**Title:** Energy Policy Act of 2005, Section 1835, Split-Estate Federal
Oil and Gas Leasing and Development Practices

**Task:** The Secretary shall review the current policies and practices
with respect to management of Federal subsurface oil and gas development
activities and their effects.

-   \(1\) a comparison of the rights and responsibilities under existing
    mineral and land law for the owner of a Federal mineral lease, the
    private surface owners and the Department;

-   \(3\) recommendations for administrative or legislative action
    necessary to facilitate reasonable access for Federal oil and gas
    activities while addressing surface owner concerns and minimizing
    impacts to private surface.

**Brief Summary:**

In order to plan for, lease, and manage the Federal subsurface mineral
estate underlying private surface estate, BLM must comply with the
provision of the Act under which the surface was patented, for example,
the Stock Raising Homestead Act. BLM must also comply with the provision
of the Mineral Leasing Act and various regulations regarding land use
planning, leasing, bonding, operations, and reclamation. Operator
guidance for surface operations was recently finalized in the Oil and
Gas Gold Book found at [www.blm.gov/bmp](http://www.blm.gov/bmp) BLM
also operates under the policy outlined in expired Washington Office
Instruction Memorandum 2003-131. In addition, BLM is updating Onshore
Oil and Gas Order No. 1, currently out for public review.

+-------+-------+------------------------------------------+----------+
| **Sp  |       |                                          |          |
| lit-e |       |                                          |          |
| state |       |                                          |          |
| Fe    |       |                                          |          |
| deral |       |                                          |          |
| Oil   |       |                                          |          |
| and   |       |                                          |          |
| Gas   |       |                                          |          |
| Le    |       |                                          |          |
| asing |       |                                          |          |
| and   |       |                                          |          |
| D     |       |                                          |          |
| evelo |       |                                          |          |
| pment |       |                                          |          |
| P     |       |                                          |          |
| racti |       |                                          |          |
| ces** |       |                                          |          |
+-------+-------+------------------------------------------+----------+
|       | **St  | **Practices**                            | **       |
|       | age** |                                          | Statute, |
|       |       |                                          | Reg      |
|       |       |                                          | ulation, |
|       |       |                                          | Policy,  |
|       |       |                                          | or       |
|       |       |                                          | Pr       |
|       |       |                                          | actice** |
+-------+-------+------------------------------------------+----------+
| Defin |       | [Split Estate:]{.underline}              | Proposed |
| ition |       |                                          | Onshore  |
|       |       | Means lands where the surface is owned   | Oil and  |
|       |       | by an entity or person other than the    | Gas      |
|       |       | owner of the Federal or Indian oil and   | Order    |
|       |       | gas.                                     | No.1     |
|       |       |                                          | (p       |
|       |       |                                          | ublished |
|       |       |                                          | in the   |
|       |       |                                          | Federal  |
|       |       |                                          | Register |
|       |       |                                          | on July  |
|       |       |                                          | 27, 2005 |
|       |       |                                          | (70 FR   |
|       |       |                                          | 43349))  |
|       |       |                                          | C        |
|       |       |                                          | urrently |
|       |       |                                          | a draft  |
|       |       |                                          | document |
|       |       |                                          | out for  |
|       |       |                                          | pubic    |
|       |       |                                          | review.  |
+-------+-------+------------------------------------------+----------+
| Le    | Land  | [Protective Leasing                      | Standard |
| asing | Use   | Stipulations]{.underline}:               | Land use |
| Deci  | Pla   |                                          | Planning |
| sions | nning | BLM notifies the public of their         | Practice |
| &     |       | opportunity to participate and comment   |          |
| Le    |       | on the preparation of land use plans and | Also     |
| asing |       | amendments. BLM does not specifically    | refer    |
|       |       | notify individual surface owners that    | to:      |
|       |       | land use planning decisions are being    | 43C      |
|       |       | made which could affect the oil and gas  | FR1610.2 |
|       |       | development actions on their surface.    |          |
|       |       | (Planning decisions include: No Lease;   |          |
|       |       | Lease with Standard Terms and            |          |
|       |       | Conditions; Lease with Major             |          |
|       |       | Constraints; Lease with Moderate         |          |
|       |       | Constraints; and are typically based on  |          |
|       |       | resources such as wildlife, steep        |          |
|       |       | slopes, wetlands.)                       |          |
|       |       |                                          |          |
|       |       | BLM does not apply any stipulations      |          |
|       |       | specific to split estate.                |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       | Pre-  | [Pre-lease Surface Owner                 | Standard |
|       | &     | Notification]{.underline}:               | Oil and  |
|       | Post- |                                          | Gas      |
|       | Lease | BLM offers for lease parcels that have   | Leasing  |
|       | No    | been nominated by the public and that    | Practice |
|       | tific | are in conformance with the BLM or FS    |          |
|       | ation | land use plan.                           | Also     |
|       |       |                                          | refer    |
|       |       | BLM notifies the public of pending lease | to:      |
|       |       | sales and provides a 45-day review       | 43CFR    |
|       |       | period. BLM posts the Competitive Sale   | 3120.4-2 |
|       |       | List and stipulations on the BLM State   |          |
|       |       | Office website; mails paper copies to    |          |
|       |       | those parties who have requested copies, |          |
|       |       | including other surface managing         |          |
|       |       | agencies; and posts the List and         |          |
|       |       | stipulations in the affected BLM Field   |          |
|       |       | Offices.                                 |          |
|       |       |                                          |          |
|       |       | BLM does not directly notify the surface |          |
|       |       | owner prior to offering for lease        |          |
|       |       | subsurface minerals under the surface    |          |
|       |       | estate. However, when processing         |          |
|       |       | isolated private surface split estate    |          |
|       |       | tracts for lease, the BLM Milwaukee      |          |
|       |       | Field Office notifies each surface owner |          |
|       |       | in writing of proposed leasing.          |          |
|       |       | Notification includes providing a tract  |          |
|       |       | map and copies of acquisition deeds, as  |          |
|       |       | well as requesting input regarding the   |          |
|       |       | owner's concerns and surface             |          |
|       |       | uses/resources that may require          |          |
|       |       | protective measures. Surface owner       |          |
|       |       | objections to allowing surface occupancy |          |
|       |       | are treated as a protest.                |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Post-Lease Sale                         | Standard |
|       |       | Notification]{.underline}:               | Lease    |
|       |       |                                          | Noti     |
|       |       | Results of competitive lease sales and   | fication |
|       |       | day-after-the-sale filings are posted on | Practice |
|       |       | the respective BLM State Office website. |          |
|       |       | Paper copies are also available upon     |          |
|       |       | request. BLM does not directly notify    |          |
|       |       | the affected surface owner that a lease  |          |
|       |       | sale of the mineral interests under      |          |
|       |       | their surface has occurred. However, the |          |
|       |       | BLM Milwaukee Field Office provides      |          |
|       |       | post-lease sale notification to          |          |
|       |       | individual surface owners, when          |          |
|       |       | requested.                               |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
| D     | W     | [Lead]{.underline}: For split estate     | Proposed |
| evelo | ithin | lands within FS administrative           | Onshore  |
| pment | F     | boundaries, BLM has the lead             | Oil and  |
|       | orest | responsibility, unless there is a local  | Gas      |
|       | Se    | BLM/FS agreement that gives the FS this  | Order    |
|       | rvice | responsibility.                          | No.1     |
|       | Bound |                                          |          |
|       | aries |                                          |          |
+-------+-------+------------------------------------------+----------+
|       | No    | [Notification]{.underline}:              | Proposed |
|       | tific |                                          | Onshore  |
|       | ation | The operator must make a good faith      | Oil and  |
|       | &     | effort to notify the private surface     | Gas      |
|       |       | owner before entry and obtain an access  | Order    |
|       | Pr    | agreement from the surface owner.        | No.1     |
|       | e-Pla |                                          |          |
|       | nning |                                          |          |
|       | Field |                                          |          |
|       | D     |                                          |          |
|       | evelo |                                          |          |
|       | pment |                                          |          |
+-------+-------+------------------------------------------+----------+
|       |       | The operator should contact the private  | Surface  |
|       |       | surface owner prior to entering upon     | O        |
|       |       | private surface to stake a well location | perating |
|       |       | and access road or conduct cultural or   | S        |
|       |       | biological surveys.                      | tandards |
|       |       |                                          | and      |
|       |       |                                          | Gu       |
|       |       |                                          | idelines |
|       |       |                                          | for Oil  |
|       |       |                                          | and Gas  |
|       |       |                                          | Exp      |
|       |       |                                          | loration |
|       |       |                                          | and      |
|       |       |                                          | Dev      |
|       |       |                                          | elopment |
|       |       |                                          | (Gold    |
|       |       |                                          | Book)    |
+-------+-------+------------------------------------------+----------+
|       |       | [Pre-Onsite Coordination:]{.underline}   | Gold     |
|       |       |                                          | Book     |
|       |       | Early coordination with the BLM and the  |          |
|       |       | appropriate surface management agency or |          |
|       |       | Bureau of Indian Affairs (BIA) office is |          |
|       |       | encouraged as procedures and requirement |          |
|       |       | vary by agency or reservation.           |          |
|       |       |                                          |          |
|       |       | Operators are strongly encouraged to     |          |
|       |       | consult with the appropriate surface     |          |
|       |       | management agency as early as possible   |          |
|       |       | before filing an APD to identify local   |          |
|       |       | requirements and potential concerns.     |          |
+-------+-------+------------------------------------------+----------+
|       | N     | [Notice of Staking                       | Proposed |
|       | otice | Requirements]{.underline}:               | Onshore  |
|       | of    |                                          | Oil and  |
|       | St    | Each Notice of Staking must contain the  | Gas      |
|       | aking | name, address, and telephone number of   | Order    |
|       | (NOS) | the surface owner.                       | No.1     |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Scheduling Onsite                       | Proposed |
|       |       | Inspection]{.underline}:                 | Onshore  |
|       |       |                                          | Oil and  |
|       |       | Processing (b) Within 10 days of         | Gas      |
|       |       | receiving the APD package, BLM, in       | Order    |
|       |       | coordination with the operator and       | No.1     |
|       |       | Surface Managing Entity (including, in   |          |
|       |       | the case of split estate, the private    |          |
|       |       | surface owners), if appropriate, will    |          |
|       |       | schedule a future date for the onsite    |          |
|       |       | inspection unless the onsite inspection  |          |
|       |       | was held as part of the Notice of        |          |
|       |       | Staking (see Section III.F. of this      |          |
|       |       | Order). The onsite inspection will be    |          |
|       |       | held as soon as practicable based on     |          |
|       |       | schedules and weather conditions.        |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Surface Owner                           | Proposed |
|       |       | Notification]{.underline}:               | Onshore  |
|       |       |                                          | Oil and  |
|       |       | BLM will invite the surface owner to the | Gas      |
|       |       | onsite inspection to assure that their   | Order    |
|       |       | concerns are considered. Surface owner   | No.1     |
|       |       | concerns will be considered to the       |          |
|       |       | extent that they are consistent with     |          |
|       |       | Federal land management policy.          |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Onsite Inspection]{.underline}:         | Gold     |
|       |       |                                          | Book     |
|       |       | BLM should solicit the surface owner's   |          |
|       |       | recommendations for addressing           |          |
|       |       | development issues such as the locations |          |
|       |       | of wells, roads, production facilities;  |          |
|       |       | compressors; pipelines, utilities,       |          |
|       |       | produced water disposal, reclamation     |          |
|       |       | preferences, noise concerns, and         |          |
|       |       | treatment of resources on the property.  |          |
|       |       | BLM will take into consideration the     |          |
|       |       | needs of the surface owner when          |          |
|       |       | reviewing the Application for Permit to  |          |
|       |       | Drill.                                   |          |
+-------+-------+------------------------------------------+----------+
|       | A     | [Scheduling Onsite                       | Proposed |
|       | pplic | Inspection]{.underline}:                 | Onshore  |
|       | ation |                                          | Oil and  |
|       | for   | (Same as Notice of Staking)              | Gas      |
|       | P     |                                          | Order    |
|       | ermit | [Surface Owner                           | No.1     |
|       | to    | Notification]{.underline}:               |          |
|       | Drill |                                          |          |
|       | (APD) | (Same as Notice of Staking)              |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Onsite Inspection]{.underline}:         |          |
|       |       |                                          |          |
|       |       | (Same as Notice of Staking)              |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Protection Standards,                   | Proposed |
|       |       | Limits]{.underline}:                     | Onshore  |
|       |       |                                          | Oil and  |
|       |       | BLM will make the final determination of | Gas      |
|       |       | appropriate surface use requirements. In | Order    |
|       |       | doing so, BLM will carefully consider    | No.1     |
|       |       | the views of the surface owner and the   |          |
|       |       | effect on the surface owner\'s use of    |          |
|       |       | the surface before implementing          |          |
|       |       | mitigation measures.                     |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | BLM will offer the surface owner the     | Gold     |
|       |       | same level of surface protection BLM     | Book     |
|       |       | provides on Federal surface. BLM will    |          |
|       |       | not apply standards or conditions that   |          |
|       |       | exceed those that would normally be      |          |
|       |       | applied to Federal surface, even when    |          |
|       |       | requested by the operator.               |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Surface Owner Agreement:]{.underline}   | Proposed |
|       |       |                                          | Onshore  |
|       |       | The operator must make a good faith      | Oil and  |
|       |       | effort to notify the private surface     | Gas      |
|       |       | owner before entry and obtain an access  | Order    |
|       |       | agreement from the surface owner. The    | No.1     |
|       |       | access agreement may include terms or    |          |
|       |       | conditions of use, be a wavier, or an    |          |
|       |       | agreement for compensation.              |          |
|       |       |                                          |          |
|       |       | The operator must describe the terms of  |          |
|       |       | the Surface Owner Agreement, if one was  |          |
|       |       | obtained, in sufficient detail in the    |          |
|       |       | Surface Use Plan of Operations to enable |          |
|       |       | BLM to evaluate impacts to adjacent      |          |
|       |       | off-site Federal and Indian lands and    |          |
|       |       | resources and prepare the necessary NEPA |          |
|       |       | documentation.                           |          |
+-------+-------+------------------------------------------+----------+
|       |       | The operator should contact the private  | Gold     |
|       |       | surface owner prior to entering upon     | Book     |
|       |       | private surface to stake a well location |          |
|       |       | and access road or conduct cultural or   |          |
|       |       | biological surveys.                      |          |
|       |       |                                          |          |
|       |       | Each Application for Permit to Drill     |          |
|       |       | (APD), Notice of Staking (NOS), or       |          |
|       |       | Sundry Notice (SN) to conduct new        |          |
|       |       | surface disturbing activities must       |          |
|       |       | contain the name, address, and the       |          |
|       |       | telephone number of the private surface  |          |
|       |       | owner and if available, the E-mail       |          |
|       |       | address.                                 |          |
|       |       |                                          |          |
|       |       | The operator is encouraged to negotiate  |          |
|       |       | an agreement with the surface owner.     |          |
|       |       | Negotiating an agreement in good faith   |          |
|       |       | provides a forum through which the       |          |
|       |       | operator and surface owner can discuss   |          |
|       |       | the preferences and needs of the surface |          |
|       |       | owner. In addressing those needs, the    |          |
|       |       | operator may be able to modify the       |          |
|       |       | development proposal to minimize         |          |
|       |       | reclamation and surface damage costs.    |          |
|       |       | These costs can be minimized by placing  |          |
|       |       | roads and facilities in locations that   |          |
|       |       | the surface owner can use, thereby       |          |
|       |       | lessening the reclamation obligations of |          |
|       |       | the operator.                            |          |
|       |       |                                          |          |
|       |       | The agreement between the surface owner  |          |
|       |       | and the operator is confidential, and    |          |
|       |       | neither the surface owner nor the        |          |
|       |       | operator is required to provide the      |          |
|       |       | details of the agreement to the BLM or   |          |
|       |       | other agencies. However, the APD Surface |          |
|       |       | Use Plan of Operations should contain    |          |
|       |       | sufficient detail about any aspects of   |          |
|       |       | the agreement necessary for National     |          |
|       |       | Environmental Policy Act (NEPA)          |          |
|       |       | documentation and to determine that the  |          |
|       |       | operations will be in compliance with    |          |
|       |       | laws, regulations, Onshore Orders, and   |          |
|       |       | agency policies.                         |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Surface Use/Owner Agreement             | Proposed |
|       |       | Certification]{.underline}:              | Onshore  |
|       |       |                                          | Oil and  |
|       |       | The operator must certify to BLM that    | Gas      |
|       |       | (1) it made a good faith effort to       | Order    |
|       |       | notify the surface owner before entry    | No.1     |
|       |       | and (2) that an agreement with the       |          |
|       |       | surface owner has been reached or that a |          |
|       |       | good faith effort to reach an agreement  |          |
|       |       | failed.                                  |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | Prior to approval of the APD, (or Sundry | Gold     |
|       |       | Notice to conduct new surface disturbing | Book     |
|       |       | activities), the operator must certify   |          |
|       |       | as part of the complete application that |          |
|       |       | it has made a good faith effort to reach |          |
|       |       | an agreement with the private surface    |          |
|       |       | owner.                                   |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Resource Survey Information Needs -     | Proposed |
|       |       | General]{.underline}:                    | Onshore  |
|       |       |                                          | Oil and  |
|       |       | When authorizing lease operations on     | Gas      |
|       |       | split estate lands where the surface is  | Order    |
|       |       | not Federally-owned and the oil and gas  | No.1     |
|       |       | is Federal or Indian, BLM must comply    |          |
|       |       | with NEPA, the National Historic         |          |
|       |       | Preservation Act, the Endangered Species |          |
|       |       | Act, and related Federal statutes.       |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | The BLM may need additional cultural     | Gold     |
|       |       | resources, threatened and endangered     | Book     |
|       |       | species, or other resource survey        |          |
|       |       | information in order to comply with the  |          |
|       |       | National Historic Preservation Act       |          |
|       |       | (NHPA), the Endangered Species Act       |          |
|       |       | (ESA), or to complete an environmental   |          |
|       |       | analysis under the National              |          |
|       |       | Environmental Policy Act. In cases where |          |
|       |       | the operator has agreed to complete the  |          |
|       |       | needed surveys, the operator will be     |          |
|       |       | responsible for making access            |          |
|       |       | arrangements with the private surface    |          |
|       |       | owner.                                   |          |
+-------+-------+------------------------------------------+----------+
|       |       | [National Historic Preservation          | Standard |
|       |       | Act]{.underline}:                        | Cultural |
|       |       |                                          | and      |
|       |       | Federal agencies take into account the   | Historic |
|       |       | effects of their undertakings on         | Resource |
|       |       | properties on or eligible for the        | Practice |
|       |       | National Register of Historic Places     |          |
|       |       | whether those effects are on Federal     | Also     |
|       |       | lands, private surface, or split estate. | refer    |
|       |       | The law defines undertakings as          | to:      |
|       |       | projects, activities, or programs,       | National |
|       |       | including those requiring a Federal      | Historic |
|       |       | permit, license, or approval. The area   | Pres     |
|       |       | of potential effect for an undertaking   | ervation |
|       |       | is defined as the geographic area or     | Act      |
|       |       | areas within which an undertaking may    | Sections |
|       |       | directly or indirectly cause alterations | 106 and  |
|       |       | in the character or use of historic      | 110;     |
|       |       | properties, if such properties exist.    | 8100     |
|       |       | Adverse effects includes physical        | manual   |
|       |       | destruction; introduction of visual,     | series;  |
|       |       | atmospheric or audible elements that     | 36 CFR   |
|       |       | diminish integrity; and transfer, lease  | Part     |
|       |       | or sale outside Federal ownership or     | 800;     |
|       |       | control. The 106 requirement to consult  | 8100     |
|       |       | with any Indian tribe that attaches      | manual   |
|       |       | religious and cultural significance to   | and      |
|       |       | historic properties that may be affected | handbook |
|       |       | by an undertaking applies regardless of  | series;  |
|       |       | the location of the historic property.   | BLM/SHPO |
|       |       |                                          | pr       |
|       |       | [Issue & Recommendation:]{.underline}    | otocols. |
+-------+-------+------------------------------------------+----------+
|       |       | [Endangered Species Act]{.underline}:    | En       |
|       |       |                                          | dangered |
|       |       | BLM must comply with provisions of the   | Species  |
|       |       | Endangered Species Act on split estate   | Act of   |
|       |       | lands. This may result in required plant | 1973,    |
|       |       | or animal surveys and mitigation to      | Section  |
|       |       | reduce impacts to endangered species,    | 7        |
|       |       | and consultation with the US Fish &      |          |
|       |       | Wildlife Service.                        |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Sensitive Species]{.underline}:         | BLM 6840 |
|       |       |                                          | Manual   |
|       |       | BLM manages sensitive species to         | --       |
|       |       | preclude the need to list as endangered  | Special  |
|       |       | species under the Endangered Species     | Status   |
|       |       | Act. This may result in required plant   | Species  |
|       |       | or animal surveys and mitigation to      |          |
|       |       | reduce impacts to sensitive species.     |          |
|       |       |                                          |          |
|       |       | BLM and the US Fish & Wildlife Service   |          |
|       |       | work together to address sensitive       |          |
|       |       | species issues to preclude the need for  |          |
|       |       | listing under the Endangered Species     |          |
|       |       | Act.                                     |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Surface Use Plan of                     | Proposed |
|       |       | Operations]{.underline}:                 | Onshore  |
|       |       |                                          | Oil and  |
|       |       | Drilling Plan (i) Plan of Operations.    | Gas      |
|       |       | The Surface Use Plan of Operations must: | Order    |
|       |       |                                          | No.1     |
|       |       | -   where the surface is privately       |          |
|       |       |     owned, include a certification of    |          |
|       |       |     surface owner agreement or an        |          |
|       |       |     adequate bond, as described in       |          |
|       |       |     Section VI. of this Order.           |          |
+-------+-------+------------------------------------------+----------+
|       | Bo    | [Operations & Reclamation Bond -- All    | Refer to |
|       | nding | Operations]{.underline}:                 | 4        |
|       |       |                                          | 3CFR3104 |
|       |       | BLM requires a bond for operations       |          |
|       |       | conducted on Federal and non-Federal     |          |
|       |       | surface "in order to ensure compliance   |          |
|       |       | with the act, including complete and     |          |
|       |       | timely plugging of the well(s),          |          |
|       |       | reclamation of the lease area(s) and the |          |
|       |       | restoration of any lands or surface      |          |
|       |       | waters adversely affected by lease       |          |
|       |       | operations after cessation of oil and    |          |
|       |       | gas operations on the lease(s)..."       |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Surface Damages Bond - Surface          | Proposed |
|       |       | Estate]{.underline}:                     | Onshore  |
|       |       |                                          | Oil and  |
|       |       | If no agreement was reached, the         | Gas      |
|       |       | operator must submit an adequate bond to | Order    |
|       |       | BLM for the benefit of the surface owner | No.1     |
|       |       | sufficient to pay for loss or damages,   |          |
|       |       | such as loss of or damage to             |          |
|       |       | agriculture, other tangible              |          |
|       |       | improvements, or structures, as required |          |
|       |       | by the specific statutory authority      |          |
|       |       | under which the surface was patented or  |          |
|       |       | the terms of the lease. The minimum      |          |
|       |       | acceptable bond amount is \$1,000.       |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | If the surface owner and operator fail   | Gold     |
|       |       | to reach an agreement, the operator must | Book     |
|       |       | file a bond (determined by BLM, minimum  |          |
|       |       | of \$1,000) with BLM for the benefit of  |          |
|       |       | the surface owner to cover compensation  |          |
|       |       | for reasonable and foreseeable loss of   |          |
|       |       | crops and damages to tangible            |          |
|       |       | improvements.                            |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Surface Owner's Right to Object to the  | Proposed |
|       |       | Sufficiency of the Bond]{.underline}:    | Onshore  |
|       |       |                                          | Oil and  |
|       |       | Surface owners have the right to appeal  | Gas      |
|       |       | the sufficiency of the bond. Before the  | Order    |
|       |       | approval of the APD, BLM will make a     | No.1     |
|       |       | good faith effort to contact the surface |          |
|       |       | owner to assure that they understand     |          |
|       |       | their rights of appeal.                  |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | The BLM will advise the surface owner of | Gold     |
|       |       | appeal rights and will review the value  | Book     |
|       |       | of the bond if the surface owner         |          |
|       |       | appeals.                                 |          |
+-------+-------+------------------------------------------+----------+
|       | Inspe | [Compliance]{.underline}:                | Oil and  |
|       | ction |                                          | Gas      |
|       | and   | Noncompliance with the conditions of the | Leasing  |
|       | E     | Application for Permit to Drill Surface  | Reform   |
|       | nforc | Use Plan and Conditions of Approval may  | Act of   |
|       | ement | result in an Incident of Non-compliance  | 1987     |
|       |       | and assessments.                         |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       | R     | [Pre-reclamation Review and              | Proposed |
|       | eclam | Approval]{.underline}:                   | Onshore  |
|       | ation |                                          | Oil and  |
|       |       | Plans for surface reclamation are a part | Gas      |
|       |       | of the Surface Use Plan of               | Order    |
|       |       | Operations\...                           | No.1     |
|       |       |                                          |          |
|       |       | For wells not having an approved plan    |          |
|       |       | for surface reclamation, operators must  |          |
|       |       | submit a proposal describing the         |          |
|       |       | procedures to be followed for complete   |          |
|       |       | abandonment, including a map showing the |          |
|       |       | disturbed area and roads to be           |          |
|       |       | reclaimed. The operator must submit the  |          |
|       |       | request to BLM. BLM will forward the     |          |
|       |       | request to the FS or other Surface       |          |
|       |       | Managing Entity (Private Surface owner), |          |
|       |       | if appropriate.                          |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       | [Post-Reclamation Approval]{.underline}: | Standard |
|       |       |                                          | Practice |
|       |       | There are no current requirements to     | -        |
|       |       | obtain the surface owner's approval. In  |          |
|       |       | practice, however, offices generally     | No       |
|       |       | seek the surface owner's written         | S        |
|       |       | concurrence that the reclamation is      | tatutory |
|       |       | satisfactory.                            | or       |
|       |       |                                          | Re       |
|       |       | [Issue & Recommendation:]{.underline}    | gulatory |
|       |       |                                          | Req      |
|       |       |                                          | uirement |
+-------+-------+------------------------------------------+----------+
|       |       | Upon completion of reclamation           | Draft    |
|       |       | operations, the lessee or operator must  | Onshore  |
|       |       | notify the BLM or the FS using Form      | Oil and  |
|       |       | 3160-5, Final Abandonment Notice, when   | Gas      |
|       |       | the location is ready for inspection.    | Order    |
|       |       | Final abandonment will not be approved   | No.1     |
|       |       | until the surface reclamation work       |          |
|       |       | required in the Surface Use Plan or      |          |
|       |       | Subsequent Report of Plug and Abandon    |          |
|       |       | has been completed to the satisfaction   |          |
|       |       | of the BLM or FS and Surface Managing    |          |
|       |       | Entity (Private Surface owner), if       |          |
|       |       | appropriate.                             |          |
|       |       |                                          |          |
|       |       | [Issue & Recommendation:]{.underline}    |          |
+-------+-------+------------------------------------------+----------+
|       |       |                                          |          |
+-------+-------+------------------------------------------+----------+