Title 43 CFR 3100-3200
Title 43-3100-3200.doc
Oil and Gas and Geothermal Resources Leasing (43 CFR 3100 and 3200)
Title 43 CFR 3100-3200
OMB: 1004-0074
PART 3130—OIL AND GAS LEASING: NATIONAL PETROLEUM RESERVE, ALASKA
Section Contents Subpart 3130—Oil and Gas Leasing, National Petroleum Reserve, Alaska: General
Subpart 3132—Issuance of Leases
Subpart 3133—Rentals and Royalties
Subpart 3135—Transfers, Extensions, Consolidations, and Suspensions
Subpart 3136—Relinquishments, Terminations and Cancellations of Leases
Subpart 3137—Unitization Agreements—National Petroleum Reserve-Alaska
Subpart 3138—Subsurface Storage Agreements in the National Petroleum Reserve-Alaska (NPR-A)
Note: The information collection requirements contained in part 3130 have been approved by the Office of Management and Budget under 44 U.S.C. 3507 and assigned clearance number 1004–0067. The information is being collected to allow the authorized officer to determine if the bidder is qualified to hold a lease. The information will be used in making that determination. The obligation to respond is required to obtain a benefit. Authority: 42 U.S.C. 6508 and 43 U.S.C.1701 et seq. Source: 46 FR 55497, Nov. 9, 1981, unless otherwise noted. Subpart 3130—Oil and Gas Leasing, National Petroleum Reserve, Alaska: General§ 3130.0-1 Purpose.These regulations establish the procedures under which the Secretary of the Interior will exercise the authority granted to administer a competitive leasing program for oil and gas within the National Petroleum Reserve—Alaska. § 3130.0-2 Policy.The oil and gas leasing program within the National Petroleum Reserve—Alaska shall be conducted in accordance with the purposes and policy directions provided by the Department of the Interior Appropriations Act, Fiscal Year 1981 (Pub. L. 96–514), and other executive, legislative, judicial and Department of the Interior guidance. § 3130.0-3 Authority.(a) The Department of the Interior Appropriations Act, Fiscal year 1981 (Pub. L. 96–514); (b) The Naval Petroleum Reserves Production Act of 1976 (42 U.S.C. 6504, et seq.); and (c) The Federal Lands Policy and Management Act of 1976 (43 U.S.C. 1701 et seq.), except that sections 202 and 603 are not applicable. § 3130.0-5 Definitions.As used in this part, the term: (a) Act means the Department of the Interior Appropriations Act, Fiscal Year 1981 (Pub. L. 96–514). (b) Bureau means the Bureau of Land Management. (c) Constructive operations means the exploring, testing, surveying or otherwise investigating the potential of a lease for oil and gas or the actual drilling or preparation for drilling of wells therefor. (d) NPR-A means the area formerly within Naval Petroleum Reserve Numbered 4 Alaska which was redesignated as the National Petroleum Reserve—Alaska by the Naval Petroleum Reserves Production Act of 1976 (42 U.S.C. 6501). (e) Reworking operations means all operations designed to secure, restore or improve production through some use of a hole previously drilled, including, but not limited to, mechanical or chemical treatment of any horizon, deepening to test deeper strata and plugging back to test higher strata. (f) Special Areas means the Utokok River, the Teshekpuk Lake areas and other areas within NPR—A identified by the Secretary as having significant subsistence, recreational, fish and wildlife or historical or scenic value. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3130.0-7 Cross references. [Reserved]§ 3130.1 Attorney General review.(a) Prior to the issuance of any lease, contract or operating agreement under this subpart, the Secretary shall notify the Attorney General of the proposed issuance, the name of the successful bidder, the terms of the proposed lease, contract or operating agreement and any other information the Attorney General may require to conduct an antitrust review of the proposed action. Such other information shall include, but is not limited to, information to be provided the Secretary by the successful bidder or its owners. (b) In advance of the publication of any notice of sale, the Attorney General shall notify the Secretary of his/her preliminary determination of the information each successful bidder shall be required to submit for antitrust review purposes. The Secretary shall require this information to be promptly submitted by successful bidders, and may provide prospective bidders the opportunity to submit such information in advance of or accompanying their bids. For subsequent notices of sale, the Attorney General's preliminary information requirements shall be as specified for the prior notice unless a change in the requirements is communicated to the Secretary in advance of publication of the new notice of sale. Where a bidder in a prior sale has previously submitted any of the currently required information, a reference to the date of submission and to the serial number of the record in which it is filed, together with a statement of any and all changes in the information since the date of the previous submission, shall be sufficient. (c) The Secretary shall not issue any lease, contract or operating agreement until: (1) Thirty days after the Attorney General receives notice from the Secretary of the proposed lease contract or operating agreement, together with any other information required under this section; or (2) The Attorney General notifies the Secretary that issuance of the proposed lease, contract or operating agreement does not create or maintain a situation inconsistent with the antitrust laws, whichever comes first. The Attorney General shall inform the successful bidder, and simultaneously the Secretary, if the information supplied is insufficient, and shall specify what information is required for the Attorney General to complete his/her review. The 30-day period shall stop running on the date of such notification and not resume running until the Attorney General receives the required information. (d) The Secretary shall not issue the lease, contract for operating agreement to the successful bidder, if, during the 30-day period, the Attorney General notifies the Secretary that such issuance would create or maintain a situation inconsistent with the antitrust laws. (e) If the Attorney General does not reply in writing to the notification provided under paragraph (a) of this section within the 30-day review period, the Secretary may issue the lease, contract or operating agreement without waiting for the advice of the Attorney General. (f) Information submitted to the Secretary to comply with this section shall be treated by the Secretary and by the Attorney General as confidential and proprietary data if marked confidential by the submitting bidder or other person. Such information shall be submitted to the Secretary in sealed envelopes and shall be transmitted in that form to the Attorney General. (g) The procedures outlined in paragraphs (a) through (f) of this section apply to the proposed assignment or transfer of any lease, contract or operating agreement. § 3130.2 Limitation on time to institute suit to contest a Secretary's decision.Any action seeking judicial review of the adequacy of any programmatic or site-specific environmental impact statement under section 102 of the National Environmental Policy Act of 1969 (42 U.S.C. 4332) concerning oil and gas leasing in NPR-A shall be barred unless brought in the appropriate District Court within 60 days after notice of availability of such statement is published in the Federal Register. § 3130.3 Drainage.Upon a determination by the authorized officer, that lands owned by the United States within NPR-A are being drained, the regulations under §3162.2 of this title, including the provisions relating to compensatory agreements or royalties, shall apply. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988; 66 FR 1892, Jan. 10, 2001] § 3130.4 Leasing: General.§ 3130.4-1 Tract size.A tract selected for leasing shall consist of a compact area of not more than 60,000 acres. § 3130.4-2 Lease term.The primary term of an NPR-A lease is 10 years. [67 FR 17885, Apr. 11, 2002] § 3130.5 Bona fide purchasers.The provisions of §3108.4 of this title shall apply to bona fide purchasers of leases within NPR-A. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3130.6 Leasing maps and land descriptions.§ 3130.6-1 Leasing maps.The Bureau shall prepare leasing maps showing the tracts to be offered for lease sale. § 3130.6-2 Land descriptions.(a) All tracts shall be composed of entire sections either surveyed or protracted, whichever is applicable, except that if the tracts are adjacent to upland navigable water areas, they may be adjusted on the basis of subdivisional parts of the sections. (b) Leased lands shall be described according to section, township and range in accordance with the official survey or protraction diagrams. Subpart 3131—Leasing Program§ 3131.1 Receipt and consideration of nominations; public notice and participation.During preparation of a proposed leasing schedule, the Secretary shall invite and consider suggestions and relevant information for such program from the Governor of Alaska, local governments, Native corporations, industry, other Federal agencies, including the Attorney General and all interested parties, including the general public. This request for information shall be issued as a notice in the Federal Register. § 3131.2 Tentative tract selection.(a) The State Director Alaska, Bureau of Land Management, shall issue calls for Nominations and Comments on tracts for leasing for oil and gas in specified areas. The call for Nominations and Comments shall be published in the Federal Register and may be published in other publications as desired by the State Director. Nominations and Comments on tracts shall be addressed to the State Director Alaska, Bureau of Land Management. The State Director shall also request comments on tracts which should receive special concern and analysis. (b) The State Director, after completion of the required environmental analysis (see 40 CFR 1500–1508), shall select tracts to be offered for sale. In making the selection, the State Director shall consider available environmental information, multiple-use conflicts, resource potential, industry interest, information from appropriate Federal agencies and other available information. The State Director shall develop measures to mitigate adverse impacts, including lease stipulations and information to lessees. These mitigating measures shall be made public in the notice of sale. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3131.3 Special stipulations.Special stipulations shall be developed to the extent the authorized officer deems necessary and appropriate for mitigating reasonably foreseeable and significant adverse impacts on the surface resources. Special Areas stipulations for exploration or production shall be developed in accordance with section 104 of the Naval Petroleum Reserves Production Act of 1976. Any special stipulations and conditions shall be set forth in the notice of sale and shall be attached to and made a part of the lease, if issued. Additional stipulations needed to protect surface resources and special areas may be imposed at the time the surface use plan and permit to drill are approved. § 3131.4 Lease sales.§ 3131.4-1 Notice of sale.(a) The State Director Alaska, Bureau of Land Management, shall publish the notice of sale in the Federal Register, and may publish the notice in other publications if he/she deems it appropriate. The publication in the Federal Register shall be at least 30 days prior to the date of the sale. The notice shall state the place and time at which bids are to be filed, and the place, date and hour at which bids are to be opened. (b) Tracts shall be offered for lease by competitive sealed bidding under conditions specified in the notice of lease sale and in accordance with all applicable laws and regulations. Bidding systems used in sales shall be based on bidding systems included in section (205)(a)(1)(A) through (H) of the Outer Continental Shelf Lands Act Amendments of 1978 (43 U.S.C. 1801 et seq.). (c) A detailed statement of the sale, including a description of the areas to be offered for lease, the lease terms, conditions and special stipulations and how and where to submit bids shall be made available to the public immediately after publication of the notice of sale. Subpart 3132—Issuance of Leases§ 3132.1 Who may hold a lease.Leases issued pursuant to this subpart may be held only by: (a) Citizens and nationals of the United States; (b) Aliens lawfully admitted for permanent residence in the United States as defined in 8 U.S.C. 1101(a)(20); (c) Private, public or municipal corporations organized under the laws of the United States or of any State or of the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa or any of its territories; or (d) Associations of such citizens, nationals, resident aliens or private, public or municipal corporations. § 3132.2 Submission of bids.(a) A separate sealed bid shall be submitted for each tract in the manner prescribed. A bid shall not be submitted for less than an entire tract. (b) Each bidder shall submit with the bid a certified or cashier's check, bank draft, U.S. currency or any other form of payment approved by the Secretary for one-fifth of the amount of the cash bonus, unless stated otherwise in the notice of sale. (c) Each bid shall be accompanied by statements of qualifications prepared in accordance with §3132.4 of this title. (d) Bidders are bound by the provisions of 18 U.S.C. 1860 prohibiting unlawful combination or intimidation of bidders. § 3132.3 Payments.(a) Make payments of bonuses, including deferred bonuses, first year's rental, other payments due upon lease issuance, and fees, to BLM's Alaska State Office. Before we issue a lease, the highest bidder must pay the processing fee for competitive lease applications found in the fee schedule in §3000.12 of this chapter in addition to other remaining bonus and rental payments. All payments shall be made by certified or cashier's check, bank draft, U.S. currency or any other form of payment approved by the Secretary. Payments shall be made payable to the Department of the Interior, Bureau of Land Management, unless otherwise directed. (b) All other payments required by a lease or the regulations in this part shall be payable to the Department of the Interior, Minerals Management Service. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988; 70 FR 58875, Oct. 7, 2005] § 3132.4 Qualifications.Submission of a lease bid constitutes certification of compliance with the regulations of this part. Anyone seeking to acquire, or anyone holding, a Federal oil and gas lease or interest therein may be required to submit additional information to show compliance with the regulations of this part. [47 FR 8546, Feb. 26, 1982] § 3132.5 Award of leases.(a) Sealed bids received in response to the notice of lease sale shall be opened at the place, date and hour specified in the notice of sale. The opening of bids is for the sole purpose of publicly announcing and recording the bids received. No bids shall be accepted or rejected at that time. (b) The United States reserves the right to reject any and all bids received for any tract, regardless of the amount offered. (c) In the event the highest bids are tie bids, the tying bidders shall be allowed to submit within 15 days of the public announcement of a tie bid additional sealed bids to break the tie. The additional bids shall include any additional amount necessary to bring the amount tendered with his/her bid to one-fifth of the additional bid. Additional bids to break tie bids shall be processed in accordance with paragraph (a) of this section. (d) If the authorized officer fails to accept the highest bid for a lease within 90 days or a lesser period of time as specified in the notice of sale, the highest bid for that lease shall be considered rejected. This 90-day period or lesser period as specified in the notice of sale shall not include any period of time during which acceptance, rejection or other processing of bids and lease issuance by the Department of the Interior are enjoined or prohibited by court order. (e) Written notice of the final decision on the bids shall be transmitted to those bidders whose deposits have been held in accordance with instructions set forth in the notice of sale. If a bid is accepted, 2 copies of the lease shall be transmitted with the notice of acceptance to the successful bidder. The bidder shall, not later than the 15th day after receipt of the lease, sign both copies of the lease and return them, together with the first year's rental and the balance of the bonus bid, unless deferred, and shall file a bond, if required to do so. Deposits shall be refunded on rejected bids. (f) If the successful bidder fails to execute the lease within the prescribed time or otherwise to comply with the applicable regulations, the deposit shall be forfeited and disposed of as other receipts under the Act. (g) If the awarded lease is executed by an attorney-in-fact acting on behalf of the bidder, the lease shall be accompanied by evidence that the bidder authorized the attorney-in-fact to execute the lease on his/her behalf. Reference may be made to the serial number of the record and the office of the Bureau of Land Management in which such evidence has already been filed. (h) When the executed lease is returned to the authorized officer, he/she shall within 15 days of receipt of the material required by paragraph (e) of this section, execute the lease on behalf of the United States. A copy of the fully executed lease shall be transmitted to the lessee. § 3132.5-1 Forms.Leases shall be issued on forms approved by the Director. § 3132.5-2 Dating of leases.All leases issued under the regulations in this part shall become effective as of the first day of the month following the date they are signed on behalf of the United States. When prior written request is made, a lease may become effective as of the first day of the month within which it is signed on behalf of the United States. Subpart 3133—Rentals and Royalties§ 3133.1 Rentals.(a) An annual rental shall be due and payable at the rate prescribed in the notice of sale and the lease, but in no event shall such rental be less than $3 per acre, or fraction thereof. Payment shall be made on or before the first day of each lease year prior to discovery of oil or gas on the lease. (b) If there is no actual or allocated production on the portion of a lease that has been segregated from a producing lease, the owner of such segregated lease shall pay an annual rental for such segregated portion at the rate per acre specified in the original lease. This rental shall be payable each lease year following the year in which the segregation became effective and prior to discovery of oil or gas on such segregated portion. (c) Annual rental paid in any year prior to discovery of oil or gas on the lease shall be in addition to, and shall not be credited against, any royalties due from production. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3133.2 Royalties.Royalties on oil and gas shall be at the rate specified in the notice of sale as to the tracts, if appropriate, and in the lease, unless the Secretary, in order to promote increased production on the leased area through direct, secondary or tertiary recovery means, reduces or eliminates any royalty set out in the lease. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3133.2-1 Minimum royalties.For leases which provide for minimum royalty payments, each lessee shall pay the minimum royalty specified in the lease at the end of each lease year beginning with the first lease year following a discovery on the lease. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3133.3 Under what circumstances will BLM waive, suspend, or reduce the rental, royalty, or minimum royalty on my NPR-A lease?(a) BLM will waive, suspend, or reduce the rental, royalty, or minimum royalty of your lease if BLM finds that— (1) It encourages the greatest ultimate recovery of oil or gas or it is in the interest of conservation; and (2) You can't successfully operate the lease under its terms. This means that your cost to operate the lease exceeds income from the lease. (b) If the subsurface estate is held by a regional corporation, BLM will consult with the regional corporation, in accordance with 43 CFR 2650.4–3, before approving an action under this section. Regional corporation is defined in 43 U.S.C. 1602. [67 FR 17885, Apr. 11, 2002] § 3133.4 How do I apply for a waiver, suspension or reduction of rental, royalty or minimum royalty for my NPR-A lease?(a) Submit to BLM your application and in it describe the relief you are requesting and include— (1) The lease serial number; (2) The number, location and status of each well drilled; (3) A statement that shows the aggregate amount of oil or gas subject to royalty for each month covering a period of at least six months immediately before the date you filed the application; (4) The number of wells counted as producing each month and the average production per well per day; (5) A detailed statement of expenses and costs of operating the entire lease; (6) All facts that demonstrate that you can't successfully operate the wells under the terms of the lease; (7) The amount of any overriding royalty and payments out of production or similar interests applicable to your lease; and (8) Any other information BLM requires. (b) Your application must be signed by— (1) All record title holders of the lease; or (2) By the operator on behalf of all record title holders. [67 FR 17885, Apr. 11, 2002] Subpart 3134—Bonding: General§ 3134.1 Bonding.(a) Prior to issuance of an oil and gas lease, the successful bidder shall furnish the authorized officer a surety or personal bond in accordance with the provisions of §3104.1 of this title in the sum of $100,000 conditioned on compliance with all the lease terms, including rentals and royalties, conditions and any stipulations. The bond shall not be required if the bidder already maintains or furnishes a bond in the sum of $300,000 conditioned on compliance with the terms, conditions and stipulations of all oil and gas leases held by the bidder within NPR-A, or maintains or furnishes a nationwide bond as set forth in §3104.3(b) of this title and furnishes a rider thereto sufficient to bring total coverage to $300,000 to cover all oil and gas leases held within NPR-A. (b) A bond in the sum of $100,000 or $300,000, or a nationwide bond as provided in §3104.3(b) of this title with a rider thereto sufficient to bring total coverage to $300,000 to cover all oil and gas leases within NPR-A, may be provided by an operating rights owner (sublessee) or operator in lieu of a bond furnished by the lessee, and shall assume the responsibilities and obligations of the lessee for the entire leasehold in the same manner and to the extent as though he/she were the lessee. (c) If as a result of a default, the surety on a bond makes payment to the United States of any indebtedness under a lease secured by the bond, the face amount of such bond and the surety's liability shall be reduced by the amount of such payment. (d) A new bond in the amount previously held or a larger amount as determined by the authorized officer shall be posted within 6 months or such shorter period as the authorized officer may direct after a default. In lieu thereof, separate or substitute bonds for each lease covered by the prior bond may be filed.The authorized officer may cancel a lease(s) covered by a deficient bond(s), in accordance with §3136.3 of this title. Where a bond is furnished by an operator, suit may be brought thereon without joining the lessee when such lessee is not a party to the bond. (e) Except as provided in this subpart, the bonds required for NPR-A leases are in addition to any other bonds the successful bidder may have filed or be required to file under §§3104.2, 3104.3(a) and 3154.1 and subparts 3206 and 3209 of this title. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988; 53 FR 22846, June 17, 1988] § 3134.1-1 Form of bond.All bonds furnished by a lessee, operating rights owner (sublessee), or operator shall be on a form approved by the Director. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] § 3134.1-2 Additional bonds.(a) The authorized officer may require the bonded party to supply additional security in the form of a supplemental bond or bonds or to increase the coverage of an existing bond if, after operations or production have begun, such additional security is deemed necessary to assure maximum protection of Special Areas. (b) The holders of any oil and gas lease bond for a lease on the NPR-A shall be permitted to obtain a rider to include the coverage of oil and gas geophysical operations within the boundaries of NPR-A. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17358, May 16, 1988] Subpart 3135—Transfers, Extensions, Consolidations, and Suspensions§ 3135.1 Transfers and extensions, general.§ 3135.1-1 Transfers.(a) Subject to approval of the authorized officer, a lessee may transfer his/her lease(s), or any undivided interest therein, or any legal subdivision, to anyone qualified under §§3130.1 and 3132.4 of this title to hold a lease. (b) Any approved transfer shall be deemed to be effective on the first day of the lease month following its filing in the proper BLM office, unless, at the request of the parties, an earlier date is specified in the approval. (c) The transferor shall continue to be responsible for all obligations under the lease accruing prior to the approval of the transfer. (d) The transferee shall be responsible for all obligations under the lease subsequent to the effective date of a transfer, and shall comply with all regulations issued under the Act. (e) When a transfer of operating rights (sublease) is approved, the sublessee is responsible for all obligations under the rights transferred to the sublessee. (f) Transfers are approved for administrative purposes only. Approval does not warrant or certify that either party to a transfer holds legal or equitable title to a lease. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17359, May 16, 1988; 53 FR 31867, Aug. 22, 1988] § 3135.1-2 Requirements for filing of transfers.(a)(1) All instruments of transfer of lease or of an interest therein, including operating rights, subleases and assignments of record-title shall be filed in triplicate for approval. Such instruments shall be filed within 90 days from the date of final execution. The instruments of transfer shall include a statement, over the transferee's own signature, with respect to citizenship and qualifications as required of a bidder under §3132.4 of this title and shall contain all of the terms and conditions agreed upon by the parties thereto. Carried working interests, overriding royalty interests or payments out of production or other interest may be created or transferred without approval. (2) An application for approval of any instrument that the regulations require you to file must include the processing fee for assignments and transfers found in the fee schedule in §3000.12 of this chapter. Any document that the regulations in this part do not require you to file, but that you submit for record purposes, must also include the processing fee for assignments and transfers found in the fee schedule in §3000.12 of this chapter for each lease affected. Such documents may be rejected by the authorized officer. (b) An attorney-in-fact, on behalf of the holder of a lease, operating rights or sublease, shall furnish evidence of authority to execute the transfer or application for approval and the statement required by §3132.5(g) of this title. (c) Where a transfer of record title creates separate leases, a bond shall be furnished covering the transferred lands in the amount prescribed in §3134.1 of this title. Where a transfer does not create separate leases, the transferee, if the transfer so provides and the surety consents, may become co-principal on the bond with the transferor. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17359, May 16, 1988; 70 FR 58875, Oct. 7, 2005] § 3135.1-3 Separate filing for transfers.A separate instrument of transfer shall be filed for each lease on a form approved by the Director or an exact reproduction of the front and back of such form. Any earlier editions of the current form are deemed obsolete and are unacceptable for filing. When transfers to the same person, association or corporation, involving more than 1 lease are filed at the same time for approval, 1 request for approval and 1 showing as to the qualifications of the transferee shall be sufficient. [53 FR 17359, May 16, 1988; 53 FR 31959, Aug. 22, 1988] § 3135.1-4 Effect of transfer of a tract.(a) When a transfer is made of all the record title to a portion of the acreage in a lease, the transferred and retained portions are divided into separate and distinct leases. Transfers shall not be made for less than a compact tract of not less than 640 acres nor shall less than a compact tract of not less than 640 acres be retained. (b) Each segregated lease shall continue in full force and effect for the primary term of the original lease and so long thereafter as oil or gas is produced in paying quantities from that segregated portion of the lease area or so long as drilling or well reworking operations, either actual or constructive, as approved by the Secretary, are conducted thereon. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17359, May 16, 1988] § 3135.1-5 Extension of lease.(a) The term of a lease shall be extended beyond its primary term so long as oil or gas is produced from the lease in paying quantities or so long as drilling or reworking operations, actual or constructive, as approved by the Secretary, are conducted thereon. (b) A lease may be maintained in force by directional wells drilled under the leased area from surface locations on adjacent or adjoining lands not covered by the lease. In such circumstances, drilling shall be considered to have commenced on the lease area when drilling is commenced on the adjacent or adjoining lands for the purpose of directional drilling under the leased area through any directional well surfaced on adjacent or adjoining lands. Production, drilling or reworking of any directional well shall be considered production or drilling or reworking operations on the lease area for all purposes of the lease. § 3135.1-6 Consolidation of leases.(a) Leases may be consolidated upon written request of the lessee filed with the State Director Alaska, Bureau of Land Management. The request shall identify each lease involved by serial number and shall explain the factors which justify the consolidation. Include with each request for a consolidation of leases the processing fee found in the fee schedule in §3000.12 of this chapter. (b) All parties holding any undivided interest in any lease involved in the consolidation shall agree to enter into the same lease consolidation. (c) Consolidation of leases not to exceed 60,000 acres may be approved by the State Director, Alaska if it is determined that the consolidation is justified. (d) The effective date, the anniversary date and the primary term of the consolidated lease shall be those of the oldest original lease involved in the consolidation. The term of a consolidated lease shall be extended beyond the primary lease term only so long as oil or gas is produced in paying quantities or approved constructive or actual drilling or reworking operations are conducted thereon. (e) Royalty, rental, special lease stipulations and other terms and conditions of each original lease except the effective date, anniversary date and the primary term shall continue to apply to that lease or any portion thereof regardless of the lease becoming a part of a consolidated lease. [48 FR 413, Jan. 5, 1983, as amended at 70 FR 58875, Oct. 7, 2005] § 3135.2 Under what circumstances will BLM require a suspension of operations and production or approve my request for a suspension of operations and production for my lease?(a) BLM will require a suspension of operations and production or approve your request for a suspension of operations and production for your lease(s) if BLM determines that— (1) It is in the interest of conservation of natural resources; (2) It encourages the greatest ultimate recovery of oil and gas, such as by encouraging the planning and construction of a transportation system to a new area of discovery; or (3) It mitigates reasonably foreseeable and significantly adverse effects on surface resources. (b) BLM will suspend operations and production for your lease if it determines that, despite the exercise of due care and diligence, you can't comply with your lease requirements for reasons beyond your control. (c) If BLM requires a suspension of operations and production or approves your request for a suspension of operations and production, the suspension— (1) Stops the running of your lease term and prevents it from expiring for as long as the suspension is in effect; (2) Relieves you of your obligation to pay rent, royalty, or minimum royalty during the suspension; and (3) Prohibits you from operating on, producing from, or having any other beneficial use of your lease during the suspension. However, you must continue to perform necessary maintenance and safety activities. [67 FR 17886, Apr. 11, 2002] § 3135.3 How do I apply for a suspension of operations and production?(a) You must submit to BLM an application stating the circumstances that are beyond your reasonable control that prevent you from operating or producing your lease(s). (b) Your suspension application must be signed by— (1) All record title holders of the lease; or (2) The operator on behalf of the record title holders of the leases committed to an approved agreement. (c) You must submit your application to BLM before your lease expires. (d) Your application must be for your entire lease. [67 FR 17886, Apr. 11, 2002] § 3135.4 When is a suspension of operations and production effective?A suspension of operations and production is effective— (a) The first day of the month in which you file the application for suspension or BLM requires the suspension; or (b) Any other date BLM specifies in the decision document. [67 FR 17886, Apr. 11, 2002] § 3135.5 When should I stop paying rental or royalty after BLM requires or approves a suspension of operations and production ?You should stop paying rental or royalty on the first day of the month that the suspension is effective. However, if there is any production sold or removed during that month, you must pay royalty on that production. [67 FR 17886, Apr. 11, 2002] § 3135.6 When will my suspension terminate?(a) Your suspension terminates— (1) On the first day of the month in which you begin to operate or produce on your lease with BLM approval; or (2) The date BLM specifies in a written notice to you. (b) You must notify BLM at least 24 hours before you begin operations or production under paragraph (a)(1) of this section. [67 FR 17886, Apr. 11, 2002] § 3135.7 What effect does a suspension of operations and production have on the term of my lease?(a) Primary term. If BLM grants a suspension of operations and production for your lease, the suspension stops the running of the primary term of your lease for the period of the suspension. (b) Extended term. If your lease is in its extended term, a suspension holds your lease in its extended term for the period of the suspension as if it were in production. [67 FR 17886, Apr. 11, 2002] § 3135.8 If BLM requires a suspension or grants my request for a suspension of operations and production for my lease, when must I next pay advance annual rental, royalty, or minimum royalty?(a) You are not required to submit your next rental or minimum royalty payment until the date the suspension terminates. Therefore, if your suspension begins in month 3 of lease year A and ends in month 2 of lease year B, you must submit your rental payment for lease year B when your suspension ends. BLM will send a written notice to the lessee and operator stating that the suspension is terminated and the date your rental payment for lease year B is due to MMS. BLM's notice also will state when you must pay any minimum royalty due for lease year A. Your minimum royalty for lease year B will be due at the end of that year. (b) If you remove or sell any production from the lease during the term of the suspension, you must pay royalty on that production. [67 FR 17886, Apr. 11, 2002] Subpart 3136—Relinquishments, Terminations and Cancellations of Leases§ 3136.1 Relinquishment of leases or parts of leases.A lease may be surrendered in whole or in part by the lessee by filing a written relinquishment, in triplicate, with the Alaska State Office of the Bureau. No filing fee is required. In the case of partial relinquishments, neither the relinquished lands nor the retained lands shall be less than a compact tract of not less than 640 acres. A relinquishment shall take effect on the date it is filed subject to the continued obligation of lessee and the surety to make all payments due, including any accrued rental, royalties and deferred bonuses and to abandon all wells, and condition or remove other facilities on the lands to be relinquished to the satisfaction of the authorized officer. [46 FR 55497, Nov. 9, 1981, as amended at 53 FR 17359, May 16, 1988] § 3136.2 Terminations.Any lease on which there is no well capable of producing oil or gas in paying quantities shall terminate if the lessee fails to pay the annual rental in full on or before the anniversary date of such lease and such failure continues for more than 30 days after the notice of delinquent rental has been delivered by registered or certified mail to the lease owner's record post office address. § 3136.3 Cancellation of leases.(a) Any nonproducing lease may be canceled by the authorized officer whenever the lessee fails to comply with any provisions of the Acts cited in §3130.0–3 of this title, of the regulations issued thereunder or of the lease, if such failure to comply continues for 30-days after a notice thereof has been delivered by registered or certified mail to the lease owner's record post office address. (b) Producing leases or leases known to contain valuable deposits of oil or gas may be canceled only by court order. Subpart 3137—Unitization Agreements—National Petroleum Reserve-AlaskaSource: 67 FR 17886, Apr. 11, 2002, unless otherwise noted. § 3137.5 What terms do I need to know to understand this subpart?As used in this subpart— Actual drilling means operations you conduct that are similar to those that a person seriously looking for oil or gas could be expected to conduct in that particular area, given the existing knowledge of geologic and other pertinent facts about the area to be drilled. The term includes the testing, completing, or equipping of the drill hole (casing, tubing, packers, pumps, etc.) so that it is capable of producing oil or gas. Actual drilling operations do not include preparatory or preliminary work such as grading roads and well sites, or moving equipment onto the lease. Actual production means oil or gas flowing from the wellbore into treatment or sales facilities. Actual reworking operations means reasonably continuous well-bore operations such as fracturing, acidizing, and tubing repair. Committed tract means— (1) A Federal lease where all record title holders and all operating rights owners have agreed to the terms and conditions of a unit agreement, committed their interest to the unit; or (2) A State lease or private parcel of land where all oil and gas lessees and all operating rights owners or the owners of unleased minerals have agreed to the terms and conditions of a unit agreement. Constructive drilling means those activities that are necessary to prepare for actual drilling that occur after BLM approves an application to drill, but before you actually drill the well. These include, but are not limited to, activities such as road and well pad construction, and drilling rig and equipment set-up. Constructive reworking operations means activities that are necessary to prepare for well-bore operations. These may include rig and equipment set-up and pit construction. Continuing development obligations means a program of development or operations you conduct that, after you complete initial obligations defined in a unit agreement— (1) Meets or exceeds the rate of non-unit operations in the vicinity of the unit; and (2) Represents an investment proportionate to the size of the area covered by the unit agreement. Drainage means the migration of hydrocarbons, inert gases (other than helium), or associated resources caused by production from other wells. NPR-A lease means any oil and gas lease within the boundaries of the NPR-A, issued and administered by the United States under the Naval Petroleum Reserves Production Act of 1976, as amended (42 U.S.C. 6501–6508), that authorizes exploration for and removal of oil and gas. Operating rights (working interest) means any interest you hold that allows you to explore for, develop, and produce oil and gas. Participating area means those committed tracts or portions of those committed tracts within the unit area that contain a well meeting the productivity criteria specified in the unit agreement. Primary target means the principal geologic formation that you intend to develop and produce. Producible interval means any pool, deposit, zone, or portion thereof capable of producing oil or gas. Record title means legal ownership of an oil and gas lease recorded in BLM's records. Tract means land that may be included in an NPR-A oil and gas unit agreement and that may or may not be in a Federal lease. Unit agreement means a BLM-approved agreement to cooperate in exploring, developing, operating and sharing in production of all or part of an oil or gas pool, field or like area, including at least one NPR-A lease, without regard to lease boundaries and ownership. Unit area means all tracts committed to a BLM-approved unit. Tracts not committed to the unit, even though they may be within the external unit boundary, are not part of the unit area. Unit operations are all activities associated with exploration, development drilling, and production operations the unit operator(s) conducts on committed tracts. General§ 3137.10 What benefits do I receive for entering into a unit agreement?(a) Each individual tract committed to the unit agreement meets its full performance obligation if one or more tracts in the unit meets the development or production requirements; (b) Production from a well that meets the productivity criteria (see §3137.82 of this subpart) under the unit agreement extends the term of all NPR-A leases committed to the unit agreement as provided in §3137.111 of this subpart; (c) You may drill within the unit without regard to certain lease restrictions, such as lease boundaries within the unit and spacing offsets; and (d) You may consolidate operations and permitting and reporting requirements. Application§ 3137.15 If the Federal lands constitute less than 10 percent of the lands in the proposed unit area, is the unit agreement subject to Federal regulations or approval?If the Federal lands constitute less than 10 percent of the lands in the proposed unit area— (a) You may use a unit agreement approved by the State and/or a native corporation; (b) BLM will authorize commitment of the Federal lands to the unit if it determines that the unit agreement protects the public interest; or (c) As unit operator you may ask BLM to approve and administer the unit. If BLM agrees to approve and administer the unit, you must follow, and BLM will administer, the regulations in this subpart and 43 CFR part 3160. § 3137.20 Is there a standard unit agreement form?There is no standard unit agreement form. BLM will accept any unit agreement format if it protects the public interest and includes the mandatory terms required in §3137.21 of this subpart. § 3137.21 What must I include in an NPR-A unit agreement?(a) Your NPR-A unit agreement must include— (1) A description of the unit area and any geologic and engineering factors upon which you are basing the area; (2) Initial and continuing development obligations (see §§3137.40 and 3137.41 of this subpart); (3) The proposed participating area size and proposed well locations (see §3137.80(b) of this subpart); (4) A provision that acknowledges BLM's authority to set or modify the quantity, rate, and location of development and production; and (5) Any optional terms which are authorized in §3137.50 of this subpart you choose to include in the unit agreement. (b) You must include in the unit agreement any additional terms and conditions that result from consultation with BLM. After your initial application, BLM may request additional supporting documentation. § 3137.22 What are the size and shape requirements for a unit area?(a) The unit area must— (1) Consist of tracts, each of which must be contiguous to at least one other tract in the unit, that are located so that you can perform operations and production in an efficient and logical manner; and (2) Include at least one NPR-A lease. (b) BLM may limit the size and shape of the unit considering the type, amount and rate of the proposed development and production and the location of the oil or gas. § 3137.23 What must I include in my NPR-A unitization application?Your unitization application to BLM must include— (a) The proposed unit agreement; (b) A map showing the proposed unit area; (c) A list of committed tracts including, for each tract, the— (1) Legal land description and acreage; (2) Names of persons holding record title interest; (3) Names of persons owning operating rights; and (4) Name of the unit operator. (d) You must certify— (1) That you invited all owners of oil and gas rights (leased or unleased) and lease interests (record title and operating rights) within the external boundary of the unit area described in the application to join the unit; (2) That there are sufficient tracts committed to the unit agreement to reasonably operate and develop the unit area; (3) The commitment status of all tracts within the area proposed for unitization; and (4) That you accept unit obligations under §3137.60 of this subpart. (e) Evidence of acceptable bonding; (f) A discussion of reasonably foreseeable and significantly adverse effects on the surface resources of NPR-A and how unit operations may reduce impacts compared to individual lease operations; and (g) Other documentation BLM may request. BLM may require additional copies of maps, plats, and other similar exhibits. § 3137.24 Why would BLM reject a unit agreement application?BLM will reject a unit agreement application— (a) That does not address all mandatory terms, including those required under §3137.21(b) of this subpart; (b) If the unit operator— (1) Has an unsatisfactory record of complying with applicable laws, regulations, the terms of any lease or permit, or the requirements of any notice or order; or (2) Is not qualified to operate within NPR-A under applicable laws and regulations; (c) That does not conserve natural resources; (d) That is not in the public interest; (e) That does not comply with any special conditions in effect for any part of the NPR-A that the unit or any lease subject to the unit would affect; or (f) That does not comply with the requirements of this subpart. § 3137.25 How will the parties to the unit know if BLM approves the unit agreement?BLM will notify the unit operator in writing when it approves or disapproves the proposed unit agreement. The unit operator must notify, in writing, all parties to the unit agreement within 30 calendar days after receiving BLM's notice of approval or disapproval. § 3137.26 When is a unit agreement effective?The unit agreement is effective on the date BLM approves it. § 3137.27 What effect do subsequent contracts or obligations have on the unit agreement?No subsequent contract or obligation— (a) Modifies the terms or conditions of the unit agreement; or (b) Relieves the unit operator of any right or obligation under the unit agreement. § 3137.28 What oil and gas resources of committed tracts does the unit agreement include?A unit agreement includes all oil and gas resources of committed tracts unless BLM approves unit agreement terms to the contrary pursuant to §3137.50 of this subpart. Development§ 3137.40 What initial development obligations must I define in a unit agreement?Your unit agreement must define— (a) The number of wells you anticipate will be necessary to assess the reservoir adequately; (b) A primary target for each well; (c) A schedule for starting and completing drilling operations for each well; and (d) The time between starting operations on a well to the start of operations on the next well. § 3137.41 What continuing development obligations must I define in a unit agreement?A unit agreement must obligate the operator to a program of exploration and development (see §3137.71) that, after completion of the initial obligations— (a) Meets or exceeds the rate of non-unit operations in the vicinity of the unit; and (b) Represents an investment proportionate to the size of the area covered by the unit agreement. Optional Terms§ 3137.50 What optional terms may I include in a unit agreement?BLM may approve the following optional terms for a unit agreement if they promote additional development or enhanced production potential— (a) Limiting the unit agreement to certain formations and their intervals; (b) Multiple unit operators (see §3137.51 of this subpart); (c) Allowing modification of the unit agreement terms if less than 100 percent of the parties to the unit agreement (see §3137.52 of this subpart) agree to the modification; or (d) Other terms that BLM determines will promote the greatest economic recovery of oil and gas consistent with applicable law. § 3137.51 Under what conditions does BLM permit multiple unit operators?BLM permits multiple unit operators only if the unit agreement defines— (a) The conditions under which additional unit operators are acceptable; (b) The responsibilities of the different operators, including obtaining BLM approvals, reporting, paying Federal royalties and conducting operations; (c) Which unit operators are obligated to ensure bond coverage for each NPR-A lease in the unit; (d) The consequences if one or more unit operators defaults. For example, if an operator defaults, the unit agreement would list which unit operators would conduct that operator's operations and ensure bonding of those operations; and (e) Which unit operator is responsible for unit obligations not specifically assigned in the unit agreement. § 3137.52 How may I modify the unit agreement?(a) You may modify a unit agreement if— (1) All current parties to the unit agreement agree to the modification; or (2) You meet the requirements of the modification provision in the unit agreement. The modification provision must identify which parties, and what percentage of those parties, must consent to each type of modification. (b) You must submit to BLM an application for modification. The application must include the following— (1) The operator must certify that the necessary parties have agreed to the modification; and (2) If the unit agreement modification alters the current allocation schedule, you must submit to BLM both a— (i) Description of the new allocation methodology; and (ii) New allocation schedule. (c) A modification is not effective unless BLM approves it. After BLM approves the modification, it is effective retroactively to the date you filed a complete application for modification. However, BLM may approve a different effective date if you request it and provide acceptable justification. (d) BLM will reject modifications that do not comply with BLM regulations or applicable law. Unit Agreement Operating Requirements§ 3137.60 As the unit operator, what are my obligations?As the unit operator— (a) You must comply with the terms and conditions of the unit agreement, Federal laws and regulations, lease terms and stipulations, and BLM notices and orders; (b) You must provide to BLM evidence of acceptable bonding. Acceptable bonding means a bond in an amount which is no less than the sum of the individual Federal bonding requirements for each of the NPR-A leases committed to the unit. You may also meet this requirement if you add the unit operator as a principal to lease bonds to reach the required amount; and (c) The bond must be payable to the Secretary of the Interior. § 3137.61 How do I change unit operators?(a) To change unit operators, the new unit operator must submit to BLM— (1) Statements that— (i) It accepts unit obligations; and (ii) The percentage of required interest owners consented to a change of unit operator; and (2) Evidence of acceptable bonding (see §3137.60(b) of this subpart). (b) The effective date of the change in unit operator is the date BLM approves the new unit operator. § 3137.62 What are my liabilities as a former unit operator?You are responsible for all duties and obligations of the unit agreement that accrued while you were unit operator up to the date BLM approves a new unit operator. § 3137.63 What are my liabilities after BLM approves me as the new unit operator?(a) After BLM approves the change in unit operator, you, as the new unit operator, assume full liability, jointly and severally with the record title and operating rights owners, except as otherwise provided in paragraph (c) of this section and to the extent permitted by law, for— (1) Compliance with the terms and conditions of the unit agreement, Federal laws and regulations, lease terms and stipulations, and BLM notices and orders; (2) Plugging unplugged wells and reclaiming unreclaimed facilities that were installed or used before the effective date of the change in unit operator (this liability is joint and several with the former unit operator); and (3) Those liabilities accruing during the time you are unit operator. (b) Your liability includes, but is not limited to— (1) Rental and royalty payments; (2) Protecting the unit from loss due to drainage as provided in §3137.64 of this subpart; (3) Well plugging and abandonment; (4) Surface reclamation; (5) All environmental remediation or restoration required by law, regulations, lease terms, or conditions of approval; and (6) Other requirements related to unit operations. (c) Your liability for royalty and other payments on the unit is limited by section 102(a) of the Federal Oil and Gas Royalty Management Act of 1982, as amended (30 U.S.C. 1712(a)). § 3137.64 As a unit operator, what must I do to prevent or compensate for drainage?You must prevent uncompensated drainage of oil and gas from unit land by wells on land not subject to the unit agreement. Permissible means of satisfying the obligation include— (a) Drilling a protective well if it is economically feasible. For this subpart, economically feasible means producing a sufficient quantity of oil or gas from a protective well in the unit for a reasonable profit above the cost of drilling, completing and operating the protective well; (b) Paying compensatory royalty; (c) Forming other agreements, or modifying existing agreements, that allow the tracts committed to the unit agreement to share in production after the effective date of the new or modified agreement; or (d) BLM may require additional measures to prevent uncompensated drainage. Development Requirements§ 3137.70 What must I do to meet initial development obligations?(a) To meet initial development obligations by the time specified in your unit agreement you must— (1) Drill the required test well(s) to the primary target; (2) Drill at least one well that meets the productivity criteria (see §3137.82 of this subpart); or (3) Establish, to BLM's satisfaction, that further drilling to meet the productivity criteria is unwarranted or impracticable. (b) You must certify to BLM that you met initial development obligations no later than 60 calendar days after meeting the obligations. BLM may require you to supply documentation that supports your certification. § 3137.71 What must I do to meet continuing development obligations?(a) Once you meet initial development obligations, you must perform additional development. Work you did before meeting initial development obligations is not continuing development. Continuing development includes the following operations— (1) Drilling, testing, or completing additional wells to the primary target or other unit formations; (2) Drilling or completing additional wells that establish production of oil and gas; (3) Recompleting wells or other operations that establish new unit production; or (4) Drilling existing wells to a deeper target. (b) No later than 90 calendar days after meeting initial development obligations, submit to BLM a plan that describes how you will meet continuing development obligations. You must submit to BLM updated continuing obligation plans as soon as you determine that, for whatever reason, the plan needs amending. (1) If you have drilled a well that meets the productivity criteria, your plan must describe the activities to fully develop the oil and gas field. (2) If you fulfilled your initial development obligations, but did not establish a well that meets the productivity criteria, your plan must describe the further actual or constructive drilling operations you will conduct. § 3137.72 What if reasons beyond my control prevent me from meeting the initial or a continuing development obligation by the time the unit agreement specifies?(a) If reasons beyond your control prevent you from meeting the initial or a continuing development obligation by the time specified in the unit agreement, you may apply to BLM for an extension of time for meeting those obligations. You must submit the request for an extension of time before the date the obligation is due to be met. In the application- (1) State the obligation for which you are requesting an extension; (2) List the reasons beyond your control that prevent you from performing the obligation; and (3) State when you expect the reasons beyond your control to terminate. (b) BLM will grant an extension of time to meet initial or continuing development obligations if we determine that- (1) The extension encourages the greatest ultimate recovery of oil or gas or it is in the interest of conservation; and (2) The reasons beyond your control prevent you from performing the initial or a continuing development obligation. (c) The extension of time for performing the initial or a continuing development obligation will continue for so long as the conditions giving rise to the extension continue to exist. § 3137.73 What will BLM do after I submit a plan to meet continuing development obligations?Within 30 calendar days after receiving your proposed plan, BLM will notify you in writing that we— (a) Approved your plan; (b) Rejected your plan and explain why. This will include an explanation of how you should correct the plan to come into compliance; or (c) Have not acted on the plan, explaining the reasons and when you can expect a final response. § 3137.74 What must I do after BLM approves my continuing development obligations plan?No later than 90 calendar days after BLM's approval of your plan submitted under 3137.71(b), you must certify to BLM that you started operations to fulfill your continuing development obligations. BLM may require you to— (a) Supply documentation to support your certification; and (b) Submit periodic reports that demonstrate continuing development. § 3137.75 May I perform additional development outside established participating areas to fulfill continuing development obligations?You may perform additional development either within or outside a participating area, depending on the terms of the unit agreement. § 3137.76 What happens if I do not meet a continuing development obligation?(a) After you establish a participating area, if you do not meet a continuing development obligation and BLM has not granted you an extension of time to meet the obligation, the unit contracts. This means that— (1) All areas within the unit that do not have participating areas established are eliminated from the unit. Any eliminated areas are subject to their original lease terms; and (2) Only established participating areas, whether they are actually producing or not, remain in the unit. (b) Units contract effective the first day of the month after the date on which the unit agreement required the continuing development obligations to begin. (c) If you do not meet a continuing development obligation before you establish a participating area, the unit terminates (see §3137.132 of this subpart). Participating Areas§ 3137.80 What are participating areas and how do they relate to the unit agreement?(a) Participating areas are those committed tracts or portions of those committed tracts within the unit area that contain a well meeting the productivity criteria specified in the unit agreement. (b) You must include the proposed participating area size in the unit agreement for planning purposes and to aid in the mitigation of reasonably foreseeable and significantly adverse effects on NPR-A surface resources. The unit agreement must define the proposed participating areas. Your proposed participating area may be limited to separate producible intervals or areas. (c) At the time you meet the productivity criteria discussed in §3137.82 of this subpart, you must delineate those participating areas. § 3137.81 What is the function of a participating area?(a) The function of a participating area is to allocate production to each committed tract within a participating area. For royalty purposes, BLM allocates to each committed tract within the participating area in the same proportion as that tract's surface acreage in the participating area to the total acreage in the participating area. (b) For exploratory and primary recovery operations, BLM will consider gas cycling and pressure maintenance wells when establishing participating area boundaries. (c) For secondary and tertiary recovery operations, BLM will consider all wells that contribute to production when establishing participating area boundaries. § 3137.82 What are productivity criteria?(a) Productivity criteria are characteristics of a unit well that warrant including a defined area surrounding the well in a participating area. The unit agreement must define these criteria for each separate producible interval. You must be able to determine whether you meet the criteria when the well is drilled and you complete well testing, after a reasonable period of time to analyze new data. (b) To meet the productivity criteria, the well must indicate future production potential sufficient to pay for the costs of drilling, completing, and operating the well on a unit basis. (c) BLM will consider wells that contribute to unit production (e.g., pressure maintenance, gas cycling) when setting the participating area boundaries as provided in §3137.81(b) and (c) of this subpart. § 3137.83 What establishes a participating area?The first well you drill meeting the productivity criteria after the unit agreement is formed establishes an initial participating area. When you establish an initial participating area, lands that contain previously existing wells in the unit meeting the productivity criteria (see §3137.82 of this subpart), will— (a) Be added to that initial participating area as a revision, if the well is completed in the same producible interval; or (b) Become a separate participating area, if the well is completed in a different producible interval (see also §3137.88 of this subpart for wells that do not meet the productivity criteria). § 3137.84 What must I submit to BLM to establish a new participating area, or modify an existing participating area?To establish a new participating area or modify an existing participating area, you must submit to BLM a— (a) Statement that— (1) The well meets the productivity criteria (see §3137.82 of this subpart), necessary to establish a new participating area. You must submit information supporting your statement; or (2) Explains the reasons for modifying an existing participating area. You must submit information supporting your explanation; (b) Map showing the new or revised participating area and acreage; and (c) Schedule that establishes the production allocation for each NPR-A lease or tract, and each record title holder and operating rights owner in the participating area. You must submit a separate allocation schedule for each participating area. § 3137.85 What is the effective date of a participating area?(a) The effective date of an initial participating area is the first day of the month in which you complete a well meeting the productivity criteria, but no earlier than the effective date of the unit. (b) The effective date of a modified participating area is the earlier of the first day of the month in which you— (1) Complete a new well meeting the productivity criteria; or (2) Should have known you needed to revise the allocation schedule. § 3137.86 What happens to a participating area when I obtain new information demonstrating that the participating area should be larger or smaller than previously determined?(a) If you obtain new information demonstrating that the participating area should be larger than BLM previously determined, within 60 calendar days of obtaining the information, you must— (1) File a statement, map and revised production allocation schedule under §3137.84 of this subpart requesting addition to the participating area of all committed tracts or portions of committed tracts in the unit area that meet the productivity criteria; (2) If the proposed expanded participating area is outside the existing unit boundaries, invite all owners of oil and gas rights (leased or unleased) and lease interests (record title and operating rights) in such additional land to join the unit. If the owners of oil and gas rights in any tract of such land join the unit, you must submit to BLM— (i) An application to enlarge the unit to include the expanded area; (ii) A map showing the expanded area of the unit and the information with respect to each additional committed tract you proposed to add to the unit specified in §3137.23(c) of this subpart; and (iii) A revised allocation schedule; and (3) If any additional committed tract or tracts are added to the unit under paragraph (a)(2) of this section, you must file a statement, map and revised production allocation schedule under §3137.84 of this subpart requesting addition to the participating area of all such committed tracts or portions of such committed tracts in the unit area meeting the productivity criteria. (b) If you obtain information demonstrating that the participating area should be smaller than previously determined, within 60 calendar days of obtaining the information, you must file a statement, map and revised production allocation schedule under §3137.84 of this subpart requesting removal from the participating area of all land that does not meet the productivity criteria. § 3137.87 What must I do if there are unleased Federal tracts in a participating area?If there are unleased Federal tracts in a participating area, you must— (a) Include the unleased Federal tracts in the participating area, even though BLM will not share in unit costs; (b) Allocate production for royalty purposes as if the unleased Federal tracts were leased and committed to the unit agreement under §3137.100 of this subpart; (c) Admit Federal tracts leased after the effective date of the unit agreement into the unit agreement on the date the lease is effective; and (d) Submit to BLM revised maps, a list of committed leases, and allocation schedules that reflect the commitment of the newly leased Federal tracts to the unit. § 3137.88 What happens when a well outside a participating area does not meet the productivity criteria?If a well outside any of the established participating area(s) does not meet the productivity criteria, all operations on that well are non-unit operations and we will not revise the participating area. You must notify BLM within 60 calendar days after you determine a well does not meet the productivity criteria. You must conduct non-unit operations under the terms of the underlying lease or other federally-approved cooperative oil and gas agreements. § 3137.89 How does production allocation occur from wells that do not meet the productivity criteria?(a) If a well that does not meet the productivity criteria was drilled before the unit was formed, the production is allocated on a lease or other federally-approved oil and gas agreement basis. You must pay and report the royalties from any such well either as specified in the underlying lease or other federally-approved oil and gas agreements. (b) If you drilled a well after the unit was formed and the well is completed within an existing participating area, the production becomes a part of that participating area production even if it does not meet the productivity criteria. BLM may require the participating area to be revised under §3137.84 of this subpart. (c) If a well not meeting the productivity criteria is outside a participating area, the production is allocated as provided in paragraph (a) of this section. § 3137.90 Who must operate wells that do not meet the productivity criteria?(a) If a well not meeting the productivity criteria was drilled before the unit was formed and is not included in the participating area, the operator of the well at the time the unit was formed may continue as operator. (b) As unit operator, you must continue to operate wells drilled after unit formation not meeting the productivity criteria unless BLM approves a change in the designation of operator for those wells. § 3137.91 When will BLM allow a well previously determined to be a non-unit well to be used in establishing or modifying a PA?If you, as the unit operator, complete sufficient work so that a well BLM previously determined to be a non-unit well now meets the productivity criteria, you must demonstrate this to BLM within 60 calendar days after you determine that the well meets the productivity criteria. You must then modify an existing participating area or establish a new participating area (see §3137.84 of this subpart). § 3137.92 When does a participating area terminate?(a) After contraction under §3137.76 of this subpart, a participating area terminates 60 calendar days after BLM notifies you that there is insufficient production to meet the operating costs of that production, unless you show that within 60 calendar days after BLM's notification— (1) Your operations to restore or establish new production are in progress; and (2) You are diligently pursuing oil or gas production. (b) If you demonstrate to BLM that reasons beyond your control prevent you, despite reasonable diligence, from meeting the requirements in paragraphs (a)(1) and (a)(2) of this section within 60 calendar days after BLM notifies you that there is insufficient production to meet the operating costs of that production, BLM will extend the period of time to start those operations. Production Allocation§ 3137.100 How must I allocate production to the United States when a participating area includes unleased Federal lands?(a) When a participating area includes unleased Federal lands, you must allocate production as if the unleased Federal lands were leased and committed to the unit agreement (see §§3137.80 and 3137.81 of this subpart). The obligation to pay royalty for production attributable to unleased Federal lands accrues from the later of the date the— (1) Committed leases in the participating area that includes unleased Federal lands receive a production allocation; or (2) Previously leased tracts within the participating area become unleased. (b) The royalty rate applicable to production allocated to unleased Federal lands is the greater of 12 1/2 percent or the highest royalty rate for any lease committed to the unit. (c) The value of the production must be determined under the Minerals Management Service's oil and gas product value regulations at 30 CFR part 206. Obligations and Extensions§ 3137.110 Do the terms and conditions of a unit agreement modify Federal lease stipulations?A unit agreement does not modify Federal lease stipulations. § 3137.111 When will BLM extend the primary term of all leases committed to a unit agreement?(a) If the unit operator requests it, BLM will extend the primary term of all NPR-A leases committed to a unit agreement if, from anywhere in the unit area, there is— (1) Actual production from a well that meets the productivity criteria; (2) Actual or constructive drilling operations; or (3) Actual or constructive reworking operations. (b) BLM will extend all NPR-A leases committed to the unit, as provided in the following table, for the following types of operations from any lease committed to the unit— |
------------------------------------------------------------------------
Additional
Type of operations Length of extension extension
------------------------------------------------------------------------
(1) Actual production.......... As long as there is Does not apply.
production from a
well in the unit
that meets the
productivity
criteria.
(2) Actual or constructive Up to three years Up to three more
drilling operations. for an initial years if you
extension. demonstrate
reasonable
diligence and
reasonable
monetary
expenditures in
carrying out the
approved drilling
or reworking
operations during
the initial
extension.
(3) Actual or constructive Up to three years Up to three more
reworking operations. for an initial years if you
extension. demonstrate
reasonable
diligence and
reasonable
monetary
expenditures in
carrying out the
approved drilling
or reworking
operations during
the initial
extension.
------------------------------------------------------------------------
PART 3120—COMPETITIVE LEASES
Section Contents
Subpart 3120—Competitive Leases
§ 3120.1 General.
§ 3120.1-1 Lands
available for competitive
leasing.
§ 3120.1-2 Requirements.
§ 3120.1-3 Protests
and appeals.
§ 3120.2 Lease
terms.
§ 3120.2-1 Duration
of lease.
§ 3120.2-2 Dating
of leases.
§ 3120.2-3 Lease
size.
§ 3120.3 Nomination
process.
§ 3120.3-1 General.
§ 3120.3-2 Filing
of a nomination for competitive leasing.
§ 3120.3-3 Minimum
bid and rental remittance.
§ 3120.3-4 Withdrawal
of a nomination.
§ 3120.3-5 Parcels
receiving nominations.
§ 3120.3-6 Parcels
not receiving nominations.
§ 3120.3-7 Refund.
§ 3120.4 Notice
of competitive lease sale.
§ 3120.4-1 General.
§ 3120.4-2 Posting
of notice.
§ 3120.5 Competitive
sale.
§ 3120.5-1 Oral
auction.
§ 3120.5-2 Payments
required.
§ 3120.5-3 Award
of lease.
§ 3120.6 Parcels
not bid on at auction.
§ 3120.7 Future
interest.
§ 3120.7-1 Nomination
to make lands available for competitive lease.
§ 3120.7-2 Future
interest terms and conditions.
§ 3120.7-3 Compensatory
royalty agreements.
Authority: 16 U.S.C. 3101 et seq.; 30 U.S.C. 181 et seq. and 351–359; 40 U.S.C. 471 et seq.; 43 U.S.C. 1701 et seq.; and the Attorney General's Opinion of April 2, 1941 (40 Op. Atty. Gen. 41).
Source: 53 FR 22843, June 17, 1988, unless otherwise noted.
Subpart 3120—Competitive Leases
§ 3120.1 General.
§ 3120.1-1 Lands available for competitive leasing.
All lands available for leasing shall be offered for competitive bidding under this subpart, including but not limited to:
(a) Lands in oil and gas leases that have terminated, expired, been cancelled or relinquished.
(b) Lands for which authority to lease has been delegated from the General Services Administration.
(c) If, in proceeding to cancel a lease, interest in a lease, option to acquire a lease or an interest therein, acquired in violation of any of the provisions of the act, an underlying lease, interest or option in the lease is cancelled or forfeited to the United States and there are valid interests therein that are not subject to cancellation, forfeiture, or compulsory disposition, such underlying lease, interest, or option shall be sold to the highest responsible qualified bidder by competitive bidding under this subpart, subject to all outstanding valid interests therein and valid options pertaining thereto. If less than the whole interest in the lease, interest, or option is cancelled or forfeited, such partial interest shall likewise be sold by competitive bidding. If no satisfactory bid is obtained as a result of the competitive offering of such whole or partial interests, such interests may be sold in accordance with section 27 of the Act by such other methods as the authorized officer deems appropriate, but on terms no less favorable to the United States than those of the best competitive bid received. Interest in outstanding leases(s) so sold shall be subject to the terms and conditions of the existing lease(s).
(d) Lands which are otherwise unavailable for leasing but which are subject to drainage (protective leasing).
(e) Lands included in any expression of interest or noncompetitive offer, except offers properly filed within the 2-year period provided under §3110.1(b) of this title, submitted to the authorized officer.
(f) Lands selected by the authorized officer.
§ 3120.1-2 Requirements.
(a) Each proper BLM Sate office shall hold sales at least quarterly if lands are available for competitive leasing.
(b) Lease sales shall be conducted by a competitive oral bidding process.
(c) The national minimum acceptable bid shall be $2 per acre or fraction thereof payable on the gross acreage, and shall not be prorated for any lands in which the United States owns a fractional interest.
§ 3120.1-3 Protests and appeals.
No action pursuant to the regulations in this subpart shall be suspended under §4.21(a) of this title due to an appeal from a decision by the authorized officer to hold a lease sale. The authorized officer may suspend the offering of a specific parcel while considering a protest or appeal against its inclusion in a Notice of Competitive Lease Sale.
Only the Assistant Secretary for Land and Minerals Management may suspend a lease sale for good and just cause after reviewing the reason(s) for an appeal.
§ 3120.2 Lease terms.
§ 3120.2-1 Duration of lease.
Competitive leases shall be issued for a primary term of 10 years.
[58 FR 40754, July 30, 1993]
§ 3120.2-2 Dating of leases.
All competitive leases shall be considered issued when signed by the authorized officer. Competitive leases, except future interest leases issued under §3120.7 of this title, shall be effective as of the first day of the month following the date the leases are signed on behalf of the United States. A lease may be made effective on the first day of the month within which it is issued if a written request is made prior to the date of signature of the authorized officer. Leases for future interest shall be effective as of the date the mineral interests vest in the United States.
§ 3120.2-3 Lease size.
Lands shall be offered in leasing units of not more than 2,560 acres outside Alaska, or 5,760 acres within Alaska, which shall be as nearly compact in form as possible.
§ 3120.3 Nomination process.
The Director may elect to implement the provisions contained in §§3120.3–1 through 3120.3–7 of this title after review of any comments received during a period of not less than 30 days following publication in the Federal Register of notice that implementation of those sections is being considered.
§ 3120.3-1 General.
The Director may elect to accept nominations requiring submission of the national minimum acceptable bid, as set forth in this section, as part of the competitive process required by the act, or elect to accept informal expressions of interest. A List of Lands Available for Competitive Nominations may be posted in accordance with §3120.4 of this title, and nominations in response to this list shall be made in accordance with instructions contained therein and on a form approved by the Director. Those parcels receiving nominations shall be included in a Notice of Competitive Lease Sale, unless the parcel is withdrawn by the Bureau.
§ 3120.3-2 Filing of a nomination for competitive leasing.
Nominations filed in response to a List of Lands Available for Competitive Nominations and on a form approved by the Director shall:
(a) Include the nominator's name and personal or business address. The name of only one citizen, association or partnership, corporation or municipality shall appear as the nominator. All communications relating to leasing shall be sent to that name and address, which shall constitute the nominator's name and address of record:
(b) Be completed, signed in ink and filed in accordance with the instructions printed on the form and the regulations in this subpart. Execution of the nomination form shall constitute a legally binding offer to lease by the nominator, including all terms and conditions;
(c) Be filed within the filing period and in the BLM office specified in the List of Lands Available for Competitive Nominations. A nomination shall be unacceptable and shall be returned with all moneys refunded if it has not been completed and timely filed in accordance with the instructions on the form or with the other requirements in this subpart; and
(d) Be accompanied by a remittance sufficient to cover the national minimum acceptable bid, the first year's rental per acre or fraction thereof, and the administrative fee as set forth in §3120.5–2(b) of this title for each parcel nominated on the form.
[53 FR 22843, June 17, 1988; 53 FR 31958, Aug. 22, 1988]
§ 3120.3-3 Minimum bid and rental remittance.
Nominations filed in response to a List of Lands Available for Competitive Nominations shall be accompanied by a single remittance. Failure to submit either a separate remittance with each form or an amount sufficient to cover all the parcels nominated on each form shall cause the entire filing to be deemed unacceptable with all moneys refunded.
§ 3120.3-4 Withdrawal of a nomination.
A nomination shall not be withdrawn, except by the Bureau for cause, in which case all moneys shall be refunded.
§ 3120.3-5 Parcels receiving nominations.
Parcels which receive nominations shall be included in a Notice of Competitive Lease Sale. The Notice shall indicate which parcels received multiple nominations in response to a List of Lands Available for Competitive Nominations, or parcels which have been withdrawn by the Bureau.
§ 3120.3-6 Parcels not receiving nominations.
Lands included in the List of Lands Available for Competitive Nominations which are not included in the Notice of Competitive Lease Sale because they were not nominated, unless they were withdrawn by the Bureau, shall be available for a 2-year period, for noncompetitive leasing as specified in the List.
§ 3120.3-7 Refund.
The minimum bid, first year's rental and administrative fee shall be refunded to all nominators who are unsuccessful at the oral auction.
§ 3120.4 Notice of competitive lease sale.
§ 3120.4-1 General.
(a) The lands available for competitive lease sale under this subpart shall be described in a Notice of Competitive Lease Sale.
(b) The time, date, and place of the competitive lease sale shall be stated in the Notice.
(c) The notice shall include an identification of, and a copy of, stipulations applicable to each parcel.
§ 3120.4-2 Posting of notice.
At least 45 days prior to conducting a competitive auction, lands to be offered for competitive lease sale, as included in a List of Lands Available for Competitive Nominations or in a Notice of Competitive Lease Sale, shall be posted in the proper BLM office having jurisdiction over the lands as specified in §1821.2–1(d) of this title, and shall be made available for posting to surface managing agencies having jurisdiction over any of the included lands.
§ 3120.5 Competitive sale.
§ 3120.5-1 Oral auction.
(a) Parcels shall be offered by oral bidding. The existence of a nomination accompanied by the national minimum acceptable bid shall be announced at the auction for the parcel.
(b) A winning bid shall be the highest oral bid by a qualified bidder, equal to or exceeding the national minimum acceptable bid. The decision of the auctioneer shall be final.
(c) Two or more nominations on the same parcel when the bids are equal to the national minimum acceptable bid, with no higher oral bid being made, shall be returned with all moneys refunded. If the Bureau reoffers the parcel, it shall be reoffered only competitively under this subpart with any noncompetitive offer filed under §3110.1(a) of this title retaining priority, provided no bid is received at an oral auction.
§ 3120.5-2 Payments required.
(a) Payments shall be made in accordance with §3103.1–1 of this title.
(b) Each winning bidder shall submit, by the close of official business hours, or such other time as may be specified by the authorized officer, on the day of the sale for the parcel:
(1) The minimum bonus bid of $2 per acre or fraction thereof;
(2) The total amount of the first year's rental; and
(3) The processing fee for competitive lease applications found in the fee schedule in §3000.12 of this chapter for each parcel.
(c) The winning bidder shall submit the balance of the bonus bid to the proper BLM office within 10 working days after the last day of the oral auction.
[53 FR 22843, June 17, 1988, as amended at 70 FR 58875, Oct. 7, 2005]
§ 3120.5-3 Award of lease.
(a) A bid shall not be withdrawn and shall constitute a legally binding commitment to execute the lease bid form and accept a lease, including the obligation to pay the bonus bid, first year's rental, and administrative fee. Execution by the high bidder of a competitive lease bid form approved by the Director constitutes certification of compliance with subpart 3102 of this title, shall constitute a binding lease offer, including all terms and conditions applicable thereto, and shall be required when payment is made in accordance with §3120.5–2(b) of this title. Failure to comply with §3120.5–2(c) of this title shall result in rejection of the bid and forfeiture of the monies submitted under §3120.5–2(b) of this title.
(b) A lease shall be awarded to the highest responsible qualified bidder. A copy of the lease shall be provided to the lessee after signature by the authorized officer.
(c) If a bid is rejected, the lands shall be reoffered competitively under this subpart with any noncompetitive offer filed under §3110.1(a) of this title retaining priority, provided no bid is received in an oral auction.
(d) Issuance of the lease shall be consistent with §3110.7 (a) and (b) of this title.
§ 3120.6 Parcels not bid on at auction.
Lands offered at the oral auction that receive no bids shall be available for filing for noncompetitive lease for a 2-year period beginning the first business day following the auction at a time specified in the Notice of Competitive Lease Sale.
§ 3120.7 Future interest.
§ 3120.7-1 Nomination to make lands available for competitive lease.
A nomination for a future interest lease shall be filed in accordance with this subpart.
§ 3120.7-2 Future interest terms and conditions.
(a) No rental or royalty shall be due to the United States prior to the vesting of the oil and gas rights in the United States. However, the future interest lessee shall agree that if, he/she is or becomes the holder of any present interest operating rights in the lands:
(1) The future interest lessee transfers all or a part of the lessee's present oil and gas interests, such lessee shall file in the proper BLM office an assignment or transfer, in accordance with subpart 3106 of this title, of the future interest lease of the same type and proportion as the transfer of the present interest, and
(2) The future interest lessee's present lease interests are relinquished, cancelled, terminated, or expired, the future interest lease rights with the United States also shall cease and terminate to the same extent.
(b) Upon vesting of the oil and gas rights in the United States, the future interest lease rental and royalty shall be as for any competitive lease issued under this subpart, as provided in subpart 3103 of this title, and the acreage shall be chargeable in accordance with §3101.2 of this title.
§ 3120.7-3 Compensatory royalty agreements.
The terms and conditions of compensatory royalty agreements involving acquired lands in which the United States owns a future or fractional interest shall be established on an individual case basis. Such agreements shall be required when leasing is not possible in situations where the interest of the United States in the oil and gas deposit includes both a present and a future fractional interest in the same tract containing a producing well.
[53 FR 22843, June 17, 1988]
Title 43: Public Lands: Interior PART 3200—GEOTHERMAL RESOURCE LEASING
Section Contents Subpart 3200—Geothermal Resource Leasing
Subpart 3202—Lessee Qualifications
Subpart 3203—Obtaining a Lease
Subpart 3204—Noncompetitive Leasing
Subpart 3205—Competitive Leasing
Subpart 3207—Additional Lease Term
Subpart 3208—Extending the Primary Lease Term
Subpart 3209—Conversion of Lease Producing Byproducts
Subpart 3210—Additional Lease Information
Subpart 3211—Fees, Rent, and Royalties
Subpart 3212—Lease Suspensions and Royalty Rate Reductions
Subpart 3213—Relinquishment, Termination, Cancellation, and Expiration
Subpart 3214—Personal and Surety Bonds
Subpart 3215—Bond Collection After Default
Subpart 3217—Cooperative Conservation Provisions
Subpart 3250—Exploration Operations—General
Subpart 3251—Exploration Operations: Getting a Permit
Subpart 3252—Conducting Exploration Operations
Subpart 3253—Reports: Exploration Operations
Subpart 3254—Inspection, Enforcement, and Noncompliance for Exploration Operations
Subpart 3255—Confidential, Proprietary Information
Subpart 3256—Exploration Operations Relief and Appeals
Subpart 3260—Geothermal Drilling Operations—General
Subpart 3261—Drilling Operations: Getting a Permit
Subpart 3262—Conducting Drilling Operations
Subpart 3264—Reports—Drilling Operations
Subpart 3265—Inspection, Enforcement, and Noncompliance for Drilling Operations
Subpart 3266—Confidential, Proprietary Information
Subpart 3267—Geothermal Drilling Operations Relief and Appeals
Subpart 3270—Utilization of Geothermal Resources—General
Subpart 3271—Utilization Operations: Getting a Permit
Subpart 3272—What is in a Utilization Plan and Facility Construction Permit?
Subpart 3273—How to Apply for a Site License
Subpart 3274—Applying for and Obtaining a Commercial Use Permit
Subpart 3275—Conducting Utilization Operations
Subpart 3276—Reports: Utilization Operations
Subpart 3277—Inspections, Enforcement, and Noncompliance
Subpart 3278—Confidential, Proprietary Information
Subpart 3279—Utilization Relief and Appeals
Authority: 30 U.S.C. 1001–1028; and 43 U.S.C. 1701 et seq. Source: 63 FR 52364, Sept. 30, 1998, unless otherwise noted. Subpart 3200—Geothermal Resource Leasing§ 3200.1 Definitions.Acquired lands means lands or mineral estates that the United States obtained by deed through purchase, gift, condemnation or other legal process. Act means the Geothermal Steam Act of 1970, as amended (30 U.S.C. 1001 et seq.). Additional term means the period of years beyond the primary and any extended term of a producing lease granted when geothermal resources are produced or utilized in commercial quantities within the primary term or extended term. The additional term may not exceed 40 years beyond the end of the primary term, even if BLM grants later extensions. Byproducts are minerals (exclusive of oil, hydrocarbon gas, and helium) which are found in solution or in association with geothermal steam, and which no person would extract and produce by themselves because they are worth less than 75 percent of the value of the geothermal steam or because extraction and production would be too difficult. Casual use means activities that ordinarily lead to no significant disturbance of Federal lands, resources, or improvements. Commercial operation means delivering Federal geothermal resources, or electricity or other benefits derived from those resources, for sale. This term also includes delivering resources to the utilization point, if you are utilizing Federal geothermal resources for your own benefit and not selling energy to another entity. Commercial quantities means either: (1) For production from a lease, a sufficient volume (in terms of flow and temperature) of the resource to provide a reasonable return after you meet all costs of production; or (2) For production from a unit, a sufficient volume of the resource to provide a reasonable return after you meet all costs of drilling and production. Commercial Use Permit means BLM authorization for commercially operating a utilization facility and/or utilizing Federal geothermal resources. Cooperative agreement means an agreement to produce and utilize separately-owned interests in the geothermal resources together as a whole, where the individual interests cannot be independently operated. Development contract means a BLM-approved agreement between one or more lessees and one or more entities which makes resource exploration more efficient and protects the public interest. Exploration operations means any activity relating to the search for evidence of geothermal resources, where you are physically present on the land and your activities may cause damage to those lands. Exploration operations include, but are not limited to, geophysical operations, drilling temperature gradient wells, drilling holes used for explosive charges for seismic exploration, core drilling or any other drilling method, provided the well is not used for geothermal resource production. It also includes related construction of roads and trails, and cross-country transit by vehicles over public land. Exploration operations do not include the direct testing of geothermal resources or the production or utilization of geothermal resources. Extended term means an initial, and any successive, 5-year period beyond the primary term of a lease during which BLM will grant the lessee the right to continue activities under the existing lease. Facility Construction Permit means BLM permission to build and test a utilization facility. Facility operator means the person receiving BLM authorization to site, construct, test and/or operate a utilization facility. A facility operator may be a lessee, a unit operator, or a third party. Geothermal Drilling Permit means BLM permission to drill for and test Federal geothermal resources. Geothermal Exploration Permit means BLM permission to conduct only geothermal exploration operations and associated surface disturbance activities. Geothermal Resources Operational Order means a formal, numbered order, issued by BLM that implements or enforces the regulations in this part. Geothermal steam and associated geothermal resources are products of geothermal steam or hot water and hot brines, including those resulting from water, gas, or other fluids artificially introduced into geothermal formations; heat or other associated energy found in geothermal formations; and associated byproducts. Interest means ownership in a lease of all or a portion of the record title or operating rights. Known geothermal resource area (KGRA) means an area where BLM determines that persons knowledgeable in geothermal development would spend money to develop geothermal resources. Lessee means a person holding record title interest in a geothermal lease issued by the BLM. MMS means the Minerals Management Service of the Department of the Interior. Notice to Lessees (NTL) means a written notice issued by BLM that implements the regulations in this part or geothermal resource operational orders, and provides more specific instructions on geothermal issues within a state, district or resource area. Notices to Lessees may be obtained by contacting the BLM state office which issued the NTL. Operating rights (working interest) means any interest held in a lease with the right to explore for, develop, and produce leased substances. Operating rights owner means a person who holds operating rights in a lease. A lessee is an operating rights owners if he/she did not transfer all of his/her operating rights. An operator may or may not own operating rights. Operations Plan, or plan of operations, means a plan which fully describes the location of proposed drill pad, access roads and other facilities related to the drilling and testing of Federal geothermal resources, and includes measures for environmental and other resources protection and mitigation. Operator means any person who has taken formal responsibility for the operations conducted on the leased lands. Pay instead of produce in commercial quantities means payment in lieu of commercial quantities production, as used in section 6(g)(1)(A) of the Act. Person means an individual, firm, corporation, association, partnership, trust, municipality, consortium or joint venture. Primary term means the first 10 years of a lease, not including any periods of suspension. Produced or utilized in commercial quantities means a well producing geothermal resources in commercial quantities, or the completion of a well capable of producing geothermal resources in commercial quantities when BLM determines the lessee is diligently attempting to utilize the geothermal resources. Public lands means the general public domain lands or minerals, and acquired lands or minerals, that the United States may lease for geothermal resources. Record title means legal ownership of a geothermal lease established in BLM's records. Relinquishment means the lessee's action to voluntarily end the lease in whole or in part. Secretary means the Secretary of the Interior or the Secretary's delegate. Site license means BLM authorization to site a utilization facility on leased Federal lands. Stipulation means additional conditions BLM attaches to a lease or permit. Sublease means the lessee's conveyance of its interests in a lease to an operating rights owner. A sublessee is responsible for complying with all terms, conditions and stipulations of the lease. Subsequent well operations are those operations done to a well after it has been drilled. Examples of subsequent well operations include: cleaning the well out, surveying it, performing well tests, chemical stimulation, running a liner or another casing string, repairing existing casing, or converting the well from a producer to an injector or vice versa. Sundry notice is your written request to perform work not covered by another type of permit, or to change operations in your previously approved permit. Surface management agency means any Federal agency, other than BLM, which is responsible for managing the surface overlying Federally-owned minerals. Temperature gradient well means a well authorized under a geothermal exploration permit drilled in order to obtain information on the change in temperature over the depth of the well. Transfer means any conveyance of an interest in a lease by assignment, sublease or otherwise. Unit agreement means an agreement to explore for, produce and utilize separately owned interests in geothermal resources as a single consolidated unit. A unit agreement defines how costs and benefits will be allocated among the holders of interest in the unit area. Unit area means all tracts committed to an approved unit agreement. Unit operator means the person who has stated in writing to BLM that the interest owners of the committed leases have designated it as operator of the unit area. Unitized substances means geothermal resources recovered from lands committed to a unit agreement. Utilization Plan, or plan of utilization, means a plan which fully describes the utilization facility, including measures for environmental protection and mitigation. Waste means: (1) Physical waste, including refuse; and/or (2) Improper use or unnecessary dissipation of geothermal resources through inefficient drilling, production, transmission, or utilization. § 3200.2 Information collection.(a) The Office of Management and Budget approved the information collection contained in this part under 44 U.S.C. 3501 et seq., and assigned clearance numbers 1004–0034, 1004–0074, 1004–0132 and 1004–0160. BLM will use this information to maintain an orderly program for leasing, development and production of Federal geothermal resources, to evaluate technical feasibility and environmental impacts of geothermal operations on Federal and Indian lands, and to determine whether exploration expenditures meet the requirements for diligence credit under 43 CFR 3210.14. The public must respond to the requests for information in order to obtain a benefit. (b) Public reporting burden for this information is estimated to average 1.6 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimates or any other aspects of this collection of information, including suggestions for reducing the burden, to Administrative Record, Bureau of Land Management, Room 401 LS, 1849 C Street, NW., Washington, DC 20240; and the Paperwork Reduction Project (1004–0160), Office of Management and Budget, Washington, DC 20503. § 3200.3 Changes in agency duties.There are many leases and agreements currently in effect, and which will remain in effect, involving Federal geothermal resources leases that specifically refer to the United States Geological Survey, USGS, Minerals Management Service, MMS, or Conservation Division. These leases and agreements may also specifically refer to various officers such as Supervisor, Conservation Manager, Deputy Conservation Manager, Minerals Manager, and Deputy Minerals Manager. Those references must now be read to mean either the Bureau of Land Management or the Minerals Management Service, as appropriate. In addition, many leases and agreements specifically refer to 30 CFR part 270 or a specific section of that part. Effective December 3, 1982, references in such leases and agreements to 30 CFR part 270 should be read as references to this part 3200, which is the successor regulation to 30 CFR part 270. § 3200.4 What requirements must I comply with when taking any actions or conducting any operations under this part?When you are taking any actions or conducting any operations under this part, you must comply with: (a) The Act and the regulations of this part; (b) Geothermal resource operational orders; (c) Notices to lessees; (d) Lease terms and stipulations; (e) Approved plans and permits; (f) Conditions of approval; (g) Verbal orders from BLM which will be confirmed in writing; (h) Other instructions from BLM; and (i) Any other applicable laws and regulations. § 3200.5 What are my rights of appeal?(a) If you are adversely affected by a BLM decision under this part, you may appeal that decision under parts 4 and 1840 of this title. (b) All BLM decisions or approvals under this part are immediately effective and remain in effect while appeals are pending unless a stay is granted in accordance with 43 CFR 4.21(b). Subpart 3201—Available Lands§ 3201.10 What lands are available for geothermal leasing?(a) BLM may issue leases on: (1) Lands administered by the Department of the Interior, including public, withdrawn and acquired lands; (2) Lands administered by the Department of Agriculture with its concurrence; (3) Lands conveyed by the United States where the geothermal resources were reserved to the United States; and (4) Lands subject to section 24 of the Federal Power Act, as amended (16 U.S.C. 818), with concurrence from the Secretary of Energy. (b) If your activities under your lease or permit might adversely affect a significant thermal feature of a National Park System unit, BLM will include stipulations to protect this thermal feature in your lease or permit. This includes when your lease or permit is issued, extended, renewed or modified. § 3201.11 What lands are not available for geothermal leasing?BLM will not issue leases for: (a) Lands where the Secretary has determined that issuing the lease would cause unnecessary or undue degradation to public lands and resources; (b) Lands contained within a unit of the National Park System, or are otherwise administered by the National Park Service; (c) Lands within a National Recreation Area; (d) Lands where the Secretary determines after notice and comment that geothermal operations, including exploration, development or utilization of lands, are reasonably likely to result in a significant adverse effect on a significant thermal feature within a unit of the National Park System; (e) Fish hatcheries or wildlife management areas administered by the Secretary; (f) Indian trust or restricted lands within or outside the boundaries of Indian reservations; (g) The Island Park Geothermal Area; and (h) Lands where section 43 of the Mineral Leasing Act (30 U.S.C. 226–3) prohibits geothermal leasing, including: (1) Wilderness areas or wilderness study areas administered by BLM or other surface management agencies; (2) Lands designated by Congress as wilderness study areas, except where the statute designating the study area specifically allows leasing to continue; and (3) Lands within areas allocated for wilderness or further planning in Executive Communication 1504, Ninety-Sixth Congress (House Document 96–119), unless such lands are allocated to uses other than wilderness by a land and resource management plan or are released to uses other than wilderness by an act of Congress. Subpart 3202—Lessee Qualifications§ 3202.10 Who may hold a geothermal lease?You may hold a geothermal lease if you are: (a) A United States citizen who is at least 18 years old; (b) An association of United States citizens, including a partnership; (c) A corporation organized under the laws of the United States, any state or the District of Columbia; or (d) A domestic governmental unit. § 3202.11 Must I prove I am qualified to hold a lease when filing an offer to lease?You do not need to submit proof that you are qualified to hold a lease under 43 CFR 3202.10 at the same time you submit an offer to lease, but BLM may ask you for information about your qualifications at any time. If BLM requests additional information, you have 30 days from when you receive the request to submit the information. § 3202.12 Are other persons allowed to act on my behalf to file an offer to lease?Another person may act on your behalf to file an offer to lease. The person acting for you must be qualified to hold a lease under 43 CFR 3202.10, and must do the following: (a) Sign the document; (b) State his or her title; (c) Identify you as the person he or she is acting for; and (d) Provide written proof of his or her qualifications and authority to take such action, if BLM requests it. § 3202.13 What happens if the offeror dies before the lease is issued?If the offeror dies before the lease is issued, BLM will issue the lease to either the administrator or executor of the estate or the heirs. If the heirs are minors, BLM will issue the lease to either a legal guardian or trustee, provided that the legal guardian or trustee is qualified to hold a lease under 43 CFR 3202.10. Subpart 3203—Obtaining a Lease§ 3203.10 How can I obtain a geothermal lease?(a) If the lands are located in a known geothermal resource area (KGRA), BLM leases those lands through a competitive sale. To obtain a lease, follow the procedures for submitting a bid set out in subpart 3205 of this part. BLM will issue a competitive lease to the person who submits the highest qualified bid. (b) If the lands are located outside a KGRA, you may obtain a noncompetitive lease. Follow the procedures in subpart 3204 of this part. BLM issues noncompetitive leases to the first qualified offeror. BLM may issue a lease for a fractional interest if it serves the public interest. § 3203.11 How is a KGRA determined?BLM determines the boundaries of a KGRA based on: (a) Geologic and technical evidence. BLM will designate a KGRA if this evidence would cause a person who understands geothermal resource development to spend money developing the area; (b) Proximity to wells capable of production in commercial quantities. BLM will designate a KGRA if the lands are: (1) Within 5 miles of a well which is capable of producing steam in commercial quantities, or (2) In the same geologic structure as a well capable of producing steam in commercial quantities; and (c) Existence of competitive interest. A competitive interest exists where two or more people apply to lease some or all of the same lands for geothermal resources. BLM will not designate a KGRA based on competitive interest alone; we will also review the other factors discussed in this section to decide whether a KGRA designation is warranted. Subpart 3204—Noncompetitive Leasing§ 3204.10 How do I file a lease offer?Submit two (2) executed copies of Form 3200–24 to BLM. At least one form must have an original signature. We will accept only exact copies of the form on one two-sided page. You must accurately describe the lands covered by your offer on the form or BLM may reject of all or part of your offer. To obtain this form (and other BLM forms), contact the nearest BLM Office. § 3204.11 How do I describe the lands in my lease offer?Describe the lands as follows: (a) For lands surveyed under the public land rectangular survey system, describe the lands by legal subdivision, section, township, and range; (b) For unsurveyed lands, describe the lands by metes and bounds, giving courses and distances, and tie this information to an official corner of the public land surveys, or to a prominent topographic feature; (c) For approved protracted surveys, include an entire section, township, and range. Do not divide protracted sections into aliquot parts; (d) For unsurveyed lands in Louisiana and Alaska that have water boundaries, discuss the description with BLM before submission; and (e) For fractional interest lands, identify the United States mineral ownership by percentage. § 3204.12 What fees must I pay with my lease offer?Submit the processing fee for noncompetitive lease applications found in the fee schedule in §3000.12 of this chapter for each lease offer, and an advance rent in the amount of $1 per acre (or fraction of an acre). BLM will refund the advance rent if we reject the lease offer, or if you withdraw the lease offer before BLM accepts it. If the advance rental payment you send is more than 10 percent below the correct amount, BLM will reject the lease offer. [63 FR 52364, Sept. 30, 1998, as amended at 58875, Oct. 7, 2005] § 3204.13 May I combine acquired and public domain lands on the same lease offer?Yes, you may combine acquired and public domain lands on the same lease offer if you clearly identify both the acquired lands and the public domain lands. § 3204.14 What is the largest and smallest lease I can apply for?Lease offers must cover all lands available for leasing in a section. The smallest lease you can apply for is 640 acres, or all lands available for leasing in the section, whichever is less. You may not apply for a lease which is larger than 2,560 acres, although BLM will make an exception to this requirement when your lease offer includes an irregular subdivision. Leases must not extend outside a 6 square mile area. If your offer does not meet these requirements, we will reject it. § 3204.15 What happens when two or more offerors apply for a noncompetitive lease for the same land?BLM begins processing offers as soon as we receive them. If more than one person makes a lease offer for the same lands, BLM will give priority to the qualified offer which we received first. Once BLM approves a noncompetitive lease offer, we will reject any later offers received for the same land. However, if BLM receives additional offers for the same land while the original offer is still pending, BLM must determine if the overlapping offers warrant converting the land at issue to a KGRA: (a) If BLM determines that the land should be considered a KGRA, then we reject all noncompetitive offers, and offerors must follow the competitive bidding procedures to lease the lands. (b) If BLM determines that KGRA status is not warranted despite the multiple offers, then we will award the lease to the first qualified offeror. § 3204.16 How does BLM determine the first qualified offeror?BLM determines the first qualified offeror based on when we received the offer and whether the offeror is qualified to hold a lease. We will issue a noncompetitive lease to the offeror who is first to file a lease offer that meets all the requirements. § 3204.17 May I withdraw my lease offer?You may withdraw your lease offer in whole or in part before we issue you a lease. If you withdraw only part of your offer, the lands remaining must meet the acreage requirements of 43 CFR 3204.14. If a partial withdrawal causes your lease offer to contain less than the minimum acreage required under 43 CFR 3204.14, we will reject the lease offer. § 3204.18 May I amend my lease offer?You may amend your lease offer before we issue the lease, provided your amended lease offer meets all the lease offer requirements in this subpart. BLM will determine your priority based on the date we receive your amended lease offer, not the date of the original lease offer. Subpart 3205—Competitive Leasing§ 3205.10 How does BLM lease lands competitively?(a) We lease some Federal lands through competitive sales using sealed bids. Those lands which we lease competitively include lands from terminated, expired, or relinquished leases, and lands within a KGRA (see 43 CFR 3203.11). BLM may also use a competitive lease sale if there is public interest. (b) BLM lists these parcels, with any stipulations, in a sale notice. This sale notice will tell you where and when to submit your bids. We will post the sale notice in appropriate BLM offices, and may take other measures such as: (1) Publishing news releases; (2) Notifying interested parties of the lease sale; (3) Publishing the notice in newspapers; or (4) Posting the list on the Internet. § 3205.11 How do I get information about competitive lease terms and conditions?See our notice posted in the BLM office conducting the sale, and otherwise publicized as described in 43 CFR 3205.10. This notice will include the terms and conditions of the lease(s), including the rental and royalty rates, and will also tell you where you may obtain a form on which to submit your bid. § 3205.12 How do I bid for a parcel?(a) Submit your bid during the time period and to the BLM office specified in the sale notice; (b) Submit your bid on Form 3000–2 (or exact copy on one two-sided page); (c) Submit your bid in a separate, sealed envelope for each full parcel; (d) Include in each bid a certified or cashier's check, bank draft, or money order equal to one-fifth of the bid amount, payable to the “Department of the Interior, Bureau of Land Management;” (e) Label each envelope with the parcel number and the statement “Not to be opened before (date posted in the sale notice);” and (f) Be aware that unlawful combination or intimidation of bidders is prohibited by 18 U.S.C. 1860. § 3205.13 What is the minimum acceptable bid?BLM will not accept bids which do not meet or exceed the fair market value, which BLM determines using generally acceptable appraisal methods. BLM determines the fair market value prior to the sale, but does not disclose it to the public. § 3205.14 How does BLM conduct the sale?We will open, announce and record bids on the date, and at the place and time set out in the sale notice. We will not accept or reject any bid at that time. You do not need to attend the sale in order to bid. § 3205.15 To whom does BLM issue the lease?We will issue the lease to the highest bidder who qualifies for a lease. All other bids are rejected. If we determine that the highest bid is too low, we will also reject that bid. BLM reserves the right to reject any and all bids. § 3205.16 How will I know whether my bid is accepted?(a) If BLM accepts your bid, we will send you a notice informing you of our decision within 30 days after the sale. We will also include 3 copies of the lease. When you receive the notice and lease forms, you have 15 days in which to send BLM: (1) Signed lease forms; (2) The remaining four-fifths of the bonus bid; (3) The first year's advance rent; (4) The processing fee for competitive lease applications found in the fee schedule in §3000.12 of this chapter; and (5) Signed stipulations, if applicable. (b) If you do not meet the requirements of this section after we have accepted your bid, BLM will then revoke acceptance of your bid and keep one-fifth of your bonus bid. (c) If BLM rejects your bid, we will send you a notice informing you of our decision. At that time, we will return the one-fifth of the bonus bid that you sent with your bid offer. [63 FR 52364, Sept. 30, 1998, as amended at 58875, Oct. 7, 2005] Subpart 3206—Lease Issuance§ 3206.10 What must I do for BLM to issue my lease?Before BLM issues you a lease, you must: (a) Accept all lease stipulations; (b) Sign a unit joinder or waiver, if applicable; and, (c) Not exceed the maximum limit on acreage holdings (see 43 CFR 3206.12). § 3206.11 What must BLM do before issuing my lease?BLM must: (a) Determine that the land is available; and (b) Determine that your lease development will not significantly impact any significant thermal feature within any of the following units of the National Park System: (1) Mount Rainier National Park; (2) Crater Lake National Park; (3) Yellowstone National Park; (4) John D. Rockefeller, Jr. Memorial Parkway; (5) Bering Land Bridge National Preserve; (6) Gates of the Arctic National Park and Preserve; (7) Katmai National Park; (8) Aniakchak National Monument and Preserve; (9) Wrangell-St. Elias National Park and Preserve; (10) Lake Clark National Park and Preserve; (11) Hot Springs National Park; (12) Big Bend National Park (including that portion of the Rio Grande National Wild Scenic River within the boundaries of Big Bend National Park); (13) Lassen Volcanic National Park; (14) Hawaii Volcanoes National Park; (15) Haleakala National Park; (16) Lake Mead National Recreation Area; and (17) Any other significant thermal features within National Park System Units which the Secretary may add to the list of these features, in accordance with 30 U.S.C. 1026(a)(3). § 3206.12 What is the maximum acreage I may hold?You may not directly or indirectly hold more than 51,200 acres in any one state. This includes any leases you acquire under sections 4(a)–4(f) of the Act. You also may not convert mineral leases, permits, applications for permits, or mining claims acquired under the Act into geothermal leases totaling more than 10,240 acres. § 3206.13 How does BLM compute acreage holdings?BLM will compute acreage holdings as follows: (a) If you own an undivided lease interest, your acreage holdings will include the total lease acreage. (b) If you own stock in a corporation or a beneficial interest in an association which holds a geothermal lease, your acreage holdings will include your proportionate part of the corporation's or association's share of the total lease acreage. This paragraph applies only if you own more than 10 percent of the corporate stock or beneficial interest of the association. (c) If you own a lease interest, you will be charged with the proportionate share of the total lease acreage based on your share of the lease ownership. You will not be charged twice for the same acreage where you own both record title and operating rights for the lease. For example, if you own 50% record title interest in a 640 acre lease and 25% operating rights, you are charged with 320 acres. § 3206.14 How will BLM charge acreage holdings if the United States owns only a fractional interest in the geothermal resources?Where the United States owns only a fractional interest in the geothermal resources of the lands, BLM will only charge you with the part owned by the United States as acreage holdings. For example, if you own 100 percent of record title in a 100 acre lease, and the United States owns 50 percent of the mineral estate, you are charged with 50 acres. § 3206.15 Is there any acreage which is not chargeable?BLM does not count leased acreage included in any approved unit or cooperative agreement or development contract as part of your total acreage holdings. § 3206.16 What will BLM do if my holdings exceed the maximum acreage limits?BLM will notify you in writing if your acreage holdings exceed the limit in 43 CFR 3206.12. You have 90 days from the date you receive the notice to reduce your holdings to within the limit. If you do not comply, BLM will cancel your leases, beginning with the lease most recently issued, until your holdings are within the limit. § 3206.17 What is the primary term of my lease?Leases have a primary term of 10 years. § 3206.18 When will BLM issue my lease?BLM issues your lease the day we sign it. Your lease goes into effect the first day of the next month after the issue date. Subpart 3207—Additional Lease Term§ 3207.10 When may I get an additional lease term beyond the primary term?(a) If you produce or use geothermal resources in commercial quantities during the primary term, your lease will continue in additional term for as long as you produce or use geothermal resources in commercial quantities for up to forty years beyond the primary term. Section 3207.11 explains how to continue your lease beyond the additional term. (b) If, before the primary or extended term ends, you have a well capable of producing geothermal resources in commercial quantities, BLM may continue your lease for up to forty years beyond the primary term. To continue your lease in an additional term, we must determine that you are diligently trying to begin production. We may ask you to describe in writing your efforts to begin production during the lease term, and the efforts you plan for future lease years. You should also describe negotiations for sales contracts, marketing arrangements, and electrical generating and transmission agreements, and any other information you believe shows diligent efforts. § 3207.11 May I renew my lease at the end of its additional term?If BLM does not need the lands for another purpose at the end of the forty-year additional term, and if you are producing geothermal resources in commercial quantities, you will have a preferential right to renew the lease for an additional 40-year period under terms and conditions BLM determines. If your lease is located on lands administered by the Department of Agriculture, they must concur with the use of the surface and any terms and conditions before we may grant your renewal. If another Federal agency manages the surface, we will consult with them before granting your renewal. Subpart 3208—Extending the Primary Lease Term§ 3208.10 When may I extend my lease beyond the primary term?(a) You have four opportunities to extend your lease beyond the primary term: by drilling, diligent efforts, production of byproducts, and unit commitment. (1) For a drilling extension, we will extend your lease for five years if you: (i) Are drilling when the primary term ends; and (ii) Diligently drill to a reasonable target, based on the local geology and type of development you propose. BLM will determine if your target is adequate to extend the lease. (2) For a diligent efforts extension, if you have not produced geothermal resources in commercial quantities before the primary or extended term ends, or before your lease is eliminated from a unit agreement, BLM may still approve up to two successive five-year extensions for your lease. You must have made a good faith effort to produce. To obtain a diligent efforts extension, follow the procedures at 43 CFR 3208.11(a)(2). (3) For a byproducts extension, if your lease is in an additional term, and we determine that it can no longer produce commercial quantities, we may still extend your lease for five years. However, we will only do so if you are producing one or more valuable byproducts in commercial quantities. You should consult 43 CFR 3209.10 if you wish to convert your geothermal lease to a mineral lease for the byproduct. (4) For a unit commitment extension, if your lease is committed to a unit agreement and its term would expire before the unit term would, BLM may extend your lease to match the term of the unit. We will do this if you have diligently pursued unit development while your lease is committed to the unit. (b) During any extension period, if you use or produce geothermal resources in commercial quantities, or if you complete a well capable of producing geothermal resources in commercial quantities on the lease, BLM will place the lease into an additional term. § 3208.11 What must I do to have my lease extended?(a) You must take the following steps: (1) For a drilling extension, notify BLM prior to the end of the primary term of your drilling activities so we may determine that you are diligently drilling beyond the end of the primary term and have met your well completion requirements. (2) For a diligent efforts extension: (i) Send BLM a written extension request at least 60 days before the primary or first extended term ends, or 60 days before your lease is eliminated from a unit agreement; (ii) Include a report showing that you have made a good faith effort to produce or use geothermal resources in commercial quantities given the current economic conditions for marketing geothermal resources; and (iii) Say whether you choose to pay instead of produce in commercial quantities under 43 CFR 3208.13 or to make significant expenditures under 43 CFR 3208.14 during the period of extension. (3) For a byproducts extension, send us a request justifying an extension. (4) For a unit commitment extension, send us a request at least 60 days before your lease ends which shows that you have diligently pursued unit development. (b) Within 30 days after receiving your extension request, BLM will notify you whether we approve. BLM may request additional information from you. § 3208.12 What information must I give BLM to show that I have made bona fide efforts to produce or utilize geothermal resources in commercial quantities?Send us a report which describes: (a) Your efforts to identify and define the geothermal resource on your lease which you are making now or which you made during the primary term of the lease; (b) The results of your efforts to identify and define the geothermal resource; (c) Other actions taken to support your efforts, such as obtaining permits, conducting environmental studies, and meeting permit requirements; (d) Your efforts during the primary term and ongoing efforts to negotiate marketing arrangements, sales contracts, drilling agreements, financing for electrical generation and transmission projects, or other related actions; and, (e) Current economic factors and conditions which affect your efforts to produce or utilize geothermal resources in commercial quantities on your lease. § 3208.13 Will BLM extend my lease if I choose to pay instead of produce in commercial quantities?If you choose to pay instead of produce in commercial quantities under 43 CFR 3208.11(a)(2) and BLM approves the extension, we will modify the lease to require you to make an annual payment. We will specify the amount, which will not be less than $3.00 per acre or fraction of an acre of the lands under lease during an initial extension, or $6.00 per acre or fraction of an acre for a subsequent extension. The actual payment per acre is fixed for the period of the extension. If you request it, we will tell you the rate before you submit your petition for extension. You must make these payments to MMS at the same time you pay the lease rent. BLM may cancel your lease if you do not make these payments. § 3208.14 What will BLM do if I choose to make significant expenditures?(a) If you choose to make significant expenditures under 43 CFR 3208.11(a)(2), and BLM approves the lease extension, we will modify your lease to require you to make annual expenditures of at least $15.00 per acre or fraction of an acre for lands under lease during your first extension. You must make expenditures of $18.00 per acre or fraction of an acre during any subsequent extension. If you spend more than the minimum required in a year, you may apply the excess toward the significant expenditures requirement in subsequent years of the same extension period. (b) To give you credit for your significant expenditures, we must receive your report no later than 60 days after the end of the lease year in which you made the expenditures. Describe your operations by type, location, date(s) conducted, and amount spent on those operations. Include all geologic information obtained from your operations in your report. (c) After we review your report, we will notify you in writing whether you have met the diligent expenditure requirement. We must approve the type of work done and the expenditures claimed in your report before we can credit them toward your diligent exploration requirements. (d) We will cancel your lease if you fail to make the significant expenditures under a modified lease. § 3208.15 What actions may I take which will count as significant expenditures?Significant expenditures only include: (a) Actual drilling operations on the lease; (b) Geochemical or geophysical surveys for exploratory or development wells; (c) Road or generating facility construction on the lease; (d) Architectural or engineering services procured for the design of generating facilities located on the lease; and (e) Environmental studies required by State or Federal law. § 3208.16 During the extension, may I switch my choice to either pay instead of produce in commercial quantities or make significant expenditures?No, you may not make this change during an extension period. If you request a second extension, you may change your election for the second five year period when you submit your request. § 3208.17 If I begin production, do I get a credit for payments made instead of production in commercial quantities or significant expenditures?No, if you begin production, you will not get a credit against royalties for either payments instead of production or significant expenditures made for that year. Subpart 3209—Conversion of Lease Producing Byproducts§ 3209.10 May I convert my geothermal lease to a mineral lease?You may convert your geothermal lease to a mineral lease, effective the first day of the month following the date BLM determines you have met the terms of conversion, if: (a) Your lease is in an extended term; (b) The byproducts you are producing in commercial quantities are leasable under the Mineral Leasing Act (30 U.S.C. 181 et seq.), or under the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351–358); and (c) The lease is primarily valuable for the production of just that mineral. § 3209.11 May I convert my geothermal lease to a mining claim?If the minerals are not leasable but are locatable and would be considered a byproduct if geothermal steam production were to continue, you are entitled to locate these minerals under the mining laws. To acquire these rights, you must complete the mining claim location within 90 days after the geothermal lease terminates. Also, there must have been no intervening location and the lands must be open to entry under the mining laws. § 3209.12 May BLM include additional terms and conditions to my converted lease?If leases converted under either 43 CFR 3209.10 or 3209.11 affect lands withdrawn or acquired to aid some purpose of a Federal department or agency, including the Department of the Interior, BLM may include additional terms and conditions in your lease as prescribed by the appropriate agency. § 3209.13 How do I convert my geothermal lease to a mineral lease or a mining claim?Just send us a request. Subpart 3210—Additional Lease Information§ 3210.10 When does lease segregation occur?(a) Lease segregation occurs when: (1) A portion of a lease is committed to a unit agreement while other portions are not committed; or (2) Only a portion of a lease is located in a participating area and the unit contracts. The portion of the lease outside the participating area would be eliminated from the unit agreement and segregated as of the effective date of the unit contraction. (b) BLM will assign the original lease serial number to the portion within the plan or agreement. We will give the lease portion outside the plan or agreement a new serial number with the same lease terms as the original lease. § 3210.11 Does a lease segregated from an agreement or plan receive any benefits from unitization of the committed portion of the original lease?The new segregated lease stands alone and does not receive any of the benefits provided to the portion committed to the unit. We will not give you an extension for the eliminated portion of the lease based on status of the lands committed to the unit, including production in commercial quantities or the existence of a producible well. § 3210.12 May I consolidate leases?BLM may approve your consolidation of two or more adjacent leases that have the same ownership and same lease terms, including expiration dates, if the combined leases do not exceed 2,560 acres in size. We may consolidate leases that have different stipulations if all other lease terms are the same. You must include the processing fee for lease consolidations found in the fee schedule in §3000.12 of this chapter with your request to consolidate leases. [63 FR 52364, Sept. 30, 1998, as amended at 58875, Oct. 7, 2005] § 3210.13 What is the diligent exploration requirement?(a) During your lease's primary period, you must perform diligent exploration activities to yield new geologic information about the lease or related lands, until either: (1) Your approved expenditures on your lease total at least $40 per acre, or (2) BLM places your lease in an additional term. (b) You must begin diligent exploration by the sixth year of the primary term and continue until there is a well capable of production in commercial quantities. Some examples of activities that would qualify as diligent exploration are geochemical surveys, heat flow measurement, core drilling or drilling of test wells. § 3210.14 How do I meet the diligent exploration requirement?(a) During the first five years of the primary term, you only need to pay your rents. If you make efforts during these first five years that would qualify as diligent exploration expenditures, and we approve them as such during those five years, we will count them toward the requirements of future years. (b) To qualify as diligent exploration expenditures in lease years six through ten, you must make expenditures equal to the minimum amounts listed in the following table. We will apply approved expenditures which exceed the minimum in any one year to subsequent years. |
------------------------------------------------------------------------
Expenditure
Lease year per acre
------------------------------------------------------------------------
6.......................................................... $4
7.......................................................... 6
8.......................................................... 8
9.......................................................... 10
10......................................................... 12
------------------------------------------------------------------------
Fees, Rent, and Royalties
------------------------------------------------------------------------
Competitive
Type leases Noncompetitive leases
------------------------------------------------------------------------
(1) Lease Application As found in the As found in the fee
Processing fee. fee schedule schedule in §
in § 3000.12 of this chapter.
3000.12 of (includes future
this chapter. interest leases)
(2) Lease Rent.............. $2.00 per acre. $1.00 per acre.
(3) Transfer of Record Title As found in the As found in the fee
or Operating Rights. fee schedule schedule in §
in § 3000.12 of this chapter.
3000.12 of
this chapter.
(4) Transfer of Interest to As found in the As found in the fee
Heir or Devisee, Name fee schedule schedule in §
Change, or Notification in § 3000.12 of this chapter.
Corporate Merger. 3000.12 of
this chapter.
(5) Steam, heat, or energy Between 10% and Between 10% and 15%.
royalties. 15.
(6) Demineralized water 5%............. 5%.
royalties.
(7) Byproduct royalties..... 5%............. 5%.
(8) Minimum royalty......... $2.00 per acre. $2.00 per acre.
(9) Additional rent/Instead $3.00 per acre $3.00 per acre in
of diligent exploration. in addition to addition to regular
regular lease lease rent.
rent.
(9) Additional rent/Instead $3.00/year, $3.00/year, first 5 years
of commercial quantities first 5 years. $6.00/year, second 5
production. $6.00/year, years.
second 5 yrs.
------------------------------------------------------------------------
Note the exception stated in 43 CFR 3211.16(b).
----------------------------------------------------------------------------------------------------------------
Specific form Transfer fee (per
Type of form required Form No. Number of copies lease)
----------------------------------------------------------------------------------------------------------------
(a) Record title.................. Yes............... 3000-3 2 executed copies.... As found in the fee
schedule in §
3000.12 of this
chapter.
(b) Operating rights.............. Yes............... 3000-3(a) 2 executed copies.... As found in the fee
schedule in §
3000.12 of this
chapter.
(c) Estate transfers.............. No................ N/A 1 List of Leases..... As found in the fee
schedule in §
3000.12 of this
chapter.
(d) Corporate mergers............. No................ N/A 1 List of Leases..... As found in the fee
schedule in §
3000.12 of this
chapter.
(e) Name changes.................. No................ N/A 1 List of Leases..... As found in the fee
schedule in §
3000.12 of this
chapter.
----------------------------------------------------------------------------------------------------------------
| File Type | application/msword |
| File Title | 43: Public Lands: Interior |
| Author | sbeshir |
| Last Modified By | sbeshir |
| File Modified | 2006-09-29 |
| File Created | 2006-09-28 |
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