[Federal Register Volume 62, Number 183 (Monday, September 22, 1997)]
[Rules and Regulations]
[Pages 49582-49588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25102]



[[Page 49581]]

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Part V





Department of the Interior





_______________________________________________________________________



Bureau of Land Management



_______________________________________________________________________



43 CFR Part 3190



Delegation of Authority, Cooperative Agreements and Contracts for Oil 
and Gas Inspections; Cooperative Agreements; Final Rule

Federal Register / Vol. 62, No. 183 / Monday, September 22, 1997 / 
Rules and Regulations

[[Page 49582]]



DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3190

[WO-300-07-1310-00]
RIN 1004-AD09


Delegation of Authority, Cooperative Agreements and Contracts for 
Oil and Gas Inspections; Cooperative Agreements

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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SUMMARY: The Bureau of Land Management (BLM) is adopting these 
regulations to streamline and amend its cooperative agreement 
regulations. The rule will implement section 8(a) of the Federal Oil 
and Gas Royalty Simplification and Fairness Act that eliminates 
cooperative agreements on Federal lands and will implement a policy 
change for funding of cooperative inspection agreements on Indian 
lands.

DATES: Effective September 22, 1997.

ADDRESSES: Inquiries or suggestions should be sent to the attention of 
the Fluid Minerals Group at: Director (310), Bureau of Land Management, 
Rm. 501, LS, 1849 C Street, NW., Washington, DC 20240.

FOR FURTHER INFORMATION CONTACT: Ian Senio, Regulatory Analyst, at 
BLM's Regulatory Affairs Group at (202) 452-5049 or Sue Stephens, 
Program Analyst, at BLM's Native American Office at (505) 438-7553.

SUPPLEMENTARY INFORMATION:

Background

    In 1987 and 1991, BLM promulgated regulations, found at 43 CFR Part 
3190 (52 FR 27182) and 3192 (56 FR 2998), respectively, implementing 
section 202 of the Federal Oil and Gas Royalty Management Act of 1982, 
(30 U.S.C. 1732) (FOGRMA). Section 202 of FOGRMA provided for 
cooperative agreements with States and Tribes to share oil or gas 
royalty management information, and to carry out inspection, auditing, 
investigation or enforcement activities on Federal and Indian oil and 
gas leases. The Federal Oil and Gas Royalty Simplification and Fairness 
Act of 1996 (Pub. L. 104-185) (FOGRSFA), which in effect amended 
FOGRMA, eliminated cooperative agreements on Federal lands.
    BLM has cooperative agreements with several Tribes for oil and gas 
inspection and enforcement activities on Tribal lands. Up to now, these 
agreements were funded at 50 percent of allowable costs. The Minerals 
Management Service (MMS) also entered into cooperative agreements with 
several Tribes for royalty accounting activities. Initially these MMS 
agreements were funded at 50 percent, but in 1991, MMS increased its 
funding for cooperative agreements to 100 percent.
    This rule amends part 3190 by removing references to cooperative 
agreements on Federal lands and by increasing funding for cooperative 
agreements on Indian lands to up to 100 percent. This eliminates 
discrepancies in funding these types of agreements between bureaus 
within the Department of the Interior.
    On April 9, 1997 (62 FR 17138) BLM published a proposed rule to 
streamline and amend its cooperative inspection agreement regulations 
found at 43 CFR part 3192. The purpose of the amendment was to 
implement Section 8(a) of FOGRSFA which eliminates cooperative 
agreements on Federal lands and to implement a policy change for 
funding of cooperative agreements on Indian lands. The 30-day comment 
period expired on May 9, 1997. The BLM received 4 comments on the 
proposed rule. Of the 4 comments, 2 were from Tribes and 2 were from 
government agencies. All of the comments were carefully considered in 
developing this final rule.

General Comments

    The main purpose of the proposed regulations is to implement 
Section 8(a) of FOGRSFA and to increase funding for the BLM's 
cooperative inspection agreement program. Most commenters favored the 
increase in funding.
    One commenter stated that the following sentence in the preamble of 
the proposed rule was confusing: ``States may still enter into a 
cooperative agreement on Tribal lands with the permission of the Tribe 
or affected allottee.'' The commenter's concern was that an allottee 
cannot give permission to the State regarding a cooperative agreement 
solely impacting Tribal lands. We agree. The sentence should have made 
reference to Indian lands, which includes allotted lands.
    One commenter disagreed with the statement in the preamble that the 
increase in funding for cooperative agreements with Tribes is purely 
financial in nature because the Federal government has a fiduciary 
trust responsibility to protect Indian mineral resources. The statement 
that the regulatory change was purely financial in nature was intended 
to indicate that, for the purposes of the National Environmental Policy 
Act (NEPA), the implementation of this regulation would not have an 
effect on the environment and was not meant as a statement on BLM's 
trust responsibilities.
    One commenter did not agree that under the Regulatory Flexibility 
Act the regulatory changes proposed would ``not unnecessarily or 
disproportionately burden small entities'' since Tribal governments may 
be considered small entities. This commenter also thought it was 
unclear whether significant impacts affecting the ``public at large'' 
pertain to entire state(s) or reservations. The Regulatory Flexibility 
Act requires an analysis if a rule has significant economic impact on a 
substantial number of small entities. In this case, the total 
anticipated effect of the regulations is $250,000 annually. This is not 
considered to be a significant effect on a substantial number of small 
entities since the number of Tribes currently participating in the 
cooperative agreement program is small (5), and individual increases 
only range from $8,000 to $55,000. This funding will have an 
insignificant impact on the overall budgets of these Tribes with 
producing oil and gas leases.
    One commenter stated that the protection of Indian mineral 
resources is a fiduciary responsibility of the Federal government and 
that the requirement for Tribes to pay 50% of the costs is a breach of 
fiduciary responsibility. The commenter requested retroactive 
application of the proposed increase to 100% funding, and reimbursement 
of the 50% matching funds expended by the Tribes during that period. 
The Federal Government met its trust responsibility by insuring that 
Indian oil and gas leases were inspected to the standards of FOGRMA. 
The BLM expended no less on these functions when they were undertaken 
by Tribes than it did when it performed them directly and continued to 
take an active oversight role to assure the trust responsibility was 
met.
    Nor did BLM compel any Tribe to undertake these functions. By 
agreeing to match the Federal funding, the participating Tribes gave 
their mineral-owning members a higher level of service than required by 
the trust responsibility. Neither the trust responsibility, nor FOGRMA, 
requires BLM to fund 100% of reasonable Tribal costs under a 
cooperative agreement, but BLM is now willing to do so.
    One commenter stated that funding to support Tribal cooperative 
agreements should be appropriated under a separate allocation in BLM's 
budget. The commenter believed that otherwise it may be a low priority. 
The method BLM uses to allocate its funds is beyond the scope of this 
regulation and is not

[[Page 49583]]

addressed in the final rule, however, BLM's internal budget directives 
require that cooperative agreements be funded.
    One commenter said that eliminating the applicability of Section 
202 of FOGRMA to Federal lands is not necessary. We disagree. The 
elimination of cooperative agreements on Federal lands is required by 
section 8(a) of FOGRSFA. BLM can not undo by regulation what Congress 
has done by statute. BLM did not adopt this comment.

Specific Comments

    Section 3192.1 describes cooperative agreements and when BLM will 
enter into a cooperative agreement. BLM will enter into cooperative 
agreements with Tribes or States to conduct inspection, investigation 
or enforcement activities on producing Indian oil and gas leases. BLM 
will enter into a cooperative agreement with a State to inspect oil and 
gas leases on Indian lands only with the permission of the Tribe with 
jurisdiction over the lands.
    Two commenters asked if Sec. 3192.1(b) included allotted lands. One 
commenter asked if BLM would enter into a cooperative agreement if it 
only applied to allotted lands, and if so, whether or not BLM would 
still require permission from the Tribe even though Tribal lands would 
not be impacted. The definition of Indian lands provided by FOGRMA 
includes allotted lands, therefore, Sec. 3192.1(b) includes allotted 
lands and BLM would enter into a cooperative agreement even if it only 
applied to allotted lands. We added the words ``Indian lands'' to the 
final rule for clarification. The requirement that Tribal permission be 
obtained is statutory. Therefore if a State wanted to enter into a 
cooperative agreement involving allotted lands, BLM would require the 
State to obtain the permission of the Tribe with jurisdiction over the 
lands.
    Section 3192.2 states that the Tribal chairman or other authorized 
official of any Tribe with producing oil and gas leases may enter into 
a cooperative agreement and that Tribes may join together to apply for 
a multi-tribal cooperative agreement. It also provides for the governor 
of a State to enter into a cooperative agreement involving Indian lands 
with the permission of the Tribe having jurisdiction over the lands.
    One commenter asked that the word ``chairman'' in Sec. 3192.2(a) be 
replaced with ``chairperson.'' We agree, and the final rule adopts the 
comment. Another commenter asked if the Tribe would be required to have 
producing oil or gas leases, or Indian Mineral Development Act of 1982 
(25 U.S.C. 2101 et seq.) (IMDA) agreements, before it can enter into an 
agreement to inspect oil and gas leases. Section 3192.2(a) only 
authorizes Tribes with producing oil and gas leases or IMDA agreements 
on Indian lands under their jurisdiction to apply for a cooperative 
agreement.
    One commenter stated that if individually owned/allotted land is to 
be included, BLM, the Tribe and the State should advise the individual 
Indian landowners of the agreement with the State. Section 3192.3(c) 
already requires the written consent of all individual land owners for 
such lands to be included in an agreement.
    Section 3192.3 requires the applicant to submit completed Standard 
Forms 424, 424A, and 424B. It requires a description of the type and 
extent of activities proposed and the dates the proposed agreement 
takes effect. It also states that allotted lands may be included in an 
agreement with the allottee's written consent.
    Several comments were received relating to the requirement to have 
the allottee's written consent. One commenter stated that obtaining the 
permission of the Tribes and allottees is important. One commenter 
believed that BLM and the Tribe should be required to obtain the 
written consent of 100% of the individuals owning undivided fractional 
interests in each allotment/tract. The commenter also said that the 
number of consents, as well as the written consents, must be verified 
by the Bureau of Indian Affairs (BIA) prior to individually owned land 
being included in an agreement. Section 3192.3(c) of the regulations 
requires the written consent of all individual Indian land owners for 
their lands to be included in an agreement. Section 3192.3 has been 
modified to indicate that BLM will ask BIA to verify that the written 
consents obtained by a Tribe or State include 100% of the owners of 
record of each individual Indian tract.
    One commenter stated that ``there are no allottees living at this 
time'' and that the regulations are not consistent with Mustang v. 
Cheyenne-Arapaho, 2 Okla. Trib. 158 (1991) and Mustang Production 
Company v. Harrison, 94 F. 3d 1382 (10 Cir. 1996); certiorari denied 
117 S. Ct. 1288 (1997). There are still allottees living in some areas 
of the country, so BLM did not adopt that part of the comment and the 
word ``allottee'' has not been deleted. In order to clarify the 
statement in the case of leases that have passed on to the heirs of the 
original allottee, we amended the language to include heirs of 
allottees in Sec. 3192.3(c) and elsewhere, as appropriate. The Mustang 
decision as well as the Federal decision relates to governmental 
authority. BLM has made a policy decision to give individual land 
owners a say over who will manage and inspect their property, which is 
a property management function rather than a governmental function.
    Section 3192.4 states that cooperative agreements may be in effect 
for between 1-5 years, depending upon the agreement. This section 
remains as proposed since we received no comments on this section.
    Section 3192.5 describes the requirements for modifying a 
cooperative agreement. Both parties must agree to the modification in 
writing before a modification is effective. For State cooperative 
agreements involving Indian lands, where the proposed modification 
would affect the duration or scope of an agreement, the State must 
obtain the Tribe's written consent.
    One commenter asked if an affected allottee would be required to 
provide written consent to a proposed modification impacting the 
duration or scope of a cooperative agreement. Any proposed modification 
to an agreement involving allottees/heirs that affects the duration or 
scope of an agreement would require written permission of the affected 
allottee/heirs. In the final rule section 3192.5 the word ``both'' has 
been changed to ``all.'' The section has also been changed to include a 
reference to allottees/heirs.
    Section 3192.6 cross-references Sec. 3190.1 of this part where the 
requirements relating to a Tribe or State receiving proprietary data 
from BLM under a cooperative agreement are located. The requirements 
for evaluating requests for proprietary data are found at 43 CFR 
3190.1. BLM received no comments on this section and it remains as 
proposed.
    Section 3192.7 states the requirements for spending the money a 
Tribe receives under a cooperative agreement. Such money may only be 
used for costs incurred which are directly related to the activities 
carried out under an agreement. BLM received no comments on this 
section and it remains as proposed.
    Section 3192.8 states that activities under a cooperative agreement 
may be subcontracted with BLM's written approval.
    One commenter recommended that an alternative to BLM entering into 
a cooperative agreement with a State to inspect Indian oil and gas 
operations would be for BLM to enter into a cooperative agreement with 
the Tribe, and the Tribe subcontract to the State. Section 3192.8 
already provides that

[[Page 49584]]

activities may be subcontracted with BLM's written consent.
    Section 3192.9 describes the terms that Tribes or States must 
include in cooperative agreements. The cooperative agreement must state 
the purpose, objective and authority; contain definitions of terms used 
in an agreement; describe the lands covered in an agreement; describe 
the roles and responsibilities of BLM and the Tribe or State; describe 
the activities that will be carried out under an agreement; and define 
minimum performance standards. Agreements must include provisions to 
protect proprietary data; prevent conflict of interest; provide for 
sharing of civil penalties; and provide for termination of the 
agreement. Agreements must identify BLM and Tribal or State contacts 
and provide for the avoidance of duplication of effort. Agreements must 
list schedules for inspection activities; training; periodic reviews 
and meetings. Agreements must specify the limit on the dollar amount of 
Federal funding; describe procedures for payment or reimbursement; and 
describe allowable costs and plans for BLM oversight.
    One commenter referenced Sec. 3192.9(j)(1) and asked if BLM has the 
capability of thoroughly training Tribal personnel on a continuing 
basis as positions are vacated and filled with new personnel. The 
commenter also stated that where individually owned/allotted land is 
concerned, BLM should absolutely guarantee that inspections be made on 
that land either by qualified Tribal personnel or BLM personnel. BLM 
training provides for formal classroom instruction, on-the-job training 
and certification of inspectors before they are allowed to conduct 
independent inspections on Federal or Indian lands. Section 3192.14 of 
this regulation requires that Tribal inspectors go through the same 
training and certification procedure as BLM inspectors to ensure that 
only qualified personnel conduct inspections.
    Section 3192.10 cross-references the list of allowable costs under 
cooperative agreements in 43 CFR subpart 12, identifies the level of 
funding for cooperative agreements and states requirements related to 
funding cooperative agreements.
    One commenter stated that where BLM turns over the program, the 
recipient Tribe should be allocated sufficient Federal funds to perform 
the assumed tasks. Currently, and under these regulations, funding for 
cooperative agreements is based on costs associated with activities 
carried out under the agreement and is negotiated between the Tribe and 
BLM.
    One commenter requested that the amount of funding provided to a 
Tribe under a cooperative inspection agreement be equal to the amount 
of funding they would receive from the Minerals Management Service 
under its cooperative audit agreement. The commenter also requested 
that BLM seek input from, and involve Tribes in, BLM's fiscal year 
budgeting process for the cooperative agreements. By law, BLM can only 
fund its agreements for those costs directly required to carry out the 
program. Costs must be based on the activities carried out by the Tribe 
under the agreement, and cannot be based on what the Tribe is receiving 
from another agency under a different program. BLM did not adopt that 
part of the comment. Each year BLM requests input from Tribes 
participating in the cooperative agreement program on the amount of 
funding needed for the next year's agreement. Therefore, we believe 
that Tribes already are involved in BLM's budget process to the extent 
that is necessary.
    Section 3192.11 describes the conditions under which civil 
penalties are shared between a Tribe and BLM.
    One commenter stated that this section is misleading in that the 
first sentence implies that civil penalties are shared equally, then it 
goes on to say something different. The commenter recommended that the 
first sentence be deleted and the last sentence be expanded to include 
equal sharing of civil penalties after exceeding the amount of Federal 
funding. We agree that the language may be confusing. This section has 
been rewritten.
    Section 3192.12 identifies the activities that may be carried out 
under cooperative agreements and the conditions under which they may be 
carried out. Such activities include inspections, issuing Notices of 
Non-Compliance, issuing Notices to Shut Down Operations, conducting 
investigations, and conducting oil transporter inspections.
    One commenter asked if Tribes could conduct inspection, 
investigation or enforcement activities on producing Federal and State 
oil and gas leases within the Indian Tribe's jurisdiction. Section 8(a) 
of FOGRSFA eliminates cooperative agreements on Federal lands which 
effectively eliminates a Tribe's ability to enter into these type of 
agreements.
    One commenter had several questions relating to split-estate lands 
where the Federal government owns the mineral estate and a Tribe owns 
the surface. The questions were: whether a State could enter into a 
cooperative agreement with the permission of the Tribe involved, to 
conduct inspection and enforcement for Federal oil and gas leases; 
whether an Indian Tribe could inspect such Federal leases under a 
cooperative agreement; and whether such lands could be included in a 
delegation of authority to States under Section 205 of FOGRMA.
    Section 8(a) of FOGRSFA eliminates cooperative agreements on 
Federal lands. Although FOGRSFA does not specifically address split-
estate situations, BLM interprets the term ``Federal lands'' as 
applying to all Federal mineral interests. As such, Federal leases 
involving split-estate lands of the type to which the commenter refers 
would not be included in a cooperative agreement. BLM will allow 
inclusion of Federal leases involving split-estate lands in a 
delegation of authority to a State.
    One commenter stated that Sec. 3192.12(a) should reference Tribal 
and allotted oil and gas leases if allotted leases are part of the 
cooperative agreement. We agree; this section has been changed to 
include allotted lands.
    Section 3192.13 identifies those activities that cannot be carried 
out by a Tribe or State, but which must remain BLM's responsibility. 
These include issuing Notices of Non-compliance that involve monetary 
assessments and penalties; collecting assessments and penalties; 
calculating and distributing shared civil penalties; training and 
certifying Tribal and State inspectors; and issuing and regulating 
inspector identification cards and identifying leases to be inspected 
(taking into account priorities of the Tribe). Section 3192.13(b) 
reserves BLM's right to enter lease sites to conduct inspections, 
enforcement, investigations or other activities necessary to supervise 
lease operations.
    One commenter thought that BLM needed to explain what we meant by 
``control'' under Sec. 3192.13(5) ``Issue and control inspector 
identification cards.'' We agree that the word ``control'' in this 
context is vague and in the final rule ``control'' has been changed to 
``regulate.'' By using the term ``regulate'' BLM means that we will 
control the use and possession of inspector identification cards. For 
example, if an inspector is decertified or leaves the inspection 
program, BLM will require that the inspector return the identification 
card to BLM.
    One commenter asked that if allotted leases are included in a 
cooperative agreement, whether BLM would take into account the 
allottee's priorities. Due to the large number of allottees and heirs 
that may be involved, it is impractical for BLM to consult all of the 
allottees/heirs on an annual basis.

[[Page 49585]]

However, BLM will consult with BIA concerning priorities for allotted 
lands. Section 3192.13(a)(6) has been changed to include consultation 
with BIA to determine priorities on allotted lands.
    Section 3192.14 describes the certification requirements that 
Tribal or State inspectors must meet before BLM will authorize them to 
conduct activities under a cooperative agreement. It also describes 
conflict of interest restrictions for Tribal and State inspectors. BLM 
received no comments on this section and it remains as proposed.
    Section 3192.15 describes the conditions under which a cooperative 
agreement may be terminated by mutual agreement or unilaterally by BLM. 
BLM received no comments on this section, however, BLM added language 
to make it clear that a Tribe may unilaterally terminate a cooperative 
agreement. Unilateral terminations on the part of the Tribe are 
effective 60 days after BLM receives written notice that the Tribe is 
terminating the agreement. The 60 days is to allow BLM time to ensure 
proper staffing exists to fill the void left by the terminated 
agreement.
    Section 3192.16 describes the notification process BLM will follow 
where BLM plans to terminate an agreement unilaterally.
    One commenter recommended changing Sec. 3192.16(a) to read ``* * * 
BLM must send a notice to you that lists the reasons why BLM plans to 
terminate the agreement'' to make it more clear. BLM adopted this 
recommendation with only minor wording changes.
    One commenter asked if there was a time frame within which the 
impacted Tribe or State must submit its plan for correction under 
Sec. 3192.16(b). This section has been modified and under the final 
rule, Tribes and States have 30 days to submit a plan for correction. 
This time frame may be extended at the request of the Tribe or State.
    One commenter asked if under Sec. 3192.16(c) BLM has a time frame 
within which to make a decision to either approve or disapprove the 
plan. The commenter also asked that if BLM does not approve the plan, 
will BLM provide the impacted State or Tribe another opportunity to 
submit another plan for approval, or is it left up to the appeal 
process. BLM added a new sentence to Sec. 3192.16(b) that provides for 
a 30-day BLM review. BLM also changed Sec. 3192.16(d) and (e) to 
indicate that a second opportunity is available to correct errors in 
the first submission. Under the final rule, if the State or Tribe does 
not correct the problem(s) within 60 days of the second notice, the 
agreement terminates.
    Section 3192.17 describes what BLM requires to reinstate a 
cooperative agreement that was terminated either by mutual consent or 
unilaterally by BLM. There were no changes to this section in the final 
rule since we received no comments on this section.
    Section 3192.18 states that adversely affected Tribes and States 
may appeal a BLM decision and describes where in 43 CFR the provision 
for appealing a BLM decision are found. This section was revised to 
conform to other appeals provisions in this title.

Effective Date

    The Administrative Procedure Act (APA) (5 U.S.C. 553(d)) generally 
requires that newly promulgated regulations not take effect until 30 
days after publication to allow regulated entities time to bring their 
programs into compliance with the new regulations. However, section 
553(d)(3) allows regulations to take effect in less than 30 days for 
good cause shown. BLM does not believe that the 30 day rule should 
apply to these regulations and believes that for good cause they should 
take effect immediately.
    The primary change from existing requirements that these 
regulations implement is an increase in funding from BLM. In order for 
the regulated community to take full advantage of the increase in 
funding these regulations provide, they must take effect before the 
beginning of the next fiscal year. Furthermore, this rule does not 
contain provisions that require regulated entities to modify their 
programs to come into compliance with the new regulations. BLM is 
prepared to immediately increase funding for the cooperative agreement 
program. The Department of the Interior, therefore, for good cause 
finds under 5 U.S.C. 553(d)(3) that this rule may take effect upon 
publication.

Compliance With the National Environmental Policy Act

    It is hereby determined that this final rule does not constitute a 
major Federal action significantly affecting the quality of the human 
environment, and that no detailed statement pursuant to section 
102(2)(C) of the National Environmental Policy Act (NEPA) of 1969 (42 
U.S.C. 4332(2)(C) is required. It has been determined that this final 
rule is categorically excluded from further environmental review 
pursuant to 516 Departmental Manual (DM), Chapter 2, Appendix 1, Item 
1.10. This item states that ``Policies, directives, regulations, and 
guidelines of an administrative financial, legal, technical or 
procedural nature * * *'' are categorically exempt. Because this rule 
addresses the financial aspects of the Bureau's cooperative inspection 
agreement program and implements a statutory modification in the 
program authority, we believe that it falls into this category, thereby 
obviating any further review under NEPA. It has also been determined 
that the rule would not significantly affect the 10 criteria for 
exceptions listed in 516 DM 2, Appendix 2. Pursuant to the Council on 
Environmental Quality regulations (40 CFR 1508.4) and environmental 
policies and procedures of the Department of the Interior, 
``categorical exclusions'' are actions that do not individually or 
cumulatively have a significant effect on the human environment and 
that have been found to have no such effect in procedures adopted by a 
Federal agency and for which neither an environmental assessment nor an 
environmental impact statement is required.

Compliance With the Paperwork Reduction Act

    This rule does not add new information collection requirements and 
the existing requirements have been approved by the Office of 
Management and Budget (OMB) under OMB approval numbers 0348-0040, 0348-
0043 and 0348-0044.

Compliance With the Regulatory Flexibility Act

    The Department has determined under the Regulatory Flexibility Act 
(5 U.S.C. 601 et seq.) that the final rule will not have a significant 
economic impact on a substantial number of small entities. The reasons 
for this determination are that the economic impacts of the rule are 
not considered significant nor will the rule impact a substantial 
number of small entities. The effect of this rule will be to increase 
funding for cooperative inspection agreements from ``up to 50 percent'' 
to ``up to 100 percent.'' Only 5 Tribes currently participate in the 
cooperative agreement program, but there are 29 oil and gas Tribes 
eligible to participate. Potential funding could approach $1 million. 
However, it would be speculative for BLM to try to estimate how many of 
the non-participating Tribes may decide to participate as a result of 
the increase in funding. It is unlikely that all of the non-
participating Tribes will elect to enter into this type of agreement 
with BLM. Current funding is approximately $250,000 so the increase 
will be approximately $250,000. For the 5 Tribes currently 
participating in the program, individual increases range from $8,000 to 
$55,000. We believe that this funding will have an insignificant impact 
on the overall

[[Page 49586]]

budgets of Tribes with producing oil and gas leases that qualify for 
the program. Therefore, BLM certifies that this final rule will not 
have a significant economic impact on a substantial number of small 
entities.

Compliance With the Unfunded Mandates Reform Act

    BLM has determined that this rule is not significant under the 
Unfunded Mandates Reform Act of 1995, because it will not result in the 
expenditure by State, local and Tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. 
Further, this rule will not significantly or uniquely affect small 
governments.

Compliance With Executive Order 12612

    This final rule will not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.
    Eliminating cooperative agreements with States for inspection and 
enforcement of oil and gas leases on Federal lands is a requirement of 
section 8(a) of FOGRSFA. States that are interested in conducting 
inspections on Federal oil and gas leases may still do so under a 
Delegation of Authority as provided in section 205 of FOGRMA (30 U.S.C. 
1735).
    Therefore, in accordance with Executive Order 12612, BLM has 
determined that this final rule does not have sufficient federalism 
implications to warrant preparation of a Federalism Assessment.

Compliance With Executive Order 12630

    The Department certifies that this final rule does not represent a 
governmental action capable of interference with constitutionally 
protected property rights. It does not provide for the taking of any 
property rights or interests. Therefore, as required by Executive Order 
12630, the Department of the Interior has determined that the rule 
would not cause a taking of private property.

Compliance With Executive Order 12866

    According to the criteria listed in section 3(f) of Executive Order 
12866, BLM has determined that the final rule is not a significant 
regulatory action. As such, the final rule is not subject to Office of 
Management and Budget review under section 6(a)(3) of the order.

Compliance With Executive Order 12988

    The Department of the Interior has determined that this rule meets 
the applicable standards provided in sections 3(a) and 3(b)(2) of 
Executive Order 12988.

List of Subjects in 43 CFR Part 3192

    Administrative practice and procedure, Authority delegations 
(Government agencies), Government contracts, Indians--lands, 
Intergovernmental relations, Mineral Royalties, Reporting and 
recordkeeping requirements.

    Accordingly, under the authorities cited below, and for the reasons 
stated in the preamble, part 3190, subchapter C, chapter II, subtitle 
B, title 43 of the Code of Federal Regulations is amended as follows:

PART 3190--DELEGATION OF AUTHORITY, COOPERATIVE AGREEMENTS AND 
CONTRACTS FOR OIL AND GAS INSPECTIONS

    1. Revise the authority citation to read as follows:


Sec. 3190.2-2  [Amended]

    Authority: 30 U.S.C. 1735 and 1751.
    2. Revise Sec. 3190.2-2(b)(2) to read as follows:
* * * * *
    (b) * * *
    (2) Up to 100 percent for a cooperative agreement.
* * * * *
    3. Revise Subpart 3192 of part 3190 to read as follows:

Subpart 3192--Cooperative Agreements

Sec.
3192.1  What is a cooperative agreement?
3192.2  Who may apply for a cooperative agreement with BLM to 
conduct oil and gas inspections?
3192.3  What must a Tribe or State include in its application for a 
cooperative agreement?
3192.4  What is the term of a cooperative agreement?
3192.5  How do I modify a cooperative agreement?
3192.6  How will BLM evaluate my request for proprietary data?
3192.7  What must I do with Federal assistance I receive?
3192.8  May I subcontract activities in the agreement?
3192.9  What terms must a cooperative agreement contain?
3192.10  What costs will BLM pay?
3192.11  How are civil penalties shared?
3192.12  What activities may Tribes or States perform under 
cooperative agreements?
3192.13  What responsibilities must BLM keep?
3192.14  What are the requirements for Tribal or State inspectors?
3192.15  May cooperative agreements be terminated?
3192.16  How will I know if BLM intends to terminate my agreement?
3192.17  Can BLM reinstate cooperative agreements that have been 
terminated?
3192.18  Can I appeal BLM's decision?

Subpart 3192--Cooperative Agreements


Sec. 3192.1  What is a cooperative agreement?

    (a) A cooperative agreement is a contract between the Bureau of 
Land Management (BLM) and a Tribe or State to conduct inspection, 
investigation, or enforcement activities on producing Indian Tribal or 
allotted oil and gas leases.
    (b) BLM will enter into a cooperative agreement with a State to 
inspect oil and gas leases on Indian lands only with the permission of 
the Tribe with jurisdiction over the lands.


Sec. 3192.2  Who may apply for a cooperative agreement with BLM to 
conduct oil and gas inspections?

    (a) The Tribal chairperson, or other authorized official, of a 
Tribe with producing oil or gas leases, or agreements under the Indian 
Mineral Development Act of 1982 (25 U.S.C. 2101 et seq.), may apply for 
a cooperative agreement with BLM for Indian lands under the Tribe's 
jurisdiction.
    (b) Tribes may join together to apply for a multi-tribe cooperative 
agreement.
    (c) The Governor of a State having a Tribal resolution from the 
Tribe with jurisdiction over the Indian lands, permitting the Governor 
to enter into a cooperative agreement, may apply for a cooperative 
agreement with BLM.


Sec. 3192.3  What must a Tribe or State include in its application for 
a cooperative agreement?

    (a) To apply for a cooperative agreement you must complete--
    (1) Standard Form 424, Application for Federal Assistance;
    (2) Standard Form 424A, Budget Information--Non-Construction 
Programs; and
    (3) Standard Form 424B, Assurances--Non-Construction Programs.
    (b) You must describe the type and extent of oil and gas 
inspection, enforcement, and investigative activities proposed under 
the agreement and the period of time the proposed agreement will be in 
effect (See section 11 of Standard Form 424).
    (c) You may include allotted lands under an agreement with the 
written consent of all allottees or their heirs.

[[Page 49587]]

BLM will ask the Bureau of Indian Affairs (BIA) to verify that the 
Tribe or State has obtained all of the necessary signatures to commit 
100% of each individual tract of allotted lands to the agreement.


Sec. 3192.4  What is the term of a cooperative agreement?

    Cooperative agreements can be in effect for a period from 1 to 5 
years from the effective date of the agreement, as set out in the 
agreement.


Sec. 3192.5  How do I modify a cooperative agreement?

    You may modify a cooperative agreement by having all parties to the 
agreement consent to the change in writing. If the agreement is with a 
State, and the modification would affect the duration or scope of the 
agreement, then the State must obtain the written consent of the 
affected Tribe and/or allottee or heir.


Sec. 3192.6  How will BLM evaluate my request for proprietary data?

    BLM will evaluate Tribal or State requests for proprietary data on 
a case-by-case basis according to the requirements of Sec. 3190.1 of 
this part.


Sec. 3192.7  What must I do with Federal assistance I receive?

    You must use Federal assistance that you receive only for costs 
incurred which are directly related to the activities carried out under 
the cooperative agreement.


Sec. 3192.8  May I subcontract activities in the agreement?

    You must obtain BLM's written approval before you subcontract any 
activities in the agreement with the exception of financial audits of 
program funds that are required by the Single Audit Act of 1984 (31 
U.S.C. 7501 et seq.).


Sec. 3192.9  What terms must a cooperative agreement contain?

    The cooperative agreement must--
    (a) State its purpose, objective, and authority;
    (b) Define terms used in the agreement;
    (c) Describe the Indian lands covered;
    (d) Describe the roles and responsibilities of BLM and the Tribe or 
State;
    (e) Describe the activities the Tribe or State will carry out;
    (f) Define the minimum performance standards to evaluate Tribal or 
State performance;
    (g) Include provisions to--
    (1) Protect proprietary data, as provided in Sec. 3190.1 of this 
part;
    (2) Prevent conflict of interest, as provided in Sec. 3192.14(d);
    (3) Share civil penalties, as provided in Sec. 3192.11; and
    (4) Terminate the agreement;
    (h) List BLM and Tribal or State contacts;
    (i) Avoid duplication of effort between BLM and the Tribe or State 
when conducting inspections;
    (j) List schedules for--
    (1) Inspection activities;
    (2) Training of Tribal or State inspectors;
    (3) Periodic reviews and meetings;
    (k) Specify the limit on the dollar amount of Federal funding;
    (l) Describe procedures for Tribes or States to request payment 
reimbursement;
    (m) Describe allowable costs subject to reimbursement; and
    (n) Describe plans for BLM oversight of the cooperative agreement.


Sec. 3192.10  What costs will BLM pay?

    (a) BLM will pay expenses allowed under part 12, subpart A, 
Administrative and Audit Requirements and Cost Principles for 
Assistance Programs, of this title.
    (b) BLM will fund the agreements up to 100 percent of allowable 
costs.
    (c) Funding is subject to the availability of BLM funds.
    (d) Funding for cooperative agreements is subject to the shared 
civil penalties requirement of Sec. 3192.11.


Sec. 3192.11  How are civil penalties shared?

    (a) Civil penalties that the Federal Government collects resulting 
from an activity carried out by a Tribe or State under a cooperative 
agreement are shared equally between the inspecting Tribe or State and 
BLM.
    (b) BLM must deduct the amount of the civil penalty paid to the 
Tribe or State from the funding paid to the Tribe or State for the 
cooperative agreement.


Sec. 3192.12  What activities may Tribes or States perform under 
cooperative agreements?

    Activities carried out under the cooperative agreement must be in 
accordance with the policies of the appropriate BLM State or field 
office and as specified in the agreement, and may include--
    (a) Inspecting Tribal or allotted oil and gas leases for compliance 
with BLM regulations;
    (b) Issuing initial Notices of Incidents of Non-Compliance, Form 
3160-9, and Notices to Shut Down Operations, Form 3160-12;
    (c) Conducting investigations; or
    (d) Conducting oil transporter inspections.


Sec. 3192.13  What responsibilities must BLM keep?

    (a) Under cooperative agreements, BLM continues to--
    (1) Issue Notices of Incidents of Noncompliance that impose 
monetary assessments and penalties;
    (2) Collect assessments and penalties;
    (3) Calculate and distribute shared civil penalties;
    (4) Train and certify Tribal or State inspectors;
    (5) Issue and regulate inspector identification cards; and
    (6) Identify leases to be inspected, taking into account the 
priorities of the Tribe. Priorities for allotted lands will be 
established through consultation with the BIA office with jurisdiction 
over the lands in the agreement.
    (b) If BLM enters into a cooperative agreement, that agreement does 
not affect BLM's right to enter lease sites to conduct inspections, 
enforcement, investigations or other activities necessary to supervise 
lease operations.


Sec. 3192.14  What are the requirements for Tribal or State inspectors?

    (a) Tribal or State inspectors must be certified by BLM before they 
conduct independent inspections on Indian oil and gas leases.
    (b) The standards for certifying Tribal or State inspectors must be 
the same as the standards BLM uses for certifying BLM inspectors.
    (c) Tribal and State inspectors must satisfactorily complete on-
the-job and classroom training in order to qualify for certification.
    (d) Tribal or State inspectors must not--
    (1) Inspect the operations of companies in which they, a member of 
their immediate family, or their immediate supervisor, have a direct 
financial interest; or
    (2) Use for personal gain, or gain by another person, information 
he or she acquires as a result of his or her participating in the 
cooperative agreement.


Sec. 3192.15  May cooperative agreements be terminated?

    (a) Cooperative agreements may be terminated at any time if all 
parties agree to the termination in writing.
    (b) BLM may terminate an agreement without Tribal or State 
agreement if the--
    (1) Tribe or State fails to carry out the terms of the agreement; 
or
    (2) Agreement is no longer needed.
    (c) A Tribe may unilaterally terminate an agreement after notifying 
BLM. For a unilateral termination, the agreement terminates 60 days 
after the Tribe notifies BLM.

[[Page 49588]]

Sec. 3192.16  How will I know if BLM intends to terminate my agreement?

    (a) If BLM intends to terminate your agreement because you did not 
carry out the terms of the agreement, BLM must send you a notice that 
lists the reason(s) why BLM intends to terminate the agreement.
    (b) Within 30 days after receiving the notice, you must send BLM a 
plan to correct the problem(s) BLM listed in the notice. BLM has 30 
days to approve or disapprove the plan, in writing.
    (c) If BLM approves the plan, you have 30 days after you receive 
notice of the approval to correct the problem(s).
    (d) If you have not corrected the problem within 30 days, BLM will 
send you a second written termination notice that will give you another 
opportunity to correct the problem.
    (e) If the problem is not corrected within 60 days after you 
receive the second notice, BLM will terminate the agreement.


Sec. 3192.17  Can BLM reinstate cooperative agreements that have been 
terminated?

    (a) If your cooperative agreement was terminated by consent, you 
may request that BLM reinstate the agreement at any time.
    (b) If BLM terminated an agreement because you did not carry out 
the terms of the agreement, you must prove that you have corrected the 
problem(s) and are able to carry out the terms of the agreement.
    (c) For any reinstatement request BLM will decide whether or not 
your cooperative agreement may be reinstated and, if so, whether you 
must make any changes to the agreement before it can be reinstated.


Sec. 3192.18   Can I appeal a BLM decision?

    Any party adversely affected by a BLM decision made under this 
subpart may appeal the decision in accordance with parts 4 and 1840 of 
this title.

    Dated: September 16, 1997.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
[FR Doc. 97-25102 Filed 9-19-97; 8:45 am]
BILLING CODE 4310-84-P