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Case 1:99-cv-00550-ECH

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No. 81 -

Th.rsday April 28, 1994

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Rriefin8 on How To Use the Federal Resister For information on briefing in Washington, DC, see announcement on the inside cover of this issue.

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22104 Federal Register / VoI. 59, No; 81 / Thursday, April 28, 1994 / Rules and Regulations
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calculate royalties due from that producer. This final rule eliminates the Bureau of Indian Affairs ¯ language that caused the differences in interpretation that led to the appeals to 25- CFR Part 226 the IBIA. This rule was published as a proposed R|N 1076-AC09 rule on November 5, 1993 (58 FR Leasing Of osage Reservation Lands 59142). The last day for public comment for Oil and Gas Mining was January 4, 1994. No comments were received. April 8, 1994. It is the consensus of the BIA and the A~CY: Bureau o( Indian Affairs, Osage Tribal Council that this Interior. amendment to 25 CFR 226.11(a)(2) will ACTION: Final rule. create a pdsitive economtc benefit in the SUMMARY: The Bureau of.lndian Affairs form of increased royalty income to the (BIA) amends the regulations contained Osage headright holders. This rule change removes the existing in the Code of Federal Regulations to eliminate premium, bonus, or other like disincentive to purchasers to remain in Osage County resulting from bonus payments from consideration in the calculation of the royaltyprice for crude payments paid t0some producers but not all. The producers in Osage County ¯ oil in Osage CounT, Oklahoma. will now have incentive to receive EFFECTIVE DATE: May 31, 1994. ¯ bonus payments, which will increase FOR FURTHER INFORMATION CONTACT: Gordon Jackson. Superintendent. Osage mineral acrid;it/in the Osage mineral estate. Agency, Bureau of Indian Affairs, The Department of the Interior has Pawhuska, Oklahoma 74056, telephone determined that this rule is not a (91e~ 287-1032. significant regulatory action under SUPPLEMENTARY INFORMATION: The Executive Order 12866, and therefore purpose of this final rule is to amend 25 will not be reviewed by Lhe Office of CFR 226:11(a)(2) to eliminate premium, Management and Budget. In addition, bonus, or other like payments from the Department of the Interior bes consideration in the calculation of the determined that this rule will not have royalty price for &ude oil in Osage a significant economic effect on a County. substantial number of small entities Prior to amendment the regulations under the Regulatory Flexibility Act (5 were the subject of administrative appeals by numerous oil producers over U.S.C. 601. et seq.). The amendment the moaning of: "and ~ettlement shall be may cause small producers to pool their oil production in an'effort to secure based on the highest of the bona fide bonus or premium pay. However, under selling price, posted or offered price by the amended rule they will not be a major purchaser (as defined in Sac. ¯ Part) in Osage County, penalized for premium pay to other 226.1(h) of this lassee/producers, who purchases production from Osage In accordance with the Executive oil leases." The Bureau of Indian Affairs Order 12630, the Department has has interpreted that language to moan determined that this rule does not have that when a higher price is offered and paid for crude oil in Osage County, that . significant takings implications. In accordance wi~ Executive Order price shall be used for royalty No. 12612. the Department has computation for all oil of the same determined that'this rule does not have quality sold in the county. How6ver, significant federalism effects. there is reason to believe that this The Department has certified to the interpretation has discouraged Office of Management and Budgetthat purchasers from offering bonus prices. these final regulations meet the The interior-Board oflndian Appeals (IBIA) issued its decision in favor of the applicable standards provided in Sections 2(a) and 2(b)(2) of Executiveproducers on February 5, 1993, in Okie Crude Co.. et o2. v. Muskogee Area ¯ Order 12778. The Department of the Interior has Director, Bureau Of Indian Affairs,.IBIA 92-18-A, et at. The IBIA concluded that determined that this final rule does not the then existent regulations required a constitute a major Federal action significantly affecting the quality of the producer to pay royalty on the highest human environment and that no price available to that producer, detailed statement is required pursuant. whether or not that producer actually received that price. Prices not available to the National Environmental Policy Act of 1969. to a producer would not be used to DEPARTMENT OF THEINTERIOR

The information collections contained in 25 CFR Part 226 are required by the Secr0tary. Department of the Interior; and are .necessary to comply with the requirements of Office of Management and Budget (OMB) Circular No. A-102. The Standard Form 424 and attachments prescribed by such circular are approved by OMB under 44 U.S.C 3501, et seq. (1982) and assigned approval number 0348-0006. These sections describe the types of information that would satisfy the requirements of Circular A-102. The information will be utilized in leasing of Osage lands for oil and gas mining. Response is mandatory. William Haney. Field Sohcitor0 was the primary author o! this document. For further ~formation contact Gordon Jackson, Superintendent. Osage Agei~cy, at (918) 287-1032. List of Subjects in 25 CFR Part 226 Indian-lands. Mineral resources, Mines, Oil and gas exploration. Words of Issuance: For the reasons set out in the preamble, part 226 of chapter I, title 25 of the Code of Federal regulations is amended as set forth below. PART 226--LEASING OF OSAGE RESERVATION LANDS FOR OIL AND GAS MINING 1. The authority citation for 25 CFR Part 226 continues to read as follows: Authority: Sac. 3. 34 StaL 543; secs. 1, 2, 45 Stat. 1478; sac 3, 52 Slat. 1034.1035: sac. 2(el, 92 Slat. 1680. 2. Section 226.H(a)(2) is revised to read as follows: §~8.11 Roya,ypaym~ts. (a) * * * * *(2) Unlessthe 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 §226.1(h)) in Osage County, Oklahoma, who ¯ purchases production from Osage oil leases. Ada E. Deer, Assistant Secretary--tndion Affairs. ¯ [FR Dec. 94-10120 Filed 4-28--94; 8:45 am} mLUNO coos 431o-o2~

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Revised ,as of April I, 1995 CONTAINING A CODIFICATION OF OOCUMEHTS OF GENERAL APPLICABILITY AND FUTURE EFFECT AS OF APRIL 1. ~995 With Ancillaries Published by the Office c~ the Federal Re~ister Notional Archive~ ond Rec,~'ds Adminislroi~ as a Speciol Edith:m of the Federal Register

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§226.11 thereafter as the minerals specified are produced in paying quantities. [43 FR 8136, Feb. 28. 19"/8. Redeslgnated at 47 FR 13327. Mar. 30, 1982] §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~ 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 12½ 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 remoral of the oil, except where payments axe 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 §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, I.~ssee shall furnish free storage for royall~.y oil for a period not to exceed 60 days from date of production after notice of such election. (b) Royalty on goa--(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% 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~ percent shall t~ paid on the market value of all casinghead gas so used. All caslnghead gas not utilized by the oil Lessee .may, with the approval of the Superintendent, t~ utilized or sold by the gas Lessee, subject to the prescribed royalty of not less than 16~ percent of the market value. (2) Gas lease. Lessee shall pay a royalty of not less than 16% ]percent of the market value value of all natural gas and produc~s extracted therefrom produced and sold from his ][ease. Natural gas used in the reasonable and prudent operation a~d development of said lease shall be exempted from royalty payment. (3) Combir~tion oil and gas lease. Lessee shall I~LY royalty ~s provided in imxagraphs (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 t~n an amount equal to the annual rent~ 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 termir~ted 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 1½ 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, and amended at 55 FR 33114, Aug. 14, 1990;, 59 Fit 22101, Apr. 28, 1994]

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25 CFR (4-1-95 Edition)

25 CFR--Conflnued

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25 CFR--Conflnued

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Cbspter 11 256 Revised .................................... 3105 Chapter HI 502 Added ...................................... 12392 Effective date corrected ............... 20145 Chapter IV 700.709 (d) revised ........................... 24365

1993 25 CFR
Pip Chapter 1 11 Revised .................................... 54411 11.301 P.edesignsted as 12.100 ......... 54411 11.302 Redeaign~ted as 12.101 .........54411 11.303 Redeaign~tedas 12.102 .........54411 11.304 Redesignsted as 12.103 .........54411 11.305 Redesign~ted as 12.104 .........54411 11.306 Redesi~ted as 12.106 .........54411 11.401 Corrected ............................ 58729 12 Added; Regulations transferred from pa~ II ..................... 54431 Authority citation added ..............54431 12.100 Redesignated ~rom 54411 11.301 ........................................ 12.101 Redeatgnated from 54411 11.302 ........................................ 12.102 Redesignated flrom 54411 11.303 ........................................ 12.193 Redesignated from 11.304 ........................................ 54411 12.104 Redeslgnated flrom 11.306 ........................................ 54411 12.105 Redesignated from 11.306 ........................................ 54411 262 Added; eft. 6-13-94 ..................... 65249 Chapter II1 501-519 Deslg~ted as Subchapter A; heading added ..........16493 5810 501 Added ........................................ Technical correction ..................... 8449 502 Heading revised ....................... 16494 16495 593 Added ..................................... 5815 515 Added ........................................ 8449 Technical correction ..................... 517 Added ..................................... 44448 5810 519 Added ........................................ Technical correction ..................... 8449 520--529 Designated as Subchapter B; heading added ..........16493 5810 522 Added ........................................ 8449 Technical correction ..................... 16494 522.1 Heading revised .................... 16494 522.2 (h) revised .............................

Chapter Iili--Continued 523 Added ....................................... 5812 Technical correction ..................... 8449 523.1 Heading revised ..................... 16494 524 Added ....................................... 5812 Technical correction ...................... 8449 530--539 Designated as Subchapter C; heading added ..........16493 531 Added ....................................... Technical correction ...................... 8449 533 Added ....................................... 5829 Technical correction ...................... 8449 535 Added ....................................... 5830 Technical correction ..................... 8449 537 Added ........................................ 5831 Technical correction ..................... 8449 537.1 (bXIXvi), (vii), (c)(2)(v) and (vl) reW~sed ................................. 16494 539 Added ....................................... 5832 Technical correction ...................... 539.1 Revised ................................. 16494 550-558 Designated as Subchapter E; heading added ........................ 16493 556 Added ....................................... 5813 Technical correction ...................... 8449 556.1 Head4ng revised ..................... 16494 558 Added ....................................... 5814 Technical correction ..................... 8449 558.1 Heading revised ..................... 16494 558.2 (a) designation a~d (b) re16494 moved ........................................ 571--577 Designated as Subchapter G; heading a~ded ..........16493 5842 571 Added ....................................... 571.2 Corrected ............................... 8449 Introductery text revil~l ............ 16494 573 Added ....................................... 5344 Technical correction ..................... 8449 575 Added ....................................... 5844 Technical correction ..................... 8449 575.9 (c) revised .............................. 16495 577 Added ....................................... 5645 Technical correction ..................... 8449

25 CFR

1994

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Chapter I 11.100 (a) revised ........................... 49722 23 Revised ....................................... 2256 36 Au~hority citation revised ........ 1765 6 36.3 Amended ................................ 61765 36.10 (a) revised ............................. 61765 61705 36.11 (d) added ............................... 36.20 (d)(1)through (4)added ......... 1765 6 36,24 (g) added ............................... 61765

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List of CFR Sections Affected

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Page Chapter I ---Continued 36.42 Introductory text and (a) revised .......................................... 61766 36.61 (a~(1) revised ..........................61766 36.77 Added .................................... 61766 67 Added ........................................ 3291 83 Revised ........................................9293 113 Removed ...................................54504 !41 Authority citation revised ......................................... 54502 141.10 (d) revised ...........................54502 141.33 (d) revised ...........................54502 200.12 Added .................................. 43419 216.1{)0--216.111 ~3ubpart B) Removed ...................................... 43419 225 Added; eft. 4-29-94 .................... 14971

25 CFR--Confinued

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PNm Chapter I --Continued 226.11 (a)(2) revised .......................22104 248.6 Revised ................................ 16"/57

1995
(Regulations published from January 1, 1995 through April 1, 1995)

25 CFR

Page Chapter I 225.30 (d)(5)(li) corrected ............... 10474 Chapter VI Chapter VI]~stablished ..................8554

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