# Fluid Mineral Leases and Leasing Process > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-08138 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** April 23, 2024 - **Citation:** 89 FR 30916 ## Text DEPARTMENT OF THE INTERIOR Bureau of Land Management 43 CFR Parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160, 3170, and 3180 [BLM_HQ_FRN_MO4500176829] RIN 1004-AE80 Fluid Mineral Leases and Leasing Process AGENCY: Bureau of Land Management, Interior. ACTION: Final rule. SUMMARY: The Bureau of Land Management (BLM) is revising its oil and gas leasing regulations. Among other changes, the final rule implements provisions of the Inflation Reduction Act (IRA) pertaining to royalty rates, rentals, and minimum bids; updates the bonding requirements for leasing, development, and production; and revises some operating requirements. The final rule will improve the BLM's leasing process by ensuring proper stewardship of public lands and resources. DATES: The final rule is effective on June 22, 2024. FOR FURTHER INFORMATION CONTACT: Yvette M. Fields, Division Chief, Fluid Minerals Division, telephone: 240-712-8358, email: yfields@blm.gov, or by mail 1849 C St. NW, Washington, DC 20240, for information regarding the substance of this final rule. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States. For a summary of the final rule, please see the final rule summary document in docket BLM-2023-0005 on www.regulations.gov. SUPPLEMENTARY INFORMATION: I. List of Acronyms II. Executive Summary III. Discussion of Public Comments on the Proposed Rule IV. Overview of Modifications to the Proposed Rule V. Procedural Matters List of Acronyms APD = Application for Permit to Drill BLM = Bureau of Land Management BOEM = Bureau of Ocean Energy Management CA = Communitization Agreement CD = Certificate of Deposit CFR = Code of Federal Regulations DOI = Department of the Interior E.O. = Executive Order EOI = Expression of Interest FLPMA = Federal Land Policy and Management Act GAO = Government Accountability Office GHG = Greenhouse Gas IBLA = Interior Board of Land Appeals IIJA = Infrastructure Investment and Jobs Act of 2021 IM = Instruction Memoranda IRA = Inflation Reduction Act of 2022 LOC = Letter of Credit MLA = Mineral Leasing Act of 1920, as amended (MLA is also referred to as “Act” in the regulations.) MLAAL = Mineral Leasing Act for Acquired Lands of 1947, as amended MLRS = Mineral and Land Records System NAICS = North American Industry Classification System NEPA = National Environmental Policy Act OIG = Office of the Inspector General ONRR = Office of Natural Resources Revenue PRA = Paperwork Reduction Act RIA = Regulatory Impact Analysis RMP = Resource management plan ROW = Right-of-way SBA = Small Business Administration U.S.C. = United States Code Executive Summary On July 24, 2023, the BLM published a proposed rule to amend the regulations in 43 CFR parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160, 3170, and 3180 in the Federal Register (88 FR 47562), with a 60-day comment period. Generally, the comments supported this rulemaking and expressed the view that the changes outlined by the proposed rule will be helpful. Comments on specific sections of the proposed rulemaking opposed certain provisions and recommended changes. Within this preamble, the BLM discusses those comments and the BLM's responses. Overall, this rule will enhance the BLM's administration of oil and gas-related activities on America's public lands and reflects Congress's changes to the oil and gas program in the IRA. Specifically, the rule will reflect requirements of the IRA by increasing royalty rates, rentals, and minimum bids for BLM-issued oil and gas leases, and by imposing a fee for the submittal of an expression of interest (EOI) for leasing Federal oil and gas. The rule also updates the bonding requirements for leasing, development, and production to address shortcomings identified in reports by the Government Accountability Office (GAO) and the Department of the Interior's (DOI's) Office of Inspector General (OIG). Collectively, the BLM proposed these changes to bring the regulations into compliance with the IRA and the Infrastructure Investment and Jobs Act (IIJA) mandates and to ensure that reclamation costs are not borne by the American public. The BLM is also adjusting its cost recovery mechanisms so that project applicants provide a more appropriate share of the BLM's up-front costs for processing these applications. Finally, the BLM is implementing several changes to focus leasing on areas with fewer resource conflicts. The BLM's final rule will be the first comprehensive update to the Federal onshore oil and gas program's regulatory framework since 1988. The Secretary of the Interior manages the Federal onshore oil and gas program pursuant to the requirements of various statutes, including the Federal Land Policy and Management Act of 1976, as amended (43 U.S.C. 1701 et seq. ) (FLPMA); the Mineral Leasing Act of 1920, as amended (30 U.S.C. 181 et seq. ) (MLA or Act); and the Mineral Leasing Act for Acquired Lands of 1947, as amended (30 U.S.C. 351 et seq. ) (MLAAL), as well as the recently enacted IRA (Pub. L. 117-169 (2022)) and IIJA (Pub. L. 117-58 (2021)). Under section 102 of FLPMA (43 U.S.C. 1701(a)(7)), the BLM manages approximately 245 million acres of public lands and approximately 700 million acres of federally owned subsurface minerals “on the basis of multiple use and sustained yield.” FLPMA's definition of “multiple use” in section 103 (43 U.S.C. 1702(c)) requires the BLM to achieve “a combination of balanced and diverse resource uses that takes into account the long-term needs of future generations for renewable and non-renewable resources.” Oil and gas-related activities are one of the multiple uses that FLPMA authorizes and which the BLM administers in accordance with the MLA and MLAAL. Both of those Acts govern the leasing of public lands to explore for and develop oil, natural gas, coal, and other hydrocarbons, amongst other mineral deposits. Discussion of Public Comments on the Proposed Rule The public comment period for the proposed rule ended on September 22, 2023. During the 60-day public comment period, the BLM received over 215,000 comments submitted by Federal, State, and local governments, local agencies, Tribal organizations, industry representatives, individuals, and other external stakeholders. The vast majority of submissions were form letters. Commenters also submitted roughly 1,000 unique letters. From all submissions, the BLM identified approximately 1,200 unique comments raising specific issues on the proposed rule. The BLM carefully reviewed all comments received on the proposed rule. Certain comments suggesting that the BLM address issues outside the scope of this rulemaking are discussed in Section III.A. The BLM categorized the remaining comments received and provides an overview of those categories and associated responses in Section III.B. The BLM provides more detailed discussions of those comments in Section IV.B. The Federal Government posts all comments at the Federal eRulemaking portal: http://www.regulations.gov. To access the comments at that website, enter 1004-AE80 in the Search box and select the Fluid Mineral Leases and Leasing Process proposed rule. A. Comments Outside the Scope of This Rulemaking The BLM received many comments directed at matters outside of the scope of this rulemaking, including those regarding: project-specific considerations; the BLM's existing website or computer application programs ( e.g., Automated Fluid Mineral Support System, National Fluid Lease Sale System, etc.); additional rulemaking or programmatic environmental impact statements specific to greenhouse gas (GHG) emissions; geothermal or helium leasing activities; and additional operational provisions in 43 CFR part 3160 or additional unit provisions in 43 CFR part 3180 that were not part of the proposed rule. Other commenters recommended changes to national energy policies and priorities, such as to halt all oil and gas leasing activities due to climate change, or discussed matters not specific to the BLM's administration of oil and gas leasing. Many comments expressed general statements of support or opposition to the rule. The BLM has not responded to these comments in detail, because these myriad matters were not encompassed in the proposed rule and are best addressed, if at all, through future rulemakings. A commenter stated that the BLM failed to write this entire rule in a manner that is easily understood without providing any examples to support the assertion. When drafting the proposed and final rules, the BLM reviewed the rule text to identify areas where the regulations could be written more clearly and made changes as necessary. B. Categorized Public Comments on the Proposed Rule This section of the preamble summarizes the major categories of public comments that the BLM received in response to the proposed rule, as well as the BLM's responses. 1. Comments Recommending Additional Oil and Gas Rulemaking, or Policy Development Summary of comments: Multiple commenters recommended that the BLM initiate additional rulemaking efforts or develop additional policy that are beyond the scope of this rulemaking. These recommendations include: (1) a rule to update the BLM's unitization process in part 3180; (2) a rule to update the BLM's permitting process in 43 CFR part 3160; (3) development of “The Bureau of Land Management's Blueprint for 21st Century Outdoor Recreation”; (4) updated policy related to oil and gas lease suspension; (5) updated policy related to oil and gas unitization; (6) a similar joint rulemaking between the BLM and the Bureau of Indian Affairs; and (7) a bureau-wide review of its standard stipulation lists. Response: The BLM reviewed these comments and determined that the requested changes are outside the scope of this rulemaking. With respect to the comments recommending the BLM update the unitization portion of the regulations at part 3180, the BLM made changes to the final rule to implement the increased royalty rate mandated by Congress in the IRA but did not propose any changes to the remaining unitization provisions. As the BLM did not propose any changes in the proposed rule, the public was not provided with a chance to comment on any other changes to the regulations governing unitization. As it reviews its current policy in light of this rule's changes, the BLM will determine whether to implement any changes to its approval process for lease suspensions. Although a comment requested that the BLM review and standardize a list of lease stipulations, in addition to the terms and conditions in the BLM's standard form oil and gas lease, the BLM develops lease stipulations as part of its resource management planning process (which includes analysis under NEPA and other statutes), in which the public has opportunities to comment, and those stipulations apply to oil and gas leases issued within each RMP area. Any site-specific concerns can be addressed through the NEPA process for a particular sale or through conditions of approval at the Application for Permit to Drill (APD) stage. During the comment period, the BLM received comments requesting additional updates to parts 3160 and 3170. As part of its review under Executive Order (E.O.) 14008, issued on January 27, 2021, the Department reviewed the onshore oil and gas leasing program and published the Report on the Federal Oil and Gas Leasing Program on November 26, 2021. The Report on the Federal Oil and Gas Leasing Program recommended that the BLM should reform its royalty rate, minimum bonus bids, rental rates, and bonding amounts; establish new requirements for bidders; and take steps to discourage nominations of low-potential lands. When the BLM drafted the proposed rule, the BLM considered any critical permitting or operational changes to parts 3160 and 3170 that were needed in response to the Report's recommendation to reduce speculation but did not propose any changes to the remaining provisions. As the BLM did not propose any changes to parts 3160 and 3170, outside of the limited changes in the proposed rule, the public was not provided with a chance to comment on any other changes to the regulations governing permitting or operations. As noted above in the summary of comments outside the scope of this rulemaking effort, the BLM received a comment requesting the development of a blueprint for outdoor recreation. Such a revision is beyond the scope of this rulemaking as it would involve revising regulations in Title 43 of the CFR, Subchapter H, and those regulations do not pertain to oil and gas leasing and development, which is the focus of this effort. Finally, a joint rulemaking between the BLM and the Bureau of Indian Affairs is outside the scope of this rulemaking effort. 2. Comments on Greenhouse Gas Emissions and Climate Change Summary of comments: In the proposed rule, the BLM requested comment on whether the preference criteria in § 3120.34 or other portions of the proposed rule should be expanded, or new provisions added, to discuss analysis of GHG emissions and related decision making based on that analysis. The BLM received many comments recommending different approaches, including: • Not changing the rule to address GHG emissions and climate change on the grounds that the NEPA review process at the project level provides a sufficient review for climate change issues, and that refraining from leasing Federal minerals will not change the demand for oil and gas production; • Amending the rule to forgo future leasing based upon the need to avoid exceeding the world's pre-industrial global temperature level by 1.5 degree Celsius; • Setting lease rates based on the Social Cost of Carbon calculated by the U.S. Environmental Protection Agency in November 2022 at a discount rate of 1.5 percent; • Aligning the oil and gas program with President Biden's climate goals; • Limiting GHG emissions via emissions monitoring; • Implementing a three-stage leasing process to prioritize lands for leasing with a final climate screening; • Creating a carbon budget for the Federal onshore oil and gas program; • Requiring climate change mitigation, analyzing climate impacts across BLM-managed lands, or implementing a rule to ensure climate protection for all new leasing and permitting decisions; • Initiating a programmatic environmental impact statement for the onshore oil and gas program to assess the potential GHG impacts; • Establishing a quantitative climate test tool to evaluate the relative impact and significance of GHG emissions at the project level; and • Expanding the competitive leasing preference criteria for conformity with State policies on GHG emissions. Response: Climate change is a global process that is affected by the sum total of GHGs in the Earth's atmosphere. The BLM acknowledges the views and suggestions reflected in these comments and recognizes that GHG emissions from the Federal onshore oil and gas program contributes to climate change. After reviewing the comments received, the BLM did not make any changes to the final rule to address GHG emissions and climate change. In this rule, the BLM implements regulatory modifications required by Congress in the IRA and other revisions that aim to improve the leasing process and ensure proper management of public lands and resources. These reforms are not focused on climate change. For example, the majority of these regulations cover the administration of an oil and gas lease, such as changes to the fixed filing fees, the fiscal terms mandated by Congress, the type of lease the BLM can issue (eliminating noncompetitive leases as mandated by Congress), and the method by which the public requests lands to be considered for leasing (formal nominations vs. expressions of interest). In implementing the MLA's requirement to hold quarterly lease sales when lands are eligible and available, the BLM will continue to use the NEPA review process and guidance issued by the Council on Environmental Quality to evaluate GHG emissions that result from oil and gas leasing and development and its effects on climate change. The BLM understands the commenters' suggestions and may proceed with those suggestions in future rulemakings that more directly address GHG emissions. Further responses to comments related to the preference criteria specifically are addressed in section IV.B.12 of the preamble. 3. Comments Recommending the BLM Stop All Oil and Gas Lease Sales and Permitting Summary of comments: Multiple commenters recommended that the BLM stop, or phase out, all oil and gas lease sales, the issuance of leases, as well as permitting and development, due to climate change and the GHG emissions from oil and gas development. Response: Pursuant to the IRA, the BLM is required to conduct lease sales in order to permit wind and solar energy development projects on public lands. The approach suggested by the commenters thus would require the BLM to stop desirable wind and solar development. In implementing the MLA's requirement to hold quarterly lease sales when lands are eligible and available, the BLM will continue to use the NEPA review process to evaluate GHG emissions that result from oil and gas leasing and development and its effects on climate change. 4. Comments on Public Participation Summary of comments: Tribes, States, and local governments submitted comments requesting that the BLM update the rule to provide additional consultation and outreach to them on oil and gas leasing and development. Some comments encouraged the BLM to coordinate with the relevant State and county agencies when land-use actions are taken or if the BLM is considering leasing lands adjacent to State-owned or managed lands. Other comments requested that the BLM explore opportunities for Tribal cultural site protection and co-stewardship to ensure the BLM fully advances opportunities for the incorporation of Indigenous Knowledge, respect for Tribal sovereignty and treaty rights, and the protection of Tribal cultural sites. Comments also recommended that the BLM consult the State or local government's land use plans to ensure the BLM applies the appropriate provisions to responsibly manage natural resources, climate, and environmental quality issues during the decision making and planning efforts for oil and gas leasing. Response: The BLM will continue to engage with the public, Tribes, Federal, State, and local government partners on the BLM's management of its public lands, as appropriate. Subsequent actions that the BLM may take will be subject to the applicable policies, laws, and regulations pertaining to that action, including those for consultation and environmental review. The BLM added language into the competitive leasing process (see § 3120.42) to include scoping, comment, and protest periods to ensure that the BLM provides adequate time to evaluate the views of a wide range of partners, stakeholders, and landowners in any future decisions. Furthermore, in formulating or amending its resource management plans (RMPs), the BLM complies with FLPMA, NEPA, and its regulations providing for public participation, coordination of planning efforts, and consistency. See 43 CFR 1610.2, 1610.3-1, 1610.3-2. The RMPs serve as blueprints to enable the BLM to sustain the health, diversity, and productivity of public lands for the use and enjoyment of present and future generations. Under an RMP, the BLM will identify the lands closed to leasing of Federal oil and gas, the lands open to leasing of Federal oil and gas, and the appropriate stipulations to apply to a Federal oil and gas lease based upon the location of the lease. These decisions are not made as part of this rulemaking and will continue to be made through the BLM's land use planning process, which involves cooperating with State and local governments, consulting with Tribes, and robust public engagement. The BLM takes its responsibilities to Tribes seriously and respects Tribal sovereignty and treaty rights. Where there are such opportunities, the BLM is committed to exploring co-stewardship opportunities with Tribes. However, co-stewardship is outside the scope of this rulemaking. 5. Comments on the BLM's Discretion To Offer Parcels for Lease Sales Summary of comments: Multiple commenters stated that the rule improperly limits and discourages exploration or closes off lands to leasing outside of the NEPA process. These commenters pointed to different aspects of the rule to support their claim that the rule limits and discourages exploration. Some comments stated that the rule violates, or evades, the multiple-use mandate of FLPMA or exceeds the authority of the BLM under the MLA. Other comments stated that when a person requests the BLM include certain lands in an upcoming competitive oil and gas lease sale (via EOI) the BLM should offer all lands described in the EOI in the next available sale based on and consistent with the management decisions made in the relevant RMPs. Multiple comments stated that the new preference criteria (see § 3120.32) will create uncertainty, conflicts among stakeholders and uses, and will hinder the BLM's ability to achieve the congressional mandates such as offering enough acreage for oil and gas leasing in order to allow wind and solar right-of-way (ROW) permit issuance. Response: With respect to contentions that the BLM's proposed regulations exceed the Secretary's authority to select lands for leasing, the BLM notes that the MLA, 30 U.S.C. 226(a), by providing that the Secretary “may” lease lands, necessarily provides the BLM with broad discretion in determining precisely which lands and parcels the BLM will offer at an oil and gas lease sale. Accordingly, the agency has, since at least 1988, consistently applied a public interest determination to any such decisions. See 53 FR 22828 (June 17, 1988) (“It is Bureau policy prior to offering the lands to determine whether leasing will be in the public interest.”). The MLA does not specify how and when this decision is to be made, and both the Supreme Court and the U.S. Court of Appeals for the Tenth Circuit have recognized the Secretary's discretion in this sphere. See Udall v. Tallman, 380 U.S. 1, 4 (1965); W. Energy All. v. Salazar, 709 F.3d 1040, 1044 (10th Cir. 2013). Comments asserting that the application of the preference criteria will result in the closure of any lands to oil and gas leasing are incorrect. The BLM has and will continue to make land use decisions at the land use planning stage and document those decisions in the applicable RMP. The preference criteria, on the other hand, were proposed consistent with the MLA to direct the BLM's administrative resources to leasing tracts most likely to be developed, to reduce conflicts between oil and gas development and other public land uses that were not resolved in the resource management plans, and to “take[ ] into account the long-term needs of future generations for renewable and nonrenewable resources,” 43 U.S.C. 1702. These criteria may be considered on a case-by-case basis in light of specific circumstances. Even if the BLM were to apply such criteria and decide to defer including particular lands from any particular lease sale, nothing in this rule prevents those lands from being offered in future sales. The RMPs do not always resolve all conflicts, especially those that may be unforeseen or arise due to a change in circumstances. In many cases, this calls for a more specific site review, and the MLA provides the necessary discretion, apart from FLPMA, to engage in this type of site-specific review. 6. Comments Recommending BLM Processes Should Be Addressed in Policy and Not Regulations Summary of comments: The BLM received multiple comments stating that many of the BLM processes in the proposed rule should instead be expressed in policy documents and that the rule goes beyond the authority of the BLM under the IRA and IIJA. Comments expressed the view that the function of regulations is to inform and instruct the public with regard to actions that they may or may not take while policy interprets those regulations and provides guidance to the agency in implementing them. The commenters stated that inserting existing policy guidance, which applies only to the BLM's actions, into the regulations, rather than leaving it in Instruction Memoranda (IM), is inappropriate. For example, commenters suggested that the preference criteria and the details regarding lease suspensions belong in BLM guidance documents and not in the regulations as these do not impose any requirements on the oil and gas industry. Finally, the commenters stated that the BLM does not need to update the existing regulations governing the BLM's discretionary functions under the existing regulations, since those regulations are adequate to protect the fiscal interests of the American public. These commenters recommended that the BLM only make the changes required by the IRA. Response: By incorporating provisions such as the preference criteria and lease suspensions into the regulations, the BLM makes those provisions legally binding and provides greater certainty and transparency to the public on the decision-making processes the BLM will use when it processes EOIs (see § 3120.32) and the timeframes for lease suspensions (see § 3165.1). These regulatory criteria may influence a person's decision-making when deciding whether they will submit an EOI or may influence lessees when they are deciding whether to seek a lease suspension. Therefore, the BLM declines to make any changes to the final rule based upon concerns that the changes could be characterized as guidance. 7. Comments on Environmental Justice Summary of comments: Multiple commenters stated that the BLM should ensure that the final rule includes environmental and social justice considerations as part of the oil and gas leasing process. Comments stated that many of the fluid mineral resources are located in underserved rural areas and on Tribal lands where the fluid mineral industry has a large economic impact. These comments alleged that the rule could undercut environmental justice goals by reducing the economic benefits that would otherwise flow to disadvantaged communities as a result of onshore Federal oil and gas activities. One comment stated that jobs in extractive industries, such as oil and gas development, are not going to the members of the communities burdened by the fossil fuel industry and therefore that the BLM should end the Federal fossil fuel leasing program. Another comment stated that the BLM should solicit the knowledge and experience of those in underserved communities and ensure that these communities' perspectives are meaningfully incorporated into and actively shape planning and decision-making, and the BLM should take into account community-driven and localized health impact assessments and relevant local health and demographic data as part of this process. Another comment recommended that the BLM incorporate environmental justice as part of § 3120.32. Response: The BLM reviewed the comments recommending changes to the rule to address environmental justice concerns and determined that no changes were necessary. The BLM believes environmental justice concerns are initially addressed through the land use planning process when the BLM is evaluating whether lands should be open to leasing and what stipulations should be imposed, and then at the more site-specific level when identified parcels are being evaluated for possible inclusion in a lease sale. Both of these processes also involve an evaluation under NEPA, which provides an opportunity for considering environmental justice concerns, which are dependent on the specific conditions and history pertaining to each area and the communities potentially impacted. In addition, the preference criteria that the BLM is including in this final rule will provide a tool for the BLM to assess environmental justice concerns through government-to-government consultation and through scoping comments received from the public. To the extent a comment noted a specific environmental-justice-related concern with a particular section of the rule, the BLM has also addressed such comments in the following Section-by-Section Discussion. 8. Comments on the Impact of the Rule on Indian Leases Summary of comments: The BLM received a comment stating that the proposed rule preamble incorrectly stated that the rule “will not impact the leasing of Indian minerals.” The comment asserted that the rule would impact Indian interest, lands, and minerals, and that the BLM needs to clarify this in the final rule. The BLM also received comments stating that the rule should be revised to clarify that public lands managed by the BLM under FLPMA and do not include Indian lands; that the rule should eliminate BLM activities on Indian lands; and, that the BLM lacks authority to manage activities on Indian lands. Response: The BLM does not make leasing decisions for Indian lands. However, the BLM does make recommendations for oil and gas operations that may impact Indian lands. Existing regulations at 43 CFR part 3100 outline the BLM's authority over offering lands to lease under the BLM's jurisdiction, which does not include Indian lands. The changes made in this rulemaking clearly fall within the BLM's existing statutory authorities. The BLM acknowledges that some of the proposed changes may affect Indian lands when the BLM makes recommendations for oil and gas operations to the Bureau of Indian Affairs under the Standard Operating Procedures between agencies for the leases they manage under their respective jurisdictions. While the majority of the changes in the final rule impact the leasing of Federal minerals and not Indian leases, there are some provisions that will apply to Indian leases: the operational changes for shut-in and temporarily abandoned wells at § 3162.3-4 and the changes to the APD timeframe at § 3171.14. The BLM has also increased filing fees to account for inflation for applications such as APDs, as required by 30 U.S.C. 191. The BLM considers these updates critical for both Federal and Indian minerals because these changes will give the BLM the ability to complete operator-diligence reviews, ensure that wells are producing on Indian leases as required by law, and to recover its costs to process applications. 9. Comments on the Rule Potentially Discouraging Federal Exploration and Development Summary of comments: Multiple commenters expressed concerns that the proposed rule would discourage or eliminate future oil and gas exploration and development on Federal lands or would force production from Federal lands onto State or private lands. The BLM also received comments asserting that the combination of proposed § 3120.32 (reflecting the BLM's authority to defer certain parcels) and the increased fees, royalties, and bonding would result in the BLM violating its statutory requirements to prevent waste of the oil and gas resource. Specifically, the commenter claimed that provisions in this rule, such as the competitive leasing preference criteria at § 3120.32, could result in delays in or the complete exclusion of the development of non-Federal minerals in addition to the loss in Federal bonuses and royalties. These commenters also asserted that this rule fails to recognize studies indicating that the United States will continue to need fossil fuels for the foreseeable future. The commenters urged the BLM to look for ways to increase energy development. Commenters also stated that the proposed rule ignored the economic benefit provided by oil and gas development to local schools, hospitals, and infrastructure. Response: The GAO and the DOI OIG reviewed and audited the BLM's Federal onshore oil and gas program to identify problematic areas in this program and recommended actions to address them. Both the GAO's and OIG's audits 1 highlighted weaknesses in the onshore program's fiscal framework and recommended that the BLM take steps to ensure that the American public receives a fair return from oil and gas activities on public lands. The DOI and the BLM concurred with these recommendations in the Report on the Federal Oil and Gas Leasing Program 2 issued in November 2021. 1 See, e.g., OIG, “Inspector General's Statement Summarizing the Major Management and Performance Challenges Facing the U.S. Department of the Interior” (Nov. 2022); GAO, “OIL AND GAS LEASING—BLM Should Update Its Guidance and Review Its Fees” (Nov. 2021); GAO, “OIL AND GAS—Onshore Competitive and Noncompetitive Lease Revenues” (Nov. 2020); GAO, “FEDERAL ENERGY DEVELOPMENT—Challenges to Ensuring a Fair Return for Federal Energy Resources” (Sept. 2019); GAO, “OIL AND GAS—Bureau of Land Management Should Address Risk from Insufficient Bonds to Reclaim Wells” (Sept. 2019); GAO, “OIL AND GAS LEASE MANAGEMENT—BLM Could Improve Oversight of Lease Suspensions with Better Data and Monitoring Procedures” (June 2018); OIG, “Bureau of Land Management's Idle Well Program” (Jan. 2018). 2 DOI, “Report on the Federal Oil and Gas Leasing Program” (Nov. 2021). https://www.doi.gov/sites/doi.gov/files/report-on-the-federal-oil-and-gas-leasing-program-doi-eo-14008.pdf. Accordingly, the BLM is adjusting its oil and gas bonding requirements, including by increasing minimum bond amounts for the first time in decades. The BLM is proposing to adjust its cost recovery mechanisms to account for changes in the leasing process since the fees were initially set in 2005. The BLM drafted the proposed rule to: (1) reflect the requirements of the IRA; and (2) enhance the administration of the onshore program, to direct leasing to lands with a higher development potential, and in response to the GAO's and OIG's numerous reports identifying shortcomings in the program, as discussed in the November 2021 Report on the Federal Oil and Gas Leasing Program. The BLM did not make any changes to the final rule based upon the comments expressing concerns that the increased bonding and fees could result in the potential movement of production from Federal to State or private lands. The royalty rates on State and private lands are often higher than those for Federal lands as are the rental rates. 3 Given this, the BLM does not believe the increased rates will have the asserted affect and instead will bring the rates more in line with one another across jurisdictions. Moreover, § 3120.32 does not affect longstanding BLM policies that prioritize leasing parcels subject to drainage (from adjacent State and private minerals); the BLM will continue to work towards leasing lands that will allow for logical development of the minerals by giving preference to lands after accounting for expected yields of oil and gas, fair return for U.S. taxpayers, and decisions embodied by the BLM's RMPs. This will provide for continued development of Federal, State, and private minerals. 3 DOI, “Report on the Federal Oil and Gas Leasing Program” (Nov. 2021). IV. Overview of Modifications to the Proposed Rule A. Summary of Notable Changes The BLM made changes to the rule in response to comments and for accuracy, clarity, or grammar. The BLM received numerous comments on the proposed changes to the bonding regulations under subpart 3104, and in response to these comments, the BLM reinstated an operators' ability to post personal bonds secured with letters of credit (LOCs) and certificates of deposit (CDs). The proposed rule requested comments on if and how the BLM should adjust the minimum bond amounts in the future. After review of the comments, bond amounts will be adjusted for inflation every 10 years so that the minimum bond amounts do not become outdated as they have in the past. The BLM deleted the existing and proposed sections governing the formal lease nomination process under part 3120. The BLM revised the final rule to clarify that it will consider the preference criteria in § 3120.32 as part of the scoping process and will apply the criteria after the conclusion of scoping but before issuing the draft NEPA document for the lease sale, consistent with the BLM's existing policy and implementation of IM 2023-007, Evaluating Competitive Oil and Gas Lease Sale Parcels for Future Lease Sales. 4 4 https://www.blm.gov/policy/im-2023-007. The BLM also revised the final rule to extend an approved APD's term based on a lease suspension. These revisions are discussed in more detail in the Section-by-Section Discussion. B. Section-by-Section Discussion Sections that did not receive any comments, or that only received comments in support of the proposed changes, are not discussed in this Section-by-Section analysis and are adopted in the final rule as proposed. In addition, throughout the final rule, the BLM replaced the words “he,” “she,” or “he/she” with the appropriate title or entity to comply with Executive Order 13988, Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation. 1. Section-by-Section Discussion for Changes to 43 CFR Part 3000 Section 3000.5 Definitions The BLM received a number of comments on the definition of the terms “Acreage for which expressions of interest have been submitted,” “Person,” and “Surface Management Agency.” With respect to the phrase “Acreage for which expressions of interest have been submitted,” a comment stated the BLM should change the definition to “acreage that is identified in an EOI on land eligible and available for leasing” to ensure that the BLM accurately determines which EOIs have been properly submitted. No further changes are made to the final rule as the definition already states, “and for which the BLM may lawfully issue an oil and gas lease.” Comments on the term “Person” recommended that the BLM use the definition in the Federal Oil and Gas Royalty Management Act, 30 U.S.C. 1702, to avoid any unnecessary confusion. The BLM adopts this recommendation and has revised the definition of the term “person” in the final rule accordingly. Comments on the term “surface management agency” focused on the assertion that the definition improperly required the BLM to obtain consent from other agencies within the DOI in order to lease lands managed by those agencies, and therefore, that the BLM should not adopt the proposed changes to this definition. Based on these comments, the BLM made additional changes to § 3101.51 to provide that public domain and acquired lands that are open to the operation of the Mineral Leasing Act will be leased only with the consent of the surface managing agency, which, upon receipt of a description of the lands from the authorized officer, can report to the authorized officer that it consents to leasing with stipulations, if any, or withholds consent or objects to leasing. Section 3000.40 Appeals The existing § 3000.4 details the appeal rights and exceptions for parts 3000 through 3930. The BLM received suggestions that this section be amended to include State Director Reviews, with an option to further appeal to the Interior Board of Land Appeals (IBLA). The commenters asserted that, without the intermediary appeal to the State Director, there would effectively be no opportunity to appeal in light of average times for IBLA decisions. The BLM does not believe any change to this section is needed. Decisions that are signed at the state office level, which are usually decisions that affect the administration of a lease under parts 3100 and 3120, are signed on behalf of the State Director, meaning that State Director review is not applicable. In addition, 43 CFR subpart 3165 already states that onshore oil and gas operational decisions made under the authority of part 3160 are subject to the State Director Review process and any decision of the State Director is appealable to the IBLA. Section 3000.41 Severability This is a new section that the BLM has added in response to comments. The BLM received comments suggesting that it should include a severability clause in the final rule similar to that found in the BLM's realty regulations (43 CFR 2801.8). The final rulemaking adopts this recommendation by adding a new section addressing severability. This section will read, “If a court holds any provisions of the regulations in parts 3000 through 3180 or their applicability to any person or circumstances invalid, the remainder of these rules and their applicability to other people or circumstances will not be affected.” The BLM published the proposed rule, in large part, to address the changes required by the IRA, various reports by the GAO and OIG, and the Department's report in response to section 208 of E.O. 14008. Those sections implementing the IRA can and do function separately from those sections proposing new bonding amounts or the competitive leasing preference criteria. One commenter stated that the courts will determine if a provision is or is not severable from the rule. The comment is correct in that a court will ultimately determine whether portions of the rule can be severed from others in the event a court determines a provision was improperly promulgated. This section is designed to aid that review by demonstrating that the BLM intends the various components of the rule, with various provenances and independent functions, to continue to operate even if one or more of the provisions is declared unlawful. Section 3000.50 Limitations on Time To Institute Suit To Challenge a Decision of the Secretary The existing § 3000.5 reiterates the 90-day statute of limitations for judicial challenges to certain BLM decisions under the MLA. The BLM received comments on this section suggesting that the BLM clarify that the regulation does not apply to claims brought under statutes other than the MLA. The final rule does not adopt this recommendation, as this section also applies to other minerals management programs, such as mining claims, which are managed under the general mining laws (see part 3800). Section 3000.60 Filing of Documents The existing § 3000.6 specifies where and when documents filed under these regulations must be submitted and provides for filing by electronic means in addition to the hard copy or delivery service, as was previously authorized. Commenters generally supported the proposed changes to this section. Commenters suggested revising the provision to include a requirement that each BLM office designate an email address for filing, and that an e-filing should be deemed timely if it is received by 11:59 p.m. local time in the appropriate BLM office. These changes were recommended to ensure that the appropriate official receives the e-filing and to avoid any risk of default as a result of e-filing with the wrong person in a BLM office. The BLM does not support the use of emails for electronic filings for many of the same reasons stated in the comment, i.e., the potential to be directed to the wrong person and/or wrong office. In addition, the BLM will not incorporate the recommendation to state a specific local time, since the time by which a filing needs to be made is already addressed in 43 CFR 1821.11. The regulation at 43 CFR 1821.11 is entitled, “During what hours may I file an application?” and specifically states, “You may file applications or other documents or inspect official records during BLM office hours. Each BLM office will prominently display a notice of the hours during which that particular office will be open. Except for offices which are open periodically, for example, every Wednesday or the 3rd Wednesday of the month, all offices will be open Monday through Friday, excluding Federal holidays, at least from 9 a.m. to 3 p.m., local time.” Those instructions necessarily depend upon and encompass the local time at particular BLM offices. Section 3000.100 Fees in General The existing § 3000.10 provides general information on the types of fees the BLM may assess, how the fees are calculated, when the fees must be paid and how and when the BLM will adjust any fees. The BLM received a comment recommending a change to paragraph (c), which addresses adjustment of fees, recommending that any adjustments to fixed fees be subject to notice and comment. The BLM declines to make this change as further explained in the discussion of § 3000.120 below. Section 3000.120 Fee Schedule for Fixed Fees The existing § 3000.12 lists the fixed fees that must be paid for each transaction requiring a fixed fee and includes transactions that previously did not require a fee, such as the designation of a successor operator; unit agreement applications; subsurface storage agreement applications; unit agreement expansion applications; and formal lease nominations. The final rule removes the formal lease nominations process, consistent with the changes made under § 3120. The BLM received several comments on this section. Some comments supported the BLM's proposal to incorporate processing fees for new actions that were not previously subject to a fee, stating that the fees were appropriate given the BLM's limited resources, or stating that the proposed fees were not sufficient to cover the BLM's costs. Other comments opposed the increased fees, asserting they were excessive, disproportionate, unwarranted, and designed to be a deterrent to Federal oil and gas leasing activities. In addition, some commenters stated that the analysis in the preamble to the proposed rule failed to comprehensively analyze the BLM's fee system, and, specifically, failed to compare the fees to the increased bonus bids, rentals, and bonding. Another comment objected to the application of the new filing fees, royalty, and rental provisions to leases sold before the enactment of the IRA but issued after the IRA. The preamble to the proposed rule outlined the processing steps considered by the BLM in calculating each of the fees. The general comments only criticized the processing steps associated with the BLM's review of a competitive lease application fee, as discussed below. No comments criticized the processing steps for the other application fees; therefore, the BLM will implement the proposed fixed filing fees as stated in the preamble to reimburse the BLM for its processing costs. With respect to the fixed filing fees, the preamble specifically stated that the BLM would not charge a new fixed filing fee under this rule for processing a document that the BLM received before the effective date of the rule. Documents submitted before the effective date of the final rule will be processed based on the fee that was in effect when the document was submitted. One comment recommended that the competitive lease application fee, which includes the cost for the BLM to undertake any necessary NEPA review, should not be a fixed fee and instead should be determined on a case-by-case basis under § 3000.110, or, alternatively, that the cost should be fixed but that the applicant should have the option to request a case-by-case fee determination to establish a fee for a particular lease application. Although the BLM understands the impetus for suggesting that the fee be determined for a particular lease, the BLM cannot adopt the proposed change, because the NEPA analysis prepared for each lease sale covers all of the parcels offered in a given sale and is not for each individual parcel. Moreover, the competitive lease application fee is collected after the NEPA review has been completed, and after the lease sale has been held. Therefore, the applicant would not be able to help pay for the preparation of any BLM NEPA document before performing any case processing on a parcel-by-parcel basis. Other comments stated that the BLM should charge fixed filing fees for compensatory royalty agreements and communitization agreements (CAs). The final rule includes a fixed fee for compensatory royalty agreements under ROW pursuant to subpart 3109 where the processing steps are the same for leases. The BLM added the following clarifying language to this provision in the final rule: “Leasing and compensatory royalty agreements applications under right-of-way pursuant to subpart 3109.” The BLM does not adopt the recommendation to require a fixed filing fee for CAs. The BLM explained in the preamble to the proposed rule that new fixed filing fees were considered for Federal CAs (§ 3105), Federal participating area applications (§ 3180), and royalty rate reduction applications (§ 3103), but it ultimately declined to propose these fees due to the low value and the public benefit related to these items. The BLM received suggestions that the Bureau clarify requirements for the fixed filing fee for designation of successor operator for Federal agreements, such that the fee would not be required when a successor operator is designated for contracted unit agreements that do not contain Federal lands. The BLM adopts the suggestion and has revised the Processing and Filing Fee table in this section of the final rule to include the following language: “Designation of successor operator for all Federal agreements, except for contracted unit agreements that contain no Federal lands.” The BLM also received several comments stating the BLM erred in adding the fee for EOIs to the fixed filing fee table, because these fees are adjusted for inflation every year; and section 50262(d) of the IRA expressly authorizes the Secretary to only adjust the EOI fee “not less frequently than every 4 years . . . to reflect the changes in inflation.” The BLM concurs with this comment and has moved the EOI fee to the new § 3103.1(a) where it will be adjusted based on inflation every 4 years. Another comment stated that the BLM did not explain its authority to impose an annual inflation adjustment and that for the annual inflation adjustment, the BLM must re-apply all of the factors set out in section 304(b) of FLPMA, make a new determination as to whether the fee warrants an adjustment, and similarly codify the determination via rulemaking every time a fee is adjusted. A similar comment asked the BLM to consider the disproportionate impact continued increases have on the total cost to develop Federal minerals. Section 304 of FLPMA, 43 U.S.C. 1734, authorizes the BLM to establish fees intended to reimburse the government for reasonable costs and authorizes the Secretary to change or abolish such fees. The BLM establishes fees based upon the reasonableness factors at section 304(b) of FLPMA, which include “actual costs (exclusive of management overhead), the monetary value of the rights or privileges sought by the applicant, the efficiency to the government processing involved, that portion of the cost incurred for the benefit of the general public interest rather than for the exclusive benefit of the applicant, the public service provided, and other factors relevant to determining the reasonableness of the costs.” Once the BLM establishes a fee, the BLM adjusts the fees for inflation annually to effectively keep fees in line with current costs. This process comports with the broad authority given to the BLM in section 304 to set reasonable fees. The BLM did not propose changes to this method, or how the fees are adjusted annually for inflation in this proposed rule. The BLM will not use an alternative method for annual fee adjustments as it would require collecting data periodically for each fee, which is inefficient, costly, and impractical. However, as recommended by the GAO, 5 the BLM did review the six factors, commonly known as “FLPMA reasonableness factors” in section 304(b), to account for changes in the leasing process since the fees were initially set. For the proposed rule, the BLM: (1) contacted each office with this type of application (the 10 state offices or all of the 40 field/district and state offices depending on the application type); (2) requested the offices to provide the average processing time for each type of application and the employee completing this work; (3) received the estimates from each office; (4) calculated the weighted average for each type of application; (5) reviewed the monetary value of the right or privilege that the applicant seeks; (6) evaluated how efficiently the BLM processes a document based upon the processing times; (7) reviewed the public benefit factor for the application; and (8) reviewed the public service factor for the application. The preamble to the proposed rule reflects this analysis of its fixed filing fees. Without the inflation adjustment that has existed since 2005, the BLM would instead be required to complete the same burdensome, eight step review under FLPMA for every subsequent update. 5 GAO. GAO-22-103968: OIL AND GAS LEASING BLM Should Update Its Guidance and Review Its Fees. https://www.gao.gov/assets/gao-22-103968.pdf. Furthermore, to verify the accuracy of the BLM's method for determining fees, the BLM reviewed a common oil and gas fixed filing fee—assignments and transfers—which has not experienced changes to the process since 2005. The BLM intentionally selected the assignment and transfer fixed filing fee as the most representative filing fee to review because (1) assignments and transfers are the most common application received by the BLM; (2) the other applications that require filing fees are more rarely used; and 3) all state offices are familiar with the assignment and transfer application. After completing the review of the assignment and transfer fixed filing fee for the proposed rule, the BLM compared the outcome of that review with the inflation adjustments (86 FR 54636 (Oct. 4, 2021)). The review identified that the assignment and transfer fixed filing fee should be $100 in FY2022 based upon the FLPMA factors. This amount matched the inflation-adjusted fixed filing fee for FY2022, which was also $100. Therefore, the FY2022 inflation adjustment matched the calculated fixed filing fee based upon the FLPMA factors in FY2022. If the BLM's review process changes for an application, and thus there is the potential that reasonable costs may change outside of the cost of inflation, the BLM would update the fixed filing fees based upon the FLPMA factors and provide the opportunity for notice and comment. Finally, the BLM requested comments related to changing its current process, which requires publishing the annual fee adjustments as a final rule in the Federal Register and then incorporating the new fees in the Code of Federal Regulations (CFR). Instead, the BLM proposed to post the updated table on the BLM's web page with the historical fees posted in the same location. Commenters stated that since the fixed filing fees are not subject to appeal, the BLM should remove this provision; that adjustment of the fees should include a notice and comment period; and that the BLM should continue to publish the annual fee adjustments in the Federal Register . The BLM is updating the final rule to state that the BLM will “announce annually in the Federal Register ” revised fees, as well as posting the fees to the website. The BLM initially promulgated the fixed filing fees in 2005 after conducting a notice-and-comment rulemaking. Each year since, the fees have been adjusted for inflation through a final rule without further notice and comment. This is because the BLM included the method used to calculate inflation in its proposal in 2005, and the same method has been used for each subsequent increase. As stated in the proposed rule, the BLM will follow this same procedure for any new fees. For example, the BLM will: (1) publish a proposed rule with information on the proposed fee and propose to adjust the fee based on inflation; (2) review the comments received on the proposed rule for the new fixed filing; (3) publish a final rule with the new fixed filing fee; and (4) adjust the new fixed filing fee based upon inflation without notice and comment for any subsequent increases. This process negates the need for notice and comment every time the BLM adjusts the fee solely for inflation. These periodic inflation adjustments are not subject to appeal. Additionally, as stated above, if the BLM's review process for any application changes, and thus there is the potential that the BLM's reasonable costs may change outside of the cost of inflation, the BLM would review the FLPMA factors to update the fixed filing fees and provide the opportunity for notice and comment. The BLM adopts the proposed change to publish the fixed filing fees on the BLM's web page and to publish the adjusted fees each year in the Federal Register to provide additional public notice. The table in this section will still contain a list of the types of applications that require a fixed filing fee, but the fee itself will be removed from the table so it does not become outdated as each subsequent adjustment for inflation is made. In addition, the BLM modified the regulatory text to reflect that the table in 3000.120 does not include the actual fee amounts. When fees are added, deleted, or need to be adjusted due to changes in the processing steps for the application or a change to the method to calculate the inflation adjustment amount, the BLM will do so by a notice and comment rulemaking. Section 3000.130 Fiscal Terms of New Leases The provisions within § 3000.130 only apply to oil and gas leasing; therefore, the BLM moved the fiscal terms for new leases to a new section under subpart 3103 for Fees, Rentals and Royalty in the final rule in response to comments stating that failure to specify the rental amounts, within the context of the regulation on annual rentals, would be a disservice, detracting from the regulations' value as an orderly source for basic information. 2. Section-by-Section Discussion for Changes to 43 CFR Subpart 3100 The BLM received a recommendation to reference its legal authority and duties under FLPMA and NEPA in all authority citations in the regulation. The BLM concurred in part and added a full reference to FLPMA into the authority introduction to the regulatory text, which changes “43 U.S.C. 1732(b), 1733, and 1740” to now state, “43 U.S.C. 1701 et seq. ” This update was only made to part 3100 since the other authority references already include a reference to FLPMA. The BLM did not add NEPA into the authority section, as NEPA does not provide the BLM with any authority for leasing. Section 3100.3 Authority The existing § 3100.0-3 sets out the BLM's authority for leasing on various types of lands, such as public domain land and acquired lands. During the comment review period, the BLM decided to add clarifying language in the final rule on Wild and Scenic Rivers to comply with the Wild and Scenic Rivers Act (16 U.S.C. 1280). Therefore, the final rule makes the following adjustments to the language for the Wild and Scenic Rivers exceptions listed under both Public Domain and Acquired lands: “subject to valid existing rights,” is moved to the beginning of the sentence to clarify that this applies to all types of National Wild and Scenic Rivers Systems lands. The following clarifying language is added to the end of the sentence “lands within designated Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-quarter mile of the bank of certain rivers designated as scenic or recreational, and in some cases, designating legislation may apply a different boundary extent. Lands within the National Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-half mile of the bank of any river designated a wild river by the Alaska National Interest Lands Conservation Act (16 U.S.C. 3148).” The BLM received a comment on paragraphs (a)(1) and (b)(1), suggesting that the BLM change the phrase “are subject to lease” to “may be subject to lease” to align with the discretion afforded the Interior Secretary under the MLA, 30 U.S.C. 226(a), that lands “may be leased.” The final rule does not adopt this recommendation. In 1920, Congress enacted the MLA to facilitate the exploration and development of oil and gas and other federally owned minerals. The MLA specifies the lands that are subject to the statute, and then provides discretion to the Secretary to determine which of those lands may be leased. The first step in exercising that discretion is making decisions in the BLM's resource management plans under FLPMA. The BLM declines to change this phrase so as not to confuse this section on the authority to lease, including the exceptions listed under both public domain and acquired lands, where there is no discretion to lease ineligible lands. A comment recommended that paragraphs (a)(2) and (b)(2) rely solely on the subhead—Exceptions—to indicate what the provisions in the sections mean and, for clarity, that the BLM should consider inserting language to the effect of: “The following lands are not subject to lease.” The final rule adopts this recommendation. The BLM received a comment requesting that the BLM identify additional exceptions for both public domain and acquired lands. This exception would specify that the BLM cannot lease lands identified in the land use plans as unavailable for oil and gas leasing or otherwise determined by the authorized officer to be inappropriate for leasing to protect other multiple use resources and values. The final rule does not adopt this recommendation. As stated in the proposed rule, the purpose of this section is to describe lands subject to leasing, and changes proposed to this section were made to provide clarity and to conform the regulations to exceptions identified in various other laws. The change requested by the comment does not meet this requirement, as the comment addresses discretionary decisions regarding leasing. Moreover, the concerns represented by this comment are already addressed in the BLM's land use planning process, NEPA reviews, and other processes that identify suitable areas for leasing. Section 3100.5 Definitions The existing § 3100.0-5 sets out the definitions applicable to part 3100. The BLM added new proposed definitions for “competitive auction,” “exception,” “modification,” “oil and gas agreement,” “qualified bidder,” “qualified lessee,” “responsible bidder,” “responsible lessee,” and “waiver.” The BLM received several comments on this section requesting additional definitions for “bad actors,” “current land use plan,” “exclusion area,” “mitigation,” “permanent impairment,” and “preferred leasing area.” Since these terms are not used in parts 3000, 3100, and 3120, the BLM has not adopted these recommendations. In addition, a comment recommended adding a definition for “restoration.” The BLM declines to make this change given that § 3104.10, where this term is used, specifically states that the restoration is to be “in accordance with, but not limited to, the standards and requirements set forth in 43 CFR 3162.3 and 3162.5 and orders issued by the authorized officer.” This flexible definition does not warrant modification at this time. Some comments recommended that the BLM expand the definitions in this section to include the terms “eligible” and “available.” The BLM declines to define those terms by regulation at this time and may revisit the issue in future rulemakings. One commenter requested that the BLM remove the definition for “modification” to avoid confusion where this term is used in contexts other than changes to lease stipulations. The BLM agrees there is a potential for confusion given the numerous different contexts in which the word “modification” is used and has therefore revised the definition to clarify that it only applies to lease stipulations. For similar reasons, the BLM has made changes to “exception” and “waiver” in the final rule. Each definition now includes the phrase “as used for lease stipulations.” A comment recommended modifying the term “oil and gas agreement” to reflect the fact that an agreement may in some instances include unleased lands. The BLM adopts this recommendation. The BLM received a comment suggesting that the term “operator” should be revised to explicitly state that the operator holds operating rights and thus has the same obligations as the operating rights owners to plug wells and remediate the well sites. The BLM does not concur with the recommendation, as an operator could be a lessee and may or may not own operating rights. The current definition for “operator” states, “including, but not limited to, the lessee or operating rights owner, who has stated in writing to the authorized officer that it is responsible under the terms and conditions of the lease for the operations conducted on the leased lands or a portion thereof.” Therefore, the BLM kept the existing definition of “operator” in the final rule. The BLM received several comments on the proposed definitions for the terms “qualified bidder,” “qualified lessee,” “responsible bidder,” and “responsible lessee.” Those comments that supported the inclusion of these new definitions suggested modifications that would also exclude from those terms anyone with a history of failing to make timely rental or royalty payments; failing to meet a diligent development obligation; maintaining a significant number of inactive wells; engaging in repeated or ongoing environmental, worker safety, or labor violations; violating State reclamation requirements on other leases; or engaging in lease speculation, such as failing to drill approved APDs, or holding large quantities of undeveloped leases. The BLM declines to include this language, which is too vague and overlooks existing enforcement tools. For example, when a company fails to make timely payments, such as rental payments, the Act already dictates that the lease will automatically terminate through operation of law. In addition, if a company fails to make royalty payments after being notified such payments are due and exhausting its legal remedies, the Office of Natural Resources Revenue (ONRR) may refer an entity to the Federal suspension and debarment list. It is the BLM's policy to check SAM.gov (the Federal suspension and debarment site) before issuing a lease or approving an entity to acquire a lease interest through an assignment or transfer of operating rights. The BLM may also take enforcement actions when lessees violate the terms of a lease, including environmental, worker safety, or labor standards. The BLM does not agree that a company's decision to not drill a well or develop leases should determine if they are responsible or qualified, because such fact-specific business decisions do not, by themselves, determine whether a lessee has acted irresponsibly or incompetently. The BLM generally lacks the capacity to investigate and evaluate State law reclamation violations; however, the current definition for responsible lessee provides for the lessee to be in compliance with statutes applicable to oil and gas development. While it is not the BLM's practice to investigate a person's compliance with State law reclamation requirements, the BLM would not ignore a person's noncompliance when it has been brought to the BLM's attention for consideration if a person is a responsible lessee prior to lease issuance. Other comments suggested that, in connection with these definitions, the BLM should: (1) create a public registry of individuals and companies currently identified as not being responsible bidders and/or lessees, and make the list of “Entities in Noncompliance with Reclamation Requirements of section 17(g) of the MLA” public and updated on a regular basis; (2) clarify, in § 3108.30, that leases are subject to cancellation if the lessee is found not to be a “qualified lessee” or a “responsible lessee”; and (3) implement a system that allows States, local government, Tribal governments, and individuals to report behavior or conduct that warrants investigation. The BLM updates the list of “Entities in Noncompliance with Reclamation Requirements of section 17(g) of the MLA” on an as needed basis, and then forwards the names of the entities to the Federal Government's suspension and debarment program. SAM.gov is a publicly available website. In turn, when a company returns to compliance, the BLM notifies the suspension and debarment program that the entity should be removed from SAM.gov. The cancellation provisions in § 3108.30 contains language for entities that fail to comply with the laws and regulations. The BLM also notes that any entity or individual can contact the BLM to report behavior or conduct that warrants investigation, and the BLM declines to create a separate regulatory system for this purpose at this time. The BLM also received comments regarding the new definitions for “qualified bidder,” “qualified lessee,” “responsible bidder,” and “responsible lessee.” One comment suggested that the term “qualified bidder” does not take into account that brokers or non-operating partners bid on leases, and that the new term could substantially impede bidding if it were to mandate that bonding or similar bidder requirements that historically only applied to a lessee be in place prior to bidding. The BLM considered the involvement of brokers or non-operating partners when it drafted these definitions, which is evidenced by the separate definitions for “qualified bidder” and “responsible bidder”, as well as to whom the lease is issued (“qualified lessee” and “responsible lessee”), since these may not be the same entities. In addition, there is no mandate, in either the proposed or final rules, for bonding or similar requirements prior to bidding. Another comment suggested that the BLM should clarify in the definitions (and in proposed § 3102.51) that it will continue to adhere only to the factors in MLA section 17(g), 30 U.S.C. 226(g), in determining who may hold a lease. The BLM disagrees. The MLA, 30 U.S.C. 226(b)(1)(A), refers to responsible qualified bidders and specifically states that: “[a]ll lands to be leased which are not subject to leasing under paragraph (2) shall be leased as provided in this paragraph to the highest responsible qualified bidder by competitive bidding under general regulations in units of not more than 2,560 acres, except in Alaska, where units shall be not more than 5,760 acres.” The MLA also states that “[t]he Secretary shall accept the highest bid from a responsible qualified bidder which is equal to or greater than the national minimum acceptable bid, without evaluation of the value of the lands proposed for lease.” The BLM's regulations reiterate and rely on these statutory terms. Specifically, because a person who bids on a lease is not necessarily the same person to whom the lease is issued, it is appropriate to include definitions for “qualified bidder” and “responsible bidder,” as well as definitions for whom the lease is issued, i.e., “qualified lessee” and “responsible lessee.” Another comment on the definitions for “responsible bidder” and “responsible lessee” questioned the inclusion of the phrase “history of noncompliance” with applicable regulations and lease terms, stating that the meaning of a “history of noncompliance” is unclear. The comment suggested that the phrase could be construed broadly to mean that, if a person ever was found to have been in noncompliance with the terms of its Federal oil and gas lease or applicable regulations, that person could be precluded from obtaining future Federal lease interests, even if they corrected the alleged noncompliance or disputed the alleged violation and won. The BLM agrees the term is imprecise and has revised the definitions by changing the phrase “does not have a history of noncompliance” to “is in compliance.” A lessee would not be precluded from obtaining future Federal lease interests if it corrected the noncompliance. A lessee's noncompliance ends: (1) when the entity has paid all civil penalties and performed the required reclamation; (2) the BLM accepts the required reclamation performed under contract, and the entity reimburses the U.S. for all costs associated with the required reclamation, including the costs associated with the BLM's issuing and overseeing the performance contract during its life; and (3) if the bond is collected and is insufficient to cover the total costs, the entity pays the entire amount due to the U.S. and the BLM accepts compliance. This is outlined in the BLM handbook H-3120-1, Competitive Leases, Appendix 4. 6 6 https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_h3120.pdf. The BLM proposed to separate the definitions for “assignment” and “sublease” from the current definition of “transfer” in the existing regulations. One comment stated that a greater understanding of the differences between assignment and transfer of operating rights is long overdue. Another comment stated that the BLM's definitions for “assignment” and “transfer” have corresponding, but different, meanings; that the Bureau of Ocean Energy Management (BOEM) recently issued a proposed rule stating that the terms are interchangeable; and that the BLM should ensure consistency and clarity in use of these terms between the two bureaus regulating Federal oil and gas leasing onshore and on the Outer Continental Shelf. The BLM reviewed its definitions and believes the two terms are distinct and should remain separate. An assignment of record title conveys both record title and operating rights and is limited under § 3106.10 to certain restrictions that do not apply to transfers. The BOEM regulations do not have this distinction, which is why the BLM is retaining the separate definitions. Comments recommended adding a definition for “unnecessary or undue degradation.” The BLM declines to define this phrase in this rule because it is used only once, in § 3120.32, and such a definition would benefit from public input before promulgation. As used in § 3120.32, the phrase reflects the ordinary meaning of the terms used in section 302(b) of FLPMA. Section 3100.22 Drilling and Production or Payment of Compensatory Royalty The existing § 3100.2-2 addresses drainage protection, an express covenant of the lease agreement. Under the terms of Federal leases, the lessee has the obligation to protect the leased land from drainage by drilling and producing any well that is necessary to protect the lease from drainage, or, in lieu thereof and with the consent of the authorized officer, by paying a compensatory royalty assessment to the Federal government. The BLM did not propose changes to this section but did receive a comment stating that the BLM should consider using this opportunity to amend this section to (1) clarify when drainage involving two Federal leases with different fund distribution codes occurs; and (2) specify that the lessee may resolve drainage by creating a federally approved agreement for sharing production among the affected leases. These proposals already reflect current policy; refer to the BLM Manual Section 3160, Drainage Protection Manual. 7 The Drainage Protection Manual provides guidelines, standards, and procedures to prevent the loss of oil and gas resources and any resulting loss of royalty revenues from drainage on leased and unleased public domain, acquired, and Indian lands. The BLM does not believe changes are needed to this section since these proposals are already allowed under the current regulations to address possible solutions to drainage. 7 BLM. MS-3160, Drainage Protection Manual (Public). https://www.blm.gov/sites/blm.gov/files/uploads/mediacenter_blmpolicymanual3160.pdf. Section 3100.40 Public Availability of Information The proposed rule stated that the BLM was considering adding language that would provide notice that names and addresses of the nominator, lessee, operating rights holders, and operators would be made public on the BLM's Mineral & Land Records System (MLRS). The BLM's lease and agreement case files are already public records, and any change to the existing § 3100.4 would merely reflect the BLM's current practice. The BLM received comments supporting additional changes to this section, stating that it should be made clear to nominators, lessees, operating rights holders, and lessees that their identities will be made public through the MLRS rather than the current practice, which requires a member of the public to be at the BLM state office to submit a paper request to document the case file. The BLM will continue to release the names and addresses of nominators, lessees, operating rights holders, and lessees to the extent allowed by the Privacy Act to ensure there is a transparent onshore leasing process and does not believe any further changes to this section are needed. The names and addresses of individuals were redacted from all reports, including Serial Register Pages, as a result of a recent privacy review. The redacted information only applies to individuals (MLRS personal accounts) and not companies (MLRS business accounts). Specifically, the privacy review determined that all personal accounts regardless of type of case are considered to contain Personally Identifiable Information (PII). In order to release this PII—specifically names and addresses that are collected of our applicants/interest holders—the BLM must meet two requirements. First, the BLM must establish and disclose a routine use for the information—which, in other words, is establishing that the public need and benefit outweighs the need for the protection of the privacy information and notifies that the PII may potentially be released. This has been completed by disclosing the routine uses contained in BLM System of Records Notice (SORN) LLM32 in accordance with the Privacy Act. The SORN LLM32 is for Lands & Minerals Authorization Tracking System and covers the data from both LR2000 and MLRS. Most requests made in the Information Access Center at the state offices fall under routine use number “(2) to Federal, State, or local agencies or a member of the general public in response to a specific request for pertinent information.” Second, to meet Privacy Act requirements, the BLM must be able to track who received the information, when, and for what purpose to satisfy the Privacy Act's requirement that the information was released in accordance with a “specific request for pertinent information.” A member of the public can create an MLRS account to view unredacted information. This log in method allows for the BLM to meet this requirement through a logging system. The BLM received a comment stating that the BLM provides no justification for publishing information on all entities registered to bid during a lease sale, rather than providing this information only for issued leases. Publishing participants in oil and gas lease sales has been a long-standing Bureau policy to provide transparency in the competitive leasing process. Refer to H-3120-1 Competitive Leases handbook, published February 2013. 8 This policy specifically states, “Names of bidders/high bidders remain confidential until the end of the sale.” In addition, each Notice of Competitive Lease Sale provides adequate notice that the names and addresses of bidders will be released and no further changes to the lease sale process are needed. 8 BLM: H-3120-1, Competitive Leases handbook. https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_h3120.pdf. Another comment stated that the final rule should also authorize researchers to use lease and production data to analyze market-level royalty, bid, and rental rates. The comment then stated that independent, professional analysis would provide the BLM with critical data on the appropriate market-level rates for Federal mineral charges. In addition, the commenter also stated that the final rule should authorize the BLM to provide a quarterly report to the public on all revenues received from leasing and mineral production on Federal lands on a lease-by-lease basis, and as the ultimate owners of the lands and minerals being leased, the public has a right to know this information. The BLM makes lease information, including lease terms such as rental rates and royalty rates, available through the MLRS; however, because the amount of royalty is a function of production and proprietary data is confidential, the royalty amount the Federal government receives cannot be released on a lease-by-lease basis. The public may obtain general information on production data, rental, and royalty payments from the ONRR. Section-by-Section Discussion for Changes to 43 CFR Subpart 3101 Section 3101.12 Surface Use Rights The proposed rule revised the existing § 3101.1-2, which was originally promulgated in 1988, to provide that the BLM could impose reasonable measures under the lease terms to avoid, minimize, or mitigate adverse impacts to other resource values, land uses or users, federally recognized Tribes, and underserved communities. Those reasonable measures include site-specific minimum siting and timing parameters that the BLM may impose on lessees to protect the public interest. The BLM received numerous comments on this section, including: (1) support for the proposed changes, and statements that the changes are critical to mitigate impacts when the relevant RMP is outdated; (2) requests for clarification that leases are contingent on NEPA analysis and not a lessee's expectation; (3) requests for clarification that a lessee's surface use rights are subject to a land use plan's term, including terms provided for by land use plans either revised or amended after a lease is issued; and (4) requests for the BLM to clarify that the agency retains its full authority to condition development and production on leases after the lease is issued in order to respond to findings of site-specific NEPA analyses or changing conditions between the time a lease is issued and when it is developed. These changes are unwarranted as the BLM has the authority to impose measures that are more stringent than those in the regulations as long as they constitute reasonable measures to minimize adverse impacts, Yates Petroleum, 176 IBLA 144, 156 (2008). Therefore, the BLM is not revising this section further based on these comments, many of which request unwarranted or unnecessary clarification or specificity that would exceed the scope of this rulemaking. Some comments opposed the proposed changes to this section, including by asserting that: (1) distance/siting requirements could lead to the BLM exceeding its authority to regulate air quality; (2) the BLM did not reference a lease provision that grants the agency the proposed new authority to constrain or deny lease operations; and (3) the BLM should consider public welfare when determining which measures may be reasonable. The BLM has the authority to use terms and conditions under Section 6 of the standard lease form to control site-specific environmental or public welfare impacts on leaseholds, as opposed to using lease-specific protective measures in lease stipulations from the RMPs. 9 Section 6 of the standard lease form authorizes the BLM to require “reasonable measures” to the extent that such measures would be consistent with the lessee's lease rights. The existing regulation has been misconstrued as limiting the BLM's authority to establish reasonable measures to protect resources and to establish minimum parameters within which the BLM can specify site-specific mitigating measures that are consistent with the lease rights granted a lessee. 9 Stipulations are additional specific terms and conditions that change the manner in which operations may be conducted on a lease or modify the lease rights granted. Comments requested (1) the removal of language that arguably suggests that the BLM could require a lessee to “avoid” or “mitigate” all adverse impacts of developing mineral rights; and (2) that the final rule specify how water sources will be protected. The BLM has revised this section by clarifying that not all surface impacts must be mitigated and by clarifying the distance the BLM may require operations to be moved. The final rule strikes the words “avoid, minimize, or” since this is not needed as avoidance and minimization are integral to mitigating adverse impacts. Some comments requested changes to require the relocation distances to be either a maximum of or be at least 1 mile and requested the BLM to prohibit new surface disturbing operations. The language in this section has been in place since at least 1988 and does not prohibit new surface disturbance. The BLM proposed to change only the minimum siting and timing parameters to account for changes in technology. The BLM declines to further increase or set a maximum parameter as this would not allow the flexibility that may be required to avoid resource conflict. The final rule amends the last sentence of the section to clarify the intent of the proposed rule. The proposed rule removed the phrase “At a minimum” from the existing regulations but retained the phrase “by more than.” The final rule is amended to state, “At a minimum, modifications that are consistent with lease rights include, but are not limited to, requiring relocation of proposed operations by up to 800 meters,”, which allows the BLM to require a lessee to relocate proposed operations by up to 800 meters to avoid a resource conflict that may not have been identified at the time the BLM issued the lease. For example, the BLM may need to move operations to avoid a sage grouse lek, a contingency that may not be encompassed by standard lease terms. In that circumstance, this provision would allow the BLM to move the operations up to 800 meters to minimize the impacts to the sage grouse lek. As stated in the 1988 final rule preamble for the existing regulations, “Similarly, the authority of the BLM to prescribe “reasonable,” but more stringent, protection measures is not affected by the final rulemaking,” see 53 FR 17341 (May 16, 1988). This section does not apply to the protection of resource values that are already addressed in lease stipulations. Comments requested that the BLM strike the word “specific” as a modifier for “nondiscretionary statutes” that provide post-lease restrictions on surface use rights. The final rule adopts the recommendation to strike the word “specific” as a modifier to nondiscretionary statutes. Comments stated that the language explicitly allowing a BLM officer to restrict the development of a project to proactively avoid impacts to “land users” or “underserved communities,” is improper because, the commenter contended, such language is vague and would improperly expand the BLM's authority, potentially encroach upon a lessee's lease rights, and cause uncertainty. Other comments requested that the BLM add “overburdened and” before “underserved communities” in the final rule, and that the BLM better specify procedures the BLM could use to protect multiple use standards and Native Americans' land rights in areas near reservations. For the reasons explained below, the BLM does not agree with these comments and retains its proposed language to proactively avoid impacts to “land users” or “underserved communities.” The term “land users” is already used in the existing 43 CFR 3101.1-2 and is specifically included in Section 6 of the standard lease form. This term identifies segments of the public that use the land for recreation or for economic growth in the community. Like the term, “resource values”—which the BLM's regulations do not define—the term “underserved communities” has a straightforward and commonly understood meaning that would not benefit from elaboration here, and the BLM has an obligation under the MLA and APA to articulate a rational connection between underserved communities and the proposed operations, as modified by the BLM. Based on the above, the BLM declines to modify or remove either “land users” or “underserved communities.” Section 3101.13 Stipulations and Information Notices The BLM proposed to split the existing § 3101.13 into two separate provisions and add a new paragraph (a), stating the BLM would consider the sensitivity and importance of a resource when developing stipulations without regard to the restrictiveness of the stipulation. One comment on this section recommended that the consideration of affected resources and potential uncertainty be made mandatory by substituting “shall” or “must” for “may” in the final rule text to remove any uncertainty. The BLM declines to make this change so as to maintain discretion when considering potential stipulations. The BLM requires this discretion because the BLM need not consider every potentially affected resource for each parcel. Instead, the BLM will use its discretion to determine, based on the sensitivity, importance, and any uncertainty, which resources should be considered, and will then assess whether those resources are adequately protected by stipulation. Some comments stated that the BLM should delete the proposed paragraph (a) 10 , arguing that the language is subjective and would allow the inclusion of new stipulations that were not addressed in the underlying planning documents. Some comments stated that proposed paragraph (a), and in particular the phrase “without regard to the restrictiveness of the stipulation,” disregards the principle of multiple use by elevating certain uses or allows the BLM to essentially prevent oil and gas operations. Another comment recommended changing the phrase “without regard” to “along with consideration.” 10 Proposed regulation text at 43 CFR 3101.13(a): “The BLM may consider the sensitivity and importance of potentially affected resources and any uncertainty concerning the present or future condition of those resources and will assess whether a resource is adequately protected by stipulation without regard for the restrictiveness of the stipulation on operations.” As stated in the proposed rule, the BLM added this paragraph to more explicitly recognize its mandate to manage the Federal lands for multiple use. Stipulations do not prevent oil and gas operations from occurring under a lease. Rather, stipulations that allow, but control, surface use are a valuable management tool to achieve balanced multiple resource use, including oil and gas development. As stated above, the BLM retains discretion in this section and will rely on its expertise when making these site-specific decisions regarding stipulations. Consistent with these objectives, the BLM agrees that the bureau should consider the restrictiveness of a stipulation on operations. In the final rule, the BLM deletes the phrase “without regard for” and inserts instead “while considering” to recognize the BLM's mandate to manage the Federal lands for multiple use and to provide for the protection of the resources on those lands. The BLM also received a comment on proposed paragraph (c), which specified that the BLM may attach an information notice to the lease. That comment requested that the BLM remove the last sentence in the paragraph—which reads, “Information notices may not be a basis for denial of lease operations”—because it undermines the BLM's management authority. Another comment recommended that this paragraph incorporate a requirement that information notices highlight potential conflicts with other resource values and be accompanied by full lease stipulations specifying how those conflicts will be resolved. The final rule does not adopt these recommendations, as the information notice is a method of informing lessees of requirements that may be imposed by an existing law or regulation, not of imposing new requirements. Finally, the BLM received comments recommending the development of specific stipulations and considerations for all leases, including a no surface occupancy within 2 miles of developed recreation sites and a 1-mile no surface occupancy from key recreation areas. The BLM disagrees and declines to adopt one-size-fits-all stipulations for all leases. The BLM historically has identified the appropriate stipulations through RMPs, ensuring that the BLM ties the appropriate stipulations to the lease under consideration. That approach allows the BLM to develop and set forth lease stipulations in the land-use planning documents/RMPs so that the public is aware of the balance that will exist between environmental protection and opportunities for development of oil and gas resources in advance of offering the lands for lease. Section 3101.14 Modification, Waiver, or Exception This section describes the standards that the BLM will use when evaluating modifications, waivers, or exceptions. The BLM proposed changes to the existing § 3101.14 to more explicitly recognize its mandate to manage the Federal lands for multiple use and to provide for the protection of the resources on those lands. The proposed rule also split the existing provision into two components: one to address modifications prior to lease issuance and one for modifications after lease issuance. The BLM received multiple comments on the BLM's proposed approach. For example, comments: (1) expressed concern that the language broadened the ability of surface management agencies to object to the inclusion of parcels in an oil and gas lease sale; (2) requested a revision to paragraph (a) to state that requests for modification, waivers, or exceptions would not be posted for public comment; (3) suggested the BLM should clarify that this paragraph does not alter or affect criteria for modification, waivers, and exceptions of stipulations in the BLM's RMPs; (4) suggested that the proposed rule introduced new subjective standards, such as a “major concern to the public;” and (5) recommended that the BLM should not remove the language “or if proposed operations would not cause unacceptable impacts,”, since, in the commentors' view, that edit would curtail the BLM's flexibility for addressing circumstances where the BLM's granting of the modification or waiver would not result in unacceptable impacts. After consideration of these comments, the final rule splits paragraph (a) into two paragraphs for clarity. The first sentence in proposed paragraph (a) now appears at the end of the section in new final paragraph (d), since modifications, waivers, and exceptions to a stipulation are considered later at the APD stage, not at the leasing stage. The restructuring of this provision addresses concerns that the paragraph alters or affects criteria for modification, waivers, and exceptions of stipulations in the BLM's RMPs. As stated in the proposed rule, the BLM removed the existing provision—allowing the granting of modifications, waivers, or exceptions to lease stipulations if the authorized officer determines that the “proposed operations would not cause unacceptable impacts”—because this authority has been overused 11 and has potentially led to unnecessary adverse environmental impacts. 11 See, e.g., GAO-17-307, https://www.gao.gov/products/gao-17-307. The BLM has concluded that it is appropriate to exempt situations based on time-sensitive information from the review requirement. For example, if a survey is completed for nesting raptors and it can be confirmed that there are no raptors present, then an exception from a timing stipulation based on the presence of nesting raptors would be appropriate. However, if the 30-day review period applied, the conditions would no longer be in effect to support the exception. Final paragraph (a), which applies to lease terms and stipulations, now states, “If the authorized officer determines that a change to a lease term or stipulation is substantial or a stipulation involves an issue of major concern to the public, except time-sensitive exceptions based on verified data, the changes will be subject to public review for at least 30 calendar days.” As stated in the proposed rule, the BLM would consider a change to the lease terms to be substantial if the change would have an important, considerable, consequential, major, or meaningful effect on the environment that was not previously considered, thus requiring public notification (30-day public review) of a lease term or stipulation. The language in this section does not broaden surface management agencies' ability to object to the inclusion of parcels in an oil and gas lease sale, because lands requiring the consent of other surface management agencies is addressed under § 3101.51. This rulemaking does not introduce new subjective standards. Language such as a “major concern to the public” appears in existing regulations and has not caused issues. One commenter stated paragraph (b) presents potential disruption to the competitive lease sale process as all lease conditions or stipulations must be disclosed prior to a lease sale. The BLM revised this paragraph to reflect IBLA decisions, which have stated that if a lease is issued without prior notice of an additional stipulation, the stipulation is not binding on the potential lessee and is without effect in the absence of the potential lessee's acceptance of the stipulation, see Emery Energy, Inc, 64 IBLA 175 (1982). While this rarely occurs, the purpose of this section is to allow the BLM to correct errors made when preparing the Notice of Competitive Lease Sale. Moreover, the MLA vests the Secretary with broad discretion to decide, up until the time of lease issuance, whether particular parcels of Federal land “may be leased” for oil and gas development, see 30 U.S.C. 226(a). Under the final rule, the BLM may decide not to issue a lease if the modification of a stipulation could increase the value of a parcel. For example, if the Notice of Competitive Lease Sale incorrectly listed a parcel as subject to a no-surface-occupancy stipulation, and it is then realized that the parcel should not have been subject to that limitation, but this mistake is not caught until after the sale, this could increase the value of the lease. To ensure a fair return to the public, the BLM would decline to issue the lease and would offer the parcel in a future lease sale. The competitive bidding process would ensure that the BLM receives the appropriate bid for the parcel with the modified stipulation. One comment on paragraph (c) recommended striking the phrase “was inadvertently omitted,” and adding “to comply with a nondiscretionary legal requirement, or to address an adverse effect that was not reasonably foreseeable at the time of lease issuance or whose analysis was otherwise expressly deferred to the site-specific proposal stage,” and changing “may” to “will” in reference to lease cancellation. These recommendations would substantially change the meaning of the paragraph, which was intended to address situations when the BLM inadvertently omits a stipulation when preparing parcels for a lease sale. The intent of the modified language is to reflect IBLA decisions on this issue. The BLM has not made any changes based on this comment. Section 3101.21 Public Domain Lands The BLM did not propose any changes to the existing § 3101.2-1; however, the BLM received a comment stating that the BLM should not only rely on the section title to convey to readers that the language in the section applies to public domain lands (whereas the next section applies to acquired lands). The BLM concurs with this recommendation and inserts in final paragraph (a) “on public domain lands.” Section 3101.22 Acquired Lands The BLM did not propose any changes to the existing § 3101.2-2; however, the BLM received a comment stating that the BLM should not only rely on the section title to convey to readers that the language applies to acquired lands. Another comment stated that the BLM should specify that the acquired lands limitation is separate from, and in addition to, the limitation for public domain lands. The BLM concurs with these recommendations and inserts in final paragraph (a) “on acquired lands” as well as “separate from, and in addition to, the limitation for public domain lands.” Federal Lands Administered by an Agency Other Than the Bureau of Land Management Because of other proposed changes to part 3100, the BLM proposed to redesignate and consolidate the provisions under this heading. The BLM received several comments suggesting that the new definition for “surface management agency” under § 3000.5 of this chapter, which includes Interior agencies such as the Fish and Wildlife Service and the Bureau of Reclamation, conflicts with and causes confusion with the provisions under this heading. The BLM concurs and changes the title of this heading from “Federal Lands Administered by an Agency Outside of the Department of the Interior” to “Federal Lands Administered by an Agency Other than the Bureau of Land Management.” Section 3101.51 General Requirements and Section 3101.52 Action by the Bureau of Land Management The BLM received numerous comments on proposed revisions, which, collectively, would replicate several paragraphs in the existing regulations requiring the BLM to seek and, in some cases, obtain the consent of surface management agencies prior to leasing acquired or public domain lands into one paragraph. Some comments supported the change. Several comments opposed the change, asserting that it expands the authority of some surface managing agencies, such as the Fish and Wildlife Service and the Bureau of Reclamation, beyond that which is provided under the applicable statute. The BLM disagrees that the proposed change improperly expands the authority of certain surface management agencies, such as the Fish and Wildlife Service. Instead, this change merely consolidates and clarifies the BLM's duties with respect to prohibitions provided elsewhere in statute or regulation. The BLM has a longstanding practice of consultation with all Federal surface management agencies before authorizing subsurface mineral leasing. For example, the existing regulation at 43 CFR 3101.7-1 recognizes that in some cases the Secretary may lease over the objection of the surface management agency and in other cases the Secretary may not. Moreover, even where consent is statutorily required, such as on Forest Service lands, the MLA directs that the Secretary of the Interior the Secretary of the Interior ultimately must apply their independent judgement before any leasing may occur. The proposed regulation merely supplies the BLM with the uniform procedures necessary to facilitate these preexisting prohibitions and grants of discretion; it does not enlarge or restrict the BLM's authority. The BLM has added a clause to § 3101.52(b) to clarify that a lack of consent or concurrence will preclude leasing only where provided by law. The BLM has also made certain minor changes for clarity. Commentors stated that, under the MLAAL, 30 U.S.C. 352, only the head of an executive department has the authority to consent to leasing covered by that statute, such that it necessarily does not embrace “consent” by subdivisions of the DOI. The BLM agrees, particularly because the Department's sub-agencies ordinarily enjoy their authority only be virtue of delegation from the Secretary. As set forth above, the proposed text does not alter the balance of authority and discretion among agencies within the Department, but instead simply clarifies that the BLM shall, as a procedural matter, confer with surface management agencies. Section-by-Section Discussion for Changes to 43 CFR Subpart 3102 Section 3102.20 Non-U.S. Citizens The BLM proposed to revise the existing § 3102.2 to remove the reference to the outdated term “alien.” The BLM received a comment stating that this section should be amended to include more stringent language that would require prospective, non-U.S. citizen bidders, lessees, or interest holders to submit to the BLM a certification of compliance with Federal foreign ownership laws and procedures, including the final rule from the Office of Investment Security, Department of the Treasury, implementing the provisions relating to real estate transactions in section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018, prior to the BLM granting such entities a lease. The BLM declines to adopt this change, which is unnecessary. In 1982, the BLM eliminated the requirement for entities to submit documents substantiating their qualifications to hold a lease or an interest in a lease and now requires entities to certify their compliance, including those relating to foreign investment in Federal land, on the lease or assignment application. Any false statements on these documents are subject to the criminal sanctions in 18 U.S.C. 1001 (see 47 FR 8544, February 28, 1982). Section 3102.40 Signature The BLM proposed changes to the existing § 3102.4 to clarify that it applies to all applications submitted to the BLM and to allow for electronic signatures. The BLM received a comment in support of the proposal to remove paragraph (b) from this section. The commenter also said the BLM erred, as the submission of three hard copies of any transfer of record title or operating rights is required by the MLA. 30 U.S.C. 187a. The BLM agrees and makes the appropriate changes to the final § 3106.41. The BLM declines to reinstate paragraph (b) in this section to avoid confusion when the BLM starts accepting transfers electronically. Section 3102.51 Compliance The BLM proposed revising the existing § 3102.5-1 to clarify who is entitled to hold a lease and that the reclamation obligations under the lease reside with the lessee, operating rights owners, and operators, and not the American taxpayer. The BLM received comments in support of the proposed changes to this section and a recommendation in a comment that the BLM publish and regularly update the list of entities that are not in noncompliance with reclamation requirements of section 17(g) of the MLA. Many comments opposed the proposed changes, citing a lack of due process, fairness, the BLM's ability to take enforcement actions to address any compliance deficiencies, and the need to provide entities the ability to remedy any alleged compliance issues before the BLM turns to cancelling a lease, among other concerns. To address the comments, the BLM is revising the phrase “will be subject to cancellation” to “may be subject to cancellation” to clarify that cancellation is only one of the enforcement tools the BLM could apply and allows for due process. As provided under § 3000.40 of this chapter, any decision issued by the BLM pursuant to this section would be subject to appeal. In addition, the BLM updates the list of “Entities in Noncompliance with Reclamation Requirements of section 17(g) of the MLA” on an as-needed basis, and then forwards the names of the entities to the Federal Government's suspension and debarment program. SAM.gov is a publicly available website that contains the list of suspended or debarred entities. Likewise, when a company returns to compliance, the BLM notifies the suspension and debarment program that the entity should be removed from SAM.gov . The BLM declines to publish a duplicate list of these entities. Thus, no further changes are warranted. Section 3102.52 Certification of Compliance The BLM proposed a minor change to the existing § 3102.5-2: the removal of the word “offer” to reflect Congress' elimination of the noncompetitive leasing process. The BLM received a comment on this section recommending additional language to explicitly state that any false certification is subject to the criminal penalties contained in 18 U.S.C. 1001. The BLM declines to adopt this proposal, which is unnecessary. Section 3000.20 of this chapter already informs all entities that they are subject to criminal penalties if they provide false statements to the BLM. In addition, the standard forms used by the BLM under these regulations, such as the bid form (3000-002), assignment of record title form (3000-003) and the transfer of operating rights (3000-003a), and the lease form (3100-011), all include similar statements and references to 18 U.S.C. 1001 for any false statements. 5. Section-by-Section Discussion for Changes to 43 CFR Subpart 3103 Section 3103.1 Fiscal Terms The BLM removes the proposed § 3000.130 from the final rule and moves the information in that section into final § 3103.1, since this section addresses oil and gas fiscal terms and does not impact other minerals management programs. Therefore, the BLM determined that it is more appropriate to codify this section in subpart 3103 instead of part 3000. As a result of this change, the BLM updated all cross references in the final rule from § 3000.130 to § 3103.1. Based upon the comments received, the BLM also incorporates additional updates that include: (1) adding the EOI filing fee from the IRA to this section and (2) changing the timeframe that the BLM will adjust the fees for inflation from annually to once every 4 years. First, the BLM moved the new EOI filing fee, established by the IRA, from proposed § 3000.120 to final § 3103.1(a). The BLM cannot update the EOI fee annually. The MLA at 30 U.S.C. 226(q)(2)(B) states, “The Secretary shall, by regulation, not less frequently than every 4 years, adjust the amount of the fee under subparagraph (A) to reflect the change in inflation.” Therefore, the final rule moves the EOI fee to paragraph (a). Second, the EOI fee will be adjusted every 4 years by way of a final rule as part of the new Fiscal Terms Table. The BLM also changed the adjustment for minimum bonus bids and rentals to be adjusted every 4 years for inflation by way of a final rule. This change will allow the final rule to update these terms to occur at the same time and minimize the public's costs for these inflation adjustments. The BLM also renamed the title of this section from “Fiscal terms of new leases” to “Fiscal terms.” One commenter stated that the BLM should tie all costs and returns associated with oil and gas leasing to an inflation index. The BLM did not make any changes in response to this comment, as all fees in § 3000.120, the fiscal terms in § 3103.1, and the minimum bond amounts are tied to changes in the Implicit Price Deflator for Gross Domestic Product, which is published quarterly by the U.S. Department of Commerce. Finally, a comment stated that the BLM should clarify that the inflation adjustment as described in this section will include adjustments for inflation occurring over any period of multiple years after August 16, 2022, during which bid and rental rates were left unchanged despite inflation. The BLM concurs with this recommendation, which is reflected in the existing regulations and its use of the Implicit Price Deflator for Gross Domestic Product. Another commentor stated that the proposed rule references no authority that would support annual inflation adjustments for the rental and bonus as the IRA precludes the adjustment of these fiscal terms until after August 16, 2032. The BLM agrees that the rental and minimum bonus bids must remain at the current rate until August 16, 2032; however, after this date, the IRA changes these amounts to minimums. Therefore, the BLM proposed and is implementing inflation adjustments for rental amounts and minimum bonus bids after August 16, 2032. To reduce confusion, the BLM updates paragraph (a) by adding the sentence, “Per the Inflation Reduction Act, the BLM will not adjust the rental nor the minimum bonus bids until after August 16, 2032.” Section 3103.12 Where Remittance is Submitted The BLM proposed to update the existing § 3103.1-2 to clarify that fees set out in the fee schedule in § 3000.120 of this chapter and all first-year rentals and bonuses for leases issued under 43 CFR part 3100 must be paid to the proper BLM office. This final section also removes outdated references to the former Minerals Management Service and mailing address for payments. The BLM received a related comment on lease reinstatements, in which the commenter stated that references in the BLM regulations to rental payments through the ONRR's online system should also acknowledge ONRR's continuing practice of accepting non-electronic rental payments in some circumstances. The BLM concurs and changes the language in paragraph (a)(2) from “through its online system” to “refer to 30 CFR 1218.51” that lists the methods by which lessees and operators may submit payments to the ONRR. Section 3103.21 Rental Requirements The BLM requested comments on adding a new requirement for diligent development obligations. Comments that supported a diligent development provision included recommendations that the BLM: (1) implement further leasing reforms, such as increasing production from existing leases by ensuring diligent development, implementing specific diligent operations standards, and adopting a mechanism to hold private companies accountable when they fail to meet the requirements; (2) tie the diligent development requirement to the definitions of “qualified lessee,” “responsible bidder,” and “responsible lessee;” and (3) impose a diligent operator standard with reporting requirements, and absent a rental rate increase, clarify what consequences an operator may face when it fails to operate diligently including lease termination. Comments also asserted that the proposed lease rentals are insufficient and leases that are not pursued for development within 5 years should be permanently revoked and should not be transferable to another entity. Comments that opposed a diligent development provision included statements that: (1) failure to act diligently to develop a lease has no adverse impacts on the environment; (2) adding diligent development obligations would result in additional work for the BLM and an unnecessary burden on lessees; (3) the increased rental rates prescribed by Congress in the IRA and adopted in the final regulations will encourage diligent development on their own and encourage prudent development or lease surrender; (4) the diligent development obligations would impact business decisions that are based on markets, investment capital, supply chains, labor and equipment availability, and other factors; (5) geophysical exploration does not always result in lease development; (6) new diligent development terms would impose large cost increases on many leases and inhibit operator flexibility to properly evaluate and commence operations in a responsible developmental situation and economic manner consistent with lease requirements; (7) a diligent development requirement could exacerbate the climate crisis; (8) the BLM should consider delays that are out of an operator's control, such as the time certain Federal processes or lawsuits can take; (9) the proposed rule's list of alternatives is overly lenient and promotes speculative ventures; and (10) the BLM should not apply too broad an interpretation of diligent development. After careful consideration of the comments received, the BLM did not implement a diligent development requirement with an escalating rental rate in the final rule. The BLM believes the existing increasing rental rates prescribed by Congress in the IRA will encourage diligent development on their own by incentivizing lessees and operators to develop a lease to avoid the increased costs. The BLM will continue to assess the oil and gas leasing program, and if the BLM determines Congress' rental rate increases are not as effective as expected at encouraging diligent development, the BLM may consider additional rulemaking. The BLM further clarifies final paragraph (a) by adding, “for that lease” after the words “total acreage” to clarify the basis for calculating the first-year rental. No further changes have been made to this section. Section 3103.22 Annual Rental Payments The BLM proposed changes to the existing § 3103.2-2 to implement changes made by Congress in the IRA and clarify what constitutes a timely payment of rental by tying the payment to the lease anniversary date. The BLM received numerous comments on this section. The comments encouraged the BLM to: (1) set out the actual required rental amounts, as provided by the current regulations, rather than referring to the lease terms; (2) set a policy determining when rental rates should be higher than the statutory minimums; (3) implement the regular rate increases; and (4) further increase the rental rates, on the theory that the rental rates in the IRA are too low. In the IRA, Congress set rentals at $3 per acre, or fraction thereof, for lease years 1 and 2; $5 per acre, or fraction thereof, for years 3 through 8; and $15 per acre, or fraction thereof, thereafter. Ten years after the enactment of the IRA, those rental rates become minimums and are subject to increase, as discussed in § 3103.1. The BLM agrees with the comments that the section in the proposed rule was not clear and adds the following clause at the end of paragraph (a) “the annual rental for all new leases will be as specified in 43 CFR 3103.1.” 43 CFR 3103.1 sets out the actual required rental rate, provides details on when the BLM will increase the rental rate, and implements a rate increase every 4 years. The BLM cannot increase the rental until August 16, 2032, based upon Congress' direction in the IRA. Another comment objected to the application of these rentals to leases sold before the passage of the IRA but issued after the IRA was signed into law. The commenter explained that companies bid on those parcels relying on the rental and royalty rates that were in effect at the time of the lease sale and contended that lease issuance was only delayed due to the BLM's failure to timely resolve protests. As explained in the preamble to the proposed rule, the IRA amended the rental rate for all new oil and gas leases issued in the next 10 years. Because the statute ties the new rates to lease issuance, the BLM does not have the authority to exempt leases sold but not issued prior to the enactment of the IRA from its terms. Section 3103.31 Royalty on Production The BLM proposed changes to the existing § 3103.3-1 to implement the requirements of the IRA and received numerous comments. Supportive comments recommended that the final rule address plans, specify criteria, or include a procedure for increasing the royalty rate after 2032. These comments suggested various ways to implement this recommendation, including codifying a higher royalty rate of at least 18.75 percent, or 20 percent; increasing the royalty rate consistent with the previous 10-years' worth of inflation, but not deflation, and indexing the royalty rate to raise at prescribed intervals; or adjusting all rates to market levels on a regular basis to better ensure fair return. Supportive comments also requested a termination provision, similar to that for failure to pay rentals, for the failure to pay royalties. Other supportive comments stated that the BLM should limit changes to just those required by the IRA, as the new rate could affect the competitiveness of the U.S. minerals program. Comments that opposed the changes included statements that: (1) higher royalty rates have consistently led to increased revenues without discouraging oil and gas development and the new r [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-08138. Public record. Not legal advice.