35634 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

Regulatory Flexibility Act

The Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed this rule before

publication and by approving it certifies

that this rule does not have a significant

economic impact on a substantial

number of small entities. The rule

eliminates a single adjustment factor for

PHAs that has been rendered

inapplicable because of other regulatory

changes and HUD does not anticipate a

significant economic impact on a

substantial number of small entities

resulting from this elimination.

Federalism

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order 12612, Federalism, has

determined that the policies contained

in this rule will not have substantial

direct effects on States or their political

subdivisions, or the relationship

between the Federal government and

the States, or on the distribution of

power and responsibilities among the

various levels of government. The rule

eliminates a single adjustment factor

that has become obsolete. The rule does

not create any new significant

requirements of its own. As a result, the

rule is not subject to review under the

Order.

Family Impact

The General Counsel, as the

Designated Official under Executive

Order 12606, The Family, has

determined that this rule does not have

potential for significant impact on

family formation, maintenance, and

general well-being, and, thus, is not

subject to review under the Order. The

rule only involves the removal of a

single, obsolete adjustment factor for

management assessment of PHAs.

List of Subjects in 24 CFR Part 901

Administrative practice and

procedure, Public housing, Reporting

and recordkeeping requirements.

Accordingly, part 901 of title 24 of the

Code of Federal Regulations is amended

as follows:

PART 901—PUBLIC HOUSING

MANAGEMENT ASSESSMENT

PROGRAM

1. The authority citation for part 901

continues to read as follows:

Authority: 42 U.S.C. 1437d(j) and 3535(d).

2. In § 901.10, paragraph (b)(4) is

revised to read as follows:

§ 901.10 Indicators.

* * * * *

(b) * * *

(4) Energy Consumption. The annual

energy consumption. This indicator has

a weight of x1.

(i) Grade A: Annual energy

consumption, as compared to the

average of the three years’ rolling base

consumption, has not increased.

(ii) Grade B: Annual energy

consumption, as compared to the

average of the three years’ rolling base

consumption, has not increased by more

than 3%.

(iii) Grade C: Annual energy

consumption, as compared to the

average of the three years’ rolling base

consumption, has increased by greater

than 3% and less than or equal to 5%.

(iv) Grade D: Annual energy

consumption, as compared to the

average of the three years’ rolling base

consumption, has increased by greater

than 5% and less than or equal to 7%.

(v) Grade E: Annual energy

consumption, as compared to the

average of the three years’ rolling base

consumption, has increased by greater

than 7% and less than or equal to 9%.

(vi) Grade F: Annual energy

consumption, as compared to the

average of the three years’ rolling base

consumption, has increased by more

than 9%.

* * * * *

Dated: June 27, 1996.

Kevin Emanuel Marchman,

Acting Assistant Secretary for Public and

Indian Housing.

[FR Doc. 96–17257 Filed 7–5–96; 8:45 am]

BILLING CODE 4210–33–P

DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Parts 211 and 212

RIN 1076–AA82

Leasing of Tribal Lands for Mineral

Development and Leasing of Allotted

Lands for Mineral Development

AGENCY: Bureau of Indian Affairs,

Interior.

ACTION: Final rule.

SUMMARY: The Bureau of Indian Affairs

(BIA) of the Department of the Interior

(Department) is promulgating

regulations revising and updating

regulations in 25 CFR Parts 211 and 212

that govern mineral leasing on tribal and

allotted Indian lands respectively. The

intent of these regulations is to ensure

that Indian mineral owners, both tribes

and individual owners, desiring to have

their resources developed are assured

that they will be developed in a manner

that maximizes their best economic

interests and minimizes any adverse

environmental or cultural impact

resulting from such development.

Further, these regulations recognize

Federal government reorganization,

enacted legislation, and prevailing

administrative practice in the 58 years

since these regulations were first

promulgated.

EFFECTIVE DATE: August 7, 1996.

FOR FURTHER INFORMATION CONTACT:

Richard N. Wilson (303) 231–5070 or

Pete C. Aguilar (303) 231–5070.

SUPPLEMENTARY INFORMATION: These

final rules are published in the exercise

of the authority delegated by the

Secretary of the Interior (Secretary) to

the Assistant Secretary for Indian

Affairs by 209 DM 8. The principal

authors of these rules are Richard N.

Wilson and Pete C. Aguilar, both in the

Division of Energy and Mineral

Resources, Golden, Colorado.

This final rulemaking revises and

updates the mineral leasing of triballyowned minerals governed by the Act of

May 11, 1938 (25 U.S.C. 396a), and the

mineral leasing of allotted lands

governed by the Act of March 3, 1909,

as amended, (25 U.S.C. 396). The 1938

Act permits Indian tribes to elect

whether they wish to offer their mineral

resources for lease by competitive

bidding, or enter into negotiations with

prospective lessees if bids are not

satisfactory. The Act of 1909 permits

individual Indian mineral owners to

offer their mineral resources for lease by

competitive bidding under the aegis of

the Secretary.

This is the first comprehensive

revision of general BIA regulations

governing mineral leasing of Indian

lands since 1938. In the intervening

period Congress has enacted many laws

applicable to Indian mineral leases,

including the National Environmental

Policy Act of 1969 and the Federal Oil

and Gas Royalty Management Act of

1982. There have also been major

changes in Federal Indian policy, as

reflected in the Indian SelfDetermination Act of 1975 and recent

amendments thereto. This revision is

the product of many years of

consultation with Indian tribal leaders.

It is intended to update, streamline and

clarify the procedures for Indian

mineral leasing and administration,

consistent with the Federal

government’s role as trustee for these

mineral resources and with the modern

Federal policy of self-determination.

Indeed, they largely reflect current BIA

practice and procedure, and are

intended in part to eliminate the

confusion often fostered by the existing,
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35635

outmoded regulations. Although these

revised regulations include new

requirements imposed by modern

statutes and intervening judicial

interpretations of the BIA’s legal

responsibilities, they are no lengthier

than the existing regulations, most of

which have been in place for 58 years.

Pursuant to section 8 of the Indian

Mineral Development Act (IMDA) of

1982, the BIA published a notice of

proposed rulemaking in the Federal

Register on July 12, 1983 (48 FR 31978)

to revise and reorganize the regulations

governing solid mineral, oil and gas,

and geothermal leasing adopted

pursuant to the Acts of 1909 and 1938,

last revised in their entirety on

December 24, 1957 (22 FR 10588); as

well as to promulgate regulations

implementing the IMDA. On August 24,

1987, the BIA published final

regulations (52 FR 31916) that were

scheduled to become effective on

October 24, 1987. Then, in response to

concerns expressed by the public, the

regulations were amended and

republished as proposed on October 21,

1987 (52 FR 39332), and the public was

notified that the regulations published

on August 24, 1987 would not become

effective.

Public responses to these publications

contained compelling arguments for

restructuring the format of the proposed

regulations. Several commenters stated

that the October 21, 1987 proposed

regulations were confusing and

ambiguous. The format of the proposed

regulations, implementing the Acts of

March 3, 1909 and May 11, 1938, and

the IMDA; combined the regulations

into two separate parts: (1) Part 211,

contracts for prospecting and mining on

Indian lands (except oil and gas and

geothermal) and (2) Part 225, oil and gas

and geothermal contracts. The most

common major concern was whether

provisions of the IMDA would supplant

lease and regulatory conditions

contained in lease contracts entered into

under the authority of the 1909 and

1938 Acts. The regulatory format

created confusion about contract

approval procedures for leasing tribal

versus allotted lands. In addition, the

format created confusion between

regulatory requirements for solid

mineral versus fluid mineral contracts.

The uncertainty expressed by Indian

interests and industry on numerous

issues convinced the Department that

the regulations needed to be entirely

reformatted and revised.

The proposed regulations were then

organized under a system that would be

more familiar to both Indian mineral

owners and industry. The proposed

regulations were organized in three

parts: (1) 25 CFR Part 211 provided the

procedures for obtaining and operating

standard mineral leases, for both solid

and fluid minerals, on tribal lands

under the Act of May 11, 1938, as

amended; (2) 25 CFR Part 212 provided

the procedures for obtaining and

operating standard mineral leases, for

both solid and fluid minerals, on

allotted lands under the Act of March 3,

1909, as amended; and (3) 25 CFR Part

225 provided a new and separate part

governing minerals agreements for

development of Indian minerals under

the IMDA.

Along with the reformatting, many

changes were made to the individual

parts of the regulation. Those changes

reflected the Department’s efforts to be

responsive to the comments received in

1987, and to include the additional

business and administrative experience

that had been gained on several issues

during the intervening years.

In order to provide Indian mineral

owners and Indian-mineral operators

full opportunity to review and comment

on the reformatted and rewritten

regulations, the Department determined

that those regulations should be

published as proposed rather than as

final rules, and that the public should

be given 90 days to review the

regulations and provide written

comments. The proposed rulemaking

was published in the Federal Register

(56 FR 58734) on November 21, 1991.

The closing date for submission of

review comments on the proposed

rulemaking was February 19, 1992.

Comments received from Indian

mineral owners, industry, and the

public were directed mostly to 25 CFR

Parts 211 and 212. Tribes were

especially concerned that the proposed

regulations did not adequately recognize

tribal rules and regulations and did not

provide for adequate notification and

communication with tribes prior to

implementation of Departmental

decision and authority with respect to

mineral leasing and mineral

management activities. Industry

expressed concern about acreage

limitations in the leasing of solid

minerals and oil and gas, the role of the

regulatory structure of the Department

and its effects on the reclamation of

Indian lands mined for coal, and were

still concerned about the possible effects

of the proposed rules on existing

mineral leases on Indian lands.

Because there were: (1) regulations

formerly in place governing the mineral

leasing of Indian lands (25 CFR Parts

211 and 212 as well as the regulations

of other Federal agencies); (2) no

regulations governing the disposition of

mineral resources pursuant to the

IMDA; and (3) because the IMDA is and

has been utilized by tribes to participate

in minerals agreements, since 1982,

without benefit of formal regulations

designed specifically to implement the

IMDA; the Department published

separately (25 CFR Part 225, 59 FR

14960, March 30, 1994) as final

rulemaking the regulations

implementing the IMDA. In response to

the wishes and numerous comments of

Indian tribes and the public and to

ensure that Indian mineral owners and

lessees and the general public had

adequate and full opportunity for

review and comment, the Department

determined that the regulations revising

and updating 25 CFR Parts 211 and 212

should be published as final rulemaking

only after an additional opportunity for

review and comment had been

provided.

Accordingly, the public comment

period was reopened, public meetings

scheduled, and additional opportunity

provided for concerned and involved

parties to further discuss and provide

comments, prior to final rulemaking, on

25 CFR Parts 211 and 212 published on

November 21, 1991. The comment

period was reopened for 60 days by

Federal Register notice (57 FR 40298)

on September 2, 1992. Public hearings

were held at Denver, Colorado on

September 25, 1992 and at

Albuquerque, New Mexico on

September 28, 1992 to receive public

comments on 25 CFR Parts 211 and 212

as proposed and published on

November 21, 1991. The closing date for

submission of comments on proposed

rulemaking was November 2, 1992.

In reviewing all of the issues raised in

the 1987, 1991 and 1992 comments and

in redrafting the regulations, the goal of

the BIA is to ensure that the Department

is able to fulfill its trust responsibility

by providing adequate provisions to

ensure the protection of the trust

resources and at the same time benefit

the Indian mineral owners by removing

unnecessary regulatory barriers and

complications that could make their

minerals less attractive to industry and

thus frustrate development. In addition,

consistent with the policy on selfdetermination, the Department has

attempted to provide the tribes as much

freedom as possible to make their own

determination on issues affecting the

development of their minerals.

The regulations are rewritten and

restructured in response to the

comments received during the comment

periods of 1991 and 1992. Because of

previous extensive reformatting and

restructuring in response to comments

received in 1987 (56 FR 58735), as well

as to comments received in 1991 and
35636 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

1992, the Department is of the opinion

that a detailed review of comments

received during a time interval of more

than five years would be more confusing

than helpful. Accordingly, the

Department decided to provide in the

preamble a listing by section of the

salient changes made in the proposed

regulations.

I. Changes Made to Proposed Rules

Set forth in the following list of

changes are most of the clarifying

changes, but not each and every minor

change, made to the regulations since

they were last published as proposed in

the Federal Register on November 21,

1991. The proposed rules are modified:

(1) in response to comments received;

(2) to reflect the fact that 25 CFR Parts

211 and 212 now stand alone after

separation and subsequent publication

of 25 CFR Part 225 (59 FR 14960) as a

final rule; and (3) in recognition of

prevailing and customary business and

administrative practices developed in

the last 58 years (since regulations were

first promulgated in 1938) under the

Acts of 1909 and 1938. The salient

modifications to the proposed rules are

here summarized by section. Many of

the changes and modifications made in

25 CFR Part 212 are the same as those

made in 25 CFR Part 211 or the sections

are included from 25 CFR Part 211 by

reference. The changes and

modifications in sections so referenced

are the same in both parts. These

changes and modifications as well as

changes and modifications in common

in the text of both parts of regulation are

set forth only in the section summaries

of Part 211 below, but are easily found

because the numbering and designation

of sections in Part 212 parallel those of

Part 211. Where significant differences

exist the sections of Part 212 are

discussed separately (below). The

section headings refer to this final rule.

Section 211.1. Purpose and Scope

Several changes are made to this

section to more clearly state the general

guidance of this section and to assure

the Alaska native corporations that 25

CFR Parts 211 and 212 are applicable

only to Indian mineral interests held in

trust by the United States. In addition,

a change is made to clarify that 25 CFR

Parts 211 and 212 do not affect certain

key provisions of existing mineral leases

and permits.

Section 211.3. Definitions

The definitions section of Part 211 is

modified somewhat, partly in response

to comments, because permits are now

specifically recognized in regulation,

and for other reasons. The necessary

changes made are:

Applicant is an addition to clarify that

no one is a lessee or permittee does not

exist until after the issuance of a lease

or permit;

Bureau is deleted from definitions

because this word is no longer used

specifically without qualification in the

regulations;

Cooperative Agreement is added

because the term is used in many places

in the discussion of agreements that

allocate costs and benefits among the

operator(s) and the mineral owner(s).

Director’s representative is added to

bring the Office of Surface Mining

Reclamation and Enforcement

representative formally into Part 211;

In the best interest of the Indian

mineral owner is modified to clarify that

the Secretary shall consider any relevant

factor in making a best interest

determination;

Indian Surface Owner is defined in

both Part 211 and Part 212 in response

to comments and because this phrase is

brought into Part 212 by reference to the

appropriate sections of Part 211.

Minerals is modified to better define

the scope and description of minerals

that may be included in a mineral lease

or permit on Indian lands;

Permit is added to recognize that

permits, as well as leases, may be issued

in the course of exploration and

development of mineral resources on

Indian lands;

Permittee is added to recognize one

who holds a permit as compared to one

who holds a lease on Indian land;

Tar sand is deleted, but tar sand is

now defined as a mineral and included

as a result of the modification of the

definition of ‘‘minerals.’’

Section 211.4. Authority and

Responsibility of the Bureau of Land

Management (BLM)

References are added to cite the BLM

regulations concerning onshore oil and

gas and geothermal unitization and

communitization.

Section 211.6. Authority and

Responsibility of the Minerals

Management Service (MMS)

This section is expanded to clarify

that the Secretary may consider

alternative provisions in a lease or

permit with respect to the requirements

found in 30 CFR Chapter II, Subchapters

A and C, if they are reasonable and

adequately address the royalty functions

governed by MMS regulations.

Section 211.7. Environmental Studies

A change is made in this section to

clarify that although compliance with

all environmental, archeological and

historic preservation statutes is

required, the exhaustive, site-specific

analyses and surveys demanded when

operations begin at a specific site are not

invariably required prior to approval of

a lease or permit. Rather, the degree and

timing of environmental compliance

activity demanded at a specific site or

area is dependent upon the findings of

the environmental analysis or

environmental assessment.

Section 211.9. Existing Permits and

Leases for Minerals Issued Pursuant to

43 CFR and Acquired for Indian Tribes

This section is modified to clarify that

permits and leases issued under 43 CFR

on certain Federal lands which later

became Indian lands, shall be

administered in accordance with the

regulations set forth in 30 CFR and 43

CFR, as applicable. This section also

provides guidance in the making of

payments and the submittal of reports

for mineral permits and leases.

Section 211.20. Leasing Procedures

Changes are made in this section to

emphasize that the Secretary undertakes

mineral leasing on Indian lands at the

request of, and in consultation with, the

Indian mineral owner. Except for oil

and gas, and with the approval of the

Secretary, the Indian mineral owner

and/or the Secretary may engage in

private negotiations in pursuit of

mineral leasing. After oil and gas lands

have been considered for lease by

competitive bid, the oil and gas lands

may be leased by private negotiation

between the Indian mineral owner and

the mineral industry, subject to

approval of the Secretary.

Section 211.24. Bonds

Changes in this section emphasize

that bonds are payable to the Secretary

or the Secretary’s designee and provide

minimum (nationwide and/or statewide

bonds) requirements for the bonding of

lessees and permittees. Current financial

and business practices are now

recognized in the regulations by

providing for a variety of financial

instruments to accompany a personal

bond so that a wide variety of assets can

be used to satisfy the bonding

requirements.

Section 211.25. Acreage Limitation

As a result of comments, Section

211.25 is rewritten to more nearly

reflect current administrative practice.

In the previous proposed rulemaking,

coal leases were restricted to 640 acres

(56 FR 58740). In the final rule the limit

is raised to 2,560 acres and may, with

the consent of the Indian mineral
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35637

owner, be approved in larger acreage.

This is similar to the existing regulation.

For other minerals each lease may not

exceed 640 acres, or the nearest aliquot

portion thereof, although multiple

leases of 640 acres each may be obtained

by lessees. Indian mineral owners and

applicants who find the acreage

limitations in § 211.25 unduly

restrictive may avail themselves of

procedures under the IMDA (25 CFR

Part 225).

Section 211.27. Duration of Leases

Rewording in this section clarifies the

conditions under which a lease may be

extended beyond its primary term of

lease duration by drilling (oil and gas

and geothermal leases) or actual

production (solid minerals leases). A

provision is added, in the interest of

diligent development of oil and gas and

geothermal leases, that provides a lease

cannot be extended more than 120 days

beyond its primary term by drilling

activity in the absence of production or

an approval of a cooperative agreement.

Section 211.28. Unitization and

Communitization Agreements, and Well

Spacing

Additions to this section include (1)

the requirement that the Secretary

consult with the Indian mineral owner

prior to making a determination

concerning a cooperative agreement or a

well-spacing plan and (2) a clarification

at § 211.28(e) that requests for approval

of cooperative agreements, which must

be appropriately filed ninety (90) days

prior to the expiration date of the first

Indian lease to be included in the

proposed agreement, apply to all

mineral commodities amenable to

approval of a cooperative agreement.

Section 211.29. Exemption of Leases

and Permits Made by Organized Tribes

At the suggestion of tribal

commenters, the regulation currently

found in 25 CFR § 211.29,

acknowledging that tribal laws may

supersede these regulations, has been

retained in this final rule. However, for

clarification purposes, a proviso has

been added, stating that tribal law may

not supersede the requirements of

Federal statutes governing Indian

mineral leasing, for example, the

requirement in 25 U.S.C. § 396a that a

tribal lease must be approved by the

Secretary of the Interior.

Section 211.40. Manner of Payments

The change to this section clarifies the

manner of payments and specifically

identifies the Secretary’s designees to

receive payments prior to the

establishment of production.

Section 211.41. Rentals and Production

Royalty on Oil and Gas Leases

The change to this section: (1) raises

the minimum annual rental for Indian

land to $2.00 per acre in keeping with

current practices and rentals for mineral

leases on Federal land; (2) clarifies at

§ 211.41(c) that the Secretary may

consider alternative lease or permit

provisions to the requirements of 30

CFR Chapter II, Subchapters A and C, if

the alternatives are reasonable and

adequately address the royalty functions

governed by regulations of the Minerals

Management Service; and (3) restores

the language in regulations formerly in

place at § 211.13(b) thus removing the

requirement in the proposed regulations

(56 FR 58734) that lessor use of gas in

excess of lessee’s requirements must be

provided for in lease provisions.

Section 211.42. Annual Rentals and

Expenditures for Development on

Leases Other Than Oil and Gas

The changes to this section increase

the minimum annual development

expenditure to $20.00 per acre and

increase the minimum rental to $2.00

per acre in keeping with current rates

and rentals for mineral leases on Federal

land and to reflect the effects of

inflation over the years.

Section 211.43. Royalty Rates for

Minerals Other Than Oil and Gas

Minor changes are made to clarify that

the royalty rates specified are only

minimums, and that higher rates are

allowed without any special approvals.

Section 211.53. Assignments, Overriding

Royalties, and Operating Agreements

Changes are made in this section to

clarify that: (1) the Indian mineral

owner must consent to assignment or

transfer of approved leases or any

interest therein if such approval of the

Indian mineral owner is required in the

lease; (2) even if such consent is not

required the Secretary shall notify the

Indian mineral owner of a proposed

assignment; (3) agreements creating

overriding royalties or payments out of

production or agreements designating

operators, although not requiring the

approval of the Secretary, are required

to be filed with the superintendent and

do not relieve the lessee from

obligations imposed by the MMS for

reporting, accounting, and auditing; and

(4) in response to comments, the

proposed restrictions concerning

assignment of partial interests and

assignment of stratigraphic intervals are

removed from the regulations.

Section 211.54. Lease or Permit

Cancellation; Bureau of Indian Affairs

Notice of Noncompliance

Changes to this section include: (1)

reorganization of the section in the

interests of clarity of procedure in the

serving of notices of noncompliance,

orders of cessation, notices of

cancellation, and orders of cancellation;

(2) allowing a permittee or lessee thirty

(30) days, rather than twenty (20) days,

in which to respond to notices; and (3)

clarification, by reorganization and

addition of paragraphs, of BIA

procedures to be followed in the event

of noncompliance and necessary

enforcement associated with the

cancellation process which includes the

option of BIA to issue a notice of noncompliance rather than to immediately

start cancellation proceedings.

Section 211.55. Penalties

This section is rewritten with minor

changes, including a change in section

title, to clarify procedures in the event

penalties are imposed on a permittee or

lessee. A change is made to formally

recognize the authority of the director’s

representative of the Office of Surface

Mining Reclamation and Enforcement to

impose penalties and paragraph (f) is

rewritten to guard against the

imposition of multiple penalties by

different Federal agencies for the same

violation. A penalties section in the

Bureau of Indian Affairs minerals

regulations continues to be necessary

because the only other remedies

available to the Secretary for

noncompliance with permit

requirements or breach of the lease are

cessation of operations or cancellation

of the lease, either of which may be seen

as extreme measures and may cause

harm to the interests of the Indian

mineral owner. Also, there are no

penalty provisions under any other

Federal agency’s regulations to provide

for enforcement of provisions of a

permit or lease which includes solid

minerals or other mineral commodities

not covered by the Federal Oil and Gas

Royalty Management Act of 1982

(FOGRMA) or the Surface Mining

Control and Reclamation Act of 1977

(SMCRA). The new rule also provides

more detail on the due process and

appeal procedures available to a lessee

or operator subject to a penalty

assessment, than is found in the existing

rule in 25 CFR § 211.22.

Section 211.56. Geological and

Geophysical Permits

Change is made in § 211.56(a)(3) to

provide for the release of data after six

(6) years after receipt by the Federal
35638 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

Government, if no time limit for the

release of data is prescribed in the

permit; and to provide that data release

is subject to the consent of the Indian

mineral owner.

Section 212.20. Leasing Procedures

Changes made in this section

emphasize that the Secretary undertakes

mineral leasing on Indian lands at the

request of the Indian mineral owner and

that the lease or permit shall not be

approved without the consent of the

Indian mineral owner. After the lands

have been considered for lease by

competitive bid, the Secretary may

engage in negotiations, at the request of,

and on behalf of the Indian mineral

owner, in pursuit of mineral leasing.

Section 212.21. Execution of Leases

Minor changes are made in the

wording to clarify under what

circumstances the Secretary may

execute leases on behalf of the Indian

mineral owners. A change has been

made to subsection (b), in part to reflect

the existence of modern tribal courts, by

adding a proviso that the Secretary may

exercise this authority only if there is no

parent, guardian, conservator, or other

person who has lawful authority to

execute a lease on behalf of the minor

or person with mental incapacity.

Section 212.28. Unitization and

Communitization Agreements, and Well

Spacing

This section, included in Part 212 by

reference to Part 211 in proposed rules,

is now specifically included in Part 212

in final rules because of necessary

minor differences in the unitization and

communitization of allotted versus

unallotted lands. Clarification is made

at § 212.28(e) that requests for approval

of a cooperative agreement, that must be

appropriately filed ninety (90) days

prior to the expiration date of the first

Indian lease to be included in the

proposed agreement, apply to all

mineral commodities amenable to

approval of a cooperative agreement.

Section 212.33. Terms Applying After

Relinquishment

This section is rewritten with the

provision that the lessee may, after lease

relinquishment by the Secretary and the

revesting of the lessor’s title, withhold

payment of rental and royalty until all

parties agree upon and designate a

trustee in writing and in a recordable

instrument to receive all payments due

thereunder on behalf of said parties and

their respective successors in title. The

provision that there must be four or

more parties entitled to royalties and

rentals before withholding is permitted

is removed.

Section 212.41. Rentals and Production

Royalty on Oil and Gas Leases

Changes in this section (1) raise the

minimum annual rental for Indian land

to $2.00 per acre in keeping with

current practices and rentals for mineral

leases on Federal land and (2) clarify at

§ 212.41(c) that if valuation provisions

in the lease are inconsistent with the

regulations in 30 CFR Chapter II,

Subchapters A and C, the lease

provisions shall govern.

Section 212.56. Geological and

Geophysical Permits

This section is reorganized in the

interests of clarity of presentation and a

change is made to proposed

§ 212.56(a)(3) to provide for the release

of data after six (6) years after receipt by

the Federal Government, if no time limit

for the release of data is prescribed in

the permit, and to provide that data

release is subject to the discretion of the

Secretary.

II. Comments Received on Proposed

Rules

The notice of Proposed Rulemaking

was published in the Federal Register

on November 21, 1991 (56 FR 58734).

The proposed rules provided for a 90-

day comment period ending on

February 19, 1992. The comment period

was subsequently reopened (57 FR

40298) on September 2, 1992. Public

hearings were held at Denver, Colorado

on September 25, 1992 and at

Albuquerque, New Mexico on

September 28, 1992. The closing date

for the submission of comments on

proposed rulemaking and the reopened

comment period was November 2, 1992.

During the two comment periods, 27

commenters submitted written

comments and/or oral statements and

comments at public hearings. All

comments were accepted for

consideration in preparation of the final

rules and are addressed in this portion

of the preamble (Section II). All

substantive comments applicable to

sections of 25 CFR Parts 211 and 212

were considered with respect to both

Parts whether or not the comments were

directed to Part 212 specifically.

(1) One commenter states that the title

of Part 211 creates some unnecessary

confusion by referring to ‘‘Leasing’’ of

tribal lands; that Part 225 also applies to

certain ‘‘leases’’ of tribal lands, when

negotiated under the IMDA; and that the

title to Part 211 would be more accurate

if it referred to ‘‘Competitive Bid

Leasing’’ rather than just ‘‘Leasing.’’

Response: References to leasing are

mostly removed from 25 CFR Part 225

(published separately in final

rulemaking, 59 FR 14960) and efforts

made to refer, where at all possible, to

the disposition of mineral resources

under Part 225 as disposition by

minerals agreement. Also, at the request

of the Indian mineral owner or in the

event of waiver, rejection, or failure of

the bidding process, negotiated leases

may be issued under Parts 211 and 212.

Thus, the present titling of Part 211 is

retained without change.

(2) Several commenters stated that

sufficient time for review of the

proposed regulations was not initially

provided and ask for extended review

time as well as public hearings at

locations convenient to the Indian

tribes; and stated that the proposed

rules should be subject to a negotiated

rule-making process among interested

tribes, industry, and the Bureau of

Indian Affairs.

Response: As set forth in the

introductory remarks (above), the

Secretary reopened the period for

comment for an additional 60 days and

public hearings were held at Denver,

Colorado and Albuquerque, New

Mexico. Thus, the regulations have been

subject to written oral comments twice

and all interested parties have been

afforded an opportunity to influence the

content. Additionally, the regulations

are not subject to negotiated rulemaking

processes because enacted and codified

legislation is not subject to subsequent

unilateral negotiation to the exclusion of

any concerned party.

(3) One commenter indicates that the

purpose of the proposed rulemaking is

to make regulations consistent with the

regulations governing mineral leasing

and development of Federal lands. The

commenter states that mineral leasing

and development on Indian lands are

not sufficiently similar to mineral

leasing on Federal lands to justify

uniformity.

Response: One of the Department’s

purposes in the reformatting and

changing of proposed rules is to make,

when appropriate, these regulations

consistent with the regulations

governing mineral leasing and

development of Federal lands (56 FR

58734). Appropriate consistency is

desirable because many of the operating

and reclamation regulations of other

offices and bureaus of the Department of

the Interior are also applicable in the

day-to-day management of the mineral

estate on Tribal and allotted Indian

lands subject to mineral leasing and

development under 25 CFR 211 and

212. The commenter is correct that in a

number of important respects mineral
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35639

leasing and development on Indian

lands differ from such activities on

Federal lands; in such instances

different treatment is required, and the

regulations so provide. To the extent

that Indian tribes find the Department’s

leasing regulations generally unuseful,

they may wish to enter into minerals

agreements under the IMDA (see 25 CFR

Part 225).

(4) One commenter states that the

rules must provide that fixed dollar

amounts (in lease provisions), whether

in relation to annual rental, bonds, or

other fees be indexed for inflation.

Response: Although many fixed costs

and charges in these regulations have

been increased to offset the inflationary

effects since the rules were last revised,

no provision is made for indexing costs

and charges to reflect the expected

decrease in the purchasing power of

money in future years. It is doubtful if

an index (standard) or method of

calculation acceptable to all parties to

Indian mineral leasing can be found.

Further, the IMDA provides the means

by which indexing for inflation can be

done for individual mineral properties

and minerals agreements.

(5) One commenter states that the

Department attempting to ‘‘remove

unnecessary regulatory barriers and

complications which could make

[Indian] minerals less attractive to

industry and thus frustrate

development’’ (56 FR 59735) should be

principally addressed by tribes because

many of the regulatory barriers and

complications exist to protect tribes.

Response: Tribes may address how

best to protect their interests in minerals

agreements under the IMDA (25 CFR

Part 225). Also, provision is made at

§ 211.29 in final rules for supersedence

of Federal regulations by the provisions

of any properly issued tribal

constitution, bylaw, or charter.

(6) One commenter states that the

proposed regulations should be

reproposed with coal mining leases and

operations addressed by separate

regulations specific to coal operations

because, as proposed, the regulations

would impose an unnecessary and

duplicate regulatory burden on coal

operations on Indian lands; and further

states that coal-specific regulations must

avoid creating overlapping and

duplicative regulatory requirements and

that the mining of minerals other than

coal also warrants separate treatment.

Response: The authorization for the

leasing of allotted and unallotted Indian

lands for mining (including oil and gas)

is set forth at 25 U.S.C. § 396 and

§§ 396a–396g, in which no provision is

made for the promulgation of separate

regulations for individual mineral

commodities. Although not prohibited,

the Secretary is of the opinion that the

devising of regulations for the

administration of individual mineral

commodities occurring in each

individual land category would create a

costly and unmanageable administrative

situation for those engaged in the

management of minerals operations and

reclamation of disturbed lands. Sections

211.7, 211.24, 211.47, 211.48, 211.51,

211.54, and 211.58 have all been

changed to remove the concerns of

regulatory overlap and duplication.

(7) Several Alaska Native Regional

Corporations ask that language be made

in the rules to clarify that the Part 211

Tribal leasing regulations do not apply

to lands conveyed pursuant to the

Alaska Native Claims Settlement Act of

1971.

Response: Language is added in 25

CFR 211.1(a) to clarify that the rules

apply only to lands which the United

States holds in trust for the benefit of an

Indian tribe, or which are subject to a

restriction against alienation imposed

by the United States.

(8) Several tribal commenters are in

favor of a broader retroactive effect for

the proposed regulations. One

commenter stated that only the royalty

rate should not be subject to retroactive

change by the regulations. One industry

commenter stated that the regulations

should not have any retroactive effect

unless agreed to by all parties.

Response: The current regulations in

§ 211.28 provide for an effective date

and state that the current regulations

supersede all former regulations. The

current regulations then include a

proviso, ‘‘That no 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 to the lease.’’ This

provision has been carried essentially

unchanged. No attempt has been made

to change this provision that has been

in effect for many years and has not led

to any problems in interpretation or

application. Therefore, no changes were

made pursuant to the comments.

(9) Several commenters state that the

placement of the provisions of § 211.29,

from regulations formerly in place, at

proposed § 211.1(c) does not: (1)

adequately recognize the regulatory

authority of tribes; (2) specifically

provide that the proposed regulations

may be superseded by the provisions of

any tribal constitution, bylaw, or

ordinance; nor (3) provide the proper

platform for the adoption of tribal

bylaws, ordinances, and other measures

governing assignments, taxation, and

other matters of regulation of the Indian

mineral estate.

Response: In response to this and

other comments the regulation in 25

CFR § 211.29 has been reinstated in the

same place, with minor revisions for

clarification purposes. In addition to the

tribal regulatory authority recognized in

the new Section 211.1(d) (211.1(c) in the

proposed rules), Section 211.29

recognizes that tribes may enact laws

which supersede these regulations, but

not Federal statutes.

(10) One commenter states that many

tribes have adopted their own mineral

leasing act, which should be noted in

the new regulations.

Response: See the response to

comment (9).

(11) One commenter is concerned that

each part of proposed 25 CFR Parts 211,

212, and 225 have separate sets of

definitions and states that only one set

of definitions should be used.

Response: The commenter is correct

in stating that uniformity of definition is

desirable. However, with the decision to

separate 25 CFR Parts 211 and 212 from

Part 225 (59 FR 14960), more than one

set of definitions is required for

publication in the Federal Register.

Also, the three parts of regulation

respond to at least three different sets of

empowering legislation over about an

80-year, time span such that differences

of definition are unavoidable. Wherever

possible terms in the three sets of

regulations have the same meaning.

(12) One commenter points out that

‘‘Bureau’’ is specified in definition, but

not used consistently in the proposed

regulations and suggests usage

consistent with definition.

Response: We agree. The word

‘‘Bureau’’ is removed from definitions

and the regulations in favor of usage of

the ‘‘Secretary’’ or the title(s) of the

Secretary’s designee.

(13) One commenter states that ‘‘coal’’

ought to be defined because it is a

referenced mineral in the proposed

regulations.

Response: The definition of

‘‘minerals’’ includes coal specifically in

definition and also by virtue of

including metalliferous, nonmetalliferous, energy, and non-energy

minerals. A definition of ‘‘coal’’ is not

added in final rulemaking.

(14) One commenter suggests that coal

be specifically included in the

definition of ‘‘solid minerals.’’

Response: Coal is specifically

included in the definition of

‘‘minerals’’, and by virtue of being a

solid is included in the definition of

‘‘solid minerals.’’ The definition is

unchanged in final rulemaking.

(15) Several commenters are

concerned that the definition of ‘‘gas’’:

(1) may or may not include coal-bed
35640 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

methane and suggest that methane gas

and other ‘‘non-traditional

hydrocarbons’’ be exempted from

definitions of minerals acquired under a

traditional mineral lease; and (2) should

exclude those substances found in other

minerals as a constituent part of other

minerals.

Response: The issues raised by

commenters are currently being

litigated. The definition of ‘‘gas’’ in

these regulations is consistent with the

position that the Department of the

Interior has taken in litigation. If

necessary, distinction among gases of

various origin or association may be

made by the use of suitable modifiers in

lease provisions (e.g., coal-bed methane,

natural gas, or carbon-dioxide gas) at the

time of advertisement of properties for

lease and/or subsequent lease

negotiation by principals. Further, the

IMDA is available to tribes (and allottees

if participating in a minerals agreement

under the IMDA) to specifically address

in minerals agreements these issues on

an individual basis.

(16) One commenter states that the

definition of a ‘‘gas’’ should make clear

the meaning of ‘‘ordinary temperatures

and pressure conditions’’ because of

perceived differences in ordinary

temperature and pressure in subsurface

contrasted with ordinary temperature

and pressure at land surface.

Response: Ordinary temperature and

pressure generally means near room

temperature and about one atmosphere

pressure as commonly used in the

calculation and handling of gases and in

specified standards for the

determination of quantities of materials.

The specification of temperature and

pressure standards for produced gas(es)

are found in the operating regulations of

the BLM and the production and

valuation regulations of MMS. The

specification of a standard, if required,

should appear in lease provisions or be

specified at the time of lease

negotiation.

(17) One commenter suggests that the

definition in proposed rules of ‘‘in the

best interest of the Indian mineral

owner’’ be dropped because an adequate

and concise definition of this phrase is

difficult to compose, although the

concept is generally understood.

Response: The final definition

includes a partial list of factors to be

considered by the Secretary and is

consistent with Kenai Oil and Gas, Inc.

v. Department of Interior, 671, F.2d 383.

(18) One commenter suggests that the

proposed definition of ‘‘in the best

interest of the Indian mineral owner’’ be

changed to require the Secretary to

consider any relevant factor in the best

interest determination.

Response: We agree. The definition is

changed in final rulemaking.

(19) One commenter is concerned that

the definition of ‘‘Indian lands’’ was

included in proposed rulemaking with

no explanation in preamble and is

different than the definition used by

OSM.

Response: The proposed rules state

(56 FR 58735) that the definitions

section of the regulations is expanded

significantly to eliminate ambiguities

and questions concerning the meaning

of frequently used terms. The definition

of ‘‘Indian lands’’ used by OSM is found

in SMCRA, and is applicable only to the

provisions of SMCRA. Indeed, that

statutory definition has been the subject

of varying interpretations and litigation

over its meaning. The definition used in

these regulations simply recognizes that

Indian-owned lands held in trust or

subject to Federal restrictions against

alienation are within the purview of the

Indian mineral leasing statutes and the

Secretary’s trust responsibilities.

(20) One commenter suggests that the

proposed definition of ‘‘Indian lands’’

specifically exclude Alaska Native

Regional Corporations which own land

or interest in minerals.

Response: Language is added to 25

CFR 211.1(a) to specify those lands to

which 25 CFR Part 211 applies,

language which excludes lands or

mineral interest owned by Alaska

Native Regional Corporations.

(21) One commenter objects to

confusing syntax in the proposed

definition of ‘‘Indian lands’’ and

suggests that such lands be defined (in

part) in terms of ownership by group(s)

recognized by the United States as

eligible for services from the Bureau of

Indian Affairs. Another commenter

suggests that in use in regulation the

words ‘‘trust or restricted lands’’ be

changed to ‘‘Indian lands.’’

Response: See the response to

comment (19).

(22) One commenter questions the

need for including lands owned by any

individual Indian in the definition of

‘‘Indian lands’’ because Part 211 deals

exclusively with leasing of tribal lands.

Response: Use of the term ‘‘Indian

lands’’ in Part 211 is very limited. See

Sections 211.9 and 211.22. There the

context includes allotted as well as

tribal lands.

(23) Several commenters state that

‘‘Indian surface owner’’ needs to be

defined in rulemaking.

Response: We agree. The phrase

‘‘Indian surface owner’’ is defined in

both Part 211 and Part 212 because

sections of Part 211 are referenced in

Part 212.

(24) One commenter suggests that the

definition of ‘‘lessee’’ imposes diligent

development and other operating

obligations (as well as the obligation of

paying royalty and rental) on a

designated royalty payor rather than an

operator and suggests the definition be

deleted whereas another commenter

states that the definition should be

broadened to include anyone who has

been assigned any rights associated with

the lease.

Response: The definition of ‘‘lessee’’

in Parts 211 and 212 parallels and

supports similar definitions in the

operating regulations of both the BLM

and the MMS. The MMS definition

includes those who have been assigned

an obligation to make royalty or other

payments as required by the lease. The

definition is retained unchanged in final

rulemaking.

(25) Several commenters point out

that the definition of ‘‘lessee’’ should

not include those prior to the time a

lease is granted.

Response: We agree. The definition is

rewritten to reflect that those who have

made application for or who are

negotiating for a lease are not lessees.

(26) One commenter states that the

common mineral varieties should be

excluded from the definition of

‘‘minerals’’ at § 211.3.

Response: The authority in the Act of

May 11, 1938, for the leasing of tribal

lands for mining purposes has been

interpreted broadly since its enactment.

Nothing in the Act suggests that

common varieties of minerals should

not be included.

(27) Two commenters object to the

exclusion of materials from the

definition of mining based on the type

and volume of material considered for

extraction and one questions if the

extraction of 5,000 cubic yards of gold

and silver bearing material is a nonmining venture.

Response: Common varieties of

mineral resources extracted in small

amounts are excluded from the

definition of mining, especially because

the purpose of such extraction is often

for local and/or tribal use. However,

permits for these small operations are

still reviewed and approved at the

superintendent’s office. Gold and silver

are not included in the extraction of

small amounts of materials because gold

and silver are precious metals and not

common mineral varieties. The Indian

mineral owner still retains the option of

disposing of the common mineral

varieties in whatever types and

quantities specified by a minerals

agreement under the provisions of the

IMDA, if desired.
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35641

(28) One commenter points out that in

proposed rulemaking the definitions of

‘‘oil’’ and ‘‘gas’’ are at odds with the

definitions used by the Minerals

Management Service and suggests that

the definitions of the two Federal

agencies should be more compatible.

Response: The definitions of the two

Federal agencies are unavoidably

different because those at 25 CFR

§ 211.3 are similar to those used by the

Bureau of Land Management in the

management of mineral leasing and

production whereas the Minerals

Management Service definitions are

more closely tied to measurement and

royalty management concerns.

(29) Three commenters suggest that a

definition of ‘‘in paying quantities’’ be

included in proposed definitions at

§ 211.3.

Response: The paying quantities

determination is made by the Bureau of

Land Management after operations

commence and production begins. The

definition of paying quantities is

contained in 43 CFR Part 3160. The

definitions of commercial quantities for

geothermal resources is in 43 CFR Part

3260 and for coal is in 43 CFR Part

3480. A definition is not needed here,

because this responsibility falls to the

BLM to determine whether production

meets the ‘‘pay quantities’’ criteria.

Therefore no definition is included.

(30) One commenter suggests that

additional definitions be added to

§ 211.3 including ‘‘primary term’’ and

‘‘maximum term’’ as used in § 211.27.

Response: The primary term is

defined in context when used to

describe the duration of a lease. No

reference is made to a maximum term of

lease duration in final regulation. These

definitions are not added in final

rulemaking.

(31) One commenter states that the

definition of ‘‘tar sands’’ is restrictive

because it is limited in definition to

production by mining or quarrying.

Response: We agree. The definition is

not used in regulation and is removed

from § 211.3 (and § 212.3) in final

rulemaking.

(32) Two commenters feel that in

proposed §§ 211.4, 211.5, and 211.6 the

authority and responsibility of tribal

governments over operations on

reservation lands should be explicitly

recognized and one believes that with

respect to the authority and

responsibilities of the various agencies

of the U.S. Government, explicit

mention of the Government’s trust

responsibility to Indians should be

included in the regulations.

Response: The authority and

responsibility of tribal governments is

recognized and in these rules at

§ 211.1(d), at § 211.29, and discussed

above (see comment number 9 and in

the summary remarks of this preamble).

Insofar as the mention of the Secretary’s

trust responsibility is concerned all

Federal agencies must recognize the

trust responsibility of the United States

when implementing programs for

Indians.

(33) One commenter is especially

concerned about § 211.5 and states that

the regulations should make it clear that

coal mining reclamation requirements

and procedures have no application to

open-pit, hard-rock operations.

Response: Section 211.5 is changed to

specifically cite the Code of Federal

Regulations governing coal mining and

reclamation requirements and

procedures.

(34) One commenter states that the

regulations of the MMS recognize that

Indian lessees must ‘‘dual account’’ for

gas produced from tribal lands and

states that the proposed regulations are

silent on this methodology which could

be viewed as a retreat from the valuation

system that greatly enhances tribal

income. Another commenter states that

these regulations must expressly state

that the trust responsibility requires the

Secretary to maximize valuation on

Indian lands.

Response: Under FOGRMA and the

Department of the Interior Manual, the

valuation of production for royalty

purposes is a function of the MMS.

Thus, the requirements and

methodology of valuation are properly

set forth in appropriate case law and

Title 30 of the CFR in Chapter II,

Subchapters A and C, of the MMS rules

and regulations. Section 211.6 is

rewritten to provide that if parties to a

lease or permit are able to provide

reasonable provisions satisfactorily

addressing the functions governed by

MMS regulations, the Secretary may

approve such alternate provisions.

(35) Several tribal commenters and

many industry commenters raise

questions concerning the application of

environmental, historic preservation

and archaeological protection laws to

Indian lands. One tribal commenter

states that the National Historic

Preservation Act does not apply to

Indian lands. Another opposes the

application of the National

Environmental Protection Act (NEPA) to

Indian lands. Industry commenters state

that compliance with environmental,

archaeological and historic preservation

survey requirements is an extremely

burdensome, expensive, and

unnecessary requirement. Several

industry commenters recommend that

archaeological surveys be performed

after approval of a lease, but prior to

approval of any surface disturbing

operations.

Response: The National

Environmental Protection Act and the

other historic preservation and

archaeological protection statutes cited

in this section apply to Indian lands

when activities on those lands are

subject to approval by the Federal

Government. Therefore, the Department

has no discretion to determine whether

or not to comply with those laws as they

affect mineral leasing on Indian lands.

It is also clear that the provisions of

NEPA must be complied with at the

time of lease approval. It is not possible

to defer NEPA compliance until the

surface disturbance phase of lease

development. However, the prior

proposed regulations stated that all

historic preservation and archaeological

surveys would be performed prior to

approval of a lease. It has been

determined that this statement may

impose a greater burden than is actually

required by applicable regulations.

Therefore § 211.7 is modified to state

that ‘‘the Secretary shall ensure that all

clearances and surveys are performed in

compliance with these laws * * *.’’

(36) One commenter states that the

second sentence of § 211.9 should be

revised to read that ‘‘Existing mineral

prospecting permits, exploration and

mining leases on these lands issued

prior to these properties being placed in

trust status or becoming Indian lands

pursuant to 43 CFR * * *.’’

Response: We agree. Section 211.9 is

rewritten to clarify that such lands, once

taken into trust or becoming Indian

lands, are no longer treated as public or

Federal lands (recognizing pre-existing

rights).

(37) Several commenters state that the

leasing procedures of proposed § 211.20

are not clear and suggest that the

procedures are in need of clarification.

Response: We agree. Section 211.20 is

rewritten and recast to clarify

procedures and to emphasize the

involvement of the Indian mineral

owner in the leasing process.

(38) One commenter states that

§ 211.20 is unclear as to amendments to

existing leases and suggests that

amendments to 1938 Act leases be

negotiated under the 1982 Act (IMDA).

Response: Neither rules formerly in

place nor final rules provide a formal

regulatory scheme for amendment to

existing leases because the amendments

are either at the convenience of the

parties to the lease or result from lease

provisions to open and renegotiate a

lease after a specified event occurs.

Regardless of the approach to

amendment, the resulting terms must be

approved by the Secretary, an action
35642 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

resulting in the issuance of a minerals

agreement (25 CFR Part 225), a new

lease, or ancillary terms appended to an

existing lease; all of which are new

leases that must be approved by the

Secretary. Provision is made for the

amendment of minerals agreements (25

CFR Part 225, 59 FR 14975). Minerals

agreements are expected to be the

preferred procedure for the amendment

of all existing leases and agreements.

(39) One commenter states that

potential lessees should be instructed to

submit lease applications directly to the

Indian mineral owner as well as the

superintendent at the time of

application.

Response: Submittal of applications to

lease to multiple offices is not required

in final rules. Rather, the Indian mineral

owner shall be promptly notified of the

lease application and the leasing

alternatives. The course of action to be

followed after this notification is then

contingent upon the decisions of the

Indian mineral owner.

(40) Several tribes comment that the

royalty rate and rental as well as bonus

should be included as variables in the

advertisement of leases for sealed or oral

bid, and that the Secretary should not

unilaterally set a royalty rate and rental

amount in the advertisement.

Response: Comments concerning the

need for tribal input are well taken and

§ 211.20 is modified to require

consultation with the Indian mineral

owner prior to advertisement. However,

the comments requesting that royalty

rate and rental be variables in the sealed

and oral bid process is not accepted

because the procedures can be managed

only with great difficulty. Past

experience has shown that it is

extremely difficult to compare the

values of bids that are contingent upon

three different variables bid separately.

In addition, if an Indian mineral owner

desires to receive offers to lease a land

parcel or tract, the value of which is

determined by the total value of a

variety of considerations each of which

may be dependent on another, the

procedures under the IMDA or, in

certain circumstances, negotiation offer

flexibility to a Tribe.

(41) One commenter states that there

ought to be included in § 211.20 a

provision that requires BIA to issue a

comprehensive analysis of the potential

value of the property being considered

for oil and gas development and its

potential effect upon reservoir

production; otherwise, tribes that do not

have independent assessment

capabilities will have no way of

knowing what the value of properties

are before they are submitted for bid.

Response: Mineral inventories and

appraisals are conducted by the BLM

and BIA, depending upon the resources

available. Limited resources make it

impossible to appraise every mineral

tract prior to leasing. The best readily

available measure of mineral worth of

an oil and gas tract is likely the fair

market value of the tract as revealed by

past and present bonus bids for the tract

or (if available) nearby similar tracts.

(42) One commenter states that the

language of § 211.20(b)(5) indicating the

high bidder ‘‘may’’ forfeit the required

25 percent of bonus bid should be

changed to ‘‘shall’’ and that there is no

standard to establish when the forfeiture

occurs.

Response: We agree. In final rules a

standard is specified and the forfeiture

is made certain by the use of the word

‘‘shall’’ in final rules.

(43) One commenter states that the

successful oral bidder should be

required to immediately pay 25 percent

bonus [bid as] deposit at the time of the

auction.

Response: The final rules continue to

permit five (5) working days in which

the successful oral auction high bidder

will be allowed to remit the required 25

percent deposit of the bonus bid. In the

event of a spirited auction, the

successful high bidder may not have at

the place and time of auction the

requisite 25 percent of the bonus bid for

the deposit.

(44) One commenter states that the

required publication of a notice of sale

at least thirty (30) days prior to the sale

date should be sixty (60) days to give an

interested party adequate time to

prepare for the sale.

Response: The publication of the

advertisement of lease sale thirty (30)

days in advance of the sale date is a

minimum time interval. The publication

of the advertisement of date of lease sale

and ancillary information may take

place more than thirty (30) days before

the sale. This minimum time has for

many years proved to be a workable

minimum.

(45) Two commenters are of the

opinion that the proposed rules allow

for competitive bonus bid and

negotiated leases at the same time and

object to negotiations after the potential

lessor has the advantage of evaluating

bids received. Further, one commenter

states that the results of competitive

bidding should be final and the winning

bid should be awarded the lease.

Response: As owner of the property to

be leased, the Indian mineral owner has

wide latitude in the determination of

methods of auction and conditions of

lease sale. Under the trust

responsibility, the Secretary must

reserve sufficient latitude to properly

discharge that responsibility.

Accordingly, there is no provision in

final rules for lease sales and lease

negotiations to be conducted at the same

time for the same land tracts. In the

event that the results of a lease sale are

not to the liking or not in the best

interest of an Indian mineral owner,

action must be taken to satisfy the needs

and wishes of the potential lessor.

Section 211.20 therefore balances

concerns of potential lessees and

lessors.

(46) One commenter is uncertain why

the storage option is granted at 25 CFR

§ 211.22 and is unsure of what benefit

is derived by a lessor when a lessee

produces oil and gas, but stores it for

future use; and whether or not

hydrocarbons not previously produced

includes hydrocarbons produced, but

stored; and if a lessee may store

previously produced minerals

indefinitely and thereby hold the lease

without payments to the lessor.

Response: The storage option is

included at 25 CFR § 211.22 to provide

the Indian mineral owner with a

mechanism to profitably participate in

the demand for surge storage capacity

for oil and gas (usually hydrocarbons)

by underground storage. Participation is

achieved by means of leasing or

adjusting existing lease provisions to

accommodate produced oil and gas, in

existing natural or near natural

underground structures (oil and gas

traps comprising an oil and gas field) at

or near the end of productive life; or

those older, produced fields having

capacity that can be used to store oil

and gas. Payments to Indian mineral

owners can be based on metered transfer

of oil and gas in and out of the field

(structure) that may provide rental in

lieu of, or in addition to, royalties

deriving from field production. Oil and

gas stored may be from the same field

or other sources (including pipelines).

Usually, provision must be made in

royalty, fees, and/or rentals to ensure

proper accounting and payment for all

oil and gas recovered from storage

including quantities in excess of stored

amounts and those fluid phases,

produced as a result of introduction of

stored hydrocarbons (say, residue gas)

or other gases, that would not have been

produced otherwise. Also, provision

must be made in royalty, fees, and/or

rentals to pay the Indian mineral owner

for the use of the field (trap) for storage

purposes. Section 211.22 is unchanged

in final rulemaking.

(47) Two commenters representing

industry interests recommend the

deletion of proposed § 211.23(b) that

requires: (1) the filing of a statement
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35643

showing a corporate applicant’s State of

incorporation; (2) that the corporation is

authorized to hold interests in property

in the State in which the lands are

operated; and (3) a notarized statement

that the corporation has the power to

conduct all business and operations as

described in the lease.

Response: The requirements are

retained because the information

required has been found to be useful to

the Department, is not burdensome to

industry, and is a standard requirement

of long standing for all significant

transactions with corporations.

Therefore no changes were made in

final rules.

(48) Several commenters are

concerned that the dollar amounts

stated in § 211.24 for bond requirements

are inadequate and recommend that

bonds be required in amounts sufficient

to protect the interests of the Indian

mineral owner and the United States.

Response: The final rule balances the

high cost of bonds against potential

damage to the Indian mineral owner and

the United States. Section 211.24 is

rewritten to permit the use of personal

bonds as surety as well as the customary

Statewide and Nationwide bonds and

§ 211.24(e) provides for increasing bond

amounts in any particular case at the

discretion of the Secretary. The goal in

regulation remains that lessees furnish

bond sufficient to ensure compliance

with all lease provisions and applicable

rules and statutes.

(49) One commenter states that

§ 211.24 should make provision for

bonding to include Federal, State, or fee

mineral leases, the surface of which is

owned by a tribe or individual Indian,

for purposes of surface reclamation as

proposed in an approved plan of

operation.

Response: The rules in 25 CFR Parts

211 and 212 are concerned with the

leasing of minerals on Indian lands.

Therefore, the requirements for leasing

of Federal, State, and fee minerals must

be addressed under other authority, and

published elsewhere.

(50) One commenter states that

proposed paragraphs 211.24(c) and

211.24(c)(3) are inconsistent in naming

the payee.

Response: Although § 211.24 is

rewritten the language included in these

proposed paragraphs is essentially the

same; the payee is the Secretary with

the stipulation that the letter of credit is

payable to the Bureau of Indian Affairs

(the Secretary’s designee) upon receipt

from the Secretary of a notice of

attachment stating the basis thereof.

(51) One commenter states that the

Indian mineral owner should be

allowed to be named as the payee on a

bond.

Response: An Indian mineral owner

cannot be named as payee on Statewide

or Nationwide bonds which affect more

than one Indian mineral owner. In final

rulemaking the Secretary remains the

payee because, in the discharge of the

trust responsibility, the bond must be

continually and easily available to

defray the cost of abandonment,

reclamation and/or provide for payment

of royalties, other charges, and fees in

the event of default.

(52) One commenter states that the

proposed § 211.24(d) should be changed

to state explicitly that bonding shall be

in an amount satisfactory to the

Secretary and the Indian mineral owner

or the Indian surface owner, in amounts

sufficient to ensure compliance with the

requirements of the authorized officer

and the Indian mineral owner or the

Indian surface owner and shall be

available, in the Secretary’s discretion,

with concurrence by the Indian mineral

or surface owner, to satisfy any unpaid

debt of the lessee or assignee to the

lessor or surface owner.

Response: In situations requiring

complex and detailed bonding in

response to many and varied interests,

the prospective lessor should consider

using a minerals agreement under the

IMDA (25 CFR Part 225) rather than 25

CFR Part 211.

(53) One commenter points out that

no definition is provided for the term

‘‘assignee’’ which is used in § 211.24.

Response: The paragraph (a) in

§ 211.24 is rewritten to clarify the use in

context of the word ‘‘assignee.’’

(54) Two commenters recommend

that proposed paragraph § 211.24(d) be

revised to allow the posting of an

individual lease bond is some amount

not to exceed $5,000 to encourage

independent operators to invest and

work on Indian land.

Response: The rule at § 211.24 is

rewritten in response to comments to

provide in final rulemaking the minimal

requirements for the bonding (or

equivalent surety) of lessees conducting

mineral operations on Indian lands such

that the Secretary may adequately and

timely fulfill the trust responsibility.

(55) Several commenters object to the

single section of land (640 acre), leasesize limitation. It is stated that smaller

leases would be less attractive to

industry because they would be less

economic. Other commenters request

that the lease-size limitation be subject

to variations on a case-by-case basis to

allow for irregularities in land sections.

Response: Except for coal, the leasesize limitations remain the same as in

the proposed rules. Coal leases have

historically been limited to 2,560 acres

with due allowances for exceptions to

provide for the dedication of sufficient

reserves to specific projects

(powerplants) to ensure that ventures

will not fail for lack of fuel. Additional

language is added to § 211.25 to restore

the 2,560-acre limitation (with provision

for exception) for coal and to provide

that the rule of approximation shall

apply in the event irregular land

sections are included in the leased land

blocks as well as provision for lands not

surveyed under the United States

Governmental survey. Changes to

§ 211.25 are also made to emphasize

that the acquisition and holding of

multiple leases (both adjoining and not

adjoining) of 640 acres each are not

affected by the acreage limitation. In the

past, large tracts of Indian land have

been held by production from a small

portion of a lease and in response to this

concern the Department has for three

decades restricted the size of offered

leases (especially for oil and gas) not to

exceed 640 acres or one section, with

provision for irregular sections. In

addition, the problems raised by

commenters may easily be mitigated in

several ways: (1) acquisition of multiple

leases because there is no limitation on

the number of leases a party may enter

into; (2) inclusion of multiple leases in

a unitization or communitization

agreement to allow mineral

development on one lease to hold more

than one lease; and (3) a party desiring

a larger lease may enter into

negotiations with an Indian mineral

owner to secure a minerals agreement in

accordance with the IMDA, under

which there is no provision limiting

lease acreage. Finally, acreage

limitations will have no retroactive

effect, and so will not reduce the

acreage of any current lease.

(56) One industry commenter states

that the 10-year limitation on the term

of any minerals lease is insufficient to

permit development into production,

especially for a surface coal mining

operation. The commenter recommends

that the 20-year time period provided in

the Mineral Leasing Act of 1920, for

Federal lands, be used instead. The

commenter further recommends that the

regulations should prevent tribes from

entering into leases for periods of less

than 10 years.

Response: The Indian Mineral Leasing

Act of 1938, that governs leasing of

tribal lands, provides a statutory 10-year

limit (25 U.S.C. § 396a) with exceptions

for the primary term of lease duration.

This limitation is statutory and may not

be waived by the parties to a lease, or

altered by the Department by

regulations. As an alternative, the IMDA
35644 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

does not limit the time period for

development and therefore, may be for

any time period negotiated by the

parties.

(57) One commenter believes that a

primary lease term should be

determined by the commodity leased,

together with a term maximum, say oil

and gas leases not to exceed 3 years,

solid minerals other than coal not to

exceed 5 years, coal not to exceed 10

years, and no lease to exceed a 20-year

maximum unless agreed to between the

Indian mineral owner and the lessee.

Response: Although permitted by

statute, the primary term of lease

duration is not specified in final rules

as a result of commodity considerations.

If the specific mineral commodity is

regarded as a critical factor in the

determination of lease duration, then

this factor may be set forth at the time

of advertisement of lease sale,

negotiated, or the lease provisions may

be determined in minerals agreements,

under the IMDA (25 CFR Part 225), by

the Indian mineral owner and a

prospective lessee.

(58) One tribal commenter points out

that some leases impose a maximum

ultimate term [of lease duration] of

twenty (20) to thirty (30) years.

Therefore, the commenter recommends

that the regulations include a provision

that would defer to specific lease terms

on this point.

Response: In any instance where

specific lease provisions do not conflict

with statutory authorities, or do not

prevent the Department from exercising

its trust responsibilities, the Indian

mineral owners are free to negotiate

specific lease provisions of their

choosing. In this particular instance the

limitation of lease duration by the

provisions of lease is entirely

appropriate. Therefore, the comment is

accepted and a change was made to

clarify this point.

(59) One commenter states that

commencement clauses (beyond the

primary lease term) should not be

permitted because such clauses permit

oil companies to do nothing until the

last day of the primary term, and then

begin drilling. Another commenter

believes the proposed regulations

governing the primary-term

commencement clauses works contrary

to the actual intent of a primary term

and believes § 211.27(b) should be

changed. Two commenters recommend

the inclusion of the commencement

clause at § 211.27 and state that a

duration of extension should be

included in this section and one states

that a continuous drilling clause should

be included.

Response: A review of comments

indicate that the possibility that this

provision would allow lessees to extend

leases for an inordinate time period is

highly unlikely. Most current leases

limit the primary term of lease duration

to 3 to 5 years. An extension of this term

(duration) while active drilling takes

place is an appropriate extension of the

lease and accords with standard

business practice. However, to ensure

that lessees do not abuse this provision,

a 120-day limitation has been added in

response to concerns of Indian mineral

owners. A drilling clause without

limitation could extend, by mere

drilling that fails to result in production,

the primary term of lease duration.

(60) One commenter states that when

read literally, the first sentence of

§ 211.27(a) is inconsistent with the

provision for the suspension of

operations at § 211.44.

Response: Section 211.44 makes

provision for the suspension of

operations on a lease after the primary

term. The paragraph at § 211.27(a)

speaks to the primary term of lease

duration.

(61) Several commenters state that the

regulations should require tribal consent

to any communitization or unitization

agreement whether or not such consent

is required in the lease. One commenter

states that the consent of the mineral

owner is seldom required for the

communitization of an Indian lease, and

in the commenter’s view, is

unnecessary.

Response: Every tribal lease executed

under the Indian Mineral Leasing Act of

1938 contains the following provision or

a similar provision:

Unit Operation—The parties hereto agree

to subscribe to and abide by any agreement

for the cooperative or unit development of

the field or area, affecting the leased lands,

or any pool thereof, if and when collectively

adopted by a majority operating interest

therein and approved by the Secretary of the

Interior, during the period of supervision.

This provision grants the consent of the

tribe to cooperative agreements

provided they are reviewed and

approved by the Secretary. The

Department does not intend to attempt

to amend this lease provision through

these regulations. Instead, the

Department affirms that Indian mineral

owners may require consent in any

future leases or lease amendments. The

Department believes that this remains

the most equitable method of handling

this issue. However, in response to

tribal concerns, a provision has been

added at § 211.28 requiring the

Department to consult with the Indian

mineral owner prior to making a

determination concerning an operating,

unitization, or communitization

agreement or well spacing plan. This

will ensure that the Indian mineral

owner has an opportunity to bring any

relevant information concerning the

proposal to the Secretary’s attention

prior to any cooperative action or well

spacing plan being undertaken.

(62) Two commenters state that an

affidavit from the lessee stating that a

notice was mailed to each mineral

owner of record for whom the

superintendent and/or area director has

an address should satisfy the

requirement that all Indian mineral

owners will be notified by the lessee at

the time a cooperative agreement is

submitted to the superintendent and/or

area director.

Response: We agree. Section 211.28(d)

is changed in response to this comment.

(63) One commenter states that the

Secretary shall approve well spacing

programs, in the context of unit

agreements and that it is not clear why

the regulations single out well spacing

in this context for Secretarial approval.

Another commenter states that the well

spacing program should be approved by

the Secretary and the Indian mineral

owner.

Response: The paragraph in

§ 211.28(h) is rewritten to provide that

the well spacing program is subject to

the approval of the authorized officer

under the operating rules of the Bureau

of Land Management. Provision is made

at § 211.28(b) for consultation with the

Indian mineral owner before approval of

a well spacing plan.

(64) One commenter states that

provision for lease segregation at

§ 211.28(g) should be included at

§ 211.28(f) as a specific ‘‘Pugh Clause.’’

Such a clause provides that the effect of

production constructively obtained

through communitization is restricted to

lands that are communitized and does

not extend to other leases or to any

other leased lands outside the

communitized area. Another commenter

states that § 211.28(g) should be deleted

entirely because it provides a pugh

clause in leases that are already reduced

in size when issued and that segregation

should only occur when the lands are

partially included in Federal field-wide

units. Another commenter states that

provision for segregation will clearly

discourage leasing and exploration

activity on tribal lands.

Response: The segregation clause

contained in § 211.28(g) is intended to

ensure diligent development of Indian

lands. If portions of a lease are not

included in a communitization

agreement, or within a producing or

exploratory cooperative unit then there

is no reason why the excluded lease
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35645

portion should be held by the unit

agreement to the disadvantage of the

Indian mineral owner and perhaps of no

particular advantage to the lessee,

regardless of whether partially within

an entire field or mining district or only

a portion of an entire field or just within

a mining unit. Further, the segregation

provision must be applicable to the

lease portions both within and excluded

from an exploratory or productive unit

for any mineral commodity and not

satisfy only the pugh clause

requirements with respect to an area

communitized for gas and oil.

(65) One commenter states that well

spacing is governed by state oil and gas

regulations and that there is no reason

for the Secretary to become involved in

well spacing issues.

Response: Each State issues well

spacing orders that are commonly, but

not necessarily, accepted as a spacing

standard within the State or area in

question. However, States have no

authority to regulate well spacing on

Indian land. The Secretary, in

consultation with the Indian mineral

owner, has exclusive authority with

respect to the spacing of wells, as

reflected in § 211.28(h).

(66) One commenter states that

§ 211.28 should be expanded to permit

unitization or communitization of hard

rock mineral leases and expresses

concern about efficiency of operation in

exploiting an ore body in two or more

sections of land.

Response: We agree. Although

§ 211.28 is not greatly changed from

proposed rules, provision is made for

the commenter’s concern by stating in

final rules that a cooperative unit or

other development plan means an

agreement to develop a specifically

designated area without regard to

ownership of the land included in the

agreement.

(67) Several commenters ask that

various time deadlines be imposed on

the superintendent or area director to

review and approve or reject

cooperative agreements. One commenter

requests that agreements submitted after

the 90 day deadline be reviewed in the

discretion of the superintendent or area

director.

Response: Review of these requests

for a time limitation for Departmental

review of proposed cooperative

agreements, indicates that the issues

raised in individual agreements and the

problems posed in individual cases vary

so widely that it was not advisable to

specify a set time frame for review.

However, the 90 day time period

specified in the regulations in effect

imposes such a limitation. Cooperative

agreements submitted after the 90 day

deadline will be considered by the

Department, but the lessee bears the risk

that leases may expire prior to the

Department being able to take action to

approve the agreement.

(68) One commenter states that the

existing lock-box arrangement for

receipt of monies is working well and

another suggests that it be stated in

§ 211.40 that current lock-box

arrangements are not to be affected.

Response: Present lock-box

arrangements for the receipt of monies

are not affected by § 211.40. The final

regulations merely provide for the

continuation of existing and standard

procedures for the receipt and handling

of bonus, rent, and royalty payments.

(69) One commenter suggests that

proposed § 211.40 be modified to allow

lease provisions and Federal regulations

to be superseded by tribal regulation

and another states that the regulation

should expressly authorize the Secretary

to designate the tribe or the tribe’s fiscal

agent as the payee.

Response: Section 211.40 is rewritten

to clarify that unless otherwise

specifically provided for in a lease all

payments after production has been

established shall be made to the MMS

or such other party as may be

designated, and that prior to production

all bonus and rental payments shall be

made to the superintendent or area

director. Present payment arrangements

may be modified by tribal notification to

the Minerals Management Service prior

to the modification. All payments after

production has been established are

regulated in 30 CFR Chapter II,

Subchapters A and C. Supersedence of

Federal regulations is addressed in final

rules at § 211.29.

(70) One commenter points out that

proposed § 211.40 is inconsistent in

identifying where payments should be

made and states that payments should

be made to the BIA and MMS unless

otherwise provided for in lease terms.

Response: We agree. Section 211.40 is

rewritten to clarify where and when all

payments are to be made. Also, after

production has been established the

payee may modify the manner of

payment in accordance with 30 CFR

Chapter II, Subchapters A and C.

(71) One tribal commenter requests

that the minimum rental be increased

from $1.25 per acre to $10.00 per acre

with a consumer price index adjustment

clause. Two industry commenters object

that in the proposed regulations rentals

are not credited against production

royalties.

Response: The minimum rental

specified in final regulations is $2.00

per acre, an increase of $0.75 per acre

from the current rate. This increases the

rental to that presently being imposed

for Federal lands leased for oil and gas,

which is a standard rate throughout the

industry. It is clearly stated in final

regulations that the rental will be

controlled by the provisions negotiated

in a lease. Any Indian mineral owner

who wishes to make provision for

higher rental and/or adjustments as a

hedge against inflation in a lease is free

to do so for leases or lease provisions

which are negotiated. In such cases,

whether or not the rentals are credited

against production royalty is entirely up

to the parties. Where a lease is silent on

this issue, the rentals must be paid in

addition to royalties. Therefore, further

changes are not made in § 211.41(a).

(72) One tribal commenter states that

the minimum royalty be set at 20

percent and others do not object to the

162⁄3 percent minimum royalty. Several

industry commenters state that the

proposed 162⁄3 percent minimum

royalty is too high and may place Indian

minerals at a competitive disadvantage.

Response: The 162⁄3 percent royalty

proposed in the regulations is a

minimum royalty that may be raised

upon agreement of the parties to a lease,

or which may be reduced upon

agreement of the parties and the

findings of the Department that a lower

rate is in the best interest of the Indian

mineral owner. Although industry has

objected to the increased rates this

change merely brings the rates in line

with general practice on Indian lands.

For over twenty years the standard

royalty rate for all leases on Indian

lands has been 162⁄3 percent or higher.

The change in the regulations will not

cause any significant change in leasing

procedures on Indian lands. It will not

retroactively affect any current leases,

and will not require applicants for

Indian leases to agree to this royalty rate

against their will. The minimum royalty

simply requires the parties to submit a

good reason why a lower royalty rate is

necessary before it may be approved by

the Department. This helps to ensure

that the Secretary exercises his

responsibility to protect trust resources.

(73) Several tribes comment that the

regulations should contain provisions

concerning valuation of production and

other accounting issues. They are

concerned that reference to the MMS

regulations in 30 CFR Chapter II,

Subchapters A and C, will not be

sufficient to clarify that the lease

provisions concerning valuation issues

shall govern in the event that lease

provisions are inconsistent with MMS’s

regulations.

Response: The valuation provisions

contained in current 25 CFR § 211.13

were included in the regulations prior to
35646 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

the creation of the MMS. It is

appropriate, now that authority for

valuation issues has been given to the

MMS, that the BIA leasing regulations

defer to the much more detailed

treatment of this subject in the MMS

regulations. However, in response to

tribal concerns a sentence is added to

final § 211.41(c) to clarify that the

specific provisions of a lease on this

issue shall govern where those

provisions are inconsistent with the

MMS regulations.

(74) One tribe comments that Indian

mineral owners should be allowed to

use gas which is in excess of the lessees

needs for any purpose rather than be

limited to use of excess gas for schools

or other tribal buildings. Two industry

commenters object to this provision and

ask that it be removed entirely or that

the use of excess gas for tribal buildings

be treated as a taking of royalty-in-kind.

Response: The provision in the

current 25 CFR § 211.13(b), which is

carried over to final rules at 25 CFR

§ 211.41(d), provides for a reasonable

and limited use of excess gas by the

lessor. This provision has been included

in the regulations for at least 30 years.

In addition, many current leases contain

a specific provision allowing such use,

and all current leases contain a

provision adopting regulations in effect

at the time of the lease. This means that

virtually all current tribal leases are

subject to this provision. Also, in the

many years that this provision has been

either included in the leases specifically

or by reference to the regulations, we

know of no instance where the right to

use excess gas has been abused.

Therefore this section is amended to

incorporate the language in § 211.13(b)

of the current regulations as being

clearer than the proposed language.

Thus, no change is effected in final

rules.

(75) One commenter states that both

the annual rental and the expenditure

for development on leases other than oil

and gas, and geothermal resources

should be not less than $10.00 per acre

and should be escalated annually based

on the CPI [Consumer Price Index] for

all urban consumers.

Response: In § 211.14 formerly in

place the minimum annual rental is

fixed at $1.00 per acre and the

minimum annual expenditure at $10.00

per acre unless otherwise authorized by

the Secretary. These minimum

payments and expenditures have not

been changed in many years and thus

do not reflect the effects of inflation. In

final rules at § 211.42 the minimum

annual rental is fixed at $2.00 per acre

and the minimum annual expenditure at

$20.00 per acre, but with no provision

for the expected future decline in

purchasing power of money. It is not

likely that a satisfactory index or

method can be identified. In those

situations where escalation of payments

and expenditures is an issue, the

prospective lessors may, however

include indexing in minerals

agreements under the IMDA (25 CFR

Part 225).

(76) One tribal commenter states that

the value of production removed and

sold from the lease should be

established FOB at the mine rather than

at the nearest shipping point as

proposed at § 211.43. Another

commenter states that the proposed rule

would affect their sales (but did not

elaborate) and urged deletion of specific

commodities from this section.

Response: The wording of 25 CFR

§ 211.43(a) stating the 10 percent

minimum royalty ‘‘at the nearest

shipping point’’ is the same as that in

regulations formerly in place at

§ 211.15. In those instances where the

point of valuation is an issue or that

§ 211.43 is not appropriate, as written,

to a specific mineral commodity the

Indian mineral owner may wish to

negotiate the royalty provisions or

conclude a minerals agreement under

the IMDA (25 CFR Part 225). Section

211.43(a) is essentially unchanged in

the final rules.

(77) Two commenters indicate that

certain royalty rates and royalty

provisions at § 211.43 for minerals other

than oil and gas are not sufficient and

state that: (1) the royalty rate for

byproducts from geothermal resources

should not be less than 10 percent of the

value of the byproducts; (2) a lower

royalty rate should only be granted with

the consent of the Indian mineral

owner; (3) a lower royalty rate may be

allowed, but not to exceed 5 years, after

which the royalty rate should be

adjusted upward; and (4) that this

section should be revised to take into

account potential unconventional

means for developing coal resources,

e.g., where a processed product is made

out of coal, the royalty rate should be

121⁄2 percent of the processed product,

not 121⁄2 percent of the value of what is

removed.

Response: Special lease conditions

and provisions for certain mineral

commodities, and special and/or new

technologies are best negotiated under

the IMDA (25 CFR Part 225). Under

Parts 211 and 212 a lower royalty rate

may be approved only if it is in the best

interest of the Indian mineral owner.

This determination will require a higher

level of analysis to assure that the tribe

is receiving adequate consideration.

Thus, a minimum royalty rate should

provide no barrier to mineral

development. Tribes and industry are

required to justify proposed lower

royalty rates for leases on a case-by-case

basis.

(78) One commenter states that as

noted in the proposed rules (56 FR

58736) the BIA for the first time is

proposing minimum royalty rates for

minerals other than oil and gas with no

explanation of the reasons for imposing

these minimum royalty rates and urges

the BIA to withdraw the minimum

royalty provisions.

Response: In current regulations at

§ 211.15 minimum royalty rates for

minerals other than oil and gas are set

forth, and have been contained in

regulations since 1957. The preamble of

the proposed regulations (56 FR 58736),

stating that a new section would

provide, for the first time, minimum

royalty rates for minerals other than oil

and gas, was in error.

(79) One commenter states that the

proposed rules (§ 211.43(b)) allow a

lower royalty rate if it is determined to

be in the best interest of the Indian

mineral owner but that no valid criteria

are established for implementing this

term [in the best interest of the Indian

mineral owner]. The commenter states

further that the lessee has no assurance

that a lower rate can be obtained in the

event that he proves that a minable

deposit exists that cannot profitably be

mined at the rate set by regulation and

that this could have a negative effect on

mineral development under Indian

leases.

Response: The criteria implementing

the best interest determination are set

forth at proposed § 211.3 (56 FR 58738).

Minor change in § 211.3 is made in the

final rules to require the Secretary to

consider any relevant factor in the best

interest determination. Special

assurances that lower royalty rates can

be obtained by a lessor or lessee, cast in

a scenario of expected or possible future

events, are best sought by negotiation of

a minerals agreement under the IMDA

(25 CFR Part 225).

(80) Some industry commenters object

to the minimum royalty rates in

proposed § 211.43 as being too high and

one commenter states that 5 percent or

less of net smelter returns has long been

the royalty standard for base and

precious metals under leases of fee

simple mineral land and suggests that

the regulations should allow minimum

royalties more in line with market rates

or should establish a royalty formula

which will accommodate variances in

mineral quality and quantity, mining

costs, recovery rates, and the like.

Response: In the event that minimum

royalty rates, as set forth in the
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35647

proposed and/or final § 211.43, are

judged to be too high by the prospective

parties to a minerals lease, the parties

should consider negotiating an IMDA

minerals agreement. Similarly, if risk

sharing or royalty adjustment provisions

in lease or minerals agreement

instruments are contemplated, then the

parties should consider negotiation

rather than competitive bidding. In the

final regulations, the minimum royalties

for the competitive acquisition of leases

from Indian mineral owners are brought

into line with those prevailing on

Federal lands (not fee lands). In view of

the negotiation alternatives, available

under both the Indian Mineral Leasing

Act of 1938 and the IMDA, no further

changes to § 211.43 are made.

(81) One commenter is of the opinion

that proposed § 211.44 requires tribal

consent to suspension of operations

whereas several other commenters are

concerned that suspension of operations

for remedial purposes by the Secretary

(§ 211.44(a)) does not require the

consent of the Indian mineral owner;

and another commenter states that the

proposed rule would allow an operator

to suspend operations without the

consent of the Indian mineral owner

and should not be permitted.

Response: The suspension of

operations provision at § 211.44 is

applicable only to leases after expiration

of the primary term of lease duration

and in no way affects the prerogatives

of the Indian mineral owner during the

primary term. Section 211.44(a)

provides the Secretary the necessary

latitude to act, under such provisions

and conditions as may be required, in

the discharge of the trust responsibility

in those instances where all else has

failed and remedial measures are

required, usually at once, for continued

production, protection of the resource,

or protection of the environment.

Provision is made at § 211.44(b), for

mineral properties capable of

production after expiration of the

primary term of lease duration, such

that suspension of operations requires

the consent of the Indian mineral

owner.

(82) One commenter states that

suspension of operations should: (1)

never exceed the maximum lease term;

(2) require the consent of the Indian

mineral owner if the suspension is

longer than 90 days; and (3) result in

lease cancellation if an application for

suspension of operations is denied and

the operator [be held] responsible for all

abandonment requirements. Another

commenter states that: (1) a time period

for accomplishment of remedial

operations is absolutely necessary; (2)

the regulations should expressly define

the conditions under which suspension

of operations is necessary; and (3) if

suspension of operations is necessary,

then the Department’s current policy

requiring reinstatement of production

within 30 days should apply.

Response: Numerous provisions and

conditions could be added to § 211.44,

but are best dealt with on a case-by-case

basis by the Secretary.

(83) One commenter states that

§ 211.44(b) has to do with suspension of

operations for non-physical reasons

whereas with respect to non-economic

or non-marketing reasons, no tribal

consent is required for suspension of

operations after expiration of the

primary term and there is no statutory

distinction that justifies requiring tribal

consent in one case but not the other.

Response: We see no way of readily

or reasonably separating the subtle

cause and effect of physical versus nonphysical reasons for situations leading

to a suspension of operations or

production. In the event remedial

measures are required in the proper and

timely discharge of the trust

responsibility and in the best interest of

the Indian mineral owner, the Secretary

has no choice but to take requisite

remedial measures. Provision is made at

§ 211.44(b) for the parties to the lease to

make application for permission to

suspend operations on a lease capable of

production after expiration of the

primary term of lease duration.

(84) One commenter recommends that

the extended term be referred to as

either ‘‘after expiration of the primary

term of the lease’’ or as ‘‘in the extended

term of the lease’’ and not both.

Response: We agree. Although both

phrases mean the same thing, meaning

that portion of the duration of the lease,

when the lease is held by production

beyond the primary term of the lease.

The primary lease term cannot exceed

10 years. Section 211.44 is changed so

that only one phrase is used.

(85) Two commenters state that they

do not understand why in proposed

rules that the suspension of operations

necessary for remedial operations must

be approved by the Assistant Secretary

and that this matter is best left to the

authority of the agency office.

Response: The final regulations are

changed to clarify that the suspension of

operations is at the discretion of the

Secretary, although the suspension

action will likely be issued by the

authorized officer for § 211.44(a) and for

§ 211.44(b) by the area director or

superintendent, under authority

delegated by the Secretary.

(86) One commenter states that

proposed § 211.44(a) makes reference to

minimum royalty requirements but

finds no minimum royalty requirement

in the proposed regulations.

Response: The final regulations are

clarified to provide that suspension of

operations or production after

expiration of the primary term of lease

duration shall not relieve the lessee

from liability for the payment of rental

and other payments as required by lease

provisions.

(87) One commenter states that

proposed § 211.46 should make clear to

whom the books and records will be

made available.

Response: Section 211.46 is modified

to provide that lessees shall allow the

Indian mineral owner’s representatives,

or any authorized representative of the

Secretary to enter all parts of the leased

premises for the purposes of inspection

and audit, that lessees shall keep a full

and correct account of all operations as

required by the lease and applicable

regulations, and that books and records

shall be made available during regular

business hours.

(88) One commenter states that

clarification should be added under

§ 211.46 to indicate that under the

FOGRMA of 1982 a lessee is required

only to maintain records of this type for

6 years after the records are generated

unless the Secretary notifies the record

holder that he has initiated an audit or

investigation involving such records

and that such records must be

maintained for a longer period.

Response: Record keeping

requirements are set forth in the

operating regulations of BLM, MMS,

and OSM which are included by

reference at §§ 211.4, 211.5, and 211.6.

(89) One tribal commenter signifies

that proposed § 211.47 be expanded to

include protection of all Indian lands

from drainage, whether leased or not.

Another tribal commenter states that the

burden falls on the Tribe to prove that

additional development of leased lands

is required by the prudent operator

standard. One industry commenter

states that no compensatory royalties

should be assessed if ‘‘the

superintendent has denied approval of a

cooperative agreement for any reason.’’

Response: These regulations only

concern the leasing of tribal lands, and

the requirements which are properly

placed on lessees. These regulations do

not properly include provisions for

dealing with drainage from unleased

lands. However, the standard that will

be applied to lessees as concerns the

leased land is clear. Lessees are

required, among other requirements to

exercise diligence in mining, drilling

and operating wells, protect the lease

from drainage. This standard imposes

an affirmative duty on the lessee. No
35648 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

changes in response to these tribal

comments were made. Also, no changes

were made in response to the industry

comment seeking relief from the

compensatory royalty provision in

§ 211.47(b). A proposed cooperative

agreement may properly be rejected by

the Department when such proposed

agreement fails to protect the lease. If an

inappropriate cooperative agreement

has been rejected by the Department, the

rejection should not serve to relieve the

lessee from the lessee’s obligations

under the lease.

(90) One tribal commenter requests

that the 200 feet setback requirement for

well pads and operations be increased

to a minimum of 500 feet.

Response: The proposed section

merely carries forward the limitation

contained in current § 211.19. Because

the current regulation provides a

minimum setback requirement, a tribe

may negotiate for a greater setback

whenever it deems this to be necessary.

Also a greater setback may be requested

by the authorized officer prior to

issuance of permission to drill. For

these reasons no change is made at

§ 211.47(f) in final regulations.

(91) One commenter advises that

proposed § 211.47(j) be revised to

provide that the lessee pay the surface

owner or tenant all damages, including

damages to crops, buildings, other

improvements of the surface owner

occasioned by the lessee’s operations as

determined by the Secretary with the

consent of the Indian mineral owner.

Response: No change is made in

§ 211.47 in the final regulations because

the suggested change would create

rights that would not be authorized in

law.

(92) One industry commenter states

that proposed § 211.47(i) gives the

superintendent sole authority to

establish the payment due the Indian

tribe or allottee for surface damages and

expresses the opinion that this should

be a matter of negotiation, or based on

an independent appraisal with at most,

approval of the superintendent.

Response: Authority for the

determination of payment of damages to

the surface owner is retained by the

Secretary, who may employ a BIA

appraiser in the decision making

process, in this instance the

superintendent, for those situations in

which the mineral and surface estates

have been separated and/or surface

damages are at issue.

(93) One industry commenter objects

to the provision that written permission

must be secured from the Secretary

before any operations are started on the

leased premises.

Response: The applicable operating

and reclamation regulations

administered by the Bureau of Land

Management and the Office of Surface

Mining Reclamation and Enforcement

require prior approval for drilling or

mining operations. Therefore, the only

change made in this paragraph is to the

authorities cited to include the Office of

Surface Mining Reclamation and

Enforcement. The intent of this

paragraph is to alert the mineral

industry that a mineral lease issued by

an Indian mineral owner, still requires

the approval of the Secretary. After the

lease is approved, lessees are still

required to secure written permission

(written approval) from the appropriate

agency or agencies before beginning any

operations on the lease.

(94) A tribal commenter feels that

§ 211.48 should be amended to include

the need for written permission of the

Indian mineral owner before operations

are started and that after permission is

secured, operation must also be in

accordance with all operating rules and

regulations promulgated by the

Secretary or the Indian mineral owner.

Response: Indian mineral owners are

always consulted prior to final approval

of any activity involving Indian mineral

lands, if it is an action or activity that

requires approval or consultation with

the Indian mineral owner.

(95) Two industry commenters object

to § 211.49 stating that the broad and

vague language could be used to restrict

or preclude a lessee from developing a

lease. Both commenters suggest that any

necessary restrictions be spelled out in

the lease.

Response: This section carries into

final rules § 211.21(a) of regulations

currently in place. This provision has

been contained in the Department’s

regulations for many years. The

authority stated in this section has

rarely been used, and to our knowledge,

has never been used to preclude

development of a lease. The section is

necessary to ensure that the Secretary

has the ability to fulfill the fiduciary

duty to protect the trust resource.

(96) One commenter objects that

proposed § 211.51 does not explicitly

address the option of surrender of an

operating oil and gas property to the

tribe, but rather appears to be confined

to lease surrenders after which all

production ceases.

Response: There is no barrier in either

proposed or final regulations to a

request to surrender an operating

property to an Indian mineral owner,

subject to approval of the Secretary.

There is a requirement in proposed and

final regulations that the lessee

discharge all lease obligations upon

surrender, as required.

(97) Several commenters state that the

requirement in proposed § 211.51(d)

that the original lease documents be

delivered to the Department with the

request to surrender is not supported by

any reason and imposes an additional

administrative burden without

providing any benefit.

Response: The requirement that the

original lease documents be surrendered

is intended, to the extent possible, to

prevent any confusion as to the extent

and location of lands that are leased.

Additionally, surrender will prevent

fraudulent assignments. This

requirement has been in the

Department’s regulations for several

decades (see § 211.27(b)(6)). Also, it is

standard industry practice to require

surrender of the documents. Because it

is standard industry practice the

requirement does not impose an

additional burden on lessees.

(98) One tribal commenter questions

whether this section is sufficient to

ensure that all reclamation be performed

in an environmentally sound manner.

Response: Section 211.51 requires

that the leased land be left in an

environmentally sound condition and

that all environmental work, such as

reclamation, be done. Changes are made

in final regulations to paragraph (h) to

avoid any possible conflict with this

requirement.

(99) Two industry commenters seek

qualification to the paragraph in this

section requiring the lessee to pay for all

drainage which occurs prior to

acceptance of surrender of the lease.

One commenter states that it is

unreasonable to permit liability for

compensatory royalty to continue to

accrue after filing an application to

surrender. One commenter asks that a

provision be added to excuse the lessee

from payment of compensatory royalties

for drainage if a cooperative agreement

has been denied ‘‘for any reason’’ by the

Department.

Response: The provisions contained

in proposed § 211.51(g) are an updated

version of the current requirement

found in § 211.27(b)(10). An addition to

the proposed regulations is an explicit

reference to compensatory royalties for

drainage. Neither of the proposed

changes are included in final

regulations because they could permit

unacceptable actions on the part of the

lessee. First, it may be necessary and

reasonable for the Department to assess

compensatory royalties for waste or

drainage, if lack of diligence or poor

workmanship on the lease continues to

cause the lessor damage after the date of

surrender. For instance, if a lessee has
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35649

missed the opportunity to enter into a

cooperative agreement, and then seeks

immediately to surrender the lease, the

lessor may not be able to prevent

drainage immediately. The lessee may

not avoid liability for the drainage by

attempting to surrender the lease.

Similarly, the fact that a lessee at one

time submitted a cooperative agreement

for approval will not relieve the lessee

from responsibilities under the

regulations and lease provisions. The

authority reserved to the Secretary in

final regulations is to ‘‘impose

reasonable and equitable terms and

conditions to protect the interests of the

Indian mineral owner.’’ If however, the

lessee believes that provisions imposed

are arbitrary or capricious, then the

lessee may appeal under 25 CFR Part 2.

We feel that these procedures provide

adequate protection to lessees.

(100) Three industry commenters

object to the increase in filing fees in

proposed § 211.52, by stating that the

increase is unjustified and imposes an

additional burden on a struggling

industry.

Response: For over four decades the

BIA did not raise filing fees. The

increase from $10.00 to $75.00 reflects

inflation that has occurred during four

decades and is in keeping with the

current filing fees of the Bureau of Land

Management, which increased the filing

fees to $75.00 on December 22, 1987.

However, surrender of leases no longer

must be accompanied by a filing fee,

because most standard mineral leases

specify a surrender fee.

(101) Both tribes and industry

comment that assignments of

stratigraphic horizons or intervals

should be permitted. Tribes and

industry indicate that this practice is

common within the industry and would

provide economic benefits to the Indian

mineral owner.

Response: In final regulations the

provisions in proposed rules at

§ 211.53(a) that prohibit such

assignments are removed. Assignment

of stratigraphic thicknesses or intervals

is permitted.

(102) One commenter states that

§ 211.53 should be revised so that the

broad definition of ‘‘assignment’’ that is

implied in the § 211.26(b), formerly in

place, is retained.

Response: Proposed § 211.53 is

rewritten to be more nearly compatible

with § 211.26 formerly in place and

retain the existing and widely

understood concept of an assignment in

current use with respect to Indian

mineral leases.

(103) Three commenters state that

overrides and production payments may

render prudent economic development,

or otherwise economic operations and

proposals uneconomic or prematurely

uneconomic. One commenter

recommends that both the Secretary and

the Indian mineral owner approve

overrides, production payments, and

operating agreements; one commenter

recommends that overrides, production

payments, and operating agreements

require approval; one commenter states

that at a minimum overriding royalties

and operating agreements should be

forwarded to the Secretary for review.

Response: The creation of overrides,

production payments, and use of

operating agreements have been

standard business practices in the

minerals industry for many years and

often serve as the necessary economic

incentive for the development of, and

subsequent production from, mineral

properties, especially for oil and gas.

Commenters concerns are valid that

under some conditions (e.g. a sudden

decline in value of the mineral product)

mineral properties can be burdened by

overrides and production payments. In

response to the concerns of commenters,

provision is made in final regulation

that the Indian mineral owner shall be

notified of proposed assignments and

agreements creating overriding royalties

or payments out of production, or

agreements designating operators shall

be filed with the superintendent. In

those instances where the overrides,

production payments, and operating

agreements are of concern to the Indian

mineral owner during the leasing

process, the prospective lessors and

lessees may wish to arrive at a minerals

agreement under the IMDA (25 CFR Part

225).

(104) Four tribal commenters state

that the approval or consent of the

Indian mineral owner should be

required for all assignments; one, if

required by lease or by tribal law;

another, if any instrument or agreement

either makes a present conveyance of an

interest in the minerals or obligates one

party to convey an interest in the

minerals to another party upon

performance of some condition; a third,

regardless of whether the right of

approval is retained in the lease

document; and a fourth, would require

approval of the Indian mineral owner

for all actions regardless of whether the

lease requires such approval. One

industry commenter states that the

language of proposed § 211.53 is

appropriate but not consistent with the

various tribal ordinances applicable to

oil and gas leases; another perceives that

proposed § 211.53 is a restatement of

current regulatory practice and that new

regulations should place no greater

restriction on the lessee than currently

exists.

Response: Section 211.53 is rewritten

in language more nearly resembling 25

CFR Part 211 and 212 formerly in place

and is therefore more familiar to both

Indian mineral owners and prospective

lessees. There is no consensus or

general agreement among Indian

mineral owners and/or industry upon

the conditions of approval of

assignments and related agreements.

Therefore, final regulations provide for

a broad right of assignment of an

approved lease for Indian owned

minerals, so long as there is no change

in the material provisions of the lease.

Final regulations are applicable to

existing and future leases issued under

the Act of May 11, 1938 (25 U.S.C. 396a)

and the Act of March 3, 1909 (25 U.S.C.

396). Indian mineral owners that wish

to require consent may, under the

IMDA, or by negotiated, individual (not

necessarily standard) lease provisions

under the Act of May 11, 1938; either

of which allow the Indian mineral

owner to specify the provisions under

which owner consent and/or approval

would be required for lease

assignments, overriding royalties, and

operating agreements.

(105) One industry commenter objects

to proposed lease cancellation and

notice of non-compliance provisions

(§ 211.54) on the grounds these

provisions would allow the Bureau of

Indian Affairs (BIA), to ‘‘assume

responsibility for enforcement not only

of the provisions of the IMDA, but of

other laws and regulations as well.’’ The

commenter objects to the idea that the

BIA might interfere with the authorities

which SMCRA vests with the Secretary,

who acts through the Office of Surface

Mining Reclamation and Enforcement

(OSM).

Response: Nothing in this section is

intended to interfere with the authority

of OSM to administer SMCRA. Section

211.54 is a continuation of the

cancellation provision in current 25

CFR § 211.27(a) but includes more due

process procedures to protect lessees,

and provides the Department with the

new option of issuing a notice of noncompliance rather than threatening

lease cancellation for any and all

offenses, no matter how minor. This

section applies to leases issued under

the Act of May 11, 1938 (25 U.S.C.

396a). These regulations neither govern

IMDA agreements nor purport to govern

the type of activities governed by

SMCRA. However, it should be clearly

understood that violations of SMCRA

can also be violations of the lease

which, in turn, could lead to

cancellation of the lease. Only the BIA,
35650 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

pursuant to these regulations, has

authority to cancel the lease itself.

Therefore, § 211.54 does not provide the

BIA with authority that overlaps over

the authority of OSM.

(106) One tribal commenter asks that

a procedure be added for tribes to report

any non-compliance which they may

observe.

Response: Because of the close

working relationship between the tribes

and the BIA agency and area offices, it

has been determined that a formal

regulatory procedure for tribes to share

lease compliance information with the

BIA is not necessary. Information of any

type and in any format from tribes

concerning lease compliance by lessees

is always welcomed by the Department.

(107) One tribal commenter asks that

tribes be granted a larger independent

right to cancel a lease for noncompliance.

Response: The request for tribal

authority to cancel leases is not

included in final regulations. The

mineral lease approved by the Secretary

concerns lands which the Department

has a statutory obligation to protect. The

Secretary will review any and all

information an Indian mineral owner

may have concerning whether or not a

lease should be cancelled but the final

decision to cancel must remain with the

Secretary: See Yavapai-Prescott Indian

Tribe v. Watt, 707 F.2d 1072 (9th Cir.

1983), cert. denied 464 U.S. 1017.

(108) One tribal commenter asks that

a time limit be imposed on the Secretary

to issue a decision with regard to a lease

cancellation.

Response: The request for a time limit

for issuance of a decision on

cancellation of a lease is not included in

final regulations. The factors to be

considered and the unique nature of

most lease cancellation actions makes a

time deadline for action by the Secretary

inappropriate.

(109) One tribal commenter suggests

that proposed § 211.54(a) be expanded

to include the enabling of the

noncompliance and cancellation

processes in the event the Secretary

determines that a lessee or permittee has

failed to comply with applicable tribal

laws and regulations, and mining or

reclamation plans.

Response: Section 211.54(a) is

rewritten in the interest of

simplification and to clarify that

§ 211.54 is enabled in the event of

noncompliance with lease provisions,

these regulations, or other applicable

rules and regulations. Although BLM

and OSM are primarily responsible

under those agencies’ regulations for

enforcement of mining and reclamation

plans, under some circumstances it may

be appropriate for BIA officials to issue

notices of non-compliance for violations

of such plans. Tribal administrative and

judicial remedies will often be the

appropriate means for redressing

violations of tribal laws and regulations.

But the revised language of this

regulation leaves open the possibility of

enforcement under this Part when an

alleged violation raises mixed issues of

Federal and tribal law.

(110) One commenter suggests that

service by certified mail should be

deemed to occur seven (7) rather than

five (5) days after the date of mailing (in

both §§ 211.54 and 211.55) to be

consistent with MMS regulations

regarding constructive service of official

correspondence.

Response: In the interest of

consistency the date of service is

deemed to be five (5) working days after

the date of mailing in final regulations.

(111) One commenter states that in

proposed § 211.54 there is no provision

for a hearing before the Secretary prior

to lease cancellation and that denial of

the right to a hearing is the denial of the

right to due process that exists in

present regulations and that this right

should be restored.

Response: Section 211.54 is rewritten

in final regulations to clarify

noncompliance and cancellation

procedures. Final regulations provide

lessees and permittees adequate time for

response to notices of noncompliance,

orders of cessation, and notices of

proposed cancellation or of

cancellation. Hearings may be requested

in the responses of lessees and

permittees to notices and orders and the

rights of lessees and permittees under

25 CFR Part 2 (§ 211.58) are not

abridged. The suggested provisions are

not included at § 211.54.

(112) One commenter states that in

proposed § 211.54 reference is made to

an ‘‘order of cessation’’ and it is not

clear what an order of cessation is or

how it differs from a notice of

noncompliance. Another commenter

states that BIA does not define a

‘‘cessation order.’’

Response: Section 211.54 is rewritten

in final regulations to clarify

noncompliance and cancellation

procedures.

(113) Several industry commenters

object to proposed § 211.55 and request

that it be removed for a number of

reasons. First, several commenters

challenge the authority of the

Department to impose civil penalties.

Second, the $1,000.00 per day limit is

challenged as unduly high. Finally,

even though the commenters maintain

that the Secretary lacks authority to

impose civil penalties, the commenters

object to the civil penalties as

duplicative of other civil penalties

which the Secretary has authority to

impose.

Response: The proposed civil

penalties provision is not new. The

current regulations contain § 211.22 that

provides for a $500.00 per day civil

penalty for violations of terms of the

lease, regulations or orders. Section

211.22 has been contained in the leasing

regulations for unallotted lands for

many years. The proposed revisions to

this section do two things. First, the

dollar limit for a violation is updated to

accord with current penalty limits

contained in other Departmental

regulations (see 43 CFR § 3162 and

§ 3163.2). In fact this dollar figure is

conservative when compared to the

$5,000.00 per violation per day limit

contained in the Bureau of Land

Management’s regulations. The second

change provides lessees and permittees

with additional due process procedures

to ensure that no penalty is unfairly

imposed. The Department believes that

the broad authority granted to the

President by Congress to regulate Indian

affairs (see 25 U.S.C. §§ 2 and 9), the

longstanding administrative

interpretation of these statutes as

granting authority to assess penalties,

and the unique responsibilities imposed

on the Secretary to protect Indian trust

resources support this section. However,

in response to industry comments a

provision has been added to this section

in final rules to clarify that no penalty

may be assessed under this section for

a violation over which the BLM, OSM,

or MMS have either statutory or

regulatory authority to assess a penalty.

This will ensure that this section does

not duplicate any other penalty

provision and that no duplicative

penalties will be issued.

(114) Five industry commenters

express concern that the language in

proposed § 211.56 is not adequate to

protect the rights of the data owner and

more specifically that there are no

requirements on the part of the Indian

mineral owner to protect the

confidentiality of the data provided to

them. Three Indian commenters felt that

the proposed regulation is too weak,

because it does not provide specifically

for submittal of collected data to the

Indian mineral owner.

Response: The concern regarding the

lack of confidentiality requirements on

the part of the Indian mineral owner is

best considered at the time of

negotiation between the Indian mineral

owner and the proponent of the permit.

Therefore, no specific change is made in

final regulation with respect to this

item. Section 211.56 is rewritten to
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35651

reflect the major concerns of the

commenters and provides that copies of

collected data shall be forwarded to the

Indian mineral owner, unless otherwise

provided in the permit.

(115) One industry commenter

expresses concern that seismic option

agreements are not covered in proposed

regulation.

Response: The comment regarding

seismic option agreements is not

considered because it is deemed that

such agreements are best concluded as

minerals agreements under the

provisions of the IMDA (25 CFR Part

225).

(116) One of the Indian commenters

requests that the regulations provide for

the issuance of geological and

geophysical permits by the Indian

mineral owner to university students.

The same commenter proposes that all

collected data be submitted to the

Indian mineral owner, who in turn will

provide it to the Secretary and also

recommends that the phrase that allows

a permittee to take samples for assay

and experimental purposes be deleted.

Response: The recommendation that

issuance of geological and geophysical

permits to universities be addressed in

final regulations is not included in final

regulations because such requests

should be considered on a case-by-case

basis by the Indian mineral owner, who

has the option of requesting assistance

from the Secretary if consideration of

such permits pose problems in

approval. The related recommendation

for deletion from § 211.56(b) of the

provision for the taking of assay samples

for experimental purposes is also not

included because, at times, the taking of

experimental assay samples can be of

benefit to the Indian mineral owner.

(117) One industry commenter

recommends that ‘‘Indian owner’’ in

§ 211.56(a) be changed to ‘‘Indian

mineral owner’’ in order to distinguish

between the Indian surface owner and

the Indian mineral owner. The same

commenter recommends that the word

‘‘shall’’ rather than ‘‘may’’ (§ 211.56(c))

be used in regard to the Secretary’s

responsibility to maintain for a

reasonable period of time the

confidentiality of data submitted.

Response: The words ‘‘Indian owner’’

are changed to ‘‘Indian mineral owner’’

to aid in distinction between the Indian

mineral owner and the Indian surface

owner. Language in this section is

unchanged in that the Secretary ‘‘may’’

release information after six (6) years,

with the consent of the Indian mineral

owner if no time period for release is

prescribed in the permit. The word

‘‘may’’ is retained in the final

regulations because the six years is a

minimum time period for information

retention. It may not be in the best

interest of the Indian mineral owner to

release information after the prescribed

retention period.

(118) One commenter states that the

definition of Indian lands in § 212.3

should be limited to lands owned by

any individual Indian or Alaska native.

Otherwise there is no substantive

provision in the regulations in Part 212

which limits their applicability to

allotted lands.

Response: The Secretary does not

lease Indian lands without the consent

of the individual Indian mineral

owner(s), and thus does not unilaterally

execute a lease for the individual Indian

mineral owner, except as provided in

§ 212.21. Successors in title to approved

and issued mineral leases follow

without respect to these regulations. No

change is made in the final rules.

(119) One commenter states that the

definition of a lessor should be changed

to read that a lessor is an Indian mineral

owner who has accepted or consented to

a lease or for whom the Secretary has

executed a lease, and any successor in

title to an original lessor.

Response: The Secretary does not

lease Indian mineral lands without the

consent of the individual Indian mineral

owner(s), and thus does not unilaterally

execute a lease for the individual Indian

mineral owner, except as provided by

specific statutory exceptions which

allow the Secretary to lease allotted

lands when the allottee has died and his

heirs are undetermined or when the

owner cannot be located. Successors in

title to approved and issued mineral

leases follow without respect to these

regulations. No change is made in the

final rules.

(120) One commenter states that to

receive optimal benefit for the Indian

landowner, royalty rates should be

considered in the bidding process.

Response: Royalty rates are

considered in the bidding process in the

announcement of lease sale. Royalty

bidding is not customarily included in

either written or oral bidding because of

the difficulty in determining the total

value of bid based on multiple variables

of say, total value of bonus bid, plus

rental bid, plus royalty bid, or any

combination thereof. Royalty rates may

be considered or reconsidered

separately if the lease is subsequently

negotiated on behalf of the Indian

mineral owner.

(121) One tribal commenter

recommends an addition to proposed

§ 212.20 to provide that prior to

negotiation for lease, a mineral property

must be listed but not successfully won

in the most recent lease sale of no later

than the preceding 12-month period.

Response: Section 212.20 is rewritten

to provide that the option in leasing

procedures be decided by the Indian

mineral owner. In the event that the

leasing option cannot be determined by

the Indian mineral owner(s) the

Secretary will act on their behalf, and in

the best interest of the Indian mineral

owner(s).

(122) One tribal commenter suggests

that proposed § 212.20 be modified to

provide that if an offer to lease a mineral

property is made, and no tribal property

exists within the same section or

spacing order, and given the approval of

the Indian mineral owner, or the

majority of owners; the BIA or the

Indian mineral owners themselves be

able to negotiate a lease agreement,

subject to approval of the Secretary.

Response: The suggested

modifications to § 212.20 place a great

many restrictions on the leasing

procedures. The required consent of all

Indian mineral owners to the leasing of

mineral lands composed of both tribal

and individual mineral ownership

could adversely affect all owners if

difficulty is experienced in reaching a

consensus. Thus, the suggested

modifications are not made in final

regulations. However, provision is made

in final regulations at § 212.20 that the

Indian mineral owner be advised of the

results of bidding and that the lease

shall not be approved until the consent

of the Indian mineral owner has been

obtained.

(123) One commenter suggests that a

sentence be added to proposed

§ 212.20(b)(5) to provide that the

Secretary shall not disperse any bonus

money to the Indian mineral owner(s)

until such time as the lease has been

signed by the Indian mineral owner(s)

unless otherwise agreed to by the

successful bidder.

Response: Bonus monies are not

dispensed until the lease is issued.

Money received is placed in a special

account at the BIA area or agency where

it is retained until a lease number can

be assigned; whereupon money is

distributed after the lease is signed and

a number assigned to the lease

instrument.

(124) One commenter states that the

language of proposed § 212.20(a) should

be the same as that in proposed

§ 211.20(a) providing the same

superintendent is meant at both places,

otherwise, guidance as to the

appropriate superintendent should be

given.

Response: We agree. Change is made

in the final regulations such that both

paragraphs now include a reference to
35652 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

the superintendent having jurisdiction

over the lands, because the same

superintendent is the same in both

instances.

(125) One commenter suggests

changes in § 212.30 (a) and (b) to restrict

references to lessors and lessees to the

mineral interest only and that there does

not appear to be any good reason for

relieving [from the supervision of the

Secretary] the unrestricted land of an

existing lease.

Response: Changes are not made in

response to this comment because the

references in these paragraphs are to the

unrestricted owners and not to the

owners under restriction. Protection for

the lessee existing prior to the removal

of restriction are contained in

§ 212.30(b) which provides that the

Supervision of the Secretary shall

continue until adequate arrangements

have been made to account for the

mineral resources of the restricted land

separately from those of the

unrestricted. The unrestricted lands

must be relieved from the Supervision

of the Secretary because the removal of

restriction also removes the authority of

the Secretary.

(126) One commenter states that the

30-day notice to lessee and lessor in

proposed § 212.33(a) is not adequate for

the lessee to prepare title opinions in

order to timely and properly pay rentals

and royalties and suggests that a 120-

day notice is appropriate unless a

shorter period is agreed to by the parties

[to the lease instrument].

Response: The 30-day notice to

principals in the event the Secretary

relinquishes supervision during the life

of a mineral lease instrument is

standard and has been in the present

regulations (§ 212.29) for many years

without causing difficulty. No change is

made in the final regulations.

(127) One commenter points out that

the word ‘‘fee’’ is used in a dual sense

in § 212.33 and suggests that distinction

be made between monetary fees and fee

simple title and also suggests other

changes in this section in the interest of

clarity.

Response: We agree. § 212.33(b) is

rewritten in final regulation to clarify

and simplify the provisions of this

section.

(128) One commenter states that

§ 212.56(c) should be amended to state

specifically that the subject section is

applicable to allotted lands only.

Response: The title of 25 CFR Part 212

states that these regulations are

applicable to the leasing of allotted

lands for mineral development and full

explanation of the purpose and scope of

Parts 211 and 212 are contained in

§§ 211.1 and 212.1 and to considerable

extent in preamble. This paragraph,

although redesignated, remains

unchanged.

(129) One commenter states that the

use of the words ‘‘surface occupant’’ in

proposed § 212.56(c) be changed to

‘‘surface owner.’’ Otherwise the lessee

may be in the position of not knowing

who to negotiate with, the surface

occupant or the surface owner.

Response: The lessee may have to

negotiate with both the surface occupant

and the surface owner depending upon

land use (e.g., row crops during the

growing season on leased surface) and

provisions of the surface lease between

the surface lessor and surface lessee.

The surface occupant is oftentimes the

individual easiest to find. This section

is unchanged in final rules.

(130) One commenter states that

proposed § 212.56 should be revised to

make clear that the consent of the

Indian surface owner is not required by

these regulations and that the consent

referred to in proposed paragraph (c) is

required only if made ‘‘necessary’’ by

some other applicable law.

Response: Section 212.56 in final

regulations provides that where the

Indian mineral owner is not the surface

owner, the lessee must obtain any

additional necessary permits or rights of

ingress or egress from the surface

occupant. This information is provided

to lessees so that the lessee will know

that under some conditions a mineral

lease does not automatically authorize

surface ingress and egress.

III. Conclusion

The scope and purpose of these final

rules are to revise, streamline and

update implementation of the Act of

May 11, 1938, as amended, and the Act

of March 3, 1909, as amended, that

provide for the leasing of Indian tribal

and allotted lands, respectively, for

mineral development. By means of these

final rules, the Department provides,

within statutory limitations, increased

communication between the Indian

mineral owner and the Secretary and

provides the Indian mineral owner

greater recognition and authority in the

mineral leasing of Indian lands within

the framework of the Secretary’s trust

responsibility and the determination of

the best interest of the Indian mineral

owner. The Department understands the

concerns and importance to tribes of the

recognition of tribal authority and

responsibility in matters of the

management generally of their own

mineral resources. This authority and

responsibility are recognized at §§ 211.1

and 211.29 in final rules. Section 211.29

specifically permits the supersedence of

Federal regulations by the provisions of

ordinance, resolution, or other action

authorized under any properly issued

tribal constitution, bylaw, or charter.

Superseding provisions that: (1) nullify

the provisions of enacted legislation or

judicial decision that preclude the

exercise of tribal authority; (2) modify

the provisions of an existing lease or

permit which constitute substantially

the consideration of the lease or permit,

or without which the lease or permit

would not have been made; or (3)

provide for a regulatory taking cannot be

approved by the Secretary. Also, the

rules formerly in place have not been

revised in entirety since 1938 and

therefore the action of the Department,

in this revision, reflects in final

regulation the enactment of legislation,

court decisions, evolution of usual and

common business and administrative

practices, and changes and

reorganizations within the Federal

government that has taken place during

the last 58 years.

Executive Order No. 12866 and

Regulatory Flexibility Act

These rules have been reviewed under

Executive Order 12866. In addition, the

Department of the Interior has

determined that these rules 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.).

This final rulemaking will have equal

impact on anyone desiring to engage in

prospecting for or developing Indianowned minerals, including oil and gas

and geothermal resources. The

promulgation of final rulemaking

reduces the regulatory burden imposed

on such persons in several instances.

This rulemaking will increase the filing

fee (from $10.00 to $75.00) that must

accompany each application for lease,

permit, or assignment thereof and is no

different from the filing fees presently

required when filing on Federal lands.

This increase is necessary to partially

compensate the United States for its

costs of processing those documents,

but experience shows that this increase

is not an amount that will discourage or

prevent any small business from

contracting to engage in mineral

development on Indian lands. The

minimum rental for mineral leases on

Indian land will be increased from $1.25

to $2.00 per acre which is no different

from the minimum rentals imposed on

lessees of Federal minerals. The

minimum annual development

expenditure on leases other than oil and

gas and geothermal resources will

increase from $10.00 to $20.00 per acre.

The increases in minimum rental and

annual development expenditure reflect
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35653

the effects of inflation during the last

several years on the cost of doing

business, helps ensure diligent

development of the Indian mineral

estate, and helps to protect the Indian

mineral owner against the decline

through time in purchasing power of

dollars received from the Indian mineral

leases. These rules promote economic

growth by providing tribes and

individual Indian mineral owners

greater opportunity to negotiate or

participate in the negotiation of leases

and permits that maximize their best

economic interest and minimize any

adverse environmental and cultural

impact and at the same time enhance

economic growth by allowing wise use

of a portion of the National mineral

reserve base that might not be otherwise

available.

Executive Order No. 12612

The Department has determined that

these rules do not have significant

federalism effects. These rules support

the goals of E.O. No. 12612 by

enhancing self determination among the

Indian communities by encouraging

tribes to responsibly and independently

achieve their personal, cultural, and

economic objectives through their own

efforts.

Executive Order No. 12630

In accordance with E.O. 12630, the

Department has determined that these

rules do not have significant takings

implications.

Executive Order No. 12988

The Department has determined that

these regulations meet the applicable

standards provided in Sections 3(a) and

3(b) (2) of Executive Order No. 12988.

National Environmental Policy Act of

1969

The changes made in this final

rulemaking are for the purpose of

streamlining and updating the

regulations implementing the Act of

May 11, 1938, as amended, and the Act

of March 3, 1909, as amended. These

rules constitute an administrative action

and do not impact on the physical

environment. The approval of mineral

leases, permits, and assignments will

require compliance with the provisions

of the National Environmental Policy

Act of 1969, including public

participation in compliance with the

regulations of the Council on

Environmental Quality. In analyzing the

alternatives to the changes in previously

proposed rulemaking that were made,

the Bureau of Indian Affairs considered

the changes to be of such minor

variation and degree that the impacts

were deemed equal to or less than the

changes made by the previously

proposed rulemaking. The Department

of the Interior has determined therefore,

that there will be no significant impact

to the human environment.

Paperwork Reduction Act of 1980

This rule is exempt from the

information collections requirement

under the Paperwork Reduction Act,

Pub. L. 95–511 (44 U.S.C. 3501 et seq.).

List of Subjects in 25 CFR Parts 211 and

212

Geothermal energy, Indians—lands,

Mineral resources, Mines, Oil and gas

exploration, Reporting and

recordkeeping requirements.

Words of Issuance

For the reasons set out in the

preamble, Parts 211 and 212 of Title 25,

Chapter I of the Code of Federal

Regulations are revised as set forth

below.

PART 211—LEASING OF TRIBAL

LANDS FOR MINERAL DEVELOPMENT

Subpart A—General

Sec.

211.1 Purpose and scope.

211.2 Information collection.

211.3 Definitions.

211.4 Authority and responsibility of the

Bureau of Land Management (BLM).

211.5 Authority and responsibility of the

Office of Surface Mining Reclamation

and Enforcement (OSM).

211.6 Authority and responsibility of the

Minerals Management Service (MMS).

211.7 Environmental studies.

211.8 Government employees cannot

acquire leases.

211.9 Existing permits or leases for

minerals issued pursuant to 43 CFR

chapter II and acquired for Indian tribes.

Subpart B—How To Acquire Leases

211.20 Leasing procedures.

211.21 [Reserved]

211.22 Leases for subsurface storage of oil

or gas.

211.23 Corporate qualifications and

requests for information.

211.24 Bonds.

211.25 Acreage limitation.

211.26 [Reserved]

211.27 Duration of leases.

211.28 Unitization and communitization

agreements, and well spacing.

211.29 Exemption of leases and permits

made by organized tribes.

Subpart C—Rents, Royalties, Cancellations

and Appeals

211.40 Manner of payments.

211.41 Rentals and production royalty on

oil and gas leases.

211.42 Annual rentals and expenditures for

development on leases other than oil and

gas, and geothermal resources.

211.43 Royalty rates for minerals other than

oil and gas.

211.44 Suspension of operations.

211.45 [Reserved]

211.46 Inspection of premises, books and

accounts.

211.47 Diligence, drainage and prevention

of waste.

211.48 Permission to start operations.

211.49 Restrictions on operations.

211.50 [Reserved]

211.51 Surrender of leases.

211.52 Fees.

211.53 Assignments, overriding royalties,

and operating agreements.

211.54 Lease or permit cancellation; Bureau

of Indian Affairs notice of

noncompliance.

211.55 Penalties.

211.56 Geological and geophysical permits.

211.57 Forms.

211.58 Appeals.

Authority: Sec. 4, Act of May 11, 1938, (52

Stat. 347): Act of August 1, 1956 (70 Stat.

774): 25 U.S.C. 396a-g; and 25 U.S.C. 2 and

9.

Subpart A—General

§ 211.1 Purpose and scope.

(a) The regulations in this part govern

leases and permits for the development

of Indian tribal oil and gas, geothermal,

and solid mineral resources except as

provided under paragraph (e) of this

section. These regulations are applicable

to lands or interests in lands the title to

which is held in trust by the United

States or is subject to a restriction

against alienation imposed by the

United States. These regulations are

intended to ensure that Indian mineral

owners desiring to have their resources

developed are assured that they will be

developed in a manner that maximizes

their best economic interests and

minimizes any adverse environmental

impacts or cultural impacts resulting

from such development.

(b) The regulations in this part shall

be subject to amendment at any time by

the Secretary of the Interior. No

regulation that becomes effective after

the date of approval of any lease or

permit shall operate to affect the

duration of the lease or permit, rate of

royalty, rental, or acreage unless agreed

to by all parties to the lease or permit.

(c) The regulations of the Bureau of

Land Management, the Office of Surface

Mining Reclamation and Enforcement,

and the Minerals Management Service

that are referenced in §§ 211.4, 211.5,

and 211.6 are supplemental to the

regulations in this part, and apply to

parties holding leases or permits for

development of Indian mineral

resources unless specifically stated

otherwise in this part or in such other

Federal regulations.

(d) Nothing in the regulations in this

part is intended to prevent Indian tribes
35654 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

from exercising their lawful

governmental authority to regulate the

conduct of persons, businesses,

operations or mining within their

territorial jurisdiction.

(e) The regulations in this part do not

apply to leasing and development

governed by regulations in 25 CFR Parts

213 (Members of the Five Civilized

Tribes of Oklahoma), 226 (Osage), or

227 (Wind River Reservation).

§ 211.2 Information collection.

The information collection

requirements contained in this part do

not require a review by the Office of

Management and Budget under the

Paperwork Reduction Act (44 U.S.C.

3501; et seq.).

§ 211.3 Definitions.

As used in this part, the following

words and phrases have the specified

meaning except where otherwise

indicated:

Applicant means any person seeking

a permit, lease, or an assignment from

the superintendent or area director.

Approving official means the Bureau

of Indians Affairs official with delegated

authority to approve a lease or permit.

Area director means the Bureau of

Indian Affairs official in charge of an

area office.

Authorized officer means any

employee of the Bureau of Land

Management authorized by law or by

lawful delegation of authority to

perform the duties described in this part

and in 43 CFR Parts 3160, 3180, 3260,

3280, 3480 and 3590.

Cooperative agreement means a

binding arrangement between two or

more parties purporting to the act of

agreeing or of coming to a mutual

arrangement that is accepted by all

parties to a transaction (e.g.,

communitization and unitization).

Director’s representative means the

Office of Surface Mining Reclamation

and Enforcement director’s

representative authorized by law or

lawful delegation of authority to

perform the duties described in 30 CFR

part 750.

Gas means any fluid, either

combustible or non-combustible, that is

produced in a natural state from the

earth and that maintains a gaseous or

rarefied state at ordinary temperature

and pressure conditions.

Geological and geophysical permit

means a written authorization to

conduct on-site surveys to locate

potential deposits of oil and gas,

geothermal or solid mineral resources

on the lands.

Geothermal resources means:

(1) All products of geothermal

processes, including indigenous steam,

hot water and hot brines;

(2) Steam and other gases, hot water,

and hot brines, resulting from water, gas

or other fluids artificially introduced

into geothermal formations;

(3) Heat or other associated energy

found in geothermal formations; and

(4) Any by-product derived therefrom.

In the best interest of the Indian

mineral owner refers to the standards to

be applied by the Secretary in

considering whether to take an

administrative action affecting the

interests of an Indian mineral owner. In

considering whether it is ‘‘in the best

interest of the Indian mineral owner’’ to

take a certain action (such as approval

of a lease, permit, unitization or

communitization agreement), the

Secretary shall consider any relevant

factor, including, but not limited to:

economic considerations, such as date

of lease expiration; probable financial

effect on the Indian mineral owner;

leasability of land concerned; need for

change in the terms of the existing lease;

marketability; and potential

environmental, social, and cultural

effects.

Indian lands means any lands owned

by any individual Indian or Alaska

Native, Indian tribe, band, nation,

pueblo, community, rancheria, colony,

or other tribal group which owns land

or interests in the land, the title to

which is held in trust by the United

States or is subject to a restriction

against alienation imposed by the

United States.

Indian mineral owner means an

Indian tribe, band, nation, pueblo

community, rancheria, colony, or other

tribal group which owns mineral

interests in oil and gas, geothermal or

solid mineral resources, title to which is

held in trust by the United States, or is

subject to a restriction against alienation

imposed by the United States.

Indian surface owner means any

individual Indian or Indian tribe whose

surface estate is held in trust by the

United States, or is subject to restriction

against alienation imposed by the

United States.

Lease means any contract approved

by the United States under the Act of

May 11, 1938 (52 Stat. 347) (25 U.S.C.

396a–396g), as amended, that authorizes

exploration for, extraction of, or removal

of any minerals.

Lessee means a natural person,

proprietorship, partnership,

corporation, or other entity that has

entered into a lease with an Indian

mineral owner, or who has been

assigned an obligation to make royalty

or other payments required by the lease.

Lessor means an Indian mineral

owner who is a party to a lease.

Minerals includes both metalliferous

and non-metalliferous minerals; all

hydrocarbons, including oil and gas,

coal and lignite of all ranks; geothermal

resources; and includes but is not

limited to, sand, gravel, pumice,

cinders, granite, building stone,

limestone, clay, silt, or any other energy

or non-energy mineral.

Minerals Management Service official

means any employee of the Minerals

Management Service (MMS) authorized

by law or by lawful delegation of

authority to perform the duties

described in 30 CFR chapter II,

subchapters A and C.

Mining means the science, technique,

and business of mineral development

including, but not limited to: opencast

work, underground work, and in-situ

leaching directed to severance and

treatment of minerals; Provided, when

sand, gravel, pumice, cinders, granite,

building stone, limestone, clay or silt is

the subject mineral, an enterprise is

considered ‘‘mining’’ only if the

extraction of such a mineral exceeds

5,000 cubic yards in any given year.

Oil means all nongaseous

hydrocarbon substances other than

those substances leasable as coal, oil

shale, or gilsonite (including all veintype solid hydrocarbons). Oil includes

liquefiable hydrocarbon substances such

as drip gasoline and other natural

condensates recovered or recoverable in

a liquid state from produced gas without

resorting to a manufacturing process.

Permit means any contract issued by

the superintendent and/or area director

to conduct exploration on; or removal of

less than 5,000 cubic yards per year of

common varieties of minerals from

Indian lands.

Permittee means a person holding or

required by this part to hold a permit to

conduct exploration operations on; or

remove less than 5,000 cubic yards per

year of common varieties of minerals

from Indian lands.

Secretary means the Secretary of the

Interior or an authorized representative.

Solid minerals means all minerals

excluding oil, gas and geothermal

resources.

Superintendent means the Bureau of

Indian Affairs official in charge of the

agency office having jurisdiction over

the minerals subject to leasing under

this part.

§ 211.4 Authority and responsibility of the

Bureau of Land Management (BLM).

The functions of the Bureau of Land

Management are found in 43 CFR part

3160—Onshore Oil and Gas Operations,

43 CFR part 3180—Onshore Oil and Gas
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35655

Unit Agreements: Unproven Area, 43

CFR part 3260—Geothermal Resources

Operations, 43 CFR part 3280—

Geothermal Resources Unit Agreements:

Unproven Areas, 43 CFR part 3480—

Coal Exploration and Mining

Operations, and 43 CFR part 3590—

Solid Minerals (other than coal)

Exploration and Mining Operations; and

currently include, but are not limited to,

resource evaluation, approval of drilling

permits, mining and reclamation,

production plans, mineral appraisals,

inspection and enforcement, and

production verification. These

regulations, apply to leases and permits

approved under this part.

§ 211.5 Authority and responsibility of the

Office of Surface Mining Reclamation and

Enforcement (OSM).

The OSM is the regulatory authority

for surface coal mining and reclamation

operations on Indian lands pursuant to

the Surface Mining Control and

Reclamation Act of 1977 (30 U.S.C. 1201

et seq.). The relevant regulations for

surface coal mining and reclamation

operations are found in 30 CFR part 750.

Those regulations apply to mining and

reclamation on leases approved under

this part.

§ 211.6 Authority and responsibility of the

Minerals Management Service (MMS).

The functions of the MMS for

reporting, accounting, and auditing are

found in 30 CFR chapter II, subchapters

A and C, which, apply to leases

approved under this part. To the extent

the parties to a lease or permit are able

to provide reasonable provisions

satisfactorily addressing the functions

governed by MMS regulations, the

Secretary may approve alternate

provisions in a lease or permit.

§ 211.7 Environmental studies.

(a) The Secretary shall ensure that all

environmental studies are prepared as

required by the National Environmental

Policy Act of 1969 (NEPA) and the

regulations promulgated by the Council

on Environmental Quality (CEQ), found

in 40 CFR parts 1500 through 1508.

(b) The Secretary shall ensure that all

necessary surveys are performed and

clearances obtained in accordance with

36 CFR parts 60, 63, and 800 and with

the requirements of the Archaeological

and Historic Preservation Act (16 U.S.C.

469 et seq.), the National Historic

Preservation Act (16 U.S.C. 470 et seq.),

The American Indian Religious

Freedom Act (42 U.S.C. 1996), and

Executive Order 11593, Protection and

Enhancement of the Cultural

Environment (3 CFR, 1971 through 1975

Comp., p. 559). If these surveys indicate

that a mineral development will have an

adverse effect on a property listed on or

eligible for listing on the National

Register of Historic Places, the Secretary

shall:

(1) Seek the comments of the

Advisory Council on Historic

Preservation, in accordance with 36 CFR

part 800;

(2) Ensure that the property is

avoided, that the adverse effect is

mitigated, or;

(3) Ensure that appropriate

excavations or other related research is

conducted and ensure that complete

data describing the historic property is

preserved.

§ 211.8 Government employees cannot

acquire leases.

U.S. Government employees are

prevented from acquiring leases or

interests in leases by the provisions of

25 CFR part 140 and 43 CFR part 20

pertaining to conflicts of interest and

ownership of an interest in trust land.

§ 211.9 Existing permits or leases for

minerals issued pursuant to 43 CFR chapter

II and acquired for Indian tribes.

(a) Title to the minerals underlying

certain Federal lands, which were

previously subject to general leasing and

mining laws, is now held in trust by the

United States for Indian tribes. Existing

mineral prospecting permits,

exploration and mining leases on these

lands, issued prior to these lands being

placed in trust status or becoming

Indian lands, pursuant to 43 CFR

chapter II (and its predecessor

regulations), and all actions on the

permits and leases shall be administered

by the Secretary in accordance with the

regulations set forth in 30 CFR chapters

II and VII and 43 CFR chapter II, as

applicable, provided, that all payment

or reports required by a non-producing

lease or permit, issued pursuant to 43

CFR chapter II, shall be made to the

superintendent having administrative

jurisdiction over the land involved,

instead of the officer of the Bureau of

Land Management designated in 43 CFR

unless specifically stated otherwise in

the statutes authorizing the United

States to hold the land in trust for an

Indian tribe. Producing lease payments

and reports will be submitted to the

Minerals Management Service in

accordance with 30 CFR chapter II,

subchapters A and C.

(b) Administrative actions regarding

an existing lease or permit under this

section, may be appealed pursuant to 25

CFR part 2.

Subpart B—How to Acquire Leases

§ 211.20 Leasing procedures.

(a) Indian mineral owners may, with

the approval of the superintendent or

area director, lease their land for mining

purposes. No oil and gas lease shall be

approved unless it has first been offered

for bidding at an advertised lease sale in

accordance with this section. Leases for

minerals other than oil and gas shall be

advertised for bids as prescribed in this

section unless the Secretary grants the

Indian mineral owners written

permission to negotiate for lease.

Application for leases shall be made to

the superintendent having jurisdiction

over the lands.

(b) Indian mineral owners may

request that the Secretary prepare and

advertise or negotiate (if the

requirements of this section have been

met) mineral leases on their behalf. If

requested by an applicant interested in

acquiring rights to Indian-owned

minerals, the Secretary shall promptly

notify the Indian mineral owner, and

advise the owner in writing of the

alternatives available, including the

right to decline to lease. If the Indian

mineral owner decides to have the

leases advertised, the Secretary shall

consult with the Indian mineral owner

concerning the appropriate royalty rate

and rental. The Secretary may then

undertake the responsibility to advertise

and lease in accordance with the

following procedures:

(1) Leases shall be advertised to

receive optimum competition for bonus

consideration, under sealed bid, oral

auction, or a combination of both.

Notice of such advertisement shall be

published in at least one local

newspaper and in one trade publication

at least thirty (30) days in advance of

sale. If applicable, such notice must

identify the reservation within which

the tracts to be leased are found. No

specific description of the tracts to be

leased need be published. Specific

description of such tracts shall be

available at the office of the

superintendent and/or area director

upon request. The complete text of the

advertisement, including a specific

description, shall be mailed to each

person listed on the appropriate agency

or area mailing list. Individuals and

companies interested in receiving

advertisements of lease sales should

send their mailing information to the

appropriate superintendent or area

director for future reference.

(2) The advertisement shall offer the

tracts to the responsible bidder offering

the highest bonus. The Secretary, after

consultation with the Indian mineral

owner, shall establish the rental and
35656 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

royalty rates which shall be stated in the

advertisement and shall not be subject

to negotiation. The advertisement shall

provide that the Secretary reserves the

right to reject any or all bids, and that

acceptance of the lease bid by the Indian

mineral owner is required.

(3) Each sealed bid must be

accompanied by a cashier’s check,

certified check or postal money order, or

any combination thereof, payable to the

payee designated in the advertisement,

in an amount not less than 25 percent

of the bonus bid, which shall be

returned if that bid is not accepted.

(4) A successful oral auction bidder

will be allowed five (5) working days to

remit the required 25 percent deposit of

the bonus bid.

(5) A successful bidder shall, within

thirty (30) days after notification of the

bid award, remit to the Secretary the

balance of the bonus, the first year’s

rental, a $75 filing fee, its prorated share

of the advertising costs as determined

by the Bureau of Indian Affairs, and file

with the Secretary all required bonds.

The successful bidder shall also file the

lease in completed form at that time.

However, for good reasons, the

Secretary may grant extensions of time

in thirty (30) day increments for filing

of the lease and all required bonds,

provided that additional extension

requests are submitted and approved

prior to the expiration of the original

thirty (30) days or the previously

granted extension. Failure on the part of

the bidder to take all reasonable actions

necessary to comply with the foregoing

shall result in forfeiture of the required

payment of 25 percent of any bonus bid

for the use and benefit of the Indian

mineral owner.

(6) If no satisfactory bid is received,

or if the accepted bidder fails to

complete all requirements necessary for

the approval of the lease, or if the

Secretary determines that it is not in the

best interest of the Indian mineral

owner to accept any of the bids the

Secretary may re-advertise the lease for

sale, or, subject to the consent of the

Indian mineral owner, the lease may be

let through private negotiations.

(c) The Secretary shall advise the

Indian mineral owner of the results of

the bidding, and shall not approve the

lease until the consent of the Indian

mineral owner has been obtained.

(d) The Indian mineral owner may

also submit negotiated leases to the

Secretary for review and approval.

§ 211.21 [Reserved]

§ 211.22 Leases for subsurface storage of

oil or gas.

(a) The Secretary, with the consent of

the Indian mineral owners, may approve

storage leases, or modifications,

amendments, or extensions of existing

leases, on Indian lands to provide for

the subsurface storage of oil or gas,

irrespective of the lands from which

production is initially obtained. The

storage lease, or modification,

amendment, or extension to an existing

lease, shall provide for the payment of

such storage fee or rental on such oil or

gas as may be determined adequate in

each case, or, in lieu thereof, for a

royalty other than that prescribed in the

oil and gas lease when such stored oil

and gas is produced in conjunction with

oil or gas not previously produced.

(b) The Secretary, with consent of the

Indian mineral owners, may approve a

provision in an oil and gas lease under

which storage of oil and gas is

authorized, for continuance of the lease

at least for the period of such storage

use and so long thereafter as oil or gas

not previously produced is produced in

paying quantities.

(c) Applications for subsurface storage

of oil or gas shall be filed in triplicate

with the authorized officer and shall

disclose the ownership of the lands

involved, the parties in interest, the

storage fee, rental, or royalty offered to

be paid for such storage, and all

essential information showing the

necessity for such project. Enough

copies of the final agreement signed by

the Indian mineral owners and other

parties in interest shall be submitted for

the approval of the Secretary to permit

retention of five copies by the

Department after approval.

§ 211.23 Corporate qualifications and

requests for information.

(a) The signing in a representative

capacity and delivery of bids, geological

and geophysical permits, mineral leases,

or assignments, bonds, or other

instruments required by the regulations

in this part constitutes certification that

the individual signing (except a surety

agent) is authorized to act in such

capacity. An agent for a surety shall

furnish a power of attorney.

(b) A corporate applicant proposing to

acquire an interest in a permit or lease

shall have on file with the

superintendent or area director a

statement showing:

(1) The State(s) in which the

corporation is incorporated, and that the

corporation is authorized to hold such

interests in the State where the land

described in the instrument is situated;

and

(2) A notarized statement that the

corporation has power to conduct all

business and operations as described in

the lease or permit.

(c) The Secretary may, either before or

after the approval of a permit, mineral

lease, assignment, or bond, call for any

reasonable additional information

necessary to carry out the regulations in

this part, or other applicable laws and

regulations.

§ 211.24 Bonds.

(a) The lessee, permittee or

prospective lessee acquiring a lease, or

any interest therein, by assignment shall

furnish with each lease, permit or

assignment a surety bond or personal

bond in an amount sufficient to ensure

compliance with all of the terms and

conditions of the lease(s), permit(s), or

assignment(s) and the statutes and

regulations applicable to the lease,

permit, or assignment. Surety bonds

shall be issued by a qualified company

approved by the Department of the

Treasury (see Department of the

Treasury Circular No. 570).

(b) An operator may file a $75,000

bond for all geothermal, mining, or oil

and gas leases, permits, or assignments

in any one State, which may also

include areas on that part of an Indian

reservation extending into any

contiguous State. Statewide bonds are

subject to approval in the discretion of

the Secretary.

(c) An operator may file a $150,000

bond for full nationwide coverage to

cover all geothermal or oil and gas

leases, permits, or assignments without

geographic or acreage limitation to

which the operator is or may become a

party. Nationwide bonds are subject to

approval in the discretion of the

Secretary.

(d) Personal bonds shall be

accompanied by:

(1) Certificate of deposit issued by a

financial institution, the deposits of

which are federally insured, explicitly

granting the Secretary full authority to

demand immediate payment in case of

default in the performance of the

provisions and conditions of the lease or

permit. 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) Cashier’s check;

(3) 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 Secretary of full authority to sell

such securities in case of default in the

performance of the provisions and

conditions of a lease or permit; or

(5) Letter of credit issued by a

financial institution authorized to do

business in the United States and whose
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35657

deposits are federally insured, and

identifying the Secretary as sole payee

with full authority to demand

immediate payment in the case of

default in the performance of the

provisions and conditions of a lease or

permit.

(i) The letter of credit shall be

irrevocable during its term.

(ii) The letter of credit shall be

payable to the Bureau of Indian Affairs

upon demand, in part or in full, upon

receipt from the Secretary of a notice of

attachment stating the basis thereof (e.g.,

default in compliance with the lease or

permit provisions and conditions or

failure to file a replacement in

accordance with paragraph (d)(5)(v) of

this section).

(iii) The initial expiration date of the

letter of credit shall be at least one (1)

year following the date it is filed in the

proper Bureau of Indian Affairs office.

(iv) The letter of credit shall contain

a provision for automatic renewal for

periods of not less than one (1) year in

the absence of notice to the proper

Bureau of Indian Affairs office at least

ninety (90) days prior to the originally

stated or any extended expiration date.

(v) A letter of credit used as security

for any lease or permit upon which

operations have taken place and final

approval for abandonment has not been

given, or as security for a statewide or

nationwide bond, shall be forfeited and

shall be collected by the Secretary if not

replaced by other suitable bond or letter

of credit at least thirty (30) days before

its expiration date.

(e) The required amount of bonds may

be increased in any particular case at

the discretion of the Secretary.

§ 211.25 Acreage limitation.

A lessee may acquire more than one

lease but no single lease shall be granted

for mineral leasing purposes on Indian

tribal or restricted lands in excess of the

following acreage except where the rule

of approximation applies:

(a) Leases for oil and gas and all other

minerals except coal are to be contained

within one United States Governmental

survey section of land and shall be

described by legal subdivisions

including lots or tract equivalents not to

exceed 640 acres; in instances of

irregular surveys, including lands not

surveyed under the United States

Governmental survey, lands shall be

considered in multiples of 40 acres or

the nearest aliquot equivalent thereof;

(b) Leases for coal shall ordinarily be

limited to 2,560 acres in a reasonably

compact form and shall be described by

legal subdivisions including lots or tract

equivalents. In instances of irregular

surveys, including lands not surveyed

under the United States Governmental

survey, lands shall be considered in

multiples of 40 acres or the nearest

aliquot equivalent thereof. The

Secretary may, upon application and

with the consent of the Indian mineral

owner, approve the issuance of a single

lease for more than 2,560 acres, in a

reasonably compact form, upon a

finding that the issuance is in the best

interest of the lessor.

§ 211.26 [Reserved]

§ 211.27 Duration of leases.

(a) All leases shall be for a term not

to exceed a primary term of lease

duration of ten (10) years and, absent

specific lease provisions to the contrary,

shall continue as long thereafter as the

minerals specified in the lease are

produced in paying quantities. Absent

specific lease provisions to the contrary,

all provisions in leases governing their

duration shall be measured from the

date of approval by the Secretary.

(b) An oil and gas or geothermal

resource lease which stipulates that it

shall continue in full force and effect

beyond the expiration of the primary

term of lease duration (‘‘commencement

clause’’) if drilling operations have

commenced during the primary term,

shall be valid and shall hold the lease

beyond the primary term of lease

duration if the lessee or the lessee’s

designee has commenced actual drilling

by midnight of the last day of the

primary term of the lease with a drilling

rig designed to reach the total proposed

depth, and drilling is continued with

reasonable diligence until the well is

completed to production or abandoned.

However, in no case shall such drilling

hold the lease longer than 120 days past

the primary term of lease duration

without actual production of oil, gas, or

geothermal resources. Provided, that

this extension does not allow a lease to

continue past the 10-year statutory

limitation. Drilling which meets the

requirements of this section and occurs

within a unit or communitization

agreement to which the lease is

committed shall be considered as if it

occurs on the leasehold itself. If there is

a conflict between the commencement

clause and the habendum clause of a

lease, the commencement clause will

control.

(c) A solid minerals lease which

stipulates that it shall continue in full

force and effect beyond the expiration of

the primary term of lease duration if

mining operations have commenced

during the primary term

(commencement clause), shall be valid

and hold the lease beyond the primary

term of lease duration if the lessee or the

lessee’s designee has by midnight of the

last day of the primary term of the lease

commenced actual removal of mineral

materials intended for sale and upon

which royalties will be paid. If there is

a conflict between the commencement

clause and the habendum clause of a

lease, the commencement clause will

control.

§ 211.28 Unitization and communitization

agreements, and well spacing.

(a) For the purpose of promoting

conservation and efficient utilization of

minerals, the Secretary may approve a

cooperative unit, drilling or other

development plan on any leased area

upon a determination that approval is

advisable and in the best interest of the

Indian mineral owner. For the purposes

of this section, a cooperative unit,

drilling or other development plan

means an agreement for the

development or operation of a

specifically designated area as a single

unit without regard to separate

ownership of the land included in the

agreement. Such cooperative agreements

include, but are not limited to, unit

agreements, communitization

agreements and other types of

agreements that allocate costs and

benefits.

(b) The consent of the Indian mineral

owner to such unit or cooperative

agreement shall not be required unless

such consent is specifically required in

the lease. However, the Secretary shall

consult with the Indian mineral owner

prior to making a determination

concerning a cooperative agreement or

well spacing plan.

(c) Requests for approval of

cooperative agreements which comply

with the requirements of all applicable

rules and regulations shall be filed with

the superintendent or area director.

(d) All Indian mineral owners of any

right, title or interest in the mineral

resources to be included in a

cooperative agreement must be notified

by the lessee at the time the agreement

is submitted to the superintendent or

area director. An affidavit from the

lessee stating that a notice was mailed

to each mineral owner of record for

whom the superintendent or area

director has an address will satisfy this

notice requirement.

(e) A request for approval of a

proposed cooperative agreement, and all

documents incident to such agreement,

must be filed with the superintendent or

area director at least ninety (90) days

prior to the first expiration date of any

of the Indian leases in the area proposed

to be covered by the cooperative

agreement.
35658 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

(f) Unless otherwise provided in the

cooperative agreement, approval of the

agreement commits each lease to the

unit in the area covered by the

agreement on the date approved by the

Secretary or the date of first production,

whichever is earlier, as long as the

agreement is approved before the lease

expiration date.

(g) Any lease committed in part to any

such cooperative agreement shall be

segregated into a separate lease or leases

as to the lands committed and lands not

committed to the agreement.

Segregation shall be effective on the

date the agreement is effective.

(h) Wells shall be drilled in

conformity with a well spacing program

approved by the authorized officer.

§ 211.29 Exemption of leases and permits

made by organized tribes.

The regulations in this part may be

superseded by the provisions of any

tribal constitution, bylaw or charter

issued pursuant to the Indian

Reorganization Act of June 18, 1934 (48

Stat. 984; 25 U.S.C. 461–479), the

Alaska Act of May 1, 1936 (49 Stat.

1250; 48 U.S.C. 362,258a), or the

Oklahoma Indian Welfare Act of June

26, 1936 (49 Stat. 1967; 25 U.S.C., and

Sup., 501–509), or by ordinance,

resolution, or other action authorized

under such constitution, bylaw or

charter; Provided, that such tribal law

may not supersede the requirements of

Federal statutes applicable to Indian

mineral leases. The regulations in this

part, in so far as they are not so

superseded, shall apply to leases and

permits made by organized tribes if the

validity of the lease or permit depends

upon the approval of the Secretary of

the Interior.

Subpart C—Rents, Royalties,

Cancellations and Appeals

§ 211.40 Manner of payments.

Unless otherwise specifically

provided for in a lease, once production

has been established, all payments shall

be made to the MMS or such other party

as may be designated, and shall be made

at such time as provided in 30 CFR

chapter II, subchapters A and C. Prior to

production, all bonus and rental

payments, shall be made to the

superintendent or area director.

§ 211.41 Rentals and production royalty on

oil and gas leases.

(a) A lessee shall pay, in advance,

beginning with the effective date of the

lease, an annual rental of $2.00 per acre

or fraction of an acre or such other

greater amount as prescribed in the

lease. This rental shall not be credited

against production royalty nor shall the

rental be prorated or refunded because

of surrender or cancellation.

(b) The Secretary shall not approve

leases with a royalty rate less than 16–

2⁄3 percent of the amount or value of

production produced and sold from the

lease unless a lower royalty rate is

agreed to by the Indian mineral owner

and is found to be in the best interest

of the Indian mineral owner. Such

approval may only be granted by the

area director if the approving official is

the superintendent and by the Assistant

Secretary for Indian Affairs if the

approving official is the area director.

(c) Value of lease production for

royalty purposes shall be determined in

accordance with applicable lease

provisions and regulations in 30 CFR

chapter II, subchapters A and C. If the

valuation provisions in the lease are

inconsistent with the regulations in 30

CFR chapter II, subchapters A and C, the

lease provisions shall govern.

(d) If the leased premises produce gas

in excess of the lessee’s requirements for

the development and operation of said

premises, then the lessor may use

sufficient gas, free of charge, for any

desired school or other buildings

belonging to the tribe, by making his

own connections to a regulator

installed, connected to the well and

maintained by the lessee, and the lessee

shall not be required to pay royalty on

gas so used. The use of such gas shall

be at the lessor’s risk at all times.

§ 211.42 Annual rentals and expenditures

for development on leases other than oil

and gas, and geothermal resources.

(a) Unless otherwise authorized by the

Secretary, a lease for minerals other

than oil, gas and geothermal resources

shall provide for a yearly development

expenditure of not less than $20 per

acre. All such leases shall provide for a

rental payment of not less than $2.00 for

each acre or fraction of an acre payable

on or before the first day of each lease

year.

(b) Within twenty (20) days after the

lease year, an itemized statement, in

duplicate, of the expenditure for

development under a lease for minerals

other than oil and gas shall be filed with

the superintendent or area director. The

lessee must certify the statement under

oath.

§ 211.43 Royalty rates for minerals other

than oil and gas.

(a) Except as provided in paragraph

(b) of this section, the minimum rates

for leases of minerals other than oil and

gas shall be as follows:

(1) For substances other than coal, the

royalty rate shall be 10 percent of the

value of production produced and sold

from the lease at the nearest shipping

point.

(2) For coal to be strip or open pit

mined the royalty rate shall be 121⁄2

percent of the value of production

produced and sold from the lease, and

for coal removed from an underground

mine, the royalty rate shall be 8 percent

of the value of production produced and

sold from the lease.

(3) For geothermal resources, the

royalty rate shall be 10 percent of the

amount or value of steam, or any other

form of heat or energy derived from

production of geothermal resources

under the lease and sold or utilized by

the lessee. In addition, the royalty rate

shall be 5 percent of the value of any

byproduct derived from production of

geothermal resources under the lease

and sold or utilized or reasonably

susceptible of sale or utilization by the

lessee, except that the royalty for any

mineral byproduct shall be governed by

the appropriate paragraph of this

section.

(b) A lower royalty rate shall be

allowed if it is determined to be in the

best interest of the Indian mineral

owner. Approval of a lower rate may

only be granted by the area director if

the approving official is the

superintendent or by the Assistant

Secretary for Indian Affairs, if the

approving official is the area director.

§ 211.44 Suspension of operations.

(a) After the expiration of the primary

term of the lease the Secretary may

approve suspension of operations for

remedial purposes which are necessary

for continued production, to protect the

resource, the environment, or for other

good reasons. Provided, that such

remedial operations are conducted in

accordance with 43 CFR part 3160,

subpart 3165 and under such

stipulations and conditions as may be

prescribed by the Secretary and are

conducted with reasonable diligence.

Any suspension shall not relieve the

lessee from liability for the payment of

rental and other payments as required

by lease provisions.

(b) An application for permission to

suspend operations or production for

economic or marketing reasons on a

lease capable of production after the

expiration of the primary term of lease

duration must be accompanied by the

written consent of the Indian mineral

owner, an economic analysis, and an

executed amendment by the parties to

the lease setting forth the provisions

pertaining to the suspension of

operations and production. Such

application shall be treated as a

negotiated change to lease provisions,
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35659

and as such, shall be subject to review

and approval by the Secretary.

§ 211.45 [Reserved]

§ 211.46 Inspection of premises, books

and accounts.

Lessees shall allow the Indian mineral

owner, the Indian mineral owner’s

representatives, or any authorized

representative of the Secretary to enter

all parts of the leased premises for the

purpose of inspection and audit. Lessees

shall keep a full and correct account of

all operations and submit all related

reports required by the lease and

applicable regulations. Books and

records shall be available for inspection

during regular business hours.

§ 211.47 Diligence, drainage and

prevention of waste.

The lessee shall:

(a) Exercise diligence in mining,

drilling and operating wells on the

leased lands while minerals production

can be secured in paying quantities;

(b) Protect the lease from drainage (if

oil and gas or geothermal resources are

being drained from the lease premises

by a well or wells located on lands not

included in the lease, the Secretary

reserves the right to impose reasonable

and equitable terms and conditions to

protect the interest of the Indian mineral

owner of the lands, such as payment of

compensatory royalty for the drainage);

(c) Carry on operations in a good and

workmanlike manner in accordance

with approved methods and practices;

(d) Have due regard for the prevention

of waste of oil or gas or other minerals,

the entrance of water through wells

drilled by the lessee to other strata, to

the destruction or injury of the oil or

gas, other mineral deposits, or fresh

water aquifers, the preservation and

conservation of the property for future

productive operations, and the health

and safety of workmen and employees;

(e) Securely plug all wells and

effectively shut off all water from the oil

or gas-bearing strata before abandoning

them;

(f) Not construct any well pad

location within 200 feet of any

structures or improvements without the

Indian surface owner’s written consent;

(g) Carry out, at the lessee’s expense,

all reasonable orders and requirements

of the authorized officer relative to

prevention of waste;

(h) Bury all pipelines crossing tillable

lands below plow depth unless other

arrangements are made with the Indian

surface owner; and

(i) Pay the Indian surface owner all

damages, including damages to crops,

buildings, and other improvements of

the Indian surface owner occasioned by

the lessee’s operations as determined by

the superintendent.

§ 211.48 Permission to start operations.

(a) No exploration, drilling, or mining

operations are permitted on any Indian

lands before the Secretary has granted

written approval of a mineral lease or

permit pursuant to the regulations in

this part.

(b) After a lease or permit is approved,

written permission must be secured

from the Secretary before any operations

are started on the leased premises, in

accordance with applicable rules and

regulations in 25 CFR part 216; 30 CFR

chapter II, subchapters A and C; 30 CFR

part 750 (Requirements for Surface Coal

Mining and Reclamation Operations on

Indian Lands), 43 CFR parts 3160, 3260,

3480, 3590, and Orders or Notices to

Lessees (NTLs) issued thereunder.

§ 211.49 Restrictions on operations.

Leases issued under the provisions of

the regulations in this part shall be

subject to such restrictions as to time or

times for well operations and

production from any leased premises as

the Secretary judges may be necessary

or proper for the protection of the

natural resources of the leased land and

in the interest of the lessor.

§ 211.50 [Reserved]

§ 211.51 Surrender of leases.

A lessee may, with the approval of the

Secretary, surrender a lease or any part

of it, on the following conditions:

(a) All royalties and rentals due on the

date the request for surrender is

received must be paid;

(b) The superintendent, after

consultation with the authorized officer,

must be satisfied that proper provisions

have been made for the conservation

and protection of the property, and that

all operations on the portion of the lease

surrendered have been properly

reclaimed, abandoned, or conditioned,

as required;

(c) If a lease has been recorded, the

lessee must submit a release along with

the recording information of the original

lease so that, after acceptance of the

release, it may be recorded;

(d) If a lessee requests to surrender an

entire lease or an entire undivided

portion of a lease document, the lessee

must deliver to the superintendent or

area director the original lease

documents; Provided, that where the

request is made by an assignee to whom

no copy of the lease was delivered, the

assignee must deliver to the

superintendent or area director only its

copy of the assignment;

(e) If the lease (or a portion thereof

being surrendered) is owned in

undivided interests, all lessees owning

undivided interests in the lease must

join in the request for surrender;

(f) No part of any advance rental shall

be refunded to the lessee, nor shall any

subsequent surrender or termination of

a lease relieve the lessee of the

obligation to pay advance rental if

advance rental became due prior to the

date the request for surrender was

received by the superintendent or area

director;

(g) If oil, gas, or geothermal resources

are being drained from the leased

premises by a well or wells located on

lands not included in the lease, the

Secretary reserves the right, prior to

acceptance of the surrender, to impose

reasonable and equitable terms and

conditions to protect the interests of the

Indian mineral owners of the lands

surrendered. Such terms and conditions

may include payment of compensatory

royalty for any drainage; and

(h) Upon expiration or surrender of a

solid mineral lease the lessee shall

deliver the leased premises in a

condition conforming to the approved

reclamation plan. Unless otherwise

provided in the lease, the machinery

necessary to operate the mine is the

property of the lessee. However, the

machinery may not be removed from the

leased premises without the written

permission of the Secretary.

§ 211.52 Fees.

Unless otherwise authorized by the

Secretary, each permit, lease, sublease,

or other contract, or assignment, thereof

shall be accompanied by a filing fee of

$75.00 at the time of filing.

§ 211.53 Assignments, overriding

royalties, and operating agreements.

(a) Approved leases or any interest

therein may be assigned or transferred

only with the approval of the Secretary.

The Indian mineral owner must also

consent if approval of the Indian

mineral owner is required in the lease.

If consent is not required, then the

Secretary shall notify the Indian mineral

owner of the proposed assignment. To

obtain the approval of the Secretary the

assignee must be qualified to hold the

lease under existing rules and

regulations and shall furnish a

satisfactory bond conditioned for the

faithful performance of the covenants

and conditions of the lease.

(b) No lease or interest therein or the

use of such lease shall be assigned,

sublet, or transferred, directly or

indirectly, by working or drilling

contract, or otherwise, without the

consent of the Secretary.

(c) Assignments of leases, and

stipulations modifying the provisions of
35660 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

existing leases, which stipulations are

also subject to the approval of the

Secretary, shall be filed with the

superintendent within five (5) working

days after the date of execution. Upon

execution of satisfactory bonds by the

assignee the Secretary may permit the

release of any bonds executed by the

assignor. Upon execution of satisfactory

bonds the assignee accepts all the

assignor’s responsibilities and prior

obligations and liabilities of the assignor

(including but not limited to any

underpaid royalties and rentals) under

the lease.

(d) Agreements creating overriding

royalties or payments out of production

shall not be considered as interests in

the leases as such provision is used in

this section. Agreements creating

overriding royalties or payments out of

production, or agreements designating

operators are hereby authorized and the

approval of the Secretary shall not be

required with respect thereto, but such

agreements shall be subject to the

condition that nothing in such

agreements shall be construed as

modifying any of the obligations of the

lessee, including, but not limited to,

obligations imposed by requirements of

the MMS for reporting, accounting, and

auditing; obligations for diligent

development and operation, protection

against drainage and mining in trespass,

compliance with oil and gas,

geothermal, and mining regulations (25

CFR part 216; 43 CFR parts 3160, 3260,

3480, and 3590; and those applicable

rules found in 30 CFR chapter II,

subchapters A and C) and the

requirements for Secretarial approval

before abandonment of any oil and gas

or geothermal well or mining operation.

All such obligations are to remain in full

force and effect, the same as if free of

any such overriding royalties or

payments. The existence of agreements

creating overriding royalties or

payments out of production, whether or

not actually paid, shall not be

considered as justification for the

approval of abandonment of any oil and

gas or geothermal well or mining

operation. Nothing in this paragraph

revokes the requirement for approval of

assignments and other instruments

which is required in this section, but

any overriding royalties or payments out

of production created by the provisions

of such assignments or instruments

shall be subject to the condition stated

in this section. Agreements creating

overriding royalties or payments out of

production, or agreements designating

operators shall be filed with the

superintendent unless incorporated in

assignments or instruments required to

be filed pursuant to this section.

§ 211.54 Lease or permit cancellation;

Bureau of Indian Affairs notice of

noncompliance.

(a) If the Secretary determines that a

permittee or lessee has failed to comply

with the terms of the permit or lease; the

regulations in this part; or other

applicable laws or regulations; the

Secretary may:

(1) Serve a notice of noncompliance

specifying in what respect the permittee

or lessee has failed to comply with the

requirements referenced in this

paragraph, and specifying what actions,

if any, must be taken to correct the

noncompliance; or

(2) Serve a notice of proposed

cancellation of the lease or permit. The

notice of proposed cancellation shall set

forth the reasons why lease or permit

cancellation is proposed and shall

specify what actions, if any, must be

taken to avoid cancellation.

(b) The notice of noncompliance or

proposed cancellation shall specify in

what respect the permittee or lessee has

failed to comply with the requirements

referenced in paragraph (a), and shall

specify what actions, if any, must be

taken to correct the noncompliance.

(c) The notice shall be served upon

the permittee or lessee by delivery in

person or by certified mail to the

permittee or lessee at the permittee’s or

lessee’s last known address. When

certified mail is used, the date of service

shall be deemed to be when the notice

is received or five (5) working days after

the date it is mailed, whichever is

earlier.

(d) The lessee or permittee shall have

thirty (30) days (or such longer time as

specified in the notice) from the date

that the notice is served to respond, in

writing, to the official or the Bureau of

Indian Affairs office that issued the

notice.

(e) If a permittee or lessee fails to take

any action that is prescribed in the

notice of proposed cancellation, fails to

file a timely written response to the

notice, or files a written response that

does not, in the discretion of the

Secretary, adequately justify the

permittee’s or lessee’s actions, then the

Secretary may cancel the lease or

permit, specifying the basis for the

cancellation.

(f) If a permittee or lessee fails to take

corrective action or to file a timely

written response adequately justifying

the permittee’s or lessee’s actions

pursuant to a notice of noncompliance,

the Secretary may issue an order of

cessation of operations. If the permittee

or lessee fails to comply with the order

of cessation, or fails to timely file an

appeal of the order of cessation

pursuant to paragraph (h), the Secretary

may issue an order of lease or permit

cancellation.

(g) Cancellation of a lease or permit

shall not relieve the lessee or permittee

of any continuing obligations under the

lease or permit.

(h) Orders of cessation or of lease or

permit cancellation issued pursuant to

this section may be appealed under 25

CFR part 2.

(i) This section does not limit any

other remedies of the Indian mineral

owner as set forth in the lease or permit.

(j) Nothing in this section is intended

to limit the authority of the authorized

officer or the MMS official to take any

enforcement action authorized pursuant

to statute or regulation.

(k) The authorized officer, MMS

official, and the superintendent and/or

area director should consult with one

another before taking any enforcement

actions.

§ 211.55 Penalties.

(a) In addition to or in lieu of

cancellation under § 211.54, violations

of the terms and conditions of any lease,

or the regulations in this part, or failure

to comply with a notice of

noncompliance or a cessation order

issued by the Secretary, or, in the case

of solid minerals the authorized officer,

may subject a lessee or permittee to a

penalty of not more than $1,000 per day

for each day that such a violation or

noncompliance continues beyond the

time limits prescribed for corrective

action.

(b) A notice of a proposed penalty

shall be served on the lessee or

permittee either personally or by

certified mail to the lessee or permittee

at the lessee’s or permittee’s last known

address. The date of service by certified

mail shall be deemed to be the date

when received or five (5) working days

after the date mailed, whichever is

earlier.

(c) The notice shall specify the nature

of the violation and the proposed

penalty, and shall specifically advise

the lessee or permittee of the lessee’s or

permittee’s right to either request a

hearing within thirty (30) days from

receipt of the notice or pay the proposed

penalty. Hearings shall be held before

the superintendent and/or area director

whose findings shall be conclusive,

unless an appeal is taken pursuant to 25

CFR part 2.

(d) If the lessee or permittee served

with a notice of proposed penalty

requests a hearing, penalties shall

accrue each day the violations or

noncompliance set forth in the notice
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35661

continue beyond the time limits

prescribed for corrective action. The

Secretary may issue a written

suspension of the requirement to correct

the violations pending completion of

the hearings provided by this section

only upon a determination, at the

discretion of the Secretary, that such a

suspension will not be detrimental to

the lessor and upon submission and

acceptance of a bond deemed adequate

to indemnify the lessor from loss or

damage. The amount of the bond must

be sufficient to cover the cost of

correcting the violations set forth in the

notice or any disputed amounts plus

accrued penalties and interest.

(e) Payment in full of penalties more

than ten (10) days after a final decision

imposing a penalty shall subject the

lessee or permittee to late payment

charges. Late payment charges shall be

calculated on the basis of a percentage

assessment rate of the amount unpaid

per month for each month or fraction

thereof until payment is received by the

Secretary. In the absence of a specific

lease provision prescribing a different

rate, the interest rate on late payments

and underpayments shall be a rate

applicable under § 6621(a)(2) of the

Internal Revenue Code of 1954. Interest

shall be charged only on the amount of

payment not received and only for the

number of days the payment is late.

(f) None of the provisions of this

section shall be interpreted as:

(1) Replacing or superseding the

independent authority of the authorized

officer, the director’s representative or

the MMS official to impose penalties for

violations of applicable regulations

pursuant to 43 CFR part 3160, and 43

CFR Groups 3400 and 3500, 30 CFR part

750, or 30 CFR chapter II, subchapters

A and C;

(2) Replacing or superseding any

penalty provision in the terms and

conditions of a lease or permit approved

by the Secretary pursuant to this part; or

(3) Authorizing the imposition of a

penalty for violations of lease or permit

terms for which the authorized officer,

director’s representative or MMS

official, have either statutory or

regulatory authority to assess a penalty.

§ 211.56 Geological and geophysical

permits.

Permits to conduct geological and

geophysical operations on Indian lands

which do not conflict with any mineral

leases entered into pursuant to this part,

may be approved by the Secretary with

the consent of the Indian mineral owner

under the following conditions:

(a) The permit must describe the area

to be explored, the duration, and the

consideration to be paid the Indian

owner;

(b) The permit will not grant the

permittee any option or preference

rights to a lease or other development

contract, or authorize the production of,

or removal of oil and gas, geothermal

resources, or other minerals, except

samples for assay and experimental

purposes, unless specifically so stated

in the permit; and

(c) Copies of all data collected

pursuant to operations conducted under

the permit shall be forwarded to the

Secretary and the Indian mineral owner,

unless otherwise provided in the

permit. Data collected under a permit

may be held by the Secretary as

privileged and proprietary information

for the time prescribed in the permit.

Where no time period is prescribed in

the permit, the Secretary may release

such information after six (6) years, with

the consent of the Indian mineral

owner.

§ 211.57 Forms.

Leases, bonds, permits, assignments,

and other instruments relating to

mineral leasing shall be on forms,

prescribed by the Secretary, that may be

obtained from the superintendent or

area director. The provisions of a

standard lease or permit may be

changed, deleted, or added to by written

agreement of all parties with the

approval of the Secretary.

§ 211.58 Appeals.

Appeals from decisions of Bureau of

Indian Affairs officers under this part

may be taken pursuant to 25 CFR part

2.

PART 212—LEASING OF ALLOTTED

LANDS FOR MINERAL DEVELOPMENT

Subpart A—General

Sec.

212.1 Purpose and scope.

212.2 Information collection.

212.3 Definitions.

212.4 Authority and responsibility of the

Bureau of Land Management (BLM).

212.5 Authority and responsibility of the

Office of Surface Mining Reclamation

and Enforcement (OSM).

212.6 Authority and responsibility of the

Minerals Management Service (MMS).

212.7 Environmental studies.

212.8 Government employees cannot

acquire leases.

Subpart B—How to Acquire Leases

212.20 Leasing procedures.

212.21 Execution of leases.

212.22 Leases for subsurface storage of oil

or gas.

212.23 Corporate qualifications and

requests for information.

212.24 Bonds.

212.25 Acreage limitation.

212.26 [Reserved]

212.27 Duration of leases.

212.28 Unitization and communitization

agreements, and well spacing.

212.29 [Reserved]

212.30 Removal of restrictions.

212.31 [Reserved]

212.32 [Reserved]

212.33 Terms applying after

relinquishment.

212.34 Individual tribal assignments

excluded.

Subpart C—Rents, Royalties, Cancellations,

and Appeals

212.40 Manner of payments.

212.41 Rentals and production royalty on

oil and gas leases.

212.42 Annual rentals and expenditures for

development on leases other than oil and

gas, and geothermal resources.

212.43 Royalty rates for minerals other than

oil and gas.

212.44 Suspension of operations.

212.45 [Reserved]

212.46 Inspection of premises, books and

accounts.

212.47 Diligence, drainage and prevention

of waste.

212.48 Permission to start operations.

212.49 Restrictions on operations.

212.50 [Reserved]

212.51 Surrender of leases.

212.52 Fees.

212.53 Assignments, overriding royalties,

and operating agreements.

212.54 Lease or permit cancellation; Bureau

of Indian Affairs notice of

noncompliance.

212.55 Penalties.

212.56 Geological and geophysical permits.

212.57 Forms.

212.58 Appeals.

Authority: Act of March 3, 1909, (35 Stat.

783; 25 U.S.C. 396 (as amended)): Act of May

11, 1938, (Sec. 2, 52 Stat. 347; 25 U.S.C. 396

b-g: Act of August 1, 1956, (70 Stat. 774));

and 25 U.S.C. 2 and 9.

Subpart A—General

§ 212.1 Purpose and scope.

(a) The regulations in this part govern

leases for the development of individual

Indian oil and gas, geothermal and solid

mineral resources. These regulations are

applicable to lands or interests in lands

the title to which is held, for any

individual Indian, in trust by the United

States or is subject to restriction against

alienation imposed by the United States.

These regulations are intended to ensure

that Indian mineral owners desiring to

have their resources developed are

assured that they will be developed in

a manner that maximizes their best

economic interests and minimizes any

adverse environmental impacts or

cultural impacts resulting from such

development.

(b) The regulations in this part shall

be subject to amendment at any time by

the Secretary of the Interior. No

regulation that becomes effective after
35662 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

the date of approval of any lease or

permit shall operate to affect the

duration of the lease or permit, rate of

royalty, rental, or acreage unless agreed

to by all parties to the lease or permit.

(c) Nothing in the regulations in this

part is intended to prevent Indian tribes

from exercising their lawful

governmental authority to regulate the

conduct of persons, businesses,

operations or mining within their

territorial jurisdiction.

(d) The regulations of the Bureau of

Land Management, the Office of Surface

Mining Reclamation and Enforcement,

and the Minerals Management Service

that are referenced in §§ 212.4, 212.5,

and 212.6 of this part are supplemental

to these regulations, and apply to parties

holding leases or permits for

development of Indian mineral

resources unless specifically stated

otherwise in this part or in such other

Federal regulations.

(e) The regulations in this part do not

apply to leasing and development

governed by regulations in 25 CFR parts

213 (Members of the Five Civilized

Tribes of Oklahoma), 226 (Osage), or

227 (Wind River Reservation).

§ 212.2 Information collection.

The information collection

requirements contained in this part do

not require a review by the Office of

Management and Budget under the

Paperwork Reduction Act (44 U.S.C.

3501; et seq.).

§ 212.3 Definitions.

As used in this part, the following

words and phrases have the specified

meaning except where otherwise

indicated:

Applicant means any person seeking

a permit, lease, or an assignment from

the superintendent or area director.

Approving official means the Bureau

of Indian Affairs official with delegated

authority to approve a lease or permit.

Area director means the Bureau of

Indian Affairs official in charge of an

area office.

Authorized officer means any

employee of the Bureau of Land

Management authorized by law or by

lawful delegation of authority to

perform the duties described herein and

in 43 CFR parts 3160, 3180, 3260, 3280,

3480, and 3590.

Cooperative agreement means a

binding arrangement between two or

more parties purporting to the act of

agreeing or of coming to a mutual

arrangement that is accepted by all

parties to a transaction (e.g.,

communitization and unitization).

Director’s representative means the

Office of Surface Mining Reclamation

and Enforcement director’s

representative authorized by law or

lawful delegation of authority to

perform the duties described in 30 CFR

part 750.

Gas means any fluid, either

combustible or non-combustible, that is

produced in a natural state from the

earth and that maintains a gaseous or

rarefied state at ordinary temperature

and pressure conditions.

Geological and geophysical permit

means a written authorization to

conduct on-site surveys to locate

potential deposits of oil and gas,

geothermal or solid mineral resources

on the lands.

Geothermal resources means:

(1) All products of geothermal

processes, including indigenous steam,

hot water and hot brines;

(2) Steam and other gases, hot water,

and hot brines, resulting from water, gas

or other fluids artificially introduced

into geothermal formations;

(3) Heat or other associated energy

found in geothermal formations; and

(4) Any by-product derived therefrom.

In the best interest of the Indian

mineral owner refers to the standards to

be applied by the Secretary in

considering whether to take an

administrative action affecting the

interests of an Indian mineral owner. In

considering whether it is ‘‘in the best

interest of the Indian mineral owner’’ to

take a certain action (such as approval

of a lease, permit, unitization or

communitization agreement), the

Secretary shall consider any relevant

factor, including, but not limited to:

economic considerations, such as date

of lease expiration; probable financial

effect on the Indian mineral owner;

leasability of land concerned; need for

change in the terms of the existing lease;

marketability; and potential

environmental, social, and cultural

effects.

Indian lands means any lands owned

by any individual Indian or Alaska

Native, Indian tribe, band, nation,

pueblo, community, rancheria, colony,

or other tribal group which owns lands

or interest in the minerals, the title to

which is held in trust by the United

States or is subject to restriction against

alienation imposed by the United States.

Indian mineral owner means any

individual Indian or Alaska Native who

owns mineral interests in oil and gas,

geothermal, or solid mineral resources,

title to which is held in trust by the

United States, or is subject to the

restriction against alienation imposed

by the United States.

Indian surface owner means any

individual Indian or Indian tribe whose

surface estate is held in trust by the

United States, or is subject to restriction

against alienation imposed by the

United States.

Lease means any contract, approved

by the Secretary of the Interior under

the Act of March 3, 1909 (35 Stat.

783)(25 U.S.C. 396), as amended, and

the Act of May 11, 1938 (52 Stat. 347)

(25 U.S.C. 396a–396g), as amended, that

authorize exploration for, extraction of,

or removal of any minerals.

Lessee means a natural person,

proprietorship, partnership,

corporation, or other entity which has

entered into a lease with an Indian

mineral owner, or who has been

assigned an obligation to make royalty

or other payments required by the lease.

Lessor means an Indian mineral

owner who is a party to a lease.

Minerals includes both metalliferous

and non-metalliferous minerals; all

hydrocarbons, including oil, gas, coal

and lignite of all ranks; geothermal

resources; and includes but is not

limited to, sand, gravel, pumice,

cinders, granite, building stone,

limestone, clay, silt, or any other energy

or non-energy mineral.

Minerals Management Service official

means any employee of the Minerals

Management Service (MMS) authorized

by law or by lawful delegation of

authority to perform the duties

described in 30 CFR chapter II,

subchapters A and C.

Mining means the science, technique,

and business of mineral development

including, but not limited to: opencast

work, underground work, and in-situ

leaching directed to severance and

treatment of minerals; Provided, when

sand, gravel, pumice, cinders, granite,

building stone, limestone, clay or silt is

the subject mineral, an enterprise is

considered ‘‘mining’’ only if the

extraction of such a mineral exceeds

5,000 cubic yards in any given year.

Oil means all nongaseous

hydrocarbon substances other than

those substances leasable as coal, oil

shale, or gilsonite (including all veintype solid hydrocarbons). Oil includes

liquefiable hydrocarbon substances such

as drip gasoline and other natural

condensates recovered or recoverable in

a liquid state from produced gas without

resorting to a manufacturing process.

Permit means any contract issued by

the superintendent and/or area director

to conduct exploration on; or removal of

less than 5,000 cubic yards per year of

common varieties of minerals from

Indian lands.

Permittee means a person holding or

required by this part to hold a permit to

conduct exploration operations on; or

remove less than 5,000 cubic yards per
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35663

year of common varieties of minerals

from Indian lands.

Secretary means the Secretary of the

Interior or an authorized representative.

Solid minerals means all minerals

excluding oil and gas and geothermal

resources.

Superintendent means the Bureau of

Indian Affairs official in charge of the

agency office having jurisdiction over

the minerals subject to leasing under

this part.

§ 212.4 Authority and responsibility of the

Bureau of Land Management (BLM).

The functions of the Bureau of Land

Management are found in 43 CFR part

3160—Onshore Oil and Gas Operations,

43 CFR part 3180— Onshore Oil and

Gas Unit Agreements: Unproven Area,

43 CFR part 3260—Geothermal

Resources Operations, 43 CFR part

3280—Geothermal Resources Unit

Agreements: Unproven Areas, 43 CFR

part 3480—Coal Exploration and Mining

Operations, and 43 CFR part 3590—

Solid Minerals (other than coal)

Exploration and Mining Operations, and

currently include, but are not limited to,

resource evaluation, approval of drilling

permits, mining and reclamation,

production plans, mineral appraisals,

inspection and enforcement, and

production verification. Those

regulations, apply to leases or permits

issued under this part.

§ 212.5 Authority and responsibility of the

Office of Surface Mining Reclamation and

Enforcement (OSM).

The OSM is the regulatory authority

for surface coal mining and reclamation

operations on Indian lands pursuant to

the Surface Mining Control and

Reclamation Act of 1977 (30 U.S.C. 1201

et seq.). The relevant regulations for

surface coal mining and reclamation

operations are found in 30 CFR part 750.

Those regulations apply to mining and

reclamation on leases issued under this

part.

§ 212.6 Authority and responsibility of the

Minerals Management Service (MMS).

The functions of the MMS for

reporting, accounting, and auditing are

found in 30 CFR chapter II, subchapters

A and C, which apply to leases

approved under this part. To the extent

the parties to a lease or permit are able

to provide reasonable provisions

satisfactorily addressing the functions

governed by MMS regulations, the

Secretary may approve alternate

provisions in a lease or permit.

§ 212.7 Environmental studies.

The provisions of § 211.7 of this

subchapter, as amended, are applicable

to leases under this part.

§ 212.8 Government employees cannot

acquire leases.

U.S. Government employees are

prevented from acquiring leases or

interests in leases by the provisions of

25 CFR part 140 and 43 CFR part 20

pertaining to conflicts of interest and

ownership of an interest in trust land.

Subpart B—How to Acquire Leases

§ 212.20 Leasing procedures.

(a) Application for leases shall be

made to the superintendent having

jurisdiction over the lands.

(b) Indian mineral owners may

request the Secretary to prepare,

advertise and negotiate mineral leases

on their behalf. Leases for minerals shall

be advertised for bids as prescribed in

this section unless one or more of the

Indian mineral owners of a tract sought

for lease request the Secretary to

negotiate for a lease on their behalf

without advertising. Unless the

Secretary decides that negotiation of a

mineral lease is in the best interests of

the Indian mineral owners, he shall use

the following procedure for leasing:

(1) Leases shall be advertised to

receive optimum competition for bonus

consideration, under sealed bid, oral

auction, or a combination of both.

Notice of such advertisement shall be

published in at least one local

newspaper and in one trade publication

at least thirty (30) days in advance of

sale. If applicable, such notice must

identify the reservation within which

the tracts to be leased are found. No

specific description of the tracts to be

leased need be published. Specific

description of such tracts shall be

available at the office of the

superintendent and/or area director

upon request. The complete text of the

advertisement, including a specific

description, shall be mailed to each

person listed on the appropriate agency

or area mailing list. Individuals and

companies interested in receiving

advertisements on lease sales should

send their mailing information to the

appropriate agency or area office for

future reference.

(2) The advertisement shall offer the

tracts to a responsible bidder offering

the highest bonus. The Secretary shall

establish the rental and royalty rates

which shall be stated in the

advertisement and will not be subject to

negotiation. The advertisement shall

provide that the Secretary reserves the

right to reject any or all bids, and that

acceptance of the lease bid by or on

behalf of the Indian mineral owner is

required. The requirements under

§ 212.21 are applicable to the

acceptance of a lease bid.

(3) Each sealed bid must be

accompanied by a cashier’s check,

certified check or postal money order, or

any combination thereof, payable to the

payee designated in the advertisement,

in an amount not less than 25 percent

of the bonus bid, which shall be

returned if that bid is not accepted.

(4) A successful oral auction bidder

will be allowed five (5) working days to

remit the required 25 percent deposit of

the bonus bid.

(5) A successful bidder shall, within

thirty (30) days after notification of the

bid award, remit to the Secretary the

balance of the bonus, the first year’s

rental, a $75 filing fee, its prorated share

of the advertising costs as determined

by the Bureau of Indian Affairs, and file

with the Secretary all required bonds.

The successful bidder shall also file the

lease in completed form, signed by the

Indian mineral owner(s), at that time.

However, for good reasons, the

Secretary may grant extensions of time

in thirty (30) day increments for filing

of the lease and all required bonds,

provided that additional extension

requests are submitted and approved

prior to the expiration of the original

thirty (30) days or the previously

granted extension. Failure on the part of

the bidder to take all reasonable actions

necessary to comply with the foregoing

shall result in forfeiture of the required

payment of 25 percent of any bonus bid

for the use and benefit of the Indian

mineral owner.

(6) If no satisfactory bid is received,

or if the accepted bidder fails to

complete all requirements necessary for

approval of the lease, or if the Secretary

determines that it is not in the best

interest of the Indian mineral owner to

accept any of the bids the Secretary may

re-advertise the tract for sale, or subject

to the consent of the Indian mineral

owner, a lease may be let through

private negotiations.

(c) The Secretary shall advise the

Indian mineral owner of the results of

the bidding, and shall not approve the

lease until the consent of the Indian

mineral owner has been obtained. The

requirements under § 212.21 are

applicable to the approval of a mineral

lease.

§ 212.21 Execution of leases.

(a) The Secretary shall not execute a

mineral lease on behalf of an Indian

mineral owner, except when such

owner is deceased and the heirs to or

devisee of the estate have not been

determined, or if determined, some or

all of them cannot be located. Leases

involving such interests may be

executed by the Secretary, provided that

the mineral interest shall have been
35664 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

offered for sale under the provisions of

section 212.20(b) (1) through (6).

(b) The Secretary may execute leases

on behalf of minors and persons who

are incompetent by reason of mental

incapacity; Provided, that there is no

parent, guardian, conservator, or other

person who has lawful authority to

execute a lease on behalf of the minor

or person with mental incapacity.

(c) If an owner is a life tenant, the

procedures set forth in 25 CFR part 179

(Life Estates and Future Interests), shall

apply.

§ 212.22 Leases for subsurface storage of

oil or gas.

The provisions of § 211.22 of this

subchapter are applicable to leases

under this part.

§ 212.23 Corporate qualifications and

requests for information.

The provisions of § 211.23 of this

subchapter are applicable to leases

under this part.

§ 212.24 Bonds.

The provisions of § 211.24 of this

subchapter are applicable to leases

under this part.

§ 212.25 Acreage limitation.

The provisions of § 211.25 of this

subchapter are applicable to leases

under this part.

§ 212.26 [Reserved]

§ 212.27 Duration of leases.

The provisions of § 211.27 of this

subchapter are applicable to leases

under this part.

§ 212.28 Unitization and communitization

agreements, and well spacing.

(a) For the purpose of promoting

conservation and efficient utilization of

minerals, the Secretary may approve a

cooperative unit, drilling or other

development plan on any leased area

upon a determination that approval is

advisable and in the best interest of the

Indian mineral owner. For the purposes

of this section, a cooperative unit,

drilling or other development plan

means an agreement for the

development or operation of a

specifically designated area as a single

unit without regard to separate

ownership of the land included in the

agreement. Such cooperative agreements

include, but are not limited to, unit

agreements, communitization

agreements and other types of

agreements that allocate costs and

benefits.

(b) The consent of the Indian mineral

owner to such unit or cooperative

agreement shall not be required unless

such consent is specifically required in

the lease.

(c) Requests for approval of

cooperative agreements which comply

with the requirements of all applicable

rules and regulations shall be filed with

the superintendent or area director.

(d) All Indian mineral owners of any

right, title or interest in the mineral

resources to be included in a

cooperative agreement must be notified

by the lessee at the time the agreement

is submitted to the superintendent or

area director. An affidavit from the

lessee stating that a notice was mailed

to each mineral owner of record for

whom the superintendent or area

director has an address will satisfy this

notice requirement.

(e) A request for approval of a

proposed cooperative agreement, and all

documents incident to such agreement,

must be filed with the superintendent or

area director at least ninety (90) days

prior to the first expiration date of any

of the Indian leases in the area proposed

to be covered by the cooperative

agreement.

(f) Unless otherwise provided in the

cooperative agreement, approval of the

agreement commits each lease to the

unit in the area covered by the

agreement on the date approved by the

Secretary or the date of first production,

whichever is earlier, as long as the

agreement is approved before the lease

expiration date.

(g) Any lease committed in part to any

such cooperative agreement shall be

segregated into a separate lease or leases

as to the lands committed and lands not

committed to the agreement.

Segregation shall be effective on the

date the agreement is effective.

(h) Wells shall be drilled in

conformity with a well spacing program

approved by the authorized officer.

§ 212.29 [Reserved]

§ 212.30 Removal of restrictions.

(a) Notwithstanding the provisions of

any mineral lease to the contrary, the

removal of all restrictions against

alienation shall operate to divest the

Secretary of all supervisory authority

and responsibility with respect to the

lease. Thereafter, all payments required

to be made under the lease shall be

made directly to the owner(s).

(b) In the event restrictions are

removed from a part of the land

included in any lease approved by the

Secretary, the entire lease shall continue

to be subject to the supervision of the

Secretary until such times as the holder

of the lease and the unrestricted Indian

owner submits to the Secretary

satisfactory evidence that adequate

arrangements have been made to

account for the mineral resources of the

restricted land separately from those of

the unrestricted. Thereafter, the

unrestricted portion shall be relieved

from the supervision of the Secretary,

the lease, the regulations of this part,

and all other applicable laws and

regulations.

§§ 212.31, 212.32 [Reserved]

§ 212.33 Terms applying after

relinquishment.

All leases for individual Indian lands

approved by the Secretary under this

part shall contain provisions for the

relinquishment of supervision and

provide for operations of the lease after

such relinquishment. These leases shall

contain provisions that address the

following issues:

(a) Provisions of Relinquishment. If

the Secretary relinquishes supervision

at any time during the life of the lease

instrument as to all or part of the

acreage subject to the lease, the

Secretary shall give the Indian mineral

owner and the lessee thirty (30) days

written notice prior to the termination

of supervision. After notice of

relinquishment has been given to the

lessee, the lease shall be subject to the

following conditions:

(1) All rentals and royalties thereafter

accruing shall be paid directly to the

lessor or the lessor’s successors in title,

or to a trustee appointed under the

provisions of paragraph (b) of this

section.

(2) If, at the time supervision is

relinquished by the Secretary, the lessee

has made all payments then due and has

fully performed all obligations on the

lessee’s part to be performed up to the

time of such relinquishment, the bond

given to secure the performance of the

lease, on file in the appropriate agency

or area office, shall be of no further force

or effect.

(3) Should relinquishment affect only

part of the lease, then the lessee may

continue to conduct operations on the

land covered by the lease as an entirety;

Provided, that the lessee shall pay, in

the manner prescribed by the lease and

regulations for the benefit of lessor, the

same proportion of all rentals and

royalties due under the provisions of

this part as the acreage retained under

the supervision of the Secretary bears to

the entire acreage of the lessee, and

shall pay the remainder of the rentals

and royalties directly to the remaining

lessors or successors in title or said

trustee as the case may be, as provided

in paragraph (a) (1) of this section.

(b) Division of fee. If, after the

execution of the lease and after the
Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations 35665

Secretary relinquishes supervision

thereof, the fee of the leased land is

divided into separate parcels held by

different owners, or if the rental or

royalty interest is divided in ownership,

the obligations of the lessee shall not be

modified in any manner except as

specifically provided by the provisions

of the lease. Notwithstanding such

separate ownership, the lessee may

continue to conduct operations on said

premises as an entirety. Each separate

owner shall receive such proportion of

all rental and royalties accruing after the

vesting of its title as the acreage of the

fee, or rental or royalty interest, bears to

the entire acreage covered by the lease;

or to the entire rental or royalty interest

as the case may be. If at any time after

departmental supervision of the lease is

relinquished, in whole or in part, to

rentals and royalties, whether said

parties are so entitled by virtue of

undivided interest or by virtue of

ownership of separate parcels of the

land covered, the lessee may elect to

withhold the payment of further rentals

or royalties (except as the portion due

the Indian lessor while under

restriction), until all of said parties shall

agree upon and designate a trustee in

writing and in a recordable instrument

to receive all payments due thereunder

on behalf of said parties and their

respective successors in title. Payments

to said trustee shall constitute lawful

payments, and the sole risk of an

improper or unlawful distribution of

said funds by said trustee shall rest

upon the parties naming said trustee

and their said respective successors in

title.

§ 212.34 Individual tribal assignments

excluded.

The reference in this part to Indian

mineral owners does not include

assignments of tribal lands made

pursuant to tribal constitutions or

ordinances for the use of individual

Indians and assignees of such lands.

Subpart C—Rents, Royalties,

Cancellations, and Appeals

§ 212.40 Manner of payments.

The provisions of § 211.40 of this

subchapter are applicable to leases

under this part.

§ 212.41 Rentals and production royalty on

oil and gas leases.

(a) A lessee shall pay, in advance,

beginning with the effective date of the

lease, an annual rental of $2.00 per acre

or fraction of an acre or such other

greater amount as prescribed in the

lease. This rental shall not be credited

against production royalty nor shall the

rental be prorated or refunded because

of surrender or cancellation.

(b) The Secretary shall not approve

leases with a royalty rate less than 16–

2⁄3 percent of the amount or value of

production produced and sold from the

lease unless a lower royalty rate is

agreed to by the Indian mineral owner

and is found to be in the best interest

of the Indian mineral owner. Such

approval may only be granted by the

area director if the approving official is

the superintendent and the Assistant

Secretary for Indian Affairs if the

approving official is the area director.

(c) Value of lease production for

royalty purposes shall be determined in

accordance with applicable lease

provisions and regulations in 30 CFR

chapter II, subchapters A and C. If the

valuation provisions in the lease are

inconsistent with the regulations in 30

CFR chapter II, subchapters A and C, the

lease provisions shall govern.

§ 212.42 Annual rentals and expenditures

for development on leases other than oil

and gas, and geothermal resources.

The provisions of § 211.42 of this

subchapter are applicable to leases

under this part.

§ 212.43 Royalty rates for minerals other

than oil and gas.

The provisions of § 211.43 of this

subchapter are applicable to leases

under this part.

§ 212.44 Suspension of operations.

The provisions of § 211.44 of this

subchapter are applicable to leases

under this part.

§ 212.45 [Reserved]

§ 212.46 Inspection of premises, books,

and accounts.

The provisions of § 211.46 of this

subchapter are applicable to leases

under this part.

§ 212.47 Diligence, drainage and

prevention of waste.

The provisions of § 211.47 of this

subchapter are applicable to leases

under this part.

§ 212.48 Permission to start operations.

The provisions of § 211.48 of this

subchapter are applicable to leases

under this part.

§ 212.49 Restrictions on operations.

The provisions of § 211.49 of this

subchapter are applicable to leases

under this part.

§ 212.50 [Reserved]

§ 212.51 Surrender of leases.

The provisions of § 211.51 of this

subchapter are applicable to leases

under this part.

§ 212.52 Fees.

The provisions of § 211.52 of this

subchapter are applicable to leases

under this part.

§ 212.53 Assignments, overriding

royalties, and operating agreements.

The provisions of § 211.53 of this

subchapter are applicable to leases

under this part.

§ 212.54 Lease or permit cancellation;

Bureau of Indian Affairs notice of

noncompliance.

The provisions of § 211.54 of this

subchapter are applicable to leases

under this part.

§ 212.55 Penalties.

The provisions of § 211.55 of this

subchapter are applicable to this part.

§ 212.56 Geological and geophysical

permits.

(a) Permits to conduct geological and

geophysical operations on Indian lands

which do not conflict with any mineral

lease entered into pursuant to this part

may be approved by the Secretary with

the consent of the Indian owner under

the following conditions:

(1) The permit must describe the area

to be explored, the duration and the

consideration to be paid the Indian

owner;

(2) The permit may not grant the

permittee any option or preference

rights to a lease or other development

contract, authorize the production of, or

removal of oil and gas, or geothermal

resources, or other minerals except

samples for assay and experimental

purposes, unless specifically so stated

in the permit; and

(3) Copies of all data collected

pursuant to operations conducted under

the permit shall be forwarded to the

Secretary and made available to the

Indian mineral owner, unless otherwise

provided in the permit. Data collected

under a permit shall be held by the

Secretary as privileged and proprietary

information for the time prescribed in

the permit. Where no time period is

prescribed in the permit, the Secretary

may, in the discretion of the Secretary,

release such information after six (6)

years.

(b) A permit may be granted by the

Secretary without 100 percent consent

of the individual mineral owners if:

(1) The minerals are owned by more

than one person, and the owners of a
35666 Federal Register / Vol. 61, No. 131 / Monday, July 8, 1996 / Rules and Regulations

majority of the interest therein consent

to the permit;

(2) The whereabouts of one or more

owners of the minerals or an interest

therein is unknown, and all the

remaining owners of the interests

consent to the permit;

(3) The heirs or devisee of a deceased

owner of the land or an interest therein

have not been determined, and the

Secretary finds that the permit activity

will cause no substantial injury to the

land or any owner thereof; or

(4) The owners of interests in the land

are so numerous that the Secretary finds

it would be impractical to obtain their

consent, and also finds that the permit

activity will cause no substantial injury

to the land or any owner thereof.

(c) A lessee does not need a permit to

conduct geological and geophysical

operations on Indian lands, if provided

for in the lessee’s mineral lease, where

the Indian mineral owner is also the

surface land owner. In instances where

the Indian mineral owner is not the

surface owner, the lessee must obtain

any additional necessary permits or

rights of ingress or egress from the

surface occupant.

§ 212.57 Forms.

The provisions of § 211.57 of this

subchapter are applicable to leases

under this part.

§ 212.58 Appeals.

The provisions of § 211.58 of this

subchapter are applicable to leases

under this part.

Dated: June 13, 1996.

Ada E. Deer,

Assistant Secretary—Indian Affairs.

[FR Doc. 96–16036 Filed 7–5–96; 8:45 am]

BILLING CODE 4310–02–P

OFFICE OF NAVAJO AND HOPI INDIAN

RELOCATION

25 CFR Part 700

Protection of Archaeological

Resources

AGENCY: Office of Navajo and Hopi

Indian Relocation.

ACTION: Interim final rule with comment

period.

SUMMARY: This rule establishes

procedures for implementing provisions

of the Archaeological Resources

Protection Act of 1979 (16 U.S.C. 470–

aa–11) for the lands which are

administered by the O.N.H.I.R. and have

been acquired pursuant to Public Law

96–305 (25 U.S.C. 640–d(h). The rule is

necessary and its intended effect is to

allow the Federal Land Manager to

protect archaeological resources on

lands being developed for resettlement

purposes.

DATES: This rule is effective August 7,

1996.

Comments must be received on or

before August 7, 1996.

ADDRESSES: Comments may be mailed to

the Executive Director, Office of Navajo

and Hopi Indian Relocation, P.O. Box

KK, Flagstaff, Arizona 86002.

FOR FURTHER INFORMATION CONTACT:

Paul Tessler (Legal Counsel), Office of

Navajo and Hopi Indian Relocation, at

520–779–8953.

SUPPLEMENTARY INFORMATION: Pub. L.

96–305 (25 U.S.C. 640d–11) provided

for the acquisition of land for the use of

Navajo families required to relocate

under the terms of Pub. L. 93–531.

Approximately 365,000 acres of land in

Arizona have been acquired, taken into

trust, and made part of the Navajo

Reservation. Approximately 35,000

acres of land in the State of New Mexico

will be acquired, taken into trust and

made a part of the Navajo Reservation.

These lands are referred to as the New

Lands. Pursuant to Pub. L. 96–305, as

amended, by Pub. L. 100–666, the Office

of Navajo and Hopi Indian Relocation

(O.N.H.I.R.) has complete administrative

authority over these New Lands until

the relocation program is completed as

determined by the President.

The 1986 Interior Appropriations Bill

(Pub. L. 99–190) provided construction

funds to the Bureau of Indian Affairs for

the purpose of building replacement

homes on the New Lands. A number of

relocations were completed at the New

Lands under the authority of the Bureau

of Indian Affairs. In 1988, Congress

enacted Pub. L. 100–666, which

transferred to the O.N.H.I.R. on January

31, 1989, all powers and duties of the

Bureau of Indian Affairs derived from

Pub. L. 99–190, that related to the

relocation of members of the Navajo

Tribe and also transferred all funds

appropriated for such activities relating

to such relocation. Before the passage of

Pub. L. 100–666, the O.N.H.I.R. and the

Bureau of Indian Affairs had worked

together planning and developing the

New Lands for resettlement purposes

and relied upon the Bureau of Indian

Affairs, to issue Archaeological

Resources Protection Act (16 U.S.C.

470aa–11) permits on the New Lands.

After the passage of Pub. L. 100–666,

and the transfer of all powers and duties

of the Bureau of Indian Affairs to the

O.N.H.I.R., questions arose regarding

which governmental agency was the

Federal Land Manager and has the

authority to issue A.R.P.A. permits on

the New Lands. It was determined that

the O.N.H.I.R. is the Federal Land

Manager on the New Lands and that the

Bureau of Indian Affairs, Navajo Area

Office, did not have administrative

jurisdiction or surface management

responsibilities on the New Lands

located in Arizona. Thus the O.N.H.I.R.

has the appropriate authority to issue

A.R.P.A. permits. These regulations are

being published pursuant to that

authority to allow the Federal Land

Manager to protect archaeological

resources on the New Lands by issuing

permits for authorized excavation and/

or removal of archaeological resources,

by imposing civil penalties for

unauthorized excavation, removal,

damage, alteration, or defacement of

archaeological resources, by providing

for the preservation of archaeological

resource collections and data and by

ensuring confidentiality of information

about archaeological resources when

disclosure would threaten the resources.

These regulations will apply to all New

Lands in the states or Arizona and New

Mexico acquired for relocation

purposes.

These regulations are being published

as an Interim Final Rule because of the

time frame involved in the movement of

eligible individuals to the New Lands.

Because the O.N.H.I.R. has been

requested by Congress in the 1995

Department of Interior and Related

Agencies Appropriations Act (Pub. L.

103–332) to present a plan for the phase

out of the relocation program, and

transfer of its functions before the year

2000, there is considerable urgency to

complete the development of the New

Lands. In order to complete such

development the O.N.H.I.R. must

publish these regulations. It is,

therefore, necessary for these

regulations to become effective

immediately so that development can go

on uninterrupted.

The principal author of this final

rulemaking is Paul Tessler, Legal

counsel, Office of Navajo and Hopi

Indian Relocation.

List of Subjects in 25 CFR Part 700

Administrative practice and

procedure, Conflict of interest, Freedom

of information, Grant program—Indians,

Indian claims, Privacy, Real property

acquisition, Relocation Assistance and

New Lands Administration.

PART 700—[AMENDED]

Accordingly, the Office is amending

25 CFR Part 700, by adding Subpart R,

as follows:

1. The authority citation for Part 700

continues to read as follows: