[Title 25 CFR I]
[Code of Federal Regulations (annual edition) - April 1, 2004 Edition]
[Title 25 - INDIANS]
[Chapter I - BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR]
[Subchapter I - ENERGY AND MINERALS]
[From the U.S. Government Printing Office]


25INDIANS12004-04-012004-04-01falseENERGY AND MINERALSISUBCHAPTER IINDIANSBUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR
                    SUBCHAPTER I_ENERGY AND MINERALS


PART 200_TERMS AND CONDITIONS: COAL LEASES--Table of Contents




Sec.
200.1-200.10 [Reserved]
200.11 Incorporation of coal lease terms and conditions.
200.12 Contract term incorporation.

    Authority: Pub. L. 95-87 (30 U.S.C. 1201 et seq.), as amended.

    Source: 54 FR 22188, May 22, 1989, unless otherwise noted.



Sec. Sec. 200.1-200.10  [Reserved]



Sec. 200.11  Incorporation of coal lease terms and conditions.

    (a) All leases of coal on Indian lands, as defined in Sec. 216.101 
of this chapter, issued by the Secretary, will include at the time of 
issuance, renewal, renegotiation, or readjustment, as applicable, the 
following provision:

    The Lessee shall comply with all applicable requirements of the 
Surface Mining Control and Reclamation Act of 1977, and all regulations 
promulgated thereunder, including those codified at 30 CFR part 750.

    (b) With respect to leases of coal on Indian lands issued by the 
Secretary after August 3, 1977, the Secretary shall, at the time of 
issuance, renewal, renegotiation, or readjustment, as applicable, 
include and enforce in such leases, terms and conditions related to the 
Surface Mining Control and Reclamation Act of 1977, as requested by the 
lessor Indian tribe in writing.



Sec. 200.12  Contract term incorporation.

    The requirements of 30 CFR part 750 shall be incorporated in all 
existing and new contracts entered into for coal mining on Indian lands.

[59 FR 43419, Aug. 23, 1994]



PART 211_LEASING OF TRIBAL LANDS FOR MINERAL DEVELOPMENT--Table of Contents




                            Subpart A_General

Sec.
211.1 Purpose and scope.
211.2 Information collection.
211.3 Definitions.
211.4 Authority and responsibility of the Bureau of Land Management 
          (BLM).
211.5 Authority and responsibility of the Office of Surface Mining 
          Reclamation and Enforcement (OSM).
211.6 Authority and responsibility of the Minerals Management Service 
          (MMS).
211.7 Environmental studies.
211.8 Government employees cannot acquire leases.
211.9 Existing permits or leases for minerals issued pursuant to 43 CFR 
          chapter II and acquired for Indian tribes.

                     Subpart B_How To Acquire Leases

211.20 Leasing procedures.
211.21 [Reserved]
211.22 Leases for subsurface storage of oil or gas.
211.23 Corporate qualifications and requests for information.
211.24 Bonds.
211.25 Acreage limitation.
211.26 [Reserved]
211.27 Duration of leases.
211.28 Unitization and communitization agreements, and well spacing.
211.29 Exemption of leases and permits made by organized tribes.

          Subpart C_Rents, Royalties, Cancellations and Appeals

211.40 Manner of payments.
211.41 Rentals and production royalty on oil and gas leases.
211.42 Annual rentals and expenditures for development on leases other 
          than oil and gas, and geothermal resources.
211.43 Royalty rates for minerals other than oil and gas.
211.44 Suspension of operations.
211.45 [Reserved]
211.46 Inspection of premises, books and accounts.
211.47 Diligence, drainage and prevention of waste.
211.48 Permission to start operations.
211.49 Restrictions on operations.
211.50 [Reserved]
211.51 Surrender of leases.
211.52 Fees.
211.53 Assignments, overriding royalties, and operating agreements.
211.54 Lease or permit cancellation; Bureau of Indian Affairs notice of 
          noncompliance.
211.55 Penalties.
211.56 Geological and geophysical permits.
211.57 Forms.
211.58 Appeals.


[[Page 555]]


    Authority: Sec. 4, Act of May 11, 1938, (52 Stat. 347): Act of 
August 1, 1956 (70 Stat. 774): 25 U.S.C. 396a-g; and 25 U.S.C. 2 and 9.

    Source: 61 FR 35653, July 8, 1996, unless otherwise noted.



                            Subpart A_General



Sec. 211.1  Purpose and scope.

    (a) The regulations in this part govern leases and permits for the 
development of Indian tribal oil and gas, geothermal, and solid mineral 
resources except as provided under paragraph (e) of this section. These 
regulations are applicable to lands or interests in lands the title to 
which is held in trust by the United States or is subject to a 
restriction against alienation imposed by the United States. These 
regulations are intended to ensure that Indian mineral owners desiring 
to have their resources developed are assured that they will be 
developed in a manner that maximizes their best economic interests and 
minimizes any adverse environmental impacts or cultural impacts 
resulting from such development.
    (b) The regulations in this part shall be subject to amendment at 
any time by the Secretary of the Interior. No regulation that becomes 
effective after the date of approval of any lease or permit shall 
operate to affect the duration of the lease or permit, rate of royalty, 
rental, or acreage unless agreed to by all parties to the lease or 
permit.
    (c) The regulations of the Bureau of Land Management, the Office of 
Surface Mining Reclamation and Enforcement, and the Minerals Management 
Service that are referenced in Sec. Sec. 211.4, 211.5, and 211.6 are 
supplemental to the regulations in this part, and apply to parties 
holding leases or permits for development of Indian mineral resources 
unless specifically stated otherwise in this part or in such other 
Federal regulations.
    (d) Nothing in the regulations in this part is intended to prevent 
Indian tribes from exercising their lawful governmental authority to 
regulate the conduct of persons, businesses, operations or mining within 
their territorial jurisdiction.
    (e) The regulations in this part do not apply to leasing and 
development governed by regulations in 25 CFR parts 213 (Members of the 
Five Civilized Tribes of Oklahoma), 226 (Osage), or 227 (Wind River 
Reservation).



Sec. 211.2  Information collection.

    The information collection requirements contained in this part do 
not require a review by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. 3501; et seq.).



Sec. 211.3  Definitions.

    As used in this part, the following words and phrases have the 
specified meaning except where otherwise indicated:
    Applicant means any person seeking a permit, lease, or an assignment 
from the superintendent or area director.
    Approving official means the Bureau of Indians Affairs official with 
delegated authority to approve a lease or permit.
    Area director means the Bureau of Indian Affairs official in charge 
of an area office.
    Authorized officer means any employee of the Bureau of Land 
Management authorized by law or by lawful delegation of authority to 
perform the duties described in this part and in 43 CFR parts 3160, 
3180, 3260, 3280, 3480 and 3590.
    Cooperative agreement means a binding arrangement between two or 
more parties purporting to the act of agreeing or of coming to a mutual 
arrangement that is accepted by all parties to a transaction (e.g., 
communitization and unitization).
    Director's representative means the Office of Surface Mining 
Reclamation and Enforcement director's representative authorized by law 
or lawful delegation of authority to perform the duties described in 30 
CFR part 750.
    Gas means any fluid, either combustible or non-combustible, that is 
produced in a natural state from the earth and that maintains a gaseous 
or rarefied state at ordinary temperature and pressure conditions.
    Geological and geophysical permit means a written authorization to 
conduct on-site surveys to locate potential deposits of oil and gas, 
geothermal or solid mineral resources on the lands.
    Geothermal resources means:

[[Page 556]]

    (1) All products of geothermal processes, including indigenous 
steam, hot water and hot brines;
    (2) Steam and other gases, hot water, and hot brines, resulting from 
water, gas or other fluids artificially introduced into geothermal 
formations;
    (3) Heat or other associated energy found in geothermal formations; 
and
    (4) Any by-product derived therefrom.
    In the best interest of the Indian mineral owner refers to the 
standards to be applied by the Secretary in considering whether to take 
an administrative action affecting the interests of an Indian mineral 
owner. In considering whether it is ``in the best interest of the Indian 
mineral owner'' to take a certain action (such as approval of a lease, 
permit, unitization or communitization agreement), the Secretary shall 
consider any relevant factor, including, but not limited to: economic 
considerations, such as date of lease expiration; probable financial 
effect on the Indian mineral owner; leasability of land concerned; need 
for change in the terms of the existing lease; marketability; and 
potential environmental, social, and cultural effects.
    Indian lands means any lands owned by any individual Indian or 
Alaska Native, Indian tribe, band, nation, pueblo, community, rancheria, 
colony, or other tribal group which owns land or interests in the land, 
the title to which is held in trust by the United States or is subject 
to a restriction against alienation imposed by the United States.
    Indian mineral owner means an Indian tribe, band, nation, pueblo 
community, rancheria, colony, or other tribal group which owns mineral 
interests in oil and gas, geothermal or solid mineral resources, title 
to which is held in trust by the United States, or is subject to a 
restriction against alienation imposed by the United States.
    Indian surface owner means any individual Indian or Indian tribe 
whose surface estate is held in trust by the United States, or is 
subject to restriction against alienation imposed by the United States.
    Lease means any contract approved by the United States under the Act 
of May 11, 1938 (52 Stat. 347) (25 U.S.C. 396a-396g), as amended, that 
authorizes exploration for, extraction of, or removal of any minerals.
    Lessee means a natural person, proprietorship, partnership, 
corporation, or other entity that has entered into a lease with an 
Indian mineral owner, or who has been assigned an obligation to make 
royalty or other payments required by the lease.
    Lessor means an Indian mineral owner who is a party to a lease.
    Minerals includes both metalliferous and non-metalliferous minerals; 
all hydrocarbons, including oil and gas, coal and lignite of all ranks; 
geothermal resources; and includes but is not limited to, sand, gravel, 
pumice, cinders, granite, building stone, limestone, clay, silt, or any 
other energy or non-energy mineral.
    Minerals Management Service official means any employee of the 
Minerals Management Service (MMS) authorized by law or by lawful 
delegation of authority to perform the duties described in 30 CFR 
chapter II, subchapters A and C.
    Mining means the science, technique, and business of mineral 
development including, but not limited to: opencast work, underground 
work, and in-situ leaching directed to severance and treatment of 
minerals; Provided, when sand, gravel, pumice, cinders, granite, 
building stone, limestone, clay or silt is the subject mineral, an 
enterprise is considered ``mining'' only if the extraction of such a 
mineral exceeds 5,000 cubic yards in any given year.
    Oil means all nongaseous hydrocarbon substances other than those 
substances leasable as coal, oil shale, or gilsonite (including all 
vein-type solid hydrocarbons). Oil includes liquefiable hydrocarbon 
substances such as drip gasoline and other natural condensates recovered 
or recoverable in a liquid state from produced gas without resorting to 
a manufacturing process.
    Permit means any contract issued by the superintendent and/or area 
director to conduct exploration on; or removal of less than 5,000 cubic 
yards per year of common varieties of minerals from Indian lands.
    Permittee means a person holding or required by this part to hold a 
permit to conduct exploration operations on; or remove less than 5,000 
cubic yards

[[Page 557]]

per year of common varieties of minerals from Indian lands.
    Secretary means the Secretary of the Interior or an authorized 
representative.
    Solid minerals means all minerals excluding oil, gas and geothermal 
resources.
    Superintendent means the Bureau of Indian Affairs official in charge 
of the agency office having jurisdiction over the minerals subject to 
leasing under this part.



Sec. 211.4  Authority and responsibility of the Bureau of Land Management 
(BLM).

    The functions of the Bureau of Land Management are found in 43 CFR 
part 3160--Onshore Oil and Gas Operations, 43 CFR part 3180--Onshore Oil 
and Gas Unit Agreements: Unproven Area, 43 CFR part 3260--Geothermal 
Resources Operations, 43 CFR part 3280--Geothermal Resources Unit 
Agreements: Unproven Areas, 43 CFR part 3480--Coal Exploration and 
Mining Operations, and 43 CFR part 3590--Solid Minerals (other than 
coal) Exploration and Mining Operations; and currently include, but are 
not limited to, resource evaluation, approval of drilling permits, 
mining and reclamation, production plans, mineral appraisals, inspection 
and enforcement, and production verification. These regulations, apply 
to leases and permits approved under this part.



Sec. 211.5  Authority and responsibility of the Office of Surface Mining 
Reclamation and Enforcement (OSM).

    The OSM is the regulatory authority for surface coal mining and 
reclamation operations on Indian lands pursuant to the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1201 et seq.). The 
relevant regulations for surface coal mining and reclamation operations 
are found in 30 CFR part 750. Those regulations apply to mining and 
reclamation on leases approved under this part.



Sec. 211.6  Authority and responsibility of the Minerals Management Service 
(MMS).

    The functions of the MMS for reporting, accounting, and auditing are 
found in 30 CFR chapter II, subchapters A and C, which, apply to leases 
approved under this part. To the extent the parties to a lease or permit 
are able to provide reasonable provisions satisfactorily addressing the 
functions governed by MMS regulations, the Secretary may approve 
alternate provisions in a lease or permit.



Sec. 211.7  Environmental studies.

    (a) The Secretary shall ensure that all environmental studies are 
prepared as required by the National Environmental Policy Act of 1969 
(NEPA) and the regulations promulgated by the Council on Environmental 
Quality (CEQ), found in 40 CFR parts 1500 through 1508.
    (b) The Secretary shall ensure that all necessary surveys are 
performed and clearances obtained in accordance with 36 CFR parts 60, 
63, and 800 and with the requirements of the Archaeological and Historic 
Preservation Act (16 U.S.C. 469 et seq.), the National Historic 
Preservation Act (16 U.S.C. 470 et seq.), The American Indian Religious 
Freedom Act (42 U.S.C. 1996), and Executive Order 11593, Protection and 
Enhancement of the Cultural Environment (3 CFR, 1971 through 1975 Comp., 
p. 559). If these surveys indicate that a mineral development will have 
an adverse effect on a property listed on or eligible for listing on the 
National Register of Historic Places, the Secretary shall:
    (1) Seek the comments of the Advisory Council on Historic 
Preservation, in accordance with 36 CFR part 800;
    (2) Ensure that the property is avoided, that the adverse effect is 
mitigated, or;
    (3) Ensure that appropriate excavations or other related research is 
conducted and ensure that complete data describing the historic property 
is preserved.



Sec. 211.8  Government employees cannot acquire leases.

    U.S. Government employees are prevented from acquiring leases or 
interests in leases by the provisions of 25 CFR part 140 and 43 CFR part 
20 pertaining to conflicts of interest and ownership of an interest in 
trust land.

[[Page 558]]



Sec. 211.9  Existing permits or leases for minerals issued pursuant to 
43 CFR chapter II and acquired for Indian tribes.

    (a) Title to the minerals underlying certain Federal lands, which 
were previously subject to general leasing and mining laws, is now held 
in trust by the United States for Indian tribes. Existing mineral 
prospecting permits, exploration and mining leases on these lands, 
issued prior to these lands being placed in trust status or becoming 
Indian lands, pursuant to 43 CFR chapter II (and its predecessor 
regulations), and all actions on the permits and leases shall be 
administered by the Secretary in accordance with the regulations set 
forth in 30 CFR chapters II and VII and 43 CFR chapter II, as 
applicable, provided, that all payment or reports required by a non-
producing lease or permit, issued pursuant to 43 CFR chapter II, shall 
be made to the superintendent having administrative jurisdiction over 
the land involved, instead of the officer of the Bureau of Land 
Management designated in 43 CFR unless specifically stated otherwise in 
the statutes authorizing the United States to hold the land in trust for 
an Indian tribe. Producing lease payments and reports will be submitted 
to the Minerals Management Service in accordance with 30 CFR chapter II, 
subchapters A and C.
    (b) Administrative actions regarding an existing lease or permit 
under this section, may be appealed pursuant to 25 CFR part 2.



                     Subpart B_How to Acquire Leases



Sec. 211.20  Leasing procedures.

    (a) Indian mineral owners may, with the approval of the 
superintendent or area director, lease their land for mining purposes. 
No oil and gas lease shall be approved unless it has first been offered 
for bidding at an advertised lease sale in accordance with this section. 
Leases for minerals other than oil and gas shall be advertised for bids 
as prescribed in this section unless the Secretary grants the Indian 
mineral owners written permission to negotiate for lease. Application 
for leases shall be made to the superintendent having jurisdiction over 
the lands.
    (b) Indian mineral owners may request that the Secretary prepare and 
advertise or negotiate (if the requirements of this section have been 
met) mineral leases on their behalf. If requested by an applicant 
interested in acquiring rights to Indian-owned minerals, the Secretary 
shall promptly notify the Indian mineral owner, and advise the owner in 
writing of the alternatives available, including the right to decline to 
lease. If the Indian mineral owner decides to have the leases 
advertised, the Secretary shall consult with the Indian mineral owner 
concerning the appropriate royalty rate and rental. The Secretary may 
then undertake the responsibility to advertise and lease in accordance 
with the following procedures:
    (1) Leases shall be advertised to receive optimum competition for 
bonus consideration, under sealed bid, oral auction, or a combination of 
both. Notice of such advertisement shall be published in at least one 
local newspaper and in one trade publication at least thirty (30) days 
in advance of sale. If applicable, such notice must identify the 
reservation within which the tracts to be leased are found. No specific 
description of the tracts to be leased need be published. Specific 
description of such tracts shall be available at the office of the 
superintendent and/or area director upon request. The complete text of 
the advertisement, including a specific description, shall be mailed to 
each person listed on the appropriate agency or area mailing list. 
Individuals and companies interested in receiving advertisements of 
lease sales should send their mailing information to the appropriate 
superintendent or area director for future reference.
    (2) The advertisement shall offer the tracts to the responsible 
bidder offering the highest bonus. The Secretary, after consultation 
with the Indian mineral owner, shall establish the rental and royalty 
rates which shall be stated in the advertisement and shall not be 
subject to negotiation. The advertisement shall provide that the 
Secretary reserves the right to reject any or all bids, and that 
acceptance of the lease bid by the Indian mineral owner is required.

[[Page 559]]

    (3) Each sealed bid must be accompanied by a cashier's check, 
certified check or postal money order, or any combination thereof, 
payable to the payee designated in the advertisement, in an amount not 
less than 25 percent of the bonus bid, which shall be returned if that 
bid is not accepted.
    (4) A successful oral auction bidder will be allowed five (5) 
working days to remit the required 25 percent deposit of the bonus bid.
    (5) A successful bidder shall, within thirty (30) days after 
notification of the bid award, remit to the Secretary the balance of the 
bonus, the first year's rental, a $75 filing fee, its prorated share of 
the advertising costs as determined by the Bureau of Indian Affairs, and 
file with the Secretary all required bonds. The successful bidder shall 
also file the lease in completed form at that time. However, for good 
reasons, the Secretary may grant extensions of time in thirty (30) day 
increments for filing of the lease and all required bonds, provided that 
additional extension requests are submitted and approved prior to the 
expiration of the original thirty (30) days or the previously granted 
extension. Failure on the part of the bidder to take all reasonable 
actions necessary to comply with the foregoing shall result in 
forfeiture of the required payment of 25 percent of any bonus bid for 
the use and benefit of the Indian mineral owner.
    (6) If no satisfactory bid is received, or if the accepted bidder 
fails to complete all requirements necessary for the approval of the 
lease, or if the Secretary determines that it is not in the best 
interest of the Indian mineral owner to accept any of the bids the 
Secretary may re-advertise the lease for sale, or, subject to the 
consent of the Indian mineral owner, the lease may be let through 
private negotiations.
    (c) The Secretary shall advise the Indian mineral owner of the 
results of the bidding, and shall not approve the lease until the 
consent of the Indian mineral owner has been obtained.
    (d) The Indian mineral owner may also submit negotiated leases to 
the Secretary for review and approval.



Sec. 211.21  [Reserved]



Sec. 211.22  Leases for subsurface storage of oil or gas.

    (a) The Secretary, with the consent of the Indian mineral owners, 
may approve storage leases, or modifications, amendments, or extensions 
of existing leases, on Indian lands to provide for the subsurface 
storage of oil or gas, irrespective of the lands from which production 
is initially obtained. The storage lease, or modification, amendment, or 
extension to an existing lease, shall provide for the payment of such 
storage fee or rental on such oil or gas as may be determined adequate 
in each case, or, in lieu thereof, for a royalty other than that 
prescribed in the oil and gas lease when such stored oil and gas is 
produced in conjunction with oil or gas not previously produced.
    (b) The Secretary, with consent of the Indian mineral owners, may 
approve a provision in an oil and gas lease under which storage of oil 
and gas is authorized, for continuance of the lease at least for the 
period of such storage use and so long thereafter as oil or gas not 
previously produced is produced in paying quantities.
    (c) Applications for subsurface storage of oil or gas shall be filed 
in triplicate with the authorized officer and shall disclose the 
ownership of the lands involved, the parties in interest, the storage 
fee, rental, or royalty offered to be paid for such storage, and all 
essential information showing the necessity for such project. Enough 
copies of the final agreement signed by the Indian mineral owners and 
other parties in interest shall be submitted for the approval of the 
Secretary to permit retention of five copies by the Department after 
approval.



Sec. 211.23  Corporate qualifications and requests for information.

    (a) The signing in a representative capacity and delivery of bids, 
geological and geophysical permits, mineral leases, or assignments, 
bonds, or other instruments required by the regulations in this part 
constitutes certification that the individual signing (except a surety 
agent) is authorized to act in such capacity. An agent for a

[[Page 560]]

surety shall furnish a power of attorney.
    (b) A corporate applicant proposing to acquire an interest in a 
permit or lease shall have on file with the superintendent or area 
director a statement showing:
    (1) The State(s) in which the corporation is incorporated, and that 
the corporation is authorized to hold such interests in the State where 
the land described in the instrument is situated; and
    (2) A notarized statement that the corporation has power to conduct 
all business and operations as described in the lease or permit.
    (c) The Secretary may, either before or after the approval of a 
permit, mineral lease, assignment, or bond, call for any reasonable 
additional information necessary to carry out the regulations in this 
part, or other applicable laws and regulations.



Sec. 211.24  Bonds.

    (a) The lessee, permittee or prospective lessee acquiring a lease, 
or any interest therein, by assignment shall furnish with each lease, 
permit or assignment a surety bond or personal bond in an amount 
sufficient to ensure compliance with all of the terms and conditions of 
the lease(s), permit(s), or assignment(s) and the statutes and 
regulations applicable to the lease, permit, or assignment. Surety bonds 
shall be issued by a qualified company approved by the Department of the 
Treasury (see Department of the Treasury Circular No. 570).
    (b) An operator may file a $75,000 bond for all geothermal, mining, 
or oil and gas leases, permits, or assignments in any one State, which 
may also include areas on that part of an Indian reservation extending 
into any contiguous State. Statewide bonds are subject to approval in 
the discretion of the Secretary.
    (c) An operator may file a $150,000 bond for full nationwide 
coverage to cover all geothermal or oil and gas leases, permits, or 
assignments without geographic or acreage limitation to which the 
operator is or may become a party. Nationwide bonds are subject to 
approval in the discretion of the Secretary.
    (d) Personal bonds shall be accompanied by:
    (1) Certificate of deposit issued by a financial institution, the 
deposits of which are federally insured, explicitly granting the 
Secretary full authority to demand immediate payment in case of default 
in the performance of the provisions and conditions of the lease or 
permit. The certificate shall explicitly indicate on its face that 
Secretarial approval is required prior to redemption of the certificate 
of deposit by any party;
    (2) Cashier's check;
    (3) Certified check;
    (4) Negotiable Treasury securities of the United States of a value 
equal to the amount specified in the bond. Negotiable Treasury 
securities shall be accompanied by a proper conveyance to the Secretary 
of full authority to sell such securities in case of default in the 
performance of the provisions and conditions of a lease or permit; or
    (5) Letter of credit issued by a financial institution authorized to 
do business in the United States and whose deposits are federally 
insured, and identifying the Secretary as sole payee with full authority 
to demand immediate payment in the case of default in the performance of 
the provisions and conditions of a lease or permit.
    (i) The letter of credit shall be irrevocable during its term.
    (ii) The letter of credit shall be payable to the Bureau of Indian 
Affairs upon demand, in part or in full, upon receipt from the Secretary 
of a notice of attachment stating the basis thereof (e.g., default in 
compliance with the lease or permit provisions and conditions or failure 
to file a replacement in accordance with paragraph (d)(5)(v) of this 
section).
    (iii) The initial expiration date of the letter of credit shall be 
at least one (1) year following the date it is filed in the proper 
Bureau of Indian Affairs office.
    (iv) The letter of credit shall contain a provision for automatic 
renewal for periods of not less than one (1) year in the absence of 
notice to the proper Bureau of Indian Affairs office at least ninety 
(90) days prior to the originally stated or any extended expiration 
date.

[[Page 561]]

    (v) A letter of credit used as security for any lease or permit upon 
which operations have taken place and final approval for abandonment has 
not been given, or as security for a statewide or nationwide bond, shall 
be forfeited and shall be collected by the Secretary if not replaced by 
other suitable bond or letter of credit at least thirty (30) days before 
its expiration date.
    (e) The required amount of bonds may be increased in any particular 
case at the discretion of the Secretary.



Sec. 211.25  Acreage limitation.

    A lessee may acquire more than one lease but no single lease shall 
be granted for mineral leasing purposes on Indian tribal or restricted 
lands in excess of the following acreage except where the rule of 
approximation applies:
    (a) Leases for oil and gas and all other minerals except coal are to 
be contained within one United States Governmental survey section of 
land and shall be described by legal subdivisions including lots or 
tract equivalents not to exceed 640 acres; in instances of irregular 
surveys, including lands not surveyed under the United States 
Governmental survey, lands shall be considered in multiples of 40 acres 
or the nearest aliquot equivalent thereof;
    (b) Leases for coal shall ordinarily be limited to 2,560 acres in a 
reasonably compact form and shall be described by legal subdivisions 
including lots or tract equivalents. In instances of irregular surveys, 
including lands not surveyed under the United States Governmental 
survey, lands shall be considered in multiples of 40 acres or the 
nearest aliquot equivalent thereof. The Secretary may, upon application 
and with the consent of the Indian mineral owner, approve the issuance 
of a single lease for more than 2,560 acres, in a reasonably compact 
form, upon a finding that the issuance is in the best interest of the 
lessor.



Sec. 211.26  [Reserved]



Sec. 211.27  Duration of leases.

    (a) All leases shall be for a term not to exceed a primary term of 
lease duration of ten (10) years and, absent specific lease provisions 
to the contrary, shall continue as long thereafter as the minerals 
specified in the lease are produced in paying quantities. Absent 
specific lease provisions to the contrary, all provisions in leases 
governing their duration shall be measured from the date of approval by 
the Secretary.
    (b) An oil and gas or geothermal resource lease which stipulates 
that it shall continue in full force and effect beyond the expiration of 
the primary term of lease duration (``commencement clause'') if drilling 
operations have commenced during the primary term, shall be valid and 
shall hold the lease beyond the primary term of lease duration if the 
lessee or the lessee's designee has commenced actual drilling by 
midnight of the last day of the primary term of the lease with a 
drilling rig designed to reach the total proposed depth, and drilling is 
continued with reasonable diligence until the well is completed to 
production or abandoned. However, in no case shall such drilling hold 
the lease longer than 120 days past the primary term of lease duration 
without actual production of oil, gas, or geothermal resources. 
Provided, that this extension does not allow a lease to continue past 
the 10-year statutory limitation. Drilling which meets the requirements 
of this section and occurs within a unit or communitization agreement to 
which the lease is committed shall be considered as if it occurs on the 
leasehold itself. If there is a conflict between the commencement clause 
and the habendum clause of a lease, the commencement clause will 
control.
    (c) A solid minerals lease which stipulates that it shall continue 
in full force and effect beyond the expiration of the primary term of 
lease duration if mining operations have commenced during the primary 
term (commencement clause), shall be valid and hold the lease beyond the 
primary term of lease duration if the lessee or the lessee's designee 
has by midnight of the last day of the primary term of the lease 
commenced actual removal of mineral materials intended for sale and upon 
which royalties will be paid. If there is a conflict between the 
commencement clause and the habendum clause of a lease, the commencement 
clause will control.

[[Page 562]]



Sec. 211.28  Unitization and communitization agreements, and well spacing.

    (a) For the purpose of promoting conservation and efficient 
utilization of minerals, the Secretary may approve a cooperative unit, 
drilling or other development plan on any leased area upon a 
determination that approval is advisable and in the best interest of the 
Indian mineral owner. For the purposes of this section, a cooperative 
unit, drilling or other development plan means an agreement for the 
development or operation of a specifically designated area as a single 
unit without regard to separate ownership of the land included in the 
agreement. Such cooperative agreements include, but are not limited to, 
unit agreements, communitization agreements and other types of 
agreements that allocate costs and benefits.
    (b) The consent of the Indian mineral owner to such unit or 
cooperative agreement shall not be required unless such consent is 
specifically required in the lease. However, the Secretary shall consult 
with the Indian mineral owner prior to making a determination concerning 
a cooperative agreement or well spacing plan.
    (c) Requests for approval of cooperative agreements which comply 
with the requirements of all applicable rules and regulations shall be 
filed with the superintendent or area director.
    (d) All Indian mineral owners of any right, title or interest in the 
mineral resources to be included in a cooperative agreement must be 
notified by the lessee at the time the agreement is submitted to the 
superintendent or area director. An affidavit from the lessee stating 
that a notice was mailed to each mineral owner of record for whom the 
superintendent or area director has an address will satisfy this notice 
requirement.
    (e) A request for approval of a proposed cooperative agreement, and 
all documents incident to such agreement, must be filed with the 
superintendent or area director at least ninety (90) days prior to the 
first expiration date of any of the Indian leases in the area proposed 
to be covered by the cooperative agreement.
    (f) Unless otherwise provided in the cooperative agreement, approval 
of the agreement commits each lease to the unit in the area covered by 
the agreement on the date approved by the Secretary or the date of first 
production, whichever is earlier, as long as the agreement is approved 
before the lease expiration date.
    (g) Any lease committed in part to any such cooperative agreement 
shall be segregated into a separate lease or leases as to the lands 
committed and lands not committed to the agreement. Segregation shall be 
effective on the date the agreement is effective.
    (h) Wells shall be drilled in conformity with a well spacing program 
approved by the authorized officer.



Sec. 211.29  Exemption of leases and permits made by organized tribes.

    The regulations in this part may be superseded by the provisions of 
any tribal constitution, bylaw or charter issued pursuant to the Indian 
Reorganization Act of June 18, 1934 (48 Stat. 984; 25 U.S.C. 461-479), 
the Alaska Act of May 1, 1936 (49 Stat. 1250; 48 U.S.C. 362,258a), or 
the Oklahoma Indian Welfare Act of June 26, 1936 (49 Stat. 1967; 25 
U.S.C., and Sup., 501-509), or by ordinance, resolution, or other action 
authorized under such constitution, bylaw or charter; Provided, that 
such tribal law may not supersede the requirements of Federal statutes 
applicable to Indian mineral leases. The regulations in this part, in so 
far as they are not so superseded, shall apply to leases and permits 
made by organized tribes if the validity of the lease or permit depends 
upon the approval of the Secretary of the Interior.



          Subpart C_Rents, Royalties, Cancellations and Appeals



Sec. 211.40  Manner of payments.

    Unless otherwise specifically provided for in a lease, once 
production has been established, all payments shall be made to the MMS 
or such other party as may be designated, and shall be made at such time 
as provided in 30 CFR chapter II, subchapters A and C. Prior to 
production, all bonus and rental payments, shall be made to the 
superintendent or area director.

[[Page 563]]



Sec. 211.41  Rentals and production royalty on oil and gas leases.

    (a) A lessee shall pay, in advance, beginning with the effective 
date of the lease, an annual rental of $2.00 per acre or fraction of an 
acre or such other greater amount as prescribed in the lease. This 
rental shall not be credited against production royalty nor shall the 
rental be prorated or refunded because of surrender or cancellation.
    (b) The Secretary shall not approve leases with a royalty rate less 
than 16-\2/3\ percent of the amount or value of production produced and 
sold from the lease unless a lower royalty rate is agreed to by the 
Indian mineral owner and is found to be in the best interest of the 
Indian mineral owner. Such approval may only be granted by the area 
director if the approving official is the superintendent and by the 
Assistant Secretary for Indian Affairs if the approving official is the 
area director.
    (c) Value of lease production for royalty purposes shall be 
determined in accordance with applicable lease provisions and 
regulations in 30 CFR chapter II, subchapters A and C. If the valuation 
provisions in the lease are inconsistent with the regulations in 30 CFR 
chapter II, subchapters A and C, the lease provisions shall govern.
    (d) If the leased premises produce gas in excess of the lessee's 
requirements for the development and operation of said premises, then 
the lessor may use sufficient gas, free of charge, for any desired 
school or other buildings belonging to the tribe, by making his own 
connections to a regulator installed, connected to the well and 
maintained by the lessee, and the lessee shall not be required to pay 
royalty on gas so used. The use of such gas shall be at the lessor's 
risk at all times.



Sec. 211.42  Annual rentals and expenditures for development on leases 
other than oil and gas, and geothermal resources.

    (a) Unless otherwise authorized by the Secretary, a lease for 
minerals other than oil, gas and geothermal resources shall provide for 
a yearly development expenditure of not less than $20 per acre. All such 
leases shall provide for a rental payment of not less than $2.00 for 
each acre or fraction of an acre payable on or before the first day of 
each lease year.
    (b) Within twenty (20) days after the lease year, an itemized 
statement, in duplicate, of the expenditure for development under a 
lease for minerals other than oil and gas shall be filed with the 
superintendent or area director. The lessee must certify the statement 
under oath.



Sec. 211.43  Royalty rates for minerals other than oil and gas.

    (a) Except as provided in paragraph (b) of this section, the minimum 
rates for leases of minerals other than oil and gas shall be as follows:
    (1) For substances other than coal, the royalty rate shall be 10 
percent of the value of production produced and sold from the lease at 
the nearest shipping point.
    (2) For coal to be strip or open pit mined the royalty rate shall be 
12\1/2\ percent of the value of production produced and sold from the 
lease, and for coal removed from an underground mine, the royalty rate 
shall be 8 percent of the value of production produced and sold from the 
lease.
    (3) For geothermal resources, the royalty rate shall be 10 percent 
of the amount or value of steam, or any other form of heat or energy 
derived from production of geothermal resources under the lease and sold 
or utilized by the lessee. In addition, the royalty rate shall be 5 
percent of the value of any byproduct derived from production of 
geothermal resources under the lease and sold or utilized or reasonably 
susceptible of sale or utilization by the lessee, except that the 
royalty for any mineral byproduct shall be governed by the appropriate 
paragraph of this section.
    (b) A lower royalty rate shall be allowed if it is determined to be 
in the best interest of the Indian mineral owner. Approval of a lower 
rate may only be granted by the area director if the approving official 
is the superintendent or by the Assistant Secretary for Indian Affairs, 
if the approving official is the area director.

[[Page 564]]



Sec. 211.44  Suspension of operations.

    (a) After the expiration of the primary term of the lease the 
Secretary may approve suspension of operations for remedial purposes 
which are necessary for continued production, to protect the resource, 
the environment, or for other good reasons. Provided, that such remedial 
operations are conducted in accordance with 43 CFR part 3160, subpart 
3165 and under such stipulations and conditions as may be prescribed by 
the Secretary and are conducted with reasonable diligence. Any 
suspension shall not relieve the lessee from liability for the payment 
of rental and other payments as required by lease provisions.
    (b) An application for permission to suspend operations or 
production for economic or marketing reasons on a lease capable of 
production after the expiration of the primary term of lease duration 
must be accompanied by the written consent of the Indian mineral owner, 
an economic analysis, and an executed amendment by the parties to the 
lease setting forth the provisions pertaining to the suspension of 
operations and production. Such application shall be treated as a 
negotiated change to lease provisions, and as such, shall be subject to 
review and approval by the Secretary.



Sec. 211.45  [Reserved]



Sec. 211.46  Inspection of premises, books and accounts.

    Lessees shall allow the Indian mineral owner, the Indian mineral 
owner's representatives, or any authorized representative of the 
Secretary to enter all parts of the leased premises for the purpose of 
inspection and audit. Lessees shall keep a full and correct account of 
all operations and submit all related reports required by the lease and 
applicable regulations. Books and records shall be available for 
inspection during regular business hours.



Sec. 211.47  Diligence, drainage and prevention of waste.

    The lessee shall:
    (a) Exercise diligence in mining, drilling and operating wells on 
the leased lands while minerals production can be secured in paying 
quantities;
    (b) Protect the lease from drainage (if oil and gas or geothermal 
resources are being drained from the lease premises by a well or wells 
located on lands not included in the lease, the Secretary reserves the 
right to impose reasonable and equitable terms and conditions to protect 
the interest of the Indian mineral owner of the lands, such as payment 
of compensatory royalty for the drainage);
    (c) Carry on operations in a good and workmanlike manner in 
accordance with approved methods and practices;
    (d) Have due regard for the prevention of waste of oil or gas or 
other minerals, the entrance of water through wells drilled by the 
lessee to other strata, to the destruction or injury of the oil or gas, 
other mineral deposits, or fresh water aquifers, the preservation and 
conservation of the property for future productive operations, and the 
health and safety of workmen and employees;
    (e) Securely plug all wells and effectively shut off all water from 
the oil or gas-bearing strata before abandoning them;
    (f) Not construct any well pad location within 200 feet of any 
structures or improvements without the Indian surface owner's written 
consent;
    (g) Carry out, at the lessee's expense, all reasonable orders and 
requirements of the authorized officer relative to prevention of waste;
    (h) Bury all pipelines crossing tillable lands below plow depth 
unless other arrangements are made with the Indian surface owner; and
    (i) Pay the Indian surface owner all damages, including damages to 
crops, buildings, and other improvements of the Indian surface owner 
occasioned by the lessee's operations as determined by the 
superintendent.



Sec. 211.48  Permission to start operations.

    (a) No exploration, drilling, or mining operations are permitted on 
any Indian lands before the Secretary has granted written approval of a 
mineral lease or permit pursuant to the regulations in this part.
    (b) After a lease or permit is approved, written permission must be 
secured from the Secretary before any

[[Page 565]]

operations are started on the leased premises, in accordance with 
applicable rules and regulations in 25 CFR part 216; 30 CFR chapter II, 
subchapters A and C; 30 CFR part 750 (Requirements for Surface Coal 
Mining and Reclamation Operations on Indian Lands), 43 CFR parts 3160, 
3260, 3480, 3590, and Orders or Notices to Lessees (NTLs) issued 
thereunder.



Sec. 211.49  Restrictions on operations.

    Leases issued under the provisions of the regulations in this part 
shall be subject to such restrictions as to time or times for well 
operations and production from any leased premises as the Secretary 
judges may be necessary or proper for the protection of the natural 
resources of the leased land and in the interest of the lessor.



Sec. 211.50  [Reserved]



Sec. 211.51  Surrender of leases.

    A lessee may, with the approval of the Secretary, surrender a lease 
or any part of it, on the following conditions:
    (a) All royalties and rentals due on the date the request for 
surrender is received must be paid;
    (b) The superintendent, after consultation with the authorized 
officer, must be satisfied that proper provisions have been made for the 
conservation and protection of the property, and that all operations on 
the portion of the lease surrendered have been properly reclaimed, 
abandoned, or conditioned, as required;
    (c) If a lease has been recorded, the lessee must submit a release 
along with the recording information of the original lease so that, 
after acceptance of the release, it may be recorded;
    (d) If a lessee requests to surrender an entire lease or an entire 
undivided portion of a lease document, the lessee must deliver to the 
superintendent or area director the original lease documents; Provided, 
that where the request is made by an assignee to whom no copy of the 
lease was delivered, the assignee must deliver to the superintendent or 
area director only its copy of the assignment;
    (e) If the lease (or a portion thereof being surrendered) is owned 
in undivided interests, all lessees owning undivided interests in the 
lease must join in the request for surrender;
    (f) No part of any advance rental shall be refunded to the lessee, 
nor shall any subsequent surrender or termination of a lease relieve the 
lessee of the obligation to pay advance rental if advance rental became 
due prior to the date the request for surrender was received by the 
superintendent or area director;
    (g) If oil, gas, or geothermal resources are being drained from the 
leased premises by a well or wells located on lands not included in the 
lease, the Secretary reserves the right, prior to acceptance of the 
surrender, to impose reasonable and equitable terms and conditions to 
protect the interests of the Indian mineral owners of the lands 
surrendered. Such terms and conditions may include payment of 
compensatory royalty for any drainage; and
    (h) Upon expiration or surrender of a solid mineral lease the lessee 
shall deliver the leased premises in a condition conforming to the 
approved reclamation plan. Unless otherwise provided in the lease, the 
machinery necessary to operate the mine is the property of the lessee. 
However, the machinery may not be removed from the leased premises 
without the written permission of the Secretary.



Sec. 211.52  Fees.

    Unless otherwise authorized by the Secretary, each permit, lease, 
sublease, or other contract, or assignment, thereof shall be accompanied 
by a filing fee of $75.00 at the time of filing.



Sec. 211.53  Assignments, overriding royalties, and operating agreements.

    (a) Approved leases or any interest therein may be assigned or 
transferred only with the approval of the Secretary. The Indian mineral 
owner must also consent if approval of the Indian mineral owner is 
required in the lease. If consent is not required, then the Secretary 
shall notify the Indian mineral owner of the proposed assignment. To 
obtain the approval of the Secretary the assignee must be qualified to 
hold the lease under existing rules and regulations and shall furnish a 
satisfactory bond conditioned for the

[[Page 566]]

faithful performance of the covenants and conditions of the lease.
    (b) No lease or interest therein or the use of such lease shall be 
assigned, sublet, or transferred, directly or indirectly, by working or 
drilling contract, or otherwise, without the consent of the Secretary.
    (c) Assignments of leases, and stipulations modifying the provisions 
of existing leases, which stipulations are also subject to the approval 
of the Secretary, shall be filed with the superintendent within five (5) 
working days after the date of execution. Upon execution of satisfactory 
bonds by the assignee the Secretary may permit the release of any bonds 
executed by the assignor. Upon execution of satisfactory bonds the 
assignee accepts all the assignor's responsibilities and prior 
obligations and liabilities of the assignor (including but not limited 
to any underpaid royalties and rentals) under the lease.
    (d) Agreements creating overriding royalties or payments out of 
production shall not be considered as interests in the leases as such 
provision is used in this section. Agreements creating overriding 
royalties or payments out of production, or agreements designating 
operators are hereby authorized and the approval of the Secretary shall 
not be required with respect thereto, but such agreements shall be 
subject to the condition that nothing in such agreements shall be 
construed as modifying any of the obligations of the lessee, including, 
but not limited to, obligations imposed by requirements of the MMS for 
reporting, accounting, and auditing; obligations for diligent 
development and operation, protection against drainage and mining in 
trespass, compliance with oil and gas, geothermal, and mining 
regulations (25 CFR part 216; 43 CFR parts 3160, 3260, 3480, and 3590; 
and those applicable rules found in 30 CFR chapter II, subchapters A and 
C) and the requirements for Secretarial approval before abandonment of 
any oil and gas or geothermal well or mining operation. All such 
obligations are to remain in full force and effect, the same as if free 
of any such overriding royalties or payments. The existence of 
agreements creating overriding royalties or payments out of production, 
whether or not actually paid, shall not be considered as justification 
for the approval of abandonment of any oil and gas or geothermal well or 
mining operation. Nothing in this paragraph revokes the requirement for 
approval of assignments and other instruments which is required in this 
section, but any overriding royalties or payments out of production 
created by the provisions of such assignments or instruments shall be 
subject to the condition stated in this section. Agreements creating 
overriding royalties or payments out of production, or agreements 
designating operators shall be filed with the superintendent unless 
incorporated in assignments or instruments required to be filed pursuant 
to this section.



Sec. 211.54  Lease or permit cancellation; Bureau of Indian Affairs 
notice of noncompliance.

    (a) If the Secretary determines that a permittee or lessee has 
failed to comply with the terms of the permit or lease; the regulations 
in this part; or other applicable laws or regulations; the Secretary 
may:
    (1) Serve a notice of noncompliance specifying in what respect the 
permittee or lessee has failed to comply with the requirements 
referenced in this paragraph, and specifying what actions, if any, must 
be taken to correct the noncompliance; or
    (2) Serve a notice of proposed cancellation of the lease or permit. 
The notice of proposed cancellation shall set forth the reasons why 
lease or permit cancellation is proposed and shall specify what actions, 
if any, must be taken to avoid cancellation.
    (b) The notice of noncompliance or proposed cancellation shall 
specify in what respect the permittee or lessee has failed to comply 
with the requirements referenced in paragraph (a), and shall specify 
what actions, if any, must be taken to correct the noncompliance.
    (c) The notice shall be served upon the permittee or lessee by 
delivery in person or by certified mail to the permittee or lessee at 
the permittee's or lessee's last known address. When certified mail is 
used, the date of service shall be deemed to be when the notice is 
received or five (5) working days

[[Page 567]]

after the date it is mailed, whichever is earlier.
    (d) The lessee or permittee shall have thirty (30) days (or such 
longer time as specified in the notice) from the date that the notice is 
served to respond, in writing, to the official or the Bureau of Indian 
Affairs office that issued the notice.
    (e) If a permittee or lessee fails to take any action that is 
prescribed in the notice of proposed cancellation, fails to file a 
timely written response to the notice, or files a written response that 
does not, in the discretion of the Secretary, adequately justify the 
permittee's or lessee's actions, then the Secretary may cancel the lease 
or permit, specifying the basis for the cancellation.
    (f) If a permittee or lessee fails to take corrective action or to 
file a timely written response adequately justifying the permittee's or 
lessee's actions pursuant to a notice of noncompliance, the Secretary 
may issue an order of cessation of operations. If the permittee or 
lessee fails to comply with the order of cessation, or fails to timely 
file an appeal of the order of cessation pursuant to paragraph (h), the 
Secretary may issue an order of lease or permit cancellation.
    (g) Cancellation of a lease or permit shall not relieve the lessee 
or permittee of any continuing obligations under the lease or permit.
    (h) Orders of cessation or of lease or permit cancellation issued 
pursuant to this section may be appealed under 25 CFR part 2.
    (i) This section does not limit any other remedies of the Indian 
mineral owner as set forth in the lease or permit.
    (j) Nothing in this section is intended to limit the authority of 
the authorized officer or the MMS official to take any enforcement 
action authorized pursuant to statute or regulation.
    (k) The authorized officer, MMS official, and the superintendent 
and/or area director should consult with one another before taking any 
enforcement actions.



Sec. 211.55  Penalties.

    (a) In addition to or in lieu of cancellation under Sec. 211.54, 
violations of the terms and conditions of any lease, or the regulations 
in this part, or failure to comply with a notice of noncompliance or a 
cessation order issued by the Secretary, or, in the case of solid 
minerals the authorized officer, may subject a lessee or permittee to a 
penalty of not more than $1,000 per day for each day that such a 
violation or noncompliance continues beyond the time limits prescribed 
for corrective action.
    (b) A notice of a proposed penalty shall be served on the lessee or 
permittee either personally or by certified mail to the lessee or 
permittee at the lessee's or permittee's last known address. The date of 
service by certified mail shall be deemed to be the date when received 
or five (5) working days after the date mailed, whichever is earlier.
    (c) The notice shall specify the nature of the violation and the 
proposed penalty, and shall specifically advise the lessee or permittee 
of the lessee's or permittee's right to either request a hearing within 
thirty (30) days from receipt of the notice or pay the proposed penalty. 
Hearings shall be held before the superintendent and/or area director 
whose findings shall be conclusive, unless an appeal is taken pursuant 
to 25 CFR part 2.
    (d) If the lessee or permittee served with a notice of proposed 
penalty requests a hearing, penalties shall accrue each day the 
violations or noncompliance set forth in the notice continue beyond the 
time limits prescribed for corrective action. The Secretary may issue a 
written suspension of the requirement to correct the violations pending 
completion of the hearings provided by this section only upon a 
determination, at the discretion of the Secretary, that such a 
suspension will not be detrimental to the lessor and upon submission and 
acceptance of a bond deemed adequate to indemnify the lessor from loss 
or damage. The amount of the bond must be sufficient to cover the cost 
of correcting the violations set forth in the notice or any disputed 
amounts plus accrued penalties and interest.
    (e) Payment in full of penalties more than ten (10) days after a 
final decision imposing a penalty shall subject the

[[Page 568]]

lessee or permittee to late payment charges. Late payment charges shall 
be calculated on the basis of a percentage assessment rate of the amount 
unpaid per month for each month or fraction thereof until payment is 
received by the Secretary. In the absence of a specific lease provision 
prescribing a different rate, the interest rate on late payments and 
underpayments shall be a rate applicable under Sec. 6621(a)(2) of the 
Internal Revenue Code of 1954. Interest shall be charged only on the 
amount of payment not received and only for the number of days the 
payment is late.
    (f) None of the provisions of this section shall be interpreted as:
    (1) Replacing or superseding the independent authority of the 
authorized officer, the director's representative or the MMS official to 
impose penalties for violations of applicable regulations pursuant to 43 
CFR part 3160, and 43 CFR Groups 3400 and 3500, 30 CFR part 750, or 30 
CFR chapter II, subchapters A and C;
    (2) Replacing or superseding any penalty provision in the terms and 
conditions of a lease or permit approved by the Secretary pursuant to 
this part; or
    (3) Authorizing the imposition of a penalty for violations of lease 
or permit terms for which the authorized officer, director's 
representative or MMS official, have either statutory or regulatory 
authority to assess a penalty.



Sec. 211.56  Geological and geophysical permits.

    Permits to conduct geological and geophysical operations on Indian 
lands which do not conflict with any mineral leases entered into 
pursuant to this part, may be approved by the Secretary with the consent 
of the Indian mineral owner under the following conditions:
    (a) The permit must describe the area to be explored, the duration, 
and the consideration to be paid the Indian owner;
    (b) The permit will not grant the permittee any option or preference 
rights to a lease or other development contract, or authorize the 
production of, or removal of oil and gas, geothermal resources, or other 
minerals, except samples for assay and experimental purposes, unless 
specifically so stated in the permit; and
    (c) Copies of all data collected pursuant to operations conducted 
under the permit shall be forwarded to the Secretary and the Indian 
mineral owner, unless otherwise provided in the permit. Data collected 
under a permit may be held by the Secretary as privileged and 
proprietary information for the time prescribed in the permit. Where no 
time period is prescribed in the permit, the Secretary may release such 
information after six (6) years, with the consent of the Indian mineral 
owner.



Sec. 211.57  Forms.

    Leases, bonds, permits, assignments, and other instruments relating 
to mineral leasing shall be on forms, prescribed by the Secretary, that 
may be obtained from the superintendent or area director. The provisions 
of a standard lease or permit may be changed, deleted, or added to by 
written agreement of all parties with the approval of the Secretary.



Sec. 211.58  Appeals.

    Appeals from decisions of Bureau of Indian Affairs officers under 
this part may be taken pursuant to 25 CFR part 2.



PART 212_LEASING OF ALLOTTED LANDS FOR MINERAL DEVELOPMENT
--Table of Contents




                            Subpart A_General

Sec.
212.1 Purpose and scope.
212.2 Information collection.
212.3 Definitions.
212.4 Authority and responsibility of the Bureau of Land Management 
          (BLM).
212.5 Authority and responsibility of the Office of Surface Mining 
          Reclamation and Enforcement (OSM).
212.6 Authority and responsibility of the Minerals Management Service 
          (MMS).
212.7 Environmental studies.
212.8 Government employees cannot acquire leases.

                     Subpart B_How to Acquire Leases

212.20 Leasing procedures.
212.21 Execution of leases.
212.22 Leases for subsurface storage of oil or gas.

[[Page 569]]

212.23 Corporate qualifications and requests for information.
212.24 Bonds.
212.25 Acreage limitation.
212.26 [Reserved]
212.27 Duration of leases.
212.28 Unitization and communitization agreements, and well spacing.
212.29 [Reserved]
212.30 Removal of restrictions.
212.31-212.32 [Reserved]
212.33 Terms applying after relinquishment.
212.34 Individual tribal assignments excluded.

         Subpart C_Rents, Royalties, Cancellations, and Appeals

212.40 Manner of payments.
212.41 Rentals and production royalty on oil and gas leases.
212.42 Annual rentals and expenditures for development on leases other 
          than oil and gas, and geothermal resources.
212.43 Royalty rates for minerals other than oil and gas.
212.44 Suspension of operations.
212.45 [Reserved]
212.46 Inspection of premises, books and accounts.
212.47 Diligence, drainage and prevention of waste.
212.48 Permission to start operations.
212.49 Restrictions on operations.
212.50 [Reserved]
212.51 Surrender of leases.
212.52 Fees.
212.53 Assignments, overriding royalties, and operating agreements.
212.54 Lease or permit cancellation; Bureau of Indian Affairs notice of 
          noncompliance.
212.55 Penalties.
212.56 Geological and geophysical permits.
212.57 Forms.
212.58 Appeals.

    Authority: Act of March 3, 1909, (35 Stat. 783; 25 U.S.C. 396 (as 
amended)): Act of May 11, 1938, (Sec. 2, 52 Stat. 347; 25 U.S.C. 396 b-
g: Act of August 1, 1956, (70 Stat. 774)); and 25 U.S.C. 2 and 9.

    Source: 61 FR 35661, July 8, 1996, unless otherwise noted.



                            Subpart A_General



Sec. 212.1  Purpose and scope.

    (a) The regulations in this part govern leases for the development 
of individual Indian oil and gas, geothermal and solid mineral 
resources. These regulations are applicable to lands or interests in 
lands the title to which is held, for any individual Indian, in trust by 
the United States or is subject to restriction against alienation 
imposed by the United States. These regulations are intended to ensure 
that Indian mineral owners desiring to have their resources developed 
are assured that they will be developed in a manner that maximizes their 
best economic interests and minimizes any adverse environmental impacts 
or cultural impacts resulting from such development.
    (b) The regulations in this part shall be subject to amendment at 
any time by the Secretary of the Interior. No regulation that becomes 
effective after the date of approval of any lease or permit shall 
operate to affect the duration of the lease or permit, rate of royalty, 
rental, or acreage unless agreed to by all parties to the lease or 
permit.
    (c) Nothing in the regulations in this part is intended to prevent 
Indian tribes from exercising their lawful governmental authority to 
regulate the conduct of persons, businesses, operations or mining within 
their territorial jurisdiction.
    (d) The regulations of the Bureau of Land Management, the Office of 
Surface Mining Reclamation and Enforcement, and the Minerals Management 
Service that are referenced in Sec. Sec. 212.4, 212.5, and 212.6 of 
this part are supplemental to these regulations, and apply to parties 
holding leases or permits for development of Indian mineral resources 
unless specifically stated otherwise in this part or in such other 
Federal regulations.
    (e) The regulations in this part do not apply to leasing and 
development governed by regulations in 25 CFR part 213 (Members of the 
Five Civilized Tribes of Oklahoma), 226 (Osage), or 227 (Wind River 
Reservation).



Sec. 212.2  Information collection.

    The information collection requirements contained in this part do 
not require a review by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. 3501; et seq.).



Sec. 212.3  Definitions.

    As used in this part, the following words and phrases have the 
specified meaning except where otherwise indicated:

[[Page 570]]

    Applicant means any person seeking a permit, lease, or an assignment 
from the superintendent or area director.
    Approving official means the Bureau of Indian Affairs official with 
delegated authority to approve a lease or permit.
    Area director means the Bureau of Indian Affairs official in charge 
of an area office.
    Authorized officer means any employee of the Bureau of Land 
Management authorized by law or by lawful delegation of authority to 
perform the duties described herein and in 43 CFR parts 3160, 3180, 
3260, 3280, 3480, and 3590.
    Cooperative agreement means a binding arrangement between two or 
more parties purporting to the act of agreeing or of coming to a mutual 
arrangement that is accepted by all parties to a transaction (e.g., 
communitization and unitization).
    Director's representative means the Office of Surface Mining 
Reclamation and Enforcement director's representative authorized by law 
or lawful delegation of authority to perform the duties described in 30 
CFR part 750.
    Gas means any fluid, either combustible or non-combustible, that is 
produced in a natural state from the earth and that maintains a gaseous 
or rarefied state at ordinary temperature and pressure conditions.
    Geological and geophysical permit means a written authorization to 
conduct on-site surveys to locate potential deposits of oil and gas, 
geothermal or solid mineral resources on the lands.
    Geothermal resources means:
    (1) All products of geothermal processes, including indigenous 
steam, hot water and hot brines;
    (2) Steam and other gases, hot water, and hot brines, resulting from 
water, gas or other fluids artificially introduced into geothermal 
formations;
    (3) Heat or other associated energy found in geothermal formations; 
and
    (4) Any by-product derived therefrom.
    In the best interest of the Indian mineral owner refers to the 
standards to be applied by the Secretary in considering whether to take 
an administrative action affecting the interests of an Indian mineral 
owner. In considering whether it is ``in the best interest of the Indian 
mineral owner'' to take a certain action (such as approval of a lease, 
permit, unitization or communitization agreement), the Secretary shall 
consider any relevant factor, including, but not limited to: economic 
considerations, such as date of lease expiration; probable financial 
effect on the Indian mineral owner; leasability of land concerned; need 
for change in the terms of the existing lease; marketability; and 
potential environmental, social, and cultural effects.
    Indian lands means any lands owned by any individual Indian or 
Alaska Native, Indian tribe, band, nation, pueblo, community, rancheria, 
colony, or other tribal group which owns lands or interest in the 
minerals, the title to which is held in trust by the United States or is 
subject to restriction against alienation imposed by the United States.
    Indian mineral owner means any individual Indian or Alaska Native 
who owns mineral interests in oil and gas, geothermal, or solid mineral 
resources, title to which is held in trust by the United States, or is 
subject to the restriction against alienation imposed by the United 
States.
    Indian surface owner means any individual Indian or Indian tribe 
whose surface estate is held in trust by the United States, or is 
subject to restriction against alienation imposed by the United States.
    Lease means any contract, approved by the Secretary of the Interior 
under the Act of March 3, 1909 (35 Stat. 783)(25 U.S.C. 396), as 
amended, and the Act of May 11, 1938 (52 Stat. 347) (25 U.S.C. 396a-
396g), as amended, that authorize exploration for, extraction of, or 
removal of any minerals.
    Lessee means a natural person, proprietorship, partnership, 
corporation, or other entity which has entered into a lease with an 
Indian mineral owner, or who has been assigned an obligation to make 
royalty or other payments required by the lease.
    Lessor means an Indian mineral owner who is a party to a lease.
    Minerals includes both metalliferous and non-metalliferous minerals; 
all hydrocarbons, including oil, gas, coal and lignite of all ranks; 
geothermal resources; and includes but is not limited to, sand, gravel, 
pumice, cinders, granite, building stone, limestone, clay,

[[Page 571]]

silt, or any other energy or non-energy mineral.
    Minerals Management Service official means any employee of the 
Minerals Management Service (MMS) authorized by law or by lawful 
delegation of authority to perform the duties described in 30 CFR 
chapter II, subchapters A and C.
    Mining means the science, technique, and business of mineral 
development including, but not limited to: opencast work, underground 
work, and in-situ leaching directed to severance and treatment of 
minerals; Provided, when sand, gravel, pumice, cinders, granite, 
building stone, limestone, clay or silt is the subject mineral, an 
enterprise is considered ``mining'' only if the extraction of such a 
mineral exceeds 5,000 cubic yards in any given year.
    Oil means all nongaseous hydrocarbon substances other than those 
substances leasable as coal, oil shale, or gilsonite (including all 
vein-type solid hydrocarbons). Oil includes liquefiable hydrocarbon 
substances such as drip gasoline and other natural condensates recovered 
or recoverable in a liquid state from produced gas without resorting to 
a manufacturing process.
    Permit means any contract issued by the superintendent and/or area 
director to conduct exploration on; or removal of less than 5,000 cubic 
yards per year of common varieties of minerals from Indian lands.
    Permittee means a person holding or required by this part to hold a 
permit to conduct exploration operations on; or remove less than 5,000 
cubic yards per year of common varieties of minerals from Indian lands.
    Secretary means the Secretary of the Interior or an authorized 
representative.
    Solid minerals means all minerals excluding oil and gas and 
geothermal resources.
    Superintendent means the Bureau of Indian Affairs official in charge 
of the agency office having jurisdiction over the minerals subject to 
leasing under this part.



Sec. 212.4  Authority and responsibility of the Bureau of Land Management 
(BLM).

    The functions of the Bureau of Land Management are found in 43 CFR 
part 3160--Onshore Oil and Gas Operations, 43 CFR part 3180--Onshore Oil 
and Gas Unit Agreements: Unproven Area, 43 CFR part 3260--Geothermal 
Resources Operations, 43 CFR part 3280--Geothermal Resources Unit 
Agreements: Unproven Areas, 43 CFR part 3480--Coal Exploration and 
Mining Operations, and 43 CFR part 3590--Solid Minerals (Other Than 
Coal) Exploration and Mining Operations, and currently include, but are 
not limited to, resource evaluation, approval of drilling permits, 
mining and reclamation, production plans, mineral appraisals, inspection 
and enforcement, and production verification. Those regulations, apply 
to leases or permits issued under this part.



Sec. 212.5  Authority and responsibility of the Office of Surface Mining 
Reclamation and Enforcement (OSM).

    The OSM is the regulatory authority for surface coal mining and 
reclamation operations on Indian lands pursuant to the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1201 et seq.). The 
relevant regulations for surface coal mining and reclamation operations 
are found in 30 CFR part 750. Those regulations apply to mining and 
reclamation on leases issued under this part.



Sec. 212.6  Authority and responsibility of the Minerals Management 
Service (MMS).

    The functions of the MMS for reporting, accounting, and auditing are 
found in 30 CFR chapter II, subchapters A and C, which apply to leases 
approved under this part. To the extent the parties to a lease or permit 
are able to provide reasonable provisions satisfactorily addressing the 
functions governed by MMS regulations, the Secretary may approve 
alternate provisions in a lease or permit.



Sec. 212.7  Environmental studies.

    The provisions of Sec. 211.7 of this subchapter, as amended, are 
applicable to leases under this part.

[[Page 572]]



Sec. 212.8  Government employees cannot acquire leases.

    U.S. Government employees are prevented from acquiring leases or 
interests in leases by the provisions of 25 CFR part 140 and 43 CFR part 
20 pertaining to conflicts of interest and ownership of an interest in 
trust land.



                     Subpart B_How to Acquire Leases



Sec. 212.20  Leasing procedures.

    (a) Application for leases shall be made to the superintendent 
having jurisdiction over the lands.
    (b) Indian mineral owners may request the Secretary to prepare, 
advertise and negotiate mineral leases on their behalf. Leases for 
minerals shall be advertised for bids as prescribed in this section 
unless one or more of the Indian mineral owners of a tract sought for 
lease request the Secretary to negotiate for a lease on their behalf 
without advertising. Unless the Secretary decides that negotiation of a 
mineral lease is in the best interests of the Indian mineral owners, he 
shall use the following procedure for leasing:
    (1) Leases shall be advertised to receive optimum competition for 
bonus consideration, under sealed bid, oral auction, or a combination of 
both. Notice of such advertisement shall be published in at least one 
local newspaper and in one trade publication at least thirty (30) days 
in advance of sale. If applicable, such notice must identify the 
reservation within which the tracts to be leased are found. No specific 
description of the tracts to be leased need be published. Specific 
description of such tracts shall be available at the office of the 
superintendent and/or area director upon request. The complete text of 
the advertisement, including a specific description, shall be mailed to 
each person listed on the appropriate agency or area mailing list. 
Individuals and companies interested in receiving advertisements on 
lease sales should send their mailing information to the appropriate 
agency or area office for future reference.
    (2) The advertisement shall offer the tracts to a responsible bidder 
offering the highest bonus. The Secretary shall establish the rental and 
royalty rates which shall be stated in the advertisement and will not be 
subject to negotiation. The advertisement shall provide that the 
Secretary reserves the right to reject any or all bids, and that 
acceptance of the lease bid by or on behalf of the Indian mineral owner 
is required. The requirements under Sec. 212.21 are applicable to the 
acceptance of a lease bid.
    (3) Each sealed bid must be accompanied by a cashier's check, 
certified check or postal money order, or any combination thereof, 
payable to the payee designated in the advertisement, in an amount not 
less than 25 percent of the bonus bid, which shall be returned if that 
bid is not accepted.
    (4) A successful oral auction bidder will be allowed five (5) 
working days to remit the required 25 percent deposit of the bonus bid.
    (5) A successful bidder shall, within thirty (30) days after 
notification of the bid award, remit to the Secretary the balance of the 
bonus, the first year's rental, a $75 filing fee, its prorated share of 
the advertising costs as determined by the Bureau of Indian Affairs, and 
file with the Secretary all required bonds. The successful bidder shall 
also file the lease in completed form, signed by the Indian mineral 
owner(s), at that time. However, for good reasons, the Secretary may 
grant extensions of time in thirty (30) day increments for filing of the 
lease and all required bonds, provided that additional extension 
requests are submitted and approved prior to the expiration of the 
original thirty (30) days or the previously granted extension. Failure 
on the part of the bidder to take all reasonable actions necessary to 
comply with the foregoing shall result in forfeiture of the required 
payment of 25 percent of any bonus bid for the use and benefit of the 
Indian mineral owner.
    (6) If no satisfactory bid is received, or if the accepted bidder 
fails to complete all requirements necessary for approval of the lease, 
or if the Secretary determines that it is not in the best interest of 
the Indian mineral owner to accept any of the bids the Secretary may re-
advertise the tract for sale, or subject to the consent of the Indian 
mineral owner, a lease may be let through private negotiations.

[[Page 573]]

    (c) The Secretary shall advise the Indian mineral owner of the 
results of the bidding, and shall not approve the lease until the 
consent of the Indian mineral owner has been obtained. The requirements 
under Sec. 212.21 are applicable to the approval of a mineral lease.



Sec. 212.21  Execution of leases.

    (a) The Secretary shall not execute a mineral lease on behalf of an 
Indian mineral owner, except when such owner is deceased and the heirs 
to or devisee of the estate have not been determined, or if determined, 
some or all of them cannot be located. Leases involving such interests 
may be executed by the Secretary, provided that the mineral interest 
shall have been offered for sale under the provisions of section 
212.20(b) (1) through (6).
    (b) The Secretary may execute leases on behalf of minors and persons 
who are incompetent by reason of mental incapacity; Provided, that there 
is no parent, guardian, conservator, or other person who has lawful 
authority to execute a lease on behalf of the minor or person with 
mental incapacity.
    (c) If an owner is a life tenant, the procedures set forth in 25 CFR 
part 179 (Life Estates and Future Interests), shall apply.



Sec. 212.22  Leases for subsurface storage of oil or gas.

    The provisions of Sec. 211.22 of this subchapter are applicable to 
leases under this part.



Sec. 212.23  Corporate qualifications and requests for information.

    The provisions of Sec. 211.23 of this subchapter are applicable to 
leases under this part.



Sec. 212.24  Bonds.

    The provisions of Sec. 211.24 of this subchapter are applicable to 
leases under this part.



Sec. 212.25  Acreage limitation.

    The provisions of Sec. 211.25 of this subchapter are applicable to 
leases under this part.



Sec. 212.26  [Reserved]



Sec. 212.27  Duration of leases.

    The provisions of Sec. 211.27 of this subchapter are applicable to 
leases under this part.



Sec. 212.28  Unitization and communitization agreements, and well spacing.

    (a) For the purpose of promoting conservation and efficient 
utilization of minerals, the Secretary may approve a cooperative unit, 
drilling or other development plan on any leased area upon a 
determination that approval is advisable and in the best interest of the 
Indian mineral owner. For the purposes of this section, a cooperative 
unit, drilling or other development plan means an agreement for the 
development or operation of a specifically designated area as a single 
unit without regard to separate ownership of the land included in the 
agreement. Such cooperative agreements include, but are not limited to, 
unit agreements, communitization agreements and other types of 
agreements that allocate costs and benefits.
    (b) The consent of the Indian mineral owner to such unit or 
cooperative agreement shall not be required unless such consent is 
specifically required in the lease.
    (c) Requests for approval of cooperative agreements which comply 
with the requirements of all applicable rules and regulations shall be 
filed with the superintendent or area director.
    (d) All Indian mineral owners of any right, title or interest in the 
mineral resources to be included in a cooperative agreement must be 
notified by the lessee at the time the agreement is submitted to the 
superintendent or area director. An affidavit from the lessee stating 
that a notice was mailed to each mineral owner of record for whom the 
superintendent or area director has an address will satisfy this notice 
requirement.
    (e) A request for approval of a proposed cooperative agreement, and 
all documents incident to such agreement, must be filed with the 
superintendent or area director at least ninety (90) days prior to the 
first expiration date of any of the Indian leases in the area

[[Page 574]]

proposed to be covered by the cooperative agreement.
    (f) Unless otherwise provided in the cooperative agreement, approval 
of the agreement commits each lease to the unit in the area covered by 
the agreement on the date approved by the Secretary or the date of first 
production, whichever is earlier, as long as the agreement is approved 
before the lease expiration date.
    (g) Any lease committed in part to any such cooperative agreement 
shall be segregated into a separate lease or leases as to the lands 
committed and lands not committed to the agreement. Segregation shall be 
effective on the date the agreement is effective.
    (h) Wells shall be drilled in conformity with a well spacing program 
approved by the authorized officer.



Sec. 212.29  [Reserved]



Sec. 212.30  Removal of restrictions.

    (a) Notwithstanding the provisions of any mineral lease to the 
contrary, the removal of all restrictions against alienation shall 
operate to divest the Secretary of all supervisory authority and 
responsibility with respect to the lease. Thereafter, all payments 
required to be made under the lease shall be made directly to the 
owner(s).
    (b) In the event restrictions are removed from a part of the land 
included in any lease approved by the Secretary, the entire lease shall 
continue to be subject to the supervision of the Secretary until such 
times as the holder of the lease and the unrestricted Indian owner 
submits to the Secretary satisfactory evidence that adequate 
arrangements have been made to account for the mineral resources of the 
restricted land separately from those of the unrestricted. Thereafter, 
the unrestricted portion shall be relieved from the supervision of the 
Secretary, the lease, the regulations of this part, and all other 
applicable laws and regulations.



Sec. Sec. 212.31-212.32  [Reserved]



Sec. 212.33  Terms applying after relinquishment.

    All leases for individual Indian lands approved by the Secretary 
under this part shall contain provisions for the relinquishment of 
supervision and provide for operations of the lease after such 
relinquishment. These leases shall contain provisions that address the 
following issues:
    (a) Provisions of relinquishment. If the Secretary relinquishes 
supervision at any time during the life of the lease instrument as to 
all or part of the acreage subject to the lease, the Secretary shall 
give the Indian mineral owner and the lessee thirty (30) days written 
notice prior to the termination of supervision. After notice of 
relinquishment has been given to the lessee, the lease shall be subject 
to the following conditions:
    (1) All rentals and royalties thereafter accruing shall be paid 
directly to the lessor or the lessor's successors in title, or to a 
trustee appointed under the provisions of paragraph (b) of this section.
    (2) If, at the time supervision is relinquished by the Secretary, 
the lessee has made all payments then due and has fully performed all 
obligations on the lessee's part to be performed up to the time of such 
relinquishment, the bond given to secure the performance of the lease, 
on file in the appropriate agency or area office, shall be of no further 
force or effect.
    (3) Should relinquishment affect only part of the lease, then the 
lessee may continue to conduct operations on the land covered by the 
lease as an entirety; Provided, that the lessee shall pay, in the manner 
prescribed by the lease and regulations for the benefit of lessor, the 
same proportion of all rentals and royalties due under the provisions of 
this part as the acreage retained under the supervision of the Secretary 
bears to the entire acreage of the lessee, and shall pay the remainder 
of the rentals and royalties directly to the remaining lessors or 
successors in title or said trustee as the case may be, as provided in 
paragraph (a) (1) of this section.
    (b) Division of fee. If, after the execution of the lease and after 
the Secretary relinquishes supervision thereof, the fee of the leased 
land is divided into separate parcels held by different

[[Page 575]]

owners, or if the rental or royalty interest is divided in ownership, 
the obligations of the lessee shall not be modified in any manner except 
as specifically provided by the provisions of the lease. Notwithstanding 
such separate ownership, the lessee may continue to conduct operations 
on said premises as an entirety. Each separate owner shall receive such 
proportion of all rental and royalties accruing after the vesting of its 
title as the acreage of the fee, or rental or royalty interest, bears to 
the entire acreage covered by the lease; or to the entire rental or 
royalty interest as the case may be. If at any time after departmental 
supervision of the lease is relinquished, in whole or in part, to 
rentals and royalties, whether said parties are so entitled by virtue of 
undivided interest or by virtue of ownership of separate parcels of the 
land covered, the lessee may elect to withhold the payment of further 
rentals or royalties (except as the portion due the Indian lessor while 
under restriction), until all of said parties shall agree upon and 
designate a trustee in writing and in a recordable instrument to receive 
all payments due thereunder on behalf of said parties and their 
respective successors in title. Payments to said trustee shall 
constitute lawful payments, and the sole risk of an improper or unlawful 
distribution of said funds by said trustee shall rest upon the parties 
naming said trustee and their said respective successors in title.



Sec. 212.34  Individual tribal assignments excluded.

    The reference in this part to Indian mineral owners does not include 
assignments of tribal lands made pursuant to tribal constitutions or 
ordinances for the use of individual Indians and assignees of such 
lands.



         Subpart C_Rents, Royalties, Cancellations, and Appeals



Sec. 212.40  Manner of payments.

    The provisions of Sec. 211.40 of this subchapter are applicable to 
leases under this part.



Sec. 212.41  Rentals and production royalty on oil and gas leases.

    (a) A lessee shall pay, in advance, beginning with the effective 
date of the lease, an annual rental of $2.00 per acre or fraction of an 
acre or such other greater amount as prescribed in the lease. This 
rental shall not be credited against production royalty nor shall the 
rental be prorated or refunded because of surrender or cancellation.
    (b) The Secretary shall not approve leases with a royalty rate less 
than 16-\2/3\ percent of the amount or value of production produced and 
sold from the lease unless a lower royalty rate is agreed to by the 
Indian mineral owner and is found to be in the best interest of the 
Indian mineral owner. Such approval may only be granted by the area 
director if the approving official is the superintendent and the 
Assistant Secretary for Indian Affairs if the approving official is the 
area director.
    (c) Value of lease production for royalty purposes shall be 
determined in accordance with applicable lease provisions and 
regulations in 30 CFR chapter II, subchapters A and C. If the valuation 
provisions in the lease are inconsistent with the regulations in 30 CFR 
chapter II, subchapters A and C, the lease provisions shall govern.



Sec. 212.42  Annual rentals and expenditures for development on leases 
other than oil and gas, and geothermal resources.

    The provisions of Sec. 211.42 of this subchapter are applicable to 
leases under this part.



Sec. 212.43  Royalty rates for minerals other than oil and gas.

    The provisions of Sec. 211.43 of this subchapter are applicable to 
leases under this part.



Sec. 212.44  Suspension of operations.

    The provisions of Sec. 211.44 of this subchapter are applicable to 
leases under this part.

[[Page 576]]



Sec. 212.45  [Reserved]



Sec. 212.46  Inspection of premises, books, and accounts.

    The provisions of Sec. 211.46 of this subchapter are applicable to 
leases under this part.



Sec. 212.47  Diligence, drainage and prevention of waste.

    The provisions of Sec. 211.47 of this subchapter are applicable to 
leases under this part.



Sec. 212.48  Permission to start operations.

    The provisions of Sec. 211.48 of this subchapter are applicable to 
leases under this part.



Sec. 212.49  Restrictions on operations.

    The provisions of Sec. 211.49 of this subchapter are applicable to 
leases under this part.



Sec. 212.50  [Reserved]



Sec. 212.51  Surrender of leases.

    The provisions of Sec. 211.51 of this subchapter are applicable to 
leases under this part.



Sec. 212.52  Fees.

    The provisions of Sec. 211.52 of this subchapter are applicable to 
leases under this part.



Sec. 212.53  Assignments, overriding royalties, and operating agreements.

    The provisions of Sec. 211.53 of this subchapter are applicable to 
leases under this part.



Sec. 212.54  Lease or permit cancellation; Bureau of Indian Affairs 
notice of noncompliance.

    The provisions of Sec. 211.54 of this subchapter are applicable to 
leases under this part.



Sec. 212.55  Penalties.

    The provisions of Sec. 211.55 of this subchapter are applicable to 
this part.



Sec. 212.56  Geological and geophysical permits.

    (a) Permits to conduct geological and geophysical operations on 
Indian lands which do not conflict with any mineral lease entered into 
pursuant to this part may be approved by the Secretary with the consent 
of the Indian owner under the following conditions:
    (1) The permit must describe the area to be explored, the duration 
and the consideration to be paid the Indian owner;
    (2) The permit may not grant the permittee any option or preference 
rights to a lease or other development contract, authorize the 
production of, or removal of oil and gas, or geothermal resources, or 
other minerals except samples for assay and experimental purposes, 
unless specifically so stated in the permit; and
    (3) Copies of all data collected pursuant to operations conducted 
under the permit shall be forwarded to the Secretary and made available 
to the Indian mineral owner, unless otherwise provided in the permit. 
Data collected under a permit shall be held by the Secretary as 
privileged and proprietary information for the time prescribed in the 
permit. Where no time period is prescribed in the permit, the Secretary 
may, in the discretion of the Secretary, release such information after 
six (6) years.
    (b) A permit may be granted by the Secretary without 100 percent 
consent of the individual mineral owners if:
    (1) The minerals are owned by more than one person, and the owners 
of a majority of the interest therein consent to the permit;
    (2) The whereabouts of one or more owners of the minerals or an 
interest therein is unknown, and all the remaining owners of the 
interests consent to the permit;
    (3) The heirs or devisee of a deceased owner of the land or an 
interest therein have not been determined, and the Secretary finds that 
the permit activity will cause no substantial injury to the land or any 
owner thereof; or
    (4) The owners of interests in the land are so numerous that the 
Secretary finds it would be impractical to obtain their consent, and 
also finds that the permit activity will cause no substantial injury to 
the land or any owner thereof.
    (c) A lessee does not need a permit to conduct geological and 
geophysical operations on Indian lands, if provided for

[[Page 577]]

in the lessee's mineral lease, where the Indian mineral owner is also 
the surface land owner. In instances where the Indian mineral owner is 
not the surface owner, the lessee must obtain any additional necessary 
permits or rights of ingress or egress from the surface occupant.



Sec. 212.57  Forms.

    The provisions of Sec. 211.57 of this subchapter are applicable to 
leases under this part.



Sec. 212.58  Appeals.

    The provisions of Sec. 211.58 of this subchapter are applicable to 
leases under this part.



PART 213_LEASING OF RESTRICTED LANDS OF MEMBERS OF FIVE CIVILIZED 
TRIBES, OKLAHOMA, FOR MINING--Table of Contents




Sec.
213.1 Definitions.

                          How To Acquire Leases

213.2 Applications for leases.
213.3 No Government employee shall acquire leases.
213.4 Sale of oil and gas leases.
213.5 Term of oil and gas leases.
213.6 Leases for minerals other than oil and gas.
213.7 Fees.
213.8 Filing of lease deemed constructive notice.
213.9 Noncontiguous tracts.
213.10 Lessor's signature.
213.11 Minor lessors.
213.12 Leases executed by guardians of minors.
213.13 Inherited lands.
213.14 Corporations and corporate information.
213.15 Bonds.
213.16 Additional information may be requested by Area Director.
213.17 Government reserves right to purchase minerals produced.

                           Rents and Royalties

213.18 Manner of payment of rents and royalties.
213.19 Crediting advance annual payments.
213.20 [Reserved]
213.21 Rate of rents on leases other than oil and gas.
213.22 Expenditures under lease other than oil and gas.
213.23 Royalty rates for minerals other than oil and gas.
213.24 Rate of rents and royalties on oil and gas leases.
213.25 Free use of gas by lessor.
213.26 Rate of royalty on casing-head gas.
213.27 Rate of rental for nonutilized gas wells.
213.28 Royalty payments and production reports.
213.29 Division orders.

                               Operations

213.30 Permission to start operations.
213.31 Restrictions on operations.
213.32 Wells.
213.33 Diligence and prevention of waste.
213.34 Inspection of premises; books and accounts.
213.35 Mines to be timbered properly.
213.36 Surrender of leased premises in good condition.
213.37 Penalties.
213.38 Assignments and overriding royalties.
213.39 Stipulations.
213.40 Cancellations.

                         Removal of Restrictions

213.41 Leases executed but not approved before restrictions removed from 
          land.
213.42 Operations after removal of restrictions from leased lands.
213.43 Relinquishment of Government supervision.
213.44 Division of royalty to separate fee owners.
213.45 Restrictions especially continued as to certain lands.
213.46 Field clerks.
213.47 Forms.
213.48 Effective date.
213.49 Scope of regulations.

    Authority: Sec. 2, 35 Stat. 312, sec. 18, 41 Stat. 426, sec. 1, 45 
Stat. 495, sec. 1, 47 Stat. 777; 25 U.S.C. 356. Interpret or apply secs. 
3, 11, 35 Stat. 313, 316, sec. 8, 47 Stat. 779, unless otherwise noted.

    Cross Reference: For oil and gas operating regulations of the 
Geological Survey, see 30 CFR part 221.

    Source: 22 FR 10599, Dec. 24, 1957, unless otherwise noted. 
Redesignated at 47 FR 13327, Mar. 30, 1982.



Sec. 213.1  Definitions.

    Area Director. The term ``Area Director'' in this part refers to the 
officer in charge of the Five Civilized Tribes Indian Agency.
    Supervisor. The term ``supervisor'' in this part refers to a 
representative of

[[Page 578]]

the Secretary of the Interior under direction of the Director of the 
U.S. Geological Survey, authorized and empowered to supervise and direct 
operations under oil and gas or other mining leases, to furnish 
scientific and technical information and advice, to ascertain and record 
the amount and value of production, and to determine and record rentals 
and royalties due and paid.

                          How To Acquire Leases



Sec. 213.2  Applications for leases.

    Applications for leases should be made to the Area Director.



Sec. 213.3  No Government employee shall acquire leases.

    No lease, assignment thereof, or interest therein will be approved 
to any employee or employees of the U.S. Government, whether connected 
with the Bureau of Indian Affairs or otherwise, and no employee of the 
Department of the Interior shall be permitted to acquire any interest in 
such leases covering restricted Indian lands by ownership of stock in 
corporations having leases or in any other manner.

(R.S. 2078; 25 U.S.C. 68)



Sec. 213.4  Sale of oil and gas leases.

    (a) At such times and in such manner as he may deem appropriate, the 
Area Director shall publish notices at least thirty days prior to the 
sale, unless a shorter period is authorized by the Commissioner of 
Indian Affairs, that oil and gas leases on specific tracts, each of 
which shall be in a reasonably compact body, will be offered to the 
highest responsible bidder for a bonus consideration, in addition to 
stipulated rentals and royalties. Each bid must be accompanied by a 
cashier's check, certified check, or postal money order, payable to the 
payee designated in the invitation to bid, in an amount not less than 25 
percent of the bonus bid. Within 30 days after notification of being the 
successful bidder, said bidder must remit the balance of the bonus, the 
first year's rental, and his share of the advertising costs, and shall 
file with the Area Director the lease in completed form. The Area 
Director may, for good and sufficient reasons, extend the time for the 
completion and submission of the lease form, but no extension shall be 
granted for remitting the balance of monies due. If the successful 
bidder fails to pay the full consideration within said period, or fails 
to file the completed lease within said period or extension thereof, or 
if the lease is disapproved through no fault of the lessor or the 
Department of the Interior, 25 percent of the bonus bid will be 
forfeited for the use and benefit of the Indian lessor.
    (b) In cases where any part of the bonus bid for a lease is paid 
directly to the Indian lessor, upon his signing the lease, the lessee 
must procure and file with the lease an affidavit of the lessor, sworn 
to before a U.S. Commissioner, Postmaster, Area Director, local 
representative of the Area Director, county or district judge, Federal 
judge or clerk of a Federal court, showing the amount of bonus so paid, 
and the balance thereof must be paid into the office of the Area 
Director upon filing the lease. Where possible lessees are requested to 
take the lessor to the nearest United States field clerk who will render 
all proper assistance in the execution of leases, and before whom the 
bonus affidavit may be executed in cases where any part of bonus 
consideration is paid directly to the lessor. Where leases are executed 
by guardians, under order of court, the affidavit of lessor may be 
executed before a notary public.
    (c) All notices or advertisements of sales of oil and gas leases 
shall reserve to the Secretary of the Interior the right to reject all 
bids when in his judgment the interests of the Indians will be best 
served by so doing, and that if no satisfactory bid is received, or if 
the accepted bidder fails to complete the lease or if the Secretary of 
the Interior shall determine that it is unwise in the interests of the 
Indians to accept the highest bid, the Secretary may readvertise such 
lease for sale, or if deemed advisable, with the consent of the Indian 
owners, a lease may be made by private negotiations. The successful 
bidder or bidders will be required to pay his or their share of the 
advertising costs. Amounts received from unsuccessful bidders will be 
returned; but when no bid is accepted on

[[Page 579]]

a tract, the costs of advertising will be assessed against the applicant 
who requested that said tract be advertised.

(Secs. 16, 17, 48 Stat. 987, 988, sec. 9, 49 Stat. 1968, sec. 4, 52 
Stat. 348; 25 U.S.C. 396d, 476, 477, 509)



Sec. 213.5  Term of oil and gas leases.

    Oil and gas mining leases which require the approval of the 
Secretary of the Interior may be made for periods of 10 years from the 
date of approval of lease by the Secretary of the Interior and as much 
longer thereafter as oil and/or gas is produced in paying quantities.



Sec. 213.6  Leases for minerals other than oil and gas.

    Uncontested mining leases for minerals other than oil and gas shall 
be made on forms \1\ prescribed by the Department, for a period of 15 
years with the right of renewal on such terms as the superintendent may 
prescribe, and shall be subject only to approval by the Area Director. 
See provisions of the act of February 14, 1920 (41 Stat. 408). Any 
persons aggrieved by any decision or order of the Area Director 
approving, rejecting, or disapproving any such lease may appeal from the 
same to the Secretary of the Interior within 30 days from the date of 
such decision or order.
---------------------------------------------------------------------------

    \1\ For further information regarding forms, see Sec. 211.30.
---------------------------------------------------------------------------



Sec. 213.7  Fees.

    The provisions of Sec. 211.25 of this chapter, or as hereafter 
amended, are applicable to this part.

[24 FR 7949, Oct. 2, 1959. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 213.8  Filing of lease deemed constructive notice.

    The filing of any lease in the office of the Area Director shall be 
deemed constructive notice of the existence of such lease. See act of 
March 1, 1907.

(34 Stat. 1026)



Sec. 213.9  Noncontiguous tracts.

    No lease will be approved covering two or more noncontiguous tracts 
of land, but in such case a lease must be executed on each separate 
tract.



Sec. 213.10  Lessor's signature.

    Any Indian who cannot write his name will be required to sign all 
official papers by making a distinct thumbprint which shall be 
designated as ``right'' or ``left'' thumbmark. Such signatures must be 
witnessed by two persons, one of whom must be a U.S. Government employee 
(such as field clerk, postmaster, U.S. Commissioner, etc.).



Sec. 213.11  Minor lessors.

    Where the lessor is a minor, certified copies of letters of 
guardianship and court orders approving leases must be filed.



Sec. 213.12  Leases executed by guardians of minors.

    Leases executed by guardians of minors under order of court for a 
period extending beyond the minority of the minor will be approved 
unless it appears that such action would be prejudicial to the interests 
of the minor: Provided, That in the event the minor becomes of age 
within 1 year from the date of execution of lease the consent of the 
minor to the execution of the lease should be obtained and submitted 
with the lease for consideration.



Sec. 213.13  Inherited lands.

    Except to prevent loss or waste, leases on undivided inherited lands 
will not be approved until the heirship determination has been approved. 
If the heirs to undivided inherited lands are undetermined or cannot be 
located, or if the heirs owning less than one-half interest in the lands 
refuse to sign a lease and it appears necessary to lease the lands to 
prevent loss or waste, the Area Director will report the facts to the 
Commissioner of Indian Affairs and ask for instructions. Minor heirs can 
lease or joint adult heirs in leasing only through guardians under order 
of court. Proof of heirship shall be given upon Form F prescribed. If 
probate or other court proceedings have established the heirship in any 
case, or the land has been partitioned, certified copy of final order, 
judgment, or decree of the court will be accepted in lieu of Form F.

[[Page 580]]



Sec. 213.14  Corporations and corporate information.

    If the applicant for a lease is a corporation, it shall file 
evidence of authority of its officers to execute papers; and with its 
first application it shall also file a certified copy of its articles of 
incorporation, and, if foreign to the State in which the lands are 
located, evidence showing compliance with the corporation laws thereof. 
Statements of changes in officers and stockholders shall be furnished by 
a corporation lessee to the Area Director January 1 of each year, and at 
such other times as may be requested.
    Whenever deemed advisable in any case the Area Director may require 
a corporation applicant or lessee to file:
    (a) List of officers, principal stockholders, and directors, with 
post office addresses and numbers of shares held by each.
    (b) A sworn statement of the proper officer showing:
    (1) The total number of shares of the capital stock actually issued 
and the amount of cash paid into the treasury on each share sold; or, if 
paid in property, the kind of quantity and value of the same paid per 
share.
    (2) Of the stock sold, how much remains unpaid and subject to 
assessment.
    (3) The amount of cash the company has in its treasury and 
elsewhere.
    (4) The property, exclusive of cash, owned by the company and its 
value.
    (5) The total indebtedness of the company and the nature of its 
obligations.
    (6) Whether the applicant or any person controlling, controlled by 
or under common control with the applicant has filed any registration 
statement, application for registration, prospectus or offering sheet 
with the Securities and Exchange Commission pursuant to the Securities 
Act of 1933 or the Securities Exchange Act of 1934 or said Commission's 
rules and regulations under said acts; if so, under what provision of 
said acts or rules and regulations; and what disposition of any such 
statement, application, prospectus or offering sheet has been made.
    (c) Affidavits of individual stockholders, setting forth in what 
corporations, or with what persons, firms, or associations such 
individual stockholders are interested in mining leases on restricted 
lands within the State, and whether they hold such interest for 
themselves or in trust.

    Cross Reference: For regulations of the Securities and Exchange 
Commission, see 17 CFR chapter II.



Sec. 213.15  Bonds.

    (a) Lessee shall furnish with each mining lease a bond (Form 5-
154b), and an assignee of a lease shall furnish with each assignment a 
bond (Form 5-154m), with an acceptable company authorized to act as sole 
surety, or with two or more personal sureties and a deposit as 
collateral security of any public-debt obligations of the United States 
guaranteed as to principal and interest by the United States, equal to 
the full amount of such bonds, or other collateral satisfactory to the 
Secretary of the Interior, or show ownership of unencumbered real estate 
of the value equal to twice the amount of the bonds. Lessee may file a 
bond on Form 5-154a without sureties and a deposit as collateral 
security of Government bonds equal in value to the full amount of the 
bond. Lease bonds, except as provided in paragraph (c) of this section, 
shall not be less than the following amounts:

For less than 80 acres............................................$l,000
For 80 acres and less than 120 acres...............................1,500
For 120 acres and not more than 160 acres..........................2,000
For each additional 40 acres, or part thereof, above 160 acres.......500

    Provided, That for leases for minerals other than oil and gas the 
Secretary of the Interior or his authorized representative with the 
consent of the Indian landowner may authorize a bond for a lesser amount 
if, in his opinion, the circumstances warrant and the interests of the 
Indian landowners are fully protected: Provided further, That a lessee 
may file a bond (Form 5-154f), in the sum of $15,000 for all leases of 
minerals up to 10,240 acres under the jurisdiction of the officer in 
charge of the Five Civilized Tribe Agency.
    (b) In lieu of the bonds required under paragraph (a) of this 
section, a lessee may furnish a bond (Form 5-156) in the sum of $75,000 
for full nationwide coverage with an acceptable company

[[Page 581]]

authorized to act as sole surety to cover all oil and gas leases and oil 
and gas prospecting permits without geographic or acreage limitation to 
which the lessee or permittee is or may become a party.
    (c) The right is specifically reserved to increase the amount of 
bonds and the collateral security prescribed in paragraph (a) of this 
section in any particular case when the officer in charge deems it 
proper to do so. The nationwide bond may be increased at any time in the 
discretion of the Secretary of the Interior.

[22 FR 10599, Dec. 24, 1957, as amended at 26 FR 164, Jan. 10, 1961. 
Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 213.16  Additional information may be requested by Area Director.

    The Area Director, or other Government officer having the matter in 
charge or under investigation, may, at any time, either before or after 
approval of a lease, call for any additional information desired to 
carry out the purpose of the regulations in this part, and such 
information shall be furnished within the time specified in the request 
therefor. If the lessee fails to furnish the information requested, the 
lease will be subject to disapproval or cancellation, whichever is 
appropriate.



Sec. 213.17  Government reserves right to purchase minerals produced.

    In time of war or other public emergency any of the executive 
departments of the U.S. Government shall have the option to purchase at 
the prevailing market price on the date of sale all or any part of the 
minerals produced under any lease.

                           Rents and Royalties



Sec. 213.18  Manner of payment of rents and royalties.

    (a) Except as provided in paragraph (b) of this section, all rents, 
royalties and other payments due under leases which have been or may be 
approved in accordance with this part shall be paid by check or bank 
draft to the order of the Treasurer of the United States and mailed to 
the Area Director for deposit to the credit of the various lessors. When 
lessees and purchasers are instructed, in writing, by the Area Director, 
which instructions shall be complete as to lessors for each lease, 
separate remittances for each payment due each lessor shall be mailed to 
the Area Director. Any payments under this paragraph, covering lands or 
interests therein from which restrictions have been removed by death or 
otherwise, may continue to be made in the manner provided by this 
paragraph until ten days after notice of relinquishment of supervision 
has been mailed to the lessee.
    (b) The Area Director may, in his discretion, whenever it appears to 
be in the best interest of any lessor, authorize and direct the lessee 
to pay directly to the lessor, or to the legal guardian of any lessor 
under guardianship, the rents, royalties and other payments (other than 
bonuses and advance payments for the first year) due under leases which 
have been or may be approved in accordance with the regulations in this 
part. Any such authority for direct payment shall be in writing, 
addressed to the owner or owners of the lease, and shall expressly 
provide for its revocation or modification at any time, in writing, by 
the Area Director. Written authorization for direct payment and written 
revocations or modifications thereof shall become a part of the lease 
and shall be distributed as in the case of original leases. All such 
revocations or modifications shall have a 5-day grace period after date 
of receipt. Rents, royalties, and other payments paid in accordance 
therewith shall constitute full compliance with the requirements of the 
lease pertaining to such payments.
    (c) Rents and royalties paid pursuant to paragraphs (a) and (b) of 
this section on producing leases shall be supported by statements, 
acceptable to the Secretary or his duly authorized representative, to be 
transmitted to the Supervisor, in duplicate, covering each lease, 
identified by contract number and lease number. Such statements shall 
show the specific items of rents or royalties for which remittances are 
made, and shall identify each remittance by the remittance number, date, 
amount, and name of each payee.
    (d) Rents paid on nonproducing leases pursuant to paragraphs (a) and 
(b) of

[[Page 582]]

this section shall be supported by a statement, acceptable to the Area 
Director, to be transmitted to the Area Director covering each lease, 
identified by contract number and lease number. Each remittance shall be 
identified by the remittance number, date, amount, name of each payee, 
and dates of mailing of remittances. Date of mailing, or, if remittance 
is sent by registered mail, the date of registration receipts covering 
remittances mailed, shall be considered as date of payment.
    (e) For leases other than oil and gas, all advance rentals and 
royalties for the first year shall be paid to the Area Director at the 
time of filing the lease, and the advance royalty and 20 percent of the 
first year's rental so paid shall be and become the property of the 
lessor, if the lease be disapproved because of the lessee's failure to 
meet the requirements of the law or of the regulations in this part or 
because of any other fault or defect chargeable to the lessee.



Sec. 213.19  Crediting advance annual payments.

    In the event of discovery of minerals, all advance rents and advance 
royalties shall be allowed as credit on stipulated royalties for the 
year for which such advance payments have been made. No refund of such 
advance payments made under any lease will be allowed in the event the 
royalty on production is not sufficient to equal such advance payment; 
nor will any part of the moneys so paid be refunded to the lessee 
because of any subsequent surrender or cancellation of the lease.



Sec. 213.20  [Reserved]



Sec. 213.21  Rate of rents on leases other than oil and gas.

    On all mineral leases of allotted lands other than oil and gas 
leases, rental shall be paid annually in advance from the date of 
approval of the lease, as follows: Fifty cents per acre for the first 
year, 75 cents per acre for the second year, and $1 per acre for the 
third and each succeeding year of the term of the lease.



Sec. 213.22  Expenditures under lease other than oil and gas.

    (a) On all leases for deposits of minerals other than oil and gas, 
there shall be expended for each calendar year the lease is in force, 
and for each fraction of a calendar year greater than 6 months, in 
actual mining operations, development, or improvements upon the lands 
leased, or for the benefit thereof, a sum which, with the annual rental, 
shall amount to not less than $5 per acre.
    (b) The expenditures for development required by this section upon 
application may be waived in writing by the Area Director or other 
officer in charge of the Five Civilized Tribes Agency either before or 
after the approval of a lease, such waiver to be subject to termination 
at any time upon 10 days' written notice to the holder of the lease by 
the said Area Director or other officer in charge.
    (c) Each lessee, except oil and gas lessees, shall file with the 
Area Director an itemized statement in duplicate, within 20 days after 
the close of each calendar year, of the amount and character of said 
expenditures during such years the statement to be certified under oath 
by the lessee or his agent having personal knowledge of the facts 
contained therein.



Sec. 213.23  Royalty rates for minerals other than oil and gas.

    Unless otherwise authorized by the Commissioner of Indian Affairs, 
the minimum rates for minerals other than oil and gas shall be as 
follows:
    (a) For substances other than gold, silver, copper, lead, zinc, 
tungsten, coal, asphaltum and allied substances, oil, and gas, the 
lessee shall pay quarterly or as otherwise provided in the lease, a 
royalty of not less than 10 percent of the value, at the nearest 
shipping point, of all ores, metals, or minerals marketed.
    (b) For gold and silver the lessee shall pay quarterly or as 
otherwise provided in the lease, a royalty of not less than 10 percent 
to be computed on the value of bullion as shown by mint returns after 
deducting forwarding charges to the point of sale; and for copper, lead, 
zinc, and tungsten, a royalty of not less than 10 percent to be

[[Page 583]]

computed on the value of ores and concentrates as shown by reduction 
returns after deducting freight charges to the point of sale. Duplicate 
returns shall be filed by the lessee with the Area Director within 10 
days after the ending of the quarter or other period specified in the 
lease within which such returns are made: Provided, however, That the 
lessee shall pay a royalty of not less than 10 percent of the value of 
the ore or concentrates sold at the mine unless otherwise provided in 
the lease.
    (c) For coal the lessee shall pay quarterly or as otherwise provided 
in the lease, a royalty of not less than 10 cents per ton of 2,000 
pounds of mine run, or coal as taken from the mine, including what is 
commonly called ``slack.''
    (d) For asphaltum and allied substances the lessee shall pay 
quarterly or as otherwise provided in the lease, a royalty of not less 
than 10 cents per ton of 2,000 pounds on crude material or not less than 
60 cents per ton on refined substances.



Sec. 213.24  Rate of rents and royalties on oil and gas leases.

    The lessee shall pay, beginning with the date of approval of oil and 
gas leases by the Secretary of the Interior, a rental of $1.25 per acre 
per annum in advance during the continuance thereof, together with a 
royalty of 12\1/2\ percent of the value or amount of all oil, gas and/or 
natural gasoline, and/or all other hydrocarbon substances produced and 
saved from the land leased, save and except oil and/or gas used by the 
lessee for development and operation purposes on the lease, which oil or 
gas shall be royalty free. A higher rate of royalty may be fixed by the 
Secretary of the Interior or his authorized representative, prior to the 
advertisement of land for oil and gas leases. During the period of 
supervision, ``value'' for the purposes of the lease may, in the 
discretion of the Secretary of the Interior be calculated on the basis 
of the highest price paid or offered (whether calculated on the basis of 
short or actual volume) at the time of production for the major portion 
of the oil of the same gravity, and gas, and/or natural gasoline, and/or 
all other hydrocarbon substances produced and sold from the field where 
the leased lands are situated, and the actual volume of the marketable 
product less the content of foreign substances as determined by the 
supervisor. The actual amount realized by the lessee from the sale of 
said products may, in the discretion of the Secretary of the Interior, 
be deemed mere evidence of or conclusive evidence of such value. When 
paid in value, such royalties shall be due and payable monthly at such 
time as the lease provides; when royalty on oil produced is paid in 
kind, such royalty oil shall be delivered in tanks provided by the 
lessee on the premises where produced without cost to the lessor unless 
otherwise agreed to by the parties thereto, at such time as may be 
required by the lessor. The lessee shall not be required to hold such 
royalty oil in storage longer than 30 days after the end of the calendar 
month in which said oil is produced. The lessee shall be in no manner 
responsible or held liable for loss or destruction of such oil in 
storage by causes beyond his control.



Sec. 213.25  Free use of gas by lessor.

    If the leased premises produce gas in excess of the lessee's 
requirements for the development and operation of said premises, then 
the lessor may use sufficient gas, free of charge, for all stoves and 
inside lights in the principal dwelling house on said premises, by 
making his own connections to a regulator, connected to the well and 
maintained by the lessee, and the lessee shall not be required to pay 
royalty on gas so used. The use of such gas shall be at the lessor's 
risk at all times.



Sec. 213.26  Rate of royalty on casing-head gas.

    (a) On casing-head gas used or sold for the manufacture of casing-
head gasoline the minimum rate of royalty shall be 12\1/2\ percent of 
the value of the casing-head gas, which value shall be determined and 
computed on the basis and in the manner provided in the applicable 
operating regulations of the Department.
    (b) In cases where gas produced and sold has a value for drip 
gasoline, casing-head gasoline content, and as dry

[[Page 584]]

gas from which the casing-head gasoline has been extracted, then the 
royalties above provided shall be paid on all such values.



Sec. 213.27  Rate of rental for nonutilized gas wells.

    If the gas from a gas producing well is not marketed or utilized, 
other than for operation of the lease, then for each such well the 
lessee shall pay such rental as may be determined by the supervisor and 
approved by the Secretary of the Interior, calculated from the date of 
the completion of the well. Payment of annual gas rentals shall be made 
within 30 days from the date such payment becomes due.



Sec. 213.28  Royalty payments and production reports.

    (a) Royalty payments on all oil and gas or other producing leases 
shall be made at the rates, and at such time, and in the manner 
prescribed by the terms of the lease.
    (b) Quarterly reports shall be made by each lessee on nonproducing 
leases other than oil and gas within 25 days after December 31, March 
31, June 30, and September 30, of each year, upon forms provided, 
showing manner of operations and total production during such quarter. A 
lessee may include within one sworn statement all leases upon which 
there is no production or upon which dry holes have been drilled. 
Reports of oil and gas leases where royalty accounting is done in the 
field office of the supervisor will be made as required in the operating 
regulations.



Sec. 213.29  Division orders.

    (a) Lessees may make arrangements with the purchasers of oil and gas 
for the payment of the royalties as provided for in the lease and the 
regulations but such arrangement, if made, shall not operate to relieve 
a lessee from responsibility should the purchaser fail or refuse to pay 
royalties when due. Where lessees avail themselves of this privilege, 
division orders should be executed by the lessee and forwarded to the 
supervisor for approval. Purchasers may be authorized by the supervisor 
to reimburse lessees out of royalties for advance rents and advance 
royalties. Copies of written instructions, notices, modifications, 
revocations, and authorizations, as provided for in Sec. 213.18 (a) and 
(b), shall be furnished to purchasers. The right is reserved for the 
supervisor to cancel a division order at any time or require the 
purchaser to discontinue to run the oil of any lessee who fails to 
operate the lease properly or otherwise violates the provisions of the 
lease, of the regulations in this part, or of the operating regulations.
    (b) When oil is taken by authority of a division order, the lessee 
or his representatives shall be actually present when the oil is gauged 
and records are made of the temperature, gravity, and impurities. The 
lessee will be held responsible for the correctness and the correct 
recording and reporting of all the foregoing measurements, which, except 
lowest gauge, shall be made at the time the oil is turned into the 
pipeline. Failure of the lessee to perform properly these duties will 
subject the division order to revocation.

                               Operations



Sec. 213.30  Permission to start operations.

    No operations will be permitted on any lease before it is approved. 
Written permission must be secured from the supervisor before any 
operations are started under any oil and gas lease. Operations must be 
in accordance with the operating regulations promulgated by the 
Secretary of the Interior. Copies of these regulations may be secured 
from either the supervisor or the Area Director and no operations should 
be attempted without a study of the operating regulations.



Sec. 213.31  Restrictions on operations.

    (a) Oil and gas leases issued under the provisions of this part 
shall be subject to imposition by the Secretary of the Interior of such 
restrictions as to time or times for the drilling of wells and as to the 
production from any well or wells as in his judgment may be necessary or 
proper for the protection of the natural resources of the leased land 
and in the interest of the lessor. In the exercise of his judgment the 
Secretary of the Interior may take into consideration, among other 
things, the Federal

[[Page 585]]

laws, State laws, regulations by competent Federal or State authorities, 
lawful agreements among operators regulating either drilling or 
production, or both.
    (b) All such leases shall be subject to any cooperative or unit plan 
of development affecting the leased lands that may be required by the 
Secretary of the Interior, but no lease shall be included in any 
cooperative or unit plan without prior approval of the Secretary of the 
Interior. If said plan effects a change in the lease terms, the consent 
of the lessor or lessors must be obtained before the plan is effective.



Sec. 213.32  Wells.

    The lessee shall agree (a) to drill and produce all wells necessary 
to offset or protect the leased land from drainage by wells on adjoining 
lands not the property of the lessor, or in lieu thereof, compensate the 
lessor in full each month for the estimated loss of royalty through 
drainage: Provided, That during the period of supervision by the 
Secretary of the Interior, the necessity for offset wells shall be 
determined by the supervisor and payment in lieu of drilling and 
producing shall be with the consent of, and in an amount determined by 
the Secretary of the Interior; (b) at the election of the lessee to 
drill and produce other wells: Provided, That the right to drill and 
produce such other wells shall be subject to any system of well spacing 
or production allotments authorized and approved under applicable law or 
regulations, approved by the Secretary of the Interior and affecting the 
field or area in which the leased lands are situated; and (c) if the 
lessee elects not to drill and produce such other wells for any period 
the Secretary of the Interior may, within 10 days after due notice in 
writing, either require the drilling and production of such wells to the 
number necessary, in his opinion, to insure reasonable diligence in the 
development and operation of the property, or may in lieu of such 
additional diligent drilling and production require the payment on and 
after the first anniversary date of the lease of not to exceed $1 per 
acre per annum, which sum shalI be in addition to any rental or royalty 
herein specified.



Sec. 213.33  Diligence and prevention of waste.

    The lessee shall exercise diligence in drilling and operating wells 
for oil and gas on the leased lands while such products can be secured 
in paying quantities; carry on all operations in a good and workmanlike 
manner in accordance with approved methods and practice, having due 
regard for the prevention of waste of oil or gas developed on the land, 
or the entrance of water through wells drilled by the lessee to the 
productive sands or oil or gas-bearing strata to the destruction or 
injury of the oil or gas deposits, the preservation and conservation of 
the property for future productive operations, and to the health and 
safety of workmen and employees; plug securely all wells before 
abandoning the same and to shut off effectually all water from the oil 
or gas-bearing strata; not drill any well within 200 feet of any house 
or barn on the premises without the lessor's written consent approved by 
the Area Director; carry out at his expense all reasonable orders and 
requirements of the supervisor relative to prevention of waste, and 
preservation of the property and the health and safety of workmen; bury 
all pipelines crossing tillable lands below plow depth unless other 
arrangements therefor are made with the Area Director; pay the lessor 
all damages to crops, buildings, and other improvements of the lessor 
occasioned by the lessee's operations: Provided, That the lessee shall 
not be held responsible for delays or casualties occasioned by causes 
beyond his control.



Sec. 213.34  Inspection of premises; books and accounts.

    Lessees shall agree to allow the lessors and their agents or any 
authorized representative of the Interior Department to enter, from time 
to time, upon and into all parts of the leased premises for the purpose 
of inspection, and shall further agree to keep a full and correct 
account of all operations and make reports thereof, as required by the 
applicable regulations of the Department; and their books and records, 
showing manner of operations and persons interested, shall be open at 
all times for examination by such officers

[[Page 586]]

of the Department as shall be instructed in writing by the Secretary of 
the Interior or authorized by regulations to make such examination.



Sec. 213.35  Mines to be timbered properly.

    In mining operations the lessee shall keep the mine well and 
sufficiently timbered at all points where necessary, in accordance with 
good mining practice, and in such manner as may be necessary to the 
proper preservation of the property leased and safety of workmen.



Sec. 213.36  Surrender of leased premises in good condition.

    On expiration of the term of a lease, or when a lease is 
surrendered, the lessee shall deliver to the Government the leased 
ground, with the mine workings in case of leases other than oil and gas, 
in good order and condition, and the bondsmen will be held for such 
delivery in good order and condition, unless relieved by the Secretary 
of the Interior for cause. It shall, however, be stipulated that the 
machinery necessary to operate any mine is the property of the lessee, 
but that it may be removed by him only after the condition of the 
property has been ascertained by inspection by the Secretary of the 
Interior or his authorized agents, to be in satisfactory condition.



Sec. 213.37  Penalties.

    Failure of the lessee to comply with any provisions of the lease, of 
the operating regulations, of the regulations in this part, orders of 
the Area Director or his representative, or of the orders of the 
supervisor or his representative, shall subject the lease to 
cancellation by the Secretary of the Interior or the lessee to a penalty 
of not more than $500 per day for each day the terms of the lease, the 
regulations, or such orders are violated, or to both such penalty and 
cancellation: Provided, That the lessee shall be entitled to notice and 
hearing, within 30 days after such notice, with respect to the terms of 
the lease, regulations, or orders violated, which hearing shall be held 
by the supervisor, whose findings shall be conclusive unless an appeal 
be taken to the Secretary of the Interior within 30 days after notice of 
the supervisor's decision, and the decision of the Secretary of the 
Interior upon appeal shall be conclusive.



Sec. 213.38  Assignments and overriding royalties.

    (a) Leases or any interest therein, may be assigned or transferred 
only with the approval of the Secretary of the Interior, and to procure 
such approval the assignee must be qualified to hold such lease under 
existing rules and regulations, and shall furnish a satisfactory bond 
for the faithful performance of the covenants and conditions thereof. No 
lease or any interest therein, or the use of such lease, shall be 
assigned, sublet, or transferred, directly or indirectly, by working or 
drilling contract, or otherwise, without the consent of the Secretary of 
the Interior. Assignments of leases shall be filed with the Area 
Director within 20 days after the date of execution.
    (b) An agreement creating overriding royalties or payments out of 
production on oil and gas leases under this part shall be subject to the 
provisions of Sec. 211.26(d) of this subchapter, or as hereafter 
amended.

[22 FR 10599, Dec. 24, 1957, as amended at 23 FR 9758, Dec. 18, 1958. 
Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 213.39  Stipulations.

    The lessee under any lease heretofore approved may by stipulation 
(Form 5-154i) with the consent of the lessor and the approval of the 
Secretary of the Interior, make such approved lease subject to all the 
terms, conditions, and provisions contained in the lease form and 
regulations currently in use. Stipulations shall be filed with the Area 
Director within 20 days after the date of execution.



Sec. 213.40  Cancellations.

    (a) When, in the opinion of the Secretary of the Interior, the 
lessee has violated any of the terms and conditions of a lease or of the 
applicable regulations, or if mining operations are conducted wastefully 
and without regard to good mining practice, the Secretary of the 
Interior shall have the right at any time after 30 days' notice to the 
lessee specifying the terms and

[[Page 587]]

conditions violated, and after a hearing, if the lessee shall so request 
within 30 days after issuance of the notice, to declare such lease null 
and void, and the lessor shall then be entitled and authorized to take 
immediate possession of the land.
    (b) On the following conditions, the lessee may, on approval of the 
Secretary of the Interior, surrender a lease or any part of it:
    (1) That he make application for cancellation to the Area Director 
having jurisdiction over the land.
    (2) That he pay a surrender fee of $1 at the time the application is 
made.
    (3) That he pay all royalties and rentals due to the date of such 
application.
    (4) That he make a satisfactory showing that full provision has been 
made for conservation and protection of the property and that all wells, 
drilled on the portion of the lease surrendered, have been properly 
abandoned.
    (5) If the lease has been recorded, that he file, with his 
application, a recorded release of the acreage covered by the 
application.
    (6) If the application is for the cancellation of the entire lease 
or the entire undivided portion, that he surrender the lease: Provided, 
That where the application is made by an assignee to whom no copy of the 
lease was delivered, he will be required to surrender only his copy of 
assignment.
    (7) If the lease (or portion being surrendered or canceled) is owned 
in undivided interests by more than one party, then all parties shall 
join in the application for cancellation.
    (8) That all required fees and papers must be in the mail or 
received on or before the date upon which rents and royalties become 
due, in order for the lessee and his surety to be relieved from 
liability for the payment of such royalties and rentals.
    (9) If there has been a contest respecting a lease or leases, the 
approved, the disapproved, or the canceled parts thereof will be held in 
the office of the Area Director for 5 days after the Department's 
decision has been promulgated, by mail or delivery, and will not be 
delivered, if within that period a motion for review and reconsideration 
be filed, until such motion is passed upon by the Department.
    (10) In the event oil or gas is being drained from the leased 
premises by wells not covered by a lease; the lease, or any part of it, 
may be surrendered, only on such terms and conditions as the Secretary 
of the Interior may determine to be reasonable and equitable.
    (c) No part of any advance rental shall be refunded to the lessee 
nor shall he be relieved, by reason of any subsequent surrender or 
cancellation of the lease, from the obligation to pay said advance 
rental when it becomes due.
    (d) For proper method of terminating departmental leases covering 
lands from which restrictions have been removed see section 3 of the act 
of May 27, 1908 (35 Stat. 312).

                         Removal of Restrictions



Sec. 213.41  Leases executed but not approved before restrictions removed 
from land.

    Leases executed before the removal of restrictions against 
alienation on land from all of which restrictions against alienation 
shall be removed after such execution, if such leases contain specific 
provisions for approval by the Secretary of the Interior, whether now 
filed with the Department or presented for consideration hereafter, will 
be considered and acted upon by this Department as heretofore but only 
for the purpose of approving or disapproving the instrument.



Sec. 213.42  Operations after removal of restrictions from leased lands.

    (a) Oil and gas leases heretofore approved and leases for other 
minerals now or hereafter in force on land from all of which 
restrictions against alienation have been or shall be removed, even if 
such leases contain provision authorizing supervision by this 
Department, shall after such removal of restrictions against alienation, 
be operated entirely free from such supervision, and the authority and 
power delegated to the Secretary of the Interior in said leases shall 
cease and all payments required to be made to the Area Director shall 
thereafter be made to the lessor or the then owner of the land, and 
changes in regulations thereafter made by the Secretary of the Interior 
shall not apply to such leased

[[Page 588]]

land from which said restrictions are removed.
    (b) In the event restrictions are removed from a part of the land 
included in any lease to which this section applies the entire lease 
shall continue subject to the supervision of the Secretary of the 
Interior, and all royalties thereunder shall be paid to the Area 
Director until such time as the lessor and lessee shall furnish the 
Secretary of the Interior satisfactory information that adequate 
arrangements have been made to account for the oil, gas or mineral upon 
the restricted land separately from that upon the unrestricted. 
Thereafter the restricted land only shall be subject to the supervision 
of the Secretary of the Interior: Provided, That the unrestricted 
portion shall be relieved from such supervision as in the lease or 
regulations provided.



Sec. 213.43  Relinquishment of Government supervision.

    All oil and gas leases hereafter executed shall contain the 
following relinquishment of supervision clause and terms operative after 
such relinquishment, or other provisions similar in substance:

    Relinquishment of supervision by the Secretary of the Interior.--
Should the Secretary of the Interior, at any time during the life of 
this instrument, relinquish supervision as to all or part of the acreage 
covered hereby, such relinquishment shall not bind lessee until said 
Secretary shall have given 30 days' written notice. Until said 
requirements are fulfilled, lessee shall continue to make all payments 
due hereunder as heretofore in section 3(c). After notice of 
relinquishment has been received by lessee, as herein provided this 
lease shall be subject to the following further conditions:
    (a) All rentals and royalties thereafter accruing shall be paid in 
the following manner: Rentals and royalties shall be paid to lessor or 
his successors in title, or to a trustee appointed under the provision 
of section 9 hereof. Rentals and royalties shall be paid directly to 
lessor, his successors in title, or to said trustee as the case may be.
    (b) If, at the time supervision is relinquished by the Secretary of 
the Interior, lessee shall have made all payments then due hereunder, 
and shall have fully performed all obligations on its part to be 
performed up to the time of such relinquishment, then the bond given to 
secure the performance hereof, on file in the Indian Office, shall be of 
no further force or effect.
    (c) Should such relinquishment affect only part of the acreage, then 
lessee may continue to drill and operate the land covered hereby as an 
entirety: Provided, That lessee shall pay in the manner prescribed by 
section 3(c), for the benefit of lessor such proportion of all rentals 
and royalties due hereunder as the acreage retained under the 
supervision of the Secretary of the Interior bears to the entire acreage 
of the lease, the remainder of such rentals and royalties to be paid 
directly to lessor or his successors in title or said trustee as the 
case may be, as provided in subdivision (a) of this section.
    Division of fee. It is covenanted and agreed that should the fee of 
said land be divided into separate parcels, held by different owners, or 
should the rental or royalty interests hereunder be so divided in 
ownership, after the execution of this lease and after the Secretary of 
the Interior relinquishes supervision hereof, the obligations of lessee 
hereunder shall not be added to or changed in any manner whatsoever save 
as specifically provided by the terms of this lease. Notwithstanding 
such separate ownership, lessee may continue to drill and operate said 
premises as an entirety: Provided, That each separate owner shall 
receive such proportion of all rentals and royalties accruing after the 
vesting of his title as the acreage of the fee, or rental or royalty 
interest, bears to the entire acreage covered by the lease; or to the 
entire rental and royalty interest as the case may be: Provided further, 
That, if, at any time after departmental supervision hereof is 
relinquished, in whole or in part, there shall be four or more parties 
entitled to rentals or royalties hereunder, whether said parties are so 
entitled by virtue of undivided interests or by virtue of ownership of 
separate parcels of the land covered hereby, lessee at his election may 
withhold the payment of further rentals or royalties (except as to the 
portion due the Indian lessor while under restriction), until all of 
said parties shall agree upon and designate in writing and in a 
recordable instrument a trustee to receive all payments due hereunder on 
behalf of said parties and their respective successors in title. 
Payments to said trustee shall constitute lawful payments hereunder, and 
the sole risk of an improper or unlawful distribution of said funds by 
said trustee shall rest upon the parties naming said trustee and their 
respective successors in title. (The above provisions are copied from 
oil and gas mining lease Form 5-154h,\1\ revised April 24, 1935.)
---------------------------------------------------------------------------

    \1\ For information relative to obtaining Form 5-154h, see Sec. 
211.30.

---------------------------------------------------------------------------

[[Page 589]]



Sec. 213.44  Division of royalty to separate fee owners.

    Should the removal of restrictions affect only part of the acreage 
covered by a lease containing provisions to the effect that the 
royalties accruing under the lease, where the fee is divided into 
separate parcels, shall be paid to each owner in the proportion which 
his acreage bears to the entire acreage covered by the lease, the lessee 
or assignee of such unrestricted portion will be required to make the 
reports required by the regulations in this part and the operating 
regulations with respect to the beginning of drilling operations, 
completion of wells, and production the same as if the restrictions had 
not been removed. In the event the unrestricted portion of the leased 
premises is producing, the owner of the lease thereon will be required 
to pay the portion of the royalties due the Indian lessor at the time 
and in the manner specified by the regulations in this part.



Sec. 213.45  Restrictions especially continued as to certain lands.

    Restricted lands allotted as either homestead or surplus allotments, 
designated as tax exempt under section 4 of the act of May 10, 1928, as 
amended May 24, 1928 (45 Stat. 495, 733), the entire interest in which 
was acquired by inheritance, gift, devise, or purchase with restricted 
funds, by persons of one-half or more Indian blood, after the passage of 
the act of January 27, 1933 (47 Stat. 777), continue to be restricted 
under the provisions of the last mentioned act and oil and gas leases 
thereof are subject to the regulations in this part and all such leases 
to be valid must be approved by the Secretary of the Interior. Lands 
inherited by or devised to full blood Indians prior to the act of 
January 27, 1933, are not affected as to restrictions by the provisions 
of said act and may continue to be leased with the approval of the 
county court having jurisdiction of the estate of the deceased allottee 
and without approval of the Secretary of the Interior (54 L.D. 382; 10 
F. (2d), 487). Lands acquired prior to the passage of the act of January 
27, 1933 by Indians of less than full blood, whether such lands were 
restricted and tax exempt or restricted and taxable, passed to such 
persons free of all restrictions. Inherited homesteads restricted prior 
to April 26, 1931, by section 9,\2\ of the act of May 27, 1908 (35 Stat. 
312), for the benefit of heirs of one-half or more Indian blood but less 
than full bloods, born after March 4, 1906, became unrestricted April 
26, 1931, or upon the death prior thereto of the heir born subsequent to 
March 4, 1906, and oil and gas leases thereof are not subject to the 
regulations in this part nor under the jurisdiction of the Secretary of 
the Interior.
---------------------------------------------------------------------------

    \2\ Repealed restrictions on inherited homesteads, by sec. 2 of the 
act of May 10, 1928 (45 Stat. 495).
---------------------------------------------------------------------------



Sec. 213.46  Field clerks.

    Local representatives known officially as ``field clerks'' are 
located in the various districts comprising that part of the State of 
Oklahoma occupied by the Five Civilized Tribes. Such field clerks shall 
report to and act under the direction of the Area Director. Any and all 
counsel and advice desired by allottees concerning deeds, leases, or 
other instruments or matters relating to lands allotted to them shall be 
furnished by such field clerks free of charge. Field clerks shall not, 
during their term of employment, have any personal interest, directly or 
indirectly, in any transaction concerning leases covering lands of 
allottees or in the purchase or sale of any such lands regardless of 
whether the restrictions have or have not been removed. This 
prohibition, however, shall not apply to lands which such field clerks 
have legally acquired before their employment in the Bureau of Indian 
Affairs. Field clerks shall report to the Area Director at the end of 
each month the work performed during such period and special reports 
shall be made immediately of any apparently illegal transaction 
involving the estates or allotments of allottees.



Sec. 213.47  Forms.

    The provisions of Sec. 211.30 of this chapter, or as hereafter 
amended, are applicable to this part.

[24 FR 7949, Oct. 2, 1959. Redesignated at 47 FR 13327, Mar. 30, 1982]

[[Page 590]]



Sec. 213.48  Effective date.

    The regulations in this part shall become effective and in full 
force from and after the date of approval (Apr. 27, 1938), and shall be 
subject to change or alteration at any time by the Secretary of the 
Interior: Provided, That no regulations made after the approval of any 
lease shall operate to affect the term of the lease, rate of royalty, 
rental, or acreage unless agreed to by both parties to the lease. All 
former regulations governing the leasing of individually owned lands of 
the Five Civilized Tribes for mining purposes are superseded by the 
regulations in this part.



Sec. 213.49  Scope of regulations.

    The regulations in this part shall apply in so far as practicable to 
land purchased for Indians under the Oklahoma Indian Welfare Act of June 
26, 1936 (49 Stat. 1967; 25 U.S.C. 501-509), as well as to other lands 
of individual Indians of the Five Civilized Tribes.



PART 214_LEASING OF OSAGE RESERVATION LANDS, OKLAHOMA, FOR MINING, 
EXCEPT OIL AND GAS--Table of Contents




Sec.
214.1 Definition.
214.2 Sale of leases.
214.3 Corporate information.
214.4 Bonds.
214.5 Additional information.
214.6 Failure of lessee to complete lease.
214.7 Operation not permitted until lease approved; 160 acres maximum 
          for single lease.
214.8 Acreage limitation.
214.9 Advance rental.
214.10 Royalty rates.
214.11 Payment of rents and royalties.
214.12 Time of payment of royalties.
214.13 Diligence; annual expenditures; mining records.
214.14 Use of surface lands.
214.15 Homesteads.
214.16 Settlement of damages.
214.17 Use of timber from restricted lands.
214.18 Assignments.
214.19 Cancellation.
214.20 Annual reports by corporate lessees.
214.21 Inspection of lessees' books and rec ords.
214.22 Serving of notices.
214.23 Plat of mine location.
214.24 Forms.
214.25 Forfeiture of lease.
214.26 Fine; notice and hearing.
214.27 Changes in regulations.
214.28 Location of sites for mines and buildings.
214.29 Prospecting; abandonment of mines.
214.30 Lessees must appoint local representative.

    Authority: Sec. 3, 34 Stat. 543.

    Source: 22 FR 10605, Dec. 24, 1957, unless otherwise noted. 
Redesignated at 47 FR 13327, Mar. 30, 1982.



Sec. 214.1  Definition.

    The term ``officer in charge'' shall refer to the superintendent of 
the Osage Indian Agency and school or other representative of the 
Government who may, for the time, be in charge of the Osage Agency and 
school, or any person who may be detailed by the Secretary of the 
Interior or the Commissioner of Indian Affairs to take charge of leasing 
or mining operations under the regulations in this part.



Sec. 214.2  Sale of leases.

    Leases of minerals other than oil and gas may be negotiated with the 
tribal council after permission to do so has been obtained from the 
officer in charge. Leases with all papers required, shall be filed with 
the officer in charge within 30 days from the date of execution by the 
lessee and the principal chief of the Osage Tribe. The lease will be 
forwarded to the Commissioner of Indian Affairs for consideration by him 
and the Secretary of the Interior and will become effective only after 
approval by the Secretary of the Interior. If any lease should be 
disapproved through no fault of the lessee, all amounts deposited by him 
will be promptly refunded.



Sec. 214.3  Corporate information.

    A corporation shall file with its first lease a certified copy of 
articles of incorporation, and, if a foreign corporation, evidence 
showing compliance with local corporation laws in duplicate; a list of 
all stockholders, with their post office addresses, and showing the 
number of shares of capital stock held by each; together with a sworn 
statement of its proper officer showing:
    (a) The total number of shares of the capital stock actually issued, 
the number of shares actually sold and the amount of cash paid into the 
treasury

[[Page 591]]

out of the stock sold, or, if paid in property, kind, quantity, and 
value of the same.
    (b) Of the stock sold, how much per share remains unpaid and subject 
to assessment.
    (c) How much cash the company has in its treasury and elsewhere, and 
from what source it was received.
    (d) What property, exclusive of cash, is owned by the company, and 
its value.
    (e) What the total indebtedness of the company is, and the nature of 
its obligations.
    (f) Names of officers and directors.



Sec. 214.4  Bonds.

    Lessee shall furnish with each lease at the time it is filed with 
the officer in charge an acceptable bond not less than the following 
amounts:

For less than 80 acres............................................$1,000
For 80 acres and less than 120 acres...............................1,500
For 120 acres and not more than 160 acres..........................2,000
For each additional 40 acres, or part thereof above 160 acres........500

    Provided, That for leases for minerals other than oil and gas the 
Secretary of the Interior or his authorized representatives with the 
consent of the Indian landowner may authorize a bond for a lesser amount 
if, in his opinion, the circumstances warrant and the interests of the 
Indian landowners are fully protected: Provided further, That the lessee 
shall be allowed to file bond, Form S \1\ covering all leases to which 
he or they are or may become parties instead of a separate bond in each 
case, such bond to be in the penal sum of $15,000. The right is reserved 
to change the amount of the bond in any particular case, or to require a 
new bond in the discretion of the Secretary of the Interior.
---------------------------------------------------------------------------

    \1\ For further information concerning forms, see Sec. 214.24.

[26 FR 164, Jan. 10, 1961. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 214.5  Additional information.

    The officer in charge may, at any time, either before or after 
approval of a lease call for any additional information necessary to 
carry out the purpose and intent of the regulations in this part, and 
such information shall be furnished within the time specified in the 
request therefor.



Sec. 214.6  Failure of lessee to complete lease.

    Should a lessee fail to furnish, within the time specified after his 
bid is accepted, the papers necessary to put his lease and bond in 
proper form for consideration, the officer in charge shall recommend 
that the sale be disapproved and money paid forfeited to the Osage 
Tribe.



Sec. 214.7  Operation not permitted until lease approved; 160 acres 
maximum for single lease.

    No mining or work of any nature will be permitted upon any tract of 
land until a lease covering such tract shall have been approved by the 
Secretary of the Interior and delivered to the lessee. All leases shall 
be made for such period as the title to the minerals remain in the Osage 
Tribe, which time will expire April 8, 1931, unless otherwise provided 
by Congress and shall be subject to cancellation or termination as 
specified in this part. Leases made by corporations shall be accompanied 
by an affidavit by the secretary or president of the company showing the 
authority of its officers to execute leases, bonds, and other papers. No 
lease shall be made covering more than 160 acres.



Sec. 214.8  Acreage limitation.

    No person, firm, or corporation shall hold under lease at any one 
time without special permission from the Secretary of the Interior in 
excess of the following areas:
    (a) For deposits of the nature of lodes, or veins containing ores of 
gold, silver, copper, or other useful metals, 640 acres.
    (b) For beds of placer gold, gypsum, asphaltum, phosphate, iron 
ores, and other useful minerals, other than coal, lead, and zinc, 960 
acres.
    (c) For coal, 4,800 acres.
    (d) For lead and zinc, 1,280 acres.



Sec. 214.9  Advance rental.

    (a) Lessees shall pay, in addition to other considerations, annual 
advance rentals as follows: 15 cents per acre for

[[Page 592]]

the first year; 30 cents per acre for the second year; 50 cents per acre 
for the third year; and $1 per acre per annum for the fourth and each 
succeeding year during the life of any lease: Provided, That all such 
payments of advance rentals shall be credits on royalties on production 
during the year for which payment of advance rental is made.
    (b) The payment of annual advance rental shall not release the 
lessee from the obligation to conduct mining operations, as required by 
the terms of the lease.



Sec. 214.10  Royalty rates.

    Royalties will be required as follows, subject to the approval of 
the President, in accordance with the act of June 28, 1906 (34 Stat. 
543):
    (a) For gold, silver, or copper lessee shall pay quarterly a royalty 
of 10 percent to be computed on the gross value of the ores as shown by 
reduction returns after deducting freight and treatment charges. 
Duplicate reduction returns shall be filed by the lessee with the 
officer in charge within 20 days after the reduction of the ores.
    (b) For coal the lessee shall pay a royalty of 10 cents per ton of 
2,000 pounds on mine run or coal as taken from the mines, including what 
is commonly called ``slack.''
    (c) For asphaltum and allied substances, the lessee shall pay 
quarterly a royalty of 10 cents per ton of 2,000 pounds on crude 
material, and 60 cents per ton on refined substances.
    (d) For substances other than gold, silver, copper, lead, zinc, 
coal, and asphaltum the lessee shall pay quarterly a royalty of 10 
percent of the value at the nearest shipping point of all ores, metals, 
or minerals marketed.
    (e) The royalties to be paid for lead and zinc shall be computed for 
each mineral at the same rate that the amount of the concentrates of 
such mineral bears to the total amount of dirt or rock actually mined, 
except as stipulated in this section. The royalty so determined shall be 
increased by adding 1 percent for each increase of $10 in the selling 
price per ton thereof over and above the following, which shall be the 
agreed base or standard:

For zinc--$50
For lead--$65


but in no case shall the rate of royalty be less than 5 percent or more 
than 20 percent. The percentage of recovery shall be computed as nearly 
as practicable upon the ore included in each sale, but where it is 
impracticable so to do the officer in charge and the lessee shall agree 
upon some other method of computation which will produce substantially 
the same result: Provided, That in case of their disagreement the 
Commissioner of Indian Affairs shall prescribe a rule of computation to 
be followed in such cases.

    Note: The royalty would always be determined under this rule by 
ascertaining the percentage of recovery were it not for two things: (1) 
the flat rates which are fixed as the minimum and the maximum rates of 
royalty and (2) variations in the selling price of the ores. Concrete 
examples coming under the rule are set forth in the following table:

                                  Zinc
               [Where the base or standard is $50 per ton]
------------------------------------------------------------------------
 Percentage of recovery       Selling price          Royalty (percent)
------------------------------------------------------------------------
           7                      $48                        7
          14                       49                       14
          12                       50                       12
          15                       60                       16
          30                       60                       20
           9                       70                       11
------------------------------------------------------------------------

A similar table might be constructed for royalties on lead, but in so 
doing it would be necessary to bear in mind that the base or standard 
selling price for the lead is to be $65 instead of $50.



Sec. 214.11  Payment of rents and royalties.

    All rentals, royalties, damages, or other amounts which may become 
due under leases approved in accordance with the regulations in this 
part shall be paid to the disbursing agent at Pawhuska, Okla. The 
remittances shall be in St. Louis exchange, except that where such 
exchanges cannot be procured post office or express money orders will be 
accepted. All royalties or other payments or claims of the Osage Tribe 
arising under such leases shall be a lien upon the mining plant 
machinery, and all minerals mined on the property leased or in which the 
lessee still retains any right, claim, or interest.

[[Page 593]]



Sec. 214.12  Time of payment of royalties.

    Royalties on all minerals produced in any quarter (January-March, 
April-June, July-September, October-December) shall be paid on or before 
the 25th day of the month next succeeding, and the remittance shaIl be 
accompanied by sworn reports covering all operations, whether there has 
been production or not. Annual advance rentals shall be paid within 10 
days after the beginning of the lease year.



Sec. 214.13  Diligence; annual expenditures; mining records.

    (a) Lessees shall exercise diligence in the conduct of prospecting 
and mining operations, and on all leases referred to in Sec. 214.8(a) 
shall expend annually in development work a sum which with the annual 
rental shall make an amount of not less than $5 per acre. On all leases 
referred to in Sec. 214.8 (b) and (c) there shall be expended annually 
in development work a sum which inclusive of the annual rental shall 
make an amount of not less than $1 for each acre or fraction thereof 
included in the lease. The lands covered by each lease referred to in 
Sec. 214.8 (d) shall be prospected for lead and zinc ores by drilling 
within 1 year test holes aggregating 2,000 feet unless a sufficient ore 
body is discovered to justify the sinking of a shaft to the ore body and 
the erecting of a mill when such tract may be released from further 
prospecting by the written consent of the superintendent: Provided, That 
within 90 days after an ore body of sufficient quantity is discovered, 
and shown by the logs or records of the drill holes, to justify the 
expenditure, the sinking of a shaft to the ore body, and the erection of 
a mill shall be commenced and continued to completion without cessation 
of work thereon, barring unavoidable accidents or causes beyond the 
control of the lessee.
    (b) Lessee shall keep upon the leased premises accurate records of 
the drilling, redrilling, or deepening of all holes showing the 
formations, and upon the completion of such holes, copies of such 
records shall be transmitted to the superintendent by the lessee after 
the first completion and of any further drilling thereafter, and a 
failure to so furnish report within the time prescribed shall be 
considered a violation of the regulations. Lessee shall, before 
commencing operations, file with the superintendent a plat and 
preliminary statement of how the openings are to be made and the 
property developed.



Sec. 214.14  Use of surface lands.

    (a) Lessees may use so much of the surface of the leased land as 
shall be reasonably necessary for the prospecting and mining operations 
and buildings required by the lease, and shall also have the right-of-
way over and across such land to any point of prospecting or mining 
operations, but such use of the surface shall be permissible only under 
condition of least injury and inconvenience to the allottee or owner of 
the land. Lessees before commencing and during such operations shall pay 
all reasonable damages for the use of the surface land and to any 
growing crops thereon, or to improvements on said land, or any damage 
that during the life of the lease may be occasioned in any manner 
whatsoever by the use of the surface, to the allottee or his successor 
in interest or assignee, or to a lessee of the surface of said land or 
to an oil and gas lessee, damages to be apportioned among the parties 
interested in the surface, whether as owner, lessee, or otherwise, as 
the parties in interest may mutually agree or as their interests may 
appear. If the parties are unable to agree concerning damages the same 
shall be determined by arbitration.
    (b) All agreements (or authenticated copies thereof) providing for 
the settlement of damages shall be filed in the Osage Agency if the 
surface owner is a restricted Indian, and all such amounts which may be 
due and payable to any such Indian shall be paid to the superintendent 
and by him immediately remitted to the Indian entitled thereto. All sums 
due as royalty or damages shall be a lien on all equipment on leased 
premises.



Sec. 214.15  Homesteads.

    Lessees and those acting under them shall not conduct prospecting or 
mining operations within or upon any homestead selection without written

[[Page 594]]

consent of the Secretary of the Interior.



Sec. 214.16  Settlement of damages.

    Any person, other than a lessee or an allottee or the heirs of a 
deceased allottee, claiming an interest in any leased tract or in 
damages thereto must furnish to the officer in charge a statment in 
writing showing his interest, and failure to furnish such statement 
shall constitute a waiver of notice and estop said person from claiming 
any part of such damages after the same shall have been disbursed.



Sec. 214.17  Use of timber from restricted lands.

    Lessees will not be permitted to use any timber from any Osage lands 
not relieved of restrictions upon alienation except under written 
agreement with the owner approved by the officer in charge.



Sec. 214.18  Assignments.

    Approved leases or any interest therein may be transferred or 
assigned with the consent and approval of the Secretary of the Interior 
and not otherwise. Transfers or assignments, when so approved, shall be 
subject to the terms and conditions of the original leases and 
regulations under which such leases were approved as well as to such 
additional requirements as the Secretary of the Interior may prescribe. 
The transferee or assignee shall furnish with his transfer or assignment 
a satisfactory bond as prescribed in Sec. 214.4 in connection with 
leases. Any attempt to transfer or assign an approved lease or any 
interest therein without the consent and approval of the Secretary of 
the Interior shall be absolutely void and shall subject the original 
lease to cancellation in the discretion of the secretary.



Sec. 214.19  Cancellation.

    When a lessee makes application for the cancellation of a lease in 
whole or in part, all royalties or rentals due up to and including the 
date of the application for cancellation must be paid, and that part of 
the lease delivered to the lessee shall be surrendered before such 
application will be considered. In the event a lease is surrendered for 
cancellation in whole or in part, after a new lease year has been 
entered upon, the lessee and his surety shall be liable for the advance 
rentals required to be paid under the lease for that year, and no part 
of such rentals which may have been paid shall be refunded.



Sec. 214.20  Annual reports by corporate lessees.

    Lessees and assignees must submit to the officer in charge on 
January 1, of each year and at such other times as may be required by 
the Secretary of the Interior, a statement containing the information 
called for in Sec. 214.3(a) and (f) and also showing any changes in 
officers or changes in or additions to stockholders. At any time 
individual stockholders may be required to show to the satisfaction of 
the Secretary of the Interior in what companies or with what persons or 
firms they are interested in mining leases on the Osage Reservation and 
whether they hold such stock or interest for themselves or in trust.



Sec. 214.21  Inspection of lessees' books and records.

    Lessees shall allow the agents and representatives of the lessor, or 
any authorized representative of the Interior Department, to enter, from 
time to time, upon and into all parts of the leased premises for the 
purpose of inspection, and their books and records showing manner of 
operations and persons interested, shall be open at all times for the 
examination of such officers of the department as shall be instructed by 
the Secretary of the Interior to make such examinations.



Sec. 214.22  Serving of notices.

    Wherever notice is provided for in this part it shall be sufficient 
if notice has been mailed to the last known place of address of the 
party, and time shall begin to run with the day next ensuing after the 
mailing or from the date of delivery of personal notice; but where the 
party is outside the State of Oklahoma the officer in charge may, in his 
discretion, increase the time allowed.

[[Page 595]]



Sec. 214.23  Plat of mine location.

    Lessees are required, when so requested, to file a plat of their 
leases showing exact locations of all mines, proposed locations, power 
houses, etc.



Sec. 214.24  Forms.

    Applications, leases, and other papers must be upon forms prepared 
by the department, and the superintendent of the Osage Indian school, 
Pawhuska, Okla., will furnish prospective lessees with such forms at a 
cost of $1 per set.

Form M. Application for mining lease, including financial showing.
Form N. Lease (except lead and zinc).
Form O. Bond.
Form P. Authority of officers to execute papers.
Form Q. Assignment.
Form R. Lease for lead and zinc.
Form S. Collective bond.



Sec. 214.25  Forfeiture of lease.

    On the failure of any lessee or assignee to comply with any 
regulation or any obligation in the lease or assignment, the Secretary 
of the Interior may cancel and annul such lease without resorting to the 
courts and without any further proceeding: Provided, That the party or 
parties charged with such violation shall be first given not less than 
30 days' notice to show cause why such lease should not be canceled and 
annulled or other order made with reference thereto.



Sec. 214.26  Fine; notice and hearing.

    Violation of any of the terms or conditions of any lease or of the 
regulations pertaining thereto shall subject the lease to cancellation 
by the Secretary of the Interior, or the lessee to a fine of not 
exceeding $500 per day for each and every day the terms of the lease or 
of the regulations are violated, or the orders of the superintendent in 
reference thereto are not complied with, or to both such fine and 
cancellation in the discretion of the Secretary of the Interior: 
Provided, That the lessee shall be entitled to notice and hearing with 
respect to the terms of the lease or of the regulations violated, which 
hearing shall be held by the superintendent, whose findings shall be 
conclusive unless an appeal be taken to the Secretary of the Interior 
within 30 days after notice of the superintendent's decision, and the 
decision of the Secretary of the Interior upon appeal shall be 
conclusive.



Sec. 214.27  Changes in regulations.

    The regulations in this part are subject to change or alteration at 
any time by the Secretary of the Interior.



Sec. 214.28  Location of sites for mines and buildings.

    In event of disagreement between two or more mineral lessees 
regarding sites for the location of wells, mines, buildings, plants, 
etc., the same shall be determined by the superintendent after 
investigation and after due consideration of prior right of any lessee 
by reason of date of approval of lease.



Sec. 214.29  Prospecting; abandonment of mines.

    All prospecting or mining operations or the abandonment of a well or 
mine shall be subject to the approval of the superintendent, and any 
disagreement between lessees of mineral leases regarding operations 
likely to result in injury to either lessee shall be determined by the 
superintendent, whose decision shall be final, unless an appeal is filed 
with the Secretary of the Interior within 30 days after notice of such 
decision.



Sec. 214.30  Lessees must appoint local representative.

    Before actual drilling or development operations are commenced on 
leased lands, the lessee or assignee shall appoint a local or resident 
representative within the State, on whom the superintendent or other 
authorized representative of the department may serve notice or 
otherwise communicate with in securing compliance with the regulations 
in this part and shall notify the superintendent of the name and post 
office address of the representative so appointed.



PART 215_LEAD AND ZINC MINING OPERATIONS AND LEASES, QUAPAW AGENCY
--Table of Contents




Sec.
215.0 Definitions.
215.1 No operations until lease approved.

[[Page 596]]

215.2 Local representative of lessee.
215.3 Manner and time of royalty payments.
215.4 Leases to be sold at public auction.
215.5 Royalty rates.
215.6 Applications for leases; consent of Indian owners.
215.7 Advertisement of sale of leases.
215.8 Submission of bids.
215.9 Execution of leases.
215.10 Renewal of leases on developed lands.
215.11 New leases where prior leases have been forfeited or abandoned.
215.12 Advertising costs.
215.13 Bond.
215.14 Payments to be made to superintendent.
215.15 Leases to be accompanied by Form D.
215.16 Requirements of corporate lessees.
215.17 Additional information required.
215.18 Term of leases.
215.19 Forms.
215.20 Assignment.
215.21 Payment of gross production tax on lead and zinc.
215.22 Operations.
215.23 Cooperation between superintendent and district mining 
          supervisor.
215.23a Suspension of operations and production on leases for minerals 
          other than oil and gas.
215.24 Books and accounts.
215.25 Other minerals and deep-lying lead and zinc minerals.

    Authority: Sec. 26, 41 Stat. 1248; 50 Stat. 68.

    Source: 22 FR 10608, Dec. 24, 1957, unless otherwise noted. 
Redesignated at 47 FR 13327, Mar. 30, 1982.



Sec. 215.0  Definitions.

    The following expressions, wherever used in the regulations in this 
part or leases thereunder, shall have the meaning designated in this 
section:
    (a) Superintendent. The term ``superintendent'' shall mean any 
person in charge of the Quapaw Indian Agency, or having supervision 
under the direction of the Secretary of the Interior of the Indian 
restricted and trust allotted lands thereunder.
    (b) Allottee. The term ``allottee'' shall mean any Indian to whom 
land has been allotted, or any Indian owner of land or interest therein 
as an heir or devisee.
    (c) Incompetent Indian. The term ``incompetent Indian'' or 
``incompetent'' shall mean any Indian who has been declared by the 
Secretary of the Interior to be incompetent to improve or manage his 
restricted or trust lands properly or with benefit to himself. The term 
shall also include any Indian who is a minor and any Indian who is a 
legal incompetent under the laws of the State. The term shall also apply 
to any Indian who is in fact incompetent, and the question of whether an 
Indian is competent or incompetent at the time of making a lease of his 
restricted or trust Indian lands is one for the Secretary of the 
Interior to determine.
    (d) Lessee. The term ``lessee,'' except where otherwise modified or 
limited in the regulations in this part, shall mean any person, firm, or 
corporation, their legal representatives, heirs, or assigns, to whom a 
lead and zinc mining lease has been made by or on behalf of Indians 
under the provisions of the regulations in this part.
    (e) Lessor. The term ``lessor,'' except where otherwise modified or 
limited in the regulations in this part, shall mean any Indian owning or 
having any interest in restricted or trust allotted any inherited lands 
under the supervision of the Quapaw Indian Agency, by or for whom a 
lease has been executed pursuant to the regulations in this part.
    (f) Leased lands. The terms ``leased lands,'' ``leased premises,'' 
or ``leased tract'' shall mean any leased restricted or trust lands 
within and under jurisdiction of the Quapaw Indian Agency allotted to or 
inherited by an Indian.
    (g) Mining operations. The term ``mining operation'' or 
``operations,'' except where otherwise modified or limited in the 
regulations in this part or in leases thereunder shall mean actual 
drilling, mining, or construction on the leased lands.



Sec. 215.1  No operations until lease approved.

    No operations under any lease executed under the regulations in this 
part shall be permitted upon any restricted or trust lands allotted to 
or inherited by an Indian until such lease covering such tract shall be 
approved by the Secretary of the Interior.



Sec. 215.2  Local representative of lessee.

    Before actual drilling or development operations are commenced on 
the leased lands the lessee shall appoint a local or resident 
representative within Ottawa County, Oklahoma, on whom the 
superintendent may serve notice or

[[Page 597]]

otherwise communicate with in securing compliance with the regulations, 
and shall notify the superintendent of the name and post office address 
of the representative so appointed. In the event of the incapacity or 
absence from the county of Ottawa of such designated local or resident 
representative, the lessee shall appoint some person to serve in his 
stead, and in the absence of such representative or of notice of the 
appointment of a substitute any employee of the lessee upon the leased 
premises, or the contractor, or other person in charge of mining 
operations thereon shall be considered the representative of the lessee 
for the purpose of service of orders or notices as provided in this 
part, and service upon any employee, contractor, or other person shall 
be deemed service on the lessee. Wherever a notice is provided for in 
the regulations in this part or in the lease from it shall be deemed 
sufficient if notice has been mailed to the last known address of the 
lessee or his local or resident representatives, and time shall begin to 
run with the day next ensuing after the mailing, or from date of 
delivery of personal notice.



Sec. 215.3  Manner and time of royalty payments.

    All royalties belonging to the lessor shall be paid to the 
superintendent of the Quapaw Agency at Miami, Okla., or such other 
official as the Secretary of the Interior may designate, for the benefit 
of the lessor, not later than 15 days from the 1st of each month for ore 
and concentrates sold during the preceding month.



Sec. 215.4  Leases to be sold at public auction.

    Except as otherwise provided in the regulations in this part, no 
lead and zinc mining lease under this part of restricted or trust 
allotted and inherited Indian lands within and under the Quapaw Indian 
Agency shall be made except to the highest responsible bidder at public 
auction.



Sec. 215.5  Royalty rates.

    (a) In leases offered for sale at public auction under the 
regulations in this part the royalty to be paid by the lessee shall be 
stipulated at a fixed percent of the gross proceeds of all lead and zinc 
ores and concentrates extracted from the leased premises, the royalty to 
be computed and based upon each sale of ore or concentrates separately, 
the rate of royalty to be determined and fixed by the Secretary of the 
Interior in the case of each lease prior to the offering of such lease 
for sale. Subject to the right of the Secretary of the Interior to 
reject any and all bids, leases offered for sale at public auction shall 
be awarded in each case to the responsible bidder submitting the highest 
bonus offer.
    (b) In leases not offered for sale at public auction but otherwise 
made and entered into under the provisions of the regulations in this 
part the royalty stipulated and fixed therein shall be such as may be 
determined by the Secretary of the Interior or as may be agreed upon in 
each case, subject to the approval of the Secretary of the Interior.
    (c) It shall be further provided, however, that said sale-price 
basis for the determination of the rates and amount of royalty shall not 
be less than the highest and best obtainable market price of the lead 
and zinc ores and concentrates at the usual and customary place of 
disposing of such ores and concentrates at the time of sale: Provided, 
however, That the right is reserved to the Secretary of the Interior to 
determine and declare such market price if it is deemed necessary for 
him to do so for the protection of the interests of the Indian lessor: 
And provided further, That the right is reserved to the Secretary of the 
Interior on behalf of the Indian lessors to reserve at any time it shall 
be deemed to be to the best interests of the Indian lessors and upon due 
notice to the lessee, the royalty share of the gross production of the 
ore and concentrates and upon such notice that the royalty share of such 
production shall be stored and not sold, the lessee shall be required to 
store, free of charge to the Indian lessors in the ore bins of said 
lessee, said royalty shares of the gross production of ore and 
concentrates, provided that the lessee may not be required to store ore 
or concentrates for the lessor in amounts

[[Page 598]]

greater than one-third of his bin capacity or for a period longer than 6 
months.



Sec. 215.6  Applications for leases; consent of Indian owners.

    (a) Applications or requests by the Indian owners of restricted or 
trust land, or by others, that such land be leased or offered for lease 
for lead and zinc mining purposes should be addressed to the Secretary 
of the Interior and submitted through the superintendent of the Quapaw 
Indian Agency. Upon receipt of such applications or requests, the 
superintendent shall give consideration thereto and forward the same to 
the Commissioner of Indian Affairs with his report and recommendation.
    (b) In no instance will a new lease be executed and delivered (or 
advertised for sale to the highest bidder) unless the Indian owner 
thereof, if an adult who has not been specifically found by the 
Secretary of the Interior to be personally incompetent to transact 
ordinary business affairs, has agreed to the terms of said lease or the 
terms under which said lease is advertised for lease, except in cases 
where the land is owned by several co-tenants, and, in such cases, no 
such lease shall be given or advertised for sale unless the co-owners or 
a majority in interest, if adults, and not specifically declared 
incompetent, have first consented thereto: Provided, That in the event 
the majority in interest is owned by minors, or adults specifically 
found to be incompetent, then and in that event, the Secretary of the 
Interior reserves the right to lease the entire tract if, in his 
opinion, such leasing will inure to the best interest of the restricted 
Indian owners.



Sec. 215.7  Advertisement of sale of leases.

    Upon authority being granted by the Secretary of the Interior to the 
superintendent to offer for sale at public auction a lead and zinc 
mining lease of any tract or tracts of restricted or trust allotted and 
inherited Indian lands, the superintendent shall cause a notice to be 
published once a week for at least 4 weeks in some designated newspaper 
of general circulation in the county in which the land is located, 
setting forth that upon a certain day, which shall be not less than 30 
days from the first publication of such notice and at a place to be 
named in the notice, the superintendent or other duly authorized 
representatives of the Secretary of the Interior will offer for sale at 
public auction a lead and zinc mining lease of such lands to the highest 
and best bidder, subject to the rules and regulations prescribed by the 
Secretary of the Interior, notice to be in such form as may be 
prescribed by the Secretary of the Interior.



Sec. 215.8  Submission of bids.

    At the time of public auction bidders may submit their bids in 
person or by authorized agents, but in the latter case the bids must be 
accompanied by power of attorney duly executed by the real party or 
person in interest. Sealed bids may be submitted by mail or otherwise to 
the superintendent at his office at Miami, Okla., or delivered to him at 
the place set for the sale at any time prior to the hour fixed for 
offering the lease for sale. At the time and place of the public auction 
and before receiving the public bids the officer in charge shall 
announce the amounts and terms of all sealed bids received by him and 
the names of the bidders. The persons present, including those, if any, 
who may have theretofore submitted sealed bids, shall then be allowed to 
offer public bids. Bids must contain the offer of the stipulated and 
fixed royalty (see Sec. 215.5 as to royalty) and, in addition thereto, 
the offer of a bonus payable as follows: 25 percent at time of sale and 
the balance before or at time of execution of the lease contract. 
Bidders shall be required to submit with their bids a draft or certified 
check payable to the order of the superintendent covering the advance 
rental for the first year on the proposed leasehold and 25 percent of 
the amount of the bonus offered. The superintendent shall, in each case, 
determine the highest and best bid, said determination, however, to be 
subject to the approval of the Secretary of the Interior. Upon approval 
by the Secretary of the Interior of the award, the successful bidder 
shall, within 30 days from notice thereof, enter into and execute the 
lease contract in accordance with said bid and the regulations in this 
part. The

[[Page 599]]

lease so executed shall be subject to the approval of the Secretary of 
the Interior and may be accepted or rejected by him when submitted for 
his approval. The right is reserved to the Secretary of the Interior, in 
the event of the rejection of such lease, to authorize and instruct the 
superintendent to accept the offer of some competitive bidder or to 
readvertise the land for lease. The report of the superintendent to the 
Commissioner of Indian Affairs relative to the auction sale shall 
contain full information as to all bids received for the lease rights on 
the land. If any person or party fails or refuses to execute a lease 
after being declared the highest bidder or after being awarded such 
lease, the amount tendered with his bid shall be forfeited to the 
superintendent for the benefit of the owner of the land.



Sec. 215.9  Execution of leases.

    Whenever a lease award to a proposed lessee has been approved by the 
Secretary of the Interior, as provided in Sec. Sec. 215.7 and 215.8, 
the lease contract shall be executed by the Indian owner of the land, if 
he be an adult and not incompetent as defined in Sec. 215.0(c). Before 
any lease is entered into by the Indian owners or is approved by the 
Secretary of the Interior, all the adult and competent owners or co-
owners of the tract of land which it is proposed to lease, shall be 
furnished by the Bureau such geological reports as may be available or 
that can be secured from the representative of the Geological Survey 
showing the estimated mineral reserves on said property, the estimated 
reasonable value of such property for mining purposes, and such other 
data as might reasonably be necessary to fully advise the owners of said 
property of the then present status and mining value of their lands. If 
the Quapaw or other Indian owner of the land is a minor, or is otherwise 
an incompetent as defined in the regulations in this part, the lease 
contract shall be executed by the superintendent for and on behalf of 
such minor or such incompetent. The leases executed, either by the 
Indian owner of the land or by the superintendent in his behalf, shall 
be subject to the approval of the Secretary of the Interior and shall be 
effective only upon such approval.

[22 FR 10608, Dec. 24, 1957. Redesignated at 47 FR 13327, Mar. 30, 1982; 
48 FR 13414, Mar. 31, 1983]



Sec. 215.10  Renewal of leases on developed lands.

    (a) In cases where the lands have heretofore been leased, and lead 
and zinc ores have been discovered hereon, and it shall appear to the 
Secretary of the Interior to be advisable and to the best interests of 
the Indian owners of the lands that the terms of the existing lease or 
leases be extended or that a new lease or leases for an additional 
period of time, or that a new lease or leases to take effect upon the 
expiration of present valid leases, should, upon application therefor, 
be granted to either the present lessees or to parties holding under 
assignments, subleases, or mining contracts, from such present lessees, 
or to parties who have expended capital in lead and zinc mining 
operation and development of the land under such leases, assignments, 
subleases, or mining contracts, a new lease or leases or contract of 
extension or existing lease or leases as may be authorized by the 
Secretary of the Interior may be entered into with the proper party or 
parties as may be determined by said Secretary of the Interior, and such 
new lease or leases or contract of extension of existing lease or leases 
shall be executed subject to the regulations in this part by and between 
the Indian owner of the land, if an adult and not incompetent as defined 
in Sec. 215.0 (c), and said proper party or parties. If the Quapaw or 
other Indian owner of the land is a minor or an otherwise incompetent as 
defined in Sec. 215.0 (c), the superintendent shall execute the new 
lease or leases or contract of extension of existing lease or leases for 
and on behalf of said Indian minor or incompetent. Said new leases or 
contracts of extension of old leases, whether executed by the Indian 
owner of the land or by the superintendent for and in his behalf, shall 
be subject to the approval of the Secretary of the Interior and shall 
become effective only upon such approval. No offering for sale at public 
auction or advertisement of sale

[[Page 600]]

will be necessary in reference to contracts of extension of leases, or 
to leases entered into under this section, as above provided, but such 
lease or contract shall be upon such terms as to bonus and royalty as 
may be determined and fixed in each case by the Secretary of the 
Interior under the provisions of Sec. 215.5. The approval by the 
Secretary of the Interior of new leases or of the contracts of extension 
of old leases shall be conclusive as to the validity of said leases, or 
contracts of extension of leases, the manner and method of negotiating 
the same, and the execution thereof. If, however, in any case where 
lands have heretofore been leased and lead and zinc ores have been 
discovered thereon, it shall appear to the Secretary of the Interior 
that the extension of the existing lease or leases or the granting of 
new leases to the present lessees, or to the persons or parties holding 
under said lessees by assignment, sublease, or mining contract, would 
not be to the best interests of the Indian owners of the land, the 
Secretary of the Interior may, at the expiration, cancellation, or 
forfeiture of the existing lease, cause the mining lease rights on said 
land to be offered for sale at public auction to the highest bidder. If 
the lead and zinc mining lease on said land be offered for sale at 
public auction, the same procedure shall be followed as provided in 
Sec. Sec. 215.7 through 215.9.
    (b) Applications under the provision of this section for a lease or 
extension of lease or for the approval of such lease or extension of 
lease will not be received or considered prior to the period of 1 year 
next preceding the date of the expiration of such valid existing lease 
or leases as may be on the land covered by such application.
    (c) Applications under the provisions of this section for a lease or 
extension of lease or for the approval of such lease or extension of 
lease shall be filed with the superintendent of the Quapaw Agency at any 
time within the period of 1 year next preceding the date of the 
expiration of such valid existing lease or leases as may be on the land 
covered by such application, and if the records of or papers in the 
office of said superintendent or the records of the county court of 
Ottawa County, Okla., indicate that there are any prior existing leases, 
subleases, assignments of leases or mining contracts covering any of the 
land applied for, the superintendent shall notify all persons having or 
claiming any rights or interest in or under said prior existing leases, 
subleases, assignments of leases, or mining contract concerning said 
application for lease or extension of lease, and that they will be 
allowed 10 days in which to file with the superintendent any objection 
they may have to the allowance of the application or to the approval of 
the new lease or extension of existing lease. If objection or protest is 
made by any owner of the land or by any person claiming rights or 
interests in or under existing lease, sublease, assignment of lease, or 
mining contract, a reasonable time, not exceeding 20 days, shall be 
allowed them in which to file their statement or brief in support of 
their protest or objection, and a reasonable further time not exceeding 
10 days shall be allowed the applicant for new lease or for extension of 
existing lease to reply in support of the application. In case of 
contest, hearings may be had if deemed necessary by the Secretary of the 
Interior or his representative. The application and papers in each case 
shall be forwarded by the superintendent of the Quapaw Indian Agency to 
the Commissioner of Indian Affairs with his report and recommendation in 
regard thereto.



Sec. 215.11  New leases where prior leases have been forfeited or abandoned.

    In cases where the lands have heretofore been leased and lead and 
zinc ores have been discovered but the mines and mining operations have 
been abandoned and the leases have been canceled or forfeited or have 
expired, special arrangements in the matter of the leasing and mining of 
said lands may be made provided the consent thereto of the Secretary of 
the Interior be first obtained. Applications containing special offers 
as to the terms and conditions may be considered by the Secretary of the 
Interior and the leasing of said lands may be made upon such special 
terms and conditions as the Secretary of the Interior may in each case 
deem to be for the best interests of the Indian owners of the land.

[[Page 601]]

If, however, in any case, it shall appear to the Secretary of the 
Interior that the granting of such lease would not be to the best 
interest of the Indian owners of the land, the Secretary of the Interior 
may cause the mining lease rights on said land to be offered for sale at 
public auction to the highest bidder. If the lead and zinc mining lease 
on said land be offered for sale at public auction, the same procedure 
shall be followed as provided in Sec. Sec. 215.7 through 215.9.



Sec. 215.12  Advertising costs.

    All advertising costs, publication fees, expenses incurred for 
abstracts of lease title, and other expenses incurred in connection with 
the advertising and sale of leases and in connection with the execution 
of lease contracts shall be borne by the lessee. In the event a lease of 
the land is offered to the highest bidder and he fails or refuses to 
execute such lease when duly notified and as required by or under the 
regulations in this part, and no other bid is accepted, such costs, 
fees, and expenses shall be paid from such money as he may have paid 
with his bid. If no bid is tendered after a tract is advertised, or if 
all bids are refused, said items of expenses shall be charged to the 
Indian owner of the land and be paid by him or be paid by the 
superintendent from any funds held by such superintendent to the credit 
of such Indian owner of the land.



Sec. 215.13  Bond.

    Every mineral lease made and entered into under the regulations in 
this part, by an Indian or by the superintendent as his representative 
or in his behalf, must be accompanied by a surety bond, executed by the 
lessee and by a responsible surety company or two or more satisfactory 
sureties, guaranteeing the payment of all deferred installments of bonus 
and the payment of all specified royalties and rentals and the 
performance of all covenants and agreements undertaken by the lessee. 
Such bonds, unless authorized by the Secretary of the Interior or his 
authorized representative, with the consent of the Indian landowner, 
shall be not less than the following amounts:

For less than 80 acres--$2,500
For 80 acres and less than 120 acres--3,500
For 120 acres or more--5,000

    Provided, however, That the lessee may, in lieu of such surety bond 
and upon execution of a proper penal bond to the United States in the 
sum prescribed and a proper power of attorney to the Secretary of the 
Interior, submit therewith United States bonds or notes in the aggregate 
sum prescribed as security for the carrying out of the terms, 
conditions, and provisions of the lease: Provided further, That a lessee 
may file in lieu of such individual lease bonds, one bond in a sum to be 
fixed by the Secretary of the Interior covering all leases to which he 
is or may become a party. The right is specifically reserved to the 
Secretary of the Interior to require an increase of the amount of any 
bond above the sum named in any particular case where he deems it 
necessary to require such increased bond.

[26 FR 164, Jan. 10, 1961. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 215.14  Payments to be made to superintendent.

    No bonus, rents, royalties, nor other payments accruing under any 
mineral lease executed in accordance with or subject to the regulations 
in this part and approved by the Secretary of the Interior shall be paid 
direct to the Indian lessor; but all such bonus, rents, royalties, and 
other payments accruing under any such lease shall be paid to the 
superintendent for the benefit of the Indian lessors, to be deposited by 
that officer to the credit of the superintendent in some bank designated 
for the deposit of individual Indian moneys.



Sec. 215.15  Leases to be accompanied by Form D.

    Lead and zinc leases should be accompanied, when filed, with 
application for approval (Form D) \1\ made under oath, and said 
application shall set forth the information therein required.
---------------------------------------------------------------------------

    \1\ For further information concerning forms, see Sec. 215.19.

---------------------------------------------------------------------------

[[Page 602]]



Sec. 215.16  Requirements of corporate lessees.

    (a) When the lessee is a corporation, its first application must be 
accompanied by a sworn statement of its proper officers showing:
    (1) The total number of shares of the capital stock actually issued 
and, specifically, the amount of cash paid into the treasury on each 
share sold; or, if paid in property, state kind, quantity, and value of 
the same paid per share.
    (2) Of the stock sold how much per share remains unpaid and subject 
to assessment.
    (3) How much cash the company has in its treasury and elsewhere and 
from what source it was received.
    (4) What property, exclusive of cash, is owned by the company and 
its value.
    (5) What the total indebtedness of the company is, and, 
specifically, the nature of its obligations.
    (b) Subsequent applications of the corporation should show briefly 
the aggregate amounts of assets and liabilities.



Sec. 215.17  Additional information required.

    Corporations, with their first application, must file one certified 
copy of articles of incorporation and, if a foreign corporation, 
evidence showing compliance with local corporation laws; also a list 
showing officers and stockholders, with post-office addresses and number 
of shares held by each. Statements of any changes of officers or any 
changes or additions of stockholders must be furnished to the Indian 
superintendent on January 1 of each year and at any time when requested. 
The right is reserved to the Secretary of the Interior to require of 
individual stockholders affidavits setting forth in what companies or 
with what persons or firms they are interested in lead and zinc mining 
leases, or land under the jurisdiction of the Quapaw Indian Agency, and 
whether they hold such stock for themselves or in trust. Evidence must 
also be given in a single affidavit (Form I) by the Secretary of the 
company or by the president of said company, showing authority of the 
officers of the company to execute the lease, bond, and other papers.



Sec. 215.18  Term of leases.

    The term of lead and zinc mining leases executed pursuant to acts of 
Congress and under the regulations in this part shall be for such period 
of time as may be determined in each case by the Secretary of the 
Interior, but in no case shall a lease be made to extend beyond the 
restriction or trust period on the lands covered by such lease.



Sec. 215.19  Forms.\2\

    Application, leases, and other papers must be upon forms prescribed 
by the Secretary of the Interior. Except as may be otherwise provided 
and required by the Secretary of the Interior, the leases and other 
papers required under the regulations in this part shall be in 
conformity with the forms designated, respectively, as follows:
---------------------------------------------------------------------------

    \2\ Forms may be obtained from the Commissioner of Indian Affairs, 
Washington, D.C.

Form A. Lease of Quapaw Indian land.
Form B. For lease of Indian land other than Quapaw.
Form C. Application by Indian.
Form D. Application for approval of lease.
Form E. Affidavit of lessor (or of superintendent acting for him) and 
affidavit of lessee.
Form F. Surety bond.
Form G. Affidavit of surety on personal bond.
Form H. Certificate as to sufficiency of surety on personal bond.
Form I. Affidavit as to authority of officers of corporation to execute 
lease and other papers.
Form J. Penal bond (in lieu of surety bond), and accompanying power of 
attorney.
Form K. Assignment of lead and zinc lease.



Sec. 215.20  Assignment.

    Leases granted or approved under the regulations in this part may be 
assigned and the leased premises may be subleased or sublet, but only 
with the consent and authority of the Secretary of the Interior and 
subject to his approval as to the terms and conditions of such 
assignments, sublease, and subletting contracts and not otherwise, and 
provided also that the proposed assignees, sublessee, or sublettee shall 
be qualified to hold such lease under the regulations in this part and 
shall furnish such bond as may be required by

[[Page 603]]

the Secretary of the Interior, such bond to be with responsible surety 
to the satisfaction of the Secretary of the Interior and conditioned for 
the faithful performance of the covenants and conditions of the lease. 
Upon the filing with the Indian agent of such assignment, financial 
statement, and bond, the said agent shall at once give notice in writing 
to all restricted Indian owners of said land, advising them of said 
proposed assignment, and that if they have any bona fide objections to 
same, such objections must be filed in writing within 10 days from the 
date of said notice.



Sec. 215.21  Payment of gross production tax on lead and zinc.

    The superintendent of the Quapaw Indian Agency is hereby authorized 
and directed to pay at the appropriate times, from the respective 
individual Indian funds held under his supervision, such gross 
production tax due the State on production of lead and zinc from 
restricted lands under his jurisdiction as may be properly assessed 
under provisions of law against the royalty interests of the respective 
Indian owners in the mineral produced from their lands.



Sec. 215.22  Operations.

    (a) All shafts shall be securely cribbed to a point at least 8 
inches above the immediate surrounding surface and cribbing shall be 
maintained in good condition during the life of the mining lease: 
Provided, however, That at any time shafts may be permanently sealed by 
a reinforced concrete slab after first obtaining the written approval of 
the duly authorized representative of the Department of the Interior. 
The slab shall be so placed as to prevent caving of the ground around 
the shaft collar.
    (b) All shafts, prior to the expiration, surrender, or upon 
cancellation of the mining lease or abandonment of the property, shall 
be permanently sealed so as to prevent the caving of the ground around 
the shaft collar: Provided, however, That this requirement may be waived 
after first obtaining the written consent of the duly authorized 
representative of the Department of the Interior.
    (c) All shaft entrances not permanently sealed shall be so fenced, 
boxed, or covered as to prevent persons or animals from falling into the 
mine when the shaft is not in actual use, and such fencing, boxing, or 
covering shall be maintained in good condition during the life of the 
mining lease.
    (d) All shafts where hoisting is done shall be boxed or fenced on 
three sides and the fourth side equipped with a gate which shall be kept 
closed when access to the shaft is not necessary.
    (e) All churn drill holes shall be securely plugged to the surface 
unless used for ventilation or other mining purposes, in which case they 
shall be cased or otherwise prevented from caving or becoming a hazard 
to persons or animals. If cased, the casing shall extend 4 feet above 
the collar of the hole.



Sec. 215.23  Cooperation between superintendent and district mining 
supervisor.

    (a) The district mining supervisor of the Miami field office, 
Geological Survey, directly or through his assistants, shall receive 
from lessees for the superintendent, all notices, reports, drill logs, 
maps, and records, and all other information relating to mining 
operations required by said regulations to be submitted by lessees, and 
shall maintain a file thereof for the superintendent.
    (b) The files of the Geological Survey supervisor relating to lead 
and zinc leases of Quapaw Indian lands shall be at all times available 
for inspection and use by authorized employees of the Bureau of Indian 
Affairs, and the employees of the Geological Survey assigned to work 
relating to Indian lands shall furnish to authorized employees of the 
Bureau of Indian Affairs such information and technical advice as may be 
necessary or appropriate to the most efficient cooperation in the 
conduct of the work assigned to the two bureaus. Likewise, similar 
facilities and service shall be provided for the benefit of the 
authorized employees of the Geological Survey by the Bureau of Indian 
Affairs.
    (c) No orders of any kind will be issued by Geological Survey 
representatives to any Indian, but such representatives shall have full 
authority

[[Page 604]]

to issue and amend orders to operators relative to production and 
operations: i.e., the supervision of all operations, including safety 
and efficiency, health and sanitation, and prevention of material or 
economic waste, such orders to be prepared with the advice of the local 
representative of the Bureau of Indian Affairs.

    Cross Reference: For regulations of the Geological Survey, see 30 
CFR chapter II.



Sec. 215.23a  Suspension of operations and production on leases for 
minerals other than oil and gas.

    The provisions of Sec. 212.15a of this subchapter are applicable to 
leases under this part.

[24 FR 9511, Nov. 26, 1959. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 215.24  Books and accounts.

    (a) The lessee shall maintain books in which shall be kept a correct 
account of all ore and rock mined on the tract, of all ore put through 
the mill, of all lead and zinc concentrates produced, and of all ore and 
concentrates sold and to whom sold, the weight, assay value, moisture 
content, base price, dates, penalties, and price received, and the 
percentage of lead and zinc recovered. A correct statement of the same 
for each month shall be furnished the office of the district mining 
supervisor pursuant to Sec. 215.23 not later than 15 days after the 
first of each month for the preceding month, together with a certificate 
from the smelter showing the unit price paid for the mineral purchased 
and the amount of ore and concentrates purchased during the month from 
said land.
    (b) An audit of the lessee's accounts and books shall be made 
semiannually, or at such other times as may be directed by the Secretary 
of the Interior, by certified public accountants, approved by the 
Secretary, and at the expense of the lessee. The lessee shall furnish 
free of cost a copy of such semiannual or other audit, through the 
office of the district mining supervisor pursuant to Sec. 215.23, 
within 30 days after the completion of each auditing.



Sec. 215.25  Other minerals and deep-lying lead and zinc minerals.

    Except as provided in Sec. 215.6(b), leases on Quapaw Indian lands, 
for mining minerals other than lead and zinc and for lead and zinc and 
associated minerals below the horizon of the rock stratum known as the 
Reed Springs Formation, shall be made pursuant to the provisions of part 
212 of this subchapter.

[26 FR 1910, Mar. 4, 1961. Redesignated at 47 FR 13327, Mar. 30, 1982]



PART 216_SURFACE EXPLORATION, MINING, AND RECLAMATION OF LANDS
--Table of Contents




                      Subpart A_General Provisions

Sec.
216.1 Purpose.
216.2 Scope.
216.3 Definitions.
216.4 Technical examination of prospective surface exploration and 
          mining operations.
216.5 Basis for denial of a permit or lease.
216.6 Approval of exploration plan.
216.7 Approval of mining plan.
216.8 Performance bond.
216.9 Reports.
216.10 Inspection: Notice of noncompliance: Revocation.
216.11 Appeals.
216.12 Consultation.

    Authority: 34 Stat. 539, 35 Stat. 312; 25 U.S.C. 355 NT; 35 Stat 
781; 25 U.S.C. 396; sec. 1, 49 Stat. 1250; 25 U.S.C. 473a; 49 Stat. 
1967, 25 U.S.C. 501, 502; 52 Stat. 347, 25 U.S.C. 396a-f; 5 U.S.C. 301.



                      Subpart A_General Provisions

    Source: 34 FR 813, Jan. 18, 1969, unless otherwise noted. 
Redesignated at 42 FR 63394, Dec. 16, 1977; and further redesignated at 
47 FR 13327, Mar. 30, 1982.



Sec. 216.1  Purpose.

    It is the policy of this Department to encourage the development of 
the mineral resources underlying Indian lands where mining is 
authorized. However, interest of the Indian owners and the public at 
large requires that, with respect to the exploration for, and the

[[Page 605]]

surface mining of, such minerals, adequate measures be taken to avoid, 
minimize, or correct damage to the environment--land, water, and air--
and to avoid, minimize, or correct hazards to the public health and 
safety. The regulations in this part prescribe procedures to that end.



Sec. 216.2  Scope.

    (a) Except as provided in paragraph (b) of this section, the 
regulations in this part provide for the protection and conservation of 
nonmineral resources during operations for the discovery, development, 
surface mining, and onsite processing of minerals under permits or 
leases issued pursuant to statutes pertaining to Indian lands including 
but not limited to the following statutes or amendments thereto:

The Act of June 28, 1906 (34 Stat. 539);
    The Act of May 27, 1908 (35 Stat. 312);
    The Act of March 3, 1909 (35 Stat. 781, 25 U.S.C. 396);
    The Act of May 1, 1936 (49 Stat. 1250);
    The Act of June 26, 1936 (49 Stat. 1967);
    The Act of May 11, 1939 (52 Stat. 347, 25 U.S.C. 396a-f, and 5 
U.S.C. 301).
    (b) The regulations in this part do not cover the exploration for 
oil and gas or the issuance of leases, or operations thereunder, nor 
minerals underlying lands, the surface of which is not owned by the 
owner of the minerals.
    (c) The regulations in this part shall apply only to permits or 
leases issued subsequent to the date on which these regulations become 
effective and which are subject to the approval of the Secretary of the 
Interior or his designated representative.



Sec. 216.3  Definitions.

    As used in the regulations in the part:
    (a) Superintendent means the superintendent or other officer of the 
Bureau of Indian Affairs having jurisdiction under delegated authority, 
over the lands involved.
    (b) Mining supervisor means the Regional Mining Supervisor, or his 
authorized representative, of the Geological Survey authorized as 
provided in 30 CFR 211.3 and 231.2 to supervise operations on the land 
covered by a permit or lease.
    (c) Overburden means all the earth and other materials which lie 
above a natural deposit of minerals and such earth and other materials 
after removal from their natural state in the process of mining.
    (d) Area of land to be affected or area of land affected means the 
area of land from which overburden is to be or has been removed and upon 
which the overburden or waste is to be or has been deposited, and 
includes all lands affected by the construction of new roads or the 
improvement or use of existing roads to gain access to an operation and 
for haulage.
    (e) Operation means all of the premises, facilities, roads, and 
equipment used in the process of determining the location, composition 
or quality of a mineral deposit, or in developing, extracting, or onsite 
processing of a mineral deposit in a designated area.
    (f) Method of operation means the method or manner by which a cut or 
open pit is made, the overburden is placed or handled, water is 
controlled or affected and other acts performed by the operator in the 
process of exploring or uncovering and removing or onsite processing of 
a mineral deposit.
    (g) Holder or operator means the permittee or lessee designated in a 
permit or lease.
    (h) Reclamation means measures undertaken to bring about the 
necessary reconditioning or restoration of land or water that has been 
affected by exploration or mineral development, mining or onsite 
processing operations, and waste disposal, in ways which will prevent or 
control onsite and offsite damage to the environment.



Sec. 216.4  Technical examination of prospective surface exploration 
and mining operations.

    (a)(1) In connection with an application for a permit or lease, the 
superintendent shall make, or cause to be made, a technical examination 
of the prospective effects of the proposed exploration or surface mining 
operations upon the environment. The technical examination shall take 
into consideration the need for the preservation and protection of other 
resources, including cultural, recreational, scenic, historic, and 
ecological values; and control of

[[Page 606]]

erosion, flooding, and pollution of water; the isolation of toxic 
materials; the prevention of air pollution; the reclamation by 
revegetation, replacement of soil or by other means, of lands affected 
by the exploration or mining operations; the prevention of slides; the 
protection of fish and wildlife and their habitat; and the prevention of 
hazards to public health and safety.
    (2) A technical examination of an area should be made with the 
recognition that actual potential mining sites and mining operations 
vary widely with respect to topography, climate, surrounding land uses, 
proximity to densely used areas, and other environmental influences and 
that mining and reclamation requirements should provide sufficient 
flexibility to permit adjustment to local conditions.
    (b) Based upon the technical examination, the superintendent shall 
formulate the general requirements which the applicant must meet for the 
protection of nonmineral resources during the conduct of exploration or 
mining operations and for the reclamation of lands or waters affected by 
exploration or mining operations. The general requirements shall be made 
known in writing to the applicant before the issuance of a permit or 
lease and upon acceptance thereof by the applicant, shall be 
incorporated in the permit or lease.
    (c) In each instance in which an application is made the mining 
supervisor shall participate in the technical examination and in the 
formulation of the general requirements.
    (d) The superintendent may prohibit or otherwise restrict operations 
on any part of an area whenever it is determined that such part of the 
area described in an application for a permit or lease is such that 
previous experience under similar conditions has shown that operations 
cannot feasibly be conducted by any known methods or measures to avoid--
    (1) Rock or landslides which would be a hazard to human lives or 
endanger or destroy private or public property; or
    (2) Substantial deposition of sediment and silt into streams, lakes, 
reservoirs; or
    (3) A lowering of water quality below standards established by the 
appropriate State water pollution control agency, or by the Secretary of 
the Interior, or his authorized representative; or
    (4) A lowering of the quality of waters whose quality exceeds that 
required by the established standards--unless and until it has been 
affirmatively demonstrated to the Secretary of the Interior, or his 
authorized representative, that such lowering of quality is necessary to 
economic and social development and will not preclude any assigned uses 
made of such waters; or
    (5) The destruction of key wildlife habitat or important scenic, 
historical, or other natural or cultural features.
    (e) If, on the basis of a technical examination, the superintendent 
determines that there is a likelihood that there will be a lowering of 
water quality as described in paragraphs (d) (3) and (4) of this section 
caused by the operation, no lease or permit shall be issued until after 
consultation with the Federal Water Pollution Control Administration and 
a finding by the Administration that the proposed operation would not be 
in violation of the Federal Water Pollution Control Act, as amended (33 
U.S.C. 466 et seq.), or of Executive Order No. 11288 (31 FR 9261). Where 
a permit or lease is involved the Superintendent's determination shall 
be made in consultation with the mining supervisor.



Sec. 216.5  Basis for denial of a permit or lease.

    An application for a permit or lease to conduct exploratory or 
mining operations may be denied any applicant who has forfeited a 
required bond because of failure to comply with a mining plan. However, 
a permit or lease may not be denied an applicant because of the 
forfeiture of a bond if the lands disturbed under his previous permit or 
lease have subsequently been reclaimed without cost to the lessor or the 
United States.



Sec. 216.6  Approval of exploration plan.

    (a) Before commencing any surface disturbing operations to explore, 
test or prospect for minerals, the operator shall file with the mining 
supervisor a plan for the proposed exploration operations. The mining 
supervisor shall

[[Page 607]]

consult with the superintendent with respect to the surface protection 
and reclamation aspects before approving said plan.
    (b) Depending upon the size and nature of the operation and the 
requirements established pursuant to Sec. 216.4 the mining supervisor 
may require that the exploration plan submitted by the operator include 
any or all of the following:
    (1) A description of the area within which exploration is to be 
conducted;
    (2) Two copies of a suitable map or aerial photograph showing 
topographic, cultural and drainage features;
    (3) A statement of proposed exploration methods; i.e., drilling, 
trenching, etc., and the location of primary support roads and 
facilities;
    (4) A description of measures to be taken to prevent or control 
fire, soil erosion, pollution of surface and ground water, damage to 
fish and wildlife or other natural resources, and hazards to public 
health and safety both during and upon abandonment of exploration 
activities.
    (c) The mining supervisor shall promptly review the exploration plan 
submitted to him by the operator and shall indicate to the operator any 
changes, additions, or amendments necessary to meet the requirements 
formulated pursuant to Sec. 216.4, the provisions of these regulations, 
and the terms of the permit.
    (d) The operator shall comply with the provisions of an approved 
exploration plan. The mining supervisor may, with respect to such a 
plan, exercise the authority provided by paragraphs (f) and (g) of Sec. 
216.7 respecting a mining plan.



Sec. 216.7  Approval of mining plan.

    (a) Before surface mining operations may commence under any permit 
or lease, the operator must file a mining plan with the mining 
supervisor and obtain his approval of the plan. The mining supervisor 
shall consult with the superintendent with respect to the surface 
protection and reclamation aspects before approving said plan.
    (b) Depending on the size and nature of the operation and the 
requirements established pursuant to Sec. 216.4 the mining supervisor 
may require that the mining plan submitted by the operator include any 
or all of the following:
    (1) A description of the location and area to be affected by the 
operations;
    (2) Two copies of a suitable map, or aerial photograph showing the 
topography, the area covered by the permit or lease, the name and 
location of major topographic and cultural features, and the drainage 
plan away from the area affected;
    (3) A statement of proposed methods of operating, including a 
description of proposed roads or vehicular trails; the size and location 
of structures and facilities to be built;
    (4) An estimate of the quantity of water to be used and pollutants 
that are expected to enter any receiving waters;
    (5) A design for the necessary impoundment, treatment or control of 
all runoff water and drainage from workings so as to reduce soil erosion 
and sedimentation and to prevent the pollution of receiving waters;
    (6) A description of measures to be taken to prevent or control 
fire, soil erosion, pollution of surface and ground water, damage to 
fish and wildlife, and hazards to public health and safety; and
    (7) A statement of the proposed manner and time of performance of 
work to reclaim areas disturbed by the holder's operation.
    (c) In those instances in which the permit or lease requires the 
revegetation of an area of land to be affected, the mining plan shall 
show:
    (1) Proposed methods of preparation and fertilizing the soil prior 
to replanting;
    (2) Types and mixtures of shrubs, trees, or tree seedlings, grasses 
or legumes to be planted; and
    (3) Types and methods of planting, including the amount of grasses 
or legumes per acre, or the number and spacing of trees, or tree 
seedlings, or combinations of grasses and trees.
    (d) In those instances in which the permit or lease requires 
regrading and backfilling, the mining plan shall show the proposed 
methods and the timing of grading and backfilling of areas of land to be 
affected by the operation.

[[Page 608]]

    (e) The mining supervisor shall review the mining plan submitted to 
him by the operator and shall promptly indicate to the operator any 
changes, additions, or amendments necessary to meet the requirements 
formulated pursuant to Sec. 216.4, the provisions of these regulations 
and the terms of the permit or lease. The operator shall comply with the 
provisions of an approved mining plan.
    (f) A mining plan may be changed by mutual consent of the mining 
supervisor and the operator at any time to adjust to changed conditions 
or to correct any oversight. To obtain approval of a change or 
supplemental plan, the operator shall submit a written statement of the 
proposed changes or supplement and the justification for the changes 
proposed. The mining supervisor shall promptly notify the operator that 
he consents to the proposed changes or supplement, or in the event he 
does not consent, he shall specify the modifications thereto under which 
the proposed changes or supplement would be acceptable. After mutual 
acceptance of a change of a plan, the operator shall not depart 
therefrom without further approval.
    (g) If circumstances warrant or if development of a mining plan for 
the entire operation is dependent upon unknown factors which cannot or 
will not be determined except during the progress of the operations, a 
partial plan may be approved and supplemented from time to time. The 
operator shall not, however, perform any operation except under an 
approved plan.



Sec. 216.8  Performance bond.

    (a) Upon approval of an exploration plan or mining plan, the 
operator shall be required to file a suitable performance bond of not 
less than $2,000 with satisfactory surety, payable to the Secretary of 
the Interior, and the bond shall be conditioned upon the faithful 
compliance with applicable regulations, the terms and conditions of the 
permit, lease, or contract, and the exploration or mining plan as 
approved, amended or supplemented. The bond shall be in an amount 
sufficient to satisfy the reclamation requirements established pursuant 
to an approved exploration or mining plan, or an approved partial or 
supplemental plan. In determining the amount of the bond consideration 
shall be given to the character and nature of the reclamation 
requirements and the estimated costs of reclamation in the event that 
the operator forfeits his performance bond. In lieu of a surety bond an 
operator may elect to deposit cash or negotiable bonds of the U.S. 
government. The cash deposit or the market value of such securities 
shall be equal at least to the required sum of the bond.
    (b) In a particular instance where the circumstances are such as to 
warrant an exception, the amount of the bond for a particular operation 
may be reduced to less than the required minimum of $2,000.
    (c) The superintendent shall set the amount of a bond and take the 
necessary action for an increase or for a complete or partial release of 
a bond. He shall take action with respect to bonds for leases or permits 
only after consultation with the mining supervisor.



Sec. 216.9  Reports.

    (a) Within 30 days after the end of each calendar year, or if 
operations cease before the end of a calendar year, within 30 days after 
the cessation of operations, the operator shall submit an operations 
report to the mining supervisor containing the following information:
    (1) An identification of the permit or lease and the location of the 
operation.
    (2) A description of the operations performed during the period of 
time for which the report is filed.
    (3) An identification of the area of land affected by the operations 
and a description of the manner in which the land has been affected.
    (4) A statement as to the number of acres disturbed by the 
operations and the number of acres which were reclaimed during the 
period of time.
    (5) A description of the method utilized for reclamation and the 
results thereof.
    (6) A statement and description of reclamation work remaining to be 
done.
    (b) Upon completion of such grading and backfilling as may be 
required by

[[Page 609]]

an approved exploration or mining plan, the operator shall make a report 
thereon to the mining supervisor and request inspection for approval. 
Whenever it is determined by such inspection that backfilling and 
grading have been carried out in accordance with the established 
requirements and approved exploration or mining plan, the superintendent 
shall issue a release of an appropriate amount of the performance bond 
for the area graded and backfilled. Appropriate amounts of the bond 
shall be retained to assure that satisfactory planting, if required, is 
carried out.
    (c)(1) Whenever planting is required by an approved exploration or 
mining plan, the operator shall file a report with the superintendent 
whenever such planting is completed. The report shall--
    (i) Identify the permit or lease;
    (ii) Show the type of planting or seeding, including mixtures and 
amounts;
    (iii) Show the date of planting or seeding;
    (iv) Identify or describe the areas of the lands which have been 
planted;
    (v) Contain such other information as may be relevant.
    (2) The superintendent, as soon as possible after the completion of 
the first full growing season, shall make an inspection and evaluation 
of the vegetative cover and planting to determine if a satisfactory 
growth has been established.
    (3) If it is determined that a satisfactory vegetative cover has 
been established and is likely to continue to grow, any remaining 
portion of the surety bond may be released if all requirements have been 
met by the operator.
    (d)(1) Not less than 30 days prior to cessation or abandonment of 
operations, the operator shall report to the mining supervisor his 
intention to cease or abandon operations, together with a statement of 
the exact number of acres of land affected by his operations, the extent 
of reclamation accomplished and other relevant information.
    (2) Upon receipt of such report an inspection shall be made to 
determine whether operations have been carried out in accordance with 
the approved exploration or mining plan.



Sec. 216.10  Inspection: Notice of noncompliance: Revocation.

    (a) The mining supervisor and superintendent shall have the right to 
enter upon the lands under a permit or lease, at any reasonable time, 
for the purpose of inspection or investigation to determine whether the 
terms and conditions of the permit or lease and the requirements of the 
exploration or mining plan have been complied with.
    (b) If the mining supervisor determines that an operator has failed 
to comply with the terms and conditions of a permit or lease, or with 
the requirements of an exploration or mining plan, or with the 
provisions of applicable regulations, the superintendent shall serve a 
notice of noncompliance upon the operator by delivery in person to him 
or his agent or by certified or registered mail addressed to the 
operator at his last known address.
    (c) A notice of noncompliance shall specify in what respects the 
operator has failed to comply with the terms and conditions of a permit 
or lease or the requirements of an exploration or mining plan, or the 
provisions of applicable regulations, and shall specify the action which 
must be taken to correct the noncompliance and the time limits within 
which such action must be taken.
    (d) Failure of the operator to take action in accordance with the 
notice of noncompliance shall be grounds for suspension by the mining 
supervisor of operations or for the initiation of action for the 
cancellation of the permit or lease and for forfeiture of the surety 
bond required under Sec. 216.8.



Sec. 216.11  Appeals.

    An applicant, permittee, lessee, or lessor aggrieved by a decision 
or order of a mining supervisor or superintendent may appeal such 
decision or order. An appeal from a decision or order of a 
superintendent shall be made pursuant to 25 CFR part 2. An appeal from a 
decision or order of a mining supervisor shall be made pursuant to 30 
CFR parts 211 and 231.

[[Page 610]]



Sec. 216.12  Consultation.

    A superintendent shall consult with the Indian landowner with 
respect to actions he proposes to take under Sec. Sec. 216.4, 216.6, 
216.7, 216.9, and 216.10.



PART 217_MANAGEMENT OF TRIBAL ASSETS OF UTE INDIAN TRIBE, UINTAH AND 

OURAY RESERVATION, UTAH, BY THE TRIBE AND THE UTE DISTRIBUTION CORP.
--Table of Contents




Sec.
217.1 Definitions.
217.2 Authority and purpose.
217.3 Referral of questions by superintendent.
217.4 Referral of questions by the joint managers.
217.5 Management decisions.
217.6 Method of casting votes.
217.7 Implementation of decision.

    Authority: Secs. 27 and 28 of the Act of August 27, 1954, 68 Stat. 
868 (25 U.S.C. 677-677aa); 5 U.S.C. 301; secs. 463, 465 of the Revised 
Statutes (25 U.S.C. 2 and 9) and 230 DM 1 and 2.

    Source: 43 FR 40458, Sept. 12, 1978, unless otherwise noted. 
Redesignated at 47 FR 13327, Mar. 30, 1982.



Sec. 217.1  Definitions.

    As used in this part:
    Assets means all unadjudicated or unliquidated claims against the 
United States, all gas, oil, and mineral rights of every kind, and all 
other assets of the Ute Tribe of Uintah and Ouray Reservation as 
constituted on August 27, 1954, not distributed in accordance with the 
terms of the Ute Partition Act.
    Business Committee means the Uintah and Ouray Tribal Business 
Committee, created pursuant to the provisions of the constitution and 
bylaws of the Ute Indian Tribe of the Uintah and Ouray Reservation.
    Board of directors means the board of directors of the Ute 
Distribution Corp., a corporation organized and existing under the laws 
of the State of Utah.
    Joint manager or joint managers means the business committee and the 
board of directors, or either of them, as is appropriate, within the 
context where one of those terms is used.
    Superintendent means the superintendent of the Uintah and Ouray 
Agency, Bureau of Indian Affairs.
    Secretary means the secretary of the Interior or a subordinate 
official acting pursuant to authority delegated by said Secretary.



Sec. 217.2  Authority and purpose.

    In accordance with the Ute Partition Act approved August 27, 1954 
(68 Stat. 868; 25 U.S.C. 677-677aa), as amended by the Act of August 2, 
1956 (70 Stat. 936), and the Act of September 25, 1962 (76 Stat. 597), 
assets shall be managed jointly by the business committee and the board 
of directors. These regulations set out the procedures for exercising 
such joint management.



Sec. 217.3  Referral of questions by superintendent.

    The superintendent shall refer all questions and problems related to 
the management of the assets as they come to his attention, together 
with his analysis of alternative solutions to each question or problem, 
to the business committee and to the board of directors for resolution. 
Such referrals shall be in writing and shall be addressed to the joint 
managers at such addresses as they furnish to the superintendent and to 
each other from time to time.



Sec. 217.4  Referral of questions by the joint managers.

    The business committee and the board of directors must refer to each 
other for resolution any questions or problems related to joint 
management of the assets which they from time to time determine need to 
be resolved together with the submitting party's proposal, if any, for 
solution. Such referrals shall be in writing, addressed to the other 
joint manager at the address furnished in accordance with Sec. 217.3 of 
this part. Copies of all such referrals shall also be furnished to the 
superintendent. Either of the parties may request an analysis of 
alternative solutions of each question or problem referred pursuant to 
this section, and the superintendent will furnish such analysis within 
ten working days, or within such longer period as he may notify the 
parties is required to prepare such analysis.

[[Page 611]]



Sec. 217.5  Management decisions.

    In arriving at management decisions concerning the assets, the 
business committee shall be entitled to cast 72.83814 votes and the 
board of directors shall be entitled to cast 27.16186 votes. Any total 
number of votes cast exceeding 50 shall be sufficient to determine an 
issue submitted to the joint managers for resolution. A majority of 
votes cast will decide an issue.



Sec. 217.6  Method of casting votes.

    Within 30 days after an issue and any analysis provided for in 
Sec. Sec. 217.4 and 217.5 have been submitted to the joint managers for 
resolution, they shall each notify the superintendent in writing of the 
number of votes cast for and against the proposed or alternative 
solutions. If either of the joint managers fails or refuses to cast his 
votes and to notify the superintendent thereof within the time 
specified, the superintendent may conclude that such joint managers' 
votes have been cast against the proposed solution or solutions; or, if 
no solutions have been proposed, for the maintenance of the status quo. 
At the time they notify the superintendent of the votes cast on an 
issue, each joint manager shall furnish to the superintendent a 
certified copy of a resolution of the business committee or the board of 
directors, as the case may be, authorizing such vote.



Sec. 217.7  Implementation of decision.

    The Secretary shall issue such documents as are necessary or 
expendient to implement the decisions of the joint managers, insofar as 
such issuance is authorized by law, and he shall execute and/or approve 
such documents for and on behalf of the joint managers, or either of 
them, and on behalf of the United States, as necessary. If it becomes 
necessary for the Secretary to execute an instrument on behalf of one or 
both of the joint managers and to approve the same instrument as 
trustee, two different officials having delegated authority from the 
Secretary shall serve as executing and approving officers, respectively.



PART 225_OIL AND GAS, GEOTHERMAL, AND SOLID MINERALS AGREEMENTS
--Table of Contents




                            Subpart A_General

Sec.
225.1 Purpose and scope.
225.2 Information collection.
225.3 Definitions.
225.4 Authority and responsibility of the Bureau of Land Management 
          (BLM).
225.5 Authority and responsibility of the Office of Surface Mining 
          Reclamation and Enforcement (OSMRE).
225.6 Authority and responsibility of the Minerals Management Service 
          (MMS).

                      Subpart B_Minerals Agreements

225.20 Authority to contract.
225.21 Negotiation procedures.
225.22 Approval of minerals agreements.
225.23 Economic assessments.
225.24 Environmental studies.
225.25 Resolution of disputes.
225.26 Auditing and accounting.
225.27 Forms and reports.
225.28 Approval of amendments to minerals agreements.
225.29 Corporate qualifications and requests for information.
225.30 Bonds.
225.31 Manner of payments.
225.32 Permission to start operations.
225.33 Assignment of minerals agreements.
225.34 [Reserved]
225.35 Inspection of premises; books and accounts.
225.36 Minerals agreement cancellation; Bureau of Indian Affairs notice 
          of noncompliance.
225.37 Penalties.
225.38 Appeals.
225.39 Fees.
225.40 Government employees cannot acquire minerals agreements.

    Authority: Indian Mineral Development Act of 1982, 25 U.S.C. 2101-
2108; and 25 U.S.C. 2 and 9.

    Source: 59 FR 14971, Mar. 30, 1994, unless otherwise noted.



                            Subpart A_General



Sec. 225.1  Purpose and scope.

    (a) The regulations in this part, administered by the Bureau of 
Indian Affairs under the direction of the Secretary of the Interior, 
govern minerals agreements for the development of Indian-owned minerals 
entered into pursuant to the Indian Mineral Development Act of 1982, 25 
U.S.C. 2101-2108

[[Page 612]]

(IMDA). These regulations are applicable to the lands or interests in 
lands of any Indian tribe, individual Indian or Alaska native the title 
to which is held in trust by the United States or is subject to a 
restriction against alienation imposed by the United States. These 
regulations are intended to ensure that Indian mineral owners are 
permitted to enter into minerals agreements that will allow the Indian 
mineral owners to have more responsibility in overseeing and greater 
flexibility in disposing of their mineral resources, and to allow 
development in the manner which the Indian mineral owners believe will 
maximize their best economic interest and minimize any adverse 
environmental or cultural impact resulting from such development. 
Pursuant to section 4 of the IMDA (25 U.S.C. 2103(e)), as part of this 
greater flexibility, where the Secretary has approved a minerals 
agreement in compliance with the provisions of 25 U.S.C. chap. 23 and 
any other applicable provision of law, the United States shall not be 
liable for losses sustained by a tribe or individual Indian under such 
minerals agreement. However, as further stated in the IMDA, the 
Secretary continues to have a trust obligation to ensure that the rights 
of a tribe or individual Indian are protected in the event of a 
violation of the terms of any minerals agreement, and to uphold the 
duties of the United States as derived from the trust relationship and 
from any treaties, executive orders, or agreements between the United 
States and any Indian tribe.
    (b) The regulations in this part shall become effective and in full 
force on April 29, 1994, and shall be subject to amendment at any time 
by the Secretary; Provided, that no such regulation that becomes 
effective after the date of approval of any minerals agreement shall 
operate to affect the duration of the minerals agreement, the rate of 
royalty or financial consideration, rental, or acreage unless agreed to 
by all parties to the minerals agreement.
    (c) The regulations of the Bureau of Land Management, the Office of 
Surface Mining Reclamation and Enforcement, and the Minerals Management 
Service that are referenced in Sec. Sec. 225.4, 225.5, and 225.6 are 
supplemental to these regulations, and apply to minerals agreements for 
development of Indian mineral resources unless specifically stated 
otherwise in this part or in other Federal regulations. To the extent 
the parties to a minerals agreement are able to provide reasonable 
provisions satisfactorily addressing the issues of valuation, method of 
payment, accounting, and auditing, governed by the Minerals Management 
Service regulations, the Secretary may approve alternate provisions in a 
minerals agreement.
    (d) Nothing in these regulations is intended to prevent Indian 
tribes from exercising their lawful governmental authority to regulate 
the conduct of persons, businesses, or minerals operations within their 
territorial jurisdiction.



Sec. 225.2  Information collection.

    It has been determined by the Office of Management and Budget that 
the Information Collection Requirements contained in part 225 do not 
require review under the Paperwork Reduction Act (44 U.S.C. 3501 et 
seq.).



Sec. 225.3  Definitions.

    As used in this part, the following terms have the specified meaning 
except where otherwise indicated.
    Area Director means the Bureau of Indian Affairs Official in charge 
of an Area Office.
    Assistant Secretary--Indian Affairs means the Assistant Secretary--
Indian Affairs of the Department of the Interior, a designee of the 
Secretary of the Interior who may be specifically authorized by the 
Secretary to disapprove minerals agreements (25 U.S.C. 2103(d)) and to 
issue orders of cessation and/or minerals agreement cancellations as 
final orders of the Department.
    Authorized Officer means any employee of the Bureau of Land 
Management authorized by law or by lawful delegation of authority to 
perform the duties described herein and in 43 CFR parts 3160, 3180, 
3260, 3280, 3480 and 3590.
    Director's Representative means the Office of Surface Mining 
Reclamation and Enforcement Director's Representative authorized by law 
or by lawful delegation of authority to perform the

[[Page 613]]

duties described in 30 CFR part 750 and 25 CFR part 216.
    Gas means any fluid, either combustible or noncombustible, that is 
produced in a natural state from the earth and that maintains a gaseous 
or rarefied state at ordinary temperature and pressure conditions.
    Geothermal resources means: (1) All products of geothermal 
processes, including indigenous steam, hot water, and hot brines;
    (2) Steam and other gases, hot water, and hot brines, resulting from 
water, gas, or other fluids artificially introduced into geothermal 
formations;
    (3) Heat or other associated energy found in geothermal formations; 
and
    (4) Any by-product derived therefrom.
    In the best interest of the Indian mineral owner refers to the 
standards to be applied by the Secretary in considering whether to take 
administrative action affecting the interests of an Indian mineral 
owner. In considering whether it is ``in the best interest of the Indian 
mineral owner'' to take a certain action (such as approval of a minerals 
agreement or a unitization or communitization agreement) the Secretary 
shall consider any relevant factor, including, but not limited to: 
economic considerations, such as date of lease or minerals agreement 
expiration; probable financial effects on the Indian mineral owner; need 
for change in the terms of the existing minerals agreement; 
marketability of mineral products; and potential environmental, social 
and cultural effects.
    Indian lands means any lands or interests in lands owned by any 
individual Indian or Alaska Native, Indian tribe, band, nation, pueblo, 
community, rancheria, colony, or other group, the title to which is held 
in trust by the United States or is subject to a restriction against 
alienation imposed by the United States.
    Indian mineral owner means any individual Indian or Alaska Native, 
or Indian tribe, band, nation, pueblo, community, rancheria, colony, or 
other group that owns a mineral interest in oil and gas, geothermal 
resources or solid minerals, title to which is held in trust by the 
United States or is subject to a restriction against alienation imposed 
by the United States.
    Indian surface owner means any individual Indian or Alaska Native, 
or Indian tribe, band, nation, pueblo, community, rancheria, colony, or 
other group that owns the surface estate in land the title to which is 
held in trust by the United States or is subject to a restriction 
against alienation imposed by the United States.
    Indian tribe means any Indian tribe, band, nation, pueblo, 
community, rancheria, colony, or other group that owns land or interests 
in land the title to which is held in trust by the United States or is 
subject to a restriction against alienation imposed by the United 
States.
    Individual Indian means any individual Indian or Alaska Native who 
owns land or interests in land the title to which is held in trust by 
the United States or is subject to a restriction against alienation 
imposed by the United States.
    Minerals includes both metalliferous and non-metalliferous minerals; 
all hydrocarbons, including oil and gas, coal and lignite of all ranks; 
geothermal resources; and includes but is not limited to sand, gravel, 
pumice, cinders, granite, building stone, limestone, clay, silt, or any 
other energy or non-energy mineral.
    Minerals agreement means any joint venture, operating, production 
sharing, service, managerial, lease (other than a lease entered into 
pursuant to the Act of May 11, 1938, or the Act of March 3, 1909), 
contract, or other minerals agreement; or any amendment, supplement or 
other modification of such minerals agreement, providing for the 
exploration for, or extraction, processing, or other development of 
minerals in which an Indian mineral owner owns a beneficial or 
restricted interest, or providing for the sale or other disposition of 
the production or products of such minerals.
    Minerals Management Service official means any employee of the 
Minerals Management Service authorized by law or by lawful delegation of 
authority to perform the duties described in 30 CFR chapter II, 
subchapters A and C.
    Mining means the science, technique, and business of mineral 
development,

[[Page 614]]

including, but not limited to: opencast work, underground work, in-situ 
leaching, or other methods directed to severance and treatment of 
minerals; however, when sand, gravel, pumice, cinders, granite, building 
stone, limestone, clay or silt is the subject mineral, an enterprise is 
considered ``mining'' only if the extraction of such a mineral exceeds 
5,000 cubic yards in any given year.
    Oil means all non-gaseous hydrocarbon substances other than coal, 
oil shale, or gilsonite (including all vein-type solid hydrocarbons). 
Oil includes liquefiable hydrocarbon substances such as drip gasoline 
and other natural condensates recovered or recoverable in a liquid state 
from produced gas without resorting to a manufacturing process.
    Operator means a person, proprietorship, partnership, corporation, 
or other business entity that has entered into an approved minerals 
agreement under the authority of the Indian Mineral Development Act of 
1982, or who has been assigned an obligation to make royalty or other 
payments required by the minerals agreement.
    Secretary means the Secretary of the Interior or an authorized 
representative, except that as used in Sec. 225.22 (e) and (f) the 
authorized representative may only be the Assistant Secretary for Indian 
Affairs (25 U.S.C. 2103(d)).
    Solid minerals means all minerals excluding oil, gas, and geothermal 
resources.
    Superintendent means the Bureau of Indian Affairs official in charge 
of an agency office.



Sec. 225.4  Authority and responsibility of the Bureau of Land Management 
(BLM).

    The functions of the Bureau of Land Management are found in 43 CFR 
part 3160--Onshore Oil and Gas Operations, 43 CFR part 3180--Onshore Oil 
and Gas Unit Agreements: Unproven Areas, 43 CFR part 3260--Geothermal 
Resources Operations, 43 CFR part 3280--Geothermal Resources Unit 
Agreements: Unproven Areas, 43 CFR part 3480--Coal Exploration and 
Mining Operations, and 43 CFR part 3590--Solid Minerals (Other Than 
Coal) Exploration and Mining Operations. These functions include, but 
are not limited to, resource evaluation, approval of drilling permits, 
approval of mining, reclamation, and production plans, mineral 
appraisals, inspection and enforcement, and production verification. 
These regulations, as amended, apply to minerals agreements approved 
under this part.



Sec. 225.5  Authority and responsibility of the Office of Surface Mining 
Reclamation and Enforcement (OSMRE).

    The OSMRE is the regulatory authority for surface coal mining and 
reclamation operations on Indian lands pursuant to the Surface Mining 
Control and Reclamation Act of 1977 (30 U.S.C. 1201 et seq.). The 
relevant regulations for surface mining and reclamation operations are 
found in 30 CFR part 750 and 25 CFR part 216. These regulations, as 
amended, apply to minerals agreements approved under this part.



Sec. 225.6  Authority and responsibility of the Minerals Management Service (MMS).

    The functions of the MMS for reporting, accounting, and auditing are 
found in 30 CFR chapter II, subchapters A and C. These regulations, 
unless specifically stated otherwise in this part or in other 
regulations, apply to all minerals agreements approved under this part. 
To the extent the parties to a minerals agreement are able to provide 
reasonable provisions satisfactorily addressing the issues or functions 
governed by the MMS regulations relating to valuation of mineral 
product, method of payment, accounting procedures, and auditing 
procedures, the Secretary may approve alternate provisions in a minerals 
agreement.



                      Subpart B_Minerals Agreements



Sec. 225.20  Authority to contract.

    (a) Any Indian tribe, subject to the approval of the Secretary and 
any limitation or provision contained in its constitution or charter, 
may enter into a minerals agreement with respect to mineral resources in 
which the tribe owns a beneficial or restricted interest.

[[Page 615]]

    (b) Any individual Indian owning a beneficial or restricted interest 
in mineral resources may include those resources in a tribal minerals 
agreement subject to the concurrence of the parties and a finding by the 
Secretary that inclusion of the resources is in the best interest of the 
individual Indian mineral owner.



Sec. 225.21  Negotiation procedures.

    (a) An Indian mineral owner that wishes to enter into a minerals 
agreement may ask the Secretary for advice, assistance, and information 
during the negotiation process. The Secretary shall provide advice, 
assistance, and information to the extent allowed by available 
resources.
    (b) No particular form of minerals agreement is prescribed. In 
preparing the minerals agreement the Indian mineral owner shall, if 
applicable, address provisions including, but not limited to, the 
following:
    (1) A general statement identifying the parties to the minerals 
agreement, the legal description of the lands, including, if applicable, 
rock intervals or thicknesses subject to the minerals agreement, and the 
purposes of the minerals agreement;
    (2) A statement setting forth the duration of the minerals 
agreement;
    (3) A statement providing indemnification to the Indian mineral 
owner(s) and the United States from all claims, liabilities and causes 
of action that may be made by persons not a party to the minerals 
agreement;
    (4) Provisions setting forth the obligations of the contracting 
parties;
    (5) Provisions describing the methods of disposition of production;
    (6) Provisions outlining the method of payment and amount of 
compensation to be paid;
    (7) Provisions establishing accounting and mineral valuation 
procedures;
    (8) Provisions establishing operating and management procedures;
    (9) Provisions establishing any limitations on assignment of 
interests, including any right of first refusal by the Indian mineral 
owner in the event of a proposed assignment;
    (10) Bond requirements;
    (11) Insurance requirements;
    (12) Provisions establishing audit procedures;
    (13) Provisions for resolving disputes;
    (14) A force majeure provision;
    (15) Provisions describing the rights of the parties to terminate or 
suspend the minerals agreement, and the procedures to be followed in the 
event of termination or suspension;
    (16) Provisions describing the nature and schedule of the activities 
to be conducted by the parties;
    (17) Provisions describing the proposed manner and time of 
performance of future abandonment, reclamation and restoration 
activities;
    (18) Provisions for reporting production and sales;
    (19) Provisions for unitizing or communitizing of lands included in 
a minerals agreement for the purpose of promoting conservation and 
efficient utilization of natural resources;
    (20) Provisions for protection of the minerals agreement lands from 
drainage and/or unauthorized taking of mineral resources; and
    (21) Provisions for record keeping.
    (c) In order to avoid delays in obtaining approval, the Indian 
mineral owner is encouraged to confer with the Secretary prior to 
formally executing the minerals agreement, and seek advice as to whether 
the minerals agreement appears to satisfy the requirements of Sec. 
225.22, or whether additions or corrections may be required in order to 
obtain Secretarial approval.
    (d) The executed minerals agreement, together with a copy of a 
tribal resolution authorizing tribal officers to enter into the minerals 
agreement, shall be forwarded by the tribal representative to the 
appropriate Superintendent, or in the absence of a Superintendent to the 
Area Director, for approval.



Sec. 225.22  Approval of minerals agreements.

    (a) A minerals agreement submitted for approval pursuant to Sec. 
225.21(d) shall be approved or disapproved within:
    (1) One hundred and eighty (180) days after submission, or
    (2) Sixty (60) days after compliance, if required, with section 
102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 
4332(2)(C)) or any other

[[Page 616]]

requirement of Federal law, whichever is later.
    (b) At least thirty (30) days prior to approval or disapproval of 
any minerals agreement, the affected Indian mineral owners shall be 
provided with written findings forming the basis of the Secretary's 
intent to approve or disapprove the minerals agreement.
    (1) The written findings shall include an environmental study which 
meets the requirements of Sec. 225.24 and an economic assessment, as 
described in Sec. 225.23.
    (2) The Secretary shall include in the written findings any 
recommendations for changes to the minerals agreement needed to qualify 
it for approval.
    (3) The 30-day period shall commence to run as of the date the 
written findings are received by the Indian mineral owner.
    (4) Notwithstanding any other law, such findings and all 
projections, studies, data or other information (other than the 
environmental study required by Sec. 225.24) possessed by the 
Department of the Interior regarding the terms and conditions of the 
minerals agreement; the financial return to the Indian parties thereto; 
the extent, nature, value or disposition of the mineral resources; or 
the production, products or proceeds thereof, shall be held by the 
Department of the Interior as privileged and proprietary information of 
the affected Indian mineral owners. The letter containing the written 
findings should be headed with: PRIVILEGED PROPRIETARY INFORMATION OF 
THE (names of Indian mineral owners).
    (c) A minerals agreement shall be approved if, at the Secretary's 
discretion, it is determined that the following conditions are met:
    (1) The minerals agreement is in the best interest of the Indian 
mineral owner;
    (2) The minerals agreement does not have adverse cultural, social, 
or environmental impacts sufficient to outweigh its expected benefits to 
the Indian mineral owners; and,
    (3) The minerals agreement complies with the requirements of this 
part and all other applicable regulations and the provisions of 
applicable Federal law.
    (d) The determinations required by paragraph (c) of this section 
shall be based on the written findings required by paragraph (b) and 
paragraphs (b)(1) through (b)(4), inclusive, of this section. The 
question of ``best interest'' within the meaning of paragraph (c)(1) of 
this section shall be determined by the Secretary based on information 
obtained from the parties, and any other information considered relevant 
by the Secretary, including, but not limited to, a review of comparable 
contemporary contractual arrangements or offers for the development of 
similar mineral resources received by Indian mineral owners, by non-
Indian mineral owners, or by the Federal Government, insofar as that 
information is readily available.
    (e) If a Superintendent or Area Director believes that a minerals 
agreement should not be approved, a written statement of the reasons why 
the minerals agreement should not be approved shall be prepared and 
forwarded, together with the minerals agreement, the written findings 
required by paragraph (b) and subparagraphs (b)(1) through (b)(4), 
inclusive, of this section, and all other pertinent documents, to the 
Secretary for a decision with a copy to the affected Indian mineral 
owner.
    (f) The Secretary shall review any minerals agreement referred with 
a recommendation that it be disapproved, and the Secretary's decision to 
disapprove a minerals agreement shall be deemed a final Federal agency 
action (25 U.S.C. 2103(d)).



Sec. 225.23  Economic assessments.

    The Secretary shall prepare or cause to be prepared an economic 
assessment that shall address, among other things:
    (a) Whether there are assurances in the minerals agreement that 
operations shall be conducted with appropriate diligence;
    (b) Whether the production royalties or other form of return on 
mineral resources is adequate; and
    (c) Whether the minerals agreement is likely to provide the Indian 
mineral owner with a return on the production comparable to what the 
owner might otherwise obtain through competitive

[[Page 617]]

bidding, when such a comparison can reasonably be made.



Sec. 225.24  Environmental studies.

    (a) The Secretary shall ensure that all environmental studies are 
prepared as required by the National Environmental Policy Act of 1969 
(NEPA) and the regulations promulgated by the Council on Environmental 
Quality (CEQ) found at 40 CFR parts 1500-1508.
    (b) The Secretary shall ensure that all necessary surveys are 
performed and clearances obtained in accordance with 36 CFR parts 60, 
63, and 800 and with the requirements of the Archaeological and Historic 
Preservation Act (16 U.S.C. 469 et seq.), the National Historic 
Preservation Act (16 U.S.C. 470 et seq.), the American Indian Religious 
Freedom Act (42 U.S.C. 1996), and Executive Order 11593 (3 CFR 1971-1975 
Comp., p. 559, May 13, 1971). If these surveys indicate that a mineral 
development will have an adverse effect on a property listed on or 
eligible for listing on the National Register of Historic Places, the 
Secretary shall:
    (1) Seek the comments of the Advisory Council on Historic 
Preservation, in accordance with 36 CFR part 800;
    (2) Ensure that the property is avoided, that the adverse effect is 
mitigated, or that appropriate excavations or other related research is 
conducted; and
    (3) Ensure that complete data describing the historic property is 
preserved.



Sec. 225.25  Resolution of disputes.

    A minerals agreement shall contain provisions for resolving disputes 
that may arise between the parties. However, no such provision shall 
limit the Secretary's authority or ability to ensure that the rights of 
an Indian mineral owner are protected in the event of a violation of the 
provisions of the minerals agreement by any other party to the minerals 
agreement.



Sec. 225.26  Auditing and accounting.

    The Secretary may conduct audits relating to the scope, nature and 
extent of compliance with the minerals agreement and with applicable 
regulations and orders to lessees, operators, revenue payors, and other 
persons with rental, royalty, net profit share and other payment 
requirements arising from the provisions of a minerals agreement. 
Procedures and standards used for accounting and auditing of minerals 
agreements will be in accordance with audit standards established by the 
Comptroller General of the United States, in ``Standards for Auditing of 
Governmental Organizations, Programs, Activities, and Functions, 1981,'' 
and standards established by the American Institute of Certified Public 
Accountants.



Sec. 225.27  Forms and reports.

    Any forms required to be filed pursuant to a minerals agreement may 
be obtained from the Superintendent or Area Director. Prescribed forms 
for filing geothermal production reports required by the BLM (43 CFR 
part 3260, Sec. Sec. 3264.1, 3264.2-4 and 3264.2-5) may be obtained 
from the Superintendent, Area Director, or the Authorized Officer. 
Applicable reports required by the MMS shall be filed using the forms 
prescribed in 30 CFR part 210, which are available from MMS. Guidance on 
how to prepare and submit required information, collection reports, and 
forms to MMS is available from: Minerals Management Service, Attention: 
Lessee (or Reporter) Contact Branch, P.O. Box 5760, Denver, Colorado 
80217. Additional reporting requirements may be required by the 
Secretary.



Sec. 225.28  Approval of amendments to minerals agreements.

    An amendment, modification or supplement to a minerals agreement 
entered into pursuant to the regulations in this part, whether the 
minerals agreement was approved before or after the effective date of 
these regulations, must be approved in writing by all parties before 
being submitted to the Secretary for approval. The provisions of Sec. 
225.22 apply to approvals of amendments, modifications, or supplements 
to minerals agreements entered into under the regulations in this part. 
However, amendments, modifications, or supplements that do not 
substantially alter or affect the factors listed

[[Page 618]]

in Sec. 225.22(c), may be approved by referencing materials previously 
submitted for the initial review and approval of the minerals agreement. 
The Secretary may approve an amendment, modification, or supplement if 
it is determined that the underlying minerals agreement, as amended, 
modified, or supplemented meets the criteria for approval set forth in 
Sec. 225.22(c).



Sec. 225.29  Corporate qualifications and requests for information.

    (a) The signing in a representative capacity of minerals agreements 
or assignments, bonds, or other instruments required by a minerals 
agreement or these regulations, constitutes certification that the 
individual signing (except a surety agent) is authorized to act in such 
a capacity. An agent for a surety shall furnish a power of attorney.
    (b) A prospective corporate operator proposing to acquire an 
interest in a minerals agreement shall have on file with the 
Superintendent a statement showing:
    (1) The State(s) in which the corporation is incorporated, and a 
notarized statement that the corporation is authorized to hold such 
interests in the State where the land described in the minerals 
agreement is situated; and
    (2) A notarized statement that it has power to conduct all business 
and operations as described in the minerals agreement.
    (c) The Secretary may, either before or after the approval of a 
minerals agreement, assignment, or bond, call for any reasonable 
additional information necessary to carry out the regulations in this 
part, or other applicable laws and regulations.



Sec. 225.30  Bonds.

    (a) Bonds required by provisions of a minerals agreement should be 
in an amount sufficient to ensure compliance with all of the 
requirements of the minerals agreement and the statutes and regulations 
applicable to the minerals agreement. Surety bonds shall be issued by a 
qualified company approved by the Department of the Treasury (see 
Department of the Treasury Circular No. 570).
    (b) An operator may file a $75,000 bond for all geothermal, mining, 
or oil and gas minerals agreements in any one State, which may also 
include areas on that part of an Indian reservation extending into any 
contiguous State. Statewide bonds shall be filed for approval with the 
Secretary.
    (c) An operator may file a $150,000 bond for full nationwide 
coverage to cover all geothermal or oil and gas minerals agreements 
without geographic or acreage limitation to which the operator is or may 
become a party. Nationwide bonds shall be filed for approval with the 
Secretary.
    (d) Personal bonds shall be accompanied by:
    (1) Certificate of deposit issued by a financial institution, the 
deposits of which are Federally insured, explicitly granting the 
Secretary full authority to demand immediate payment in case of default 
in the performance of the provisions and conditions of the minerals 
agreement. The certificate shall explicitly indicate on its face that 
Secretarial approval is required prior to redemption of the certificate 
of deposit by any party;
    (2) Cashier's check;
    (3) Certified check;
    (4) Negotiable Treasury securities of the United States of a value 
equal to the amount specified in the bond. Negotiable Treasury 
securities shall be accompanied by a proper conveyance to the Secretary 
of full authority to sell such securities in case of default in the 
performance of the provisions and conditions of a minerals agreement; or
    (5) Letter of credit issued by a financial institution authorized to 
do business in the United States and whose deposits are Federally 
insured, and identifying the Secretary as sole payee with full authority 
to demand immediate payment in the case of default in the performance of 
the provisions and conditions of a minerals agreement.
    (i) The letter of credit shall be irrevocable during its term.
    (ii) The letter of credit shall be payable to the Bureau of Indian 
Affairs on demand, in part or in full, upon receipt from the Secretary 
of a notice of attachment stating the basis thereof (e.g., default in 
compliance with the minerals agreement provisions and

[[Page 619]]

conditions or failure to file a replacement in accordance with 
subparagraph (d)(5)(v) of this section).
    (iii) The initial expiration date of the letter of credit shall be 
at least one (1) year following the date it is filed in the proper 
Bureau of Indian Affairs office.
    (iv) The letter of credit shall contain a provision for automatic 
renewal for periods of not less than one (1) year in the absence of 
notice to the proper Bureau of Indian Affairs office at least ninety 
(90) days prior to the originally stated or any extended expiration 
date.
    (v) A letter of credit used as security for any minerals agreement 
upon which operations have taken place and final approval for 
abandonment has not been given, or as security for a statewide or 
nationwide bond, shall be forfeited and shall be collected by the 
Secretary if not replaced by other suitable bond or letter of credit at 
least thirty (30) days before its expiration date.
    (e) The required amount of a bond may be increased in any particular 
case at the discretion of the Secretary.

[59 FR 14971, Mar. 30, 1994; 60 FR 10474, Feb. 24, 1995]



Sec. 225.31  Manner of payments.

    Unless specified otherwise in the minerals agreement, after 
production has been established, all payments due for royalties, 
bonuses, rentals and other payments under a minerals agreement shall be 
made to the Secretary or such other party as may be designated, and 
shall be made at such time as provided in 30 CFR chapter II, subchapters 
A and C. Prior to production, all bonus and rental payments, shall be 
made to the Superintendent or Area Director.



Sec. 225.32  Permission to start operations.

    (a) No exploration, drilling, or mining operations are permitted on 
any Indian lands before the Secretary has granted written approval of 
the minerals agreement pursuant to the regulations. After a minerals 
agreement is approved, written permission to start operations must be 
secured by applying for the permits referred to in paragraph (b) of this 
section.
    (b) Applicable permits in accordance with rules and regulations in 
30 CFR part 750, 43 CFR parts 3160, 3260, 3480, 3590, and Orders or 
Notices to Lessees (NTL) issued thereunder shall be required before 
actual operations are conducted on the minerals agreement acreage.



Sec. 225.33  Assignment of minerals agreements.

    An assignment of a minerals agreement, or any interest therein, 
shall not be valid without the approval of the Secretary and, if 
required in the minerals agreement, the Indian mineral owner. The 
assignee must be qualified to hold the minerals agreement and shall 
furnish a satisfactory bond conditioned on the faithful performance of 
the covenants and conditions thereof as stipulated in the minerals 
agreement. A fully executed copy of the assignment shall be filed with 
the Secretary within five (5) working days after execution by all 
parties. The Secretary may permit the release of any bonds executed by 
the assignor upon submission of satisfactory bonds to the Bureau of 
Indian Affairs by the assignee, and a determination that the assignor 
has satisfied all accrued obligations.



Sec. 225.34  [Reserved]



Sec. 225.35  Inspection of premises; books and accounts.

    (a) Operators shall allow Indian mineral owners, their authorized 
representatives, or any authorized representatives of the Secretary to 
enter all parts of the minerals agreement area for the purpose of 
inspection. Operators shall keep a full and correct account of all 
operations and submit all related reports required by the minerals 
agreement and applicable regulations. Books and records shall be 
available for inspection during regular business hours.
    (b) Operators shall provide records to the Minerals Management 
Service (MMS) in accordance with MMS regulations and guidelines. All 
records pertaining to a minerals agreement shall be maintained by an 
operator in accordance with 30 CFR part 212.

[[Page 620]]

    (c) Operators shall provide records to the Authorized Officer in 
accordance with BLM regulations and guidelines.
    (d) Operators shall provide records to the Director's Representative 
in accordance with OSMRE regulations and guidelines.



Sec. 225.36  Minerals agreement cancellation; Bureau of Indian Affairs 
notice of noncompliance.

    (a) If the Secretary determines that an operator has failed to 
comply with the regulations in this part; other applicable laws or 
regulations; the terms of the minerals agreement; the requirements of an 
approved exploration, drilling or mining plan; Secretarial orders; or 
the orders of the Authorized Officer, the Director's Representative, or 
the MMS Official, the Secretary may:
    (1) Serve a notice of noncompliance; or
    (2) Serve a notice of proposed cancellation.
    (b) The notice of noncompliance shall specify in what respect the 
operator has failed to comply with the requirements referenced in 
paragraph (a), and shall specify what actions, if any, must be taken to 
correct the noncompliance.
    (c) The notice of proposed cancellation shall set forth the reasons 
why cancellation is proposed.
    (d) The notice of proposed cancellation or noncompliance shall be 
served upon the operator by delivery in person or by certified mail to 
the operator at the operator's last known address. When certified mail 
is used, the date of service shall be deemed to be when received or five 
(5) working days after the date it is mailed, whichever is earlier.
    (e) The operator shall have thirty (30) days (or such longer time as 
specified in the notice) from the date that the Bureau of Indian Affairs 
notice of proposed cancellation or noncompliance is served to respond, 
in writing, to the Superintendent or Area Director actually issuing the 
notice.
    (f) If an operator fails to take any action that may be prescribed 
in the notice of proposed cancellation, fails to file a timely written 
response to the notice, or files a written response that does not, in 
the discretion of the Secretary, adequately justify the operator's 
failure to comply, then the Secretary may cancel the minerals agreement, 
specifying the basis for the cancellation. Cancellation of a minerals 
agreement shall not relieve the operator of any continuing obligation 
under the minerals agreement.
    (g) If an operator fails to take corrective action or to file a 
timely written response adequately justifying the operator's actions 
pursuant to a notice of noncompliance, the Secretary may issue an order 
of cessation. If the operator fails to comply with the order of 
cessation, or fails to timely file an appeal of the order of cessation 
pursuant to paragraph (k) of this section, the Secretary may issue an 
order of minerals agreement cancellation.
    (h) This section does not limit any other remedies of the Indian 
mineral owner as set forth in the minerals agreement.
    (i) Nothing in this section is intended to limit the authority of 
the Authorized Officer, the Director's Representative, or the MMS 
Official to take any enforcement action authorized pursuant to statute 
or regulation.
    (j) The Authorized Officer, the Director's Representative, the MMS 
Official, and the Superintendent or Area Director should consult with 
one another before taking any enforcement actions.
    (k) If orders of cessation or minerals agreement cancellation issued 
pursuant to this section are issued by a designee of the Secretary other 
than the Assistant Secretary for Indian Affairs, the orders may be 
appealed under 25 CFR part 2. If the orders are issued by the Secretary 
or the Assistant Secretary for Indian Affairs, and not one of their 
delegates or subordinates, the orders are the final orders of the 
Department.



Sec. 225.37  Penalties.

    (a) In addition to or in lieu of cancellation under Sec. 225.36, 
violations of the terms and conditions of any minerals agreement, the 
regulations in this part, other applicable laws or regulations, or 
failure to comply with a notice of noncompliance or a cessation order 
issued by the Secretary may subject an operator to a penalty of not more 
than $1,000 per day for each day

[[Page 621]]

that such a violation or noncompliance continues beyond the time limits 
prescribed for corrective action.
    (b) A notice of a proposed penalty shall be served on the operator 
either personally or by certified mail to the operator at the operator's 
last known address. The date of service by certified mail shall be 
deemed to be the date received or five (5) working days after the date 
mailed, whichever is earlier.
    (c) The notice shall specify the nature of the violation and the 
proposed penalty, and shall specifically advise the operator of the 
operator's right to either request a hearing within thirty (30) days of 
receipt of the notice or pay the proposed penalty. Hearings shall be 
held before the Superintendent or Area Director whose findings shall be 
conclusive, unless an appeal is taken pursuant to 25 CFR part 2. If 
within thirty (30) days of receipt of the notice of proposed penalty the 
operator has not requested a hearing or paid the amount of the proposed 
penalty, a final notice of penalty shall be served.
    (d) If the person served with a notice of proposed penalty requests 
a hearing, penalties shall accrue each day the violations or 
noncompliance set forth in the notice continue beyond the time limits 
presented for corrective action. The Secretary may issue a written 
suspension of the requirement to correct the violations pending 
completion of the hearings provided by this section only upon a 
determination, at the discretion of the Secretary, that such a 
suspension will not be detrimental to the Indian mineral owner and upon 
submission and acceptance of a bond deemed adequate to indemnify the 
Indian mineral owner from loss or damage. The amount of the bond must be 
sufficient to cover the cost of correcting the violations set forth in 
the notice or any disputed amounts plus accrued penalties and interest.
    (e) Payment of penalties in full more than ten (10) days after a 
final decision imposing a penalty shall subject the operator to late 
payment charges. Late payment charges shall be calculated on the basis 
of a percentage assessment rate of the amount unpaid per month for each 
month or fraction thereof until payment is received by the Secretary. In 
the absence of a specific minerals agreement provision prescribing a 
different rate, the interest rate on late payments and underpayments 
shall be a rate applicable under section 6621(a)(2) of the Internal 
Revenue Code of 1954. Interest shall be charged only on the amount of 
payment not received and only for the number of days the payment is 
late.
    (f) None of the provisions of this section shall be interpreted as:
    (1) Replacing or superseding the independent authority of the 
Authorized Officer, the Director's Representative, or the MMS Official 
to impose penalties under applicable statutory or regulatory 
authorities;
    (2) Replacing, superseding, or replicating any penalty provision in 
the terms and conditions of a minerals agreement approved by the 
Secretary pursuant to this part; or
    (3) Authorizing the imposition of a penalty for violations of 
minerals agreement provisions for which the Authorized Officer, 
Director's Representative, or MMS Official has either statutory or 
regulatory authority to assess a penalty.



Sec. 225.38  Appeals.

    Appeals from decisions of Officials of the Bureau of Indian Affairs 
under this part may be taken pursuant to 25 CFR part 2.



Sec. 225.39  Fees.

    (a) Unless otherwise authorized by the Secretary, each minerals 
agreement or assignment thereof, shall be accompanied by a filing fee of 
$75.00 at the time of filing.
    (b) An Indian mineral owner shall not be required to pay a filing 
fee if the Indian mineral owner, pursuant to a provision in the existing 
minerals agreement, acquires an additional interest in that minerals 
agreement.



Sec. 225.40  Government employees cannot acquire minerals agreements.

    U.S. Government employees are prevented from acquiring any 
interest(s) in minerals agreements by the provisions of 25 CFR part 140 
and 43 CFR part 20 pertaining to conflicts of interest and ownership of 
an interest in trust land.

[[Page 622]]



PART 226_LEASING OF OSAGE RESERVATION LANDS FOR OIL AND GAS MINING
--Table of Contents




Sec.
226.1 Definitions.

                  Leasing Procedure, Rental and Royalty

226.2 Sale of leases.
226.3 Surrender of lease.
226.4 Form of payment.
226.5 Leases subject to current regulations.
226.6 Bonds.
226.7 Provisions of forms made a part of the regulations.
226.8 Corporation and corporate information.
226.9 Rental and drilling obligations.
226.10 Term of lease.
226.11 Royalty payments.
226.12 Government reserves right to purchase oil.
226.13 Time of royalty payments and reports.
226.14 Contracts and division orders.
226.15 Unit leases, assignments and related instruments.

                               Operations

226.16 Commencement of operations.
226.17 How to acquire permission to begin operations on a restricted 
          homestead allotment.
226.18 Information to be given surface owners prior to commencement of 
          drilling operations.
226.19 Use of surface of land.
226.20 Settlement of damages claimed.
226.21 Procedure for settlement of damages claimed.
226.22 Prohibition of pollution.
226.23 Easements for wells off leased premises.
226.24 Lessee's use of water.
226.25 Gas well drilled by oil lessees and vice versa.
226.26 Determining cost of well.
226.27 Gas for operating purposes and tribal use.

                         Cessation of Operations

226.28 Shutdown, abandonment, and plugging of wells.
226.29 Disposition of casings and other improvements.

                         Requirements of Lessees

226.30 Lessees subject to Superintendent's orders; books and records 
          open to inspection.
226.31 Lessee's process agents.
226.32 Well records and reports.
226.33 Line drilling.
226.34 Wells and tank batteries to be marked.
226.35 Formations to be protected.
226.36 Control devices.
226.37 Waste of oil and gas.
226.38 Measuring and storing oil.
226.39 Measurement of gas.
226.40 Use of gas for lifting oil.
226.41 Accidents to be reported.

                                Penalties

226.42 Penalty for violation of lease terms.
226.43 Penalties for violation of certain operating regulations.

                           Appeals and Notices

226.44 Appeals.
226.45 Notices.
226.46 Information collection.

    Authority: Sec. 3, 34 Stat. 543; secs. 1, 2, 45 Stat. 1478; sec. 3, 
52 Stat. 1034, 1035; sec. 2(a), 92 Stat. 1660.

    Source: 39 FR 22254, June 21, 1974, unless otherwise noted. 
Redesignated at 47 FR 13327, Mar. 30, 1982.



Sec. 226.1  Definitions.

    As used in this part 226, terms shall have the meanings set forth in 
this section.
    (a) Secretary means the Secretary of the Interior or his authorized 
representative acting under delegated authority.
    (b) Osage Tribal Council means the duly elected governing body of 
the Osage Nation or Tribe of Indians of Oklahoma vested with authority 
to lease or take other actions on oil and gas mining pertaining to the 
Osage Mineral Estate.
    (c) Superintendent means the Superintendent of the Osage Agency, 
Pawhuska, Oklahoma, or his authorized representative acting under 
delegated authority.
    (d) Oil lessee means any person, firm, or corporation to whom an oil 
mining lease is made under the regulations in this part.
    (e) Gas lessee means any person, firm, or corporation to whom a gas 
mining lease is made under the regulations in this part.
    (f) Oil and gas lessee means any person, firm, or corporation to 
whom an oil and gas mining lease is made under the regulations in this 
part.
    (g) Primary term means the basic period of time for which a lease is 
issued during which the lease contract may be kept in force by payment 
of rentals.

[[Page 623]]

    (h) Major purchaser means any one of the minimum number of 
purchasers taking 95 percent of the oil in Osage County, Oklahoma. Any 
oil purchased by a purchaser from itself, its subsidiaries, 
partnerships, associations, or other corporations in which it has a 
financial or management interest shall be excluded from the 
determination of a major purchaser.
    (i) Casinghead gas means gas produced from an oil well as a 
consequence of oil production from the same formation.
    (j) Natural gas means any fluid, either combustible or 
noncombustible, recovered at the surface in the gaseous phase and/or 
hydrocarbons recovered at the surface as liquids which are the result of 
condensation caused by reduction of pressure and temperature of 
hydrocarbons originally existing in a reservoir in the gaseous phase.
    (k) Authorized representative of an oil lessee, gas lessee, or oil 
and gas lessee means any person, group, or groups of persons, 
partnership, association, company, corporation, organization or agent 
employed by or contracted with a lessee or any subcontractor to conduct 
oil and gas operations or provide facilities to market oil and gas.
    (l) Oil well means any well which produces one (1) barrel or more of 
crude petroleum oil for each 15,000 standard cubic feet of natural gas.
    (m) Gas well means any well which:
    (1) Produces natural gas not associated with crude petroleum oil at 
the time of production or
    (2) Produces more than 15,000 standard cubic feet of natural gas to 
each barrel of crude petroleum oil from the same producing formation.

[39 FR 22254, June 21, 1974, as amended at 41 FR 50648, Nov. 17, 1976; 
43 FR 8135, Feb. 28, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33114, Aug. 14, 1990]

                  Leasing Procedure, Rental and Royalty



Sec. 226.2  Sale of leases.

    (a) Written application, together with any nomination fee, for 
tracts to be offered for lease shall be filed with the Superintendent.
    (b) The Superintendent, with the consent of the Osage Tribal 
Council, shall publish notices for the sale of oil leases, gas leases, 
and oil and gas leases to the highest responsible bidder on specific 
tracts of the unleased Osage Mineral Estate. The Superintendent may 
require any bidder to submit satisfactory evidence of his good faith and 
ability to comply with all provisions of the notice of sale. Successful 
bidders must deposit with the Superintendent on day of sale a check or 
cash in an amount not less than 25 percent of the cash bonus offered as 
a guaranty of good faith. Any and all bids shall be subject to the 
acceptance of the Osage Tribal Council and approval of the 
Superintendent. Within 20 days after notification of being the 
successful bidder, and said bidder must submit to the Superintendent the 
balance of the cash bonus, a $10 filing fee, and the lease in completed 
form. The Superintendent may extend the time for the completion and 
submission of the lease form, but no extension shall be granted for 
remitting the balance of moneys due. If the bidder fails to pay the full 
cash consideration within said period or fails to file the completed 
lease within said period or extention thereof, or if the lease is 
rejected through no fault of the Osage Tribal Council or the 
Superintendent, 25 percent of the cash bonus bid will be forfeited for 
the use and benefits of the Osage Tribe. The Superintendent may reject a 
lease made on an accepted bid, upon evidence satisfactory to him of 
collusion, fraud, or other irregularity in connection with the notice of 
sale. The Superintendent may approve oil leases, gas leases, and oil and 
gas leases made by the Osage Tribal Council in conformity with the 
notice of sale, regulations in this part, bonds, and other instruments 
required.
    (c) Each oil and/or gas lease and activities and installations 
associated therewith subject to these regulations shall be assessed and 
evaluated for its environmental impact prior to its approval by the 
Superintendent.
    (d) Lessee shall accept a lease with the understanding that a 
mineral not covered by his lease may be leased separately.
    (e) No lease, assignment thereof, or interest therein will be 
approved to any employee or employees of the Government and no such 
employee shall be

[[Page 624]]

permitted to acquire any interest in leases covering the Osage Mineral 
Estate by ownership of stock in corporations having leases or in any 
other manner.
    (f) The Osage Tribal Council may utilize the following procedures 
among others, in entering into a mining lease. A contract may be entered 
into through competitive bidding as outlined in Sec. 226.2(b), 
negotiation, or a combination of both. The Osage Tribal Council may also 
request the Superintendent to undertake the preparation, advertisement 
and negotiation. The Superintendent may approve any such contract made 
by the Osage Tribal Council.

[39 FR 22254, June 21, 1974, as amended at 43 FR 8135, Feb. 28, 1978. 
Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 226.3  Surrender of lease.

    Lessee may, with the approval of the Superintendent and payment of a 
$10 filing fee, surrender all or any portion of any lease, have the 
lease cancelled as to the portion surrendered and be relieved from all 
subsequent obligations and liabilities. If the lease, or portion being 
surrendered, is owned in undivided interests by more than one party, 
then all parties shall join in the application for cancellation: 
Provided, That if this lease has been recorded, Lessee shall execute a 
release and record the same in the proper office. Such surrender shall 
not entitle Lessee to a refund of the unused portion of rental paid in 
lieu of development, nor shall it relieve Lessee and his sureties of any 
obligation and liability incurred prior to such surrender: Provided 
further, That when there is a partial surrender of any lease and the 
acreage to be retained is less than 160 acres or there is a surrender of 
a separate horizon, such surrender shall become effective only with the 
consent of the Osage Tribal Council and approval of the Superintendent.

[43 FR 8135, Feb. 28, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 226.4  Form of payment.

    Sums due under a lease contract and/or the regulations in this part 
shall be paid by cash or check made payable to the Bureau of Indian 
Affairs and delivered to the Osage Agency, Pawhuska, Oklahoma 74056. 
Such sums shall be a prior lien on all equipment and unsold oil on the 
leased premises.



Sec. 226.5  Leases subject to current regulations.

    Leases issued pursuant to this part shall be subject to the current 
regulations of the Secretary, all of which are made a part of such 
leases: Provided, That no amendment or change of such regulations made 
after the approval of any lease shall operate to affect the term of the 
lease, rate of royalty, rental, or acreage unless agreed to by both 
parties and approved by the Superintendent.



Sec. 226.6  Bonds.

    Lessees shall furnish with each lease a corporate surety bond 
acceptable to the Superintendent as follows:
    (a) A bond on Form D shall be filed with each lease submitted for 
approval. Such bond shall be in an amount of not less than $5,000 for 
each quarter section or fractional quarter section covered by said 
lease: Provided, however, That one bond in the penal sum or not less 
than $50,000 may be filed on Form G covering all oil, gas and 
combination oil and gas leases not in excess of 10,240 acres to which 
Lessee is or may become a party.
    (b) In lieu of the bonds required under paragraph (a) of this 
section, a bond in the penal sum of $150,000 may be filed on Form 5-5438 
for full nationwide coverage of all leases, without geographic or 
acreage limitation, to which the Lessee is or may become a party.
    (c) A bond on Form H shall be filed in an amount of not less than 
$5,000 covering a lease acquired through assignment where the assignee 
does not have a collective bond on form G or nationwide bond, or the 
corporate surety does not execute its consent to remain bound under the 
original bond given to secure the faithful performance of the terms and 
conditions of the lease.
    (d) The right is specifically reserved to increase the amount of 
bonds prescribed in paragraphs (a) and (c) of this section in any 
particular case when the Superintendent deems it proper. The

[[Page 625]]

nationwide bond may be increased at any time in the discretion of the 
Secretary.

[39 FR 22254, June 21, 1974, as amended at 43 FR 8135, Feb. 28, 1978; 43 
FR 11815, Mar. 22, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982, as 
amended at 55 FR 33114, Aug. 14, 1990]



Sec. 226.7  Provisions of forms made a part of the regulations.

    Leases, assignments, and supporting instruments shall be in the form 
prescribed by the Secretary, and such forms are hereby made a part of 
the regulations.



Sec. 226.8  Corporation and corporate information.

    (a) If the applicant for a lease is a corporation, it shall file 
evidence of authority of its officers to execute papers; and with its 
first application it shall also file a certified copy of its Articles of 
Incorporation and, if foreign to the State of Oklahoma, evidence showing 
compliance with the corporation laws thereof.
    (b) Whenever deemed advisable the Superintendent may require a 
corporation to file any additional information necessary to carry out 
the purpose and intent of the regulations in this part, and such 
information shall be furnished within a reasonable time.



Sec. 226.9  Rental and drilling obligations.

    (a) Oil leases, gas leases, and combination oil and gas leases. 
Unless Lessee shall complete and place on production a well producing 
and selling oil and/or gas in paying quantities on the land embraced 
within the lease within 12 months from the date of approval of the 
lease, or as otherwise provided in the lease terms, or 12 months from 
the date the Superintendent consents to drilling on any restricted 
homestead selection, the lease shall terminate unless rental at the rate 
of not less than $1 per acre for an oil or gas lease, or not less than 
$2.00 per acre for a combination oil and gas lease, shall be paid before 
the end of the first year of the lease. The lease may also be held for 
the remainder of its primary term without drilling upon payment of the 
specified rental annually in advance, commencing with the second lease 
year. The lease shall terminate as of the due date of the rental unless 
such rental shall be received by the Superintendent, or shall have been 
mailed as indicated by postmark on or before said date. The completion 
of a well producing in paying quantities shall, for so long as such 
production continues, relieve Lessee from any further payment of rental, 
except that should such production cease during the primary term the 
lease may be continued only during the remaining primary term of the 
lease by payment of advance rental which shall commence on the next 
anniversary date of the lease. Rental shall be paid on the basis of a 
full year and no refund will be made of advance rental paid in 
compliance with the regulations in this part: Provided, That the 
Superintendent in his discretion may order further development of any 
leased acreage or separate horizon if, in his opinion, a prudent 
operator would conduct further development. If Lessee refuses to comply, 
the refusal will be considered a violation of the lease terms and said 
lease shall be subject to cancellation as to the acreage or horizon the 
further development of which was ordered: Provided further, That the 
Superintendent may impose restrictions as to time of drilling and rate 
of production from any well or wells when in his judgment, such action 
may be necessary or proper for the protection of the natural resources 
of the leased land and the interests of the Osage Tribe. The 
superintendent may consider, among other things, Federal and Oklahoma 
laws regulating either drilling or production. If a lessee holds both an 
oil lease and a gas lease covering the same acreage, such lessee is 
subject to the provisions of this section as to both the oil lease and 
the gas lease.
    (b) The Superintendent may, with the consent of and under terms 
approved by the Osage Tribal Council, grant an extension of the primary 
term of a lease on which the actual drilling of a well shall have 
commenced within the term thereof or for the purpose of enabling Lessee 
to obtain a market for his oil and/or gas production.

[43 FR 8135, Feb. 28, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982]

[[Page 626]]



Sec. 226.10  Term of lease.

    Leases issued hereunder shall be for a primary term as established 
by the Osage Tribal Council, approved by the Superintendent, and so 
stated in the notice of sale of such leases and so long thereafter as 
the minerals specified are produced in paying quantities.

[43 FR 8136, Feb. 28, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 226.11  Royalty payments.

    (a) Royalty on oil--(1) Royalty rate. Lessee shall pay or cause to 
be paid to the Superintendent, as royalty, the sum of not less than 
16\2/3\ percent of the gross proceeds from sales after deducting the oil 
used by Lessee for development and operation purposes on the lease: 
Provided, That when the quantity of oil taken from all the producing 
wells on any quarter-section or fraction thereof, according to the 
public survey, during any calendar month is sufficient to average one 
hundred or more barrels per active producing well per day the royalty on 
such oil shall be not less than 20 percent. The Osage Tribal Council 
may, upon presentation of justifiable economic evidence by Lessee, agree 
to a revised royalty rate subject to approval by the Superintendent, 
applicable to additional oil produced from a lease or leases by enhanced 
recovery methods, which rate shall not be less than 12\1/2\ percent of 
the gross proceeds from sale of oil produced by enhanced recovery 
processes, other than gas injection, after deducting the oil used by 
Lessee for development and operating purposes on the lease or leases.
    (2) Unless the Osage Tribal Council, with approval of the Secretary, 
shall elect to take the royalty in kind, payment is owing at the time of 
sale or removal of the oil, except where payments are made on division 
orders, and settlement shall be based on the actual selling price, but 
at not less than the highest posted price by a major purchaser (as 
defined in Sec. 226.1(h)) in Osage County, Oklahoma, who purchases 
production from Osage oil leases.
    (3) Royalty in kind. Should Lessor, with approval of the Secretary, 
elect to take the royalty in kind, Lessee shall furnish free storage for 
royalty oil for a period not to exceed 60 days from date of production 
after notice of such election.
    (b) Royalty on gas--(1) Oil lease. All casinghead gas shall belong 
to the oil Lessee subject to any rights under existing gas leases. All 
casinghead gas removed from the lease from which it is produced shall be 
metered unless otherwise approved by the Superintendent and be subject 
to a royalty of not less than 16\2/3\ percent of the market value of the 
gas and all products extracted therefrom, less a reasonable allowance 
for manufacture or processing. If an oil Lessee supplies casinghead gas 
produced from one lease for operation and/or development of other 
leases, either his/hers or others, a royalty of not less than 16\2/3\ 
percent shall be paid on the market value of all casinghead gas so used. 
All casinghead gas not utilized by the oil Lessee may, with the approval 
of the Superintendent, be utilized or sold by the gas Lessee, subject to 
the prescribed royalty of not less than 16\2/3\ percent of the market 
value.
    (2) Gas lease. Lessee shall pay a royalty of not less than 16\2/3\ 
percent of the market value value of all natural gas and products 
extracted therefrom produced and sold from his lease. Natural gas used 
in the reasonable and prudent operation and development of said lease 
shall be exempted from royalty payment.
    (3) Combination oil and gas lease. Lessee shall pay royalty as 
provided in paragraphs (b)(1) and (2) of this section.
    (c) Minimum royalty. In no event shall the royalty paid from 
producing leases during any year be less than an amount equal to the 
annual rental specified for the lease. Any underpayment of minimum 
royalty shall be due and payable within 45 days following the end of the 
lease year. After the primary term, Lessee shall submit with his payment 
evidence that the lease is producing in paying quantities. The 
Superintendent is authorized to determine whether the lease is actually 
producing in paying quantities or has terminated for lack of such 
production. Payment for any underpayment not made within the time 
specified shall be subject to a late charge at the rate of not less than 
1\1/2\

[[Page 627]]

percent per month for each month or fraction thereof until paid.

[39 FR 22254, June 21, 1974, as amended at 43 FR 8136, Feb. 28, 1978; 43 
FR 11815, Mar. 22, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982, as 
amended at 55 FR 33114, Aug. 14, 1990; 59 FR 22104, Apr. 28, 1994]



Sec. 226.12  Government reserves right to purchase oil.

    Any of the executive departments of the U.S. Government shall have 
the option to purchase all or any part of the oil produced from any 
lease at not less than the highest posted price as defined in Sec. 
226.11.



Sec. 226.13  Time of royalty payments and reports.

    (a) Royalty payments due may be paid by either purchaser or Lessee. 
Unless otherwise provided by the Osage Tribal Council and approved by 
the Superintendent, all payments shall be due by the 25th day of each 
month and shall cover the sales of the preceding month. Failure to make 
such payments shall subject Lessee or purchaser, whoever is responsible 
for royalty payment, to a late charge at the rate of not less than 1\1/
2\ percent for each month or fraction thereof until paid. The Osage 
Tribal Council, subject to the approval of the Superintendent, may waive 
the late charges.
    (b) Lessee shall furnish certified monthly reports by the 25th of 
each following month covering all operations, whether there has been 
production or not, indicating therein the total amount of oil, natural 
gas, casinghead gas, and other products subject to royalty payment.
    (c) Failure to remit payments or reports shall subject Lessee to 
further penalties as provided in Sec. Sec. 226.42 and 226.43 and shall 
subject the division order to cancellation.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33114, Aug. 14, 1990]



Sec. 226.14  Contracts and division orders.

    (a) Lessee may enter into division orders or contracts with the 
purchasers of oil, gas, or derivatives therefrom which will provide for 
the purchaser to make payment of royalty in accordance with his lease: 
Provided, That such division orders or contracts shall not relieve 
Lessee from responsibility for the payment of the royalty should the 
purchaser fail to pay. No production shall be removed from the leased 
premises until a division order and/or contract and its terms are 
approved by the Superintendent: Provided further, That the 
Superintendent may grant temporary permission to run oil or gas from a 
lease pending the approval of a division order or contract. Lessee shall 
file a certified monthly report and pay royalty on the value of all oil 
and gas used off the premises for development and operating purposes. 
Lessee shall be responsible for the correct measurement and reporting of 
all oil and/or gas taken from the leased premises.
    (b) Lessee shall require the purchaser of oil and/or gas from his/
her lease or leases to furnish the Superintendent, no later than the 
25th day of each month, a statement reporting the gross barrels of oil 
and/or gross Mcf of gas sold during the preceding month. The 
Superintendent may authorize an extension of time, not to exceed 10 
days, for furnishing this statement.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33114, Aug. 14, 1990]



Sec. 226.15  Unit leases, assignments and related instruments.

    (a) Unitization of leases. The Osage Tribal Council and Lessee or 
Lessees, may, with the approval of the Superintendent, unitize or merge, 
two or more oil or oil and gas leases into a unit or cooperative 
operating plan to promote the greatest ultimate recovery of oil and gas 
from a common source of supply or portion thereof embracing the lands 
covered by such lease or leases. The cooperative or unit agreement shall 
be subject to the regulations in this part and applicable laws governing 
the leasing of the Osage Mineral Estate. Any agreement between the 
parties in interest to terminate a unit or cooperative agreement as to 
all or any portion of the lands included shall be submitted to the 
Superintendent for his approval. Upon approval the leases included 
thereunder shall be restored to their original terms: Provided, That for 
the purpose of preventing waste and to promote the

[[Page 628]]

greatest ultimate recovery of oil and gas from a common source of supply 
or portion thereof, all oil leases, oil and gas leases, and gas leases 
issued heretofore and hereafter under the provisions of the regulations 
in this part shall be subject to any unit development plan affecting the 
leased lands that may be required by the Superintendent with the consent 
of the Osage Tribal Council, and which plan shall adequately protect the 
rights of all parties in interest including the Osage Mineral Estate.
    (b) Assignments. Approved leases or any interest therein may be 
assigned or transferred only with the approval of the Superintendent. 
The assignee must be qualified to hold such lease under existing rules 
and regulations and shall furnish a satisfactory bond conditioned for 
the faithful performance of the covenants and conditions thereof. Lessee 
must assign either his entire interest in a lease or legal subdivision 
thereof, or an undivided interest in the whole lease: Provided, That 
when an assignment covers only a portion of a lease or covers interests 
in separate horizons such assignment shall be subject to both the 
consent of the Osage Tribal Council and approval of the Superintendent. 
If a lease is divided by the assignment of an entire interest in any 
part, each part shall be considered a separate lease and the assignee 
shall be bound to comply with all the terms and conditions of the 
original lease. A fully executed copy of the assignment shall be filed 
with the Superintendent within 30 days after the date of execution by 
all parties. If requested within the 30-day period, the Superintendent 
may grant an extension of 15 days. A filing fee of $10 shall accompany 
each assignment.
    (c) Overriding royalty. Agreements creating overriding royalties or 
payments out of production shall not be considered as an interest in a 
lease as such term is used in paragraph (b) of this section. Agreements 
creating overriding royalties or payments out of production are hereby 
authorized and the approval of the Department of the Interior or any 
agency thereof shall not be required with respect thereto, but such 
agreements shall be subject to the condition that nothing in any such 
agreement shall be construed as modifying any of the obligations of 
Lessee under his lease and the regulations in this part. All such 
obligations are to remain in full force and effect, the same as if free 
of any such royalties or payments. The existence of agreements creating 
overriding royalties or payments out of production, whether or not 
acutally paid, shall not be considered in justifying the shutdown or 
abandonment of any well. Agreements creating overriding royalties or 
payments out of production need not be filed with the Superintendent 
unless incorporated in assignments or instruments required to be filed 
pursuant to paragraph (b) of this section. An agreement creating 
overriding royalties or payment out of production shall be suspended 
when the working interest income per active producing well is equal to 
or less than the operational cost of the well, as determined by the 
Superintendent.
    (d) Drilling contracts. The Superintendent is authorized to approve 
drilling contracts with a stipulation that such approval does not in any 
way bind the Department to approve subsequent assignments that may be 
provided for in said contracts. Approval merely authorizes entry on the 
lease for the purpose of development work.
    (e) Combining leases. The lessee owning both an oil lease and gas 
lease covering the same acreage is authorized to convert such leases to 
a combination oil and gas lease.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]

                               Operations



Sec. 226.16  Commencement of operations.

    (a) No operations shall be permitted upon any tract of land until a 
lease covering such tract shall have been approved by the 
Superintendent: Provided, That the Superintendent may grant authority to 
any party under such rules, consistent with the regulations in this part 
that he deems proper, to conduct geophysical and geological exploration 
work.

[[Page 629]]

    (b) Lessee shall submit applications on forms to be furnished by the 
Superintendent and secure his approval before:
    (1) Well drilling, treating, or work over operations are started on 
the leased premises.
    (2) Removing casing from any well.
    (c) Lessee shall notify the Superintendent a reasonable time in 
advance of starting work, of intention to drill, redrill, deepen, plug, 
or abandon a well.



Sec. 226.17  How to acquire permission to begin operations on a restricted 
homestead allotment.

    (a) Lessee may conduct operations within or upon a restricted 
homestead selection only with the written consent of the Superintendent.
    (b) If the allottee is unwilling to permit operations on his 
homestead, the Superintendent will cause an examination of the premises 
to be made with the allottee and lessee or his representative. Upon 
finding that the interests of the Osage Tribe require that the tract be 
developed, the Superintendent will endeavor to have the parties agree 
upon the terms under which operations on the homestead may be conducted.
    (c) In the event the allottee and lessee cannot reach an agreement, 
the matter shall be presented by all parties before the Osage Tribal 
Council, and the Council shall make its recommendations. Such 
recommendations shall be considered as final and binding upon the 
allottee and lessee. A guardian may represent the allottee. Where no one 
is authorized or where no person is deemed by the Superintendent to be a 
proper party to speak for a person of unsound mind or feeble 
understanding, the Principal Chief of the Osage Tribe shall represent 
him.
    (d) If the allottee or his representative does not appear before the 
Osage Tribal Council when notified by the Superintendent, or if the 
Council fails to act within 10 days after the matter is referred to it, 
the Superintendent may authorize lessee to proceed with operations in 
conformity with the provisions of his lease and the regulations in this 
part.



Sec. 226.18  Information to be given surface owners prior to commencement 
of drilling operations.

    Except for the surveying and staking of a well, no operations of any 
kind shall commence until the lessee or his/her authorized 
representative shall meet with the surface owner or his/her 
representative, if a resident of and present in Osage County, Oklahoma. 
Unless waived by the Superintendent or otherwise agreed to between the 
lessee and surface owner, such meeting shall be held at least 10 days 
prior to the commencement or any operations, except for the surveying 
and staking of the well. At such meeting lessee or his/her authorized 
representative shall comply with the following requirements:
    (a) Indicate the location of the well or wells to be drilled.
    (b) Arrange for route of ingress and egress. Upon failure to agree 
on route ingress and egress, said route shall be set by the 
Superintendent.
    (c) Impart to said surface owners the name and address of the party 
or representative upon whom the surface owner shall serve any claim for 
damages which he may sustain from mineral development or operations, and 
as to the procedure for settlement thereof as provided in Sec. 226.21
    (d) Where the drilling is to be on restricted land, lessee or his 
authorized representative in the manner provided above shall meet with 
the Superintendent.
    (e) When the surface owner or his/her representative is not a 
resident of, or is not physically present in, Osage County, Oklahoma, or 
cannot be contacted at the last known address, the Superintendent may 
authorize lessee to proceed with operations.

[39 FR 22254, June 21, 1974, as amended at 41 FR 50648, Nov. 17, 1976; 
43 FR 8136, Feb. 28, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]



Sec. 226.19  Use of surface of land.

    (a) Lessee or his/her authorized representative shall have the right 
to use so much of the surface of the land within the Osage Mineral 
Estate as may be reasonable for operations and marketing. This includes 
but is not

[[Page 630]]

limited to the right to lay and maintain pipelines, electric lines, pull 
rods, other appliances necessary for operations and marketing, and the 
right-of-way for ingress and egress to any point of operations. If 
Lessee and surface owner are unable to agree as to the routing of 
pipelines, electric lines, etc., said routing shall be set by the 
Superintendent. The right to use water for lease operations is 
established by Sec. 226.24. Lessee shall conduct his/her operations in 
a workmanlike manner, commit no waste and allow none to be committed 
upon the land, nor permit any unavoidable nuisance to be maintained on 
the premises under his/her control.
    (b) Before commencing a drilling operation, Lessee shall pay or 
tender to the surface owner commencement money in the amount of $25 per 
seismic shot hole and commencement money in the amount of $300 for each 
well, after which Lessee shall be entitled to immediate possession of 
the drilling site. Commencement money will not be required for the 
redrilling of a well which was originally drilled under the currently 
lease. A drilling site shall be held to the minimum area essential for 
operations and shall not exceed one and one-half acres in area unless 
authorized by the Superintendent. Commencement money shall be a credit 
toward the settlement of the total damages. Acceptance of commencement 
money by the surface owner does not affect his/her right to compensation 
for damages as described in Sec. 226.20, occasioned by the drilling and 
completion of the well for which it was paid. Since actual damage to the 
surface from operations cannot necessarily be ascertained prior to the 
completion of a well as a serviceable well or dry hole, a damage 
settlement covering the drilling operation need not be made until after 
completion of drilling operations.
    (c) Where the surface is restricted land, commencement money shall 
be paid to the Superintendent for the landowner. All other surface 
owners shall be paid or tendered such commencement money direct. Where 
such surface owners are not residents of Osage County nor have a 
representative located therein, such payment shall be made or tendered 
to the last known address of the surface owner at least 5 days before 
commencing drilling operation on any well: Provided, That should lessee 
be unable to reach the owner of the surface of the land for the purpose 
of tendering the commencement money or if the owner of the surface of 
the land shall refuse to accept the same, lessee shall deposit such 
amount with the Superintendent by check payable to the Bureau of Indian 
Affairs. The superintendent shall thereupon advise the owner of the 
surface of the land by mail at his last known address that the 
commencement money is being held for payment to him upon his written 
request.
    (d) Lessee shall also pay fees for tank sites not exceeding 50 feet 
square at the rate of $100 per tank site or other vessel: Provided, That 
no payment shall be due for a tank temporarily set on a well location 
site for drilling, completing, or testing. The sum to be paid for a tank 
occupying more than 50 feet square shall be agreed upon between the 
surface owner and lessee or, on failure to agree, the same shall be 
determined by arbitration as provided by Sec. 226.21.

[39 FR 22254, June 22, 1974, as amended at 43 FR 8136, Feb. 28, 1978; 43 
FR 11815, Mar. 22, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982, as 
amended at 55 FR 33115, Aug. 14, 1990]



Sec. 226.20  Settlement of damages claimed.

    (a) Lessee or his authorized representative or geophysical permittee 
shall pay for all damages to growing crops, any improvements on the 
lands, and all other surface damages as may be occasioned by operations. 
Commencement money shall be a credit toward the settlement of the total 
damages occasioned by the drilling and completion of the well for which 
it was paid. Such damages shall be paid to the owner of the surface and 
by him apportioned among the parties interested in the surface, whether 
as owner, surface lessee, or otherwise, as the parties may mutually 
agree or as their interests may appear. If lessee or his authorized 
representative and surface owner are unable to agree concerning damages, 
the same shall be determined by arbitration. Nothing herein contained 
shall

[[Page 631]]

be construed to deny any party the right to file an action in a court of 
competent jurisdiction if he is dissatisfied with the amount of the 
award.
    (b) Surface owners shall notify their lessees or tenants of the 
regulations in this part and of the necessary procedure to follow in all 
cases of alleged damages. If so authorized in writing, surface lessees 
or tenants may represent the surface owners.
    (c) In settlement of damages on restricted land all sums due and 
payable shall be paid to the Superintendent for credit to the account of 
the Indian entitled thereto. The Superintendent will make the 
apportionment between the Indian landowner or owners and surface Lessee 
of record.
    (d) Any person claiming an interest in any leased tract or in 
damages thereto, must furnish to the Superintendent a statement in 
writing showing said claimed interest. Failure to furnish such statement 
shall constitute a waiver of notice and estop said person from claiming 
any part of such damages after the same shall have been disbursed.

[39 FR 22254, June 21, 1974, as amended at 41 FR 50649, Nov. 17, 1976; 
43 FR 8137, Feb. 28, 1978. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 226.21  Procedure for settlement of damages claimed.

    Where the surface owner or his lessee suffers damage due to the oil 
and gas operations and/or marketing of oil or gas by lessee or his 
authorized representative, the procedure for recovery shall be as 
follows:
    (a) The party or parties aggrieved shall, as soon as possible after 
the discovery of any damages, serve written notice to Lessee or his 
authorized representative as provided by Sec. 226.18. Written notice 
shall contain the nature and location of the alleged damages, the date 
of occurrence, the names of the party or parties causing said damages, 
and the amount of damages. It is not intended by this requirement to 
limit the time within which action may be brought in the courts to less 
than the 90-day period allowed by section 2 of the Act of March 2, 1929 
(45 Stat. 1478, 1479).
    (b) If the alleged damages are not adjusted at the time of such 
notice, Lessee or his authorized representative shall try to adjust the 
claim with the party or parties aggrieved within 20 days from receipt of 
the notice. If the claimant is the owner of restricted property and a 
settlement results, a copy of the settlement agreement shall be filed 
with the Superintendent. If the settlement agreement is approved by the 
Superintendent, payment shall be made to the Superintendent for the 
benefit of said claimant.
    (c) If the parties fail to adjust the claim within the 20 days 
specified, then within 10 days thereafter each of the interested parties 
shall appoint an arbitrator who immediately upon their appointment shall 
agree upon a third arbitrator. If the two arbitrators shall fail to 
agree upon a third arbitrator within 10 days, they shall immediately 
notify the parties in interest. If said parties cannot agree upon a 
third arbitrator within 5 days after receipt of such notice, the 
Superintendent shall appoint the third arbitrator.
    (d) As soon as the third arbitrator is appointed, the arbitrators 
shall meet; hear the evidence and arguments of the parties; and examine 
the lands, crops, improvements, or other property alleged to have been 
injured. Within 10 days they shall render their decision as to the 
amount of the damage due. The arbitrators shall be disinterested 
persons. The fees and expenses of the third arbitrator shall be borne 
equally by the claimant and Lessee or his authorized representative. 
Each Lessee or his authorized representative and claimant shall pay the 
fee and expenses for the arbitrator appointed by him.
    (e) When an act of an oil or gas lessee or his authorized 
representative results in injury to both the surface owner and his 
lessee, the parties aggrieved shall join in the appointment of an 
arbitrator. Where the injury complained of is chargeable to one or more 
oil or gas Lessee, or his authorized representative, such lessee or said 
representative shall join in the appointment of an arbitrator.
    (f) Any two of the arbitrators may make a decision as to the amount 
of damage due. The decision shall be in writing and shall be served 
forthwith

[[Page 632]]

upon the parties in interest. Each party shall have 90 days from the 
date the decision is served in which to file an action in a court of 
competent jurisdiction. If no such action is filed within said time and 
the award is against Lessee or his/her authorized representative, he/she 
shall pay the same, together with interest at an annual rate established 
for the Internal Revenue Service from date of award, within 10 days 
after the expiration of said period for filing an action.
    (g) Lessee or his authorized representative shall file with the 
Superintendent a report on each settlement agreement, setting out the 
nature and location of the damage, date, and amount of the settlement, 
and any other pertinent information.

[39 FR 22254, June 21, 1974, as amended at 41 FR 50649, Nov. 17, 1976. 
Redesignated at 47 FR 13327, Mar. 30, 1982, as amended at 55 FR 33115, 
Aug. 14, 1990; 64 FR 13896, Mar. 23, 1999]



Sec. 226.22  Prohibition of pollution.

    (a) All operators, contractors, drillers, service companies, pipe 
pulling and salvaging contractors, or other persons, shall at all times 
conduct their operations and drill, equip, operate, produce, plug and 
abandon all wells drilled for oil or gas, service wells or exploratory 
wells (including seismic, core and stratigraphic holes) in a manner that 
will prevent pollution and the migration of oil, gas, salt water or 
other substance from one stratum into another, including any fresh water 
bearing formation.
    (b) Pits for drilling mud or deleterious substance used in the 
drilling, completion, recompletion, or workover of any well shall be 
constructed and maintained to prevent pollution of surface and 
subsurface fresh water. These pits shall be enclosed with a fence of at 
least four strands of barbed wire, or an approved substitute, stretched 
taut to adequately braced corner posts, unless the surface owner, user, 
or the Superintendent gives consent to the contrary. Immediately after 
completion of operations, pits shall be emptied and leveled unless 
otherwise requested by surface owner or user.
    (c) Drilling pits shall be adequate to contain mud and other 
material extracted from wells and shall have adequate storage to 
maintain a supply of mud for use in emergencies.
    (d) No earthen pit, except those used in the drilling, completion, 
recompletion or workover of a well, shall be constructed, enlarged, 
reconstructed or used without approval of the Superintendent. Unlined 
earthen pits shall not be used for the continued storage of salt water 
or other deleterious substances.
    (e) Deleterious fluids other than fresh water drilling fluids used 
in drilling or workover operations, which are displaced or produced in 
well completion or stimulation procedures, including but not limited to 
fracturing, acidizing, swabbing, and drill stem tests, shall be 
collected into a pit lined with plastic of at least 30 mil or a metal 
tank and maintained separately from above-mentioned drilling fluids to 
allow for separate disposal.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]



Sec. 226.23  Easements for wells off leased premises.

    The Superintendent, with the consent of the Osage Tribal Council, 
may grant commercial and noncommercial easements for wells off the 
leased premises to be used for purposes associated with oil and gas 
production. Rental payable to the Osage Tribe for such easements shall 
be an amount agreed to by Grantee and the Osage Tribal Council subject 
to the approval of the Superintendent. Grantee shall be responsible for 
all damages resulting from the use of such wells and settlement therefor 
shall be made as provided in Sec. 226.21.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]



Sec. 226.24  Lessee's use of water.

    Lessee or his contractor may, with the approval of the 
Superintendent, use water from streams and natural water courses to the 
extent that same does not diminish the supply below the requirements of 
the surface owner from whose land the water is taken. Similarly, Lessee 
or his contractor may use water from reservoirs formed by the 
impoundment of water from such

[[Page 633]]

streams and natural water courses, provided such use does not exceed the 
quantity to which they originally would have been entitled had the 
reservoirs not been constructed. Lessee or his contractor may install 
necessary lines and other equipment within the Osage Mineral Estate to 
obtain such water. Any damage resulting from such installation shall be 
settled as provided in Sec. 226.21.



Sec. 226.25  Gas well drilled by oil lessees and vice versa.

    Prior to drilling, the oil or gas lessee shall notify the other 
lessees of his/her intent to drill. When an oil lessee in drilling a 
well encounters a formation or zone having indications of possible gas 
production, or the gas lessee in drilling a well encounters a formation 
or zone having indication of possible oil production, he/she shall 
immediately notify the other lessee and the Superintendent. Lessee 
drilling the well shall obtain all information which a prudent operator 
utilizes to evaluate the productive capability of such formation or 
zone.
    (a) Gas well to be turned over to gas lessee. If the oil lessee 
drills a gas well, he/she shall, without removing from the well any of 
the casing or other equipment, immediately shut the well in and notify 
the gas lessee and the Superintendent. If the gas lessee does not, 
within 45 days after receiving notice and cost of drilling, elect to 
take over such well and reimburse the oil lessee the cost of drilling, 
including all damages paid and the cost in-place of casing, tubing, and 
other equipment, the oil lessee shall immediately confine the gas to the 
original stratum. The disposition of such well and the production 
therefrom shall then be subject to the approval of the Superintendent. 
In the event the oil lessee and gas lessee cannot agree on the cost of 
the well, such cost shall be apportioned between the oil and gas lessee 
by the Superintendent. If such apportionment is not accepted, the well 
shall be plugged by the oil and gas lessee who drilled the well.
    (b) Oil well to be turned over to oil lessee. If the gas lessee 
drills an oil well, he/she must immediately, without removing from the 
well any of the casing or other equipment, notify the oil lessee and the 
superintendent.
    (1) If the oil lessee does not, within 45 days after receipt of 
notice and cost of drilling, elect to take over the well, he/she must 
immediately notify the gas lessee. From that point, the superintendent 
must approve the disposition of the well, and any gas produced from it.
    (2) If the oil lessee chooses to take over the well, he/she must pay 
to the gas lessee:
    (i) The cost of drilling the well, including all damages paid; and
    (ii) The cost in place of casing and other equipment.
    (3) If the oil lessee and the gas lessee cannot agree on the cost of 
the well, the superintendent will apportion the cost between the oil and 
gas lessees. If the lessees do not accept the apportionment, the oil or 
gas lessee who drilled the well must plug the well.
    (c) Lands not leased. If the gas lessee shall drill an oil well upon 
lands not leased for oil purposes or vice versa, the Superintendent may, 
until such time as said lands are leased, permit the lessee who drilled 
the well to operate and market the production therefrom. When said lands 
are leased, the lessee who drilled and completed the well shall be 
reimbursed by the oil or gas lessee, for the cost of drilling said well, 
including all damages paid and the cost in-place of casing, tubing, and 
other equipment. If the lessee does not elect to take over said well as 
provided above, the disposition of such well and the production 
therefrom shall be determined by the Superintendent. In the event the 
oil lessee and gas lessee cannot agree on the cost of the well, such 
cost shall be apportioned between the oil and gas lessee by the 
Superintendent. If such apportionment is not accepted, the well shall be 
plugged by the oil and gas lessee who drilled the well.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990; 64 FR 13896, Mar. 23, 1999]



Sec. 226.26  Determining cost of well.

    The term ``cost of drilling'' as applied where one lessee takes over 
a well drilled by another, shall include all

[[Page 634]]

reasonable, usual, necessary, and proper expenditures. A list of 
expenses mentioned in this section shall be presented to proposed 
purchasing lessee within 10 days after the completion of the well. In 
the event of a disagreement between the parties as to the charges 
assessed against the well that is to be taken over, such charges shall 
be determined by the Superintendent.



Sec. 226.27  Gas for operating purposes and tribal use.

    (a) Gas to be furnished oil lessee. Lessee of a producing gas lease 
shall furnish the oil lessee sufficient gas for operating purposes at a 
rate to be agreed upon, or on failure to agree the rate shall be 
determined by the Superintendent: Provided, That the oil lessee shall at 
his own expense and risk, furnish and install the necessary connections 
to the gas lessee's well or pipeline. All such connections shall be 
reported in writing to the Superintendent.
    (b) Use of gas by Osage Tribe. (1) Gas from any well or wells shall 
be furnished any Tribal-owned building or enterprise at a rate not to 
exceed the price less royalty being received or offered by a gas 
purchaser: Provided, That such requirement shall be subject to the 
determination by the Superintendent that gas in sufficient quantities is 
available above that needed for lease operation and that no waste would 
result. In the absence of a gas purchaser the rate to be paid by the 
Osage Tribe shall be determined by the Superintendent based on prices 
being paid by purchasers in the Osage Mineral Estate. The Osage Tribe is 
to furnish all necessary material and labor for such connection with 
Lessee's gas system. The use of such gas shall be at the risk of the 
Osage Tribe at all times.
    (2) Any member of the Osage Tribe residing in Osage County and 
outside a corporate city is entitled to the use at his own expense of 
not to exceed 400,000 cubic feet of gas per calendar year for his 
principal residence at a rate not to exceed the amount paid by a gas 
purchaser plus 10 percent: Provided, That such requirement shall be 
subject to the determination by the Superintendent that gas in 
sufficient quantities is available above that needed for lease operation 
and that no waste would result. In the absence of a gas purchaser the 
amount to be paid by the Tribal member shall be determined by the 
Superintendent. Gas to Tribal members is not royalty free. The Tribal 
member is to furnish all necessary material and labor for such 
connection to Lessee's gas system, and shall maintain his own lines. The 
use of such gas shall be at the risk of the Tribal member at all times.
    (3) Gas furnished by Lessee under paragraphs (b) (1) and (2) of this 
section may be terminated only with the approval of the Superintendent. 
Written application for termination must be made to the Superintendent 
showing justification.

                         Cessation of Operations



Sec. 226.28  Shutdown, abandonment, and plugging of wells.

    No productive well shall be abandoned until its lack for further 
profitable production of oil and/or gas has been demonstrated to the 
satisfaction of the Superintendent. Lessee shall not shut down, abandon, 
or otherwise discontinue the operation or use of any well for any 
purpose without the written approval of the Superintendent. All 
applications for such approval shall be submitted to the Superintendent 
on forms furnished by him/her.
    (a) Application for authority to permanently shut down or 
discontinue use or operation of a well shall set forth justification, 
probable duration the means by which the well bore is to be protected, 
and the contemplated eventual disposition of the well. The method of 
conditioning such well shall be subject to the approval of the 
Superintendent.
    (b) Prior to permanent abandonment of any well, the oil lessee or 
the gas lessee, as the case may be, shall offer the well to the other 
for his recompletion or use under such terms as may be mutually agreed 
upon but not in conflict with the regulations. Failure of the Lessee 
receiving the offer to reply within 10 days after receipt thereof shall 
be deemed as rejection of the offer. If, after indicating acceptance, 
the two parties cannot agree on the terms of the offer within 30 days, 
the

[[Page 635]]

disposition of such well shall be determined by the Superintendent.
    (c) The Superintendent is authorized to shut in a lease when the 
lessee fails to comply with the terms of the lease, the regulations, 
and/or orders of the Superintendent.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]



Sec. 226.29  Disposition of casings and other improvements.

    (a) Upon termination of lease, permanent improvements, unless 
otherwise provided by written agreement with the surface owner and filed 
with the Superintendent, shall remain a part of said land and become the 
property of the surface owner upon termination of the lease, other than 
by cancellation. Exceptions include personal property not limited to 
tools, tanks, pipelines, pumping and drilling equipment, derricks, 
engines, machinery, tubing, and the casings of all wells: Provided, That 
when any lease terminates, all such personal property shall be removed 
the word ``terminates''; and in the last sentence of the paragraph, 
within 90 days or such reasonable extension of time as may be granted by 
the Superintendent. Otherwise, the ownership of all casings shall revert 
to Lessor and all other personal property and permanent improvements to 
the surface owner. Nothing herein shall be construed to relieve lessee 
of responsibility for removing any such personal property or permanent 
improvements from the premises if required by the Superintendent and 
restoring the premises as nearly as practicable to the original state.
    (b) Upon cancellation of lease. When there has been a cancellation 
for cause, Lessor shall be entitled and authorized to take immediate 
possession of the lease premises and all permanent improvements and all 
other equipment necessary for the operation of the lease.
    (c) Wells to be abandoned shall be promptly plugged as prescribed by 
the Superintendent. Applications to plug shall include a statement 
affirming compliance with Sec. 226.28(b) and shall set forth reasons 
for plugging, a detailed statement of the proposed work including kind, 
location, and length of plugs (by depth), plans for mudding and 
cementing, testing, parting and removing casing, and any other pertinent 
information: Provided, That the Superintendent may give oral permission 
and instructions pending receipt of a written application to plug a 
newly drilled hole. Lessee shall remit a fee of $15 with each written 
application for authority to plug a well. This fee will be refunded if 
permission is not granted.
    (d) Lessee shall plug and fill all dry or abandoned wells in a 
manner to confine the fluid in each formation bearing fresh water, oil, 
gas, salt water, and other minerals, and to protect it against invasion 
of fluids from other sources. Mud-laden fluid, cement, and other plugs 
shall be used to fill the hole from bottom to top: Provided, That if a 
satisfactory agreement is reached between Lessee and the surface owner, 
subject to the approval of the Superintendent, Lessee may condition the 
well for use as a fresh water well and shall so indicate on the plugging 
record. The manner in which plugging material shall be introduced and 
the type of material so used shall be subject to the approval of the 
Superintendent. Within 10 days after plugging, Lessee shall file with 
the Superintendent a complete report of the plugging of each well. When 
any well is plugged and abandoned, Lessee shall, within 90 days, clean 
up the premises around such well to the satisfaction of the 
Superintendent.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33115, Aug. 14, 1990]

                         Requirements of Lessees



Sec. 226.30  Lessees subject to Superintendent's orders; books and records 
open to inspection.

    Lessee shall comply with all orders or instructions issued by the 
Superintendent. The Superintendent or his representative may enter upon 
the leased premises for the purpose of inspection. Lessee shall keep a 
full and correct account of all operations, receipts, and disbursements 
and make reports thereof, as required. Lessee's books and records shall 
be available to the Superintendent for inspection.

[[Page 636]]



Sec. 226.31  Lessee's process agents.

    (a) Before actual drilling or development operations are commenced 
on leased lands, Lessee or Assignee, if not a resident of the State of 
Oklahoma, shall appoint a local or resident representative within the 
State of Oklahoma on whom the Superintendent may serve notice or 
otherwise communicate in securing compliance with the regulations in 
this part, and shall notify the Superintendent of the name and post 
office address of the representative appointed.
    (b) Where several parties own a lease jointly, one representative or 
agent shall be designated whose duties shall be to act for all parties 
concerned. Designation of such representative should be made by the 
party in charge of operations.
    (c) In the event of the incapacity or absence from the State of 
Oklahoma of such designated local or resident representative, Lessee 
shall appoint a substitute to serve in his stead. In the absence of such 
representative or appointed substitute, any employee of Lessee upon the 
leased premises or person in charge of drilling or related operations 
thereon shall be considered the representative of Lessee for the purpose 
of service of orders or notices as herein provided.



Sec. 226.32  Well records and reports.

    (a) Lessee shall keep accurate and complete records of the drilling, 
redrilling, deepening, repairing, treating, plugging, or abandonment of 
all wells. These records shall show all the formations penetrated, the 
content and character of oil, gas, or water in each formation, and the 
kind, weight, size, landed depth and cement record of casing used in 
drilling each well; the record of drill-stem and other bottom hole 
pressure or fluid sample surveys, temperature surveys, directional 
surveys, and the like; the materials and procedure used in the treating 
or plugging of wells or in preparing them for temporary abandonment; and 
any other information obtained in the course of well operation.
    (b) Lessee shall take such samples and make such tests and surveys 
as may be required by the Superintendent to determine conditions in the 
well or producing reservoir and to obtain information concerning 
formations drilled, and shall furnish reports thereof as required by the 
Superintendent.
    (c) Within 10 days after completion of operations on any well, 
Lessee shall transmit to the Superintendent the applicable information 
on forms furnished by the Superintendent; a copy of electrical, 
mechanical or radioactive log, or other types of survey of the well 
bore; and core analysis obtained from the well. Lessee shall also submit 
other reports and records of operations as may be required and in the 
manner and form prescribed by the Superintendent.
    (d) Lessee shall measure production of oil, gas, and water from 
individual wells at reasonably frequent intervals to the satisfaction of 
the Superintendent.
    (e) Upon request and in the manner and form prescribed by the 
Superintendent, Lessee shall furnish a plat showing the location, 
designation, and status of all wells on the leased lands, together with 
such other pertinent information as the Superintendent may require.



Sec. 226.33  Line drilling.

    Lessee shall not drill within 300 feet of boundary line of leased 
lands, nor locate any well or tank within 200 feet of any public 
highway, any established watering place, or any building used as a 
dwelling, granary, or barn, except with the written permission of the 
Superintendent. Failure to obtain advance written permission from the 
Superintendent shall subject lessee to cancellation of his/her lease 
and/or plugging of the well.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33116, Aug. 14, 1990]



Sec. 226.34  Wells and tank batteries to be marked.

    Lessee shall clearly and permanently mark all wells and tank 
batteries in a conspicuous place with number, legal description, 
operator, and telephone number, and shall take all necessary precautions 
to preserve these markings.

[55 FR 33116, Aug. 14, 1990]

[[Page 637]]



Sec. 226.35  Formations to be protected.

    Lessee shall, to the satisfaction of the Superintendent, take all 
proper precautions and measures to prevent damage or pollution of oil, 
gas, fresh water, or other mineral bearing formations.



Sec. 226.36  Control devices.

    In drilling operations in fields where high pressures, lost 
circulation, or other conditions exist which could result in blowouts, 
lessee shall install an approved gate valve or other controlling device 
which is in proper working condition for use until the well is 
completed. At all times preventative measures must be taken in all well 
operations to maintain proper control of subsurface strata.

[55 FR 33116, Aug. 14, 1990]



Sec. 226.37  Waste of oil and gas.

    Lessee shall conduct all operations in a manner that will prevent 
waste of oil and gas and shall not wastefully utilize oil or gas. The 
Superintendent shall have the authority to impose such requirements as 
he deems necessary to prevent waste of oil and gas and to promote the 
greatest ultimate recovery of oil and gas. Waste as applied herein 
includes, but is not limited to, the inefficient excessive or improper 
use or dissipation of reservoir energy which would reasonably reduce or 
diminish the quantity of oil or gas that might ultimately be produced, 
or the unnecessary or excessive surface loss or destruction, without 
beneficial use, of oil and/or gas.



Sec. 226.38  Measuring and storing oil.

    All production run from the lease shall be measured according to 
methods and devices approved by the Superintendent. Facilities suitable 
for containing and measuring accurately all crude oil produced from the 
wells shall be provided by Lessee and shall be located on the leasehold 
unless otherwise approved by the Superintendent. Lessee shall furnish to 
the Superintendent a copy of 100-percent capacity tank table for each 
tank. Meters and installations for measuring oil must be approved, and 
tests of their accuracy shall be made when directed by the 
Superintendent.



Sec. 226.39  Measurement of gas.

    All gas, required to be measured, shall be measured by meter 
(preferably of the orifice meter type) unless otherwise agreed to by the 
Superintendent. All gas meters must be approved by the Superintendent 
and installed at the expense of Lessee or purchaser at such places as 
may be agreed to by the Superintendent. For computing the volume of all 
gas produced, sold or subject to royalty, the standard of pressure shall 
be 14.65 pounds to the square inch, and the standard of temperature 
shall be 60 degrees F. All measurements of gas shall be adjusted by 
computation to these standards, regardless of the pressure and 
temperature at which the gas was acutally measured, unless otherwise 
authorized in writing by the Superintendent.



Sec. 226.40  Use of gas for lifting oil.

    Lessee shall not use natural gas from a distinct or separate stratum 
for the purpose of flowing or lifting the oil, except where said Lessee 
has an approved right to both the oil and the gas, and then only with 
the approval of the Superintendent of such use and of the manner of its 
use.



Sec. 226.41  Accidents to be reported.

    Lessee shall make a complete report to the Superintendent of all 
accidents, fires, or acts of theft and vandalism occurring on the leased 
premises.

                                Penalties



Sec. 226.42  Penalty for violation of lease terms.

    Violation of any of the terms or conditions of any lease or of the 
regulations in this part shall subject the lease to cancellation by the 
Superintendent, or Lessee to a fine of not more than $500 per day for 
each day of such violation or noncompliance with the orders of the 
Superintendent, or to both such fine and cancellation. Fines not 
received within 10 days after notice of the decision shall be subject to 
late charges at the rate of not less than 1\1/2\ percent per month for 
each month or fraction thereof until paid. The Osage

[[Page 638]]

Tribal Council, subject to the approval of the Superintendent, may waive 
the late charge.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33116, Aug. 14, 1990]



Sec. 226.43  Penalties for violation of certain operating regulations.

    In lieu of the penalties provided under Sec. 226.42, penalties may 
be imposed by the Superintendent for violation of certain sections of 
the regulations of this part as follows:
    (a) For failure to obtain permission to start operations required by 
Sec. 226.16(b), $50 per day until permission is obtained.
    (b) For failure to file records required by Sec. 226.32, $50 per 
day until compliance is met.
    (c) For failure to mark wells and tank batteries as required by 
Sec. 226.34, $50 for each well and tank battery.
    (d) For failure to construct and maintain pits as required by Sec. 
226.22, $50 for each day after operations are commenced on any well 
until compliance is met.
    (e) For failure to comply with Sec. 226.36 regarding valve or other 
approved controlling device, $100.
    (f) For failure to notify Superintendent before drilling, 
redrilling, deepening, plugging, or abandoning any well, as required by 
Sec. Sec. 226.16(c) and 226.25, $200.
    (g) For failure to properly care for and dispose of deleterious 
fluids as provided in Sec. 226.22, $500 per day until compliance is 
met.
    (h) For failure to file plugging reports as required by Sec. 226.29 
and for failure to file reports as required by Sec. 226.13, $50 per day 
for each violation until compliance is met.
    (i) For failure to perform or start an operation within 5 days after 
ordered by the Superintendent in writing under authority provided in 
this part, if said operation is thereafter performed by or through the 
Superintendent, the actual cost of performance thereof, plus 25 percent.
    (j) Lessee or his/her authorized representative is hereby notified 
that criminal procedures are provided by 18 U.S.C. 1001 for knowingly 
filing fraudulent reports and information.

[39 FR 22254, June 21, 1974. Redesignated at 47 FR 13327, Mar. 30, 1982, 
as amended at 55 FR 33116, Aug. 14, 1990]

                           Appeals and Notices



Sec. 226.44  Appeals.

    Any person, firm or corporation aggrieved by any decision or order 
issued by or under the authority of the Superintendent, by virtue of the 
regulations in this part, may appeal pursuant to 25 CFR part 2.

[55 FR 33116, Aug. 14, 1990]



Sec. 226.45  Notices.

    Notices and orders issued by the Superintendent to the 
representative and/or operator shall be binding on the lessee. The 
Superintendent may in his/her discretion increase the time allowed in 
his/her orders and notices.

[55 FR 33116, Aug. 14, 1990]



Sec. 226.46  Information collection.

    The Office of Management and Budget has determined that the 
information collection requirements contained in this part need not be 
submitted for clearance pursuant to 44 U.S.C. 3501 et seq.

[55 FR 33116, Aug. 14, 1990]



PART 227_LEASING OF CERTAIN LANDS IN WIND RIVER INDIAN RESERVATION, 
WYOMING, FOR OIL AND GAS MINING--Table of Contents




Sec.
227.1 Definitions.

                          How To Acquire Leases

227.2 Applications for leases.
227.3 Leases to citizens of the United States except Government 
          employees.
227.4 Sale of oil and gas leases.
227.5 Terms of leases, procedure for renewal and execution.
227.6 Corporations and corporate information.
227.7 Additional information from applicant.
227.8 Bonds.
227.9 Acreage limitation: Leases on noncontiguous tracts.
227.10 Minerals other than oil and gas.

[[Page 639]]

227.11 Bureau of Land Management to be furnished copy of lease.
227.12 Mineral reserves in nonmineral entries.
227.13 Vested rights to be respected.
227.14 Government reserves right to purchase oil and gas.

                           Rents and Royalties

227.15 Manner of payment.
227.16 Crediting advance annual payments.
227.17 Rates of rents and royalties.
227.18 Free use of gas by lessor.
227.19 Division orders.

                               Operations

227.20 Permission to start operations.
227.21 Restrictions on operations.
227.22 Diligence and prevention of waste.
227.23 Wells.
227.24 Penalties.
227.25 Inspection of premises, books and accounts.
227.26 Assignments and overriding royalties.
227.27 Stipulations.
227.28 Cancellations.
227.29 Fees.
227.30 Forms.

    Authority: Sec. 1, 39 Stat. 519, unless otherwise noted.

    Source: 22 FR 10622, Dec. 24, 1957, unless otherwise noted. 
Redesignated at 47 FR 13327, Mar. 30, 1982.



Sec. 227.1  Definitions.

    (a) The term ``superintendent'' in this part refers to the 
superintendent or other officers of the Bureau of Indian Affairs or of 
the Government who may have jurisdiction over the Shoshone or Wind River 
Reservation.
    (b) The term ``supervisor'' in this part refers to a representative 
of the Secretary of the Interior, under direction of the Director of the 
U.S. Geological Survey, authorized and empowered to supervise and direct 
operations under oil and gas mining leases, to furnish scientific and 
technical information and advice, to ascertain and record the amount and 
value of production, and to determine and record rentals and royalties 
due and paid.

    Cross Reference: For rules and regulations of the Geological Survey, 
see 30 CFR chapter II.

                          How To Acquire Leases



Sec. 227.2  Applications for leases.

    Applications for leases should be made to the superintendent.



Sec. 227.3  Leases to citizens of the United States except Government 
employees.

    Leases will be made only to persons who are citizens of the United 
States or have declared their intention to become so, or corporations 
which are organized under the laws of the United States or one of the 
States or Territories: Provided, That no lease, assignment thereof, or 
interest therein will be approved to any employee or employees of the 
United States Government, whether connected with the Bureau or 
otherwise, and no employee of the Interior Department shall be permitted 
to acquire any interest in such leases by ownership of stock in 
corporations having leases or in any other manner.

(R.S. 2078; 25 U.S.C. 68)



Sec. 227.4  Sale of oil and gas leases.

    (a) At such times and in such manner as he may deem appropriate, 
after being authorized by the Joint Business Council of the Shoshone and 
Arapahoe Tribes or its authorized representative, the superintendent 
shall publish notices at least thirty days prior to the sale, unless a 
shorter period is authorized by the Secretary of the Interior or his 
authorized representative, that oil and gas leases on specific tracts, 
each of which shall be in a reasonably compact body, will be offered to 
the highest responsible bidder for a bonus consideration, in addition to 
stipulated rentals and royalties. Each bid must be accompanied by a 
cashier's check, certified check, or postal money order, payable to the 
payee designated in the invitation to bid, in an amount not less than 25 
percent of the bonus bid. Within 30 days after notification of being the 
successful bidder, said bidder must remit the balance of the bonus, the 
first year's rental, and his share of the advertising costs, and shall 
file with the superintendent the lease in completed form. The 
superintendent may for good and sufficient reasons, extend

[[Page 640]]

the time for completion and submission of the lease form, but no 
extension shall be granted for remitting the balance of monies due. If 
the successful bidder fails to pay the full consideration within said 
period, or fails to file the completed lease within said period or 
extension thereof, or if the lease is disapproved through no fault of 
the lessor or the Department of the Interior, 25 percent of the bonus 
bid will be forfeited for the use and benefit of the Shoshone and 
Arapahoe Tribes.
    (b) All notices or advertisements of sales of oil and gas leases 
shall reserve to the Secretary of the Interior the right to reject all 
bids when in his judgment the interests of the Indians will be best 
served by so doing, and that if no satisfactory bid is received, or if 
the accepted bidder fails to complete the lease, or if the Secretary of 
the Interior shall determine that it is unwise in the interests of the 
Indians to accept the highest bid, the Secretary may readvertise such 
lease for sale, or if deemed advisable, with the consent of the tribal 
council or other governing tribal authorities, a lease may be made by 
private negotiations. The successful bidder or bidders will be required 
to pay his or their share of the advertising costs. Amounts received 
from unsuccessful bidders will be returned; but when no bid is accepted 
on a tract, the costs of advertising will be assessed against the 
applicant who requested that said tract be advertised.

[22 FR 10622, Dec. 24, 1957, as amended at 25 FR 7185, July 29, 1960. 
Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 227.5  Terms of leases, procedure for renewal and execution.

    (a) Leases shall be for a period of twenty years with the 
preferential right in the lessee to renew the same for successive 
periods of ten years each upon such reasonable terms and conditions as 
may be prescribed by the Secretary of the Interior or his authorized 
representative, unless otherwise provided by law at the expiration of 
any such period. Applications for renewal of leases shall be filed with 
the superintendent within ninety days prior to the date of expiration of 
the lease. One copy of the application for renewal shall be filed by the 
applicant with the Joint Business Council of the Shoshone and Arapahoe 
Tribes and no lease shall be renewed unless the Joint Business Council 
or its authorized representative is afforded an opportunity to present 
the Council's views to the Secretary of the Interior or his authorized 
representative.
    (b) The Secretary of the Interior or his authorized representative 
may execute oil and gas leases with the consent of the Joint Business 
Council or its authorized representative, and may execute renewals of 
leases after consultation with the Joint Business Council or its 
authorized representative.

[25 FR 7185, July 29, 1960. Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 227.6  Corporations and corporate information.

    (a) If the applicant for a lease is a corporation, it shall file 
evidence of authority of its officers to execute papers; and with its 
first application it shall also file a certified copy of its articles of 
incorporation, and, if foreign to the state in which the lands are 
located, evidence showing compliance with the corporation laws thereof. 
Statements of changes in officers and stockholders shall be furnished by 
a corporation lessee to the superintendent January 1 of each year, and 
at such other times as may be requested.
    (b) Whenever deemed advisable in any case the superintendent may 
require a corporation applicant or lessee to file:
    (1) List of officers, principal stockholders, and directors, with 
post-office addresses and number of shares held by each.
    (2) A sworn statement of the proper officer showing:
    (i) The total number of shares of the capital stock actually issued 
and the amount of cash paid into the treasury on each share sold; or, if 
paid in property, the kind, quantity, and value of same paid per share.
    (ii) Of the stock sold, how much remains unpaid and subject to 
assessment.
    (iii) The amount of cash the company has in its treasury and 
elsewhere.
    (iv) The property, exclusive of cash owned by the company and its 
value.

[[Page 641]]

    (v) The total indebtedness of the company and the nature of its 
obligations.
    (vi) Whether the applicant or any person controlling, controlled by 
or under common control with the applicant has filed any registration 
statement, application for registration, prospectus or offering sheet 
with the Securities and Exchange Commission pursuant to the Securities 
Act of 1933 or the Securities Exchange Act of 1934 or said Commission's 
rules and regulations under said acts; if so, under what provision of 
said acts or rules and regulations; and what disposition of any such 
statement, application, prospectus or offering sheet has been made.
    (c) Affidavits of individual stockholders, setting forth in what 
corporations, or with what persons, firms, or associations such 
individual stockholders are interested in mining leases on restricted 
lands within the state, and whether they hold such interest for 
themselves or in trust.

    Cross Reference: For rules and regulations of the Securities and 
Exchange Commission, see 17 CFR chapter II.



Sec. 227.7  Additional information from applicant.

    The superintendent may, either before or after approval of a lease, 
call for any additional information desired to carry out the regulations 
in this part. If a lessee shall fail to furnish the papers necessary to 
put his lease and bond in proper form for consideration, the 
superintendent shall forward such lease for disapproval.



Sec. 227.8  Bonds.

    The provisions of Sec. 211.6 of this chapter, or as hereafter 
amended, are applicable to leases under this part.



Sec. 227.9  Acreage limitation: Leases on noncontiguous tracts.

    No person, firm, or corporation will be allowed to lease for oil and 
gas more than 10,240 acres in the aggregate. The land contained in the 
lease shall be described by legal subdivisions, and leases may be 
executed to cover only adjoining or contiguous subdivisions. In case a 
lessee is a successful bidder for two or more tracts of land which are 
not contiguous, separate leases shall be executed.



Sec. 227.10  Minerals other than oil and gas.

    Unreserved, unwithdrawn, and unallotted lands which have not been 
leased for oil and gas under the act of August 21, 1916 (39 Stat. 519) 
and which are not chiefly valuable therefor, are subject to mineral 
application or mineral entry, for minerals other than oil and gas, under 
the supervision of the Bureau of Land Management.



Sec. 227.11  Bureau of Land Management to be furnished copy of lease.

    The Bureau of Land Management shall be furnished with a copy of each 
lease signed by the Secretary of the Interior.



Sec. 227.12  Mineral reserves in nonmineral entries.

    Where lands have been leased under authority of said act of August 
21, 1916 (39 Stat. 519), and nonmineral entry is subsequently lawfully 
made for such lands with a view to obtaining a restricted patent 
therefor, all such subsequently allowed nonmineral entries shall be with 
the mineral reservation prescribed by the act of July 17, 1914 (38 Stat. 
509).



Sec. 227.13  Vested rights to be respected.

    All drilling and other oil and natural gas developments and mining 
operations, work, and improvements, and all other acts and things 
necessary to be done, in connection with the exploration for mining and 
production of oil and natural gas from the leased premises, under the 
terms and conditions of a lease shall be performed with due regard to 
the rights, statutory and otherwise, of others, if any, who may have or 
who may acquire a lawful claim or estate to the leased premises, 
separate and distinct from the oil and gas or other mineral therein 
contained. See act of July 17, 1914 (38 Stat. 509).



Sec. 227.14  Government reserves right to purchase oil and gas.

    In time of war or other public emergency any of the executive 
departments of the United States Government shall have the option to 
purchase

[[Page 642]]

at the posted market price on the date of sale all or any part of the 
minerals produced under any lease.

                           Rents and Royalties



Sec. 227.15  Manner of payment.

    All payments due the lessor shall be made to the superintendent for 
the benefit of the Shoshone Indian Tribe, in accordance with the act of 
August 21, 1916 (39 Stat. 519), and no credit will be given any lessee 
for payments made otherwise. Payments of rentals and royalties except 
the first year's rental, which shall be paid to the superintendent as 
prescribed in Sec. 227.4 shall be transmitted to the superintendent 
through the supervisor. All such payments shall be accompanied by a 
statement, in triplicate, by the lessee, showing the specific items of 
royalty or rental that the remittance is intended to cover, and payment 
of royalties on production shall be made not later than the last day of 
the calendar month following the production for which such payment is to 
be made.



Sec. 227.16  Crediting advance annual payments.

    In the event of discovery of minerals in paying quantities all 
advance rents and advance royalties shall be allowed as credit on 
stipulated royalties as they accrue for the year for which such advance 
payments have been made. No refund of any such advance payment made 
under any lease will be allowed in the event the royalty on production 
for the year is not sufficient to equal such advance payment; nor will 
any part of the moneys so paid be refunded to the lessee because of any 
subsequent surrender or cancellation of the lease.



Sec. 227.17  Rates of rents and royalties.

    (a) The lessee shall pay, beginning with the date of execution of 
leases by the Secretary of the Interior, a rental of $1.25 per acre per 
annum in advance during the continuance thereof, together with a royalty 
of 12\1/2\ percent of the value or amount of all oil, gas, and/or 
natural gasoline, and/or all other hydrocarbon substances produced and 
saved from the land leased, save and except oil and/or gas used by the 
lessee for development and operation purposes on the lease, which oil or 
gas shall be royalty free. A higher rate of royalty may be fixed by the 
Secretary of the Interior or his authorized representative, prior to the 
advertisement of land for oil and gas leases. During the period of 
supervision, ``value'' for the purposes of the lease may, in the 
discretion of the Secretary of the Interior, be calculated on the basis 
of the highest price paid or offered (whether calculated on the basis of 
short or actual volume) at the time of production for the major portion 
of the oil of the same gravity, and gas, and/or natural gasoline, and/or 
all other hydrocarbon substances produced and sold from the field where 
the leased lands are situated, and the actual volume of the marketable 
product less the content of foreign substances as determined by the 
supervisor. The actual amount realized by the lessee from the sale of 
said products may, in the discretion of the Secretary of the Interior, 
be deemed mere evidence of or conclusive evidence of such value. When 
paid in value, such royalties shall be due and payable monthly at such 
time as the lease provides; when royalty on oil produced is paid in 
kind, such royalty oil shall be delivered in tanks provided by the 
lessee on the premises where produced without cost to the lessor unless 
otherwise agreed to by the parties thereto, at such time as may be 
required by the lessor. The lessee shall not be required to hold such 
royalty oil in storage longer than 30 days after the end of the calendar 
month in which said oil is produced. The lessee shall be in no manner 
responsible or held liable for loss or destruction of such oil by causes 
beyond his control.
    (b) The proceeds from all leases shall be taken up in the accounts 
of the superintendent for appropriate deposit for the benefit of the 
Indians.



Sec. 227.18  Free use of gas by lessor.

    If the leased premises produce gas in excess of the lessee's 
requirements for the development and operation of said premises, then 
the lessor may use sufficient gas, free of charge, for any desired 
school or other buildings belonging to the tribe, by making his own 
connections to a regulator installed, connected to the well and 
maintained

[[Page 643]]

by the lessee, and the lessee shall not be required to pay royalty on 
gas so used. The use of such gas shall be at the lessor's risk at all 
times.



Sec. 227.19  Division orders.

    (a) Lessees may make arrangements with the purchasers of oil for the 
payment of the royalties on production to the superintendent by such 
purchasers, but such arrangements, if made, shall not operate to relieve 
a lessee from responsibility should the purchaser fail or refuse to pay 
such royalties when due. Where lessees avail themselves of this 
privilege, division orders permitting the pipeline companies or other 
purchasers of the oil to withhold the royalty interest shall be executed 
and forwarded to the supervisor for approval, as pipeline companies are 
not permitted to accept or run oil from leased Indian lands until after 
the approval of a division order showing that the lessee has a lease 
regularly approved and in effect. When the lessee company runs its own 
oil, it shall execute an intracompany division order and forward it to 
the supervisor for his consideration. The right is reserved for the 
supervisor to cancel a division order at any time or require the 
pipeline company to discontinue to run the oil of any lessee who fails 
to operate the lease properly or otherwise violates the provisions of 
the lease, of the regulations in this part, or of the operating 
regulations.
    (b) When oil is taken by authority of a division order, the lessee 
or his representatives shall be actually present when the oil is gaged 
and records are made of the temperature, gravity and impurities. The 
lessee will be held responsible for the correctness and the correct 
recording and reporting of all the foregoing measurements, which except 
lowest gage, shall be made at the time the oil is turned into the 
pipeline. Failure of the lessee to perform properly these duties will 
subject the division order to revocation.

    Cross Reference: For oil and gas operating regulations of the 
Geological Survey, see 30 CFR part 221.

                               Operations



Sec. 227.20  Permission to start operations.

    (a) No operations will be permitted on any lease before it is 
executed by the Secretary of the Interior.
    (b) Written permission must be secured from the supervisor or his 
representative before any operations are started on the leased premises. 
After such permission is secured the operations must be in accordance 
with the operating regulations promulgated by the Secretary of the 
Interior. Copies of the regulations in this part may be secured from 
either the supervisor or the superintendent, and no operations should be 
attempted without a study of the operating regulations.



Sec. 227.21  Restrictions on operations.

    (a) All leases issued under the provisions of the regulations in 
this part shall be subject to imposition by the Secretary of the 
Interior of such restrictions as to time or times for the drilling of 
wells and as to the production from any well or wells as in his judgment 
may be necessary or proper for the protection of the natural resources 
of the leased land and in the interest of the lessor. In the exercise of 
his judgment the Secretary of the Interior may take into consideration, 
among other things, the Federal laws, State laws, regulations by 
competent Federal or State authorities, lawful agreements among 
operators regulating either drilling or production, or both, and any 
regulatory action desired by tribal authorities.
    (b) All leases issued pursuant to the regulations in this part shall 
be subject to a co-operative or unit development plan affecting the 
leased lands if and when required by the Secretary of the Interior, but 
no lease shall participate in any cooperative or unit plan without prior 
approval of the Secretary of the Interior.



Sec. 227.22  Diligence and prevention of waste.

    The lessee shall exercise diligence in drilling and operating wells 
for oil and gas on the leased lands while such products can be secured 
in paying quantities; carry on all operations in a

[[Page 644]]

good and workmanlike manner in accordance with approved methods and 
practice, having due regard for the prevention of waste of oil or gas 
developed on the land, or the entrance of water through wells drilled by 
the lessee to the productive sands or oil or gas-bearing strata to the 
destruction or injury of the oil or gas deposits, the preservation and 
conservation of the property for future productive operations, and to 
the health and safety of workmen and employees; plug securely all wells 
before abandoning the same and to shut off effectually all water from 
the oil or gas-bearing strata; not drill any well within 200 feet of any 
house or barn on the premises without the lessor's written consent; 
carry out at his expense all reasonable orders and requirements of the 
supervisor relative to prevention of waste, and preservation of the 
property and the health and safety of workmen; bury all pipelines 
crossing tillable lands below plow depth unless other arrangements 
therefor are made with the superintendent; pay all damages to crops, 
buildings, and other improvements on the premises occasioned by the 
lessee's operations: Provided, That the lessee shall not be held 
responsible for delays or casualties occasioned by causes beyond his 
control.



Sec. 227.23  Wells.

    The lessee shall agree (a) to drill and produce all wells necessary 
to offset or protect the leased land from drainage by wells on adjoining 
lands not the property of the lessor, or in lieu thereof, compensate the 
lessor in full each month for the estimated loss of royalty through 
drainage: Provided, That during the period of supervision by the 
Secretary of the Interior, the necessity for offset wells shall be 
determined by the supervisor and payment in lieu of drilling and 
producing shall be with the consent of, and in an amount determined by 
the Secretary of the Interior; (b) at the election of the lessee to 
drill and produce other wells: Provided, That the right to drill and 
produce such other wells shall be subject to any system of well spacing 
or production allotments authorized and approved under the applicable 
law or regulations, approved by the Secretary of the Interior and 
affecting the field or area in which the leased lands are situated; and 
(c) if the lessee elects not to drill and produce such other wells for 
any period the Secretary of the Interior may, within 10 days after due 
notice in writing, either require the drilling and production of such 
wells to the number necessary, in his opinion, to insure reasonable 
diligence in the development and operation of the property, or may in 
lieu of such additional diligent drilling and production require the 
payment on and after the first anniversary date of the lease of not to 
exceed $1 per acre per annum, which sum shall be in addition to any 
rental or royalty herein specified.



Sec. 227.24  Penalties.

    Failure of the lessee to comply with any provisions of the lease, of 
the operating regulations, of the regulations in this part, orders of 
the superintendent or his representative, or of the orders of the 
supervisor or his representative, shall subject the lessee to a penalty 
of not more than $500 per day for each day the terms of the lease, the 
regulations, or such orders are violated: Provided, That the lessee 
shall be entitled to notice, and hearing within 30 days after such 
notice, with respect to the terms of the lease, regulations, or orders 
violated, which hearing shall be held by the supervisor, whose findings 
shall be conclusive unless an appeal be taken to the Secretary of the 
Interior within 30 days after notice of the supervisor's decision, and 
the decision of the Secretary of the Interior upon appeal shall be 
conclusive.



Sec. 227.25  Inspection of premises, books and accounts.

    Lessee shall agree to allow the lessor and his agents or any 
authorized representative of the Interior Department to enter, from time 
to time, upon and into all parts of the leased premises for the purposes 
of inspection and shall further agree to keep a full and correct account 
of all operations and make reports thereof, as required by the 
applicable regulations of the Department; and their books and records, 
showing manner of operations and persons interested, shall be open at 
all times for

[[Page 645]]

examination of such officers of the Department as shall be instructed in 
writing by the Secretary of the Interior or authorized by regulations, 
to make such examination.



Sec. 227.26  Assignments and overriding royalties.

    (a) Leases, or any interest therein, may be assigned or transferred 
only with the approval of the Secretary of the Interior, and to procure 
such approval the assignee must be qualified to hold such lease under 
existing rules and regulations, and shall furnish a satisfactory bond 
for the faithful performance of the covenants and conditions thereof. No 
lease or any interest therein, or the use of such lease, shall be 
assigned, sublet, or transferred directly or indirectly, by working or 
drilling contract, or otherwise without the consent of the Secretary of 
the Interior. Assignments of leases shall be filed with the 
superintendent within 20 days after the date of execution.
    (b) An agreement creating overriding royalties or payments out of 
production under this part shall be subject to the provisions of Sec. 
211.26(d) of this chapter, or as hereafter amended.

[22 FR 10622, Dec. 24, 1957, as amended at 23 FR 9759, Dec. 18, 1958. 
Redesignated at 47 FR 13327, Mar. 30, 1982]



Sec. 227.27  Stipulations.

    The lessee under any lease heretofore executed may be stipulation 
(Form 5-154i), with the consent of the lessor, make such lease subject 
to all the terms, conditions, and provisions contained in the lease form 
currently in use. Stipulations shall be filed with the superintendent 
within 20 days after the date of execution.



Sec. 227.28  Cancellations.

    Leases shall be irrevocable except for breach of the terms and 
conditions of the same and may be forfeited and cancelled by an 
appropriate proceeding in the U.S. District Court for the District of 
Wyoming whenever the lessee fails to comply with their terms and 
conditions; the lessee may, on approval of the Secretary of the 
Interior, surrender a lease or any part of it:
    (a) That he make application for cancellation to the superintendent 
having jurisdiction over the land.
    (b) That he pay a surrender fee of $1 at the time the application is 
made.
    (c) That he pay all royalties and rentals due to the date of such 
application.
    (d) That he make a satisfactory showing that full provision has been 
made for conservation and protection of the property and that all wells, 
drilled on the portion of the lease surrendered, have been properly 
abandoned.
    (e) If the lease has been recorded, that he file, with his 
application, a recorded release of the acreage covered by the 
application.
    (f) If the application is for the cancellation of the entire lease 
or the entire undivided portion, that he surrender the lease: Provided, 
That where the application is made by an assignee to whom no copy of the 
lease was delivered, he will be required to surrender only his copy of 
the assignment.
    (g) If the lease (or portion being surrendered or canceled) is owned 
in undivided interests by more than one party, then all parties shall 
join in the application for cancellation.
    (h) That all required fees and papers must be in the mail or 
received on or before the date upon which rents and royalties become 
due, in order for the lessee and his surety to be relieved from 
liability for the payment of such royalties and rentals.
    (i) In the event oil or gas is being drained from the leased 
premises by wells not covered by the lease; the lease, or any part of it 
may be surrendered, only on such terms and conditions as the Secretary 
of the Interior may determine to be reasonable and equitable.



Sec. 227.29  Fees.

    Unless otherwise authorized by the Secretary of the Interior or his 
authorized representative, each lease, sublease, or assignment shall be 
accompanied at the time of filing by a fee of $10.

(Sec. 1, 41 Stat. 415, as amended; 25 U.S.C. 413)

[24 FR 7949, Oct. 2, 1959. Redesignated at 47 FR 13327, Mar. 30, 1982]

[[Page 646]]



Sec. 227.30  Forms.

    The provisions of Sec. 211.30 of this chapter, or as hereafter 
amended are applicable to this part.

[24 FR 7949, Oct. 2, 1959. Redesignated at 47 FR 13327, Mar. 30, 1982]

[[Page 647]]