thereby.
                                party holding the excess acreage shall
                                have 180 days from the date of the                        § 3101.3    Leases within unit areas.
                                merger or purchase to divest the excess
                                acreage. If additional time is required                   § 3101.3–1 Joinder evidence required.
                                to complete the divestiture of the ex-                       Before issuance of a lease for lands
                                cess acreage, a petition requesting ad-                   within an approved unit, the lease of-
                                ditional time, along with a full jus-                     feror shall file evidence with the proper
                                tification for the additional time, may                   BLM office of having joined in the unit
                                be filed with the authorized officer                      agreement and unit operating agree-
                                prior to the termination of the 180-day                   ment or a statement giving satisfac-
                                period provided herein.                                   tory reasons for the failure to enter
                                   (b) If any person or entity is found to                into such agreement. If such statement
                                hold accountable acreage in violation                     is acceptable to the authorized officer
                                of the provisions of these regulations,                   the operator shall be permitted to op-
                                lease(s) or interests therein shall be                    erate independently but shall be re-
                                subject to cancellation or forfeiture in                  quired to conform to the terms and

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                                Bureau of Land Management, Interior                                                            § 3101.5–4

                                provisions of the unit agreement with                     § 3101.5–2    Coordination lands.
                                respect to such operations.
                                                                                            (a) Coordination lands are those
                                [48 FR 33662, July 22, 1983, as amended at 53             lands withdrawn or acquired by the
                                FR 17353, May 16, 1988]                                   United States and made available to
                                                                                          the States by cooperative agreements
                                § 3101.3–2     Separate leases to issue.
                                                                                          entered into between the Fish and
                                  A lease offer for lands partly within                   Wildlife Service and the game commis-
                                and partly outside the boundary of a                      sions of the various States, in accord-
                                unit shall result in separate leases, one                 ance with the Act of March 10, 1934 (48
                                for the lands within the unit, and one                    Stat. 401), as amended by the Act of
                                for the lands outside the unit.                           August 14, 1946 (60 Stat. 1080), or by
                                [48 FR 33662, July 22, 1983, as amended at 53             long-term leases or agreements be-
                                FR 17353, May 16, 1988]                                   tween the Department of Agriculture
                                                                                          and the game commissions of the var-
                                § 3101.4 Lands covered by application                     ious States pursuant to the Bankhead-
                                    to close lands to mineral leasing.
                                                                                          Jones Farm Tenant Act (50 Stat. 525),
                                  Offers filed on lands within a pending                  as amended, where such lands were
                                application to close lands to mineral                     subsequently transferred to the De-
                                leasing shall be suspended until the                      partment of the Interior, with the Fish
                                segregative effect of the application is                  and Wildlife Service as the custodial
                                final.                                                    agency of the United States.
                                § 3101.5 National Wildlife Refuge Sys-                      (b) Representatives of the Bureau and
                                    tem lands.                                            the Fish and Wildlife Service shall, in
                                                                                          cooperation with the authorized mem-
                                § 3101.5–1     Wildlife refuge lands.                     bers of the various State game com-
                                  (a) Wildlife refuge lands are those                     missions, confer for the purpose of de-
                                lands embraced in a withdrawal of pub-                    termining by agreement those coordi-
                                lic domain and acquired lands of the                      nation lands which shall not be subject
                                United States for the protection of all                   to oil and gas leasing. Coordination
                                species of wildlife within a particular                   lands not closed to oil and gas leasing
                                area. Sole and complete jurisdiction                      shall be subject to leasing on the impo-
                                over such lands for wildlife conserva-                    sition of such stipulations as are
                                tion purposes is vested in the Fish and                   agreed upon by the State Game Com-
                                Wildlife Service even though such                         mission, the Fish and Wildlife Service
                                lands may be subject to prior rights for                  and the Bureau.
                                other public purposes or, by the terms
                                of the withdrawal order, may be sub-                      § 3101.5–3    Alaska wildlife areas.
                                ject to mineral leasing.                                    No lands within a refuge in Alaska
                                  (b) No offers for oil and gas leases                    open to leasing shall be available until
                                covering wildlife refuge lands shall be                   the Fish and Wildlife Service has first
                                accepted and no leases covering such                      completed compatability determina-
                                lands shall be issued except as provided                  tions.
                                in § 3100.2 of this title. There shall be
                                no drilling or prospecting under any                      § 3101.5–4    Stipulations.
                                lease heretofore or hereafter issued on
                                lands within a wildlife refuge except                        Leases shall be issued subject to stip-
                                with the consent and approval of the                      ulations prescribed by the Fish and
                                Secretary with the concurrence of the                     Wildlife Service as to the time, place,
                                Fish and Wildlife Service as to the                       nature and condition of such oper-
                                time, place and nature of such oper-                      ations in order to minimize impacts to
                                ations in order to give complete pro-                     fish and wildlife populations and habi-
                                tection to wildlife populations and                       tat and other refuge resources on the
                                wildlife habitat on the areas leased,                     areas leased. The specific conduct of
                                and all such operations shall be con-                     lease activities on any refuge lands
                                ducted in accordance with the stipula-                    shall be subject to site-specific stipula-
                                tions of the Bureau on a form approved                    tions prescribed by the Fish and Wild-
                                by the Director.                                          life Service.

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                                § 3101.6                                                              43 CFR Ch. II (10–1–04 Edition)

                                § 3101.6 Recreation and public pur-                       managing agency objects or withholds
                                     poses lands.                                         consent required by statute. In all
                                   Under the Recreation and Public                        other instances, the Secretary has the
                                Purposes Act, as amended (43 U.S.C. 869                   final authority and discretion to decide
                                et seq.), all lands within Recreation and                 to issue a lease.
                                Public Purposes leases and patents are                      (c) The authorized officer shall re-
                                subject to lease under the provisions of                  view all recommendations and shall ac-
                                this part, subject to such conditions as                  cept all reasonable recommendations
                                the Secretary deems appropriate.                          of the surface managing agency.

                                § 3101.7 Federal lands administered by                    [48 FR 33662, July 22, 1983. Redesignated and
                                    an agency outside of the Depart-                      amended at 53 FR 22836, June 17, 1988]
                                    ment of the Interior.
                                                                                          § 3101.7–3    Appeals.
                                § 3101.7–1 General requirements.                            (a) The decision of the authorized of-
                                   (a) Acquired lands shall be leased                     ficer to reject an offer to lease or to
                                only with the consent of the surface                      issue a lease with stipulations rec-
                                managing agency, which upon receipt                       ommended by the surface managing
                                of a description of the lands from the                    agency may be appealed to the Interior
                                authorized officer, shall report to the                   Board of Land Appeals under part 4 of
                                authorized officer that it consents to                    this title.
                                leasing with stipulations, if any, or                       (b) Where, as provided by statute, the
                                withholds consent or objects to leasing.                  surface managing agency has required
                                   (b) Public domain lands shall be                       that certain stipulations be included in
                                leased only after the Bureau has con-                     a lease or has consented, or objected or
                                sulted with the surface managing agen-                    refused to consent to leasing, any ap-
                                cy and has provided it with a descrip-                    peal by an affected lease offeror shall
                                tion of the lands, and the surface man-                   be pursuant to the administrative rem-
                                aging agency has reported its rec-
                                                                                          edies provided by the particular surface
                                ommendation to lease with stipula-
                                                                                          managing agency.
                                tions, if any, or not to lease to the au-
                                thorized officer. If consent or lack of                   [53 FR 22837, June 17, 1988]
                                objection of the surface managing
                                agency is required by statute to lease                    § 3101.8 State’s or charitable organiza-
                                public domain lands, the procedure in                         tion’s ownership of surface over-
                                paragraph (a) of this section shall                           lying Federally-owned minerals.
                                apply.                                                      Where the United States has con-
                                   (c) National Forest System lands                       veyed title to, or otherwise transferred
                                whether acquired or reserved from the                     the control of the surface of lands to
                                public domain shall not be leased over                    any State or political subdivision,
                                the objection of the Forest Service.                      agency, or instrumentality thereof, or
                                The provisions of paragraph (a) of this                   a college or any other educational cor-
                                section shall apply to such National                      poration or association, or a charitable
                                Forest System lands.                                      or religious corporation or association,
                                [53 FR 22836, June 17, 1988]                              with reservation of the oil and gas
                                                                                          rights to the United States, such party
                                § 3101.7–2 Action by the Bureau of                        shall be given an opportunity to sug-
                                     Land Management.                                     gest any lease stipulations deemed nec-
                                   (a) Where the surface managing agen-                   essary for the protection of existing
                                cy has consented to leasing with re-                      surface improvements or uses, to set
                                quired stipulations, and the Secretary                    forth the facts supporting the necessity
                                decides to issue a lease, the authorized                  of the stipulations and also to file any
                                officer shall incorporate the stipula-                    objections it may have to the issuance
                                tions into any lease which it may                         of a lease. Where a party controlling
                                issue. The authorized officer may add                     the surface opposes the issuance of a
                                additional stipulations.                                  lease or wishes to place such restric-
                                   (b) The authorized officer shall not                   tive stipulations upon the lease that it
                                issue a lease and shall reject any lease                  could not be operated upon or become
                                offer on lands to which the surface                       part of a drilling unit and hence is

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                                Bureau of Land Management, Interior                                                            § 3102.5–1

                                without mineral value, the facts sub-                     § 3102.3    Minors.
                                mitted in support of the opposition or
                                                                                            Leases shall not be acquired or held
                                request for restrictive stipulations
                                                                                          by one considered a minor under the
                                shall be given consideration and each
                                                                                          laws of the State in which the lands
                                case decided on its merits. The opposi-
                                                                                          are located, but leases may be acquired
                                tion to lease or necessity for restric-
                                                                                          and held by legal guardians or trustees
                                tive stipulations expressed by the
                                                                                          of minors in their behalf. Such legal
                                party controlling the surface affords no
                                                                                          guardians or trustees shall be citizens
                                legal basis or authority to refuse to
                                                                                          of the United States or otherwise meet
                                issue the lease or to issue the lease
                                                                                          the provisions of § 3102.1 of this title.
                                with the requested restrictive stipula-
                                tions for the reserved minerals in the                    [48 FR 33662, July 22, 1983, as amended at 53
                                lands; in such case, the final deter-                     FR 17353, May 16, 1988]
                                mination whether to issue and with
                                what stipulations, or not to issue the                    § 3102.4    Signature.
                                lease depends upon whether or not the                       (a) The original of an offer or bid
                                interests of the United States would                      shall be signed in ink and dated by the
                                best be served by the issuance of the                     present or potential lessee or by any-
                                lease.                                                    one authorized to sign on behalf of the
                                [48 FR 33662, July 22, 1983, as amended at 49
                                                                                          present or potential lessee.
                                FR 2113, Jan. 18, 1984; 53 FR 22837, June 17,               (b) Three copies of a transfer of
                                1988]                                                     record title or of operating rights (sub-
                                                                                          lease), as required by section 30a of the
                                  Subpart 3102—Qualifications of                          act, shall be originally signed and
                                                                                          dated by the transferor or anyone au-
                                             Lessees                                      thorized to sign on behalf of the trans-
                                § 3102.1     Who may hold leases.                         feror. However, a transferee, or anyone
                                                                                          authorized to sign on his or her behalf,
                                  Leases or interests therein may be                      shall be required to sign and date only
                                acquired and held only by citizens of                     1 original request for approval of a
                                the United States; associations (includ-                  transfer.
                                ing partnerships and trusts) of such                        (c) Documents signed by any party
                                citizens; corporations organized under                    other than the present or potential les-
                                the laws of the United States or of any                   see shall be rendered in a manner to re-
                                State or Territory thereof; and munici-                   veal the name of the present or poten-
                                palities.
                                                                                          tial lessee, the name of the signatory
                                [48 FR 33662, July 22, 1983, as amended at 53             and their relationship. A signatory who
                                FR 17353, May 16, 1988]                                   is a member of the organization that
                                                                                          constitutes the present or potential
                                § 3102.2     Aliens.                                      lessee (e.g., officer of a corporation,
                                  Leases or interests therein may be                      partner of a partnership, etc.) may be
                                acquired and held by aliens only                          requested by the authorized officer to
                                through stock ownership, holding or                       clarify his/her relationship, when the
                                control in a present or potential lessee                  relationship is not shown on the docu-
                                that is incorporated under the laws of                    ments filed.
                                the United States or of any State or                        (d) Submission of a qualification
                                territory thereof, and only if the laws,                  number does not meet the require-
                                customs or regulations of their country                   ments of paragraph (c) of this section.
                                do not deny similar or like privileges
                                                                                          [53 FR 17353, May 16, 1988]
                                to citizens or corporations of the
                                United States. If it is determined that                   § 3102.5 Compliance, certification           of
                                a country has denied similar or like                          compliance and evidence.
                                privileges to citizens or corporations of
                                the United States, it would be placed                     § 3102.5–1    Compliance.
                                on a list available from any Bureau of
                                                                                            In order to actually or potentially
                                Land Management State office.
                                                                                          own, hold, or control an interest in a
                                [53 FR 17353, May 16, 1988]                               lease or prospective lease, all parties,

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                                § 3102.5–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                including corporations, and all mem-                      ance shall end upon a determination by
                                bers of associations, including partner-                  the authorized officer that all required
                                ships of all types, shall, without excep-                 reclamation has been completed and
                                tion, be qualified and in compliance                      that the United States has been fully
                                with the act. Compliance means that                       reimbursed for any costs incurred due
                                the lessee, potential lessee, and all                     to the required reclamation.
                                such parties (as defined in § 3000.0–5(k))                  (g) In compliance with § 3106.1(b) of
                                are:                                                      this title and section 30A of the Act.
                                   (a) Citizens of the United States (see                 The authorized officer may accept the
                                § 3102.1) or alien stockholders in a cor-                 signature on a request for approval of
                                poration organized under State or Fed-
                                                                                          an assignment of less than 640 acres
                                eral law (see § 3102.2);
                                                                                          outside of Alaska (2,560 acres within
                                   (b) In compliance with the Federal
                                acreage limitations (see § 3101.2);                       Alaska) as acceptable certification
                                   (c) Not minors (see § 3102.3);                         that the assignment would further the
                                   (d) Except for an assignment or                        development of oil and gas, or the au-
                                transfer under subpart 3106 of this title,                thorized officer may apply the provi-
                                in compliance with section 2(a)(2)(A) of                  sions of § 3102.5–3 of this title.
                                the Act, in which case the signature on                   [53 FR 22837, June 17, 1988]
                                an offer or lease constitutes evidence
                                of compliance. A lease issued to any                      § 3102.5–2    Certification of compliance.
                                entity in violation of this paragraph (d)
                                shall be subject to the cancellation                         Any party(s) seeking to obtain an in-
                                provisions of § 3108.3 of this title. The                 terest in a lease shall certify it is in
                                term entity is defined at § 3400.0–5(rr) of               compliance with the act as set forth in
                                this title.                                               § 3102.5–1 of this title. A party(s) that is
                                   (e) Not in violation of the provisions                 a corporation or publicly traded asso-
                                of section 41 of the Act; and                             ciation, including a publicly traded
                                   (f) In compliance with section 17(g) of                partnership, shall certify that con-
                                the Act, in which case the signature on                   stituent members of the corporation,
                                an offer, lease, assignment, transfer,                    association or partnership holding or
                                constitutes evidence of compliance                        controlling more than 10 percent of the
                                that the signatory and any subsidiary,                    instruments of ownership of the cor-
                                affiliate, or person, association, or cor-                poration, association or partnership
                                poration controlled by or under com-                      are in compliance with the act. Execu-
                                mon control with the signatory, as de-                    tion and submission of an offer, com-
                                fined in §3400.0–5(rr) of this title, has                 petitive bid form, or request for ap-
                                not failed or refused to comply with                      proval of a transfer of record title or of
                                reclamation requirements with respect                     operating rights (sublease), constitutes
                                to all leases and operations thereon in                   certification of compliance.
                                which such person or entity has an in-
                                terest. Noncompliance with section                        [53 FR 17353, May 16, 1988; 53 FR 22837, June
                                17(g) of the Act begins on the effective                  17, 1988]
                                date of the imposition of a civil pen-
                                alty by the authorized officer under                      § 3102.5–3    Evidence of compliance.
                                § 3163.2 of this title, or when the bond is                 The authorized officer may request
                                attached by the authorized officer for                    at any time further evidence of compli-
                                reclamation purposes, whichever comes                     ance and qualification from any party
                                first. A lease issued, or an assignment                   holding or seeking to hold an interest
                                or transfer approved, to any such per-                    in a lease. Failure to comply with the
                                son or entity in violation of this para-                  request of the authorized officer shall
                                graph (f) shall be subject to the can-                    result in adjudication of the action
                                cellation provisions of § 3108.3 of this                  based on the incomplete submission.
                                title, notwithstanding any administra-
                                tive or judicial appeals that may be                      [53 FR 17353, May 16, 1988]
                                pending with respect to violations or
                                penalties assessed for failure to comply
                                with the prescribed reclamation stand-
                                ards on any lease holdings. Noncompli-

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                                Bureau of Land Management, Interior                                                            § 3103.2–2

                                 Subpart 3103—Fees, Rentals and                           competitive lease offer shall be accom-
                                             Royalty                                      panied by full payment of the first
                                                                                          year’s rental based on the total acre-
                                § 3103.1     Payments.                                    age, if known, and, if not known, shall
                                                                                          be based on 40 acres for each smallest
                                § 3103.1–1     Form of remittance.                        legal subdivision. An offer deficient in
                                  All remittances shall be by personal                    the first year’s rental by not more than
                                check, cashier’s check, certified check,                  10 percent or $200, whichever is less,
                                or money order, and shall be made pay-                    shall be accepted by the authorized of-
                                able to the Department of the Inte-                       ficer provided all other requirements
                                rior—Bureau of Land Management or                         are met. Rental submitted shall be de-
                                the Department of the Interior—Min-                       termined based on the total amount re-
                                erals Management Service, as appro-                       mitted less all required fees. The addi-
                                priate. Payments made to the Bureau                       tional rental shall be paid within 30
                                may be made by other arrangements                         days from notice of the deficiency
                                such as by electronic funds transfer or                   under penalty of cancellation of the
                                credit card when specifically author-                     lease.
                                ized by the Bureau. In the case of pay-                     (b) If the acreage is incorrectly indi-
                                ments made to the Service, such pay-                      cated in a List of Lands Available for
                                ments may also be made by electronic                      Competitive Nominations or a Notice
                                funds transfer.                                           of Competitive Lease Sale, payment of
                                [53 FR 22837, June 17, 1988]                              the rental based on the error is curable
                                                                                          within 15 calendar days of receipt of
                                § 3103.1–2     Where submitted.                           notice from the authorized officer of
                                  (a)(1) All filing fees for lease applica-               the error.
                                tions or offers or for requests for ap-                     (c) Rental shall not be prorated for
                                proval of a transfer and all first-year                   any lands in which the United States
                                rentals and bonuses for leases issued                     owns an undivided fractional interest
                                under Group 3100 of this title shall be                   but shall be payable for the full acre-
                                paid to the proper BLM office.                            age in such lands.
                                  (2) All second-year and subsequent
                                                                                          [48 FR 33662, July 22, 1983, as amended at 49
                                rentals, except for leases specified in                   FR 26920, June 29, 1984, 53 FR 22837, June 17,
                                paragraph (b) of this section, shall be                   1988; 53 FR 31958, Aug. 22, 1988]
                                paid to the Service at the following ad-
                                dress: Minerals Management Service,                       § 3103.2–2    Annual rental payments.
                                Royalty Management Program/BRASS,
                                Box 5640 T.A., Denver, CO 80217.                             Rentals shall be paid on or before the
                                  (b) All rentals and royalties on pro-                   lease anniversary date. A full year’s
                                ducing leases, communitized leases in                     rental shall be submitted even when
                                producing well units, unitized leases in                  less than a full year remains in the
                                producing unit areas, leases on which                     lease term, except as provided in
                                compensatory royalty is payable and                       § 3103.4–4(d) of this title. Failure to
                                all payments under subsurface storage                     make timely payment shall cause a
                                agreements and easements for direc-                       lease to terminate automatically by
                                tional drilling shall be paid to the                      operation of law. If the designated
                                Service.                                                  Service office is not open on the anni-
                                                                                          versary date, payment received on the
                                [48 FR 33662, July 22, 1983, as amended at 49             next day the designated Service office
                                FR 11637, Mar. 27, 1984; 49 FR 39330, Oct. 5,
                                1984; 53 FR 17353, May 16, 1988]                          is open to the public shall be deemed to
                                                                                          be timely made. Payments made to an
                                § 3103.2     Rentals.                                     improper BLM or Service office shall
                                                                                          be returned and shall not be forwarded
                                § 3103.2–1 Rental requirements.                           to the designated Service office. Rental
                                   (a) Each competitive bid or competi-                   shall be payable at the following rates:
                                tive nomination submitted in response                        (a) The annual rental for all leases
                                to a List of Lands Available for Com-                     issued subsequent to December 22, 1987,
                                petitive Nominations or Notice of Com-                    shall be $1.50 per acre or fraction there-
                                petitive Lease Sale, and each non-                        of for the first 5 years of the lease term

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                                § 3103.3                                                              43 CFR Ch. II (10–1–04 Edition)

                                and $2 per acre or fraction for any sub-                  lease shall increase by an additional $5
                                sequent year, except as provided in                       per acre or fraction thereof for leases
                                paragraph (b) of this section;                            that were originally issued non-
                                   (b) The annual rental for all leases                   competitively and by an additional $10
                                issued on or before December 22, 1987,                    per acre or fraction thereof for leases
                                or issued pursuant to an application or                   that were originally issued competi-
                                offer to lease filed prior to that date                   tively.
                                shall be as stated in the lease or in reg-                [53 FR 17353, May 16, 1988 and 53 FR 22837,
                                ulations in effect on December 22, 1987,                  June 17, 1988, as amended at 61 FR 4750, Feb.
                                except:                                                   8, 1996]
                                   (1) Leases issued under former sub-
                                part 3112 of this title on or after Feb-                  § 3103.3    Royalties.
                                ruary 19, 1982, shall be subject after
                                February 1, 1989, to annual rental in                     § 3103.3–1 Royalty on production.
                                the sixth and subsequent lease years of                      (a) Royalty on production shall be
                                $2 per acre or fraction thereof;                          payable only on the mineral interest
                                   (2) The rental rate of any lease deter-                owned by the United States. Royalty
                                mined after December 22, 1987, to be in                   shall be paid in amount or value of the
                                a known geological structure outside of                   production removed or sold as follows:
                                Alaska or in a favorable petroleum ge-                       (1) 121⁄2 percent on all leases, includ-
                                ological province within Alaska shall                     ing exchange and renewal leases and
                                not be increased because of such deter-                   leases issued in lieu of unpatented oil
                                mination;                                                 placer mining claims under § 3108.2–4 of
                                   (3) Exchange and renewal leases shall                  this title, issued after December 22,
                                be subject to rental of $2 per acre or                    1987, except:
                                fraction thereof upon exchange or re-                        (i) Leases issued after December 22,
                                newal;                                                    1987, resulting from offers to lease or
                                   (c) Rental shall not be due on acreage                 bids filed on or before December 22,
                                for which royalty or minimum royalty                      1987, which are subject to the rates in
                                is being paid, except on nonproducing                     effect on December 22, 1987; and
                                leases when compensatory royalty has                         (ii) Leases issued on or before Decem-
                                been assessed in which case annual                        ber 22, 1987, which are subject to the
                                rental as established in the lease shall                  rates contained in the lease or in regu-
                                be due in addition to compensatory                        lations at the time of issuance;
                                royalty;                                                     (2) 162⁄3 percent on noncompetitive
                                   (d) On terminated leases that were                     leases reinstated under § 3108.2–3 of this
                                originally issued noncompetitively and                    title plus an additional 2 percentage-
                                are reinstated under § 3108.2–3 of this                   point increase added for each suc-
                                title, and on noncompetitive leases                       ceeding reinstatement;
                                that were originally issued under                            (3) Not less than 4 percentage points
                                § 3108.2–4 of this title, the annual rental               above the rate used for royalty deter-
                                shall be $5 per acre or fraction thereof                  mination contained in the lease that is
                                beginning with the termination date                       reinstated or in force at the time of
                                upon the filing, on or after the effec-                   issuance of the lease that is reinstated
                                tive date of this regulation, of a peti-                  for competitive leases, plus an addi-
                                tion to reinstate a lease or convert an                   tional 2 percentage-point increase
                                abandoned, unpatented oil placer min-                     added for each succeeding reinstate-
                                ing claim;                                                ment.
                                   (e) On terminated leases that were                        (b) Leases that qualify under specific
                                originally issued competitively, the an-                  provisions of the Act of August 8, 1946
                                nual rental shall be $10 per acre or frac-                (30 U.S.C. 226c) may apply for a limita-
                                tion thereof beginning with the termi-                    tion of a 121⁄2 percent royalty rate.
                                nation date upon the filing, on or after                     (c) The average production per well
                                the effective date of this regulation, of                 per day for oil and gas shall be deter-
                                a petition to reinstate a lease under                     mined pursuant to 43 CFR 3162.7–4.
                                § 3108.2–3 of this title; and                                (d) Payment of a royalty on the he-
                                   (f) Each succeeding time a specific                    lium component of gas shall not con-
                                lease is reinstated under § 3108.2–3 of                   vey the right to extract the helium.
                                this title, the annual rental on that                     Applications for the right to extract

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                                Bureau of Land Management, Interior                                                            § 3103.4–1

                                helium shall be made under part 16 of                     duce the royalty on an entire lease-
                                this title.                                               hold, or any portion thereof.
                                [53 FR 22838, June 17, 1988]                                 (b)(1) An application for the benefits
                                                                                          under paragraph (a) of this section on
                                § 3103.3–2 Minimum royalties.                             other than stripper oil well leases or
                                   (a) A minimum royalty shall be pay-                    heavy oil properties must be filed by
                                able at the expiration of each lease                      the operator/payor in the proper BLM
                                year beginning on or after a discovery                    office. (Royalty reductions specifically
                                of oil or gas in paying quantities on the                 for stripper oil well leases or heavy oil
                                lands leased, except that on unitized                     properties are discussed in § 3103.4–2
                                leases the minimum royalty shall be                       and § 3103.4–3 respectively.) The appli-
                                payable only on the participating acre-                   cation must contain the serial number
                                age, at the following rates:                              of the leases, the names of the record
                                   (1) On leases issued on or after Au-                   title holders, operating rights owners
                                gust 8, 1946, and on those issued prior                   (sublessees), and operators for each
                                thereto if the lessee files an election                   lease, the description of lands by legal
                                under section 15 of the Act of August 8,                  subdivision and a description of the re-
                                1946, a minimum royalty of $1 per acre                    lief requested.
                                or fraction thereof in lieu of rental, ex-                   (2) Each application shall show the
                                cept as provided in paragraph (a)(2) of                   number, location and status of each
                                this section; and
                                                                                          well drilled, a tabulated statement for
                                   (2) On leases issued from offers filed
                                                                                          each month covering a period of not
                                after December 22, 1987, and on com-
                                petitive leases issued from successful                    less than 6 months prior to the date of
                                bids placed at oral auctions conducted                    filing the application of the aggregate
                                after December 22, 1987, a minimum                        amount of oil or gas subject to royalty,
                                royalty in lieu of rental of not less                     the number of wells counted as pro-
                                than the amount of rental which other-                    ducing each month and the average
                                wise would be required for that lease                     production per well per day.
                                year.                                                        (3) Every application shall contain a
                                   (b) Minimum royalties shall not be                     detailed statement of expenses and
                                prorated for any lands in which the                       costs of operating the entire lease, the
                                United States owns a fractional inter-                    income from the sale of any production
                                est but shall be payable on the full                      and all facts tending to show whether
                                acreage of the lease.                                     the wells can be successfully operated
                                   (c) Minimum royalties and rentals on                   upon the fixed royalty or rental. Where
                                non-participating acreage shall be pay-                   the application is for a reduction in
                                able to the Service.                                      royalty, full information shall be fur-
                                   (d) The minimum royalty provisions                     nished as to whether overriding royal-
                                of this section shall be applicable to                    ties, payments out of production, or
                                leases reinstated under § 3108.2–3 of this                similar interests are paid to others
                                title and leases issued under § 3108.2–4
                                                                                          than the United States, the amounts so
                                of this title.
                                                                                          paid and efforts made to reduce them.
                                [48 FR 33662, July 22, 1983, as amended at 49             The applicant shall also file agree-
                                FR 11637, Mar. 27, 1984; 49 FR 30448, July 30,            ments of the holders to a reduction of
                                1984; 53 FR 22838, June 17, 1988]
                                                                                          all other royalties or similar payments
                                § 3103.4     Production incentives.                       from the leasehold to an aggregate not
                                                                                          in excess of one-half the royalties due
                                § 3103.4–1 Royalty reductions.                            the United States.
                                   (a) In order to encourage the greatest                    (c) Petition may be made for reduc-
                                ultimate recovery of oil or gas and in                    tion of royalty under § 3108.2–3(f) for
                                the interest of conservation, the Sec-                    leases reinstated under § 3108.2–3 of this
                                retary, upon a determination that it is                   title and under § 3108.2–4(i) for non-
                                necessary to promote development or                       competitive leases issued under § 3108.2–
                                that the leases cannot be successfully                    4 of this title. Petitions to waive, sus-
                                operated under the terms provided                         pend or reduce rental or minimum roy-
                                therein, may waive, suspend or reduce                     alty for leases reinstated under § 3108.2–
                                the rental or minimum royalty or re-                      3 of this title or for leases issued under

                                                                                     333



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                                § 3103.4–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                § 3108.2–4 of this title may be made                      assigned to that allocated property in
                                under this section.                                       that communitization agreement or
                                [48 FR 33662, July 22, 1983; 48 FR 39225, Aug.
                                                                                          participating area.
                                30, 1983, as amended at 49 FR 30448, July 30,               (3) Procedures to be used by operator:
                                1984; 53 FR 17354, May 16, 1988; 57 FR 35973,               (i) Qualifying determination.
                                Aug. 11, 1992; 61 FR 4750, Feb. 8, 1996]                    (A) Calculate an average daily pro-
                                                                                          duction rate for the property in order
                                § 3103.4–2 Stripper well royalty reduc-                   to verify that the property qualifies as
                                     tions.                                               a stripper property.
                                   (a)(1) A stripper well property is any                   (B) The initial qualifying period for
                                Federal lease or portion thereof seg-                     producing properties is the period Au-
                                regated     for   royalty    purposes,    a               gust 1, 1990, through July 31, 1991. For
                                communitization agreement, or a par-                      the properties that were shut-in for 12
                                ticipating area of a unit agreement, op-                  consecutive months or longer, the
                                erated by the same operator, that pro-                    qualifying period is the 12-month pro-
                                duces an average of less than 15 barrels                  duction period immediately prior to
                                of oil per eligible well per well-day for                 the shut-in. If the property does not
                                the qualifying period.                                    qualify during the initial qualifying pe-
                                   (2) An eligible well is an oil well that               riod, it may later qualify due to pro-
                                produces or an injection well that in-                    duction decline. In those cases, the 12-
                                jects and is integral to production for                   month qualifying period will be the
                                any period of time during the quali-                      first consecutive 12-month period be-
                                fying or subsequent 12-month period.                      ginning after August 31, 1990, during
                                   (3) An oil completion is a completion                  which the property qualifies.
                                from which the energy equivalent of                         (ii) Qualifying royalty rate calcula-
                                the oil produced exceeds the energy                       tion. If the property qualifies, use the
                                equivalent of the gas produced (includ-                   production rate rounded down to the
                                ing the entrained liquid hydrocarbons)                    next whole number (e.g., 6.7 becomes 6)
                                or any completion producing oil and                       for the qualifying period, and apply the
                                less than 60 MCF of gas per day.                          following formula to determine the
                                   (4) An injection well is a well that in-               maximum royalty rate for oil produc-
                                jects a fluid for secondary or enhanced                   tion from the Federal leases for the life
                                oil recovery, including reservoir pres-                   of the program.
                                sure maintenance operations.
                                                                                          Royalty Rate (%) = 0.5 + (0.8 × the aver-
                                   (b) Stripper oil well property royalty
                                                                                           age daily production rate)
                                rate reduction shall be administered
                                according to the following require-                         The formula-calculated royalty rate
                                ments and procedures.                                     shall apply to all oil production (except
                                   (1) An application for the benefits                    condensate) from the property for the
                                under paragraph (a) of this section for                   first 12 months. The rate shall be effec-
                                stripper oil well properties is not re-                   tive the first day of the production
                                quired.                                                   month after the Minerals Management
                                   (2) Total oil production (regardless of                Service (MMS) receives notification. If
                                disposition) for the subject period from                  the production rate is 15 barrels or
                                the eligible wells on the property is to-                 greater, the royalty rate will be the
                                taled and then divided by the total                       rate in the lease terms.
                                number of well days or portions of                          (iii) Outyears royalty rate calcula-
                                days, both producing and injection                        tions.
                                days, as reported on Form MMS–3160 or                       (A) At the end of each 12-month pe-
                                MMS–4054 for the eligible wells to de-                    riod, the property average daily pro-
                                termine the property average daily                        duction rate shall be determined for
                                production rate. For those properties                     that period. A royalty rate shall then
                                in communitization agreements and                         be calculated using the formula in
                                participating areas of unit agreements                    paragraph (b)(3)(ii) of this section.
                                that have allocated (not actual) pro-                       (B) The new calculated royalty rate
                                duction, the production rate for all eli-                 shall be compared to the qualifying pe-
                                gible     well(s)    in    that    specific               riod royalty rate. The lower of the two
                                communitization agreement or partici-                     rates shall be used for the current pe-
                                pating area is determined and shall be                    riod provided that the operator notifies

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                                Bureau of Land Management, Interior                                                            § 3103.4–2

                                the MMS of the new royalty rate. The                      BLM may terminate a royalty rate re-
                                new royalty rate shall not become ef-                     duction if it is determined that the
                                fective until the first day of the month                  production rate was manipulated by
                                after the MMS receives notification.                      the operator for the purpose of receiv-
                                Notification shall be received on Form                    ing a royalty rate reduction. Termi-
                                MMS–4377 and mailed to Minerals Man-                      nations of royalty rate reductions will
                                agement Service, P.O. Box 17110, Den-                     be effective on the effective date of the
                                ver, CO 80217. If the operator does not                   royalty rate reduction resulting from
                                notify the MMS of the new royalty rate                    the manipulated production rate (i.e.,
                                within 60 days after the end of the sub-                  the termination will be retroactive to
                                ject 12-month period, the royalty rate                    the effective date of the improper re-
                                for the property shall revert back to                     duction). The operator/payor shall pay
                                the royalty rate established as the                       the difference in royalty resulting from
                                qualifying period royalty rate, effec-                    the retroactive application of the
                                tive at the beginning of the current 12-                  unmanipulated rate. Late payment or
                                month period.                                             underpayment charges will be assessed
                                  (C) The royalty rate shall never ex-                    in accordance with 30 CFR 218.102.
                                ceed the calculated qualifying royalty                      (4) The royalty rate reduction provi-
                                rate for the life of this program.                        sion for stripper well properties shall
                                  (iv) Prohibition. For the qualifying                    be effective as of October 1, 1992. If the
                                period and any subsequent 12-month                        oil price, adjusted for inflation by BLM
                                period, the production rate shall be the                  and MMS, using the implicit price
                                result of routine operational and eco-                    deflator for gross national product
                                nomic factors for that period and for                     with 1991 as the base year, remains on
                                that property and not the result of pro-                  average above $28 per barrel, based on
                                duction manipulation for the purpose                      West Texas Intermediate crude average
                                of obtaining a lower royalty rate. A                      posted price for a period of 6 consecu-
                                production rate that is determined to                     tive months, the benefits of the royalty
                                have resulted from production manipu-                     rate reduction under this section may
                                lation will not receive the benefit of a                  be terminated upon 6 months’ notice,
                                royalty rate reduction.                                   published in the FEDERAL REGISTER.
                                  (v) Certification. The applicable roy-
                                                                                            (5) The Secretary will evaluate the
                                alty rate shall be used by the operator/
                                                                                          effectiveness of the stripper well roy-
                                payor when submitting the required
                                royalty reports/payments to MSS. By                       alty reduction program and may at any
                                submitting royalty reports/payments                       time after September 10, 1997, termi-
                                using the royalty rate reduction bene-                    nate any or all royalty reductions
                                fits of this program, the operator cer-                   granted under this section upon 6
                                tifies that the production rate for the                   months notice.
                                qualifying and subsequent 12-month pe-                      (6) The stripper well property royalty
                                riod was not subject to manipulation                      rate reduction benefits shall apply to
                                for the purpose of obtaining the benefit                  all oil produced from the property.
                                of a royalty rate reduction, and the                        (7) The royalty for gas production
                                royalty rate was calculated in accord-                    (including liquids produced in associa-
                                ance with the instructions and proce-                     tion with gas) for oil completions shall
                                dures in these regulations.                               be calculated separately using the
                                  (vi) Agency action. If a royalty rate                   lease royalty rate.
                                is improperly calculated, the MMS will                      (8) If the lease royalty rate is lower
                                calculate the correct rate and inform                     than the benefits provided in this strip-
                                the operator/payors. Any additional                       per oil property royalty rate reduction
                                royalties due are payable immediately                     program, the lease rate prevails.
                                upon notification. Late payment or un-                      (9) The minimum royalty provisions
                                derpayment charges will be assessed in                    of § 3103.3–2 apply.
                                accordance with 30 CFR 218.102. The                         (10) Examples.




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                                § 3103.4–2                                                            43 CFR Ch. II (10–1–04 Edition)




                                              Explanation, Example 1                        3. Production rate for the first year is 8
                                                                                          BOPD.
                                  1. Property production rate per well for
                                                                                            4. Using the formula, the royalty rate is
                                qualifying period (August 1, 1990–July 31,
                                                                                          calculated at 6.9 percent. Since 6.9 percent is
                                1991) is 10 barrels of oil per day (BOPD).
                                                                                          less than the first year rate of 8.5 percent, 6.9
                                  2. Using the formula, the royalty rate for
                                                                                          percent is the applicable royalty rate for the
                                the first year is calculated to be 8.5 percent.
                                                                                          second year.
                                This rate is also the maximum royalty rate
                                for the life of the program.                              6.9%=0.5+(0.8×8)
                                8.5%=0.5+(0.8×10)

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                                Bureau of Land Management, Interior                                                            § 3103.4–2
                                  5. Production rate for the second year is 12            program, the calculated royalty rate would
                                BOPD.                                                     be the property royalty rate. However, since
                                  6. Using the formula, the royalty rate is               the 8.5 percent first year royalty rate is less
                                calculated at 10.1 percent. Since the 8.5 per-            than the property rate, the royalty rate for
                                cent first year royalty rate is less than 10.1            the fourth year is 8.5 percent.
                                percent, the applicable royalty rate for third              9. Production rate for the fourth year is 15
                                year is 8.5 percent.                                      BOPD.
                                                                                            10. Since the production is at the 15 BOPD
                                10.1%=0.5+(0.8×12)
                                                                                          threshold, the royalty rate would be the
                                  7. Production rate for the third year is 23             property royalty rate. However, since the 8.5
                                BOPD.                                                     percent first year royalty rate is less than
                                  8. Since the production rate of 23 BOPD is              the lease rate, the royalty rate for the fifth
                                greater than the 15 BOPD threshold for the                year is 8.5 percent.




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                                § 3103.4–2                                                            43 CFR Ch. II (10–1–04 Edition)




                                              Explanation, Example 2                        2. Property royalty rate for the first year
                                                                                          is the rate as stated in the lease.
                                  1. Property production rate of 23 BOPD per
                                                                                            3. Production rate for the first year is 8
                                well (for the August 1, 1990–July 31, 1991,
                                                                                          BOPD.
                                qualifying period prior to the effective date
                                                                                            4. Using the formula, the royalty rate is
                                of the program) is greater than the 15 BOPD
                                                                                          calculated to be 6.9 percent for the second
                                which qualifies a property for a royalty rate
                                                                                          year. This rate is also the maximum royalty
                                reduction. Therefore, the property is not en-
                                                                                          rate for the life of the program.
                                titled to a royalty rate reduction for the
                                first year of the program.                                6.9%=0.5+(0.8×8)


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                                Bureau of Land Management, Interior                                                            § 3103.4–2
                                  5. Production rate for the second year is 12            qualifying (maximum) rate of 6.9 percent,
                                BOPD.                                                     the royalty rate for the fourth year is 6.1
                                  6. Using the formula, the royalty rate is               percent.
                                calculated at 10.1 percent. Since the 6.9 per-
                                                                                          6.1%=0.5+(0.8×7)
                                cent second year royalty rate is less than
                                10.1 percent, the applicable royalty rate for               9. Production rate for the fourth year is 15
                                third year is 6.9 percent.                                BOPD.
                                                                                            10. Since the production is at the 15 BOPD
                                10.1%=0.5+(0.8×12)
                                                                                          threshold, the royalty rate would be the
                                  7. Production rate third year is 7 BOPD.                lease royalty rate. However, since the 6.9
                                  8. Using the formula, the royalty rate is               percent second year royalty rate is less than
                                calculated at 6.1 percent. Since the 6.1 per-             the lease rate, the royalty rate for the fifth
                                cent third year royalty rate is less than the             year is 6.9 percent.




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                                § 3103.4–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                                                                APPENDIX




                                [48 FR 33662, July 22, 1983; 48 FR 39225, Aug. 30, 1983, as amended at 49 FR 30448, July 30, 1984;
                                53 FR 17354, May 16, 1988; 57 FR 35973, Aug. 11, 1992. Redesignated at 61 FR 4750, Feb. 8, 1996]




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                                Bureau of Land Management, Interior                                                            § 3103.4–3

                                § 3103.4–3 Heavy oil royalty reduc-                       ments (sales receipts) to document the
                                     tions.                                               weighted average API gravity for a
                                   (a)(1) A heavy oil well property is any                property.
                                Federal lease or portion thereof seg-                       (2) The operator must determine the
                                regated     for   royalty    purposes,   a                weighted average API gravity for a
                                communitization area, or a unit par-                      property by averaging (adjusted to rate
                                ticipating area, operated by the same                     of production) the API gravities re-
                                operator, that produces crude oil with                    ported on the operator’s Purchaser’s
                                a weighted average gravity of less than                   Statement for the last 3 calendar
                                20 degrees as measured on the Amer-                       months preceding the operator’s writ-
                                ican Petroleum Institute (API) scale.                     ten notice of intent to seek a royalty
                                   (2) An oil completion is a completion                  rate reduction, during each of which at
                                from which the energy equivalent of                       least one sale was held. This is shown
                                the oil produced exceeds the energy                       in the following 3 illustrations:
                                equivalent of the gas produced (includ-                     (i) If a property has oil sales every
                                ing the entrained liquefiable hydro-                      month prior to requesting the royalty
                                carbons) or any completion producing                      rate reduction in October of 1996, the
                                oil and less than 60 MCF of gas per day.                  operator must submit Purchaser’s
                                   (b) Heavy oil well property royalty                    Statements for July, August, and Sep-
                                rate reductions will be administered                      tember of 1996;
                                according to the following require-                         (ii) If a property has sales only every
                                ments and procedures:                                     6 months, during the months of March
                                   (1) The Bureau of Land Management                      and September, prior to requesting the
                                requires no specific application form                     rate reduction in October of 1996, the
                                for the benefits under paragraph (a) of                   operator must submit Purchaser’s
                                this section for heavy oil well prop-                     Statements for the months of Sep-
                                erties. However, the operator/payor                       tember 1995, and March and September
                                must notify, in writing, the proper                       1996; and
                                BLM office that it is seeking a heavy                       (iii) If a property has multiple sales
                                oil royalty rate reduction. The letter                    each month, the operator must submit
                                must contain the serial number of the                     Purchaser’s Statements for every sale
                                affected leases (or, as appropriate, the                  for the 3 entire calendar months imme-
                                communitization agreement number or                       diately preceding the request for a rate
                                the unit agreement name); the names                       reduction.
                                of the operators for each lease; the cal-                   (3) The following equation must be
                                culated new royalty rate as determined                    used by the operator/payor for calcu-
                                under paragraph (b)(2) of this section;                   lating the weighted average API grav-
                                and copies of the Purchaser’s State-                      ity for a heavy oil well property:



                                   (V1 × G1 ) + (V2 × G 2 ) + (Vn × G n ) = Weighted Average API gravity for a property
                                                 V1 + V2 + Vn

                                Where:                                                    G2=Average Gravity (degrees) of oil produced
                                V 1=Average Production (bbls) of Well #1 over              from Well #2 over the last 3 calendar
                                 the last 3 calendar months of sales                       months of sales
                                                                                          Gn=Average Gravity (degrees) of each addi-
                                V2=Average Production (bbls) of Well #2 over
                                                                                           tional well (G3, G4, etc.) over the last 3 cal-
                                 the last 3 calendar months of sales
                                                                                           endar months of sales
                                Vn=Average Production (bbls) of each addi-
                                 tional well (V3, V4, etc.) over the last 3 cal-            Example: Lease ‘‘A’’ has 3 wells producing at
                                 endar months of sales                                    the following average rates over 3 sales
                                G1=Average Gravity (degrees) of oil produced              months with the following associated aver-
                                 from Well #1 over the last 3 calendar                    age gravities: Well #1, 4,000 bbls, 13° API;
                                                                                          Well #2, 6000 bbls, 21° API; Well #3, 2,000 bbls,
                                 months of sales
                                                                                          14° API. Using the equation above—




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                                § 3103.4–3                                                                                                      43 CFR Ch. II (10–1–04 Edition)

                                     ( 4,000 × 13) + (6,000 × 21) + (2,000 × 14)
                                                                                 = 17.2 Weighted Average API gravity for property
                                              ( 4,000 + 6,000 + 2,000)


                                  (4) For those properties subject to a                                                        ROYALTY RATE REDUCTION FOR HEAVY OIL—
                                communitization agreement or a unit                                                                          Continued
                                participating area, the weighted aver-
                                                                                                                                                                                                      Royalty Rate
                                age API oil gravity for the lands dedi-                                                        Weighted average API gravity (degrees)                                  (percent)
                                cated to that specific communitization
                                agreement or unit participating area                                                       15   ...................................................................            8.2
                                                                                                                           16   ...................................................................            9.1
                                must be determined in the manner pre-                                                      17   ...................................................................            9.9
                                scribed in paragraph (b)(3) of this sec-                                                   18   ...................................................................           10.8
                                tion and assigned to all property sub-                                                     19   ...................................................................           11.6
                                                                                                                           20   ...................................................................           12.5
                                ject to Federal royalties in the
                                communitization agreement or unit                                                            (iii) New royalty rate effective date.
                                participating area.                                                                        The new royalty rate will be effective
                                  (5) The operator/payor must use the                                                      on the first day of production 2 months
                                following procedures in order to obtain                                                    after BLM receives notification by the
                                a royalty rate reduction under this sec-                                                   operator/payor. The rate will apply to
                                tion:                                                                                      all oil production from the property for
                                  (i) Qualifying royalty rate determina-                                                   the next 12 months (plus the 2 calendar
                                tion.                                                                                      month grace period during which the
                                  (A) The operator/payor must cal-                                                         next 12 months’ royalty rate is deter-
                                culate the weighted average API grav-                                                      mined in the next year). If the API oil
                                ity for the property proposed for the                                                      gravity is 20 degrees or greater, the
                                royalty rate reduction in order to                                                         royalty rate will be the rate in the
                                verify that the property qualifies as a                                                    lease terms.
                                heavy oil well property.
                                  (B) Properties that have removed or                                                        Example: BLM receives notification from
                                sold oil less than 3 times in their pro-                                                   an operator on June 8, 1996. There is a two
                                                                                                                           month period before new royalty rate is ef-
                                ductive life may still qualify for this                                                    fective—July and August. New royalty rate
                                royalty rate reduction. However, no ad-                                                    is effective September 1, 1996.
                                ditional royalty reductions will be
                                granted until the property has a sales                                                       (iv) Royalty rate determinations in sub-
                                history of at least 3 production months                                                    sequent years.
                                (see paragraph (b)(2) of this section).                                                      (A) At the end of each 12-month pe-
                                  (ii) Calculating the qualifying royalty                                                  riod, beginning on the first day of the
                                rate. If the Federal leases or portions                                                    calendar month the royalty rate reduc-
                                thereof (e.g., communitization or unit                                                     tion went into effect, the operator/
                                agreements) qualify as heavy oil prop-                                                     payor must determine the weighted av-
                                erty, the operator/payor must use the                                                      erage API oil gravity for the property
                                weighted average API gravity rounded                                                       for that period. The operator/payor
                                down to the next whole degree (e.g.,                                                       must then determine the royalty rate
                                11.7 degrees API becomes 11 degrees),                                                      for the following year using the table
                                and determine the appropriate royalty                                                      in paragraph (b)(5)(ii) of this section.
                                rate from the following table:                                                               (B) The operator/payor must notify
                                                                                                                           BLM of its determinations under this
                                     ROYALTY RATE REDUCTION FOR HEAVY OIL                                                  paragraph and paragraph (b)(5)(iv)(A)
                                                                                                                           of this section. The new royalty rate
                                                                                                          Royalty Rate
                                   Weighted average API gravity (degrees)                                  (percent)       (effective for the next 12 month period)
                                                                                                                           will become effective the first day of
                                6 .....................................................................             0.5    the third month after the prior 12
                                7 .....................................................................             1.4
                                8 .....................................................................             2.2
                                                                                                                           month period comes to a close, and will
                                9 .....................................................................             3.1    remain effective for 12 calendar months
                                10 ...................................................................              3.9    (plus the 2 calendar month grace period
                                11 ...................................................................              4.8    during which the next 12 months’ roy-
                                12 ...................................................................              5.6
                                13 ...................................................................              6.5    alty rate is determined in the next
                                14 ...................................................................              7.4    year). Notification must include copies

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                                Bureau of Land Management, Interior                                                            § 3103.4–3

                                of the Purchaser’s Statements (sales                      adulterated by the operator/payor. Ter-
                                receipts) and be mailed to the proper                     minations of royalty rate reductions
                                BLM office. If the operator does not no-                  for individual properties will be effec-
                                tify the BLM of the new royalty rate                      tive on the effective date of the royalty
                                within 60 days after the end of the sub-                  rate reduction resulting from a manip-
                                ject 12-month period, the royalty rate                    ulated or adulterated API oil gravity
                                for the heavy oil well property will re-                  so that the termination will be retro-
                                turn to the rate in the lease terms.                      active to the effective date of the im-
                                  Example: On September 30, 1997, at the end              proper reduction. The operator/payor
                                of a 12-month royalty reduction period, the               must pay the difference in royalty re-
                                operator/payor determines what the weight-                sulting from the retroactive applica-
                                ed average API oil gravity for the property               tion of the non-manipulated rate. The
                                for that period has been. The operator/payor              late payment or underpayment charges
                                then determines the new royalty rate for the              will assessed in accordance with 30
                                next 12 month using the table in paragraph                CFR 218.102.
                                (b)(5)(ii) of this section. Given that there is a
                                2-month delay period for the operator/payor
                                                                                            (6) The BLM may suspend or termi-
                                to calculate the new royalty rate, the new                nate all royalty reductions granted
                                royalty rate would be effective December 1,               under this paragraph (b) and terminate
                                1997 through November 30, 1998 (plus the 2                the availability of further heavy oil
                                calendar month grace period during which                  royalty relief under this section—
                                the next 12 months’ royalty rate is deter-                  (i) Upon 6 month’s notice in the FED-
                                mined—December 1, 1998 through January 31,                ERAL REGISTER when BLM determines
                                1999).                                                    that the average oil price has remained
                                  (v) Prohibition. Any heavy oil prop-                    above $24 per barrel over a period of 6
                                erty reporting an API average oil grav-                   consecutive months (based on the WTI
                                ity determined by BLM to have re-                         Crude average posted prices and ad-
                                sulted from any manipulation of nor-                      justed for inflation using the implicit
                                mal production or adulteration of oil                     price deflator for gross national prod-
                                sold from the property will not receive                   uct with 1991 as the base year), or
                                the benefit of a royalty rate reduction                     (ii) After September 10, 1999, if the
                                under this paragraph (b).                                 Secretary determines the royalty rate
                                  (vi) Certification. The operator/payor                  reductions authorized by this para-
                                must use the applicable royalty rate                      graph (b) have not been effective in re-
                                when submitting the required royalty                      ducing the loss of otherwise recover-
                                reports/payments to the Minerals Man-                     able reserves. This will be determined
                                agement Service (MMS). In submitting                      by evaluating the expected versus the
                                royalty reports/payments using a roy-                     actual abandonment rate, the number
                                alty rate reduction authorized by this                    of enhanced recovery projects, and the
                                paragraph (b), the operator/payor must                    amount of operator reinvestment in
                                certify that the API oil gravity for the                  heavy oil production that can be at-
                                initial and subsequent 12-month peri-                     tributed to this rule.
                                ods was not subject to manipulation or                      (7) The heavy oil well property roy-
                                adulteration and the royalty rate was                     alty rate reduction applies to all Fed-
                                determined in accordance with the re-                     eral oil produced from a heavy oil prop-
                                quirements and procedures of this                         erty.
                                paragraph (b).                                              (8) If the lease royalty rate is lower
                                  (vii) Agency action. If an operator/                    than the benefits provided in this
                                payor incorrectly calculates the roy-                     heavy oil well property royalty rate re-
                                alty rate, the BLM will determine the                     duction program, the lease rate pre-
                                correct rate and notify the operator/                     vails.
                                payor in writing. Any additional royal-                     (9) If the property qualifies for a
                                ties due are payable to MMS imme-                         stripper well property royalty rate re-
                                diately upon receipt of this notice.                      duction, as well as a heavy oil well
                                Late    payment       or  underpayment                    property reduction, the lower of the
                                charges will be assessed in accordance                    two rates applies.
                                with 30 CFR 218.102. The BLM will ter-                      (10) The operator/payor must sepa-
                                minate a royalty rate reduction for a                     rately calculate the royalty for gas
                                property if BLM determines that the                       production (including condensate pro-
                                API oil gravity was manipulated or                        duced in association with gas) from oil

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                                § 3103.4–4                                                            43 CFR Ch. II (10–1–04 Edition)

                                completions using the lease royalty                       shall not be suspended during any pe-
                                rate.                                                     riod of suspension of operations only or
                                  (11) The minimum royalty provisions                     suspension of production only.
                                of § 3103.3–2 will continue to apply.                       (e) Where all operations and produc-
                                [61 FR 4750, Feb. 8, 1996]                                tion are suspended on a lease on which
                                                                                          there is a well capable of producing in
                                § 3103.4–4 Suspension of operations                       paying quantities and the authorized
                                     and/or production.                                   officer approves resumption of oper-
                                   (a) A suspension of all operations and                 ations and production, such resump-
                                production may be directed or con-                        tion shall be regarded as terminating
                                sented to by the authorized officer only                  the suspension, including the suspen-
                                in the interest of conservation of nat-                   sion of rental and minimum royalty
                                ural resources. A suspension of oper-                     payments, as provided in paragraph (d)
                                ations only or a suspension of produc-                    of this section.
                                tion only may be directed or consented                      (f) The relief authorized under this
                                to by the authorized officer in cases                     section also may be obtained for any
                                where the lessee is prevented from op-                    Federal lease included within an ap-
                                erating on the lease or producing from                    proved unit or cooperative plan of de-
                                the lease, despite the exercise of due                    velopment and operation. Unit or coop-
                                care and diligence, by reason of force                    erative plan obligations shall not be
                                majeure, that is, by matters beyond the                   suspended by relief obtained under this
                                reasonable control of the lessee. Appli-                  section but shall be suspended only in
                                cations for any suspension shall be                       accordance with the terms and condi-
                                filed in the proper BLM office. Com-                      tions of the specific unit or cooperative
                                plete information showing the neces-                      plan.
                                sity of such relief shall be furnished.
                                                                                          [53 FR 17354, May 16, 1988. Redesignated at 61
                                   (b) The term of any lease shall be ex-                 FR 4750, Feb. 8, 1996]
                                tended by adding thereto the period of
                                the suspension, and no lease shall be
                                deemed to expire during any suspen-                                   Subpart 3104—Bonds
                                sion.
                                                                                          § 3104.1    Bond obligations.
                                   (c) A suspension shall take effect as
                                of the time specified in the direction or                   (a) Prior to the commencement of
                                assent of the authorized officer, in ac-                  surface disturbing activities related to
                                cordance with the provisions of § 3165.1                  drilling operations, the lessee, oper-
                                of this title.                                            ating rights owner (sublessee), or oper-
                                   (d) Rental and minimum royalty pay-                    ator shall submit a surety or a per-
                                ments shall be suspended during any                       sonal bond, conditioned upon compli-
                                period of suspension of all operations                    ance with all of the terms and condi-
                                and production directed or assented to                    tions of the entire leasehold(s) covered
                                by the authorized officer beginning                       by the bond, as described in this sub-
                                with the first day of the lease month in                  part. The bond amounts shall be not
                                which the suspension of all operations                    less than the minimum amounts de-
                                and production becomes effective, or if                   scribed in this subpart in order to en-
                                the suspension of all operations and                      sure compliance with the act, including
                                production becomes effective on any                       complete and timely plugging of the
                                date other than the first day of a lease                  well(s), reclamation of the lease
                                month, beginning with the first day of                    area(s), and the restoration of any
                                the lease month following such effec-                     lands or surface waters adversely af-
                                tive date. Rental and minimum royalty                     fected by lease operations after the
                                payments shall resume on the first day                    abandonment or cessation of oil and
                                of the lease month in which the suspen-                   gas operations on the lease(s) in ac-
                                sion of all operations and production is                  cordance with, but not limited to, the
                                terminated. Where rentals are cred-                       standards and requirements set forth
                                itable against royalties and have been                    in §§ 3162.3 and 3162.5 of this title and
                                paid in advance, proper credit shall be                   orders issued by the authorized officer.
                                allowed on the next rental or royalty                       (b) Surety bonds shall be issued by
                                due under the terms of the lease. Rent-                   qualified surety companies approved by
                                al and minimum royalty payments                           the Department of the Treasury (see

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                                Bureau of Land Management, Interior                                                              § 3104.3

                                Department of the Treasury Circular                       tions or failure to file a replacement in
                                No. 570).                                                 accordance with paragraph (c)(5)(ii) of
                                  (c) Personal bonds shall be accom-                      this section;
                                panied by:                                                  (iv) The initial expiration date of the
                                  (1) Certificate of deposit issued by a                  letter of credit shall be at least 1 year
                                financial institution, the deposits of                    following the date it is filed in the
                                which are Federally insured, explicitly                   proper BLM office; and
                                granting the Secretary full authority                       (v) The letter of credit shall contain
                                to demand immediate payment in case                       a provision for automatic renewal for
                                of default in the performance of the
                                                                                          periods of not less than 1 year in the
                                terms and conditions of the lease. The
                                                                                          absence of notice to the proper BLM of-
                                certificate shall explicitly indicate on
                                its face that Secretarial approval is re-                 fice at least 90 days prior to the origi-
                                quired prior to redemption of the cer-                    nally stated or any extended expiration
                                tificate of deposit by any party;                         date.
                                  (2) Cashier’s check;                                    [53 FR 22838, June 17, 1988]
                                  (3) Certified check;
                                  (4) Negotiable Treasury securities of                   § 3104.2    Lease bond.
                                the United States of a value equal to
                                                                                            A lease bond may be posted by a les-
                                the amount specified in the bond. Ne-
                                                                                          see, owner of operating rights (subles-
                                gotiable Treasury securities shall be
                                accompanied by a proper conveyance to                     see), or operator in an amount of not
                                the Secretary of full authority to sell                   less than $10,000 for each lease condi-
                                such securities in case of default in the                 tioned upon compliance with all of the
                                performance of the terms and condi-                       terms of the lease. Where 2 or more
                                tions of a lease; or                                      principals have interests in different
                                  (5) Irrevocable letter of credit issued                 formations or portions of the lease,
                                by a financial institution, the deposits                  separate bonds may be posted. The op-
                                of which are Federally insured, for a                     erator on the ground shall be covered
                                specific term, identifying the Sec-                       by a bond in his/her own name as prin-
                                retary as sole payee with full authority                  cipal, or a bond in the name of the les-
                                to demand immediate payment in the                        see or sublessee, provided that a con-
                                case of default in the performance of                     sent of the surety, or the obligor in the
                                the terms and conditions of a lease.                      case of a personal bond, to include the
                                  Letters of credit shall be subject to                   operator under the coverage of the
                                the following conditions:                                 bond is furnished to the Bureau office
                                  (i) The letter of credit shall be issued                maintaining the bond.
                                only by a financial institution orga-
                                nized or authorized to do business in                     [53 FR 22839, June 17, 1988]
                                the United States;
                                  (ii) The letter of credit shall be irrev-               § 3104.3 Statewide         and      nationwide
                                ocable during its term. A letter of cred-                     bonds.
                                it used as security for any lease upon                      (a) In lieu of lease bonds, lessees,
                                which drilling has taken place and                        owners of operating rights (sublessees),
                                final approval of all abandonment has                     or operators may furnish a bond in an
                                not been given, or as security for a                      amount of not less than $25,000 cov-
                                statewide or nationwide lease bond,                       ering all leases and operations in any
                                shall be forfeited and shall be collected                 one State.
                                by the authorized officer if not re-                        (b) In lieu of lease bonds or statewide
                                placed by other suitable bond or letter                   bonds, lessees, owners of operating
                                of credit at least 30 days before its ex-                 rights (sublessees), or operators may
                                piration date;                                            furnish a bond in an amount of not less
                                  (iii) The letter of credit shall be pay-
                                                                                          than $150,000 covering all leases and op-
                                able to the Bureau of Land Manage-
                                                                                          erations nationwide.
                                ment upon demand, in part or in full,
                                upon receipt from the authorized offi-                    [53 FR 22839, June 17, 1988; 53 FR 31958, Aug.
                                cer of a notice of attachment stating                     22, 1988]
                                the basis therefor, e.g., default in com-
                                pliance with the lease terms and condi-

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                                § 3104.4                                                              43 CFR Ch. II (10–1–04 Edition)

                                § 3104.4 Unit operator’s bond.                            owed to the lessor due to previous vio-
                                                                                          lations remaining outstanding.
                                   In lieu of individual lease, statewide,
                                or nationwide bonds for operations con-                   [53 FR 22839, June 17, 1988]
                                ducted on leases committed to an ap-
                                proved unit agreement, the unit oper-                     § 3104.6 Where filed and number of
                                ator may furnish a unit operator bond                         copies.
                                in the manner set forth in § 3104.1 of                       All bonds shall be filed in the proper
                                this title. The amount of such a bond                     BLM office on a current form approved
                                shall be determined by the authorized                     by the Director. A single copy executed
                                officer. The format for such a surety                     by the principal or, in the case of sur-
                                bond is set forth in § 3186.2 of this title.              ety bonds, by both the principal and an
                                Where a unit operator is covered by a                     acceptable surety is sufficient. A bond
                                nationwide or statewide bond, coverage                    filed on a form not currently in use
                                for such a unit may be provided by a                      shall be acceptable, unless such form
                                rider to such bond specifically covering                  has been declared obsolete by the Di-
                                the unit and increasing the bond in                       rector prior to the filing of such bond.
                                such amount as may be determined ap-                      For purposes of §§ 3104.2 and 3104.3(a) of
                                propriate by the authorized officer.                      this title, bonds or bond riders shall be
                                                                                          filed in the Bureau State office having
                                [53 FR 22839, June 17, 1988]
                                                                                          jurisdiction of the lease or operations
                                § 3104.5 Increased amount of bonds.                       covered by the bond or rider. Nation-
                                                                                          wide bonds may be filed in any Bureau
                                   (a) When an operator desiring ap-                      State office (See § 1821.2–1).
                                proval of an Application for Permit to
                                Drill has caused the Bureau to make a                     [53 FR 17354, May 16, 1988]
                                demand for payment under a bond or
                                other financial guarantee within the 5-                   § 3104.7 Default.
                                year period prior to submission of the                       (a) Where, upon a default, the surety
                                Application for Permit to Drill, due to                   makes a payment to the United States
                                failure to plug a well or reclaim lands                   of an obligation incurred under a lease,
                                completely in a timely manner, the au-                    the face amount of the surety bond or
                                thorized officer shall require, prior to                  personal bonds and the surety’s liabil-
                                approval of the Application for Permit                    ity thereunder shall be reduced by the
                                to Drill, a bond in an amount equal to                    amount of such payment.
                                the costs as estimated by the author-                        (b) After default, where the obliga-
                                ized officer of plugging the well and re-                 tion in default equals or is less than
                                claiming the disturbed area involved in                   the face amount of the bond(s), the
                                the proposed operation, or in the min-                    principal shall either post a new bond
                                imum amount as prescribed in this sub-                    or restore the existing bond(s) to the
                                part, whichever is greater.                               amount previously held or a larger
                                   (b) The authorized officer may re-                     amount as determined by the author-
                                quire an increase in the amount of any                    ized officer. In lieu thereof, the prin-
                                bond whenever it is determined that                       cipal may file separate or substitute
                                the operator poses a risk due to fac-                     bonds for each lease covered by the de-
                                tors, including, but not limited to, a                    ficient bond(s). Where the obligation
                                history of previous violations, a notice                  incurred exceeds the face amount of
                                from the Service that there are uncol-                    the bond(s), the principal shall make
                                lected royalties due, or the total cost                   full payment to the United States for
                                of plugging existing wells and reclaim-                   all obligations incurred that are in ex-
                                ing lands exceeds the present bond                        cess of the face amount of the bond(s)
                                amount based on the estimates deter-                      and shall post a new bond in the
                                mined by the authorized officer. The                      amount previously held or such larger
                                increase in bond amount may be to any                     amount as determined by the author-
                                level specified by the authorized offi-                   ized officer. The restoration of a bond
                                cer, but in no circumstances shall it                     or posting of a new bond shall be made
                                exceed the total of the estimated costs                   within 6 months or less after receipt of
                                of plugging and reclamation, the                          notice from the authorized officer.
                                amount of uncollected royalties due to                    Failure to comply with these require-
                                the Service, plus the amount of monies                    ments may subject all leases covered

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                                Bureau of Land Management, Interior                                                            § 3105.2–3

                                by such bond(s) to cancellation under                     § 3105.2–3    Requirements.
                                the provisions of § 3108.3 of this title.
                                                                                            (a) The communitization or drilling
                                [48 FR 33662, July 22, 1983, as amended at 53             agreement shall describe the separate
                                FR 17354, May 16, 1988]                                   tracts comprising the drilling or spac-
                                                                                          ing unit, shall show the apportionment
                                § 3104.8 Termination of period of li-                     of the production or royalties to the
                                    ability.
                                                                                          several parties and the name of the op-
                                  The authorized officer shall not give                   erator, and shall contain adequate pro-
                                consent to termination of the period of                   visions for the protection of the inter-
                                liability of any bond unless an accept-                   ests of the United States. The agree-
                                able replacement bond has been filed or                   ment shall be signed by or on behalf of
                                until all the terms and conditions of                     all necessary parties and shall be filed
                                the lease have been met.                                  prior to the expiration of the Federal
                                [48 FR 33662, July 22, 1983, as amended at 53             lease(s) involved in order to confer the
                                FR 17355, May 16, 1988; 53 FR 31867, Aug. 22,             benefits of the agreement upon such
                                1988]                                                     lease(s).
                                                                                            (b) The agreement shall be effective
                                     Subpart 3105—Cooperative                             as to the Federal lease(s) involved only
                                       Conservation Provisions                            if approved by the authorized officer.
                                                                                          Approved communitization agreements
                                § 3105.1 Cooperative           or    unit      agree-     are considered effective from the date
                                    ment.                                                 of the agreement or from the date of
                                  The suggested contents of such an                       the onset of production from the
                                agreement and the procedures for ob-                      communitized formation, whichever is
                                taining approval are contained in 43                      earlier, except when the spacing unit is
                                CFR part 3180.                                            subject to a State pooling order after
                                                                                          the date of first sale, then the effective
                                § 3105.2 Communitization              or    drilling      date of the agreement may be the ef-
                                    agreements.                                           fective date of the order.
                                                                                            (c) The public interest requirement
                                § 3105.2–1     Where filed.                               for an approved communitization
                                  (a) Requests to communitize separate                    agreement shall be satisfied only if the
                                tracts shall be filed, in triplicate, with                well dedicated thereto has been com-
                                the proper BLM office.                                    pleted     for   production       in   the
                                  (b) Where a duly executed agreement                     communitized formation at the time
                                is submitted for final Departmental ap-                   the agreement is approved or, if not,
                                proval, a minimum of 3 signed counter-                    that the operator thereafter com-
                                parts shall be submitted. If State lands                  mences and/or diligently continues
                                are involved, 1 additional counterpart                    drilling operations to a depth sufficient
                                shall be submitted.                                       to test the communitized formation or
                                                                                          establish to the satisfaction of the au-
                                § 3105.2–2     Purpose.                                   thorized officer that further drilling of
                                  When a lease or a portion thereof                       the well would be unwarranted or im-
                                cannot be independently developed and                     practicable. If an application is re-
                                operated in conformity with an estab-                     ceived for voluntary termination of a
                                lished well-spacing or well-develop-                      communitization agreement during its
                                ment program, the authorized officer                      fixed term or such an agreement auto-
                                may approve communitization or drill-                     matically expires at the end of its fixed
                                ing agreements for such lands with                        term without the public interest re-
                                other lands, whether or not owned by                      quirement having been satisfied, the
                                the United States, upon a determina-                      approval of that agreement by the au-
                                tion that it is in the public interest.                   thorized officer shall be invalid and no
                                Operations or production under such an                    Federal lease shall be eligible for ex-
                                agreement shall be deemed to be oper-                     tension under § 3107.4 of this title.
                                ations or production as to each lease
                                                                                          [53 FR 17355, May 16, 1988]
                                committed thereto.

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                                § 3105.3                                                              43 CFR Ch. II (10–1–04 Edition)

                                § 3105.3 Operating, drilling or develop-                  § 3105.4–3 Requirements.
                                    ment contracts.                                          The application shall show a reason-
                                § 3105.3–1     Where filed.                               able need for the combination and that
                                                                                          it will not result in any concentration
                                  A contract submitted for approval                       of control over the production or sale
                                under this section shall be filed with                    of oil and gas which would be incon-
                                the proper BLM office, together with                      sistent with the anti-monopoly provi-
                                enough copies to permit retention of 5                    sions of law.
                                copies by the Department after ap-
                                proval.                                                   § 3105.4–4 Rights-of-way.
                                                                                             Rights-of-way for pipelines may be
                                § 3105.3–2     Purpose.                                   granted as provided in part 2880 of this
                                  Approval of operating, drilling or de-                  title.
                                velopment contracts ordinarily shall be
                                granted only to permit operators or                       § 3105.5 Subsurface storage of oil and
                                pipeline companies to enter into con-                         gas.
                                tracts with a number of lessees suffi-                    § 3105.5–1 Where filed.
                                cient to justify operations on a scale
                                large enough to justify the discovery,                       (a) Applications for subsurface stor-
                                development, production or transpor-                      age shall be filed in the proper BLM of-
                                tation of oil or gas and to finance the                   fice.
                                same.                                                        (b) Enough copies of the final agree-
                                                                                          ment signed by all the parties in inter-
                                § 3105.3–3     Requirements.                              est shall be submitted to permit the re-
                                                                                          tention of 5 copies by the Department
                                  The contract shall be accompanied                       after approval.
                                by a statement showing all the inter-
                                ests held by the contractor in the area                   § 3105.5–2 Purpose.
                                or field and the proposed or agreed plan
                                                                                             In order to avoid waste and to pro-
                                for development and operation of the
                                                                                          mote conservation of natural re-
                                field. All the contracts held by the
                                                                                          sources, the Secretary, upon applica-
                                same contractor in the area or field
                                                                                          tion by the interested parties, may au-
                                shall be submitted for approval at the
                                                                                          thorize the subsurface storage of oil
                                same time and full disclosure of the                      and gas, whether or not produced from
                                projects made.                                            lands owned by the United States.
                                § 3105.4 Combination for joint oper-                      Such authorization shall provide for
                                    ations or for transportation of oil.                  the payment of such storage fee or
                                                                                          rental on the stored oil or gas as may
                                § 3105.4–1     Where filed.                               be determined adequate in each case,
                                                                                          or, in lieu thereof, for a royalty other
                                  An application under this section to-
                                                                                          than that prescribed in the lease when
                                gether with sufficient copies to permit
                                                                                          such stored oil or gas is produced in
                                retention of 5 copies by the Depart-
                                                                                          conjunction with oil or gas not pre-
                                ment after approval shall be filed with
                                                                                          viously produced.
                                the proper BLM office.
                                [48 FR 33662, July 22, 1983, as amended at 49             § 3105.5–3 Requirements.
                                FR 2113, Jan. 18, 1984]                                      The agreement shall disclose the
                                                                                          ownership of the lands involved, the
                                § 3105.4–2     Purpose.                                   parties in interest, the storage fee,
                                  Upon obtaining approval of the au-                      rental or royalty offered to be paid for
                                thorized officer, lessees may combine                     such storage and all essential informa-
                                their interests in leases for the purpose                 tion showing the necessity for such
                                of constructing and carrying on the                       project.
                                business of a refinery or of establishing
                                and constructing as a common carrier                      § 3105.5–4 Extension of lease term.
                                a pipeline or lines or railroads to be op-                   Any lease used for the storage of oil
                                erated and used by them jointly in the                    or gas shall be extended for the period
                                transportation of oil or gas from their                   of storage under an approved agree-
                                wells or from the wells of other lessees.                 ment. The obligation to pay annual

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                                Bureau of Land Management, Interior                                                            § 3106.4–1

                                lease rent continues during the ex-                       filed within 90 days from the date of its
                                tended period.                                            execution. The 90-day filing period
                                                                                          shall begin on the date the transferor
                                § 3105.6 Consolidation of leases.                         signs and dates the transfer. If the
                                   Consolidation of leases may be ap-                     transfer is filed after the 90th day, the
                                proved by the authorized officer if it is                 authorized      officer   may      require
                                determined that there is sufficient jus-                  verification that the transfer is still in
                                tification and it is in the public inter-                 force and effect. A transfer of produc-
                                est. Each application for consolidation                   tion payments or overriding royalty or
                                of leases shall be considered on its own                  other similar payments, arrangements,
                                merits. Leases to different lessees for                   or interests shall be filed in the proper
                                different terms, rental and royalty                       BLM office but shall not require ap-
                                rates, and those containing provisions                    proval.
                                required by law that cannot be rec-                          (c) No transfer of an offer to lease or
                                onciled, shall not be consolidated. The                   interest in a lease shall be approved
                                effective date of a consolidated lease                    prior to the issuance of the lease.
                                shall be that of the oldest lease in-                     [53 FR 22839, June 17, 1988]
                                volved in the consolidation.
                                                                                          § 3106.2 Qualifications of transferees.
                                [53 FR 17355, May 16, 1988]
                                                                                             Transferees shall comply with the
                                Subpart 3106—Transfers by As-                             provisions of subpart 3102 of this title
                                                                                          and post any bond that may be re-
                                   signment, Sublease or Other-                           quired.
                                   wise
                                                                                          § 3106.3 Filing fees.
                                  SOURCE: 53 FR 17355, May 16, 1988, unless                  Each transfer of record title or of op-
                                otherwise noted.                                          erating rights (sublease) or each trans-
                                § 3106.1 Transfers, general.                              fer of royalty interest, payment out of
                                                                                          production or similar interest for each
                                   (a) Leases may be transferred by as-                   lease, when filed, shall be accompanied
                                signment or sublease as to all or part                    by a nonrefundable filing fee of $25. A
                                of the acreage in the lease or as to ei-                  transfer not accompanied by the re-
                                ther a divided or undivided interest                      quired filing fee shall not be accepted
                                therein. An assignment of a separate                      and shall be returned.
                                zone or deposit, or of part of a legal
                                subdivision, shall be disapproved.                        § 3106.4    Forms.
                                   (b) An assignment of less than 640
                                acres outside Alaska or of less than                      § 3106.4–1 Transfers of record title and
                                2,560 acres within Alaska shall be dis-                        of operating rights (subleases).
                                approved unless the assignment con-                          Each transfer of record title or of an
                                stitutes the entire lease or is dem-                      operating right (sublease) shall be filed
                                onstrated to further the development                      with the proper BLM office on a cur-
                                of oil and gas to the satisfaction of the                 rent form approved by the Director or
                                authorized officer. Execution and sub-                    exact reproductions of the front and
                                mission of a request for approval of                      back of such form. A transfer filed on a
                                such an assignment shall certify that                     form not currently in use shall be ac-
                                the assignment would further the de-                      ceptable, unless such form has been de-
                                velopment of oil and gas, subject to the                  clared obsolete by the Director prior to
                                provisions of § 3102.5–3 of this title. The               the filing of the transfer. A separate
                                rights of the transferee to a lease or an                 form for each transfer, in triplicate,
                                interest therein shall not be recognized                  originally executed shall be filed for
                                by the Department until the transfer                      each lease out of which a transfer is
                                has been approved by the authorized of-                   made. Only 1 originally executed copy
                                ficer. A transfer may be withdrawn in                     of a transferee’s request for approval
                                writing, signed by the transferor and                     for each transfer shall be required, in-
                                the transferee, if the transfer has not                   cluding in those instances where sev-
                                been approved by the authorized offi-                     eral transfers to a transferee have been
                                cer. A request for approval of a transfer                 submitted at the same time (See also
                                of a lease or interest in a lease shall be                § 3106.4–3). Copies of documents other

                                                                                     349



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                                § 3106.4–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                than the current form approved by the                     each lease may be limited to line items
                                Director shall not be submitted. How-                     pertaining to individual leases as long
                                ever, reference(s) to other documents                     as that line item includes the informa-
                                containing information affecting the                      tion required by paragraph (b) of this
                                terms of the transfer may be made on                      section.
                                the submitted form.                                         (d) A nonrefundable filing fee of $25
                                                                                          for each such interest transferred for
                                § 3106.4–2 Transfers of other interests,
                                     including royalty interests and pro-                 each lease, in accordance with the pro-
                                     duction payments.                                    visions of § 3106.3 of this title, shall ac-
                                                                                          company a mass transfer.
                                   (a) Each transfer of overriding roy-
                                alty interest, payment out of produc-                     § 3106.5    Description of lands.
                                tion or similar interests created or re-
                                served in a lease in conjunction with a                      Each transfer of record title shall de-
                                transfer of record title or of operating                  scribe the lands involved in the same
                                rights (sublease) shall be described for                  manner as the lands are described in
                                each lease on the current form when                       the lease or in the manner required by
                                filed.                                                    § 3110.5 of this title, except no land de-
                                   (b) Each transfer of overriding roy-                   scription is required when 100 percent
                                alty interest, payment out of produc-                     of the entire area encompassed within
                                tion or similar interests created or re-                  a lease is conveyed.
                                served in a lease independently of a
                                transfer of record title or of operating                  [48 FR 33662, July 22, 1983, as amended at 55
                                rights (sublease), if not filed on the                    FR 12350, Apr. 3, 1990]
                                current form, shall be described and
                                                                                          § 3106.6    Bonds.
                                shall include the transferee’s executed
                                statement as to his/her qualifications                    § 3106.6–1    Lease bond.
                                under subpart 3102 of this title. A sin-
                                gle executed copy of each such transfer                     Where a lease bond is maintained by
                                of other interests for each lease shall                   the lessee or operating rights owner
                                be filed with the proper BLM office.                      (sublessee) in connection with a par-
                                                                                          ticular lease, the transferee of record
                                § 3106.4–3 Mass transfers.                                title interest or operating rights in
                                   (a) A mass transfer may be utilized in                 such lease shall furnish, if bond cov-
                                lieu of the provisions of §§ 3106.4–1 and                 erage continues to be required, either a
                                3106.4–2 of this title when a transferor                  proper bond or consent of the surety
                                transfers interests of any type in a                      under the existing bond to become co-
                                large number of Federal leases to the                     principal on such bond if the trans-
                                same transferee.                                          feror’s bond does not expressly contain
                                   (b) Three originally executed copies                   such consent. Where bond coverage is
                                of the mass transfer shall be filed with                  provided by an operator, the new oper-
                                each proper BLM office administering                      ator shall furnish an appropriate re-
                                any lease affected by the mass transfer.                  placement bond or provide evidence of
                                The transfer shall be on a current form                   consent of the surety under the exist-
                                approved by the Director or an exact                      ing bond to become co-principal on
                                reproduction of both sides thereof, with                  such bond.
                                an exhibit attached to each copy list-
                                ing the following for each lease:                         § 3106.6–2    Statewide/nationwide bond.
                                   (1) The serial number;
                                   (2) The type and percent of interest                     If the transferee is maintaining a
                                being conveyed; and                                       statewide or nationwide bond, a lease
                                   (3) A description of the lands affected                bond shall not be required, but the
                                by the transfer in accordance with                        amount of the bond may be increased
                                § 3106.5 of this title.                                   to an amount determined by the au-
                                   (c) One reproduced copy of the form                    thorized officer in accordance with the
                                required by paragraph (b) of this sec-                    provisions of § 3104.5 of this title.
                                tion shall be filed with the proper BLM
                                office for each lease involved in the
                                mass transfer. A copy of the exhibit for

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                                Bureau of Land Management, Interior                                                            § 3106.8–1

                                § 3106.7     Approval of transfer.                        retained portion into separate leases.
                                                                                          Each resulting lease retains the anni-
                                § 3106.7–1 Failure to qualify.                            versary date and the terms and condi-
                                   No transfer of record title or of oper-                tions of the original lease. A transfer of
                                ating rights (sublease) shall be ap-                      an undivided record title interest or a
                                proved if the transferee or any other                     transfer of operating rights (sublease)
                                parties in interest are not qualified to                  shall not segregate the transferred and
                                hold the transferred interest(s), or if                   retained portions into separate leases.
                                the bond, should one be required, is in-
                                                                                          § 3106.7–6 If I acquire a lease by an as-
                                sufficient. Transfers are approved for                         signment or transfer, what obliga-
                                administrative purposes only. Approval                         tions do I agree to assume?
                                does not warrant or certify that either
                                party to a transfer holds legal or equi-                     (a) If you acquire record title interest
                                table title to a lease.                                   in a Federal lease, you agree to comply
                                                                                          with the terms of the original lease
                                § 3106.7–2 If I transfer my lease, what                   during your lease tenure. You assume
                                     is my continuing obligation?                         the responsibility to plug and abandon
                                   (a) You are responsible for per-                       all wells which are no longer capable of
                                forming all obligations under the lease                   producing, reclaim the lease site, and
                                until the date BLM approves an assign-                    remedy all environmental problems in
                                ment of your record title interest or                     existence and that a purchaser exer-
                                transfer of your operating rights.                        cising reasonable diligence should have
                                   (b) After BLM approves the assign-                     known at the time. You must also
                                ment or transfer, you will continue to                    maintain an adequate bond to ensure
                                be responsible for lease obligations                      performance of these responsibilities.
                                                                                             (b) If you acquire operating rights in
                                that accrued before the approval date,
                                                                                          a Federal lease, you agree to comply
                                whether or not they were identified at
                                                                                          with the terms of the original lease as
                                the time of the assignment or transfer.
                                                                                          it applies to the area or horizons in
                                This includes paying compensatory
                                                                                          which you acquired rights. You must
                                royalties for drainage. It also includes
                                                                                          plug and abandon all unplugged wells,
                                responsibility for plugging wells and
                                                                                          reclaim the lease site, and remedy all
                                abandoning facilities you drilled, in-
                                                                                          environmental problems in existence
                                stalled, or used before the effective
                                                                                          and that a purchaser exercising reason-
                                date of the assignment or transfer.
                                                                                          able diligence should have known at
                                [66 FR 1892, Jan. 10, 2001]                               the time you receive the transfer. You
                                                                                          must also maintain an adequate bond
                                § 3106.7–3 Lease account status.                          to ensure performance of these respon-
                                   A transfer of record title or of oper-                 sibilities.
                                ating rights (sublease) in a producing                    [66 FR 1892, Jan. 10, 2001]
                                lease shall not be approved unless the
                                lease account is in good standing.                        § 3106.8    Other types of transfers.
                                § 3106.7–4 Effective date of transfer.                    § 3106.8–1 Heirs and devisees.
                                   The signature of the authorized offi-                     (a) If an offeror, applicant, lessee or
                                cer on the official form shall constitute                 transferee dies, his/her rights shall be
                                approval of the transfer of record title                  transferred to the heirs, devisees, ex-
                                or of operating rights (sublease) which                   ecutor or administrator of the estate,
                                shall take effect as of the first day of                  as appropriate, upon the filing of a
                                the lease month following the date of                     statement that all parties are qualified
                                filing in the proper BLM office of all                    to hold a lease in accordance with sub-
                                documents and statements required by                      part 3102 of this title. No filing fee is
                                this subpart and an appropriate bond,                     required. A bond rider or replacement
                                if one is required.                                       bond may be required for any bond(s)
                                                                                          previously furnished by the decedent.
                                § 3106.7–5 Effect of transfer.                               (b) Any ownership or interest other-
                                   A transfer of record title to 100 per-                 wise forbidden by the regulations in
                                cent of a portion of the lease seg-                       this group which may be acquired by
                                regates the transferred portion and the                   descent, will, judgement or decree may

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                                § 3106.8–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                be held for a period not to exceed 2                      make in that particular area, given the
                                years after its acquisition. Any such                     existing knowledge of geologic and
                                forbidden ownership or interest held                      other pertinent facts. In drilling a new
                                for a period of more than 2 years after                   well on a lease or for the benefit of a
                                acquisition shall be subject to can-                      lease under the terms of an approved
                                cellation.                                                agreement or plan, it shall be taken to
                                                                                          a depth sufficient to penetrate at least
                                § 3106.8–2 Change of name.                                1 formation recognized in the area as
                                   A change of name of a lessee shall be                  potentially productive of oil or gas, or
                                reported to the proper BLM office. No                     where an existing well is reentered, it
                                filing fee is required. The notice of                     shall be taken to a depth sufficient to
                                name change shall be submitted in                         penetrate at least 1 new and deeper for-
                                writing and be accompanied by a list of                   mation recognized in the area as poten-
                                the serial numbers of the leases af-                      tially productive of oil or gas. The au-
                                fected by the name change. If a bond(s)                   thorized officer may determine that
                                has been furnished, change of name                        further drilling is unwarranted or im-
                                may be made by surety consent or a                        practicable.
                                rider to the original bond or by a re-
                                                                                          [48 FR 33662, July 22, 1983, as amended at 49
                                placement bond.
                                                                                          FR 2113, Jan. 18, 1984; 53 FR 17357, May 16,
                                § 3106.8–3 Corporate merger.                              1988; 53 FR 22839, June 17, 1988]

                                   Where a corporate merger affects                       § 3107.2    Production.
                                leases situated in a State where the
                                transfer of property of the dissolving                    § 3107.2–1    Continuation by production.
                                corporation to the surviving corpora-                       A lease shall be extended so long as
                                tion is accomplished by operation of
                                                                                          oil or gas is being produced in paying
                                law, no transfer of any affected lease
                                                                                          quantities.
                                interest is required. A notification of
                                the merger shall be furnished with a                      § 3107.2–2    Cessation of production.
                                list, by serial number, of all lease in-
                                terests affected. No filing fee is re-                      A lease which is in its extended term
                                quired. A bond rider or replacement                       because of production in paying quan-
                                bond conditioned to cover the obliga-                     tities shall not terminate upon ces-
                                tions of all affected corporations may                    sation of production if, within 60 days
                                be required by the authorized officer as                  thereafter, reworking or drilling oper-
                                a prerequisite to recognition of the                      ations on the leasehold are commenced
                                merger.                                                   and are thereafter conducted with rea-
                                                                                          sonable diligence during the period of
                                    Subpart 3107—Continuation,                            nonproduction. The 60-day period com-
                                                                                          mences upon receipt of notification
                                       Extension or Renewal                               from the authorized officer that the
                                § 3107.1 Extension by drilling.                           lease is not capable of production in
                                                                                          paying quantities.
                                   Any lease on which actual drilling
                                operations were commenced prior to                        [48 FR 33662, July 22, 1983, as amended at 53
                                the end of its primary term and are                       FR 17357, May 16, 1988; 53 FR 22840, June 17,
                                being diligently prosecuted at the end                    1988]
                                of the primary term or any lease which
                                is part of an approved communitization                    § 3107.2–3    Leases capable of produc-
                                                                                              tion.
                                agreement or cooperative or unit plan
                                of development or operation upon                            No lease for lands on which there is a
                                which such drilling takes place, shall                    well capable of producing oil or gas in
                                be extended for 2 years subject to the                    paying quantities shall expire because
                                rental being timely paid as required by                   the lessee fails to produce the same,
                                § 3103.2 of this title, and subject to the                unless the lessee fails to place the lease
                                provisions of § 3105.2–3 and § 3186.1 of                  in production within a period of not
                                this title, if applicable. Actual drilling                less than 60 days as specified by the au-
                                operations shall be conducted in a                        thorized officer after receipt of notice
                                manner that anyone seriously looking                      by certified mail from the authorized
                                for oil or gas could be expected to                       officer to do so. Such production shall

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                                Bureau of Land Management, Interior                                                            § 3107.5–2

                                be continued unless and until suspen-                     tion of such lease so committed, shall
                                sion of production is granted by the au-                  continue in force so long as committed
                                thorized officer.                                         to the plan, beyond the expiration date
                                [48 FR 33662, July 22, 1983, as amended at 53             of its primary term. This provision
                                FR 22840, June 17, 1988; 53 FR 31958, Aug. 22,            does not apply to that portion of any
                                1988]                                                     such lease which is not included in the
                                                                                          cooperative or unit plan unless the
                                § 3107.3 Extension for terms of cooper-                   lease was so committed prior to August
                                    ative or unit plan.
                                                                                          8, 1946.
                                § 3107.3–1 Leases committed to plan.
                                                                                          § 3107.4    Extension by elimination.
                                   Any lease or portion of a lease, ex-
                                cept as described in § 3107.3–3 of this                     Any lease eliminated from any ap-
                                title, committed to a cooperative or                      proved or prescribed cooperative or
                                unit plan that contains a general provi-                  unit plan or from any communitization
                                sion for allocation of oil or gas shall                   or drilling agreement authorized by the
                                continue in effect so long as the lease                   Act and any lease in effect at the ter-
                                or portion thereof remains subject to                     mination of such plan or agreement,
                                the plan; Provided, That there is pro-                    unless relinquished, shall continue in
                                duction of oil or gas in paying quan-                     effect for the original term of the lease
                                tities under the plan prior to the expi-                  or for 2 years after its elimination from
                                ration date of such lease.                                the plan or agreement or after the ter-
                                                                                          mination of the plan or agreement,
                                § 3107.3–2 Segregation of leases com-
                                    mitted in part.                                       whichever is longer, and for so long
                                                                                          thereafter as oil or gas is produced in
                                   Any lease committed after July 29,
                                                                                          paying quantities. No lease shall be ex-
                                1954, to any cooperative or unit plan,
                                                                                          tended if the public interest require-
                                which covers lands within and lands
                                outside the area covered by the plan,                     ment for an approved cooperative or
                                shall be segregated, as of the effective                  unit plan or a communitization agree-
                                date of unitization, into separate                        ment has not been satisifed as deter-
                                leases; one covering the lands com-                       mined by the authorized officer.
                                mitted to the plan, the other lands not                   [48 FR 33662, July 22, 1983, as amended at 53
                                committed to the plan. The segregated                     FR 17357, May 16, 1988]
                                lease covering the nonunitized portion
                                of the lands shall continue in force and                  § 3107.5 Extension of leases segregated
                                effect for the term of the lease or for 2                     by assignment.
                                years from the date of segregation,
                                whichever is longer. However, for any                     § 3107.5–1 Extension after discovery on
                                lease segregated from a unit, if the                          other segregated portions.
                                public interest requirement for the                         Any lease segregated by assignment,
                                unit is not satisfied, such segregation                   including the retained portion, shall
                                shall be declared invalid by the author-                  continue in effect for the primary term
                                ized officer. Further, the segregation                    of the original lease, or for 2 years
                                shall be conditioned to state that no                     after the date of first discovery of oil
                                operations shall be approved on the                       or gas in paying quantities upon any
                                segregated portion of the lease past the
                                                                                          other segregated portion of the original
                                expiration date of the original lease
                                                                                          lease, whichever is the longer period.
                                until the public interest requirement of
                                the unit has been satisfied.                              § 3107.5–2 Undeveloped parts of leases
                                [48 FR 33662, July 22, 1983, as amended at 53                 in their extended term.
                                FR 17357, May 16, 1988]
                                                                                             Undeveloped parts of leases retained
                                § 3107.3–3 20-year lease or any renewal                   or assigned out of leases which are in
                                    thereof.                                              their extended term shall continue in
                                   Any lease issued for a term of 20                      effect for 2 years after the effective
                                years, or any renewal thereof, com-                       date of assignment, provided the par-
                                mitted to a cooperative or unit plan                      ent lease was issued prior to September
                                approved by the Secretary, or any por-                    2, 1960.

                                                                                     353



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                                § 3107.5–3                                                            43 CFR Ch. II (10–1–04 Edition)

                                § 3107.5–3 Undeveloped parts of pro-                      certification of compliance with § 3102.5
                                    ducing leases.                                        of this title.
                                  Undeveloped parts of leases retained                    [48 FR 33662, July 22, 1983, as amended at 53
                                or assigned out of leases which are ex-                   FR 22840, June 17, 1988]
                                tended by production, actual or sus-
                                pended, or the payment of compen-                         § 3107.8    Renewal leases.
                                satory royalty shall continue in effect
                                for 2 years after the effective date of                   § 3107.8–1    Requirements.
                                assignment and for so long thereafter                       (a) Twenty year leases and renewals
                                as oil or gas is produced in paying                       thereof may be renewed for successive
                                quantities.                                               terms of 10 years. Any application for
                                                                                          renewal of a lease shall be made by the
                                § 3107.6     Extension of reinstated leases.              lessee, and may be joined in or con-
                                  Where a reinstatement of a termi-                       sented to by the operator. The applica-
                                nated lease is granted under § 3108.2 of                  tion shall show whether all monies due
                                this title and the authorized officer                     the United States have been paid and
                                finds that the reinstatement will not                     whether operations under the lease
                                afford the lessee a reasonable oppor-                     have been conducted in compliance
                                tunity to continue operations under                       with the applicable regulations.
                                the lease, the authorized officer may                       (b) The applicant or his/her operator
                                extend the term of such lease for a pe-                   shall furnish, in triplicate, with the ap-
                                riod sufficient to give the lessee such                   plication for renewal, copies of all
                                an opportunity. Any extension shall be                    agreements not theretofore filed pro-
                                subject to the following conditions:                      viding for overriding royalties or other
                                  (a) No extension shall exceed a period                  payments out of production from the
                                equal to the unexpired portion of the                     lease which will be in existence as of
                                lease or any extension thereof remain-                    the date of its expiration.
                                ing at the date of termination.                           [48 FR 33662, July 22, 1983, as amended at 53
                                  (b) When the reinstatement occurs                       FR 22840, June 17, 1988]
                                after the expiration of the term or ex-
                                tension thereof, the lease may be ex-                     § 3107.8–2    Application.
                                tended from the date the authorized of-                      An application to renew shall be
                                ficer grants the petition, but in no                      filed, in triplicate, in the proper BLM
                                event for more than 2 years from the                      office at least 90 days, but not more
                                date the reinstatement is authorized                      than 6 months, prior to the expiration
                                and so long thereafter as oil or gas is                   of its term and shall be accompanied
                                produced in paying quantities.                            by a nonrefundable filing fee of $75.
                                [48 FR 33662, July 22, 1983, as amended at 49
                                FR 30448, July 30, 1984; 53 FR 17357, May 16,             § 3107.8–3    Approval.
                                1988]                                                       (a) Copies of the renewal lease, in
                                                                                          triplicate, dated the first day of the
                                § 3107.7     Exchange leases: 20-year term.
                                                                                          month following the month in which
                                  Any lease which issued for a term of                    the original lease terminated, shall be
                                20 years, or any renewal thereof, or                      forwarded to the lessee for execution.
                                which issued in exchange for a 20-year                    Upon receipt of the executed lease
                                lease prior to August 8, 1946, may be ex-                 forms, which constitutes certification
                                changed for a new lease. Such new                         of compliance with § 3102.5 of this title,
                                lease shall be issued for a primary term                  and any required bond, the authorized
                                of 5 years. An application to exchange                    officer shall execute the lease and de-
                                a lease for a new lease shall be filed, in                liver 1 copy to the lessee.
                                triplicate, by the lessee at the proper                     (b) If overriding royalties and pay-
                                BLM office, shall show full compliance                    ments out of production or similar in-
                                by the applicant with the terms of the                    terests in excess of 5 percent of gross
                                lease and applicable regulations, and                     production constitute a burden to lease
                                shall be accompanied by a nonrefund-                      operations that will retard, or impair,
                                able application fee of $75. Execution of                 or cause premature abandonment, the
                                the exchange lease by the applicant is                    lease application shall be suspended

                                                                                     354



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                                Bureau of Land Management, Interior                                                              § 3108.2–1

                                until overriding royalties and pay-                         ever, you and the party that issued the
                                ments out of production or similar in-                      bond will continue to be obligated to:
                                terests are reduced to not more then 5                        (a) Make payments of all accrued
                                percent of the value of the production.                     rentals and royalties, including pay-
                                If the holders of outstanding overriding                    ments of compensatory royalty due for
                                royalty or other interests payable out                      all drainage that occurred before the
                                of production, the operator and the les-                    relinquishments;
                                see are unable to enter into a mutually                       (b) Place all wells to be relinquished
                                fair and equitable agreement, any of                        in condition for suspension or abandon-
                                the parties may apply for a hearing at                      ment as BLM requires; and
                                which all interested parties may be                           (c) Complete reclamation of the
                                heard and written statements pre-                           leased sites after stopping or aban-
                                sented. Thereupon, a final decision will                    doning oil and gas operations on the
                                be rendered by the Department, out-                         lease, under a plan approved by the ap-
                                lining the conditions acceptable to it                      propriate surface management agency.
                                as a basis for a fair and reasonable ad-                    [66 FR 1892, Jan. 10, 2001]
                                justment of the excessive overriding
                                royalties and other payments out of                         § 3108.2 Termination by operation of
                                production and an opportunity shall be                          law and reinstatement.
                                afforded within a fixed period of time
                                to submit proof that such adjustment                        § 3108.2–1 Automatic termination.
                                has been effected. Upon failure to sub-                        (a) Except as provided in paragraph
                                mit such proof within the time so                           (b) of this section, any lease on which
                                fixed, the application for renewal shall                    there is no well capable of producing
                                be denied.                                                  oil or gas in paying quantities shall
                                                                                            automatically terminate by operation
                                [48 FR 33662, July 22, 1983, as amended at 53
                                FR 17357, May 16, 1988; 53 FR 22840, June 17,
                                                                                            of law (30 U.S.C. 188) if the lessee fails
                                1988]                                                       to pay the rental at the designated
                                                                                            Service office on or before the anniver-
                                § 3107.9     Other types.                                   sary date of such lease. However, if the
                                                                                            designated Service office is closed on
                                § 3107.9–1 Payment           of     compensatory            the anniversary date, a rental payment
                                    royalty.                                                received on the next day the Service of-
                                  The payment of compensatory roy-                          fice is open to the public shall be con-
                                alty shall extend the term of any lease                     sidered as timely made.
                                for the period during which such com-                          (b) If the rental payment due under a
                                pensatory royalty is paid and for a pe-                     lease is paid on or before its anniver-
                                riod of 1 year from the discontinuance                      sary date but the amount of the pay-
                                of such payments.                                           ment is deficient and the deficiency is
                                                                                            nominal as defined in this section, or
                                § 3107.9–2 Subsurface              storage      of   oil    the amount of payment made was de-
                                    and gas.                                                termined in accordance with the rental
                                                                                            or acreage figure stated in a bill ren-
                                  See § 3105.5–4 of this title.
                                                                                            dered by the designated Service office,
                                                                                            or decision rendered by the authorized
                                   Subpart 3108—Relinquishment,                             officer, and such figure is found to be
                                     Termination, Cancellation                              in error resulting in a deficiency, such
                                                                                            lease shall not have automatically ter-
                                § 3108.1 As a lessee, may I relinquish                      minated unless the lessee fails to pay
                                    my lease?                                               the deficiency within the period pre-
                                  You may relinquish your lease or any                      scribed in the Notice of Deficiency pro-
                                legal subdivision of your lease at any                      vided for in this section. A deficiency
                                time. You must file a written relin-                        shall be considered nominal if it is not
                                quishment with the BLM State Office                         more than $100 or more than 5 percent
                                with jurisdiction over your lease. All                      of the total payment due, whichever is
                                lessees holding record title interests in                   less. The designated Service office
                                the lease must sign the relinquish-                         shall send a Notice of Deficiency to the
                                ment. A relinquishment takes effect on                      lessee. The Notice shall be sent by cer-
                                the date you file it with BLM. How-                         tified mail, return receipt requested,

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                                § 3108.2–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                and shall allow the lessee 15 days from                     (c) Under no circumstances shall a
                                the date of receipt or until the due                      terminated lease be reinstated if:
                                date, whichever is later, to submit the                     (1) A valid oil and gas lease has been
                                full balance due to the designated                        issued prior to the filing of a petition
                                Service office. If the payment required                   for reinstatement affecting any of the
                                by the Notice is not paid within the                      lands covered by that terminated lease;
                                time allowed, the lease shall have ter-                   or
                                minated by operation of law as of its                       (2) The oil and gas interests of the
                                anniversary date.                                         United States in the lands have been
                                [48 FR 33662, July 22, 1983, as amended at 49             disposed of or otherwise have become
                                FR 11637, Mar. 27, 1984; 49 FR 30448, July 30,            unavailable for leasing.
                                1984; 53 FR 17357, May 16, 1988]                            (d) The authorized officer shall not
                                                                                          issue a lease for lands which have been
                                § 3108.2–2 Reinstatement at existing                      covered by a lease which terminated
                                     rental and royalty rates: Class I re-                automatically until 90 days after the
                                     instatements.
                                                                                          date of termination.
                                   (a) Except as hereinafter provided,
                                the authorized officer may reinstate a                    [49 FR 30448, July 30, 1984, as amended at 53
                                                                                          FR 17357, May 16, 1988]
                                lease which has terminated for failure
                                to pay on or before the anniversary                       § 3108.2–3 Reinstatement     at   higher
                                date the full amount of rental due, pro-                      rental and royalty rates: Class II re-
                                vided that:                                                   instatements.
                                   (1) Such rental was paid or tendered
                                within 20 days after the anniversary                        (a) The authorized officer may, if the
                                date; and                                                 requirements of this section are met,
                                   (2) It is shown to the satisfaction of                 reinstate an oil and gas lease which
                                the authorized officer that the failure                   was terminated by operation of law for
                                to timely submit the full amount of                       failure to pay rental timely when the
                                the rental due was either justified or                    rental was not paid or tendered within
                                not due to a lack of reasonable dili-                     20 days of the termination date and it
                                gence on the part of the lessee (reason-                  is shown to the satisfaction of the au-
                                able diligence shall include a rental                     thorized officer that such failure was
                                payment which is postmarked by the                        justified or not due to a lack of reason-
                                U.S. Postal Service, common carrier,                      able diligence, or no matter when the
                                or their equivalent (not including pri-                   rental was paid, it is shown to the sat-
                                vate postal meters) on or before the                      isfaction of the authorized officer that
                                lease anniversary date or, if the des-                    such failure was inadvertent.
                                ignated Service office is closed on the                     (b)(1) For leases that terminate on or
                                anniversary date, postmarked on the                       after January 12, 1983, consideration
                                next day the Service office is open to                    may be given to reinstatement if the
                                the public); and                                          required back rental and royalty at the
                                   (3) A petition for reinstatement, to-                  increased rates accruing from the date
                                gether with a nonrefundable filing fee                    of termination, together with a peti-
                                of $25 and the required rental, includ-                   tion for reinstatement, are filed on or
                                ing any back rental which has accrued                     before the earlier of:
                                from the date of the termination of the                     (i) Sixty days after the receipt of the
                                lease, is filed with the proper BLM of-                   Notice of Termination sent to the les-
                                fice within 60 days after receipt of No-                  see of record; or
                                tice of Termination of Lease due to                         (ii) Fifteen months after termination
                                late payment of rental. If a terminated                   of the lease.
                                lease becomes productive prior to the                       (2) After determining that the re-
                                time the lease is reinstated, all re-                     quirements for filing of the petition for
                                quired royalty that has accrued shall                     reinstatement have been timely met,
                                be paid to the Service.                                   the authorized officer may reinstate
                                   (b) The burden of showing that the                     the lease if:
                                failure to pay on or before the anniver-                    (i) No valid lease has been issued
                                sary date was justified or not due to                     prior to the filing of the petition for re-
                                lack of reasonable diligence shall be on                  instatement affecting any of the lands
                                the lessee.                                               covered by the terminated lease,

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                                Bureau of Land Management, Interior                                                            § 3108.2–4

                                whether such lease is still in effect or                  expired portion of the original lease or
                                not;                                                      any extension thereof remaining on the
                                  (ii) The oil and gas interests of the                   date of termination, and so long there-
                                United States in the lands have not                       after as oil or gas is produced in paying
                                been disposed of or have not otherwise                    quantities. Where a lease is reinstated
                                become unavailable for leasing;                           under this section and the authorized
                                  (iii) Payment of all back rentals and                   officer finds that the reinstatement of
                                royalties at the rates established for                    such lease either (1) occurs after the
                                the reinstated lease, including the re-                   expiration of the primary term or any
                                lease to the United States of funds                       extension thereof, or (2) will not afford
                                being held in escrow, as appropriate;                     the lessee a reasonable opportunity to
                                  (iv) An agreement has been signed by                    continue operations under the lease,
                                the lessee and attached to and made a                     the authorized officer may extend the
                                part of the lease specifying future rent-                 term of the reinstated lease for such
                                als at the applicable rates specified for                 period as determined reasonable, but in
                                reinstated leases in § 3103.2–2 of this                   no event for more than 2 years from
                                title and future royalties at the rates                   the date of the reinstatement and so
                                set in § 3103.3–1 of this title for all pro-              long thereafter as oil or gas is produced
                                duction removed or sold from such                         in paying quantities.
                                lease or shared by such lease from pro-                     (f) The authorized officer may, either
                                duction allocated to the lease by virtue                  in acting on a petition for reinstate-
                                of its participation in a unit or                         ment or in response to a request filed
                                communitization agreement or other                        after reinstatement, or both, reduce
                                form of approved joint development                        the royalty in that reinstated lease on
                                agreement or plan;                                        the entire leasehold or any tract or
                                  (v) A notice of the proposed rein-                      portion thereof segregated for royalty
                                statement of the terminated lease and                     purposes, if he/she determines there are
                                the terms and conditions of reinstate-                    either    economic      or   other    cir-
                                ment has been published in the FED-                       cumstances which could cause undue
                                ERAL REGISTER at least 30 days prior to                   economic hardship or premature termi-
                                the date of reinstatement for which the                   nation of production; or because of any
                                lessee shall reimburse the Bureau for                     written action of the United States, its
                                the full costs incurred in the pub-                       agents or employees, which preceded,
                                lishing of said notice; and                               and was a major consideration in, the
                                  (vi) The lessee has paid the Bureau a                   lessee’s expenditure of funds to develop
                                nonrefundable administrative fee of                       the lands covered by the lease after the
                                $500.                                                     rental had become due and had not
                                  (c) The authorized officer shall not,                   been paid; or if the authorized officer
                                after the receipt of a petition for rein-                 determines it is equitable to do so for
                                statement, issue a new lease affecting                    any other reason.
                                any of the lands covered by the termi-                    [49 FR 30449, July 30, 1984]
                                nated lease until all action on the peti-
                                tion is final.                                            § 3108.2–4 Conversion of unpatented
                                  (d) The authorized officer shall fur-                        oil placer mining claims: Class III
                                nish to the Chairpersons of the Com-                           reinstatements.
                                mittee on Interior and Insular Affairs                       (a) For any unpatented oil placer
                                of the House of Representatives and of                    mining claim validly located prior to
                                the Committee on Energy and Natural                       February 24, 1920, which has been or is
                                Resources of the Senate, at least 30                      currently producing or is capable of
                                days prior to the date of reinstate-                      producing oil or gas, and has been or is
                                ment, a copy of the notice, together                      deemed after January 12, 1983, conclu-
                                with information concerning rental,                       sively abandoned for failure to file
                                royalty, volume of production, if any,                    timely the required instruments or
                                and any other matter which the au-                        copies of instruments required by sec-
                                thorized officer considers significant in                 tion 314 of the Federal Land Policy and
                                making the determination to reinstate.                    Management Act (43 U.S.C. 1744), and it
                                  (e) If the authorized officer reinstates                is shown to the satisfaction of the au-
                                the lease, the reinstatement shall be as                  thorized officer that such failure was
                                of the date of termination, for the un-                   inadvertent, justifiable or not due to

                                                                                     357



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                                § 3108.3                                                              43 CFR Ch. II (10–1–04 Edition)

                                lack of reasonable diligence on the part                  production made subsequent to the
                                of the owner, the authorized officer                      date the claim was deemed conclu-
                                may issue, for the lands covered by the                   sively abandoned prior to the lease
                                abandoned unpatented oil placer min-                      issuance.
                                ing claim, a noncompetitive oil and gas                     (f) Noncompetitive oil and gas leases
                                lease consistent with the provisions of                   issued under this section shall be sub-
                                section 17(e) of the Act (30 U.S.C.                       ject to all regulations in part 3100 of
                                226(e)). The effective date of any lease                  this title except for those terms and
                                issued under this section shall be from                   conditions mandated by Title IV of the
                                the statutory date that the claim was                     Federal Oil and Gas Royalty Manage-
                                deemed conclusively abandoned.                            ment Act.
                                   (b) The authorized officer may issue a                   (g) A notice of the proposed conver-
                                noncompetitive oil and gas lease if a                     sion of the oil placer mining claim into
                                petition has been filed in the proper                     a noncompetitive oil and gas lease, in-
                                BLM office for the issuance of a non-                     cluding the terms and conditions of
                                competitive oil and gas lease accom-                      conversion, shall be published in the
                                panied by the required rental and roy-                    FEDERAL REGISTER at least 30 days
                                alty, including back rental and royalty                   prior to the issuance of a noncompeti-
                                accruing, at the rates specified in                       tive oil and gas lease. The mining
                                §§ 3103.2–2 and 3103.3–1 of this title, for               claim owner shall reimburse the Bu-
                                any claim deemed conclusively aban-                       reau for the full costs incurred in the
                                doned after January 12, 1983. The peti-                   publishing of said notice.
                                tion shall have been filed on or before                     (h) The mining claim owner shall pay
                                the 120th day after the final notifica-                   the Bureau a nonrefundable adminis-
                                tion by the Secretary or a court of                       trative fee of $500 prior to the issuance
                                competent jurisdiction of the deter-                      of the noncompetitive lease.
                                mination of the abandonment of the oil                      (i) The authorized officer may, either
                                placer mining claim.                                      in acting on a petition to issue a non-
                                   (c) The authorized officer shall not                   competitive oil and gas lease or in re-
                                issue a noncompetitive oil and gas                        sponse to a request filed after issuance,
                                lease under this section if a valid oil                   or both, reduce the royalty in such
                                and gas lease has been issued affecting                   lease, if he/she determines there are ei-
                                any of the lands covered by the aban-                     ther economic or other circumstances
                                doned oil placer mining claim prior to                    which could cause undue economic
                                the filing of the petition for issuance of                hardship or premature termination of
                                a noncompetitive oil and gas lease.                       production.
                                   (d) After the filing of a petition for                 [49 FR 30449, July 30, 1984, as amended at 53
                                issuance of a noncompetitive oil and                      FR 17357, May 16, 1988; 53 FR 22840, June 17,
                                gas lease covering an abandoned oil                       1988]
                                placer claim, the authorized officer
                                shall not issue any new lease affecting                   § 3108.3 Cancellation.
                                any lands covered by such petition                           (a) Whenever the lessee fails to com-
                                until all action on the petition is final.                ply with any of the provisions of the
                                   (e) Any noncompetitive lease issued                    law, the regulations issued thereunder,
                                under this section shall include:                         or the lease, the lease may be canceled
                                   (1) Terms and conditions for the pay-                  by the Secretary, if the leasehold does
                                ment of rental in accordance with                         not contain a well capable of produc-
                                § 3103.2–2(j) of this title. Payment of                   tion of oil or gas in paying quantities,
                                back rentals accruing from the date of                    or if the lease is not committed to an
                                abandonment of the oil placer mining                      approved cooperative or unit plan or
                                claim, at the rental set by the author-                   communitization agreement that con-
                                ized officer, shall be made prior to the                  tains a well capable of production of
                                lease issuance.                                           unitized substances in paying quan-
                                   (2) Royalty rates set in accordance                    tities. The lease may be canceled only
                                with § 3103.3–1 of this title. Royalty                    after notice to the lessee in accordance
                                shall be paid at the rate established by                  with section 31(b) of the Act and only if
                                the authorized officer on all production                  default continues for the period pre-
                                removed or sold from the oil placer                       scribed in that section after service of
                                mining claim, including all royalty on                    30 days notice of failure to comply.

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                                Bureau of Land Management, Interior                                                            § 3109.1–1

                                  (b) Whenever the lessee fails to com-                   § 3108.5 Waiver or suspension of lease
                                ply with any of the provisions of the                         rights.
                                law, the regulations issued thereunder,
                                                                                             If, during any proceeding with re-
                                or the lease, and if the leasehold con-
                                                                                          spect to a violation of any provisions of
                                tains a well capable of production of oil
                                                                                          the regulations in Groups 3000 and 3100
                                or gas in paying quantities, or if the
                                lease is committed to an approved co-                     of this title or the act, a party thereto
                                operative      or     unit    plan    or                  files a waiver of his/her rights under
                                communitization agreement that con-                       the lease to drill or to assign his/her
                                tains a well capable of production of                     lease interests, or if such rights are
                                unitized substances in paying quan-                       suspended by order of the Secretary
                                tities, the lease may be canceled only                    pending a decision, payments of rentals
                                by judicial proceedings in the manner                     and the running of time against the
                                provided by section 31(a) of the Act.                     term of the lease involved shall be sus-
                                  (c) If any interest in any lease is                     pended as of the first day of the month
                                owned or controlled, directly or indi-                    following the filing of the waiver or the
                                rectly, by means of stock or otherwise,                   Secretary’s suspension until the first
                                in violation of any of the provisions of                  day of the month following the final
                                the act, the lease may be canceled, or                    decision in the proceeding or the rev-
                                the interest so owned may be forfeited,                   ocation of the waiver or suspension.
                                or the person so owning or controlling
                                the interest may be compelled to dis-                     [53 FR 17357, May 16, 1988; 53 FR 22840, June
                                                                                          17, 1988]
                                pose of the interest, only by judicial
                                proceedings in the manner provided by
                                section 27(h)(1) of the Act.                                  Subpart 3109—Leasing Under
                                  (d) Leases shall be subject to can-                                 Special Acts
                                cellation if improperly issued.
                                                                                          § 3109.1    Rights-of-way.
                                [48 FR 33662, July 22, 1983, as amended at 53
                                FR 22840, June 17, 1988; 53 FR 31868, Aug. 22,            § 3109.1–1    Generally.
                                1988]
                                                                                            The Act of May 21, 1930 (30 U.S.C. 301–
                                § 3108.4     Bona fide purchasers.                        306), authorizes either the leasing of oil
                                  A lease or interest therein shall not                   and gas deposits under railroad and
                                be cancelled to the extent that such ac-                  other rights-of-way to the owner of the
                                tion adversely affects the title or inter-                right-of-way or the entering of a com-
                                est of a bona fide purchaser even                         pensatory royalty agreement with ad-
                                though such lease or interest, when                       joining landowners. This authority
                                held by a predecessor in title, may                       shall be exercised only with respect to
                                have been subject to cancellation. All                    railroad rights-of-way and easements
                                purchasers shall be charged with con-                     issued pursuant either to the Act of
                                structive notice as to all pertinent reg-                 March 3, 1875 (43 U.S.C. 934 et seq.), or
                                ulations and all Bureau records per-                      pursuant to earlier railroad right-of-
                                taining to the lease and the lands cov-                   way statutes, and with respect to
                                ered by the lease. Prompt action shall                    rights-of-way and easements issued
                                be taken to dismiss as a party to any                     pursuant to the Act of March 3, 1891 (43
                                proceedings with respect to a violation                   U.S.C. 946 et seq.). The oil and gas un-
                                by a predecessor of any provisions of                     derlying any other right-of-way or
                                the act, any person who shows the                         easement is included within any oil
                                holding of an interest as a bona fide                     and gas lease issued pursuant to the
                                purchaser without having violated any                     Act which covers the lands within the
                                provisions of the Act. No hearing shall
                                                                                          right-of-way, subject to the limitations
                                be necessary upon such showing unless
                                                                                          on use of the surface, if any, set out in
                                prima facie evidence is presented that
                                                                                          the statute under which, or permit by
                                the purchaser is not a bona fide pur-
                                chaser.                                                   which, the right-of-way or easement
                                                                                          was issued, and such oil and gas shall
                                [48 FR 33662, July 22, 1983; 48 FR 39225, Aug.            not be leased under the Act of May 21,
                                30, 1983, as amended at 53 FR 17357, May 16,              1930.
                                1988]

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                                § 3109.1–2                                                            43 CFR Ch. II (10–1–04 Edition)

                                § 3109.1–2     Application.                               United States, considering the amount
                                                                                          of royalty to be received and the better
                                  No approved form is required for an
                                                                                          development under the respective
                                application to lease lands in a right-of-
                                                                                          means of production and operation.
                                way. Applications shall be filed in the
                                proper BLM office. Such applications                      § 3109.1–5 Compensatory            royalty
                                shall be filed by the owner of the right-                      agreement or lease.
                                of-way or by his/her transferee and be
                                                                                             (a) The lease or compensatory roy-
                                accompanied by a nonrefundable filing
                                                                                          alty agreement shall be on a form ap-
                                fee of $75, and if filed by a transferee,
                                                                                          proved by the Director.
                                by a duly executed transfer of the right
                                                                                             (b) The royalty to be charged shall be
                                to lease. The application shall detail
                                                                                          fixed    by   the    Bureau     of    Land
                                the facts as to the ownership of the
                                                                                          Mangement in accordance with the
                                right-of-way, and of the transfer if the
                                                                                          provisions of § 3103.3 of this title, but
                                application is filed by a transferee; the
                                                                                          shall not be less than 121⁄2 percent.
                                development of oil or gas in adjacent or
                                                                                             (c) The term of the lease shall be for
                                nearby lands, the location and depth of
                                                                                          a period of not more than 20 years.
                                the wells, the production and the prob-
                                ability of drainage of the deposits in                    § 3109.2 Units of the National Park
                                the right-of-way. A description by                             System.
                                metes and bounds of the right-of-way is
                                                                                             (a) Oil and gas leasing in units of the
                                not required but each legal subdivision
                                                                                          National Park System shall be gov-
                                through which a portion of the right-
                                                                                          erned by 43 CFR Group 3100 and all op-
                                of-way desired to be leased extends
                                                                                          erations conducted on a lease or permit
                                shall be described.
                                                                                          in such units shall be governed by 43
                                [53 FR 17357, May 16, 1988; 53 FR 22840, June             CFR parts 3160 and 3180.
                                17, 1988]                                                    (b) Any lease or permit respecting
                                                                                          minerals in units of the National Park
                                § 3109.1–3     Notice.                                    System shall be issued or renewed only
                                  After the Bureau of Land Manage-                        with the consent of the Regional Direc-
                                ment has determined that a lease of a                     tor, National Park Service. Such con-
                                right-of-way or any portion thereof is                    sent shall only be granted upon a de-
                                consistent with the public interest, ei-                  termination by the Regional Director
                                ther upon consideration of an applica-                    that the activity permitted under the
                                tion for lease or on its own motion, the                  lease or permit will not have signifi-
                                authorized officer shall serve notice on                  cant adverse effect upon the resources
                                the owner or lessee of the oil and gas                    or administration of the unit pursuant
                                rights of the adjoining lands. The ad-                    to the authorizing legislation of the
                                joining land owner or lessee shall be al-                 unit. Any lease or permit issued shall
                                lowed a reasonable time, as provided in                   be subject to such conditions as may be
                                the notice, within which to submit a                      prescribed by the Regional Director to
                                bid for the amount or percent of com-                     protect the surface and significant re-
                                pensatory royalty, the owner or lessee                    sources of the unit, to preserve their
                                shall pay for the extraction of the oil                   use for public recreation, and to the
                                and gas underlying the right-of-way                       condition that site specific approval of
                                through wells on such adjoining lands.                    any activity on the lease will only be
                                The owner of the right-of-way shall be                    given upon concurrence by the Re-
                                given the same time period to submit a                    gional Director. All lease applications
                                bid for the lease.                                        received for reclamation withdrawn
                                                                                          lands shall also be submitted to the
                                § 3109.1–4 Award of lease or compen-                      Bureau of Reclamation for review.
                                    satory royalty agreement.                                (c) The units subject to the regula-
                                  Award of lease to the owner of the                      tions in this part are those units of
                                right-of-way, or a contract for the pay-                  land and water which are shown on the
                                ment of compensatory royalty by the                       following maps on file and available for
                                owner or lessee of the adjoining lands                    public inspection in the office of the
                                shall be made to the bidder whose offer                   Director of the National Park Service
                                is determined by the authorized officer                   and in the Superintendent’s Office of
                                to be to the best advantage of the                        each unit. The boundaries of these

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                                Bureau of Land Management, Interior                                                              § 3109.3

                                units may be revised by the Secretary                       (iii) All lands within section 34 of
                                as authorized in the Acts.                                Township 33 north, Range 7 west, Mt.
                                   (1) Lake Mead National Recreation                      Diablo Meridian.
                                Area—The map identified as ‘‘boundary                       (3) Ross Lake and Lake Chelan Na-
                                map, 8360–80013B, revised February 1986.                  tional Recreation Areas. (i) All of Lake
                                   (2)    Whiskeytown       Unit  of    the               Chelan National Recreation Area;
                                Whiskeytown-Shasta-Trinity National                         (ii) All lands within 1⁄2 mile of Gorge,
                                Recreation Area—The map identified                        Diablo and Ross Lakes measured from
                                as     ‘‘Proposed    Whiskeytown-Shasta-                  the shoreline at maximum surface ele-
                                Trinity National Recreation Area,’’                       vation;
                                numbered BOR–WST 1004, dated July                           (iii) All lands proposed for or des-
                                1963.                                                     ignated as wilderness;
                                   (3) Ross Lake and Lake Chelan Na-                        (iv) All lands within 1⁄2 mile of State
                                tional Recreation Areas—The map                           Highway 20;
                                identified as ‘‘Proposed Management
                                                                                            (v) Pyramid Lake Research Natural
                                Units, North Cascades, Washington,’’
                                                                                          Area and all lands within 1⁄2 mile of its
                                numbered NP–CAS–7002, dated October
                                                                                          boundaries.
                                1967.
                                                                                            (4) Glen Canyon National Recreation
                                   (4) Glen Canyon National Recreation
                                                                                          Area. Those units closed to mineral dis-
                                Area—the map identified as ‘‘boundary
                                map, Glen Canyon National Recreation                      position within the natural zone, devel-
                                Area,’’ numbered GLC–91,006, dated Au-                    opment zone, cultural zone and por-
                                gust 1972.                                                tions of the recreation and resource
                                   (d) The following excepted units shall                 utilization zone as shown on the map
                                not be open to mineral leasing:                           numbered 80,022A, dated March 1980,
                                   (1) Lake Mead National Recreation                      entitled ‘‘Mineral Management Plan—
                                Area. (i) All waters of Lakes Mead and                    Glen Canyon National Recreation
                                Mohave and all lands within 300 feet of                   Area.’’ This map is available for public
                                those lakes measured horizontally                         inspection in the Office of the Super-
                                from the shoreline at maximum sur-                        intendent and the office of the State
                                face elevation;                                           Directors, Bureau of Land Manage-
                                   (ii) All lands within the unit of super-               ment, Arizona and Utah.
                                vision of the Bureau of Reclamation                       [48 FR 33662, July 22, 1983, as amended at 53
                                around Hoover and Davis Dams and all                      FR 17358, May 16, 1988; 53 FR 22840, June 17,
                                lands outside of resource utilization                     1988]
                                zones as designated by the Super-
                                intendent on the map (602–2291B, dated                    § 3109.2–1 Authority         to    lease.   [Re-
                                October 1987) of Lake Mead National                           served]
                                Recreation Area which is available for
                                inspection in the Office of the Super-                    § 3109.2–2 Area subject to lease. [Re-
                                intendent.                                                    served]
                                   (2)     Whiskeytown      Unit  of    the
                                                                                          § 3109.3 Shasta and Trinity Units of
                                Whiskeytown-Shasta-Trinity        National
                                                                                              the Whiskeytown-Shasta-Trinity Na-
                                Recreation Area. (i) All waters of                            tional Recreation Area.
                                Whiskeytown Lake and all lands with-
                                in 1 mile of that lake measured from                        Section 6 of the Act of November 8,
                                the shoreline at maximum surface ele-                     1965 (Pub. L. 89–336), authorizes the
                                vation;                                                   Secretary to permit the removal of oil
                                   (ii) All lands classified as high den-                 and gas from lands within the Shasta
                                sity recreation, general outdoor recre-                   and Trinity Units of the Whiskeytown-
                                ation, outstanding natural and his-                       Shasta-Trinity National Recreation
                                toric, as shown on the map numbered                       Area in accordance with the act or the
                                611–20,004B, dated April 1979, entitled                   Mineral Leasing Act for Acquired
                                ‘‘Land      Classification,   Whiskeytown                 Lands. Subject to the determination by
                                Unit, Whiskeytown-Shasta-Trinity Na-                      the Secretary of Agriculture that re-
                                tional Recreation Area.’’ This map is                     moval will not have significant adverse
                                available for public inspection in the                    effects on the purposes of the Central
                                Office of the Superintendent;

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                                Pt. 3110                                                              43 CFR Ch. II (10–1–04 Edition)

                                Valley project or the administration of                   receive priority. Such offers shall be
                                the recreation area.                                      exposed to competitive bidding under
                                                                                          subpart 3120 of this title and if no bid is
                                [48 FR 33662, July 22, 1983. Redesignated at 53
                                FR 22840, June 17, 1988]                                  received, a noncompetitive lease shall
                                                                                          be issued all else being regular. After
                                                                                          January 2, 1989, noncompetitive lease
                                   PART 3110—NONCOMPETITIVE                               offers may be filed on unleased lands,
                                             LEASES                                       except for:
                                                                                             (i) Those lands which are in the one-
                                   Subpart 3110—Noncompetitive Leases                     year period commencing upon the expi-
                                Sec.                                                      ration, termination, relinquishment, or
                                3110.1 Lands available for noncompetitive                 cancellation of the leases containing
                                    offer and lease.                                      the lands; and
                                3110.2 Priority.                                             (ii) Those lands included in a Notice
                                3110.3 Lease terms.                                       of Competitive Lease Sale or a List of
                                3110.3–1 Duration of lease.                               Lands Available for Competitive Nomi-
                                3110.3–2 Dating of leases.                                nations. Neither exception is applica-
                                3110.3–3 Lease offer size.
                                3110.4 Requirements for offer.
                                                                                          ble to lands available under § 3110.1(b)
                                3110.5 Description of lands in offer.                     of this title.
                                3110.5–1 Parcel number description.                          (2) Noncompetitive lease offers may
                                3110.5–2 Public domain.                                   be made pursuant to an opening order
                                3110.5–3 Acquired lands.                                  or other notice and shall be subject to
                                3110.5–4 Accreted lands.                                  all provisions and procedures stated in
                                3110.5–5 Conflicting descriptions.                        such order or notice.
                                3110.6 Withdrawal of offer.                                  (3) No noncompetitive lease may
                                3110.7 Action on offer.
                                3110.8 Amendment to lease.
                                                                                          issue for any lands unless and until
                                3110.9 Future interest offers.                            they have satisfied the requirements of
                                3110.9–1 Availability.                                    § 3110.1(b) of this title.
                                3110.9–2 Form of offer.                                      (b) Lease. Only lands that have been
                                3110.9–3 Fractional present and future inter-             offered competitively under subpart
                                    est.                                                  3120 of this title, and for which no bid
                                3110.9–4 Future interest terms and condi-                 has been received, shall be available for
                                    tions.                                                noncompetitive lease. Such lands shall
                                  AUTHORITY: Mineral Leasing Act of 1920, as              become available for a period of 2 years
                                amended and supplemented (30 U.S.C. 181 et                beginning on the first business day fol-
                                seq.), the Mineral Leasing Act for Acquired               lowing the last day of the competitive
                                Lands of 1947, as amended (30 U.S.C. 351–359),            oral auction, or when formal nomina-
                                the Alaska National Interest Lands Con-
                                servation Act, as amended (16 U.S.C. 3101 et
                                                                                          tions have been requested as specified
                                seq.), Federal Land Policy and Management                 in § 3120.3–1 of this title, or the first
                                Act of 1976 (43 U.S.C. 1701 et seq.), the Omni-           business day following the posting of
                                bus Budget Reconciliation Act of 1981 (Pub.               the Notice of Competitive Lease Sale,
                                L. 97–35), and the Independent Offices Appro-             and ending on that same day 2 years
                                priations Act of 1952 (31 U.S.C. 483a).                   later. A lease may be issued from an
                                  SOURCE: 53 FR 22840, June 17, 1988, unless              offer properly filed any time within the
                                otherwise noted.                                          2-year noncompetitive leasing period.
                                                                                          [53 FR 22840, June 17, 1988; 53 FR 31958, Aug.
                                  Subpart 3110—Noncompetitive                             22, 1988]
                                             Leases
                                                                                          § 3110.2 Priority.
                                § 3110.1 Lands available for non-                            (a) Offers filed for lands available for
                                     competitive offer and lease.                         noncompetitive offer or lease, as speci-
                                   (a) Offer. (1) Effective June 12, 1988,                fied in §§ 3110.1(a)(1) and 3110.1(b) of this
                                through January 2, 1989, noncompeti-                      title, shall receive priority as of the
                                tive lease offers may be filed only for                   date and time of filing as specified in
                                lands available under § 3110.1(b) of this                 § 1821.2–3(a) of this title, except that all
                                title. Noncompetitive lease offers filed                  noncompetitive offers shall be consid-
                                after December 22, 1987, and prior to                     ered simultaneously filed if received in
                                June 12, 1988, for lands available for fil-               the proper BLM office any time during
                                ing under § 3110.1(a) of this title shall                 the first business day following the last

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