# Geothermal Resources Leasing and Operations > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A96-25254 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** October 8, 1996 - **Citation:** 61 FR 52736 ## Text DEPARTMENT OF THE INTERIOR Bureau of Land Management 43 CFR Parts 3200, 3210, 3220, 3240, 3250, and 3260 RIN: 1004-AB18 [AA-610-08-4141-02] Geothermal Resources Leasing and Operations AGENCY: Bureau of Land Management, Interior. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: This proposed rule would amend regulations which implement the Geothermal Steam Act of 1970, (Steam Act). This proposed rulemaking addresses leasing, permitting and operational and unitization requirements for geothermal exploration, drilling, and utilization operations. The proposed rulemaking proposes no additional permit requirements. The proposed regulations would put all the geothermal regulations in a plain English format; reduce and streamline permitting and information requirements; provide BLM the maximum possible flexibility regarding permit issuance and thereby accommodate the full range of potential geothermal operations and development scenarios; and reorganize the regulations and provide specific permit application informational requirements to allow more consistent interpretation of requirements by BLM and its industrial customers. DATES: Any comments must be received by BLM on or before Janaury 6, 1997. Comments received which are postmarked after this date will not necessarily be considered in the decisionmaking process on the final rule. ADDRESSES: If you wish to comment, you may hand-deliver comments to the Bureau of Land Management, Administrative Record, Room 401, 1620 L Street, NW., Washington, DC; or mail comments to the Bureau of Land Management, Administrative Record, Room 401LS, 1849 C Street, NW., Washington, DC 20240. You also may transmit comments electronically via the Internet to [email protected] Please include ``attn: RIN 1004AB18'' in your message. If you do not receive a confirmation from the system that we have received your internet message, contact us directly during regular business hours. You will be able to review comments at BLM's Regulatory Management Team office, Room 401, 1620 L Street, NW., Washington, DC, during regular business hours (7:45 a.m. to 4:15 p.m.) Monday through Friday. FOR FURTHER INFORMATION CONTACT: Richard Hoops, (702) 785-6568. SUPPLEMENTARY INFORMATION: I. Public Comment Procedures II. Background and Discussion of Proposed Rule III. Procedural Matters I. Public Comment Procedures Written Comments Written comments on the proposed rule should be specific, should be confined to issues pertinent to the rule, and should explain the reason for any recommended change. Where possible, comments should reference the specific section or paragraph of the proposal which the comment addresses. BLM may not necessarily consider or include in the Administrative Record for the rule comments which BLM receives after the close of the comment period (see ``DATES'') or comments delivered to an address other than those listed above (see ``ADDRESSES''). [[Page 52737]] II. Background and Discussion of Proposed Rule This proposed rule would revise 43 CFR parts 3200, 3210, 3220, 3240, 3250, and 3260 which implement the classification, leasing, exploration, drilling, and utilization, requirements of the Geothermal Steam Act of 1970 and the Geothermal Steam Act Amendments of 1988 (the Steam Act). The new rule would eliminate existing parts 3210, 3220, 3240, 3250 and 3260, rewrite corresponding subparts under part 3200, and reorganize the existing regulations so that all permitting requirements and operator responsibilities for each phase of development may be found in a specific subpart. The proposed rule would more clearly delineate the existing permitting and informational requirements. The existing part 3280, concerning unit agreements, will not be affected by this proposed rule. BLM intends to revise part 3280 in harmony with this general revision of the 3200 regulations, but in a separate rulemaking in the very near future. Existing parts 3200, 3210, 3220 and 3240 are consolidated and placed in order corresponding to the sequence in which leasing procedures occur. The exploration regulations are moved from subparts 3209 and 3264 and redesignated as subpart 3250. Existing part 3260 is revised to describe only the requirements for drilling operations. The existing part 3250, Site License, and the existing portions of part 3260 addressing geothermal resource utilization are revised and redesignated as subpart 3270, Utilization of Geothermal Resources. The following table lists how each subpart is reorganized: ------------------------------------------------------------------------ Current regulations Proposed regulations ------------------------------------------------------------------------ 3200--Geothermal Resources Leasing: 3200--Geothermal Resources General. Leasing. 3201--Available Lands; Limitations; 3201--Available Lands. Unit Agreements. 3202--Qualifications of Lessees........ 3202--Qualifications of Lessees. 3203--Leasing Terms.................... 3206--Lease Issuance. 3207--Additional Lease Term. 3208--Extended Lease Term. 3209--Additional Lease Information. 3204--Surface Management Requirements.. [deleted]. 3205--Fees, Rentals and Royalties...... 3210--Fees, Rentals and Royalties. 3206--Lease Bonds...................... 3213--Personal and Surety Bonds. 3214--Bonding and Lease Operations. 3215--Certificate of Deposit and Letter of Credit. 3216--Bond Collection After Default. 3207--Leases for a Fractional or Future 3206--Lease Issuance. Interest. 3208--(Reserved) 3209--Geothermal Resources Exploration 3250--Geothermal Exploration. Operations. 3210--Noncompetitive Leases: General... 3204--Noncompetitive Leasing. 3220--Competitive Leases: General...... 3205--Competitive Leasing. 3241--Transfers........................ 3217--Transfers, Interest and Qualifications. 3218--Requirements for Filing Transfers. 3242--Production and Use of Byproducts. 3272--The Contents and Review of a Plan of Utilization. 3243--Cooperative Conservation 3219--Cooperative Conservation Provisions. Provisions. 3244--Terminations and Expirations..... 3212--Relinquishment, Termination, Cancellation, and Expiration. 3250--Utilization of Geothermal 3273--Applying for and Resources. Obtaining a Site License. 3274--Joint utilization Agreements. 3260--Geothermal Resources Operations: 3260--Geothermal Drilling General. Operation--General. 3270--Utilization of Geothermal Resources General. 3261--Jurisdiction and Responsibility.. 3260--Geothermal Drilling Operation--General. 3262--Conducting Drilling Operations. 3263--Well Abandonment. 3270--Utilization of Geothermal Resources General. 3262--Requirements for Operating Rights 3261--Permitting (drilling). Owners. 3262--Conducting Drilling Operations. 3271--Permitting Utilization Operations. 3272--Contents and Review of a Plan of Utilization. 3276--Conducting Utilization Operations. 3263--Measurement of Production........ 3276--Conducting Utilization Operations. 3264--Reports to be Made by All Lessees 3261--Permitting (drilling). 3266--Reports (drilling). 3274--Submitting a Utilization Permit. 3275--Submitting a Production Permit. 3265--Procedure in Case of Violation of 3268--Inspection, Enforcement, the Regulations. and Noncompliance (drilling). 3277--Inspection, Enforcement, and Noncompliance (utilization). 3266--Appeals.......................... 3255--Relief and Appeals (exploration). 3269--Relief and Appeals (drilling). 3278--Relief and Appeals (utilization). ------------------------------------------------------------------------ Parts 3200--Geothermal Resources Leasing: General, 3210 Noncompetitive Leases, 3220--Competitive Leases, and 3240 Rules Governing Leasing Firstly, the new rule would restructure the definitions section, retaining many of the existing terms but also removing several technical terms (such as ``the Secretary'' and ``the Service'') which no longer fit within the plain English style, and adding new terms (such as ``MMS'') which play a significant role in the new rule. Furthermore, some existing terms which have narrow applicability, such as ``significant thermal features within units of the National Park System'' would be relocated to the specific [[Page 52738]] sections to which they apply. To this extent, the new definitions section contains only terms which are used repeatedly throughout the regulations. Also, the definition of commercial quantities is expanded to address the difference between commercial quantities of individual lease and unit production. Finally, the terms would be alphabetized, and the designations markers (a), (b), (c) and so forth, removed, in keeping with Federal Register guidance. Next, the section describing lands subject to geothermal leasing would be condensed and rewritten into 43 CFR 3201.10. Nothing in the new section alters what lands are available for geothermal leasing; rather, this section would just be streamlined and rewritten into plain English. Subpart 3202 would contain the qualifications for a lessee which, likewise, are intended to retain all substantive provisions from the existing regulations, streamlined and rewritten into plain English. The proposed rule would completely restructure existing regulations concerning the general leasing processes. Firstly, proposed subpart 3203 would introduce the term Known Geothermal Resource Area (KGRA) and briefly describes how this designation determines whether an area can be leased through noncompetitive bidding or solely through the competitive bidding process. Subpart 3204 would then revise the manner in which noncompetitive leases become available. BLM will no longer prepare an availability list of relinquished or terminated leases; instead, lands will become available for noncompetitive leasing as soon as BLM closes each case. An offeror could apply for these lands at any time, and instead of collecting applications in one-month application periods, BLM would open each application upon submission and immediately begin processing. This new process would substantially improve the way BLM handles noncompetitive lease applications. By eliminating the one-month delay, BLM would create a rolling application review process which would approve or deny an application much sooner than under the current process. BLM could determine at any time prior to issuing the lease that the land is a known geothermal resource area (KGRA), either as a result of overlapping applications for the same land or due to evidence indicating threshold geothermal activity (see the definition in 43 CFR 3203.11); which would mean that the area is subject to competitive leasing. Otherwise, once BLM approves a noncompetitive lease application, no KGRA designation would apply and any later overlapping applications would be rejected. If overlapping applications were filed prior to approval of the first application, this competitive interest would prompt BLM to examine the land for further evidence that might warrant a KGRA designation. If the designation were approved, all noncompetitive applications would be rejected and the lands would be made available under the competitive leasing provisions. If no KGRA designation were warranted, then the lease would be offered to the first qualified applicant, i.e., the first person to submit an application which meets all requirements. Under the proposed regulations BLM would continue to issue competitive leases as in the past, relying on published notices of available lands and a sealed bidding process. The regulations for competitive leasing would be relocated to subpart 3205, condensed and written into plain English. BLM would make no substantive changes to the manner in which we review applications, select the winning bid, notify the successful bidder, issue the lease, revoke offers when the successful bidder fails to respond, and so forth. Most of the leasing terms at subpart 3203 of the existing regulations would be retained in condensed, plain English form in proposed subparts 3206 through 3210. However, some substantive and organizational changes are proposed. For example, BLM would change the requirements for diligent exploration under a lease. The current regulation (43 CFR 3203.5) requires that diligent exploration occur during lease years 11 through 15, but BLM proposes to remove this requirement since these lease years are not part of the primary period. Rather, the new regulations add a requirement at 43 CFR 3208.10(a) that a lease be extended due to diligent drilling over the end of the primary period. To qualify, the operator must diligently strive to reach a reasonable drilling target, which BLM will define based on local geology and the type of development proposed by the operator. Under 43 CFR 3208.10 (b) and (c) of the proposed regulations leases would be eligible for extensions in two new, additional situations:( 1) when committed to a unit, lease terms expiring prior to the unit could be extended to match the unit terms as long as diligent unit development is occurring; and (2) any lease not part of a participating area is eligible for two successive five-year extensions when it is eliminated from a unit by contraction or unit review. These extensions address industry concerns that leases adjacent to producing areas may be terminated, regardless of diligence, due to the lack of electrical sales contracts or poor energy market lasting for extended periods. The proposed rule would enact a few other minor substantive changes to lease terms. For example, BLM would delete the special requirements at 43 CFR 3203.4(d) for describing unsurveyed public lands adjacent to tidal waters in southern Louisiana and in Alaska, since this part is rarely used, and since the general regulations for describing unsurveyed lands are adequate. Several other portions of existing subpart 3203 have been merged into other sections: section 3203.6, concerning plans of development and operation, has been incorporated into various sections within new subparts 3260 and 3270; 43 CFR 3203.7, concerning oil, gas and helium reservations, is covered by 43 CFR 3210.17. The 43 CFR 3203.1-6 concerning converting leases to a mineral lease would be relocated to 43 CFR 3209.10. The provisions on fees, rentals and royalties in subpart 3205 would be replaced by subpart 3211 in streamlined, plain English form. Except as noted, BLM does not intend to change any of these existing substantive provisions, but merely to make the existing ones more readily understood by the public, and more manageable for BLM. The only notable change is that the existing provision at 43 CFR 3205.3-7(a), concerning waivers and suspensions of payments, would be relocated to 43 CFR 3212.14, grouping it with the regulations on suspension of operations or operations and production leases. Finally, subparts 3206- Lease Bonds, 3207--Leases for a Fractional or Future Interest, and 3209-Geothermal Resources Exploration Operations would be relocated to, respectively, subparts 3214, 3206, and 3250. In each case, except as otherwise discussed in this preamble, the changes enacted by the proposed regulation would be limited to consolidation and plain English rewrites. Part 3250--Utilization of Geothermal Resources In order to separate operational regulations from the leasing provisions, the geothermal resources utilization regulations currently found in part 3250 would be relocated to subpart 3270, and the new subpart 3250 would contain the geophysical exploration operation regulations currently found in subpart 3209. The permitting and operational responsibilities for geophysical exploration operations occurring on either unleased public lands, Indian [[Page 52739]] lands, or lands leased for geothermal resources activities conducted by a lessee or permittee are consolidated here into a single set of standards. An exploration permit application would consist of the permit form and any operational and environmental information necessary for BLM to provide a timely review and decision. These flexible informational requirements would adequately cover the level of detail necessary to provide sufficient information for applications to drill shallow temperature gradient wells (up to 500 feet deep), temperature gradient wells (with depths of 4000 feet or more), or any exploratory drilling in areas of increased environmental concern. Currently, Geothermal Resources Operational Order 1 limits the depth of temperature gradient wells to 500 feet unless BLM grants specific authorization to drill deeper, but the proposed regulations at 43 CFR 3252.30 will allow an operator to propose a temperature gradient well to any depth necessary to adequately measure temperature gradients. Sections would be added for inspection, enforcement and noncompliance, and appeals, and the current exploration bond requirements would be retained. Part 3260--Geothermal Resource Operations: General In order to consolidate drilling operations regulations in one location, subpart 3260 as proposed would address only the drilling permit application, approval, and reporting requirements. Regulations addressing permits for utilization facilities and information requirements related to the utilization of geothermal resources would be moved to a new subpart 3270. To address concerns often expressed by the public as well as other regulatory agencies, the Jurisdiction and Responsibility section (current subpart 3261) would be amended to clarify BLM's existing authority to take post-permit actions, such as requiring modifications to or shutting down operations that are in noncompliance or pose an immediate threat to the public, the environment or private property. Under proposed subpart 3260, a drilling application would consist of a plan of operation, geothermal drilling permit and drilling program, and all three documents could be submitted for review simultaneously. The plan of operation information requirements would be reduced to cover only specific drilling activities, eliminating the current requirement that applicants also address resource utilization. The plan of operation and drilling program could be written to apply to more than one well, though separate geothermal drilling permits would be required for each proposed well. Pad construction could commence once BLM approved the plan of operation or a sundry notice specifically requesting authorization for the site construction, while the drilling program and geothermal drilling permit could be submitted later. The well location plat, as currently required, would need to be certified by a licensed surveyor. A geothermal sundry notice would be necessary for actions such as casing program changes, well stimulation, or plugging and abandoning a well, but BLM could waive the sundry notice requirement for specific routine well work, surveys, or downhole maintenance. For activities that would result in an environmental impact not already described in the plan of operation, the applicant would be required to submit a geothermal sundry notice to amend the plan of operation, which would result in subsequent environmental review. These permit review options would provide both BLM and resource users the maximum flexibility and the best opportunity to address the broad range of operational and environmental issues encountered during geothermal development. BLM would be able, as a result, to respond to industry requests more efficiently and ensure all environmental requirements are met. Several other sections have been modified to improve the way in which BLM oversees existing operations. In new 43 CFR 3266.50, BLM would reduce the current requirements of notification or reports for all accidents occurring on federal lands (current 43 CFR 3262.7) to require notification and reports only when the accident affects operations or causes environmental hazards. Per the authority under section 5 of the lease terms, BLM can conduct inspections to ensure compliance with the permit, lease terms, regulations and the Steam Act. When the lessee submits information it regards as confidential, it would be clearly marked with the words ``confidential information,'' although BLM would ultimately determine whether such information is exempt from public disclosure under the Freedom of Information Act regulations set forth in 43 CFR part 2. The noncompliance subsection is revised to more clearly define what BLM can do when an operator fails to promptly commence or complete a required remedial action. This would include modification of project operations, temporary or permanent shut down of operations, or lease termination. Because the requirements specified in some of the current Geothermal Resources Operational Orders have become out of date, BLM will revise the requirements and incorporate them into new regulations in 1997. This proposed action changes some standards and requirements from current Orders, and when finalized these changes will have precedence over the Orders standards. A new subpart 3270 makes several changes to the existing permitting procedures and operator responsibilities for producing and utilizing geothermal resources. Several related definitions would be transferred to this part from existing part 3260, and adding a new definition for commercial operations that would specifically identify when the production permit is required. To gain a permit to construct and operate a utilization facility under this part, an operator would submit in an application a plan of utilization, utilization permit, production permit, site license and joint utilization agreement, where applicable. The applicant would need to submit the plan of utilization and the utilization permit together, while the remaining items could be submitted together or separately, although BLM will not approve the utilization permit until receiving a site license and related bond. These changes to the permitting process are intended to provide the operator increased flexibility in submitting the necessary information as it becomes available. The same process would apply to all types of utilization facility proposals, rather than using separate procedures for permitting research and demonstration facilities and individual well facilities, as the current regulations do. Before any surface disturbing activities associated with utilization facility construction and testing could begin, BLM would have to approve the plan of utilization, utilization permit and site license. An approved utilization permit would authorize the site preparation, construction and testing of a facility located on lands leased for federal geothermal resources or Indian land. Production permit approval would then be needed to begin commercial operation (defined as delivering any form of geothermal resources for sale or for use by the operator) of the facility or the utilization of federal resources. By contrast, only the production permit would be needed to locate a proposed utilization facility on unleased public lands receiving production allocated to or from wells located on federal leases or Indian lands. The plan of utilization would describe the proposed facility and its [[Page 52740]] environmental protection measures, and the operator could begin building the facility according to this plan once BLM approves the utilization permit. Those portions of the plan of operation, as described in the existing regulations, that involve requirements related to utilization would become requirements of the plan of utilization. However, instead of requiring the operator in all cases to collect baseline environmental data prior to the initiation of production, BLM would determine which, if any, specific environmental parameters should be addressed, and begin degradation monitoring. BLM could also require monitoring of facility operations as a condition of approval of the permit to ensure environmental compliance. The site license requirements would be moved from part 3250 to proposed subpart 3270 and directly incorporated into the utilization permitting process. At the time of application, the site license area must be on federally leased lands, although the license term would not be based on the lease term. Applicants would be required to submit a site license bond with their license application. Other requirements, such as the minimum utilization bond amount of $100,000 for any electrical generation facility and the current bonding requirement for direct use facilities, would remain unchanged. A site bond may not be required for a direct use facility. The proposed regulations would eliminate the requirement that a lessee or unit operator pay a minimum annual rent of $100 per acre for the site license area, because the lease already grants the right to utilize a reasonable amount of surface for utilization and the lessee has already paid either rental or royalties. However, if an entity other than a lessee or unit operator owns the utilization facility, the site license rental would still be required. Furthermore, should the location of a site license area occur on a federal lease which has terminated, the license could remain in effect with facility siting authorized by BLM under FLPMA for BLM-managed lands, or by the appropriate surface management agency (in coordination with BLM) for all other lands. When the facility is owned by someone other than the lessee or unit operator, a joint utilization agreement would be required as part of the site license approval process. This document constitutes the agreement between a lessee or unit operator and a third party siting a unitization facility on their land. The third party, as the facility operator, would then assume full responsibility for all phases of facility permitting and operations. The production permit authorizes the sale and/or use of federal geothermal resources, and BLM must approve this permit before a utilization facility starts commercial operation. For this permit, the applicant must provide specific information about the proposed facility's operations, particularly its production and royalty metering. The new rules would reduce the current requirement for detailed engineering drawings to require only generalized schematics of the facility. BLM could attach conditions of approval to the production permit, such as monitoring of the facility to ensure compliance with environmental and/or operational standards, and BLM could modify or shut down the facility operation were it in noncompliance with environmental or operational standards. The new regulations would incorporate and add greater detail to Geothermal Resource Operational Order 7, containing standards for the types and accuracy of meters used to measure production or utilization or to determine royalties. The proposed regulations would identify the following for both electrical generation and direct use facilities: (1) where the operator must locate the various types of meters (43 CFR 3276.41); (2) meter accuracy standards which vary depending on the volume of resource measures (43 CFR 3276.42); and (3) meter accuracy standards for installation and measurement. Several issues regarding the site license and joint utilization agreements remain open questions, and BLM is seeking the public's input regarding these questions. First, BLM believes that the provisions for a site license should be eliminated, as a site license does not grant any additional authority to utilize the surface beyond that already granted by an approved utilization plan. BLM is therefore contemplating removing this provision in the future. If you believe the site license performs a necessary function, are there any alternatives to the current system that would serve the same purpose? BLM is also seeking comments regarding whether the public believes BLM should continue to require a rental for a site license if the site licensee is other than a geothermal lessee. Some final matters: editorial changes have been made to correct several cross-references; and BLM will modify its forms to accommodate the numerous changes in the proposed regulations, as well as to account for existing forms which have expired. III. Procedural Matters National Environmental Policy Act BLM has prepared an environmental assessment (EA), and has found that the proposed rule would not constitute a major federal action significantly affecting the quality of the human environment under section 102(2)(C) of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4332(2)(C). BLM has placed the EA and the Finding of No Significant Impact (FONSI) on file in the BLM Administrative Record at the address specified previously. BLM invites the public to review these documents by contacting us at the addresses listed above (see ADDRESSES), and suggests that anyone wishing to submit comments in response to the EA and FONSI do so in accordance with the Written Comments section above, or contact us directly. Paperwork Reduction Act The collection of information contained in this rule has been approved by the Office of Management and Budget under 44 U.S.C. 3501 et seq. and assigned clearance numbers 1004-0034, 1004-0074, 1004-0132 and 1004-0160. Regulatory Flexibility Act Congress enacted the Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., to ensure that government regulations do not unnecessarily or disproportionately burden small entities. The RFA requires a regulatory flexibility analysis if a rule would have a significant economic impact, either detrimental or beneficial, on a substantial number of small entities. BLM has determined under the RFA that this proposed rule would not have a significant economic impact on a substantial number of small entities. Executive Order 12866 According to the criteria listed in section 3(f) of Executive Order 12866, BLM has determined that the proposed rule is not a significant regulatory action. As such, the rule is not subject to Office of Management and Budget review under section 6(a)(3) of the order. Unfunded Mandates Reform Act Revision of 43 CFR group 3200 will not result in any unfunded mandate to state, local or tribal governments in the aggregate, or to the private sector, of $100,000,000 or more in any one year. Executive Order 12612 The proposed rule would not have sufficient federalism implications to [[Page 52741]] warrant BLM preparation of a Federalism Assessment (FA). Executive Order 12630 The proposed rule does not represent a government action capable of interfering with constitutionally protected property rights. Section 2(a)(1) of Executive Order 12630 specifically excludes actions abolishing regulations or modifying regulations in a way that lessens interference with private property use from the definition of ``policies that have takings implications.'' Since the primary function of the proposed rule is to abolish unnecessary regulations and rewrite existing ones, there will be no private property rights impaired as a result. Therefore, BLM has determined that the rule would not cause a taking of private property, or require further discussion of takings implications under this Executive Order. Executive Order 12988 The Department of the Interior has determined that this rule meets the applicable standards provided in sections 3(a) and 3(b)(2) of Executive Order 12988. Author The principal authors of this proposed rule are Richard Hoops and Jack Lewis of the Nevada State Office, Sean Hagerty and Sonia Santillian of the California State Office, Richard Estabrook of the Ukiah District Office, Jack Feuer and Donna Kauffman of the Oregon State Office, Dennis Davis of the Prineville District Office, and Robert Henricks and Connie Seare of the Utah State Office, all of the Bureau of Land Management. List of Subjects 43 CFR Part 3200 Environmental protection, geothermal energy, government contracts, public lands-mineral resources, reporting and recordkeeping requirements, surety bonds. 43 CFR Part 3210 Geothermal energy, government contracts, land management bureau, public lands-mineral resources, reporting and recordkeeping requirements. 43 CFR Part 3220 Geothermal energy, government contracts, land management bureau, public lands-mineral resources, reporting and recordkeeping requirements. 43 CFR Part 3240 Geothermal energy, government contracts, land management bureau, mineral royalties, public lands-mineral resources, reporting and record keeping requirements, water resources. 43 CFR Part 3250 Geothermal energy, geothermal exploration, land management bureau, public lands-mineral resources, reporting and recordkeeping requirements, surety bonds. 43 CFR Part 3260 Environmental protection, geothermal energy, government contracts, land management bureau, public lands-mineral resources, reporting and recordkeeping requirements. Dated: September 27, 1996. Sylvia V. Baca, Acting Assistant Secretary of the Interior. For the reasons set forth above in the preamble, and under the authority of the Geothermal Steam Act of 1970, as amended (30 U.S.C. 1001-1027), The Freedom of Information Act (5 U.S.C. 552), and the Federal Land Policy and Management Act (43 U.S.C. 1701 et seq.), 43 CFR chapter II is amended as set forth below: PARTS 3210, 3220, 3240, 3250 AND 3260--[REMOVED] 1. Parts 3210, 3220, 3240, 3250 and 3260 are removed. 2. The heading ``GROUP 3200--GEOTHERMAL RESOURCES LEASING'' and the accompanying note is removed. 3. Part 3200 is revised to read as follows: PART 3200--GEOTHERMAL RESOURCE LEASING Subpart 3200--Geothermal Resource Leasing--General Sec. 3200.1 What are the meanings of terms I need to know to understand the regulations in this part? 3200.2 Information collection. 3200.3 What are my rights of appeal? Subpart 3201--Available Lands 3201.10 What lands are available for geothermal leasing? 3201.11 What lands are not subject to geothermal leasing? Subpart 3202--Lessee Qualifications 3202.10 Who can hold a geothermal lease? 3202.11 Must I prove I can hold a lease when filing a lease offer? 3202.12 Are other persons allowed to act in my behalf? 3202.13 What happens if the offeror dies before the lease is issued? Subpart 3203--Obtaining a Lease 3203.10 How can I obtain a geothermal lease? 3203.11 How is a KGRA determined? Subpart 3204--Noncompetitive Leasing 3204.10 How do I file an offer to lease? 3204.11 How do I describe the lands in my lease offer? 3204.12 What fees must accompany my offer? 3204.13 May I combine acquired and public domain lands on the same offer? 3204.14 What are the minimum and maximum acreage requirements for my offer? 3204.15 What happens when two or more applicants apply for a noncompetitive lease for the same land? 3204.16 How does BLM determine the first qualified applicant? 3204.17 May I withdraw my offer? 3204.18 May I amend my offer? Subpart 3205--Competitive Leasing 3205.10 How does BLM lease competitive lands? 3205.11 How do I obtain information on the terms and conditions of leases being offered through competitive bidding? 3205.12 How do I bid for a parcel? 3205.13 What is the minimum acceptable bid? 3205.14 How does BLM conduct the sale? 3205.15 To whom does BLM issue the lease? 3205.16 How will I know if my bid is accepted? 3205.17 How will I know if my bid is not accepted? Subpart 3206--Lease Issuance 3206.10 Are there any additional requirements prior to lease issuance? 3206.11 What is the maximum acreage I may hold? 3206.12 How does BLM compute acreage holdings? 3206.13 Am I charged for acreage if the United States owns only a fractional interest in the geothermal resources? 3206.14 Are there any acreages which are not chargeable? 3206.15 What procedures does BLM follow when a party holds or controls excess accountable acreage? 3206.16 What is the primary term of my lease? 3206.17 When will BLM issue my lease? Subpart 3207--Additional Lease Term 3207.10 Under what circumstances is my lease eligible for an additional term beyond its primary term? Subpart 3208--Extending the Current Lease Term 3208.10 Under what circumstances is my lease eligible for an extension of the primary term? 3208.11 What procedures must I follow to obtain an extension of my lease? 3208.12 What information must I include in the report to document that I have made bona fide efforts? [[Page 52742]] 3208.13 What will BLM do if I choose to make payments in lieu of commercial operation? 3208.14 What will BLM do if I choose to make significant expenditures? 3208.15 May I change my election of making payments in lieu of commercial quantities or making significant expenditures during the extension? Subpart 3209--Conversion of a Lease Producing Byproducts 3209.10 May I convert my geothermal lease to a mineral lease? Subpart 3210--Additional Lease Information 3210.10 When does lease segregation occur? 3210.11 Is a lease segregated from an agreement or plan eligible for an extension? 3210.12 May I consolidate leases? 3210.13 What is the diligent exploration requirement? 3210.14 How do I meet the diligent exploration requirement? 3210.15 Is there an option to performing diligent exploration? 3210.16 What happens if I don't meet the diligence requirement or pay the additional rental? 3210.17 Can leases or locations for other mineral commodities occur on the same lands that my geothermal lease is located? 3210.18 May BLM readjust the terms and conditions of my lease? 3210.19 How will BLM readjust the terms and conditions of my lease? 3210.20 May BLM readjust the rental and royalty rates of my lease? 3210.21 What happens if I object to the proposed readjusted terms and conditions or rental and royalty rates? 3210.22 What lease obligations am I accountable for during readjustment negotiations? 3210.23 When do the readjusted terms become effective? 3210.24 Must I prevent the drainage of geothermal resources from my lease? Subpart 3211--Fees, Rentals, and Royalties 3211.10 What are the filing fees, rentals, and royalties for leases? 3211.11 When is my annual rental payment due? 3211.12 How and where do I submit my rental payment? 3211.13 Is there a different rental or minimum royalty amount for a fractional interest lease? 3211.14 Prior to production, am I expected to pay rental if my lease is committed to an approved cooperative or unit plan? 3211.15 When unit production starts, am I expected to pay rental if my lease is committed to an approved cooperative or unit plan? 3211.16 Will I always pay rental on my lease? 3211.17 What are the possible royalty rates of my lease? Subpart 3212--Suspension of Operations or Operations and Production 3212.10 May I obtain a suspension of operations or operations and production on my lease, and if so, for what reasons? 3212.11 When is a lease suspension effective or terminated? 3212.12 How does a suspension affect the lease terms? 3212.13 What happens when the suspension is lifted or removed? 3212.14 May BLM reduce or suspend the royalty or rental rate of my lease? 3212.15 What information must I submit when requesting a reduction or suspension of the royalty or rental rate of my lease? Subpart 3213--Relinquishment, Termination, Cancellation, and Expiration 3213.10 Who may relinquish a lease? 3213.11 What form must I submit to relinquish a lease? 3213.12 Can BLM accept a partial relinquishment resulting in less than 640 acres? 3213.13 When does my relinquishment take effect? 3213.14 How does a lease terminate? 3213.15 What if I don't pay the entire amount of rental due? 3213.16 Will BLM notify me if my lease terminates? 3213.17 Can my lease be reinstated? If so, how? 3213.18 Who may petition to reinstate a lease? 3213.19 What must I do to obtain a reinstatement? 3213.20 Are there reasons why BLM would not approve a reinstatement? 3213.21 When will my lease expire? 3213.22 Will BLM notify me when my lease expires if it is in an extended term? 3213.23 May BLM cancel my lease? 3213.24 When is a cancellation effective? Subpart 3214--Personal and Surety Bonds 3214.10 Who must post a geothermal bond? 3214.11 Who is covered by the bond? 3214.12 What does my bond cover? 3214.13 What is the minimum dollar amount required under each type of operation bond? 3214.14 What kind of financial guarantee will BLM accept to back my bond? 3214.15 Is there a special bond form I must use? 3214.16 Where must I submit my bond? 3214.17 Who will BLM hold liable under the bond and what are they liable for? 3214.18 What are my bonding requirements when a lease interest is transferred to me? 3214.19 How do I modify the terms and conditions of my bond? 3214.20 Can BLM ever increase the bond amount above the minimums? 3214.21 Where must I get a certificate of deposit or a letter of credit? 3214.22 What special requirements are there if I want to use a certificate of deposit to back my bond? 3214.23 What special requirements are there if I want to use a letter of credit to back my bond? Subpart 3215--Bond Collection After Default 3215.10 In what circumstances does BLM collect on a bond? 3215.11 As the principal on the bond, may BLM require me to restore the face amount of my bond or require me to replace my bond after BLM collects on default? 3215.12 What if I do not restore the face amount or file a new bond? 3215.13 When will BLM cancel or terminate my bond? Subpart 3216--Transfers 3216.10 What types of lease interests can I transfer? 3216.11 Where and when am I required to file a transfer of interest? 3216.12 When does a transferee assume responsibility for lease obligations? 3216.13 What are the responsibilities of the transferor? 3216.14 Are there required filing fees and forms associated with filing my transfer? 3216.15 Is there a required time frame for filing requests for approval of transfers? 3216.16 Must I file separate requests for approval of transfers for each lease? 3216.17 Where must I file estate transfers, corporate mergers and name changes? 3216.18 How do I describe the lands in my lease transfer? 3216.19 Can I transfer record title interest for less than 640 acres? 3216.20 When does an assignment segregate a lease? 3216.21 When is my assignment/transfer effective? 3216.22 Does BLM grant all requests for approval of transfer? Subpart 3217--Cooperative Conservation Provisions 3217.10 What is the purpose of unit agreements and cooperative plans? 3217.11 What is the purpose for communitization or drilling agreements? 3217.12 What information regarding a proposed communitization or drilling agreement must you submit to BLM? 3217.13 When is a communitization or drilling agreement effective? 3217.14 Under what conditions will BLM approve operating, drilling or development contracts? 3217.15 What information must I submit to BLM regarding proposed operating, drilling or development contracts? Subpart 3250--Exploration Operations--General 3250.10 What is the purpose, scope and authority of the subparts pertaining to exploration operations? Subpart 3251--Permitting of Exploration Operations 3251.10 What types of operations may I propose when submitting an application for an exploration permit? 3251.11 May I conduct exploration operations on my lease, someone else's lease or unleased land? 3251.12 Do I need a permit prior to conducting exploration operations? [[Page 52743]] 3251.13 What information must I submit with my application for an exploration permit? 3251.14 What action will BLM take on my permit? 3251.15 How do I receive BLM approval to change permitted exploration operations? 3251.16 Must I submit data obtained through exploration operations to BLM? 3251.17 Are there any bonding requirements for conducting exploration operations? 3251.18 When will the bond be released? Subpart 3252--Conducting Exploration Operations 3252.10 What operational requirements must I meet when conducting exploration operations? 3252.11 What environmental requirements must I meet when conducting exploration operations? 3252.12 How deep may I drill a temperature gradient well? 3252.13 How long may I collect information from my temperature gradient well? 3252.14 What are the requirements for completing and abandoning a temperature gradient well? 3252.15 Must I notify BLM when I have completed my exploration operations? Subpart 3254--Inspection, Enforcement, and Noncompliance 3254.10 Will BLM inspect my exploration operations? 3254.11 What action may BLM take if my exploration operations are not in compliance? Subpart 3255--Exploration Operations Relief and Appeals 3255.10 May I request variances from notices to lessees, permit conditions of approval, and operational or other orders issued by the BLM? 3255.11 How may I appeal a BLM decision regarding my exploration operations? Subpart 3260--Geothermal Drilling Operation--General 3260.10 What types of geothermal operations are covered under this subpart? 3260.11 What standards apply to my drilling operations? 3260.12 Can BLM issue additional orders or instructions? Subpart 3261--Permitting of Drilling Operations 3261.10 What approval must I obtain prior to well pad construction drilling? 3261.11 What information must I submit to get approval for drilling operations or well pad construction? 3261.12 What is a plan of operations? 3261.13 When must I have an approved plan of operations? 3261.14 Must I submit my drilling permit application and plan of operations at the same time? 3261.15 Can a plan of operations and drilling permit apply to more than one well? 3261.16 How do I amend a plan of operations or a drilling permit application? 3261.17 Do I need a bond before I build a well pad or drill a well? 3261.18 How will BLM review my application documents and notify me of their status? 3261.19 How do I get approval to change an approved drilling operation? 3261.20 How do I get approval for subsequent well operations? Subpart 3262--Conducting Drilling Operations 3262.10 What operational requirements must I meet when drilling a well? 3262.11 What environmental requirements must I meet when drilling a well? 3262.12 Must I post a sign at every well? 3262.13 Can BLM require well spacing? 3262.14 Can BLM require me to take samples or perform tests and surveys? Subpart 3263--Well Abandonment 3263.10 May I abandon a well without notifying BLM? 3263.11 What information must I submit to get my sundry notice for abandonment approved? 3263.12 How will BLM review my sundry notice for abandonment and notify me of its status? 3263.13 What must I do to restore the site? 3263.14 Can BLM require me to abandon a well? 3263.15 Can I abandon a producible well? Subpart 3266--Reports 3266.10 What information must I submit after completing a well? 3266.11 What information must I submit after completing subsequent well operations? 3266.12 What information must I submit after abandoning a well? 3266.13 What well records must I maintain for each well? 3266.14 Must I notify BLM of accidents occurring on my lease? Subpart 3267--Confidential, Proprietary Information 3267.10 Must I identify confidential information that I submit to BLM? 3267.11 Will BLM treat information marked as confidential, as such? 3267.12 How long will confidential information I submit to BLM remain confidential? Subpart 3268--Inspection, Enforcement, and Noncompliance 3268.10 What part of my drilling operation can BLM inspect? 3268.11 What action can BLM take if my operations are in noncompliance? Subpart 3269--Geothermal Drilling Operations Relief and Appeals 3269.10 May I request a variance from notices to lessees, permit conditions of approval, and operational and other orders issued by BLM? Subpart 3270--Utilization of Geothermal Resources--General 3270.10 What types of geothermal operations are permitted under this part? 3270.11 What standards apply to my utilization operations? 3270.12 What are my responsibilities for utilizing geothermal resources on a lease? Subpart 3271--Permitting of Utilization Operations 3271.10 How do I obtain authorization to construct and test a utilization facility? 3271.11 How do I obtain authorization to begin commercial operations? Subpart 3272--The Contents and Review of a Plan of Utilization and Utilization Permit 3272.10 What must I do prior to commencing site preparation, construction and testing of the facility? 3272.11 What information must I submit in a plan of utilization? 3272.12 How should I describe the proposed facility? 3272.13 How should I describe the environmental protection measures I intend to take? 3272.14 How will BLM review my plan of utilization and notify me of its status? 3272.15 How do I obtain authorization to construct and test my facility? Subpart 3273--Applying for and Obtaining a Site License 3273.10 When do I need a site license? 3273.11 Are there any situations in which I do not need a site license? 3273.12 What if the lands I want a license for are not administered by BLM? 3273.13 Are any lands not available for geothermal site licenses? 3273.14 What area does a site license include? 3273.15 What information must I include in my site license application? 3273.16 What is the annual rental for a site license or direct use facility? 3273.17 Can BLM reassess the annual rental for my site license? 3273.18 Must all facility operators pay the annual site license rental? 3273.19 What are the bonding requirements for a site license? 3273.20 What are my obligations under the site license? 3273.21 How long will my site license remain in effect? 3273.22 May BLM terminate my site license? 3273.23 May I relinquish my site license? 3273.24 May I assign or transfer my site license? 3273.25 What if my site license application involves lands under the jurisdiction of another agency? [[Page 52744]] Subpart 3274--Submitting a Joint Utilization Agreement 3274.10 What is the purpose of a joint utilization agreement? 3274.11 Which parties must sign the joint utilization agreement? Subpart 3275--Applying for and Obtaining a Production Permit 3275.10 What information must I include in my application for a production permit? 3275.11 How will BLM review my application for a production permit? 3275.12 Can I get an authorization even if I cannot prove I can operate within required standards? Subpart 3276--Conducting Utilization Operations 3276.10 Can I change my approved plan of utilization or production permit? 3276.11 What are the facility operator's obligations? 3276.12 Are there environmental and safety requirements for lease operations? 3276.13 Are there reporting requirements for lease operations? 3276.14 What information must be included for each well in monthly well reports? 3276.15 What information must be included in the monthly report for generation facilities? 3276.16 What additional information must be submitted in the monthly report for flash and dry facilities? 3276.17 What information must be included in the monthly report for direct use facilities? 3276.18 Does the facility operator have to measure the geothermal resources? 3276.19 What aspects of my geothermal operations must I measure? 3276.20 How accurately must I measure my production and utilization? 3276.21 To what standards must I install and maintain my meters? 3276.22 What must I do if I find an error in a meter? 3276.23 May BLM require me to test for byproducts associated with the production of geothermal resources? 3276.24 May I commingle production? 3276.25 What action will BLM take if I waste geothermal resources? 3276.26 Can BLM order me to drill and produce wells on my lease? Subpart 3277--Inspection, Enforcement, and Noncompliance 3277.10 Will BLM inspect my operations? 3277.11 What records must I keep available for inspection? 3277.12 What actions may BLM take if I am in noncompliance? Subpart 3278--Utilization Relief and Appeals 3278.10 May I request a variance from notices of lessees, permit conditions of approval, and operational and other orders issued by BLM? 3278.11 Can I appeal a BLM decision regarding my utilization operations? Authority: 5 U.S.C. 552; 30 U.S.C. 1001-1027; 43 U.S.C. 1733, 1740. Subpart 3200--Geothermal Resource Leasing Sec. 3200.1 What are the meanings of terms I need to know to understand the regulations in this part? Act means the Geothermal Steam Act of 1970, as amended (30 U.S.C. 1001 et seq.). Additional term means the 40 years beyond the primary term of a producing lease. The additional term is granted when geothermal steam is produced or utilized in commercial quantities within the primary term. This differs from an extended term because additional terms constitute a new lease term; whereas extensions lengthen the primary term without creating a new term. See the procedures in subpart 3207 of this part. Assignment means a transfer of all or a portion of the lessee's record title interest in a lease. Byproducts are minerals (exclusive of oil, hydrocarbon gas, and helium) which are found in solution or in association with geothermal steam that are not of sufficient value to warrant extraction and production by themselves because they have a value of less than 75% of the value of the geothermal steam or because of technical difficulties in extraction and production. Casual use means activities that ordinarily lead to no more than negligible disturbance or damage to lands, resources, or improvements. Commercial quantities means either: (1) For production from a lease, a sufficient volume (in terms of flow and temperature) of the resource to provide a reasonable return after all variable costs of production are met; or (2) For production from a unit, a sufficient volume of the resource to provide a reasonable return after all variable costs of production and drilling are met. Cooperative agreement means an agreement for the production and utilization of separately owned interests in the geothermal resources in which separate ownership units are independently operated without allocation of production. Development contract means an agreement between one or more lessees and one or more entities which, when approved by BLM, facilitates resource exploration and serves to protect the public interest. Exploration operations means any activity relating to the search for evidence of geothermal resources. This activity requires physical presence on the land and may result in damage to public lands or resources. Exploration includes, but is not limited to, geophysical operations such as drilling shallow temperature gradient wells or holes used for explosive charges for seismic exploration. It also includes related construction of roads and trails, and cross-country transit by vehicles over public land. Exploration operations do not include the production or utilization of geothermal resources, which may only be conducted under a lease and in accordance with the regulations of this part (see subparts 3260 and 3270 of this part). Extended term means an initial and any successive 5-year period beyond the primary term of a lease during which BLM will grant the lessee the right to continue activities under the existing lease. Extensions differ from an additional term because they serve to extend the primary term, rather than creating a new one. See the procedures in subpart 3208 of this part. Facility operator means the entity receiving authorization from BLM to site, construct, test and/or operate a utilization facility. A facility operator may be a lessee, a unit operator, or a third party. Geothermal exploration permit is an application you submit describing proposed exploration operations and which, when approved by BLM, authorizes geothermal exploration operations and associated surface disturbance. Geothermal resources operational order means a formal, numbered order, issued by BLM, that implements or enforces the regulations in this Part. Geothermal steam and associated geothermal resources are products of geothermal steam or hot water and hot brines, including those resulting from water, gas, or other fluids artificially introduced into geothermal formations, heat or other associated energy found in geothermal formations, and byproducts derived from these. Geothermal sundry notice is a written request submitted by an operator for permission to deviate from operations in a previously approved permit or sundry notice. A geothermal sundry notice may also be submitted to obtain permission to perform work not otherwise covered in a permit or sundry notice. Joint utilization agreement means an agreement between a facility operator and a Federal lessee or unit operator, if the two entities are different, which permits a facility operator to construct a utilization facility on Federal lands leased for geothermal resources. The agreement must provide for the construction, testing and operation of a utilization facility on the lease. Known geothermal resource area (KGRA) is an area where BLM determines that persons knowledgeable [[Page 52745]] in geothermal development would expend money to develop geothermal resources. For more information on how BLM determines KGRAs, see 43 CFR 3203.11. MMS means the Minerals Management Service. Notice to lessees means a written notice issued by BLM that implements the regulations in this part or geothermal resource operational orders, and provides more specific instructions on geothermal issues within a state, district or resource area. Operating rights owner means a person or entity holding operating rights in a lease. A lessee is also an operating rights owner if the operating rights or a portion of them have not been severed from record title. Operator means any person or entity who has assumed responsibility for the operations conducted on the leased lands. Plan of utilization means a plan which fully describes the utilization facility, including measures for environmental protection and mitigation. An approved plan of utilization permits the siting of a utilization facility on federal lands. Primary term means the first 10 years of a lease, not including any periods of suspension. Produced or utilized in commercial quantities means a well producing geothermal resources in commercial quantities, or the completion of a well capable of producing geothermal resources in commercial quantities when BLM determines the lessee is diligently attempting to utilize the geothermal steam. Production permit means authorization from BLM allowing for the production of geothermal resources from federal lands. Public domain lands or public lands means lands, including mineral estates, that never left the ownership of the United States, were obtained in exchange, reverted to the ownership of the United States through the operation of the public land laws, or have been identified by Congress as part of the public domain. Record title means an interest in a lease which includes the responsibility for paying rent and the right to assign and relinquish the lease. Relinquishment means action taken by the lessee to voluntarily end the lease in whole or in part. Shallow temperature gradient wells means a well drilled up to 500 feet deep for the purpose of obtaining information on the change in temperature over the depth of the well in order to extrapolate temperatures at a greater depth. Site license means authorization from BLM allowing the construction of a utilization facility on leased Federal lands. Stipulation means a condition attached by BLM to a lease or permit. Temperature gradient wells means a well drilled to a depth of 4000 feet or more for the purpose of obtaining information on the change in temperature over the depth of the well in order to extrapolate temperatures at a greater depth. Termination means the cancellation of a lease due to nonpayment of annual rental, cessation of production, or other action by the lessee which breaches the contract. Transfer means conveyance of any interest a party may have in a Federal lease. This definition includes the terms assignment and sublease. Unit agreement means an agreement for the exploration, production and utilization of separately owned interests in geothermal resources as a single consolidated unit without regard to separate ownerships and which provides for the allocation of costs and benefits on a basis defined in the agreement. Unit area means all tracts committed to an approved unit agreement. Unit operator means any person or entity that has stated in writing to BLM that it is responsible for the operations conducted under the unit agreement and is so designated in the unit agreement. Unitized substances means geothermal resources recovered from lands committed to a unit agreement. Utilization permit means authorization from BLM allowing site preparation, construction, and testing of a utilization facility. Waste means: (1) Physical waste, including refuse; and/or (2) Improper use or unnecessary dissipation of geothermal resources through inefficiency in drilling, production, transmission, or utilization. Working Interest means an interest granted by a lease, operating agreement or other authorizing document in geothermal resources conveying the right to explore for, develop, produce, and use geothermal resources, except that such rights delegated to a unit operator by a unit agreement are not working interests. Sec. 3200.2 Information collection. (a) The collection of information contained in this part has been approved by the Office of Management and Budget under 44 U.S.C. 3501 et seq. and assigned clearance numbers 1004-0034, 1004-0074, 1004-0132 and 1004-0160. The information will be used to maintain an orderly program for leasing, development and production of Federal geothermal resources, to evaluate technical feasibility and environmental impacts of geothermal operations on Federal and Indian lands, and to determine whether exploration expenditures meet the requirements for diligence credit under 43 CFR 3202.5. The public must respond to the requests for information in order to obtain a benefit. (b) Public reporting burden for this information is estimated to average 1.6 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimates or any other aspects of this collection of information, including suggestions for reducing the burden, to Administrative Record, Bureau of Land Management, Room 401 LS, 1849 C Street, NW., Washington, DC 20240; and the Paperwork Reduction Project (1004-0160), Office of Management and Budget, Washington, DC 20503. (c) There are many leases and agreements currently in effect, and which will remain in effect, involving Federal geothermal resources leases that specifically refer to the United States Geological Survey, USGS, Minerals Management Service, MMS, or Conservation Division. These leases and agreements may also specifically refer to various officers such as Supervisor, Conservation Manager, Deputy Conservation Manager, Minerals Manager, and Deputy Minerals Manager. In addition, many leases and agreements specifically refer to 30 CFR part 270 or a specific section thereof. Those references must now be read to mean either the Bureau of Land Management or the Minerals Management Service as appropriate. Sec. 3200.3 What are my rights of appeal? You may appeal any decision made by BLM under this part in accordance with 43 CFR parts 4 and 1840. Subpart 3201--Available Lands Sec. 3201.10 What lands are available for geothermal leasing? (a) BLM may issue leases on: (1) Lands administered by the Department of the Interior, including public, withdrawn and acquired lands; (2) Lands administered by the Department of Agriculture with its concurrence; [[Page 52746]] (3) Lands conveyed by the United States where the geothermal resources were reserved to the United States; and (4) Lands subject to section 24 of the Federal Power Act, as amended (16 U.S.C. 818), with concurrence from the Secretary of Energy. (b) BLM will not issue, extend, review or modify a lease that would result in a significant adverse effect on a significant thermal feature within a unit of the National Park system. If BLM determines such a potential exists, we will include in any lease action all stipulations required by law and necessary to protect such features. Sec. 3201.11 What lands are not subject to geothermal leasing? BLM will not issue leases for: (a) Lands where the Secretary has determined that issuance of the lease would cause unnecessary or undue degradation; (b) Lands that are contained within a unit of the National Park System, or are otherwise administered by the National Park Service; (c) Lands within a national recreation area; (d) Lands where the Secretary determines that geothermal operations are reasonably likely to result in a significant adverse effect on a significant thermal feature within a unit of the National Park System; (e) Fish hatcheries or wildlife management areas administered by the Secretary; (f) Indian trust or restricted lands within or without the boundaries of Indian reservations; (g) The Island Park Geothermal Area; and (h) Lands where section 43 of the Mineral Leasing Act (30 U.S.C. 226-3) prohibits leasing which includes: (1) Wilderness areas or wilderness study areas administered by BLM or other surface management agencies; (2) Lands designated by Congress as wilderness study areas, except where leasing is specifically allowed to continue by the statute designating the study area; and (3) Lands within areas allocated for wilderness or further planning in Executive Communication 1504, Ninety-Sixth Congress (House Document numbered 96-119), unless such lands are allocated to uses other than wilderness by a land and resource management plan or are released to uses other than wilderness by an act of Congress. Subpart 3202--Lessee Qualifications Sec. 3202.10 Who can hold a geothermal lease? You may hold a geothermal lease if you are: (a) A citizen of the United States who has reached the age of majority; (b) An association, including a partnership, of United States citizens; (c) A corporation organized under the laws of the United States, any state or the District of Columbia; or (d) Any domestic governmental unit. Sec. 3202.11 Must I prove I can hold a lease when filing a lease offer? Ordinarily you do not need to submit proof at the same time you submit the offer, but BLM has the right to request information regarding your qualifications at any time, including when you submit your offer. If BLM requires additional information, you have 30 days from your receipt of the request to submit the information. Sec. 3202.12 Are other persons allowed to act in my behalf? Yes, one person may act on behalf of another, provided he or she notifies BLM. The person taking the action must sign the document, note his or her title, identify the person on whose behalf he or she is acting, and be qualified to hold a lease under 43 CFR 3202.10. BLM may require the person to provide written proof of his or her qualifications and authority to take such action. Sec. 3202.13 What happens if the offeror dies before the lease is issued? If the offeror dies before the lease is issued, BLM will issue the lease to either the administrator or executor of the estate or the heirs. If the heirs are minors, BLM will issue the lease to either a legal guardian or trustee, provided that the legal guardian or trustee is also qualified to hold a lease under 43 CFR 3202.10. Subpart 3203--Obtaining a Lease Sec. 3203.10 How can I obtain a geothermal lease? You must first determine if the lands are located in a known geothermal resource area (KGRA). BLM leases lands within a KGRA through a competitive sale. If the lands you wish to lease are within a KGRA, you must follow the procedures for submitting a bid set out in subpart 3205 of this part. BLM issues a competitive lease to the person or entity submitting the highest qualified bid. BLM leases available lands outside a KGRA noncompetitively. You may lease lands outside a KGRA by submitting an offer following the procedures set out in subpart 3204 of this part. BLM issues noncompetitive leases to the first qualified applicant. BLM may issue a lease for a fractional interest if we determine the public interest is well served by doing so. Sec. 3203.11 How is a KGRA determined? BLM determines the boundaries of a KGRA based on the following indicators: (a) Geologic and technical evidence that indicates persons knowledgeable in geothermal resource development would spend money developing the area; (b) Lands within 5 miles of a well capable of production in commercial quantities, or all lands in the same geologic structure, regardless of the distance from the well capable of production in commercial quantities; and (c) Where competitive interest exists. Competitive interest exists where more than one person expresses interest in leasing an area for geothermal resources. Subpart 3204--Noncompetitive Leasing Sec. 3204.10 How do I file an offer to lease? You or your authorized agent must submit three (3) executed copies of current Form 3200-24 to BLM. At least one form must have an original signature. We will accept only exact copies of the form on one two- sided page, to match the original. The application must accurately describe the lands covered by your application. You may obtain this form (and other BLM forms) by contacting the nearest BLM Office. Sec. 3204.11 How do I describe the lands in my lease offer? You must describe the lands as follows: (a) For lands surveyed under the public land rectangular survey system, describe the lands by legal subdivision, section, township, and range; (b) For unsurveyed lands, describe the lands by metes and bounds, giving courses and distances, and tie this information to an official corner of the public land surveys, or to a prominent topographic feature; (c) For approved protracted surveys, include an entire section, township, and range. Do not divide protracted sections into aliquot parts; (d) Discuss offers for unsurveyed lands in Louisiana and Alaska that have water boundaries with BLM prior to submission; and (e) For fractional interest lands, identify the United States mineral ownership by percentage. [[Page 52747]] Sec. 3204.12 What fees must accompany my offer? You must submit a nonrefundable filing fee of $75 for each offer and advance rental in the amount of $1 per acre, or fraction of an acre. BLM will refund the advance rental if we reject the offer, or you withdraw the offer before BLM accepts it. If your advance rental is deficient by more than 10 percent, BLM will reject the offer. Sec. 3204.13 May I combine acquired and public domain lands on the same offer? Yes, as long as you clearly identify both the acquired lands and the public domain lands. Sec. 3204.14 What are the minimum and maximum acreage requirements for my offer? The minimum size of a lease is 640 acres. Your offer must include all available lands in the section. If the section contains lands not available for leasing, the lease must include all the available lands in the section, which is then the minimum size of the lease. The maximum size of a lease is 2560 acres, although BLM will make an exception to this requirement when an offer includes an irregular subdivision. Leases must not extend outside a 6 mile square area. Sec. 3204.15 What happens when two or more applicants apply for a noncompetitive lease for the same land? BLM begins processing applications as soon as they are received. Once BLM approves a noncompetitive lease application, any later applications received for the same land are rejected. However, if BLM receives additional applications for the same land while the original application is still pending, BLM must determine if the overlapping applications warrant converting the land at issue to a KGRA. (a) If BLM determines that the land should be considered a KGRA, then all noncompetitive applications are rejected, and applicants must follow the procedures for competitive bidding to obtain a lease. (b) If BLM determines that KGRA status is not warranted despite the multiple applications, then the lease will be awarded to the first qualified applicant. Sec. 3204.16 How does BLM determine the first qualified applicant? BLM determines the first qualified applicant by the priority in which the application is filed. BLM issues a noncompetitive lease to the offeror who is first to file an application that meets all the application requirements. Sec. 3204.17 May I withdraw my offer? Yes, you may withdraw your offer in whole or in part prior to lease issuance, provided the remaining lands in a partial withdrawal comply with the acreage requirements. Sec. 3204.18 May I amend my offer? Yes, you may amend your offer prior to lease issuance provided your amended offer complies with all the lease offer requirements. BLM will give your amended offer a new priority based on the date we receive it. Subpart 3205--Competitive Leasing Sec. 3205.10 How does BLM lease competitive lands? BLM leases Federal lands within KGRAs through a sealed bid, competitive sale process. BLM generally establishes parcels of lands available for competitive leasing from terminated, expired, or relinquished leases and from public expressions of interest. BLM lists these parcels, with stipulations, if applicable, in a sale notice, posts the notice in an appropriate BLM office and publishes the notice for 3 consecutive weeks in a newspaper of general circulation in the area of the lands. The sale notice will tell you which lands are offered, and where and when to submit your bids. BLM can request you to pay the cost of publication, if you are awarded the lease. Sec. 3205.11 How do I obtain information on the terms and conditions of the leases being offered through competitive bidding? BLM will post a statement which will include the terms and conditions of the lease(s), including the rental and royalty rates. The statement will also tell you where you may obtain a form on which to submit your bid. Sec. 3205.12 How do I bid for a parcel? Unlawful combination or intimidation of bidders is prohibited by 18 U.S.C. 1860. You must follow these procedures: (a) Submit your bid to the BLM office indicated in the notice prior to the date and time specified in the sale notice; (b) Submit your bid on Form 3000-2 (or exact copy); (c) Submit a bid in a separate, sealed envelope for each full parcel; (d) Include in each bid a certified or cashier's check, bank draft, or money order equal to one-fifth of the amount bid, payable to the ``Department of the Interior, Bureau of Land Management;'' and (e) Label each envelope with the parcel number and the statement ``Not to be opened before (date posted in the sale notice).'' Sec. 3205.13 What is the minimum acceptable bid? BLM will not accept bids which do not meet or exceed the fair market value as determined by BLM in accordance with generally acceptable appraisal methods. BLM determines the fair market value prior to the sale, but does not disclose it to the public. Sec. 3205.14 How does BLM conduct the sale? On the date, and at the place and time set out in the sale notice, BLM opens, announces, and records bids. BLM does not accept or reject any bid at that time. Bidders are not required to attend the sale. Sec. 3205.15 To whom does BLM issue the lease? BLM will issue the lease to the highest responsible qualified bidder within 30 days. If BLM determines that the highest bid is inadequate, BLM will reject the bid. BLM reserves the right to reject any and all bids. Sec. 3205.16 How will I know if my bid is accepted? (a) BLM will send you a letter accepting your bid. The letter will be accompanied by 3 copies of the lease. Upon receipt of the letter and lease forms, you have 15 days in which to submit: (1) The signed lease forms; (2) The remaining four-fifths of the bonus bid; (3) The first year's advance rental; and (4) Signed stipulations, if applicable. (b) If you fail to comply with these requirements BLM will revoke acceptance of your bid and you will forfeit one-fifth of your bonus bid. Sec. 3205.17 How will I know if my bid is not accepted? BLM will send a letter rejecting your bid. At that time, BLM will return the one-fifth of the bonus bid that you submitted with your application. Subpart 3206--Lease Issuance Sec. 3206.10 Are there any additional requirements prior to lease issuance? Yes. (a) You must: (1) Accept all lease stipulations; (2) Sign a unit joinder or waiver, if applicable; and (3) Comply with the maximum limits on acreage holdings. (b) BLM must: (1) Make a determination of land availability; (2) Make a determination that development on your lease will not significantly impact any significant [[Page 52748]] thermal feature within any of the following units of the National Park System: (i) Mount Rainier National Park; (ii) Crater Lake National Park; (iii) Yellowstone National Park; (iv) John D. Rockefeller, Jr. Memorial Parkway; (v) Bering Land Bridge National Preserve; (vi) Gates of the Arctic National Park and Preserve; (vii) Katmai National Park; (viii) Aniakchak National Monument and Preserve; (ix) Wrangell-St. Elias National Park and Preserve; (x) Lake Clark National Park and Preserve; (xi) Hot Springs National Park; (xii) Big Bend National Park (including that portion of the Rio Grande National Wild Scenic River within the boundaries of Big Bend National Park); (xiii) Lassen Volcanic National Park; (xiv) Hawaii Volcanoes National Park; (xv) Haleakala National Park; (xvi) Lake Mead National Recreation Area; and (xvii) Any other significant thermal features within National Park System Units which the Secretary may, after notice and public comment, in accordance with the criteria set out in 30 U.S.C. 1026(a)(3), add to the list of significant thermal features. Sec. 3206.11 What is the maximum acreage I may hold? You may not hold, either directly or indirectly, more than 51,200 acres in any one state, including any leases acquired under the provisions of sections 4(a)-4(f) of the Act. You are also not permitted to convert mineral leases, permits, applications for permits, or mining claims, pursuant to the provision of sections 4(a)-4(f) of the Act, into geothermal leases totaling more than 10,240 acres. Sec. 3206.12 How does BLM compute acreage holdings? BLM will compute acreage holdings in the following manner: (a) If you own an undivided interest in a lease, your accountable acreage will be your proportionate part of the total lease acreage. (b) If you own stock in a corporation or a beneficial interest in an association which holds a geothermal lease, your accountable acreage will be your proportionate part of the corporation's or association's acreage; except no one will be charged with a pro rata share of any acreage holdings of any association or corporation unless the person is a beneficial owner of more than 10% of the stock of the corporation or the beneficial interest of the association. (c) If you own a royalty interest, record title, or operating rights, you will be charged with your proportionate percentage of the total lease acreage only. You will not be charged twice for the same lease or for different interests in the same lease. For example, if you own a 2% overriding royalty, 10% of the operating rights and 50% of the record title in a lease, you will be charged with 50% of the total lease acreage. Sec. 3206.13 Am I charged for acreage if the United States owns only a fractional interest in the geothermal resources? Yes, you are charged with the same proportion as the United States owns of the mineral estate. For example, if you own 100% of record title in a 100 acre lease, and the United States owns 50% of the mineral estate, you are charged with 50 acres. Sec. 3206.14 Are there any acreages which are not chargeable? BLM does not count acreage in any approved unit or cooperative plan or acreage subject to an operating, drilling or development contract other than communitization or drilling agreements, in determining accountable acreage of the lessees or operators. Sec. 3206.15 What procedures does BLM follow when a party holds or controls excess accountable acreage? BLM will notify you of an excess acreage situation, and give you 90 days to divest yourself of the excess acreage. If you fail to comply BLM will cancel your leases, beginning with the lease most recently issued, until your chargeable acreage is within the maximum allowable. Sec. 3206.16 What is the primary term of my lease? Leases have a primary term of 10 years. Sec. 3206.17 When will BLM issue my lease? Leases are issued the day they are signed by BLM, and are effective the first day of the month following the issue date. Subpart 3207--Additional Lease Term Sec. 3207.10 Under what circumstances is my lease eligible for an additional term beyond its primary term? A lease is eligible to be renewed for an additional term under the following conditions: (a) If you produce or use geothermal steam in commercial quantities within the primary term, the lease will continue for as long as geothermal steam is produced or used in commercial quantities. However, the additional term may not exceed forty years beyond the primary term unless the provisions of paragraph (c) of this section apply. (b) If, prior to the end of the primary term, you have a well capable of producing geothermal steam in commercial quantities, BLM may decide to continue the lease for an additional forty-year period, if we determine that you are making diligent efforts to commence production. You must submit to BLM a written description of the efforts completed for the lease year and the efforts planned for the next lease year 60 days before the lease expires. Your submission should include descriptions of negotiations for sales contract, marketing arrangements, and electrical generating and transmission agreements and any other information you believe supports a finding of diligent efforts. (c) If at the end of the additional 40-year term, BLM does not need the lands for another purpose and you are producing geothermal steam in commercial quantities, you will have preferential right to renew the lease for an additional 40-year term under terms and conditions determined by BLM. Subpart 3208--Extending the Current Lease Term Sec. 3208.10 Under what circumstances is my lease eligible for an extension of the primary term? (a) A lease is eligible for an extension under the following circumstances: (1) If you commence drilling before the end of the primary term and diligently pursue drilling to a reasonable drilling target, as determined by BLM based on the local geology and type of development proposed by the operator, the lease will be extended for a 5-year period. If geothermal steam is produced or utilized during this 5-year period, the lease will be extended for a further period not to exceed 35 years. If at the end of that 35-year period you are producing or utilizing geothermal steam in commercial quantities and the lands are not needed for other purposes, you will have a preferential right to renew the lease for an additional 40-year period under such terms and conditions as BLM determines are appropriate. (2) If the term of any lease committed to a unit agreement would expire prior to the term of the unit expiring, BLM will extend the term of the lease to match the term of the unit. (3) BLM may extend any lease which at the end of its primary term or at the end of an extension provided by either [[Page 52749]] paragraphs (a)(1) or (a)(2) of this section is not producing geothermal steam, for up to 10 years in successive five-year extensions. (4) If you have a lease which produced geothermal steam, and BLM determines that it is no longer capable of commercial production, BLM may extend the lease for a 5-year period. This extension will only continue if you are producing one or more valuable byproducts in commercial quantities. You should consult 43 CFR 3209.10 if you wish to convert your lease to a mineral lease for the byproduct. (b) For an explanation of the difference between an ``additional term'' and an ``extended term'' please see the definitions in 43 CFR 3200.1. Sec. 3208.11 What procedures must I follow to obtain an extension of my lease? (a) If you are obtaining an extension under 43 CFR 3208.10 (a)(2) or (a)(4), you need not take any action. BLM will grant your lease the applicable extension. If your lease is eligible for the extension under 43 CFR 3208.10(a)(1), you should notify BLM of your drilling activities so we may document that you conducted the required drilling at the end of the primary term of your lease. (b) If you are requesting an extension under 43 CFR 3208.10(a)(3), you must: (1) Submit a written request to BLM for lease extension 60 days prior to the end of the primary or extended term of your lease; (2) Include a report documenting that you have made bona fide efforts to produce or utilize geothermal resources in commercial quantities given the current economic conditions for marketing geothermal steam; and (3) Indicate whether you choose to make payments in lieu of commercial quantities production or to make significant expenditures during the period of extension. (c) Within 30 days of receipt of your request for extension, BLM will notify you whether the request is approved or disapproved, or we will request additional information from you, if necessary. Sec. 3208.12 What information must I include in the report to document that I have made bona fide efforts? The report must include a description of: (a) Operations conducted during the primary term of the lease and currently in progress to identify and define the geothermal resource on the lease; (b) A summary of the results of those operations; (c) Actions taken in support of operations such as obtaining permits, conducting environmental studies, meeting permit requirements or other related activities; (d) Actions taken during the primary term of the lease and currently in progress to negotiate marketing arrangements, sales contracts, drilling agreements, financing for electrical generation and transmission projects, or other related actions; and (e) Current economic factors and conditions which affect your efforts to produce or utilize geothermal resources in commercial quantities on the lease. Sec. 3208.13 What will BLM do if I choose to make payments in lieu of commercial operation? If you elect to make payments in lieu of commercial quantities production and BLM approves the extension, BLM will modify the lease to require that you make an annual payment in lieu of production in the amount specified by BLM, but not less than $3.00 per acre or fraction of an acre of the lands under lease during an initial extension, or $6.00 per acre or fraction of an acre for a subsequent extension. The actual payment per acre is fixed for the period of the extension. If you request it, BLM will inform you of the rate before you submit your petition for extension. You must submit in lieu payments to MMS at the same time you pay the lease rental. The lease is subject to cancellation if you do not make these payments. Sec. 3208.14 What will BLM do if I choose to make significant expenditures? If you elect to make significant expenditures, and BLM approves the extension, we modify the lease to require you to make annual expenditures of at least $15.00 per acre or fraction of an acre for lands under lease during an initial extension. You must have expenditures of $18.00 per acre or fraction of an acre during a subsequent extension. BLM credits expenditures you make in excess of the minimum required to subsequent years within the same period of extension. Expenditures that qualify as significant expenditures are limited to those involving actual drilling operations on the lease, geochemical or geophysical surveys for exploratory or development wells, road or generating facility construction on the lease, architectural or engineering services procured for the design of generating facilities located on the lease, and environmental studies required by State or Federal law. To obtain credit toward meeting the significant expenditure requirement, you must submit to BLM a report of qualifying expenditures no later than 60 days after the end of the lease year in which the expenditures were made. BLM may cancel your lease if you fail to make such expenditures. Sec. 3208.15 May I change my election of making payments in lieu of commercial quantities or making significant expenditures during the extension? No. You may not change election during a period of extension, but must continue either to make payments in lieu of production or make significant expenditures until you drill a well that is capable of producing geothermal resources in commercial quantities. Subpart 3209--Conversion of Lease Producing Byproducts Sec. 3209.10 May I convert my geothermal lease to a mineral lease? Yes, you may under the following conditions: (a) If you have received a 5-year extension under subpart 3208 and the byproducts being produced are leasable under the Mineral Leasing Act of February 25, 1920, as amended (30 U.S.C. 181 et seq.), or under the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351-358), and the lease is primarily valuable for the production of that mineral, you are entitled to convert your geothermal lease to a mineral lease, provided you convert your lease prior to the end of the 5-year period. You will be subject to all the terms and conditions of the act permitting leasing of the mineral. (b) If the minerals are not leasable but are locatable and would be considered a byproduct if geothermal steam production were to continue, you are entitled to locate these minerals under the mining laws. To acquire these rights, you must complete the location of the mining claim within 90 days after the termination of the geothermal lease, as long as there has been no intervening location and the lands are open to entry under the mining laws. (c) If leases converted under either paragraphs (a) or (b) of this section affect lands withdrawn or acquired in aid of a function of a federal department or agency, including the Department of the Interior, you may be subject to additional terms and conditions as prescribed by the appropriate agency. Subpart 3210--Additional Lease Information Sec. 3210.10 When does lease segregation occur? (a) Lease segregation occurs when: (1) A portion of a lease is committed to a unit agreement, communitization agreement, drilling agreement, or [[Page 52750]] cooperative plan, and a portion of the lease is not committed; or (2) Only a portion of a lease is located in a participating area and the unit contracts. The portion of the lease outside the participating area is eliminated from the unit agreement and segregated as of the effective date of the unit agreement. (b) The portion of the lease within the plan or agreement will keep the same serial number. BLM will give the portion outside the plan or agreement a new serial number with the same lease terms as the original lease. Sec. 3210.11 Is a lease segregated from an agreement or plan eligible for an extension? No. The new lease will stand alone, and will not receive any of the benefits provided to the original lease by virtue of the agreement or plan. The eliminated portion of the lease is not eligible for extension due to production in commercial quantities, or the existence of a producible well on the lands remaining in the agreement or plan, or by virtue of the segregation. Sec. 3210.12 May I consolidate leases? BLM may approve the consolidation of two or more contiguous leases that have the same ownership and same lease terms, as long as the combined leases do not exceed 2,560 acres in size. Sec. 3210.13 What is the diligent exploration requirement? Diligent exploration is a lease requirement to perform activities which derive new geologic information regarding the lease or related lands. You must conduct diligent exploration beginning in the sixth year of the primary term until there is a well capable of commercial production. Some examples of activities that would qualify as diligent exploration are geochemical surveys, heat flow measurement, core drilling or drilling of test drill wells. Sec. 3210.14 How do I meet the diligent exploration requirement? (a) During the first 5 years of the primary term, you only need to pay your rentals. If you conduct activities during these first five years that would otherwise qualify as diligent exploration expenditures, and BLM approves them as such during those five years, BLM will count them toward the requirements of future years. (b) To qualify as diligent exploration expenditures in lease years 6 through 10, you must make expenditures equal to the minimum amounts set forth in the table below. BLM will apply approved expenditures in excess of the requirement in any one year to subsequent years. ------------------------------------------------------------------------ Expenditure Lease year per acre ------------------------------------------------------------------------ 6.......................................................... $4 7.......................................................... 6 8.......................................................... 8 9.......................................................... 10 10......................................................... 12 ------------------------------------------------------------------------ (c) To obtain credit for the expenditures you must submit a report to BLM no later than 60 days after the end of the lease year in which you made the expenditures. You must include the following information in your report: (1) The types of operations conducted; (2) The location of the operations; (3) When the operations occurred; (4) The amount of money spent conducting those operations; and (5) All geologic information obtained from your operations. (d) After BLM reviews your report, we will notify you in writing whether you have met the diligent expenditure requirement. BLM must approve the type of work done and the expenditures claimed in your report before they will be credited toward your diligent exploration requirements. Sec. 3210.15 Is there an option to performing diligent exploration? Yes. If you do not wish to conduct diligent exploration or if your total expenditures do not fully meet the requirement for any lease year, you may meet the diligent exploration requirement by paying an additional rental of $3 per acre or fraction of an acre. If you choose this option, you must submit the additional rental to MMS prior to the end of the lease year. Sec. 3210.16 What happens if I don't meet the diligence requirement or pay the additional rental? BLM will cancel your lease if you fail to perform and report the necessary operations and expenditures or pay the additional rental for each lease year prior to the end of that lease year. Sec. 3210.17 Can leases or locations for other mineral commodities occur on the same lands that my geothermal lease is located? Yes. The United States reserves the ownership of and the right to extract helium, oil and hydrocarbon gas from all geothermal steam and associated geothermal resources. In addition, mineral leasing or location is allowed on the same lands that are leased for geothermal resources, provided that operations under the mineral leasing or mining laws do not unreasonably interfere with or endanger geothermal operations, and the lands are not withdrawn. Sec. 3210.18 May BLM readjust the terms and conditions of my lease? Yes. Ten years after the commencement of production from your lease and at not less than 10-year intervals thereafter, BLM may readjust the terms and conditions of your lease as they pertain to stipulations and surface disturbance requirements. If the readjustment pertains to use, protection or restoration of the surface and the lands are managed by another federal agency, that agency must approve the adjustments. Sec. 3210.19 How will BLM readjust the terms and conditions of my lease? BLM will provide you with a written proposal for adjustment of the terms and conditions of your lease. You have 30 days to object to the new terms or relinquish your lease. If BLM does not receive an objection, these terms will become part of your lease. Sec. 3210.20 May BLM readjust the rental and royalty rates of my lease? Yes. Your lease rates are subject to readjustment at not less than 20-year intervals beginning thirty-five years after BLM determines that your lease is producing. Your rental and royalty will not be increased by more than 50 percent of what was paid during the preceding period. In no case will BLM raise the royalty rate beyond 22\1/2\ percent. You will be provided with written notice of BLM's proposed adjustments. If you do not object to the adjustment or relinquish your lease within 30 days of receipt of the notice, the new rate will become a part of your lease. Sec. 3210.21 What happens if I object to the proposed readjusted terms and conditions or rental and royalty rates? BLM will issue a decision responding to your objections. If we cannot reach an agreement within a 60-day period, either party may terminate the lease. Sec. 3210.22 What lease obligations am I accountable for during readjustment negotiations? If you object to the proposed terms and conditions of your lease, you are still bound by the current lease terms. To avoid termination of the lease, you must pay the proposed rentals and royalties timely, under protest. If we reach an agreement on rentals that differs from BLM's proposal, BLM will refund the difference. [[Page 52751]] Sec. 3210.23 When do the readjusted terms become effective? The new terms and conditions will be effective at the end of the prior term. Sec. 3210.24 Must I prevent the drainage of geothermal resources from my lease? Yes. You must prevent the drainage of geothermal resources from your lease by either: (a) Diligently drilling and producing wells which will protect the Federal geothermal resource from loss caused by production from other properties; or (b) Paying a sum determined by BLM as adequate compensation for failure to drill and produce any wells necessary to protect the Federal resource. BLM must agree to your use of this option. Subpart 3211--Fees, Rentals, and Royalties Sec. 3211.10 What are the filing fees, rentals, and royalties for leases? Rental and royalty payments are calculated based on the acreage amount. Therefore, prior to calculating rental and minimum royalty payments, you must determine the acreage amount. You must round up partial acreage to the next whole acre. You would then multiply the rounded acreage by the appropriate amount set out in the following chart to determine the amount you owe. Example: Rental on a lease containing 2,456.39 acres is calculated based on 2,457.00 acres. Filing Fees, Rentals, and Royalties ------------------------------------------------------------------------ Type Competitive Non competitive ------------------------------------------------------------------------ Lease Filing Fee............ N/A................. $75.00. Lease Rental................ $2.00 per acre...... $1.00 per acre. Lease Assignment Filing Fee. $50.00.............. $50.00. Royalties: steam, heat, or energy.. between 10% and 15%. between 10% and 15%. demineralized water..... 5%.................. 5% byproducts.............. 5% a................ 5% a. minimum royalty......... $2.00 per acre...... $2.00 per acre. Additional rental/In lieu of $3.00 per acre in $3.00 per acre in diligent exploration. addition to regular addition to regular lease rental. lease rental. Additional rental/In lieu of $3.00 per year/first $3.00 per year/first commercial quantities 5 years, $6.00 per 5 years, $6.00 per production. year/second 5 years. year/second 5 years. ------------------------------------------------------------------------ a Note the exception stated in 43 CFR 3211.17(b). Sec. 3211.11 When is my annual rental payment due? (a) You must submit your annual rental payments so they are received by BLM or MMS, as appropriate, on or before the anniversary date of each lease year. There is no grace period for rental payments. If the rental for your lease is not timely paid, the lease will automatically terminate by operation of law, unless you meet the conditions of 43 CFR 3213.15 of this part. Rental payments are considered timely received if they are postmarked by the United States Postal Service, common carrier, or their equivalent, on or before the anniversary of the lease. This does not include private postal meters. If less than a full year remains on a lease, you are still responsible for paying a full year's rental on or before the anniversary date of the lease. (b) When BLM terminates a lease suspension (see subpart 3212 of this part) and you had paid rent in advance, BLM applies a prorated amount to the annual rental or minimum royalty to complete the lease year requirement and return to the next anniversary date. BLM applies any remaining monies to the next year's rental. You must pay the balance due on or before the next anniversary date to fulfill your rental obligation for the next year. If you relinquish the lease, or fail to pay the balance due on or before the next anniversary date, BLM will refund the outstanding monies. If there is insufficient rental to complete payment on the lease year (i.e., to return the next anniversary date), BLM will notify you of payment due and grant you 30 days from receipt of the notification to remit the balance. (c) If payment is due on a day in which the designated payment office is closed, payment received on the next official working day is considered timely. Sec. 3211.12 How and where do I submit my rental payment? You must pay BLM the first year's advance rental. You must pay subsequent rentals, royalties, and in lieu payments to MMS. Payments may be made to the BLM in the form of personal or cashier's check or money order and should be made payable to the Department of the Interior--Bureau of Land Management. You may also make payments by credit card or electronic funds transfer when specifically authorized by BLM. Payments to the MMS by personal or cashier's check, money order, or electronic funds transfer, should be made payable to the Department of the Interior--Minerals Management Service. Sec. 3211.13 Is there a different rental or minimum royalty amount for a fractional interest lease? BLM will not prorate rentals and minimum royalties payable under leases for lands in which the United States owns only a fractional mineral interest. You must pay for the full acreage in the lease. Sec. 3211.14 Prior to production, am I expected to pay rental if my lease is committed to an approved cooperative or unit plan? Yes. You are expected to pay rental in accordance with 43 CFR 3211.10. Sec. 3211.15 When unit production starts, am I expected to pay rental if my lease is committed to an approved cooperative or unit plan? As soon as production is established on your lease, lands included in an approved cooperative or unit plan, which are within the participating area, are subject to royalties in accordance with 43 CFR 3211.17. All other unitized lands remain subject to rental in accordance with 43 CFR 3211.10. Sec. 3211.16 Will I always pay rental on my lease? No, you are required to pay rentals only until you achieve production in commercial quantities. At that time the lease converts to royalty status. [[Page 52752]] Sec. 3211.17 What are the possible royalty rates of my lease? (a) BLM will set out the royalty rate in the lease. BLM will determine the royalty rate based on the following: (1) The royalty rate for heat or energy derived from lease production may range from 10-15% of the heat or energy value. (2) The royalty rate for the value of byproducts derived from production under the lease and sold or utilized or reasonably susceptible to sale or utilization may not exceed 5%, except that the royalty rate for minerals listed in section 1 of the Mineral Leasing Act (MLA), 30 U.S.C. 181, will be the same as that provided in the MLA. (3) The royalty rate for demineralized water produced on a lease may not exceed 5%, except that BLM will not charge a royalty for water used in the operations of a utilization facility. (4) The minimum royalty rate on a producing lease is $2.00 per acre. (b) Occasions when the minimum royalty rate might apply are when an initial positive well commerciality determination is made but actual production has not yet begun, or when the value of actual production is so low that royalty due under the applicable schedule (in paragraphs (a)(1) through (a)(3) of this section) is less than $2.00 per acre. Subpart 3212--Suspension of Operations or Operations and Production Sec. 3212.10 May I obtain a suspension of operations or operations and production on my lease, and if so, for what reasons? The operator may request in writing that BLM place a producing lease in suspension. Your request must fully describe the need for the suspension. BLM, on its own, may suspend operations on any lease in the interest of conservation. The suspension may include leases committed to an approved unit agreement. Suspending the leases in a unit does not affect unit obligations. Sec. 3212.11 When is a lease suspension effective or terminated? (a) A suspension will take effect and will last for the period specified by BLM. Prior to the expiration of the time specified, you may request in writing that BLM lift the suspension. If BLM agrees to lift the suspension and permit you to resume operations, you must also resume payment of rentals and royalty, as applicable. (b) BLM may, upon information obtained by or furnished to BLM, order the resumption of operations, if BLM determines that the operations are necessary to protect the interests of the United States. Sec. 3212.12 How does a suspension affect the lease terms? An approved suspension stays all lease obligations. You do not have to conduct drilling, produce thermal steam or pay rents or royalties. The time during which the suspension is effective does not count toward the lease term. Sec. 3212.13 What happens when the suspension is lifted or removed? When BLM lifts a suspension, we extend the lease term by adding the number of days the lease was under suspension to the term. BLM suspends rental or minimum royalty payments the first day of the lease month following the effective date of the suspension. Your obligation to resume these payments begins on the first day of the lease month in which BLM lifts the suspension. Sec. 3212.14 May BLM reduce or suspend the royalty or rental rate of my lease? Yes, if you submit an application requesting a waiver, suspension or reduction of your rent or royalty, BLM may grant the request if it determines the following: (a) It is in the interests of conservation; (b) Doing so will encourage the greatest ultimate recovery of resources; (c) It is necessary to promote development; or (d) The lease cannot be successfully operated under the current lease terms. Sec. 3212.15 What information must I submit when requesting a reduction or suspension of the royalty or rental rate of my lease? (a) Your request must include: (1) The type of reduction being requested; (2) The serial number of the lease; (3) The name of the lessee and operator; (4) The number, location, and status of each well; (5) A summary of monthly production from the lease during the last 6 months; (6) A detailed statement of expenses and costs, and all facts necessary for BLM to determine if the well can be operated under its current terms; and (7) Any other information requested by BLM. (b) If the application is for a reduction in royalty, you must also submit a list of names and amounts of royalties or payments out of production paid to each individual, and every effort you have made to reduce these payments. Subpart 3213--Relinquishment, Termination, Cancellation, and Expiration Sec. 3213.10 Who may relinquish a lease? The record title holder or its authorized agent may relinquish a lease in full or in part, and must sign the relinquishment. If there is more than one record title holder to a lease, all record title holders or their authorized agents must sign the relinquishment. Sec. 3213.11 What form must I submit to relinquish a lease? You must submit a written request to BLM that includes the serial number of each lease you are relinquishing. If you are relinquishing the entire lease, no legal description of the land is required. If you are relinquishing part of the lease, you must describe the lands relinquished. Sec. 3213.12 Can BLM accept a partial relinquishment resulting in less than 640 acres? BLM may not accept a partial relinquishment that reduces the lease acreage to less than 640 acres or all of the land in the section if less than 640 acres is available. BLM may waive the minimum acreage provision found at 43 CFR 3204.14, if BLM determines that an exception is justified to further development of the resource. Sec. 3213.13 When does my relinquishment take effect? Once approved by BLM, your relinquishment takes effect as of the date it is filed, provided that you and your surety have fulfilled your obligations to: (a) Pay all rentals and royalties due prior to relinquishment; (b) Plug and abandon all wells on the relinquished land; and (c) Restore the surface resources and comply with environmental stipulations in accordance with all applicable laws and regulations and lease terms. Sec. 3213.14 How does a lease terminate? A lease terminates under the following conditions: (a) If you fail to produce or commence production prior to the end of the primary term or obtain an extension, the lease terminates at the end of that period; or (b) If you fail to pay the rental on or before the anniversary date, the lease automatically terminates by operation of law, unless you meet the conditions of 43 CFR 3213.15. Sec. 3213.15 What if I don't pay the entire amount of rental due? If your payment is received timely, but is deficient by a nominal amount, [[Page 52753]] your lease will not automatically terminate. A nominal amount is not more than $100 or 5% of the total payment due, whichever is less. BLM will notify you if your payment is deficient and will set a date by which the deficient payment must be made. Failure to submit the deficiency in the time allowed will result in lease termination as of its anniversary date. Sec. 3213.16 Will BLM notify me if my lease terminates? Yes, BLM will send a notice by certified mail, return receipt requested. Sec. 3213.17 Can my lease be reinstated? If so, how? Yes, if the lease was terminated for failure to timely pay your rentals. You will be given 30 days to petition for reinstatement. Sec. 3213.18 Who may petition to reinstate a lease? Every record title holder of the lease must sign a petition for reinstatement. Sec. 3213.19 What must I do to obtain a reinstatement? You must submit a petition to BLM requesting reinstatement. The petition should include the serial number for each lease and state your reason for late payment. You must also submit the rental, including any back rental which has accrued from the date of termination with your petition, if you have not already paid it to MMS. You must also include an explanation of why the delay in payment was justifiable and not due to a lack of diligence. Sec. 3213.20 Are there reasons why BLM would not approve a reinstatement? Yes, BLM will not approve a reinstatement if: (a) You do not prove that failure to pay rent on or before the anniversary date was justifiable or was not due to a lack of diligence on the part of the lessee; (b) A valid lease has been issued for any of the lands prior to the filing of a petition for reinstatement (BLM will not issue another lease for at least 90 days after the date of termination); or (c) The land has become unavailable for leasing. Sec. 3213.21 When will my lease expire? A lease expires at the end of its primary term (10 years) unless it meets requirements for an extended or additional term. BLM will not notify you when your lease expires at the end of the primary term. Sec. 3213.22 Will BLM notify me when my lease expires if it is in an extended term? BLM will notify the lessee by decision that BLM has determined that diligent efforts are not being made to use the geothermal resources. The lease will expire 30 days after you receive the decision. During those 30 days, you may request reconsideration of the decision by submitting information detailing why you believe you have made diligent efforts to use the resource. Sec. 3213.23 May BLM cancel my lease? BLM may cancel a lease after 30 days notice if we determine that you violated the laws and regulations governing geothermal leases and operations or you violated the lease terms. BLM may also cancel a lease that was issued in error. Sec. 3213.24 When is a cancellation effective? (a) If cancellation is due to a violation of the laws, regulations or lease terms, the cancellation is effective 30 days from your receipt of notification of the violation. The cancellation of a lease issued in error is effective upon issuance of the notice of cancellation. BLM will not cancel the lease if: (1) You have corrected the violation; or (2) BLM determines that the violation can not be corrected during the 30 day period and BLM determines you are making a good faith attempt to timely correct the violation. (b) You may request an evidentiary hearing regarding the violation or proposed lease cancellation within 30 days from receipt of the violation notification, in accordance with 43 CFR parts 4 and 1840. If a hearing occurs and the administrative law judge decides a violation occurred, you will have 30 days from receipt of the decision to commence or complete any corrective action. Subpart 3214--Personal and Surety Bonds Sec. 3214.10 Who must post a geothermal bond? The lessee, operating rights owner, or operator must file a bond prior to the commencement of exploration operations, drilling operations or whenever the operator is changed. Sec. 3214.11 Who is covered by the bond? The principals named on the bond and any other parties the principal or surety has consented to cover are covered by the bond. Sec. 3214.12 What does my bond cover? Your bond covers all surface disturbing and down hole activities related to drilling and associated operations on a Federal lease, reclamation, payment of rentals and royalties, performance of all other lease terms and conditions, and compliance with all applicable laws and regulations. Sec. 3214.13 What is the minimum dollar amount required under each type of operation bond? (a) For exploration activities, the bond may not be less than $5,000 for each operation; (b) For an individual lease, the bond may not be less than $10,000 for each lease; (c) For a statewide bond which covers all of your leases and operations in any one state, the amount may not be less than $50,000; or (d) For a nationwide bond which covers all of your leases and operations nationwide, the amount may not be less than $150,000. Sec. 3214.14 What kind of financial guarantee will BLM accept to back my bond? BLM will accept: (a) Corporate surety bonds, provided that the surety company is approved by the Department of Treasury (see Department of the Treasury Circular No. 570 which is published in the Federal Register every year on or about July 1); and (b) Personal bonds, which are guaranteed by a cashier's check, certified check, certificate of deposit, negotiable securities such as Treasury notes, or irrevocable letter of credit (see 43 CFR 3214.22). BLM will not accept cash to back a bond. Sec. 3214.15 Is there a special bond form I must use? You must use a bond Form (Form 3000-4, June 1988 or later editions) approved by BLM for either a corporate surety bond or a personal bond. Sec. 3214.16 Where must I submit my bond? You must file personal or corporate surety bonds and statewide bonds in the BLM State Office having jurisdiction over your lease or operations. You may file nationwide bonds in any BLM State Office. You must file bond riders in the BLM State Office where your bond is located. For personal or corporate surety bonds you must file a single, originally signed copy of the bond. Sec. 3214.17 Who will BLM hold liable under the bond and what are they liable for? All interest owners in a lease assume full liability, jointly and severally, from the effective date of the lease for compliance with all applicable laws, regulations, lease terms and conditions. Among other things, all interest owners are liable for: [[Page 52754]] (a) Well plugging and abandonment; (b) Surface reclamation; (c) Outstanding rental or royalty payments; (d) Assessed royalties to compensate for drainage; and (e) Other requirements related to operations on the lease. Sec. 3214.18 What are my bonding requirements when a lease interest is transferred to me? (a) If the lands transferred to you contain a well or any other surface disturbing activity which was not reclaimed by the original lessee, you must post a bond. The bond must cover all of the transferee's liability, and those holding an interest or engaging in operations on the lease. (b) If you previously furnished a statewide or nationwide bond, you do not need to post an additional bond. (c) If the operator provided the original bond, and the operator does not change, you do not need to post a new bond. (d) If the original lessee does not transfer all interest in the lease to you, you may become a co-principal on the original bond. Sec. 3214.19 How do I modify or extend the terms and conditions of my bond? You may modify your bond by submitting a rider to the BLM State Office where your bond is held. There is no special form required. Sec. 3214.20 Can BLM ever increase the bond amount above the minimums? Yes. BLM may increase the bond amount beyond the minimums set out in 43 CFR 3214.13, if those amounts will not cover the estimated costs of plugging and abandoning wells, abandoning utilization facilities, and/or performing surface reclamation. BLM may also increase the amount of your bond if BLM determines that: (a) The liability on the lease exceeds the amount of the bond; or (b) The operator has a history of noncompliance. Sec. 3214.21 Where can I get a certificate of deposit or a letter of credit? You must obtain a certificate of deposit or letter of credit through a Federally insured financial institution authorized to do business in the United States. Sec. 3214.22 What special requirements are there if I want to use a certificate of deposit to back my bond? Your certificate of deposit must: (a) Be issued by a federally insured financial institution; (b) Include on its face the statement, ``The Secretary of the Interior or his delegate must approve redemption of this certificate by any party''; (c) Not expire; (d) Automatically renew; and (e) Show it is payable to the Department of the Interior--Bureau of Land Management. Sec. 3214.23 What special requirements are there if I want to use a letter of credit to back my bond? Your letter of credit must: (a) Be issued by a federally insured financial institution authorized to do business in the United States; (b) Be payable to the Department of the Interior--BLM; (c) Be irrevocable during its term and have an initial expiration date of not less than one year following the date BLM receives it; (d) Be automatically renewable for a period of not less than one year, unless the issuing financial inst [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%3A96-25254. Public record. Not legal advice.