Federal Register / Vol. 78, No. 167 / Wednesday, August 28, 2013 / Proposed Rules 53083 

Internet http://www.bombardier.com. You 

may review copies of the referenced service 

information at the FAA, Transport Airplane 

Directorate, 1601 Lind Avenue SW., Renton, 

WA. For information on the availability of 

this material at the FAA, call 425–227–1221. 

Issued in Renton, Washington, on August 

21, 2013. 

Stephen P. Boyd, 

Acting Manager, Transport Airplane 

Directorate, Aircraft Certification Service. 

[FR Doc. 2013–20968 Filed 8–27–13; 8:45 am] 

BILLING CODE 4910–13–P 

PEACE CORPS 

22 CFR Part 303 

RIN 0420–AA29 

Freedom of Information Act 

Administration 

AGENCY: Peace Corps. 

ACTION: Proposed rule; correction. 

SUMMARY: The Peace Corps is correcting 

a typographical error in a proposed rule 

that appeared in the Federal Register of 

August 7, 2013. The proposed rule 

updates Peace Corps regulations on the 

Freedom of Information Act (FOIA) to 

implement guidance given by the 

President and the Attorney General 

regarding discretionary disclosures of 

records or information exempt from 

disclosure under the FOIA, whenever 

disclosure would not foreseeably harm 

an interest protected by a FOIA 

exemption. The proposed rule is based 

on language used by Department of 

Justice in its FOIA regulations. 

Additionally, the proposed rule deletes 

unnecessary and superfluous language 

and ensures the rule is consistent with 

current law. 

FOR FURTHER INFORMATION CONTACT: 

Anne Passmore, 202–692–2164. 

Correction 

In proposed rule FR Doc. 2013–19050 

published on August 7, 2013 (78 FR 

48083), make the following correction: 

On page 48084, in the third column, 

third paragraph, in § 303.10(c)(2)(ii), 

remove ‘‘Executive Order 13525’’ and 

add ‘‘Executive Order 13526’’ in its 

place. 

Dated: August 22, 2013. 

Garry W. Stanberry, 

Deputy Associate Director, Management. 

[FR Doc. 2013–20926 Filed 8–27–13; 8:45 am] 

BILLING CODE 6051–01–P 

DEPARTMENT OF THE INTERIOR 

Bureau of Indian Affairs 

25 CFR Part 226 

[BIA–2013–0003; 134/A0A511010/

AAK1001000] 

RIN 1076–AF17 

Leasing of Osage Reservation Lands 

for Oil and Gas Mining 

AGENCY: Bureau of Indian Affairs, 

Interior. 

ACTION: Proposed rule. 

SUMMARY: The Bureau of Indian Affairs 

is proposing to revise the regulations 

addressing oil and gas mining on 

reservation land of the Osage Nation. 

This rule updates the leasing procedures 

and rental, production, and royalties 

requirements for oil and gas on Osage 

Mineral lands and is the result of a 

negotiated rulemaking. 

DATES: Comments on this proposed rule 

must be received by October 28, 2013. 

Comments on the information 

collections contained in this proposed 

regulation are separate from those on 

the substance of the rule. Comments on 

the information collection burden 

should be received by September 27, 

2013 to ensure consideration, but must 

be received no later than October 28, 

2013. 

ADDRESSES: You may submit comments 

by any of the following methods: 

—Federal rulemaking portal: The rule is 

listed under the agency name ‘‘Bureau 

of Indian Affairs’’ and has been 

assigned Docket ID ‘‘BIA–2013–0003’’ 

at http://www.regulations.gov. 

—Email: osageregneg@bia.gov. Include 

the number 1076–AF17 in the subject 

line of the message. 

—Mail or hand-delivery: Mr. Eddie 

Streater, Designated Federal Officer, 

Bureau of Indian Affairs, P.O. Box 

8002, Muscogee, OK 74402. Include 

the number 1076–AF17 on the outer 

envelope. 

We cannot ensure that comments 

received after the close of the comment 

period (see DATES) will be included in 

the docket for this rulemaking and 

considered. Comments sent to an 

address other than those listed above 

will not be included in the docket for 

this rulemaking. 

Comments on the information 

collections contained in this proposed 

regulation are separate from those on 

the substance of the rule. Send 

comments on the information collection 

burden to OMB by facsimile to (202) 

395–5806 or email to the OMB Desk 

Officer for the Department of the 

Interior at OIRA_submission@

omb.eop.gov. Please send a copy of your 

comments to the person listed in the 

FOR FURTHER INFORMATION CONTACT

section of this notice. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Eddie Streater, Designated Federal 

Officer, Bureau of Indian Affairs, P.O. 

Box 8002, Muscogee, OK 74402; 

telephone (918) 781–4608; fax (918) 

718–4604; or email osageregneg@

bia.gov. Additional information on the 

negotiated rulemaking can be found at: 

http://www.bia.gov/osageregneg. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary of Rule 

This rule updates the oil and gas 

regulations governing Osage County. It 

is intended to strengthen the 

management and administration of the 

Osage mineral estate for the benefit of 

the Osage. These provisions provide 

updated reporting and inspection 

requirements, further specify lessee 

obligations with respect to operations, 

revise royalty rate calculations and 

update the amounts for bonds, fines and 

penalties. 

II. Background 

On October 14, 2011, the United 

States and the Osage Nation (formerly 

known as the Osage Tribe) signed a 

Settlement Agreement to resolve 

litigation regarding alleged 

mismanagement of the Osage Nation’s 

oil and gas mineral estate, among other 

claims. In the Settlement Agreement, 

the parties agreed that it would be 

mutually beneficial ‘‘to address means 

of improving the trust management of 

the Osage Mineral Estate, the Osage 

Tribal Trust Account, and Other Osage 

Accounts.’’ The parties agreed that a 

review and revision of the existing 

regulations is warranted to better assist 

the Bureau of Indian Affairs (BIA) in 

managing the Osage Mineral Estate. The 

parties agreed to engage in a negotiated 

rulemaking for this purpose. For 

additional information on the negotiated 

rulemaking, please visit http://

www.bia.gov/osageregneg/. The 

Committee submitted its report to BIA 

on April 25, 2013. BIA has based this 

proposed rule on the report. 

III. Detailed Explanation of Revisions 

This rule revises 25 CFR part 226 by 

changing all references to the ‘‘Osage 

Tribal Council’’ to the ‘‘Osage Minerals 

Council’’ because the Osage Tribal 

Council no longer exists and the Osage 

Minerals Council has the authority to 

make decisions regarding the Osage 

minerals estate. To avoid confusion in 

terminology, this rule changes all 


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53084 Federal Register / Vol. 78, No. 167 / Wednesday, August 28, 2013 / Proposed Rules 

references to ‘‘lease cancellation’’ to 

‘‘lease termination,’’ unless it is a 

voluntary lease cancellation by a lessee. 

In addition, this rule adds the term 

‘‘other marketable product’’ to the 

regulations to ensure that the 

regulations do not leave a gap as to 

other minerals. 

In § 226.1, this rule: 

• Inserts definition of ‘‘lease’’ because 

the prior regulations did not include a 

definition; 

• Changes references to a ‘‘contract’’ 

or ‘‘agreement’’ to ‘‘lease’’; 

• Adds the phrase ‘‘or an authorized 

representative’’ to all lessee definitions 

to clarify that an authorized 

representative of a lessee is bound by 

the regulations; 

• Deletes the definition of ‘‘major 

purchaser’’ because it is no longer 

necessary due to changes in the 

provisions dealing with royalty 

payments; 

• Combines the definitions for 

‘‘casinghead gas’’ and ‘‘natural gas’’ for 

simplification to make one new 

definition of ‘‘raw natural gas’’ or ‘‘gas’’; 

• Adds new definitions for 

‘‘avoidably lost,’’ ‘‘condensate,’’ 

‘‘drainage,’’ ‘‘marketable condition,’’ 

‘‘maximum ultimate economic 

recovery,’’ ‘‘natural gas liquids,’’ ‘‘notice 

to lessee,’’ ‘‘onshore oil and gas order,’’ 

‘‘other marketable product,’’ 

‘‘production in paying quantities,’’ and 

‘‘waste of oil and gas or other 

marketable product’’ to define new 

terms being introduced in the proposed 

regulations. 

This rule also adds new sections and 

redesignates other sections, as shown in 

the table below. 

Current 25 CFR 

section 

Proposed 

section Proposed change 

N/A .................... 226.2 (New) ...... Clarifies what requirements govern oil and gas activities in Osage County. 

N/A .................... 226.3 (New) ...... Clarifies the types of notices and orders BIA can issue. 

N/A .................... 226.4 (New) ...... More clearly delineates and specifies the responsibilities of the Superintendent with respect to management and administration of the Osage mineral estate. 

226.2 ................. 226.5 ................ Breaks each current requirement into its own paragraph for readability and extends the time for a successful bidder to deposit his payment; requires that payment be made in a specified form other than 

cash; increases the filing fee for submitting a completed lease form; enumerates the circumstances in 

which a portion of the bonus bid will be forfeited; requires that the Superintendent post legal descriptions within 30 days of a lease sale; and allows the Osage Minerals Council to request comparables 

from the Superintendent for lease sales. 

226.3 ................. 226.6 ................ Increases the filing fee. 

226.4 ................. 226.7 ................ Amends the provision to allow the Superintendent to specify how and where payment is made. 

226.5 ................. 226.8 ................ (No substantive change.) 

226.6 ................. 226.9 ................ Amends the current provision to allow personal bonds as well as surety bonds and specifies the requirements for personal and surety bonds; the bonding amount was changed from a per lease area bond to 

requiring that a $5,000 per well bond is required for up to 25 wells. 

226.6(d) ............. 226.10 .............. Moves provision allowing the Superintendent to increase the amount of a required bond to its own section. 

Clarifies the conditions for increasing a bond. 

N/A .................... 226.11 (New) .... Specifies the circumstances in which the Superintendent must release a bond. 

226.7 ................. 226.12 .............. (No substantive change.) 

226.8 ................. 226.13 .............. (No substantive change.) 

226.9 ................. 226.14 .............. Increases rental rates; clarifies the lessee’s responsibility for diligent development; adds new procedures 

for determining diligent development of a lease; and adds in new procedures for automatic termination 

of a lease for failure to diligently develop. 

N/A .................... 226.15 (New) .... Sets forth the lessee’s obligation relating to drainage, which is not included in the current regulations. 

N/A .................... 226.16 (New) .... Specifies the Superintendent’s remedies when drainage has occurred. 

226.10 ............... 226.17 .............. (No substantive change.) 

226.11 ............... (See below) ...... Divides into several new sections for simplicity and readability, as shown below. 

226.11(a) ........... 226.18 .............. Amends the royalty rate calculation for oil, subject to a price adjustment for gravity.

226.11(a) ........... 226.19 .............. Specifies how the gravity adjustment is calculated. 

226.11(b) ........... 226.20 .............. Amends the royalty rate calculation for gas and specifies how gross proceeds are calculated. 

N/A .................... 226.21 .............. Provides that royalty is due on all oil and gas avoidably lost and sets forth the procedure for such determination. 

226.11(c) ........... 226.22 .............. Amends the date for payment of royalty and adds a new provision for adjusting minimum royalty. 

N/A .................... 226.23 (New) .... Addresses minimum royalty for other marketable products. 

226.12 ............... 226.24 .............. Amends the references to royalty consistent with the new proposed changes. 

226.13(a) ........... 226.25 .............. Describes how royalty payments are made, extends the deadline for reporting, and adds a provision allowing the Superintendent to set an alternative rate for late charges after consultation with the Osage 

Minerals Council. 

226.13(b) ........... 226.26 .............. Describes what reports are required to be submitted to the Superintendent and adds new provisions further specifying the format of reports and information required to be submitted and includes a new provision requiring that the Osage Minerals Council receive copies of reports. 

226.14 ............... 226.27 .............. Extends the due date in paragraph (b) for a purchaser to submit reporting statement for oil and gas sold. 

226.15 ............... (See below) ...... Divides in to several new sections for simplicity and readability, as shown below. 

226.15(a) ........... 226.28 .............. (No substantive change.) 

226.15(b) ........... 226.29 .............. (No substantive change.) 

226.15(c) ........... 226.30 .............. (No substantive change.) 

226.15(d) ........... 226.31 .............. (No substantive change.) 

226.15(e) ........... 226.32 .............. (No substantive change.) 

N/A .................... 226.33 (New) .... More clearly specifies the general requirements governing leasing operations. 

226.16 ............... 226.34 .............. (No substantive change.) 

226.17 ............... 226.35 .............. (No substantive change.) 

226.18 ............... 226.36 .............. Reformats for readability; adds new requirements for notice to surface owners before conducting certain 

activities; deletes the requirements for notice depending on surface owner residence; and applies new 

uniform standards regardless of residence within or outside Osage County. 

226.19(a) ........... 226.37 .............. (No substantive change.) 


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Current 25 CFR 

section 

Proposed 

section Proposed change 

226.19(b), (c) .... 226.38 .............. (No substantive change.) 

226.19(d) ........... 226.39 .............. Increases tank siting fees and area of occupancy. 

226.20 ............... 226.40 .............. (No substantive change.) 

226.21 ............... 226.41 .............. (No substantive change.) 

N/A .................... 226.42 (New) .... Further specifies the lessee’s obligation for production. 

N/A .................... 226.43 (New) .... Requires documentation for transportation of oil, gas or other marketable product to enable the Superintendent to inspect and confirm proper transportation. 

226.22 ............... 226.44 .............. (No substantive change.) 

N/A .................... 226.45 (New) .... Further clarifies and specifies the lessee’s environmental responsibilities and obligations while conducting 

operations. 

N/A .................... 226.46 (New) .... Requires certain safety standards for lessee operations and equipment. 

226.23 ............... 226.47 .............. (No substantive change.) 

226.24 ............... 226.48 .............. (No substantive change.) 

226.25 ............... 226.49 .............. Deletes the requirements that wells be plugged if no apportionment agreement is accepted, making the 

Superintendent’s decision on apportionment final. 

226.26 ............... 226.50 .............. (No substantive change.) 

226.27 ............... 226.51 .............. Adds a general provision to require that gas used by the tribe must be odorized and treated to ensure 

human and public safety. 

226.28 ............... 226.52 .............. (No substantive change.) 

226.29 ............... 226.53 .............. Deletes the fee for submitting an application to plug a well; requires no fee. 

226.30 ............... 226.54 .............. Divides paragraph (b) into two provisions, thereby adding a paragraph (c). Adds a new paragraph (d) requiring that lessee maintain records for a period of 6 years, unless notified to maintain certain records 

for a longer period. 

226.31 ............... 226.55 .............. (No substantive change.) 

226.32 ............... 226.56 .............. Reformats for readability. 

226.33 ............... 226.57 .............. (No substantive change.) 

226.34 ............... 226.58 .............. Adds a requirement that wells and tank batteries also be marked with lessee’s name. 

226.35 ............... 226.59 .............. (No substantive change.) 

226.36 ............... 226.60 .............. Adds new paragraphs (b)–(f) to require safety precautions for drilling wells generally, drilling vertical wells, 

maintaining and controlling high pressure or loss of circulation in wells, protecting fresh water and other 

minerals and ensuring safety and protection when hydrogen sulfide gas is present at certain levels. 

226.37 ............... 226.61 .............. (No substantive change.) 

226.38 ............... 226.62 .............. Adds new paragraphs (b)–(d) specifying requirements for measuring, calibrating and adjusting meters, including notice to and follow-up by the Superintendent; adds new provisions that require notification to 

the Superintendent when an oil tank is ready for removal or for witnessing gaugings, and adds that repeated failures to comply with the new provisions subject the lessee to lease termination after consultation with the Osage Minerals Council. 

226.39 ............... 226.63 .............. Adds new paragraphs requiring measurement of gas to be done in accordance with BLM Onshore Oil and 

Gas Order 5, and specifying lessee’s obligations for calibrating, inspecting and adjusting meters, including notification and inspection by the Superintendent. Also, adds a provision that repeated failures to 

comply will subject the lease to termination after consultation with the Osage Minerals Council. 

226.40 ............... 226.64 .............. (No substantive change.) 

N/A .................... 226.65 (New) .... Specifies safety and other requirements to ensure proper site security. 

226.41 ............... 226.66 .............. Adds requirements to ensure that all reporting of incidents is done in a timely manner. 

226.42 ............... 226.67 .............. Increases the fine from $500 to $1000 and adds provisions allowing for fine adjustments and termination 

of a lease for failure to comply with the regulations after consultation with the Osage Minerals Council. 

226.43 ............... 226.68 .............. Increases fines that are currently $50 to $150; fines that are $100 to $250; fines that are $200 to $400; 

and fines that are $500 to $1000. Adds a new fine of $500 per day for failure to maintain adequate 

bonding and a new fine of up to $1000 per day (not to exceed 20 days) for failure of a transporter to 

carry proper documentation. 

226.43(j) ............ 226.69 .............. More clearly sets forth the criminal procedures for providing false, misleading, or inaccurate information. 

N/A .................... 226.70 (New) .... Explains how fees and penalties are scaled, including specifying the interest rate for late fees. 

226.44 ............... 226.71 .............. (No substantive change.) 

226.45 ............... 226.72 .............. (No substantive change.) 

226.46 ............... 226.73 .............. (No substantive change.) 

The BIA invites comments on all of the 

proposed changes, but would also like 

comments specifically addressing the 

following: 

• Whether the impact of changes in 

the regulations on existing leases as set 

forth in proposed section 226.8 (changes 

in regulations) needs to be clarified; 

• Whether there should be a specific 

reference to nationwide bonding in 

proposed section 226.9 (bonding) and/or 

comments on the current proposed 

bonding amount; 

• Whether proposed section 226.18 

(royalty) should include a deduction for 

transportation costs; 

• Whether to extend the time period 

for automatic termination of a lease that 

does not produce in paying quantities 

from 90 consecutive days to 180 

consecutive days (or some other time 

period) in proposed section 226.14 (e)(1) 

(requirements for rental, drilling and 

production). 

IV. Procedural Requirements 

A. Regulatory Planning and Review 

(E.O. 12866 and 13563) 

Executive Order (E.O.) 12866 provides 

that the Office of Information and 

Regulatory Affairs (OIRA) at the Office 

of Management and Budget (OMB) will 

review all significant rules. OIRA has 

determined that this rule is not 

significant. 

E.O. 13563 reaffirms the principles of 

E.O. 12866 while calling for 


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53086 Federal Register / Vol. 78, No. 167 / Wednesday, August 28, 2013 / Proposed Rules 

improvements in the nation’s regulatory 

system to promote predictability, to 

reduce uncertainty, and to use the best, 

most innovative, and least burdensome 

tools for achieving regulatory ends. The 

E.O. directs agencies to consider 

regulatory approaches that reduce 

burdens and maintain flexibility and 

freedom of choice for the public where 

these approaches are relevant, feasible, 

and consistent with regulatory 

objectives. E.O. 13563 emphasizes 

further that regulations must be based 

on the best available science and that 

the rulemaking process must allow for 

public participation and an open 

exchange of ideas. We have developed 

this rule in a manner consistent with 

these requirements. This rule is also 

part of the Department’s commitment 

under the Executive Order to reduce the 

number and burden of regulations and 

provide greater notice and clarity to the 

public. 

B. Regulatory Flexibility Act 

The Department of the Interior 

certifies that this rule will not have a 

significant economic effect on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.). 

C. Small Business Regulatory 

Enforcement Fairness Act 

This rule is not a major rule under 5 

U.S.C. 804(2), the Small Business 

Regulatory Enforcement Fairness Act. It 

will not result in the expenditure by 

State, local, or tribal governments, in the 

aggregate, or by the private sector, of 

$100 million or more in any one year. 

The rule’s requirements will not result 

in a major increase in costs or prices for 

consumers, individual industries, 

Federal, State, or local government 

agencies, or geographic regions. Nor will 

this rule have significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

the ability of the U.S.-based enterprises 

to compete with foreign-based 

enterprises because the rule is limited to 

management and administration of the 

Osage mineral estate. 

D. Unfunded Mandates Reform Act 

This rule does not impose an 

unfunded mandate on State, local, or 

tribal governments or the private sector 

of more than $100 million per year. The 

rule does not have a significant or 

unique effect on State, local, or tribal 

governments or the private sector. A 

statement containing the information 

required by the Unfunded Mandates 

Reform Act (2 U.S.C. 1531 et seq.) is not 

required. 

E. Takings (E.O. 12630) 

Under the criteria in Executive Order 

12630, this rule does not affect 

individual property rights protected by 

the Fifth Amendment nor does it 

involve a compensable ‘‘taking.’’ A 

takings implication assessment is 

therefore not required. 

F. Federalism (E.O. 13132) 

Under the criteria in Executive Order 

13132, this rule has no 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. 

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

This rule complies with the 

requirements of Executive Order 12988. 

Specifically, this rule has been reviewed 

to eliminate errors and ambiguity and 

written to minimize litigation; and is 

written in clear language and contains 

clear legal standards. 

H. Consultation With Indian Tribes 

(E.O. 13175) 

In accordance with the President’s 

memorandum of April 29, 1994, 

‘‘Government-to-Government Relations 

with Native American Tribal 

Governments,’’ Executive Order 13175 

(59 FR 22951, November 6, 2000), and 

512 DM 2, we have evaluated the 

potential effects on federally recognized 

Indian tribes and Indian trust assets. 

This rule was developed by negotiated 

rulemaking with representatives of the 

affected tribe. 

I. Paperwork Reduction Act 

This rule includes information 

collections requiring approval under the 

Paperwork Reduction Act (PRA), 44 

U.S.C. 3501 et seq. These information 

collections have not been approved 

previously because the last update to 25 

CFR part 226 was prior to amendments 

to the PRA subjecting these information 

collection requirements to OMB 

approval. 

OMB Control Number: 1076–NEW. 

Title: Leasing of Osage Reservation 

Lands for Oil and Gas Mining. 

Brief Description of Collection: This 

part contains leasing procedures and 

requirements and rental, production, 

and royalty requirements for leasing the 

reservation lands of the Osage Nation 

for oil and gas mining. The Secretary 

must perform the information collection 

requests in this part to obtain the 

information necessary to complete 

leasing transactions and monitor leased 

property. Responses to these 

information collection requests are 

required to obtain a benefit (e.g., 

commercial transactions). 

Type of Review: New information 

collection. 

Respondents: Indians, businesses, and 

tribal authorities. 

Number of Respondents: 965. 

Frequency of Collection: On occasion. 

Estimated Hours per Response: 

Ranges from 15 minutes to 8 hours (see 

table below). 

Estimated Total Annual Responses: 

14,414. 

Estimated Total Annual Burden 

Hours: 21,932. 

Non-Hour Cost Burden: $496. 

The table showing the burden of the 

information collection is included 

below for your information. 

Section Information collection Respondents Annual 

responses 

Hourly burden 

per response 

Total annual 

hourly burden 

226.5 .......................... Lessee must submit completed lease form ............ 160 160 0 .5 80 

226.9 .......................... Lessee must submit bonds ..................................... 160 160 0 .5 80 

226.13 ........................ Corporate lessees must submit evidence of is officers’ authority to execute papers and a copy of 

its Articles of Incorporation.

150 150 0 .25 * 38 

226.26, 226.27(a) ....... Lessee must provide certified monthly reports covering operations and on value of all oil/gas used 

off premises for development and operation.

700 8,400 0 .5 4,200 

226.27(b) .................... Purchaser of oil or gas to furnish statement of 

gross barrels of oil or gross Mcf of gas sold and 

sales price per barrel or gross McF during the 

preceding month.

45 540 0 .5 270 

226.28 ........................ Submit agreement to unitize or terminate unitization of oil or gas leases to Secretary.1 1 1 1 


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Section Information collection Respondents Annual 

responses 

Hourly burden 

per response 

Total annual 

hourly burden 

226.29 ........................ Submit assignment or transfer of lease to Secretary.500 500 0 .5 250 

226.34(b), 226.52 ....... Lessee must submit applications on BIA forms for 

well drilling, treating, or workover operations, removing casing from well. Application to shut 

down or plug well, with justification.

600 600 8 4,800 

226.36 ........................ Lessee must notify and request meeting with surface owners by certified mail, provide copy to 

Superintendent, and provide info at meeting.

160 160 1 160 

226.40, 226.41 ........... Any person claiming an interest in the leased tract 

or in damages must provide a statement showing the claimed interest.

1 1 1 1 

226.43 ........................ Drivers must carry documentation showing the 

amount, origin and intended first purchaser of 

the oil or gas or marketable product.

60 60 0 .5 30 

226.45(d) .................... Lessee must submit a contingency plan, when required.160 160 5 800 

226.54 ........................ Lessee must keep a full and correct account of all 

operations, receipts, and disbursements and 

make reports thereof, as required, make available for inspection, and maintain for 6 yrs.

700 700 1 700 

226.56 ........................ Lessee must keep records of drilling, redrilling, 

deepening, repairing, treating, plugging or abandonment of all wells and furnish reports as required in manner and method specified by Superintendent.

700 700 1 700 

226.56 ........................ Lessee must transmit to Superintendent applicable 

information of completion of operations on any 

well on BIA forms; a copy of electrical, mechanical or radioactive log, or other types of survey 

of well bore, and core analysis of well.

700 700 8 5,600 

226.56 ........................ Upon request, Lessee must furnish plat of wells in 

manner, form, and method prescribed by Superintendent.

700 700 2 1,400 

226.65 ........................ Lessee must maintain site security plan, including 

facility diagram.

700 700 4 2,800 

226.66 ........................ Lessee must report accidents, fires, vandalism including an estimate of the volume of oil involved.22 22 1 22 

Total .................... .................................................................................. ........................ 14,414 ........................ 21,932 

BIA invites comments on the 

information collection requirements in 

the proposed regulation. You may 

submit comments to OMB by facsimile 

to (202) 395–5806 or you may send an 

email to the attention of the OMB Desk 

Officer for the Department of the 

Interior: OIRA_submission@

omb.eop.gov. Please send a copy of your 

comments to the person listed in the 

FOR FURTHER INFORMATION CONTACT

section of this notice. Note that the 

request for comments on the rule and 

the request for comments on the 

information collection are separate. 

To best ensure consideration of your 

comments on the information 

collection, we encourage you to submit 

them by September 27, 2013; while 

OMB has 60 days from the date of 

publication to act on the information 

collection request, OMB may choose to 

act on or after 30 days. Comments on 

the information collection should 

address: (a) The necessity of this 

information collection for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden (hours and cost) of the 

collection of information, including the 

validity of the methodology and 

assumptions used; (c) ways we could 

enhance the quality, utility and clarity 

of the information to be collected; and 

(d) ways we could minimize the burden 

of the collection of the information on 

the respondents, such as through the 

use of automated collection techniques 

or other forms of information 

technology. Please note that an agency 

may not sponsor or request, and an 

individual need not respond to, a 

collection of information unless it has a 

valid OMB Control Number. 

J. National Environmental Policy Act 

This rule does not constitute a major 

Federal action significantly affecting the 

quality of the human environment. It is 

categorically excluded from further 

review under 43 CFR 46.210(i) because 

these are regulations ‘‘whose 

environmental effects are too broad, 

speculative, or conjectural to lend 

themselves to meaningful analysis and 

will later be subject to the NEPA process 

either collectively or case by case.’’ No 

extraordinary circumstances exist that 

would require greater NEPA review. 

K. Effects on the Energy Supply (E.O. 

13211) 

This rule is not a significant energy 

action under the definition in Executive 

Order 13211. A Statement of Energy 

Effects is not required. 

L. Clarity of This Regulation 

We are required by Executive Orders 

12866 and 12988 and by the 

Presidential Memorandum of June 1, 

1998, to write all rules in plain 

language. This means that each rule we 

publish must: 

(a) Be logically organized; 

(b) Use the active voice to address 

readers directly; 

(c) Use clear language rather than 

jargon; 


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(d) Be divided into short sections and 

sentences; and 

(e) Use lists and tables wherever 

possible. 

If you feel that we have not met these 

requirements, send us comments by one 

of the methods listed in the 

‘‘COMMENTS’’ section. To better help 

us revise the rule, your comments 

should be as specific as possible. For 

example, you should tell us the 

numbers of the sections or paragraphs 

that are unclearly written, which 

sections or sentences are too long, the 

sections where you believe lists or 

tables would be useful, etc. 

M. Public Availability of Comments 

Before including your address, phone 

number, email address, or other 

personal identifying information in your 

comment, you should be aware that 

your entire comment—including your 

personal identifying information—may 

be made publicly available at any time. 

While you can ask us in your comment 

to withhold your personal identifying 

information from public review, we 

cannot guarantee that we will be able to 

do so. 

List of Subjects in 25 CFR Part 226 

Indians-lands. 

For the reasons stated in the 

preamble, the Department of the 

Interior, Bureau of Indian Affairs, 

proposes to amend part 226 in Title 25 

of the Code of Federal Regulations by 

revising part 226 to read as follows: 

PART 226—LEASING OF OSAGE 

RESERVATION LANDS FOR OIL AND 

GAS MINING 

Sec. 

226.1 Definitions. 

226.2 What requirements govern oil and gas 

activities? 

Subpart A—Leasing Procedure 

226.3 What orders and notices can BIA 

issue? 

226.4 What responsibilities does the 

Superintendent have? 

226.5 What are the requirements for lease 

sales and approvals? 

226.6 How does a lessee surrender a lease? 

226.7 What forms of payment are 

acceptable? 

226.8 How do changes in the current 

regulations impact leases? 

226.9 What are the bonding requirements 

for leases? 

226.10 Can the Superintendent increase the 

amount of the bond required? 

226.11 When can the Superintendent 

release a bond? 

226.12 What forms are made a part of the 

regulations? 

226.13 What information must a 

corporation submit? 

Subpart B—Rental, Production and Royalty 

Rental, Drilling and Production Obligations 

226.14 What are the requirements for rental, 

drilling, and production? 

226.15 What are the lessee’s obligations 

regarding drainage? 

226.16 What can the Superintendent do 

when drainage occurs? 

Lease Term 

226.17 What is the term of a lease? 

Royalty Payments 

226.18 What is the royalty rate for oil? 

226.19 How is the gravity adjustment 

calculated? 

226.20 How is the royalty on gas 

calculated? 

226.21 Who determines royalty on lost or 

wasted minerals? 

226.22 What is the minimum royalty 

payment for all leases? 

226.23 What royalty is due on other 

marketable products? 

226.24 What purchase options does the 

Federal Government have? 

226.25 How are royalty payments made? 

226.26 What reports are required to be 

provided? 

226.27 Can a lessee enter into royalty 

payment contracts and division orders? 

Unit Leases, Assignments and Related 

Instruments 

226.28 When is unitization allowed? 

226.29 How are leases assigned? 

226.30 Are overriding royalty agreements 

allowed? 

226.31 When are drilling contracts allowed? 

226.32 When can an oil lease and a gas 

lease be combined? 

Subpart C—Operations 

226.33 What are the general requirements 

governing operations? 

226.34 What requirements apply to 

commencement of operations on a lease? 

226.35 How does a lessee acquire 

permission to begin operations on a 

restricted homestead allotment? 

226.36 What kind of notice and information 

is required to be given surface owners 

prior to commencement of drilling 

operations? 

226.37 How much of the surface may a 

lessee use? 

226.38 What commencement money must 

the lessee pay to the surface owner? 

226.39 What fees must lessee pay to a 

surface owner for tank siting? 

226.40 What is a settlement of damages 

claimed? 

226.41 What is the procedure for settlement 

of damages claimed? 

226.42 What are a lessee’s obligations for 

production? 

226.43 What documentation is required for 

transportation of oil or gas or other 

marketable product? 

226.44 What are a lessee’s obligations for 

preventing pollution? 

226.45 What are a lessee’s other 

environmental responsibilities? 

226.46 What safety precautions must a 

lessee take? 

226.47 When can the Superintendent grant 

easements for wells off leased premises? 

226.48 A lessee’s use of water. 

226.49 What are the responsibilities of an 

oil lessee when a gas well is drilled and 

vice versa? 

226.50 How is the cost of drilling a well 

determined? 

226.51 What are the requirements for using 

gas for operating purposes and tribal 

uses? 

Subpart D—Cessation of Operations 

226.52 When can a lessee shutdown, 

abandon, and plug a well? 

226.53 When must a lessee dispose of 

casings and other improvements? 

Subpart E—Requirements of Lessees 

226.54 What general requirements apply to 

lessees? 

226.55 When must a lessee designate 

process agents? 

226.56 What are the lessee’s record and 

reporting requirements for wells? 

226.57 What line drilling limitations must a 

lessee comply with? 

226.58 What are the requirements for 

marking wells and tank batteries? 

226.59 What precautions must a lessee take 

to ensure natural formations are 

protected? 

226.60 What are a lessee’s obligations to 

maintain control of wells? 

226.61 How does a lessee prevent waste of 

oil and gas and other marketable 

products? 

226.62 How does a lessee measure and store 

oil? 

226.63 How is gas measured? 

226.64 When can a lessee use of gas for 

lifting oil? 

226.65 What site security standards apply 

to oil and gas and other marketable 

product leases? 

226.66 What are a lessee’s reporting 

requirements for accidents, fires, theft, 

and vandalism? 

Subpart F—Penalties 

226.67 What are the penalties for violations 

of lease terms? 

226.68 What are the penalties for violation 

of certain operating regulations? 

226.69 What are the penalties for providing 

false, inaccurate, or misleading 

information; or engaging in unlawful 

acts? 

226.70 How are fees and penalties scaled? 

Subpart G—Appeals and Notices 

226.71 Who can file an appeal? 

226.72 Are the notices by the 

Superintendent binding? 

226.73 Information collection. 

Authority: Sec. 3, 34 Stat. 543; secs. 1, 2, 

45 Stat. 1478; sec. 3, 52 Stat. 1034, 1035; sec. 

2(a), 92 Stat. 1660. 

§ 226.1 Definitions. 

As used in this part, terms shall have 

the meanings set forth in this section. 

Authorized representative of an oil 

lessee, gas lessee, or oil and gas lessee 

means any person, group, or groups of 

persons, partnership, association, 


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company, corporation, organization or 

agent employed by or contracted with a 

lessee or any subcontractor to conduct 

oil and gas operations or provide 

facilities to market oil and gas. 

Avoidably lost means the venting or 

flaring of produced gas or other 

marketable product without the prior 

authorization, approval, ratification, or 

acceptance of the Superintendent and 

the loss of produced oil or gas or other 

marketable product when the 

Superintendent determines that such 

loss occurred as a result of: 

(1) Negligence on the part of the 

lessee; or 

(2) The failure of the lessee to take all 

reasonable measures to prevent and/or 

control the loss; or 

(3) The failure of the lessee to comply 

fully with the applicable lease terms 

and regulations, applicable orders and 

notices, or the written orders of the 

Superintendent; or 

(4) Any combination of the foregoing. 

Condensate means liquid hydrocarbons (normally exceeding 40 degrees 

of API gravity) recovered at the surface 

without resorting to processing. 

Condensate is the mixture of liquid 

hydrocarbons that results from 

condensation of petroleum 

hydrocarbons existing initially in a 

gaseous phase in an underground 

reservoir. 

Drainage means the migration of 

hydrocarbons, inert gases, or associated 

resources caused by production from 

other wells. 

Gas lessee means any person, firm, or 

corporation to whom a gas mining lease 

is made under the regulations in this 

part, or an authorized representative. 

Gas well means any well that: 

(1) Produces raw natural gas not 

associated with crude petroleum oil at 

the time of production; or 

(2) Produces more than 15,000 

standard cubic feet of raw natural gas to 

each barrel of crude petroleum oil from 

the same producing formation. 

Lease means any contract approved 

by the United States under the Act of 

June 28, 1906 (34 Stat. 539), as 

amended, that authorizes exploration 

for, extraction of, or removal of oil or 

gas. 

Marketable condition means a 

condition in which lease products are 

sufficiently free from impurities and 

otherwise so conditioned that a 

purchaser will accept them under a 

sales contract typical for the field or 

area. 

Maximum ultimate economic 

recovery means the recovery of oil and 

gas and any other marketable product 

from leased lands that a prudent lessee 

could be expected to make from that 

field or reservoir given existing 

knowledge of reservoir and other 

pertinent facts and using common 

industry practices for primary, 

secondary or tertiary recovery 

operations. 

Natural gas liquids (NGLs) means 

those gas plant products consisting of 

ethane, propane, butane, or heavier 

liquid hydrocarbons. 

Notice to lessees (NTLs) means a 

written notice issued or adopted by the 

Superintendent. NTLs implement the 

regulations in this part and operating 

orders, and serve as instructions on 

specific item(s) of importance. 

Oil and gas lessee means any person, 

firm, or corporation to whom an oil and 

gas mining lease is made under the 

regulations in this part, or an authorized 

representative. 

Oil lessee means any person, firm, or 

corporation to whom an oil mining lease 

is made under the regulations in this 

part, or an authorized representative. 

Oil well means any well that produces 

one barrel or more of crude petroleum 

oil for each 15,000 standard cubic feet 

of raw natural gas. 

Onshore oil and gas order means a 

formal order issued or adopted by the 

Director of the Bureau of Indian Affairs 

that implements and supplements the 

regulations in this part. 

Osage Minerals Council means the 

duly elected governing body of the 

Osage Nation or Tribe of Indians of 

Oklahoma vested with authority to enter 

into leases or take other actions on oil 

and gas mining pertaining to the Osage 

Mineral Estate. 

Other marketable product means a 

non-hydrocarbon product, including but 

not limited to helium, nitrogen, and 

carbon-dioxide, for which there is a 

market. 

Primary term means the basic period 

of time for which a lease is issued 

during which the lease contract may be 

kept in force by payment of rentals. 

Production in paying quantities 

means production from a lease of oil 

and/or gas of sufficient value to exceed 

direct operating costs and the cost of 

lease rentals or minimum royalties. 

Raw natural gas or gas means gas 

produced from oil and gas wells, 

including all natural gas liquids before 

any treating or processing. 

Secretary means the Secretary of the 

Interior or the Secretary’s authorized 

representative acting under delegated 

authority. 

Superintendent means the 

Superintendent of the Osage Agency, 

Pawhuska, Oklahoma, or the 

Superintendent’s authorized 

representative acting under delegated 

authority, or such other person as the 

Secretary or Superintendent may 

delegate to fulfill the responsibilities 

and exercise the authorities under this 

part. 

Waste of oil or gas or other 

marketable product means any act or 

failure to act by the lessee that is not 

sanctioned by the Superintendent as 

necessary for proper development and 

production and that results in: 

(1) A reduction in the quantity or 

quality of oil and gas or other 

marketable product ultimately 

producible from a reservoir under 

prudent and proper operations; or 

(2) Avoidable surface loss of oil or gas 

or other marketable product. 

§ 226.2 What requirements govern oil and 

gas activities? 

All oil and gas activities conducted in 

Osage County are subject to: 

(a) The regulations in this part; 

(b) Lease terms; 

(c) Orders of the Superintendent; and 

(d) All other applicable laws, 

regulations, and authorities. 

Subpart A—Leasing Procedure 

§ 226.3 What orders and notices can BIA 

issue? 

(a) In accordance with the 

Administrative Procedure Act, the 

Bureau of Indian Affairs (BIA), after 

consultation with the Osage Minerals 

Council, is authorized to: 

(1) Issue and make effective in Osage 

County oil and gas orders or notices to 

lessees (NTLs); or 

(2) Adopt onshore oil and gas orders, 

NTLs, or related oil and gas regulations 

issued by the Bureau of Land 

Management. 

(b) Adoptions by the Bureau of Indian 

Affairs shall remain in effect according 

to their terms and shall not be modified 

by any action of the Bureau of Land 

Management unless the Director issues 

further orders to that effect in 

accordance with the Administrative 

Procedure Act. 

§ 226.4 What responsibilities does the 

Superintendent have? 

(a) The Superintendent is authorized 

and directed to: 

(1) Approve unitization, 

communitization, gas storage and other 

contractual agreements; 

(2) Assess compensatory royalty; 

(3) Approve suspensions of operations 

or production, or both; 

(4) Approve and monitor other lessee 

proposals for drilling, development or 

production of oil and gas and any other 

marketable product; 

(5) Perform administrative reviews; 

(6) Impose monetary assessments or 

penalties; 


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(7) Provide technical information and 

advice relative to oil and gas and any 

other marketable product development 

and operations; 

(8) Approve, inspect, and regulate the 

operations that are subject to the 

regulations in this part; 

(9) Require compliance with lease 

terms, with the regulations in this title 

and all other applicable regulations and 

laws; and 

(10) Require that all operations be 

conducted in a manner which protects 

natural resources and environmental 

quality, protects life and property, and 

results in the maximum ultimate 

recovery of oil and gas and any other 

marketable product with minimum 

waste and with minimum adverse effect 

on the ultimate recovery of other 

mineral resources. 

(b) The Superintendent may issue 

written or oral orders to govern specific 

lease operations. Any oral orders shall 

be confirmed in writing by the 

Superintendent within 10 working days 

from issuance thereof. Before approving 

operations on a leasehold, the 

Superintendent shall determine that the 

lease is in effect, that acceptable bond 

coverage has been provided, and that 

the proposed plan of operations is 

sound. 

(c) The Superintendent shall establish 

procedures to ensure that each lease site 

which has a history of noncompliance 

with applicable provisions of law or 

regulations, lease terms, orders or 

directives shall be inspected at least 

once annually. 

§ 226.5 What are the requirements for 

lease sales and approvals? 

(a) The steps in a lease sale are as 

follows: 

(1) A written application, together 

with any nomination fee, for tracts to be 

offered for lease shall be filed with the 

Superintendent. 

(2) The Superintendent, with the 

consent of the Osage Minerals Council, 

shall publish notices for the sale of oil 

leases, gas leases, and oil and gas leases 

to the highest responsible bidder on 

specific tracts of the unleased Osage 

Mineral Estate. The Superintendent may 

require any bidder to submit satisfactory 

evidence of his good faith and ability to 

comply with all provisions of the notice 

of sale. 

(3) A successful bidder must deposit 

with the Superintendent within 5 days 

following the sale, a cashier’s check, 

money order, or electronic funds 

transfer in an amount not less than 25 

percent of the cash bonus offered as a 

guaranty of good faith. Any and all bids 

shall be subject to acceptance by the 

Osage Minerals Council and approval by 

the Superintendent. 

(4) Within 20 days after being 

notified, the successful bidder must 

submit to the Superintendent the 

balance of the bonus, a $75 filing fee, 

and a completed lease form. 

(i) The Superintendent may extend 

the deadline for submitting the 

completed lease form, but no extension 

shall be granted for remitting the 

balance of moneys due. 

(ii) Twenty-five percent of the bonus 

bid will be forfeited for the use and 

benefit of the Osage Mineral Estate if 

any of the following occur: 

(A) The bidder fails to pay the full 

consideration by the required deadline; 

or 

(B) The bidder fails to file the 

completed lease by the required 

deadline or extension thereof; or 

(C) The lease is rejected through no 

fault of the Osage Minerals Council or 

the Superintendent. 

(5) The Superintendent may reject a 

lease made on an accepted bid, upon 

satisfactory evidence of collusion, fraud, 

or other irregularity in connection with 

the notice of sale. 

(b) The Superintendent may approve 

oil leases, gas leases, and oil and gas 

leases made by the Osage Minerals 

Council in conformity with the notice of 

sale, regulations in this part, bonds, and 

other instruments required. 

(c) Within 30 days following approval 

of a lease, the Superintendent shall post 

at the Agency, a legal description of the 

Mineral Estate that was leased. 

(d) Prior to approval by the 

Superintendent, each oil and/or gas 

lease and activities and installations 

associated therewith subject to these 

regulations shall be assessed and 

evaluated for its environmental impact. 

(e) The lessee shall accept a lease with 

the understanding that a mineral not 

covered by the lease may be leased 

separately. 

(f) No lease, assignment thereof, or 

interest therein will be approved to any 

employee or employees of the 

Government and no such employee 

shall be permitted to acquire any 

interest in leases covering the Osage 

Mineral Estate by ownership of stock in 

corporations having leases or in any 

other manner. 

(g) The Osage Minerals Council may 

utilize the following procedures among 

others, in entering into a lease: 

(1) A lease may be entered into 

through competitive bidding as outlined 

in § 226.5(a)(2), negotiation, or a 

combination of both; 

(2) The Osage Minerals Council may 

request the Superintendent undertake 

the preparation, advertisement and 

negotiation of leases; and/or 

(3) The Osage Minerals Council may 

request the Superintendent to provide 

information regarding the current 

estimated value of any or all or each of 

the leases to the Osage Minerals Council 

based on comparable sales of Federal, 

Indian, State, and private leases. 

(h) The Superintendent may approve 

any lease made by the Osage Minerals 

Council. 

§ 226.6 How does a lessee surrender a 

lease? 

(a) The lessee may, with the approval 

of the Superintendent and payment of a 

$75 filing fee, surrender all or any 

portion of any lease, have the lease 

cancelled as to the portion surrendered 

and be relieved from all subsequent 

obligations and liabilities. 

(b) If the lease, or portion, being 

surrendered is owned in undivided 

interests by more than one party, then 

the following requirements apply: 

(1) All parties shall join in the 

application for cancellation; 

(2) If the lease has been recorded, then 

the lessee shall execute a release and 

record the same in the proper office; 

(3) Surrender shall not the entitle the 

lessee to a refund of the unused portion 

of rental paid in lieu of development, 

nor shall it relieve the lessee and his or 

her sureties of any obligation and 

liability incurred prior to the surrender; 

(4) When there is a partial surrender 

of any lease and the acreage to be 

retained is less than 160 acres, or there 

is a surrender of a separate horizon, the 

surrender shall become effective only 

with consent of the Osage Minerals 

Council and approval of the 

Superintendent. 

§ 226.7 What forms of payment are 

acceptable? 

Sums due under a lease contract and/ 

or the regulations in this part shall be 

paid in the manner and method 

specified by the Superintendent, unless 

otherwise specified in these regulations. 

Such sums shall be a prior lien on all 

equipment and unsold oil on the leased 

premises. 

§ 226.8 How do changes in the current 

regulations impact leases? 

Leases issued pursuant to this part 

shall be subject to the current 

regulations of the Secretary, all of which 

are made a part of such leases: Provided, 

that no amendment or change of such 

regulations made after the approval of 

any lease shall operate to affect the term 

of the lease, rate of royalty, rental, or 

acreage unless agreed to by both parties 

and approved by the Superintendent. 


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§ 226.9 What are the bonding 

requirements for leases? 

Lessees shall furnish surety bonds or 

personal bonds acceptable to the 

Superintendent as follows: 

(a) The per-well ‘‘Bonding Amount’’ 

shall be $5,000. 

(b) A surety bond or personal bond 

equal to the Bonding Amount shall be 

filed at the time an Application for 

Permit to Drill is approved and/or the 

lessee acquires liability for existing 

wells on a lease. 

(c) A lessee shall at all times maintain 

on file with the Superintendent surety 

bonds and/or personal bonds in an 

amount equal to the Bonding Amount 

times the number of wells on the 

lessee’s leases, up to a maximum of 25 

wells. 

(d) To meet the requirements of this 

section, a surety bond must be issued by 

a qualified surety company approved by 

the Department of the Treasury (see 

Department of the Treasury Circular No. 

570). 

(e) Personal bonds shall be 

accompanied by at least one of the 

following: 

(1) A certificate of deposit issued by 

a financial institution, the deposits of 

which are Federally insured, explicitly 

granting the Secretary full authority to 

demand immediate payment in case of 

default in the performance of the terms 

and conditions of the lease. The 

certificate shall explicitly indicate on its 

face that Secretarial approval is required 

prior to redemption of the certificate of 

deposit by any party. 

(2) A cashier’s check. 

(3) A certified check. 

(4) Negotiable Treasury securities of 

the United States of a value equal to the 

amount specified in the bond. 

Negotiable Treasury securities shall be 

accompanied by a proper conveyance to 

the Superintendent of full authority to 

sell such securities in case of default in 

the performance of the terms and 

conditions of a lease. 

(5) An irrevocable letter of credit 

issued by a financial institution, the 

deposits of which are Federally insured, 

for a specific term, identifying the 

Superintendent as sole payee with full 

authority to demand immediate 

payment in the case of default in the 

performance of the terms and conditions 

of a lease. Letters of credit shall be 

subject to the following conditions: 

(i) The letter of credit shall be issued 

only by a financial institution organized 

or authorized to do business in the 

United States; 

(ii) The letter of credit shall be 

irrevocable during its term. A letter of 

credit used as security for any lease 

upon which drilling has taken place and 

final approval of all abandonment has 

not been given shall be collected by the 

Superintendent if not replaced by other 

suitable bond or letter of credit at least 

30 days before its expiration date; 

(iii) The letter of credit shall be 

payable to the Superintendent upon 

demand, in part or in full, upon receipt 

from the Superintendent of a notice of 

attachment stating the basis therefor, 

e.g., default in compliance with the 

lease terms and conditions or failure to 

file a replacement in accordance with 

paragraph (c)(5)(ii) of this section; 

(iv) The initial expiration date of the 

letter of credit shall be at least 1 year 

following the date it is filed; and 

(v) The letter of credit shall contain a 

provision for automatic renewal for 

periods of not less than 1 year in the 

absence of notice to the Superintendent 

at least 90 days prior to the originally 

stated or any extended expiration date. 

§ 226.10 Can the Superintendent increase 

the amount of the bond required? 

(a) The Superintendent may require 

an increase in the amount of any bond 

in appropriate circumstances, including, 

but not limited to, a history of previous 

violations, uncollected royalties due, or 

when the total cost of plugging existing 

wells and reclaiming lands exceeds the 

present bond amount based on the 

estimates determined by the 

Superintendent. 

(b) The increase in bond amount may 

be to any level specified by the 

Superintendent, but in no 

circumstances shall it exceed the total of 

the estimated costs of plugging and 

reclamation, the amount of uncollected 

royalties due, plus the amount of 

monies owed to the lessor due to 

previous violations remaining 

outstanding. 

§ 226.11 When can the Superintendent 

release a bond? 

Within 45 calendar days of receiving 

written notice from a lessee that a well 

has been plugged or a lease has expired, 

the Superintendent shall confirm that: 

(a) The well has been properly 

plugged and the well site has been 

reclaimed,or the lease site has been 

reclaimed; 

(b) All property has been removed 

(unless otherwise agreed to in writing 

by the surface owner); and 

(c) All wells have been properly 

plugged, and then release the bond. 

§ 226.12 What forms are made a part of the 

regulations? 

Leases, assignments, and supporting 

instruments shall be in the form 

prescribed by the Secretary, and such 

forms are hereby made a part of the 

regulations. 

§ 226.13 What information must a 

corporation submit? 

(a) If the applicant for a lease is a 

corporation, it shall file evidence of 

authority of its officers to execute 

papers; and with its first application it 

shall also file a certified copy of its 

Articles of Incorporation and, if foreign 

to the State of Oklahoma, evidence 

showing compliance with the 

corporation laws thereof. 

(b) Whenever deemed advisable, the 

Superintendent may require a 

corporation to file any additional 

information necessary to carry out the 

purpose and intent of the regulations in 

this part, and such information shall be 

furnished within a reasonable time. 

Subpart B—Rental, Production and 

Royalty 

Rental, Drilling and Production 

Obligations 

§ 226.14 What are the requirements for 

rental, drilling, and production? 

(a) Oil leases, gas leases, and 

combination oil and gas leases. Unless 

the lessee shall complete and place in 

production a well producing and selling 

oil and/or gas in paying quantities on 

the land embraced within the lease 

within 12 months from the date of 

approval of the lease, or as otherwise 

provided in the lease terms, or 12 

months from the date the 

Superintendent consents to drilling on 

any restricted homestead selection, the 

lease shall terminate unless rental at the 

rate of not less than $3 per acre for an 

oil or gas lease, or not less than $6 per 

acre for a combination oil and gas lease, 

is paid at the beginning of the first year 

of the lease. These dollar amounts shall 

be adjusted as specified in § 226.70. 

(1) The lease may also be held for the 

remainder of its primary term without 

drilling upon payment of the specified 

rental annually in advance, 

commencing with the second lease year. 

(2) The lease shall terminate as of the 

due date of the rental unless such rental 

shall be received by the Superintendent 

on or before said date. 

(3) The completion of a well 

producing in paying quantities shall, for 

so long as such production continues, 

relieve the lessee from any further 

payment of rental, except that, should 

such production cease during the 

primary term the lease may be 

continued only during the remaining 

primary term of the lease by payment of 

advance rental which shall commence 

on the next anniversary date of the 

lease. Rental shall be paid on the basis 

of a full year and no refund will be 

made of advance rental paid in 


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compliance with the regulations in this 

part. 

(b) The Superintendent may, with the 

consent of and under terms approved by 

the Osage Minerals Council, grant an 

extension of the primary term of a lease 

on which actual drilling of a well shall 

have commenced within the term 

thereof, or for the purpose of enabling 

the lessee to obtain a market for his oil 

and/or gas production. 

(c) Irrespective of whether the lessee 

has drilled or paid rental, the 

Superintendent in his discretion may 

order further development of any leased 

acreage or separate horizon in any lease 

term if, in his opinion, a prudent lessee 

would conduct further development. A 

prudent lessee will diligently develop 

the minerals underlying the leasehold. 

The Osage Minerals Council shall have 

the right to request a determination of 

whether there is diligent development 

by the Superintendent as to any lease 

and may submit any materials or 

analysis to support its request. Upon 

receipt of a request, the Superintendent 

shall issue such a determination within 

90 days. 

(d) If the lessee refuses to comply 

with an order by the Superintendent to 

diligently develop its leasehold as a 

result of a determination under 

paragraph (c) of this section, the refusal 

will be considered a violation of the 

lease terms and said lease shall be 

terminated as to the acreage or horizon 

the further development of which was 

ordered, after any appeal of an order. 

The Superintendent shall promptly 

notify the lessee of such termination. 

(e) Except for a lease during its 

primary term for which rental payment 

has been paid, a lease that does not 

produce in paying quantities for 90 

consecutive days is thereby terminated, 

effective immediately. The 

Superintendent shall notify the lessee of 

such termination. 

(1) The Superintendent shall have the 

authority before termination to approve 

in writing a temporary suspension of 

operations tolling the 90-day period for 

a specified number of days, due to force 

majeure, other hardship, or other 

extenuating circumstance. 

(2) Any request for a temporary 

suspension of operations shall be made 

in writing to the Superintendent no later 

than the 45th day that the lease has not 

produced in paying quantities. The 

Superintendent may waive this 

requirement. 

(3) The Superintendent in his 

discretion may extend in writing the 

time of any temporary suspension of 

operations. 

(4) The Superintendent shall provide 

a copy of any decision under this 

paragraph (e) to the Osage Minerals 

Council at the same time it is delivered 

to the lessee. 

(f) Whenever the Osage Minerals 

Council identifies any lease that has 

terminated or may be subject to 

termination for any reason, the Osage 

Minerals Council shall have the right to 

request in writing appropriate action by 

the Superintendent, including but not 

limited to the issuance of a notice of 

termination to the lessee, and may 

submit any materials or analysis in 

support of its request. Upon receipt of 

such a request, within 90 days the 

Superintendent shall either take the 

requested action or issue a written 

decision responsive to the request. 

(g) The Superintendent may impose 

restrictions as to time of drilling and 

rate of production from any well or 

wells when the Superintendent judges 

these restrictions to be necessary or 

proper for the protection of the natural 

resources of the leased land and the 

interests of the Osage Mineral Estate. 

The Superintendent may consider, 

among other things, Federal and 

Oklahoma laws regulating either drilling 

or production. 

(h) If a lessee holds both an oil lease 

and a gas lease covering the same 

acreage, such lessee is subject to the 

provisions of this section as to both the 

oil lease and the gas lease. 

§ 226.15 What are the lessee’s obligations 

regarding drainage? 

(a) Where lands in any leases are 

being drained of their oil or gas content 

by wells outside the lease, the lessee 

shall drill or modify and produce all 

wells necessary to protect the leased 

lands from drainage within a reasonable 

time after the earlier of when the lessee 

knew or should have known of the 

drainage. In lieu of drilling or modifying 

necessary wells, the lessee may, with 

the consent of the Superintendent, pay 

compensatory royalty for drainage that 

has occurred or is occurring. 

(b) Actions under paragraph (a) of this 

section are not required if the lessee 

proves to the Superintendent that when 

it first knew or had constructive notice 

of drainage it could not produce a 

sufficient quantity of oil or gas from a 

protective well on the lease in paying 

quantities above the cost of drilling and 

completing the protective well. 

(c) A lessee has constructive notice 

that drainage may be occurring when 

well completion or first production 

reports for the draining well are 

publicly available, or, if the lessee 

operates or owns any interest in the 

draining well or lease, upon completion 

of drill stem, production, pressure 

analysis, or flow tests of the draining 

well. 

(d) If a lessee assigns its interest in a 

lease or transfers its operating rights, it 

is liable for drainage that occurs before 

the date the assignment or transfer is 

approved by the Superintendent. Any 

lessee who acquires an interest in a 

lease that is being drained is liable for 

all drainage obligations accruing on and 

after the date the assignment or transfer 

is approved by the Superintendent. 

§ 226.16 What can the Superintendent do 

when drainage occurs? 

(a) The Superintendent may send a 

demand letter by certified mail, return 

receipt requested, or personally serve 

the lessee with notice, if the 

Superintendent believes that drainage is 

occurring. However, the lessee’s 

responsibility to take protective action 

arises when it first knew or had 

constructive notice of the drainage, even 

when that date precedes the demand 

letter. 

(b) Since the time required to drill 

and produce a protective well varies 

according to the location and conditions 

of the oil and gas reservoir, the 

Superintendent will determine this on a 

case-by-case basis. The Superintendent 

will consider several factors, including, 

but not limited to: 

(1) The time required to evaluate the 

characteristics and performance of the 

draining well; 

(2) Rig availability; 

(3) Well depth; 

(4) Required environmental analysis; 

(5) Special lease stipulations that 

provide limited time frames in which to 

drill; and 

(6) Weather conditions. 

(c) If the Superintendent determines 

that a lessee did not take protective 

action in a timely manner, the lessee 

will owe compensatory royalty for the 

period of the delay. 

(d) The Superintendent will assess 

compensatory royalty beginning on the 

first day of the month following the 

earliest reasonable time the lessee 

should have taken protective action and 

continuing until: 

(1) The lessee drills sufficient 

economic protective wells and the wells 

remain in continuous production; 

(2) The draining well stops producing; 

or 

(3) The lessee relinquishes its interest 

in the lease. 

Lease Term 

§ 226.17 What is the term of a lease? 

Leases issued under this part shall be 

for a primary term as established by the 

Osage Minerals Council, approved by 

the Superintendent, and so stated in the 


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notice of sale of such leases and so long 

thereafter as the minerals specified are 

produced in paying quantities. 

Royalty Payments 

§ 226.18 What is the royalty rate for oil? 

(a) The lessee shall pay or cause to be 

paid to the Superintendent, as royalty, 

the sum of not less than 20 percent of 

the value of the oil determined under 

paragraph (b) of this section. 

(b) Unless the Osage Minerals 

Council, with approval of the Secretary, 

shall elect to take the royalty in kind, 

payment is owing at the time of sale or 

removal of the oil, except where 

payments are made on division orders, 

and settlement value per barrel shall be 

the greater of: 

(1) The average NYMEX daily price of 

oil at Cushing, Oklahoma, for the month 

in which the produced oil was sold, 

adjusted for gravity using the scale 

applicable under § 226.19; or 

(2) The actual selling price as adjusted 

for gravity. The applicable average 

NYMEX daily price of oil at Cushing, 

Oklahoma and gravity adjustment scale 

shall be available from the 

Superintendent upon request, on or 

before the fifth day of the month 

following production. 

(c) Should the lessor, with approval of 

the Secretary, elect to take the royalty in 

kind, the lessee shall furnish free 

storage for royalty oil for a period not 

to exceed 60 days from date of 

production after notice of such election. 

§ 226.19 How is the gravity adjustment 

calculated? 

(a) The gravity adjustment of Average 

Daily NYMEX Price of oil at Cushing, 

Oklahoma under § 226.18(b)(1) shall be 

a deduction from the price per barrel, as 

follows: 

If the gravity of the oil is . . . the rate is . . . for each . . . 

(1) Between 40.0 and 44.9 degrees .................. zero. 

(2) Between 35.0 and 39.9 degrees .................. $0.02 ................................................................ degree or fraction thereof below 40.0. 

(3) Below 35.0 degrees ...................................... $0.10 plus an additional $0.015 ...................... one-tenth of one degree below 35.0. 

(4) Above 44.9 degrees ..................................... $0.015 .............................................................. for each one-tenth of one degree above 44.9. 

(b) The Superintendent may, on or 

before the fifth day of the month 

following production, publish a gravity 

adjustment scale for oil of gravity below 

40.0 degrees or above 44.9 degrees that 

supersedes this paragraph, but only if 

the Superintendent determines, based 

on substantial evidence, that market 

conditions so warrant. 

§ 226.20 How is the royalty on gas 

calculated? 

(a) All gas removed from the lease 

from which it is produced shall be 

metered before removal unless 

otherwise approved by the 

Superintendent and be subject to a 

royalty of not less than 20 percent of the 

gross proceeds of the gas. Unless the 

Osage Minerals Council, with approval 

of the Secretary, shall elect to take the 

royalty in kind, gross proceeds shall be 

calculated under paragraph (b) of this 

section; except that the Superintendent 

may direct (and the Osage Minerals 

Council may request that the 

Superintendent direct) any lessee, upon 

no less than 30 days notice, to calculate 

gross proceeds at the higher royalty 

value of paragraph (b) or paragraph (c) 

of this section. 

(b) Under this paragraph, gross 

proceeds of the gas shall be determined 

by multiplying the entire volume of gas 

at the well times the heating value of the 

gas measured in MMBtu as determined 

by periodic gas analysis, times the 

Monthly Index Price in dollars per 

MMBtu for Oklahoma Zone 1 published 

by the Department of the Interior’s 

Office of Natural Resources Revenue. If 

that Monthly Index Price ceases to be 

published and is not otherwise 

available, the price shall be calculated 

in a comparable manner to be 

determined by the Superintendent. If 

any lessee supplies gas produced from 

one lease for operation and/or 

development of any other lease, 

including another lease held by the 

same lessee, the royalty calculated 

under this section shall be paid on all 

gas so used. 

(c) Under this paragraph, gross 

proceeds of the gas shall be 100 percent 

of the actual proceeds from sales of all 

residue gas produced from the lease and 

one hundred percent of the actual 

proceeds from sales of all natural gas 

liquids produced from the lease 

(including drip condensate) minus the 

actual, reasonable cost of processing not 

to exceed 50 percent of the actual sales 

value of the natural gas liquids 

(including drip condensate). If the 

actual reasonable cost of processing 

cannot be obtained, upon approval by 

the Superintendent, the lessee may 

determine such cost in accordance with 

the alternative methodology and 

procedures in 30 CFR 1206.173. There 

shall be no other deductions of any 

kind, whether monetary or volumetric 

or otherwise, for any purpose, including 

but not limited to compression, 

dehydration, gathering, treating, or 

transportation. 

§ 226.21 Who determines royalty on lost or 

wasted minerals? 

Royalty on minerals wasted or 

avoidably lost. Royalty shall be due on 

all oil and gas wasted or avoidably lost, 

the volume and quality of which shall 

be determined by the Superintendent 

after taking into consideration 

information provided by the lessee, but 

resolving all doubts about volume and 

quality in favor of the lessor. 

§ 226.22 What is the minimum royalty 

payment for all leases? 

Royalty paid from producing leases 

during any year shall not be less than 

an amount equal to the annual rental 

specified for the lease. Any 

underpayment of minimum royalty 

shall be due and payable at the end of 

the lease year. 

(a) After the primary term, the lessee 

shall submit with his payment evidence 

that the lease is producing in paying 

quantities. 

(b) The Superintendent is authorized 

to determine whether the lease is 

actually producing in paying quantities 

or has terminated for lack of such 

production. 

(c) Payment for any underpayment 

not made within the time specified shall 

be subject to a late charge at the rate of 

not less than 11⁄2 percent per month for 

each month or fraction thereof until 

paid, or such other rate as may be set 

by the Superintendent after consultation 

with the Osage Minerals Council. 

(d) The minimum royalty shall be 

adjusted in the same manner as the 

annual rental, consistent with 

§§ 226.14(a) and 226.70. 

§ 226.23 What royalty is due on other 

marketable products? 

A royalty on other marketable 

products shall be paid at the rate of not 

less than 20 per cent of the actual sales 

value of the other marketable products 

sold, irrespective of any other royalty 

due on oil or gas. 


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§ 226.24 What purchase options does the 

Federal Government have? 

Any of the executive departments of 

the U.S. Government shall have the 

option to purchase all or any part of the 

oil produced from any lease at not less 

than the price as defined in § 226.18. 

§ 226.25 How are royalty payments made? 

(a) Royalty payments due may be paid 

by either the purchaser or the lessee. 

(b) Unless otherwise provided by the 

Osage Minerals Council and approved 

by the Superintendent, all payments 

shall be due by the end of the month 

following the month during which the 

oil and gas is produced and sold, except 

when the last day of the month falls on 

a weekend or holiday. In such cases, 

payments are due on the first business 

day of the succeeding month. All 

payments shall cover the sales of the 

preceding month. 

(c) Failure to make such payments 

shall subject the lessee or purchaser, 

whoever is responsible for royalty 

payment, to a late charge at the rate of 

not less than 11⁄2 percent for each month 

or fraction thereof until paid, or such 

other rate as may be set by the 

Superintendent after consultation with 

the Osage Minerals Council. The Osage 

Minerals Council, subject to the 

approval of the Superintendent, may 

waive the late charges. 

§ 226.26 What reports are required to be 

provided? 

The lessee shall furnish certified 

monthly reports covering all operations 

in a form specified by the 

Superintendent, whether there has been 

production or not, indicating therein the 

total amount of oil, raw natural gas, and 

other products subject to royalty 

payment, by the end of the month 

following the month during which the 

oil and gas is produced and sold, except 

when the last day of the month falls on 

a weekend or holiday. In such cases, 

reports are due on the first business day 

of the succeeding month. 

(a) Reports covering oil production 

shall include the date of each sale of oil, 

well or lease identity, lessee, purchaser, 

volume of oil sold, gravity of oil sold, 

price paid per barrel for the sale, 40- 

degree price used for the sale, gravity 

adjustment scale used for the sale, and 

total amount paid for the sale. 

(b) Reports covering gas production 

shall contain the total volume of raw 

natural gas measured at the well, the 

BTU value of raw natural gas produced 

at the well, the periodic gas analysis 

applicable to the sale, and the total 

value paid for the raw natural gas, 

residue gas, natural gas liquids, and 

condensate. 

(c) Report forms shall be submitted in 

.csv (comma separated value) or ASCII 

format, or such other equivalent format 

specified by the Superintendent. The 

Superintendent shall specify the 

method of transmittal. The 

Superintendent may specify that lessees 

shall submit the reports and information 

required by this section directly to other 

federal agencies within the Department 

of the Interior, in lieu of the 

Superintendent. 

(d) The Superintendent shall provide 

to the Osage Minerals Council copies of 

all reports under this section on at least 

a quarterly basis in the format originally 

received by the lessee. Upon written 

request by the Osage Minerals Council, 

the Superintendent shall require lessees 

to provide to the Osage Minerals 

Council copies of run tickets. 

(e) Failure to remit reports shall 

subject the lessee to further penalties as 

provided in §§ 226.67 and 226.68 and 

shall subject any royalty payment 

contract or division order to 

termination. 

§ 226.27 Can a lessee enter into royalty 

payment contracts and division orders? 

(a) The lessee may enter into division 

orders or contracts with the purchasers 

of oil, gas, or derivatives therefrom that 

will provide for the purchaser to make 

payment of royalty in accordance with 

his lease. The following requirements 

apply in these cases: 

(1) The division orders or contracts 

shall not relieve the lessee from 

responsibility for the payment of the 

royalty should the purchaser fail to pay. 

(2) No production shall be removed 

from the leased premises until a 

division order and/or contract and its 

terms are approved by the 

Superintendent: 

(3) The Superintendent may grant 

temporary permission to run oil or gas 

from a lease pending the approval of a 

division order or contract. 

(4) The lessee shall file a certified 

monthly report and pay royalty on the 

value of all oil and gas used off the 

premises for development and operating 

purposes. 

(5) The lessee shall be responsible for 

the correct measurement and reporting 

of all oil and/or gas taken from the 

leased premises. 

(b) The lessee shall require the 

purchaser of oil and/or gas from its lease 

or leases to furnish the Superintendent, 

a statement reporting the gross barrels of 

oil and/or gross Mcf of gas sold and 

sales price per barrel and/or gross McF 

during the preceding month, by the end 

of the month following the month 

during which the oil and gas is 

produced and sold, except when the last 

day of the month falls on a weekend or 

holiday. In such cases, statements are 

due on the first business day of the 

succeeding month. The Superintendent 

may authorize an extension of time, not 

to exceed 10 days, for furnishing this 

statement. 

Unit Leases, Assignments and Related 

Instruments 

§ 226.28 When is unitization allowed? 

The Osage Minerals Council and the 

lessee or lessees, may, with the approval 

of the Superintendent, unitize or merge, 

two or more oil or oil and gas leases into 

a unit or cooperative operating plan to 

promote the greatest ultimate recovery 

of oil and gas from a common source of 

supply or portion thereof embracing the 

lands covered by such lease or leases. 

(a) The cooperative or unit agreement 

shall be subject to the regulations in this 

part and applicable laws governing the 

leasing of the Osage Mineral Estate. 

(b) Any agreement between the parties 

in interest to terminate a unit or 

cooperative agreement as to all or any 

portion of the lands included shall be 

submitted to the Superintendent for his 

approval. 

(c) Upon approval under paragraph 

(b) of this section, the leases included 

under the cooperative or unit agreement 

shall be restored to their original terms. 

(d) For the purpose of preventing 

waste and to promote the greatest 

ultimate recovery of oil and gas from a 

common source of supply or portion 

thereof, all oil leases, oil and gas leases, 

and gas leases issued under this part 

shall be subject to any unit development 

plan affecting the leased lands that may 

be required by the Superintendent with 

the consent of the Osage Minerals 

Council. This plan shall adequately 

protect the rights of all parties in 

interest, including the Osage Mineral 

Estate. 

§ 226.29 How are leases assigned? 

Approved leases or any interest 

therein may be assigned or transferred 

only with the approval of the 

Superintendent. The assignee must be 

qualified to hold such lease under 

existing rules and regulations and shall 

furnish a satisfactory bond conditioned 

for the faithful performance of the 

covenants and conditions thereof. 

(a) The lessee must assign either his 

entire interest in a lease or legal 

subdivision thereof, or an undivided 

interest in the whole lease: Provided, 

that when an assignment covers only a 

portion of a lease or covers interests in 

separate horizons, such assignment 

shall be subject to both the consent of 

the Osage Minerals Council and 

approval of the Superintendent. 


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(b) If a lease is divided by the 

assignment of an entire interest in any 

part, each part shall be considered a 

separate lease and the assignee shall be 

bound to comply with all the terms and 

conditions of the original lease. 

(c) A fully executed copy of the 

assignment shall be filed with the 

Superintendent within 30 days after the 

date of execution by all parties. If 

requested within the 30-day period, the 

Superintendent may grant an extension 

of 15 days. 

(d) A filing fee of $75 shall 

accompany each assignment. 

§ 226.30 Are overriding royalty 

agreements allowed? 

Agreements creating overriding 

royalties or payments out of production 

shall not be considered as an interest in 

a lease as such term is used in § 226.29. 

Agreements creating overriding royalties 

or payments out of production are 

hereby authorized and the approval of 

the Department of the Interior or any 

agency thereof shall not be required 

with respect thereto, but such 

agreements shall be subject to the 

condition that nothing in any such 

agreement shall be construed as 

modifying any of the obligations of the 

lessee under its lease and the 

regulations in this part. All such 

obligations are to remain in full force 

and effect, the same as if free of any 

such royalties or payments. 

(a) The existence of agreements 

creating overriding royalties or 

payments out of production, whether or 

not actually paid, shall not be 

considered in justifying the shutdown 

or abandonment of any well. 

(b) Agreements creating overriding 

royalties or payments out of production 

need not be filed with the 

Superintendent unless incorporated in 

assignments or instruments required to 

be filed pursuant to § 226.29. 

§ 226.31 When are drilling contracts 

allowed? 

The Superintendent is authorized to 

approve drilling contracts with a 

stipulation that such approval does not 

in any way bind the Department to 

approve subsequent assignments that 

may be provided for in said contracts. 

Approval merely authorizes entry on the 

lease for the purpose of development 

work. 

§ 226.32 When can an oil lease and a gas 

lease be combined? 

A lessee owning both an oil lease and 

gas lease covering the same acreage is 

authorized to convert such leases to a 

combination oil and gas lease. 

Subpart C—Operations 

§ 226.33 What are the general 

requirements governing operations? 

(a) The lessee shall comply with 

applicable laws and regulations; with 

the lease terms; and with orders and 

instructions of the Superintendent. 

These include, but are not limited to, 

conducting all operations in a manner 

that: 

(1) Ensures the proper handling, 

measurement, disposition, and site 

security of leasehold production; 

(2) Protects other natural resources 

and environmental quality; 

(3) Protects life and property; and 

(4) Results in maximum ultimate 

economic recovery of oil and gas and 

other marketable products with 

minimum waste and with minimum 

adverse effect on ultimate recovery of 

other mineral resources. 

(b) The lessee shall permit properly 

identified authorized representatives of 

the Superintendent to enter upon, travel 

across, and inspect lease sites and 

records normally kept on the lease 

pertinent thereto without advance 

notice. Inspections normally will be 

conducted during those hours when 

responsible persons are expected to be 

present at the operation being inspected. 

Such permission shall include access to 

secured facilities on such lease sites for 

the purpose of making any inspection or 

investigation for determining whether 

there is compliance with applicable law, 

the regulations in this part, and any 

applicable orders, notices or directives. 

(c) For the purpose of making any 

inspection or investigation, the 

Superintendent shall have the same 

right to enter upon or travel across any 

lease site as the lessee. 

§ 226.34 What requirements apply to 

commencement of operations on a lease? 

(a) No operations shall be permitted 

upon any tract of land until a lease 

covering such tract shall have been 

approved by the Superintendent. The 

Superintendent may grant authority to 

any party under such lease, consistent 

with the regulations in this part that he 

or she deems proper, to conduct 

geophysical and geological exploration 

work. 

(b) The lessee shall submit 

applications on forms to be furnished by 

the Superintendent and secure approval 

before: 

(1) Well drilling, treating, or workover 

operations are started on the leased 

premises. 

(2) Removing casing from any well. 

(c) The lessee shall notify the 

Superintendent a reasonable time in 

advance of starting work, of intention to 

drill, redrill, deepen, plug, or abandon 

a well. 

§ 226.35 How does a lessee acquire 

permission to begin operations on a 

restricted homestead allotment? 

(a) The lessee may conduct operations 

within or upon a restricted homestead 

selection only with the written consent 

of the Superintendent. 

(b) If the allottee is unwilling to 

permit operations on his homestead, the 

Superintendent will cause an 

examination of the premises to be made 

with the allottee and lessee or his 

representative. Upon finding that the 

interests of the Osage Mineral Estate 

require that the tract be developed, the 

Superintendent will endeavor to have 

the parties agree upon the terms under 

which operations on the homestead may 

be conducted. 

(c) In the event the allottee and lessee 

cannot reach an agreement, the matter 

shall be presented by all parties before 

the Osage Minerals Council, and the 

Council shall make its 

recommendations. Such 

recommendations shall be considered as 

final and binding upon the allottee and 

lessee. A guardian may represent the 

allottee. Where no one is authorized or 

where no person is deemed by the 

Superintendent to be a proper party to 

speak for a person of unsound mind or 

feeble understanding, the Principal 

Chief of the Osage Tribe shall represent 

him. 

(d) If the allottee or his representative 

does not appear before the Osage 

Minerals Council when notified by the 

Superintendent, or if the Council fails to 

act within 10 days after the matter is 

referred to it, the Superintendent may 

authorize the lessee to proceed with 

operations in conformity with the 

provisions of his lease and the 

regulations in this part. 

§ 226.36 What kind of notice and 

information is required to be given surface 

owners prior to commencement of drilling 

operations? 

(a) The lessee shall notify or attempt 

to notify the surface owner in one 

general written notification sent by 

certified mail with a copy to the 

Superintendent, that it plans to begin 

conducting the following activities over 

the term of its lease: Archeological or 

biological surveys, or staking of wells. 

(b) No operations of any kind shall 

commence until the lessee or its 

authorized representative shall meet 

with the surface owner or his/her 

representative. The lessee must request 

the meeting in writing by certified mail 

and provide a copy of the letter to the 

Superintendent. Unless waived by the 

Superintendent or otherwise agreed to 


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between the lessee and surface owner, 

such meeting shall be held at least 10 

calendar days prior to the 

commencement or any operations. At 

such meeting lessee or its authorized 

representative shall comply with the 

following requirements: 

(1) Indicate the location of the well or 

wells to be drilled. 

(2) Arrange for a route of ingress and 

egress. Upon failure to agree on a route 

of ingress and egress, said route shall be 

set by the Superintendent. 

(3) Furnish to said surface owners the 

name and address of the party or 

representative upon whom the surface 

owner shall serve any claim for damages 

which he may sustain from mineral 

development or operations, and as to 

the procedure for settlement thereof as 

provided in § 226.41. 

(4) Where the drilling is to be on 

restricted land, lessee or its authorized 

representative in the manner provided 

above shall meet with the 

Superintendent. 

(5) When the surface owner or its 

representative cannot be contacted at 

the last known address or has not 

accepted a meeting request within 30 

calendar days of receipt of the request, 

the Superintendent shall, in writing, 

authorize lessee to proceed with 

operations. 

§ 226.37 How much of the surface may a 

lessee use? 

The lessee or its authorized 

representative shall have the right to use 

so much of the surface of the land 

within the Osage Mineral Estate as may 

be reasonable for operations and 

marketing. This includes, but is not 

limited to the right to, lay and maintain 

pipelines, electric lines, pull rods, other 

appliances necessary for operations and 

marketing, and the right-of-way for 

ingress and egress to any point of 

operations. 

(a) If the lessee and surface owner are 

unable to agree as to the routing of 

pipelines, electric lines, etc., said 

routing shall be set by the 

Superintendent. 

(b) The right to use water for lease 

operations is established by § 226.48. 

(c) The lessee shall conduct its 

operations in a workmanlike manner, 

commit no waste and allow none to be 

committed upon the land, nor permit 

any avoidable nuisance to be 

maintained on the premises under its 

control. 

§ 226.38 What commencement money 

must the lessee pay to the surface owner? 

(a) Before commencing actual 

exploration and/or development, the 

lessee shall pay or tender to the surface 

owner commencement money in the 

amount of $25 per shot hole for 

explosive source (for the acquisition of 

Single Fold (100 per cent Seismic)), or 

$400 per linear mile for surface source 

data acquisition. For the purpose of 

conducting a 3D seismic survey, the 

lessee shall pay commencement money 

in the amount of $10 per acre occupied 

during the time the survey is conducted. 

The lessee shall also pay 

commencement money in the amount of 

$2500 for each well. 

(1) After payment of commencement 

money the lessee shall be entitled to 

immediate possession of the drilling 

site. 

(2) Commencement money will not be 

required for the redrilling of a well 

which was originally drilled under the 

current lease. 

(3) A drilling site shall be held to the 

minimum area essential for operations 

and shall not exceed one and one-half 

acres in area unless authorized by the 

Superintendent. 

(4) Commencement money shall be a 

credit toward the settlement of the total 

damages. 

(5) Acceptance of commencement 

money by the surface owner does not 

affect its right to compensation for 

damages as described in § 226.40, 

occasioned by the drilling and 

completion of the well for which it was 

paid. 

(6) Since actual damage to the surface 

from operations cannot necessarily be 

ascertained prior to the completion of a 

well as a serviceable well or dry hole, 

a damage settlement covering the 

drilling operation need not be made 

until after completion of drilling 

operations. 

(b) Where the surface is restricted 

land, commencement money shall be 

paid to the Superintendent for the 

landowner. All other surface owners 

shall be paid or tendered such 

commencement money direct. 

(1) Where such surface owners are 

neither residents of Osage County, nor 

have a representative located therein, 

such payment shall be made or tendered 

to the last known address of the surface 

owner at least 5 days before 

commencing drilling operation on any 

well. 

(2) If the lessee is unable to reach the 

owner of the surface of the land for the 

purpose of tendering the 

commencement money or if the owner 

of the surface of the land refuses to 

accept the same, the lessee shall deposit 

such amount with the Superintendent 

by check payable to the Bureau of 

Indian Affairs. The superintendent shall 

thereupon advise the owner of the 

surface of the land by mail at his last 

known address that the commencement 

money is being held for payment to him 

upon his written request. 

§ 226.39 What fees must lessee pay to a 

surface owner for tank siting? 

The lessee shall pay fees for each tank 

sited at the rate of $500 per tank, except 

that: 

(a) No payment shall be due for a tank 

temporarily set on a well location site 

for drilling, completing, or testing; and 

(b) The sum to be paid for a tank 

occupying an area more than 2500 

square feet shall be agreed upon 

between the surface owner and lessee 

or, on failure to agree, the same shall be 

determined by arbitration as provided 

by § 226.41. 

§ 226.40 What is a settlement of damages 

claimed? 

(a) The lessee or its authorized 

representative or geophysical permittee 

shall pay for all damages to growing 

crops, any improvements on the lands, 

and all other surface damages as may be 

occasioned by operations. 

Commencement money shall be a credit 

toward the settlement of the total 

damages occasioned by the drilling and 

completion of the well for which it was 

paid. Such damages shall be paid to the 

owner of the surface and by him 

apportioned among the parties 

interested in the surface, whether as 

owner, surface lessee, or otherwise, as 

the parties may mutually agree or as 

their interests may appear. If the lessee 

or its authorized representative and 

surface owner are unable to agree 

concerning damages, the same shall be 

determined by arbitration. Nothing 

herein contained shall be construed to 

deny any party the right to file an action 

in a court of competent jurisdiction if he 

is dissatisfied with the amount of the 

award. 

(b) Surface owners shall notify their 

lessees or tenants of the regulations in 

this part and of the necessary procedure 

to follow in all cases of alleged damages. 

If so authorized in writing, surface 

lessees or tenants may represent the 

surface owners. 

(c) In settlement of damages on 

restricted land, all sums due and 

payable shall be paid to the 

Superintendent for credit to the account 

of the Indian entitled thereto. The 

Superintendent will make the 

apportionment between the Indian 

landowner or owners and surface lessee 

of record. 

(d) Any person claiming an interest in 

any leased tract or in damages thereto, 

must furnish to the Superintendent a 

statement in writing showing said 

claimed interest. Failure to furnish such 


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statement shall constitute a waiver of 

notice and estop said person from 

claiming any part of such damages after 

the same shall have been disbursed. 

§ 226.41 What is the procedure for 

settlement of damages claimed? 

Where the surface owner or his lessee 

suffers damage due to the oil and gas 

operations and/or marketing of oil or gas 

by lessee or its authorized 

representative, the procedure for 

recovery shall be as follows: 

(a) The party or parties aggrieved 

shall, as soon as possible after the 

discovery of any damages, serve written 

notice to lessee or its authorized 

representative as provided by § 226.36. 

Written notice shall contain the nature 

and location of the alleged damages, the 

date of occurrence, the names of the 

party or parties causing said damages, 

and the amount of damages. It is not 

intended by this requirement to limit 

the time within which action may be 

brought in the courts to less than the 90- 

day period allowed by section 2 of the 

Act of March 2, 1929 (45 Stat. 1478, 

1479). 

(b) If the alleged damages are not 

adjusted at the time of such notice, the 

lessee or its authorized representative 

shall try to adjust the claim with the 

party or parties aggrieved within 20 

days from receipt of the notice. If the 

claimant is the owner of restricted 

property and a settlement results, a copy 

of the settlement agreement shall be 

submitted to the Superintendent for 

approval. If the settlement agreement 

concerning the restricted property is 

approved by the Superintendent, 

payment shall be made to the 

Superintendent for the benefit of said 

claimant. 

(c) If the parties fail to adjust the 

claim within the 20 days specified, then 

within 10 days thereafter each of the 

interested parties shall appoint an 

arbitrator who immediately upon their 

appointment shall agree upon a third 

arbitrator. If the two arbitrators shall fail 

to agree upon a third arbitrator within 

10 days, they shall immediately notify 

the parties in interest. If said parties 

cannot agree upon a third arbitrator 

within 5 days after receipt of such 

notice, the Superintendent shall appoint 

the third arbitrator. 

(d) As soon as the third arbitrator is 

appointed, the arbitrators shall meet; 

hear the evidence and arguments of the 

parties; and examine the lands, crops, 

improvements, or other property alleged 

to have been injured. Within 10 days 

they shall render their decision as to the 

amount of the damage due. The 

arbitrators shall be disinterested 

persons. The fees and expenses of the 

third arbitrator shall be borne equally by 

the claimant and the lessee or its 

authorized representative. Each lessee 

or its authorized representative and 

claimant shall pay the fee and expenses 

for the arbitrator appointed by him. 

(e) When an act of an oil or gas lessee 

or its authorized representative results 

in injury to both the surface owner and 

his lessee, the parties aggrieved shall 

join in the appointment of an arbitrator. 

Where the injury complained of is 

chargeable to more than one oil or gas 

lessee, or its authorized representative, 

all such chargeable lessees or 

representatives shall join in the 

appointment of an arbitrator. 

(f) Any two of the arbitrators may 

make a decision as to the amount of 

damage due. The decision shall be in 

writing and shall be served forthwith 

upon the parties in interest. Each party 

shall have 90 days from the date the 

decision is served in which to file an 

action in a court of competent 

jurisdiction. If no such action is filed 

within said time and the award is 

against the lessee or its authorized 

representative, he/she shall pay the 

same, together with interest at an annual 

rate established for the Internal Revenue 

Service from date of award, within 10 

days after the expiration of said period 

for filing an action. 

(g) The lessee or its authorized 

representative shall file with the 

Superintendent a report on each 

settlement agreement, setting out the 

nature and location of the damage, date, 

and amount of the settlement, and any 

other pertinent information. 

§ 226.42 What are a lessee’s obligations 

for production? 

(a) The lessee shall put into 

marketable condition at no cost to the 

lessor, all oil, gas, and other marketable 

products produced from the leased land. 

(b) Where oil accumulates in a pit, 

such oil must either be: 

(1) Recirculated through the regular 

treating system and returned to the 

stock tanks for sale; or 

(2) Pumped into a stock tank without 

treatment and measured for sale in the 

same manner as from any sales tank in 

accordance with applicable orders and 

notices. 

(c) In the absence of prior approval 

from the Superintendent, no oil should 

be pumped into a pit except in an 

emergency. Each such occurrence must 

be reported to the Superintendent and 

the oil promptly recovered in 

accordance with applicable orders and 

notices. 

§ 226.43 What documentation is required 

for transportation of oil or gas or other 

marketable product? 

(a) Any person engaged in 

transporting by motor vehicle any oil 

from any lease site, or allocated to any 

such lease site, shall carry on his/her 

person, in his/her vehicle, or in his/her 

immediate control, documentation 

showing at a minimum; the amount, 

origin, and intended first purchaser of 

the oil. 

(b) Any person engaged in 

transporting any oil or gas or other 

marketable product by pipeline from 

any lease site, or allocated to any lease 

site, shall maintain documentation 

showing, at a minimum, the amount, 

origin, and intended first purchaser of 

such oil or gas or other marketable 

product. 

(c) On any lease site, any authorized 

representative of the Superintendent 

who is properly identified may stop and 

inspect any motor vehicle that he/she 

has probable cause to believe is carrying 

oil from any such lease site, or allocated 

to such lease site, to determine whether 

the driver possesses proper 

documentation for the load of oil. 

(d) Any authorized representative of 

the Superintendent who is properly 

identified and who is accompanied by 

an appropriate law enforcement officer, 

or an appropriate law enforcement 

officer alone, may stop and inspect any 

motor vehicle which is not on a lease 

site if he/she has probable cause to 

believe the vehicle is carrying oil from 

a lease site, or allocated to a lease site, 

to determine whether the driver 

possesses proper documentation for the 

load of oil. 

§ 226.44 What are a lessee’s obligations 

for preventing pollution? 

(a) All lessees, contractors, drillers, 

service companies, pipe pulling and 

salvaging contractors, or other persons, 

shall at all times conduct their 

operations and drill, equip, operate, 

produce, plug, and abandon all wells 

drilled for oil or gas, service wells or 

exploratory wells (including seismic, 

core, and stratigraphic holes) in a 

manner that will prevent pollution and 

the migration of oil, gas, salt water, or 

other substance from one stratum into 

another, including any fresh water 

bearing formation. 

(b) Pits for drilling mud or deleterious 

substances used in the drilling, 

completion, recompletion, or workover 

of any well shall be constructed and 

maintained to prevent pollution of 

surface and subsurface fresh water. 

These pits shall be enclosed with a 

fence of at least four strands of barbed 

wire, or an approved substitute, 


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stretched taut to adequately braced 

corner posts, unless the surface owner, 

user, or the Superintendent gives 

consent to the contrary. Immediately 

after completion of operations, pits shall 

be emptied, reclaimed, and leveled 

unless otherwise requested by surface 

owner or user. 

(c) Drilling pits shall be adequate to 

contain mud and other material 

extracted from wells and shall have 

adequate storage to maintain a supply of 

mud for use in emergencies. 

(d) No earthen pit, except those used 

in the drilling, completion, 

recompletion or workover of a well, 

shall be constructed, enlarged, 

reconstructed or used without approval 

of the Superintendent. Unlined earthen 

pits shall not be used for the storage of 

salt water or other deleterious 

substances. 

(e) Deleterious fluids other than fresh 

water drilling fluids used in drilling or 

workover operations, which are 

displaced or produced in well 

completion or stimulation procedures, 

including, but not limited to, fracturing, 

acidizing, swabbing, and drill stem 

tests, shall be collected into a pit lined 

with plastic of at least 30 mil or a metal 

tank and maintained separately from 

above-mentioned drilling fluids to allow 

for separate disposal. 

§ 226.45 What are a lessee’s other 

environmental responsibilities? 

(a) The lessee shall conduct 

operations in a manner which protects 

the mineral resources, other natural 

resources, and environmental quality. 

The lessee shall comply with the 

pertinent orders of the Superintendent 

and other standards and procedures as 

set forth in the applicable laws, 

regulations, lease terms and conditions, 

and the approved drilling plan or 

subsequent operations plan. 

(b) The lessee shall exercise due care 

and diligence to assure that leasehold 

operations do not result in undue 

damage to surface or subsurface 

resources or surface improvements. 

(1) All produced water must be 

disposed of by injection into the 

subsurface, in approved pits, or by other 

methods which have been approved by 

the Superintendent. 

(2) Upon the conclusion of operations, 

the lessee shall reclaim the disturbed 

surface in a manner approved or 

prescribed by the Superintendent. 

(c) All spills or leakages of oil, gas, 

other marketable products, produced 

water, toxic liquids, or waste materials, 

blowouts, fires, personal injuries, and 

fatalities shall be reported by the lessee 

to the Superintendent as soon as 

discovered, but not later than the next 

business day. 

(1) The lessee shall exercise due 

diligence in taking necessary measures, 

subject to approval by the 

Superintendent, to control and remove 

pollutants and to extinguish fires. 

(2) A lessee’s compliance with the 

requirements of the regulations in this 

part shall not relieve the lessee of the 

obligation to comply with other 

applicable laws and regulations. 

(d) When required by the 

Superintendent, a contingency plan 

shall be submitted describing 

procedures to be implemented to protect 

life, property, and the environment. 

(e) The lessee’s liability for damages 

to third parties shall be governed by 

applicable law. 

§ 226.46 What safety precautions must a 

lessee take? 

The lessee shall perform operations 

and maintain equipment in a safe and 

workmanlike manner. The lessee shall 

take all precautions necessary to 

provide adequate protection for the 

health and safety of life and the 

protection of property. Such precautions 

shall not relieve the lessee of the 

responsibility for compliance with other 

pertinent health and safety requirements 

under applicable laws or regulations. 

§ 226.47 When can the Superintendent 

grant easements for wells off leased 

premises? 

The Superintendent, with the consent 

of the Osage Minerals Council, may 

grant commercial and noncommercial 

easements for wells off the leased 

premises to be used for purposes 

associated with oil and gas production. 

Rents payable to the Osage Mineral 

Estate for such easements shall be in an 

amount agreed to by Grantee and the 

Osage Minerals Council, subject to the 

approval of the Superintendent. Grantee 

shall be responsible for all damages 

resulting from the use of such wells and 

settlement for any damages shall be 

made as provided in § 226.41. 

§ 226.48 A lessee’s use of water. 

The lessee or his contractor may, with 

the approval of the Superintendent, use 

water from streams and natural water 

courses to the extent that such use does 

not diminish the supply below the 

requirements of the surface owner from 

whose land the water is taken. 

Similarly, the lessee or his contractor 

may use water from reservoirs formed 

by the impoundment of water from such 

streams and natural water courses, if 

such use does not exceed the quantity 

to which they originally would have 

been entitled had the reservoirs not 

been constructed. The lessee or his/her 

contractor may install necessary lines 

and other equipment within the Osage 

Mineral Estate to obtain such water. 

Any damage resulting from such 

installation shall be settled as provided 

in § 226.41. 

§ 226.49 What are the responsibilities of 

an oil lessee when a gas well is drilled and 

vice versa? 

Prior to drilling, an oil or gas lessee 

shall notify the other lessees of its intent 

to drill. When an oil lessee in drilling 

a well encounters a formation or zone 

having indications of possible gas 

production, or the gas lessee in drilling 

a well encounters a formation or zone 

having indication of possible oil 

production, the lessee shall immediately 

notify the other lessee and the 

Superintendent. The lessee drilling the 

well shall obtain all information that a 

prudent lessee would utilize to evaluate 

the productive capability of such 

formation or zone. 

(a) Gas well to be turned over to gas 

lessee. If an oil lessee drills a gas well, 

it shall, without removing from the well 

any of the casing or other equipment, 

immediately shut the well in and notify 

the gas lessee and the Superintendent. 

(1) If the gas lessee does not, within 

45 days after receiving notice and 

determining the cost of drilling, elect to 

take over such well and reimburse the 

oil lessee the cost of drilling, including 

all damages paid and the cost in-place 

of casing, tubing, and other equipment, 

the oil lessee shall immediately confine 

the gas to the original stratum. The 

disposition of such well and the 

production therefrom shall then be 

subject to the approval of the 

Superintendent. 

(2) If the oil lessee and gas lessee 

cannot agree on the cost of the well, the 

Superintendent will apportion the cost 

between the oil and gas lessees. 

(b) Oil well to be turned over to oil 

lessee. If a gas lessee drills an oil well, 

then it must immediately, without 

removing from the well any of the 

casing or other equipment, notify the oil 

lessee and the Superintendent. 

(1) If the oil lessee does not, within 45 

days after receipt of notice and cost of 

drilling, elect to take over the well, it 

must immediately notify the gas lessee. 

From that point, the Superintendent 

must approve the disposition of the 

well, and any gas produced from it. 

(2) If the oil lessee chooses to take 

over the well, it must pay to the gas 

lessee: 

(i) The cost of drilling the well, 

including all damages paid; and 

(ii) The cost in place of casing and 

other equipment. 


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(3) If the oil lessee and the gas lessee 

cannot agree on the cost of the well, the 

Superintendent will apportion the cost 

between the oil and gas lessees. 

(c) Lands not leased. If a gas lessee 

drills an oil well upon lands not leased 

for oil purposes or vice versa, the 

Superintendent may, until such time as 

said lands are leased, permit the lessee 

who drilled the well to operate and 

market the production therefrom. When 

said lands are leased, the lessee who 

drilled and completed the well shall be 

reimbursed by the oil or gas lessee for 

the cost of drilling said well, including 

all damages paid and the cost of inplace casing, tubing, and other 

equipment. If the lessee does not elect 

to take over said well as provided above, 

the disposition of such well and the 

production therefrom shall be 

determined by the Superintendent. In 

the event the oil lessee and gas lessee 

cannot agree on the cost of the well, 

such cost shall be apportioned between 

the oil and gas lessee by the 

Superintendent. 

§ 226.50 How is the cost of drilling a well 

determined? 

The term ‘‘cost of drilling’’ as applied 

where one lessee takes over a well 

drilled by another, shall include all 

reasonable, usual, necessary, and proper 

expenditures. A list of expenses 

mentioned in this section shall be 

presented to proposed purchasing lessee 

within 10 days after the completion of 

the well. In the event of a disagreement 

between the parties as to the charges 

assessed against the well that is to be 

taken over, such charges shall be 

determined by the Superintendent. 

§ 226.51 What are the requirements for 

using gas for operating purposes and tribal 

uses? 

All gas used in accordance with this 

section must first be odorized and 

treated in accordance with industry 

standards for safe use. 

(a) Gas to be furnished oil lessee. The 

lessee of a producing gas lease shall 

furnish the oil lessee sufficient gas for 

operating purposes at a rate to be agreed 

upon, or on failure to agree, the rate 

shall be determined by the 

Superintendent: Provided, that the oil 

lessee shall at his own expense and risk, 

furnish and install the necessary 

connections to the gas lessee’s well or 

pipeline. All such connections shall be 

reported in writing to the 

Superintendent. 

(b) Use of gas by Osage Tribe. (1) Gas 

from any well or wells shall be 

furnished to any Tribal-owned building 

or enterprise at a rate not to exceed the 

price less the royalty being received or 

offered by a gas purchaser. This 

requirement shall be subject to the 

determination by the Superintendent 

that gas in sufficient quantities is 

available above that needed for lease 

operation and that no waste would 

result. In the absence of a gas purchaser, 

the rate to be paid by the Osage Tribe 

shall be determined by the 

Superintendent based on prices being 

paid by purchasers in the Osage Mineral 

Estate. The Osage Tribe is to furnish all 

necessary materials and labor for such 

connection with the lessee’s gas system. 

The use of such gas shall be at the risk 

of the Osage Tribe at all times. 

(2) Any member of the Osage Tribe 

residing in Osage County and outside a 

corporate city is entitled to the use at 

his own expense of not to exceed 

400,000 cubic feet of gas per calendar 

year for his principal residence at a rate 

not to exceed the amount paid by a gas 

purchaser plus 10 percent. This 

requirement shall be subject to the 

determination by the Superintendent 

that gas in sufficient quantities is 

available above that needed for lease 

operation and that no waste would 

result. In the absence of a gas purchaser, 

the amount to be paid by the Tribal 

member shall be determined by the 

Superintendent. Gas to Tribal members 

shall not be royalty free. The Tribal 

member is to furnish all necessary 

material and labor for such connection 

to the lessee’s gas system, and shall 

maintain his own lines. The use of such 

gas shall be at the risk of the Tribal 

member at all times. 

(3) Gas furnished by the lessee under 

paragraphs (b)(1) and (2) of this section 

may be terminated only with the 

approval of the Superintendent. A 

written application for termination must 

be made to the Superintendent showing 

justification. 

Subpart D—Cessation of Operations 

§ 226.52 When can a lessee shutdown, 

abandon, and plug a well? 

No well shall be abandoned until its 

lack of further profitable production of 

oil and/or gas has been demonstrated to 

the satisfaction of the Superintendent. 

The lessee shall not shut down, 

abandon, or otherwise discontinue the 

operation or use of any well for any 

purpose without the written approval of 

the Superintendent. All applications for 

such approval shall be submitted to the 

Superintendent on forms furnished by 

the Superintendent. 

(a) Application for authority to 

permanently shut down or discontinue 

the use or operation of a well shall set 

forth the justification, probable 

duration, the means by which the well 

bore is to be protected, and the 

contemplated eventual disposition of 

the well. The method of conditioning 

such well shall be subject to the 

approval of the Superintendent. 

(b) Prior to permanent abandonment 

of any well, the oil lessee or the gas 

lessee, as the case may be, shall offer the 

well to the other for his recompletion or 

use under such terms as may be 

mutually agreed upon but not in conflict 

with the regulations. Failure of the 

lessee receiving the offer to reply within 

10 days after receipt thereof shall be 

deemed a rejection of the offer. If, after 

indicating acceptance, the two parties 

cannot agree on the terms of the offer 

within 30 days, the disposition of such 

well shall be determined by the 

Superintendent. 

(c) The Superintendent is authorized 

to shut in a lease when the lessee fails 

to comply with the terms of the lease, 

the regulations, and/or orders of the 

Superintendent. 

§ 226.53 When must a lessee dispose of 

casings and other improvements? 

(a) Upon termination of a lease, 

permanent improvements, unless 

otherwise provided by written 

agreement with the surface owner and 

filed with the Superintendent, shall 

remain a part of said land and become 

the property of the surface owner upon 

termination of the lease, other than by 

termination for cause. Exceptions 

include personal property not limited to 

tools, tanks, pipelines, pumping and 

drilling equipment, derricks, engines, 

machinery, tubing, and the casings of all 

wells. When any lease terminates, all 

such personal property shall be 

removed within 90 days or such 

reasonable extension of time as may be 

granted by the Superintendent. 

Otherwise, the ownership of all casings 

shall revert to lessor and all other 

personal property and permanent 

improvements to the surface owner. 

Nothing herein shall be construed to 

relieve the lessee of responsibility for 

removing any such personal property or 

permanent improvements from the 

premises if required by the 

Superintendent and restoring the 

premises as nearly as practicable to the 

original state. 

(b) Upon termination of lease for 

cause. When there has been a 

termination for cause, the lessor shall be 

entitled and authorized to take 

immediate possession of the lease 

premises and all permanent 

improvements and all other equipment 

necessary for the operation of the lease. 

(c) Wells to be abandoned shall be 

promptly plugged as prescribed by the 

Superintendent. Applications to plug 


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shall include a statement affirming 

compliance with § 226.52 and shall set 

forth reasons for plugging, a detailed 

statement of the proposed work, 

including the kind, location, and length 

of plugs (by depth), plans for mudding 

and cementing, testing, parting and 

removing casing, and any other 

pertinent information: Provided, that 

the Superintendent may give oral 

permission and instructions pending 

receipt of a written application to plug 

a newly drilled hole. The lessee shall 

submit a written application for 

authority to plug a well. 

(d) The lessee shall plug and fill all 

dry or abandoned wells in a manner to 

confine the fluid in each formation 

bearing fresh water, oil, gas, salt water, 

and other minerals, and to protect it 

against invasion of fluids from other 

sources. Mud-laden fluid, cement, and 

other plugs shall be used to fill the hole 

from bottom to top. 

(1) If a satisfactory agreement is 

reached between the lessee and the 

surface owner, subject to the approval of 

the Superintendent, the lessee may 

condition the well for use as a fresh 

water well and shall so indicate on the 

plugging record. 

(2) The manner in which plugging 

material shall be introduced and the 

type of material so used shall be subject 

to the approval of the Superintendent. 

(3) Within 10 days after plugging, the 

lessee shall file with the Superintendent 

a complete report of the plugging of 

each well. 

(4) When any well is plugged and 

abandoned, the lessee shall, within 90 

days, clean up the premises around 

such well to the satisfaction of the 

Superintendent. 

Subpart E—Requirements of Lessees 

§ 226.54 What general requirements apply 

to lessees? 

(a) The lessee shall comply with all 

orders or instructions issued by the 

Superintendent. The Superintendent or 

his representative may enter upon the 

leased premises for the purpose of 

inspection. 

(b) The lessee shall keep a full and 

correct account of all operations, 

receipts, and disbursements and make 

reports thereof, as required. 

(c) The lessee’s books and records 

shall be available to the Superintendent 

for inspection. 

(d) The lessee shall maintain and 

preserve records for 6 years from the 

day on which the relevant transaction 

recorded occurred unless the 

Superintendent notifies the lessee of an 

audit or investigation involving the 

records and that they must be 

maintained for a longer period. When an 

audit or investigation is underway, 

records shall be maintained until the 

lessee is released in writing from the 

obligation to maintain the records. 

§ 226.55 When must a lessee designate 

process agents? 

(a) Before actual drilling or 

development operations are commenced 

on leased lands, the lessee or assignee, 

if not a resident of the State of 

Oklahoma, shall appoint a local or 

resident representative within the State 

of Oklahoma on whom the 

Superintendent may serve notice or 

otherwise communicate in securing 

compliance with the regulations in this 

part, and shall notify the 

Superintendent of the name and post 

office address of the representative 

appointed. 

(b) Where several parties own a lease 

jointly, one representative or agent shall 

be designated whose duties shall be to 

act for all parties concerned. 

Designation of such representative 

should be made by the party in charge 

of operations. 

(c) In the event of the incapacity or 

absence from the State of Oklahoma of 

such designated local or resident 

representative, the lessee shall appoint 

a substitute to serve in his stead. In the 

absence of such representative or 

appointed substitute, any employee of 

the lessee upon the leased premises or 

person in charge of drilling or related 

operations thereon shall be considered 

the representative of the lessee for the 

purpose of service of orders or notices 

as herein provided. 

§ 226.56 What are the lessee’s record and 

reporting requirements for wells? 

(a) The lessee shall keep accurate and 

complete records of the drilling, 

redrilling, deepening, repairing, 

treating, plugging, or abandonment of 

all wells. These records shall show: 

(1) All the formations penetrated, the 

content and character of the oil, gas, 

other marketable product, or water in 

each formation, and the kind, weight, 

size, landed depth, and cement record 

of casing used in drilling each well; 

(2) The record of drill-stem and other 

bottom hole pressure or fluid sample 

surveys, temperature surveys, 

directional surveys, and the like; 

(3) The materials and procedure used 

in the treating or plugging of wells or in 

preparing them for temporary 

abandonment; and 

(4) Any other information obtained in 

the course of well operation. 

(b) The lessee shall take such samples 

and make such tests and surveys as may 

be required by the Superintendent to 

determine conditions in the well or 

producing reservoir and to obtain 

information concerning formations 

drilled, and shall furnish such reports as 

required in the manner and method 

specified by the Superintendent. 

(c) Within 10 days after completion of 

operations on any well, the lessee shall 

transmit to the Superintendent: 

(1) All applicable information on 

forms furnished by the Superintendent; 

(2) A copy of the electrical, 

mechanical or radioactive log, or other 

types of survey of the well bore; and 

(3) The core analysis obtained from 

the well. 

(d) The lessee shall also submit other 

reports and records of operations as may 

be required and in the manner, form, 

and method prescribed by the 

Superintendent. 

(e) The lessee shall measure 

production of oil, gas, other marketable 

product, and water from individual 

wells at reasonably frequent intervals to 

the satisfaction of the Superintendent. 

(f) Upon request and in the manner, 

form and method prescribed by the 

Superintendent, the lessee shall furnish 

a plat showing the location, designation, 

and status of all wells on the leased 

lands, together with such other 

pertinent information as the 

Superintendent may require. 

§ 226.57 What line drilling limitations must 

a lessee comply with? 

The lessee shall not drill within 300 

feet of the boundary line of leased lands, 

or locate any well or tank within 200 

feet of any public highway, any 

established watering place, or any 

building used as a dwelling, granary, or 

barn, except with the written 

permission of the Superintendent. 

Failure to obtain advance written 

permission from the Superintendent 

shall subject the lessee to termination of 

the lease and/or plugging of the well. 

§ 226.58 What are the requirements for 

marking wells and tank batteries? 

The lessee shall clearly and 

permanently mark all wells and tank 

batteries in a conspicuous place with 

the number, legal description, operator’s 

name, lessee’s name, and telephone 

number, and shall take all necessary 

precautions to preserve these markings. 

§ 226.59 What precautions must a lessee 

take to ensure natural formations are 

protected? 

The lessee shall, to the satisfaction of 

the Superintendent, take all proper 

precautions and measures to prevent 

damage or pollution of oil, gas, fresh 

water, or other mineral bearing 

formations. 


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Federal Register / Vol. 78, No. 167 / Wednesday, August 28, 2013 / Proposed Rules 53101 

§ 226.60 What are a lessee’s obligations to 

maintain control of wells? 

(a) In drilling operations in fields 

where high pressures, lost circulation, 

or other conditions exist which could 

result in blowouts, the lessee shall 

install an approved gate valve or other 

controlling device in proper working 

condition for use until the well is 

completed. At all times, preventative 

measures must be taken in all well 

operations to maintain proper control of 

subsurface strata. 

(b) Drilling wells. The lessee shall take 

all necessary precautions to keep each 

well under control at all times, and shall 

utilize and maintain materials and 

equipment necessary to insure the safety 

of operating conditions and procedures. 

(c) Vertical drilling. The lessee shall 

conduct drilling operations in a manner 

so that the completed well does not 

deviate significantly from the vertical 

without the prior written approval of 

the Superintendent. Significant 

deviation means a projected deviation of 

the well bore from the vertical of 10° or 

more, or a projected bottom hole 

location which could be less than 200 

feet from the spacing unit or lease 

boundary. Any well which deviates 

more than 10° from the vertical or could 

result in a bottom hole location less 

than 200 feet from the spacing unit or 

lease boundary without prior written 

approval must be reported promptly to 

the Superintendent. In these cases, a 

directional survey is required. 

(d) High pressure or loss of 

circulation. The lessee shall take 

immediate steps and utilize necessary 

resources to maintain or restore control 

of any well in which the pressure 

equilibrium has become unbalanced. 

(e) Protection of fresh water and other 

minerals. The lessee shall isolate 

freshwater-bearing and other usable 

water containing 5,000 ppm or less of 

dissolved solids and other mineralbearing formations and protect them 

from contamination. Tests and surveys 

of the effectiveness of such measures 

shall be conducted by the lessee using 

procedures and practices approved or 

prescribed by the Superintendent. 

(f) Whenever applicable given the 

circumstances, the lessee shall conduct 

activities in accordance with the 

standards and procedures set forth in 

Bureau of Land Management Onshore 

Order 6, Hydrogen Sulfide Operations, 

and any amendments thereto. 

§ 226.61 How does a lessee prevent waste 

of oil and gas and other marketable 

products? 

(a) The lessee shall conduct all 

operations in a manner that will prevent 

waste of oil and gas and other 

marketable products and shall not 

wastefully utilize oil or gas or other 

marketable products. 

(b) The Superintendent shall have the 

authority to impose such requirements 

as he deems necessary to prevent waste 

of oil and gas and other marketable 

products and to promote the greatest 

ultimate recovery of oil and gas and 

other marketable products. 

(c) For purposes of this section, waste 

includes, but is not limited to, the 

inefficient excessive or improper use or 

dissipation of reservoir energy which 

would reasonably reduce or diminish 

the quantity of oil or gas or other 

marketable product that might 

ultimately be produced, or the 

unnecessary or excessive surface loss or 

destruction, without beneficial use, of 

oil, gas or other marketable product. 

§ 226.62 How does a lessee measure and 

store oil? 

(a) All production run from the lease 

shall be measured according to methods 

and devices approved by the 

Superintendent. Facilities suitable for 

containing and measuring accurately all 

crude oil produced from the wells shall 

be provided by the lessee and shall be 

located on the leasehold unless 

otherwise approved by the 

Superintendent. The lessee shall furnish 

to the Superintendent a copy of 100- 

percent capacity tank table for each 

tank. Meters and installations for 

measuring oil must be approved. 

(b) The lessee must ensure that each 

Lease Automatic Custody Transfer 

(LACT) meter is inspected, calibrated, 

and adjusted at least twice in each 

calendar year, no less than five months 

apart. The lessee must ensure that the 

Superintendent is given 48 hours prior 

notice of all LACT meter inspections, 

calibrations, and adjustments. The 

Superintendent shall have the right to 

witness, unannounced, all LACT meter 

inspections, calibrations, and 

adjustments. The lessee shall fully 

cooperate with such witnessing. If the 

Superintendent is not present, then he 

may request records relating to all LACT 

meter inspections, calibrations, and 

adjustments. Repeated failures to 

comply with this subparagraph shall 

render the lease subject to termination 

after consultation with the Osage 

Minerals Council. 

(c) When a tank of oil is ready for 

removal by the purchaser, the lessee 

shall ensure that the Superintendent is 

informed of that fact before the 

purchaser is so informed via an 

electronic or telephonic method 

established by the Superintendent for 

reporting pursuant to this subparagraph. 

Failure to comply with the provisions of 

this subparagraph shall subject the 

lessee to a penalty of $500. This dollar 

amount shall be adjusted as specified in 

§ 226.70. Repeated failures to inform the 

Superintendent shall render the lease 

subject to termination after consultation 

with the Osage Minerals Council. 

(d) The Superintendent shall have the 

right to witness all gaugings, 

unannounced, on each lease. The lessee 

shall fully cooperate with such gaugings 

and repeated failures to comply shall 

render the lease subject to termination 

after consultation with the Osage 

Minerals Council. 

§ 226.63 How is gas measured? 

(a) All gas required to be measured 

shall be measured in accordance with 

the standards, procedures, and practices 

set forth in Bureau of Land Management 

Onshore Oil and Gas Order 5, 

Measurement of Gas, and any 

amendments thereto. To the extent that 

Onshore Oil and Gas Order 5 conflicts 

with any provision of these regulations, 

these regulations shall control. 

(b) All gas, required to be measured, 

shall be measured by meter (preferably 

of the orifice meter type) unless 

otherwise agreed to in writing by the 

Superintendent. All gas meters must be 

approved by the Superintendent and 

installed at the expense of the lessee or 

purchaser at such places as may be 

agreed to in writing by the 

Superintendent. For computing the 

volume of all gas produced, sold or 

subject to royalty, the standard of 

pressure shall be 14.65 pounds to the 

square inch, and the standard of 

temperature shall be 60 degrees F. All 

measurements of gas shall be adjusted 

by computation to these standards, 

regardless of the pressure and 

temperature at which the gas was 

actually measured, unless otherwise 

authorized in writing by the 

Superintendent. 

(c) The lessee must ensure that each 

meter is inspected, calibrated, and 

adjusted at least twice in each calendar 

year, no less than five months apart. The 

lessee must ensure that the 

Superintendent is given 48 hours prior 

notice of all meter inspections, 

calibrations, and adjustments. The 

Superintendent shall have the right to 

witness, unannounced, all meter 

inspections, calibrations, and 

adjustments. The lessee shall fully 

cooperate with such witnessing or be 

subject to lease termination. If the 

Superintendent is not present, he may 

request records relating to all meter 

inspections, calibrations, and 

adjustments. Repeated failures to 

comply with this subparagraph shall 

render the lease subject to termination 


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53102 Federal Register / Vol. 78, No. 167 / Wednesday, August 28, 2013 / Proposed Rules 

after consultation with the Osage 

Minerals Council. 

§ 226.64 When can a lessee use of gas for 

lifting oil? 

The lessee shall not use raw natural 

gas from a distinct or separate stratum 

for the purpose of flowing or lifting the 

oil, except where the lessee has an 

approved right to both the oil and the 

gas, and then only with the approval of 

the Superintendent of such use and of 

the manner of its use. 

§ 226.65 What site security standards 

apply to oil and gas and other marketable 

product leases? 

(a) Definitions. The following 

definitions apply to terms used in this 

section. 

Appropriate valves. Those valves in a 

particular piping system, i.e., fill lines, 

equalizer or overflow lines, sales lines, 

circulating lines, and drain lines that 

shall be sealed during a given operation. 

Effectively sealed. The placement of a 

seal in such a manner that the position 

of the sealed valve may not be altered 

without the seal being destroyed. 

Production phase. That period of time 

or mode of operation during which 

crude oil is delivered directly to or 

through production vessels to the 

storage facilities and includes all 

operations at the facility other than 

those defined by the sales phase. 

Sales phase. That period of time or 

mode of operation during which crude 

oil is removed from the storage facilities 

for sales, transportation or other 

purposes. 

Seal. A device, uniquely numbered, 

which completely secures a valve. 

(b) Minimum Standards. Each lessee 

shall comply with the following 

minimum standards to assist in 

providing accountability of oil or gas 

production: 

(1) All lines entering or leaving oil 

storage tanks shall have valves capable 

of being effectively sealed during the 

production and sales operations unless 

otherwise modified by other 

subparagraphs of this paragraph, and 

any equipment needed for effective 

sealing, excluding the seals, shall be 

located at the site. For a minimum of 6 

years the lessee shall maintain a record 

of seal numbers used and shall 

document on which valves or 

connections they were used as well as 

when they were installed and removed. 

The site facility diagram(s) shall show 

which valves will be sealed in which 

position during both the production and 

sales phases of operation. 

(2) Each LACT system shall employ 

meters that have non-resettable 

totalizers. There shall be no by-pass 

piping around the LACT. All 

components of the LACT that are used 

for volume or quality determinations of 

the oil shall be effectively sealed. For 

systems where production may only be 

removed through the LACT, no sales or 

equalizer valves need be sealed. 

However, any valves which may allow 

access for removal of oil before 

measurement through the LACT shall be 

effectively sealed. 

(3) There shall be no by-pass piping 

around gas meters. Equipment which 

permits changing the orifice plate 

without bleeding the pressure off the gas 

meter run is not considered a by-pass. 

(4) For oil measured and sold by hand 

gauging, all appropriate valves shall be 

sealed during the production or sales 

phase, as applicable. 

(5) Circulating lines having valves 

which may allow access to remove oil 

from storage and sales facilities to any 

other source except through the treating 

equipment back to storage shall be 

effectively sealed as near the storage 

tank as possible. 

(6) The lessee, with reasonable 

frequency, shall inspect all leases to 

determine production volumes and that 

the minimum site security standards are 

being met. The lessee shall retain 

records of such inspections and 

measurements for 6 years from 

generation. Such records and 

measurements shall be available to the 

Superintendent upon request. 

(7) Any lessee may request the 

Superintendent to approve a variance 

from any of the minimum standards 

prescribed by this section. The variance 

request shall be submitted in writing to 

the Superintendent who may consider 

such factors as regional oil field facility 

characteristics and fenced, guarded 

sites. The Superintendent may approve 

a variance if the proposed alternative 

will ensure measures equal to or in 

excess of the minimum standards 

provided in paragraph (b) of this section 

will be put in place to detect or prevent 

internal and external theft, and will 

result in proper production 

accountability. 

(c) Site security plans. (1) Site security 

plans, which include the lessee’s plan 

for complying with the minimum 

standards enumerated in paragraph (b) 

of this section for ensuring 

accountability of oil/condensate 

production are required for all facilities 

and such facilities shall be maintained 

in compliance with the plan. For new 

facilities, notice shall be given that it is 

subject to a specific existing plan, or a 

notice of a new plan shall be submitted, 

no later than 60 days after completion 

of construction or first production, and 

on that date the facilities shall be in 

compliance with the plan. At the 

lessee’s option, a single plan may 

include all of the lessee’s leases, units, 

and communitized areas, provided the 

plan clearly identifies each lease, unit, 

or communitized area included within 

the scope of the plan and the extent to 

which the plan is applicable to each 

lease, unit, or communitized area so 

identified. 

(2) The lessee shall retain the plan, 

but shall notify the Superintendent of 

its completion and which leases, units, 

and communitized areas are involved. 

Such notification is due at the time the 

plan is completed as required by 

paragraph (c)(1) of this section. Such 

notification shall include the location 

and normal business hours of the office 

where the plan will be maintained. 

Upon request, all plans shall be made 

available to the Superintendent. 

(3) The plan shall include the 

frequency and method of the lessee’s 

inspection and production volume 

recordation. The Superintendent may, 

upon examination, require adjustment 

of the method or frequency of 

inspection. 

(d) Site facility diagrams. (1) Facility 

diagrams are required for all facilities 

which are used in storing oil/

condensate. Facility diagrams shall be 

filed within 60 days after new 

measurement facilities are installed or 

existing facilities are modified. 

(2) No format is prescribed for facility 

diagrams. They are to be prepared on 

81⁄2′′ × 11′′ paper, if possible, and be 

legible and comprehensible to a person 

with ordinary working knowledge of oil 

field operations and equipment. The 

diagram need not be drawn to scale. 

(3) A site facility diagram shall 

accurately reflect the actual conditions 

at the site and shall, commencing with 

the header if applicable, clearly identify 

the vessels, piping, metering system, 

and pits, if any, which apply to the 

handling and disposal of oil, gas and 

water. The diagram shall indicate which 

valves shall be sealed and in what 

position during the production or sales 

phase. The diagram shall clearly 

identify the lease on which the facility 

is located and the site security plan to 

which it is subject, along with the 

location of the plan. 

§ 226.66 What are a lessee’s reporting 

requirements for accidents, fires, theft, and 

vandalism? 

Lessees shall make a complete report 

to the Superintendent of all accidents, 

fires, or acts of theft and vandalism 

occurring on the leased premises as 

soon as discovered, but not later than 

the next business day. Said report shall 

include an estimate of the volume of oil 


wreier-aviles on DSK5TPTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 167 / Wednesday, August 28, 2013 / Proposed Rules 53103 

involved. Lessees also are expected to 

report such thefts promptly to local law 

enforcement agencies and internal 

company security. 

Subpart F—Penalties 

§ 226.67 What are the penalties for 

violations of lease terms? 

Violation of any of the terms or 

conditions of any lease or of the 

regulations in this part shall subject the 

lease to termination by the 

Superintendent after consultation with 

the Osage Minerals Council; or the 

lessee to a fine of not more than $1000 

per day for each day of noncompliance 

with the written orders of the 

Superintendent; or to both such fine and 

lease termination. The dollar amount of 

penalties under this section shall be 

adjusted as specified in § 226.70. All 

penalties and fines shall be paid to the 

Superintendent in the form of a money 

order, cashier’s check or electronic 

funds transfer. 

§ 226.68 What are the penalties for 

violation of certain operating regulations? 

In lieu of the penalties provided 

under § 226.67, penalties may be 

imposed by the Superintendent for 

violation of certain sections of the 

regulations of this part as follows, with 

the dollar amounts in this section 

adjusted as specified in § 226.70: 

(a) For failure to obtain permission to 

start operations required by § 226.34(a), 

$150 per day. 

(b) For failure to file records required 

by § 226.56, $150 per day until 

compliance is met. 

(c) For failure to mark wells or tank 

batteries as required by § 226.58, $150 

per day for each well or tank battery. 

(d) For failure to construct and 

maintain pits as required by § 226.44(b) 

and (d), $150 for each day after 

operations are commenced on any well 

until compliance is met. 

(e) For failure to comply with § 226.60 

regarding control of wells, $250 per day. 

(f) For failure to notify 

Superintendent before drilling, 

redrilling, deepening, plugging, or 

abandoning any well, as required by 

§§ 226.34(b) through (c) and 226.49, 

$400 per day. 

(g) For failure to properly care for and 

dispose of deleterious fluids as provided 

in § 226.44(e), $1,000 per day until 

compliance is met. 

(h) For failure to file plugging reports 

as required by § 226.53(d) and for failure 

to file reports as required by § 226.26, 

$150 per day for each violation until 

compliance is met. 

(i) For failure to perform or start an 

operation within 5 days after ordered by 

the Superintendent in writing under 

authority provided in this part, if said 

operation is thereafter performed by or 

through the Superintendent, the actual 

cost of performance thereof, plus 25 

percent. 

(j) For failure to maintain adequate 

bonding as required by § 226.9, $500 per 

day. 

(k) Whenever a transporter fails to 

permit inspection for proper 

documentation by any authorized 

representative of the Superintendent, 

the transporter shall be liable for a civil 

penalty of up to $1,000 per day for the 

violation, not to exceed a maximum of 

20 days, dating from the date of notice 

of the failure to permit inspection and 

continuing until the proper 

documentation is provided. 

§ 226.69 What are the penalties for 

providing false, inaccurate, or misleading 

information; or engaging in unlawful acts? 

(a) The lessee or its authorized 

representative is hereby notified that 

criminal procedures are provided by 18 

U.S.C. 1001 for knowingly filing 

fraudulent reports and information. 

(b) Any person shall be liable for a 

civil penalty of up to $25,000 per 

violation for each day such violation 

continues, not to exceed a maximum of 

20 days if he/she: 

(1) Knowingly or willfully prepares, 

maintains or submits false, inaccurate or 

misleading reports, notices, affidavits, 

records, data or other written 

information required by this part; or 

(2) Knowingly or willfully takes or 

removes, transports, uses or diverts any 

oil or gas or other marketable product 

from any lease without having valid 

legal authority to do so; or 

(3) Purchases, accepts, sells, 

transports or conveys to another any oil 

or gas or other marketable product 

knowing or having reason to know that 

such oil or gas was stolen or unlawfully 

removed or diverted from a lease. 

(c) The dollar amount of penalties 

under this section shall be adjusted as 

specified in § 226.70. 

§ 226.70 How are fees and penalties 

scaled? 

(a) Whenever the settlement value for 

a barrel of oil under § 226.18 in any 

month is greater than $100 in the month 

preceding the assessment of any dollar 

amount in §§ 226.14, 226.62(c), 226.67, 

and 226.68, the dollar amount shall be 

adjusted by dividing by 100 and 

multiplying by the Settlement Price for 

Oil for the preceding month. 

(b) Fines and penalties under this part 

that are not received within 10 days 

after notice of the fine or penalty shall 

be subject to late charges at the rate of 

not less than 11⁄2 percent per month for 

each month or fraction thereof until 

paid, or such other rate as may be set 

by the Superintendent after consultation 

with the Osage Minerals Council. The 

Osage Minerals Council, subject to the 

approval of the Superintendent, may 

waive the late charge. 

Subpart G—Appeals and Notices 

§ 226.71 Who can file an appeal? 

Any person, firm or corporation 

aggrieved by any decision or order 

issued by or under the authority of the 

Superintendent, by virtue of the 

regulations in this part, may appeal 

pursuant to 25 CFR part 2. 

§ 226.72 Are the notices by the 

Superintendent binding? 

Notices and orders issued by the 

Superintendent to the representative 

shall be binding on the lessee. The 

Superintendent may in his/her 

discretion increase the time allowed in 

his/her orders and notices. 

§ 226.73 Information collection. 

The collections of information in this 

part have been approved by the Office 

of Management and Budget under 44 

U.S.C. 3501 et seq. and assigned OMB 

Control Number 1076–0XXX. Response 

is required to obtain a benefit. A Federal 

agency may not conduct or sponsor, and 

you are not required to respond to, a 

collection of information unless it 

displays a currently valid OMB Control 

Number. 

Dated: August 16, 2013. 

Kevin K. Washburn, 

Assistant Secretary—Indian Affairs. 

[FR Doc. 2013–20764 Filed 8–27–13; 8:45 am] 

BILLING CODE 4310–02–P 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Part 9 

[Docket No. TTB–2013–0004; Notice No. 

135A; Re: Notice No. 135] 

RIN 1513–AB96 

Proposed Establishment of the Eagle 

Peak Mendocino County Viticultural 

Area and Realignments of the 

Mendocino and Redwood Valley 

Viticultural Areas; Comment Period 

Reopening 

AGENCY: Alcohol and Tobacco Tax and 

Trade Bureau, Treasury. 

ACTION: Notice of proposed rulemaking; 

reopening of comment period. 


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