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Proposed Rule2022-28098

Mining of the Osage Mineral Estate for Oil and Gas

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Published

January 13, 2023

Issuing agencies

Interior DepartmentIndian Affairs Bureau

Abstract

The Bureau of Indian Affairs (BIA) proposes to revise the regulations governing leasing of the Osage Nation's mineral estate ("Osage Mineral Estate") for oil and gas mining. The proposed rule would allow the BIA to strengthen management of the Osage Mineral Estate by updating bonding, royalty payment and reporting, production valuation and measurement, site security, and operational requirements to address changes in technology and industry standards that have occurred in the 47 years since the regulations were issued. The proposed rule would also allow the BIA to respond to recommendations made by the Office of Inspector General, U.S. Department of the Interior (OIG).

Full Text

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<title>Federal Register, Volume 88 Issue 9 (Friday, January 13, 2023)</title>
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[Federal Register Volume 88, Number 9 (Friday, January 13, 2023)]
[Proposed Rules]
[Pages 2430-2500]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28098]

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Vol. 88

Friday,

No. 9

January 13, 2023

Part III

Department of the Interior

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Bureau of Indian Affairs

25 CFR Part 226

Mining of the Osage Mineral Estate for Oil and Gas; Proposed Rule

Federal Register / Vol. 88, No. 9 / Friday, January 13, 2023 /
Proposed Rules

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DEPARTMENT OF THE INTERIOR

Bureau of Indian Affairs

25 CFR Part 226

[Docket No. BIA-2022-0006; 2231A2100DD/AAKC001030/A0A501010.999900; OMB
Control Number 1076-0180, 1012-0004, 1012-0006]
RIN 1076-AF59

Mining of the Osage Mineral Estate for Oil and Gas

AGENCY: Bureau of Indian Affairs, Interior.

ACTION: Proposed rule.

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SUMMARY: The Bureau of Indian Affairs (BIA) proposes to revise the
regulations governing leasing of the Osage Nation's mineral estate
(``Osage Mineral Estate'') for oil and gas mining. The proposed rule
would allow the BIA to strengthen management of the Osage Mineral
Estate by updating bonding, royalty payment and reporting, production
valuation and measurement, site security, and operational requirements
to address changes in technology and industry standards that have
occurred in the 47 years since the regulations were issued. The
proposed rule would also allow the BIA to respond to recommendations
made by the Office of Inspector General, U.S. Department of the
Interior (OIG).

DATES: Proposed Regulations: Submit your comments on the proposed rule
to the BIA on or before March 17, 2023. Information Collection
Requirements: Submit your comments on the information collection
requirements in the proposed rule on or before March 17, 2023. Public
Meeting: A public meeting will be held on February 8, 2023, 6:30 p.m.
to 9 p.m. central time.

ADDRESSES:
Proposed Regulations: You may submit your comments on the proposed
rule by any of the methods listed below.
<bullet> Federal Rulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Enter ``RIN 1076-AF59'' in the search box and click ``Search.'' Follow
the instructions for sending comments.
<bullet> Mail: U.S. Department of the Interior, Eastern Oklahoma
Region, Bureau of Indian Affairs, Attn: Regional Director, P.O. Box
8002, Muskogee, OK 74402. All submissions must include the words
``Bureau of Indian Affairs'' or ``BIA'' and ``RIN 1076-AF59.''
<bullet> Hand Delivery/Courier: U.S. Department of the Interior,
Eastern Oklahoma Region, Bureau of Indian Affairs, Attn: Regional
Director, 3100 W Peak Boulevard, Muskogee, OK 74402.
Public Meeting: The BIA is holding a public meeting on the Proposed
Rule on Wednesday, February 8, 2023, from 6:30 p.m. to 9 p.m. central
time at the Osage Casino and Hotel, 5591 W Rogers Boulevard, Skiatook,
OK 74070. Please see SUPPLEMENTARY INFORMATION, Section II, Public
Comment Procedures, for details.
Information Collection Requirements: Comments on the information
collection requirements in the proposed rule must be submitted to
Steven Mullen, Information Collection Clearance Officer, Office of
Regulatory Affairs and Collaborative Action--Indian Affairs, U.S.
Department of the Interior, 1001 Indian School Road NW, Suite 229,
Albuquerque, NM 87104; or by email to <a href="/cdn-cgi/l/email-protection#fd9e9290909893898ebd9f949cd39a928b">[email&#160;protected]</a> with a copy to
<a href="/cdn-cgi/l/email-protection#3a7574686865685f5d4f565b4e53555449775b53565855427a55544848145d554c">[email&#160;protected]</a>. All submissions must include the
applicable Office of Management and Budget (OMB) Control Number(s) for
the BIA or ONRR information collection(s) you are commenting on:
<bullet> OMB Control Number 1076-0180, Mining of the Osage Mineral
Estate for Oil and Gas.
<bullet> OMB Control Number 1012-0004, Royalty and Production
Reporting.
<bullet> OMB Control Number 1012-0006, Suspensions Pending Appeal
and Bonding.

FOR FURTHER INFORMATION CONTACT: Oliver Whaley, Director, Office of
Regulatory Affairs and Collaborative Action, Office of the Assistant
Secretary--Indian Affairs, (202) 738-6065, <a href="/cdn-cgi/l/email-protection#14777b7979717a606754767d753a737b62">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:
I. Executive Summary
II. Public Comment Procedures
III. Background
IV. Incorporation by Reference of Industry Standards
V. Discussion of Proposed Changes
VI. Procedural Matters

I. Executive Summary

The purpose of this proposed rule is to amend 25 CFR part 226,
Leasing of Osage Reservation Lands for Oil and Gas Mining, to
strengthen the Bureau of Indian Affairs' (BIA) management and
administration of the Osage Mineral Estate. The last major substantive
revisions to the regulations in 25 CFR part 226 occurred in 1974, with
many provisions having remained virtually unchanged since well before
then. As a result, the regulations are outdated, inconsistent with
industry standards, and do not reflect technological advancements or
modern oil and gas operations within the Osage Mineral Estate. The BIA
believes that the proposed rule updating the regulations makes critical
changes that will improve accounting and production measurement
standards; offer consistency in production valuation; address
inadequate bonding; support the implementation of electronic reporting
systems; enhance accountability; clarify lessees' obligations; prevent
waste; promote safe and environmentally sound operations; and protect
resource values. The BIA also believes that the proposed rule will
allow it to take the necessary actions to resolve certain
recommendations made by the Office of Inspector General, U.S.
Department of the Interior (OIG).
In 2013, the OIG performed an assessment of the BIA Osage Agency's
effectiveness in managing the Osage Mineral Estate. On October 20,
2014, the OIG issued its final evaluation report, titled ``BIA Needs
Sweeping Changes to Manage the Osage Nation's Energy Resources.'' While
the OIG acknowledged the complexity of managing the Osage Mineral
Estate due, in part, to the number of competing interests, it
documented multiple deficiencies in the BIA Osage Agency's management
of the oil and gas program and called for broad reform.
The OIG report set forth 33 recommendations for improvement of the
BIA Osage Agency's oil and gas program. The first issue the OIG report
addressed was deficiencies in the regulations in 25 CFR part 226.
Specifically, the OIG found that the existing regulations are vague,
inadequate, and fail to mirror the oil and gas regulations governing
the rest of Indian country. Accordingly, the OIG recommended that the
BIA ``use its authority to correct program deficiencies by modifying 25
CFR part 226 to mirror other Indian Country oil and gas regulations.''
The OIG also identified issues with accounting, reconciliation, bonding
requirements, royalty and production reporting, inspections, lease
compliance, and enforcement measures, among other things. The BIA Osage
Agency resolved 26 of the OIG's recommendations through the
implementation of new and revised policies and procedures but
determined that the remaining seven recommendations could not be fully
resolved without revision of the regulations in 25 CFR part 226.
This proposed rule modernizes the regulations and brings them in
line with the regulations governing oil and gas leasing and development
throughout the rest of Indian country consistent with the OIG's
recommendation. In addition, the proposed rule will allow the BIA Osage
Agency to respond to the open OIG recommendations regarding engagement
of the Office of Natural Resources Revenue (ONRR) to perform accounting
and compliance activities,

[[Page 2431]]

implementation of ONRR's electronic reporting systems, reconciliation
of royalty payments, verification of allowances and arm's-length sales
transactions, and the implementation of sampling thresholds. These
revisions are critical to ensure that oil and gas produced from the
Osage Mineral Estate is properly accounted for and lessees timely pay
the correct and full amount of royalties due to the Osage Nation.

II. Public Comment Procedures

If you wish to comment on this proposed rule, you may submit your
comments to the BIA by mail, hand delivery/courier, or through <a href="https://www.regulations.gov">https://www.regulations.gov</a> (see ADDRESSES). Please make your comments on the
proposed rule as specific as possible, provide a detailed explanation
of any changes you recommend, and include any relevant supporting
documentation. Where possible, your comments should reference the
specific section or paragraph of the proposed rule that you are
addressing. The BIA is not obligated to consider comments received
after the comment period closes (see DATES) or comments delivered to an
address, or using methods other than, those identified (see ADDRESSES).
Comments, including the names and street addresses of respondents,
will be available for public review at the BIA Eastern Oklahoma
Regional Office, 3100 W Peak Boulevard, Muskogee, OK 74402, during
regular business hours (8 a.m. to 4:30 p.m.), Monday through Friday,
except holidays. Before including your address, phone number, email
address, or other personal identifying information in your comment,
please be advised that your entire comment--including your personal
identifying information--may be made publicly available at any time.
While you can ask the BIA to withhold your personal identifying
information from public review in your comment, we cannot guarantee
that we will be able to do so. As discussed in detail below, this
proposed rule would include revisions to information collection
requirements that must be approved by the Office of Management and
Budget (OMB). If you wish to comment on the revised information
collection requirements in this proposed rule, you must send such
comments directly to the OMB (see ADDRESSES).
The BIA is holding a public meeting on the Proposed Rule on
Wednesday, February 8, 2023, from 6:30 p.m. to 9 p.m. central time at
the Osage Casino and Hotel, 5591 West Rogers Boulevard, Skiatook, OK
74070. At the meeting, you may sign up for a two-minute time slot to
provide verbal comments on the Proposed Rule. The BIA requests that
groups or organizations wishing to provide verbal comments elect a
single representative to speak on behalf of the group or organization.

III. Background

A. Osage Allotment Act

In 1872, the U.S. Congress established a reservation for the Osage
Nation in the Oklahoma Territory. On June 16, 1906, Congress passed the
Oklahoma Enabling Act, Public Law 59-234, 34 Stat. 256, joining the
Oklahoma Territory with Indian Territory to form the state of Oklahoma.
Shortly thereafter, Congress passed the Act of June 28, 1906, Public
Law 59-321, 34 Stat. 539 (1906 Act), titled an ``Act for the division
of the lands and funds of the Osage Indians in Oklahoma Territory.''
The 1906 Act provided for the allotment of the Osage Nation's lands to
individual Tribal members. Upon statehood in 1907, the Osage Indian
Reservation, comprising approximately 1,475,000 acres, became Osage
County, Oklahoma.
Section 3 of the 1906 Act, as amended, severed the surface estate
from the subsurface mineral estate, reserving all oil, gas, coal, and
other minerals to the Osage Nation in perpetuity. Accordingly, the
United States holds the subsurface mineral estate in Osage County,
Oklahoma (``Osage Mineral Estate'') in trust for the benefit of the
Osage Nation. The 1906 Act authorizes the Osage Nation to lease the
Osage Mineral Estate for oil, gas, and other mineral development ``with
the approval of the Secretary of the Interior, and under such rules and
regulations as he may prescribe.'' The Secretary of the Interior
delegated this authority to the Superintendent of the BIA Osage Agency.
See 209 Departmental Manual 8.1(A).
Section 4 of the 1906 Act, as amended, required that the United
States hold the revenues derived from the Osage Mineral Estate in trust
and distribute the funds to individual Tribal members on the authorized
roll of membership in a timely (quarterly) and proper (pro rata with
interest) basis. This prospective right to share in the royalties,
rental, and bonuses derived from the Osage Mineral Estate is referred
to as a ``headright.'' See Act of October 30, 1984, Pub. L. 98-605,
section 11, 98 Stat. 3163.

B. Osage Tribal Trust Settlement and Negotiated Rulemaking

On October 14, 2011, the United States and Osage Nation signed the
Osage Tribal Trust Settlement (Settlement) resolving litigation
regarding the United States' alleged mismanagement of the Osage Mineral
Estate along with other unrelated breach of trust claims. As part of
the Settlement, the Department of the Interior (Department) agreed to
engage in negotiated rulemaking with the Osage Nation pursuant to 5
U.S.C. 561-570a and revise the regulations in 25 CFR part 226 to
improve management of the Osage Mineral Estate. The negotiated
rulemaking process began on June 18, 2012, when the Department
published a notice of the intent to establish an Osage Negotiated
Rulemaking Committee (Committee). See 77 FR 36226.
On July 31, 2012, the Department announced the establishment of the
Committee, comprised of four Federal Government representatives and
five members of the Osage Minerals Council who were selected by Council
vote. See 77 FR 45301. The Osage Minerals Council representatives on
the Committee identified five priority areas to be discussed during
negotiations: (1) modernization of royalty value and royalty rate for
oil production; (2) modernization of royalty value, royalty rate, and
royalty calculations for gas production; (3) strengthening drilling
obligations for oil lessees; (4) requiring detailed electronic
reporting by all lessees; and (5) strengthening oil gauging and gas
meter inspection, calibration, and adjustment.
The Committee held the first public meeting in August 2012 and,
except for December 2012, met monthly until April 2013. On April 25,
2013, the Negotiated Rulemaking Committee submitted its Consensus
Report to the Department on a package of proposed revisions to the
regulations, completing the negotiated rulemaking process required by
the Settlement. The Department published the proposed rule based on the
Committee's recommendations on August 28, 2013. See 78 FR 53083. The
Department received, evaluated, and responded to a significant number
of public comments on the proposed rule and amended the regulations to
make necessary changes in accordance therewith. On May 11, 2015, the
Department published the final rule, which had an effective date of
July 10, 2015. See 80 FR 26994.
On July 1, 2015, the Osage Minerals Council and Osage Producers
Association each filed suit in the U.S. District Court for the Northern
District of Oklahoma (Court), seeking to enjoin implementation of the
final rule. The arguments advanced in the lawsuits included, among
other things, claims that the final rule conflicted with the 1906 Act,
would impose administrative costs that would lead to decreased

[[Page 2432]]

production, and the Department failed to complete the analyses required
by the Regulatory Flexibility and Small Business Regulatory Enforcement
Acts. The Court consolidated the two lawsuits and entered an order
enjoining implementation of the final rule pending resolution of the
litigation.
Upon review of the issues raised in the litigation, the Department
determined that a voluntary remand of the final rule was appropriate.
The Osage Minerals Council and Osage Producers Association supported
such action. On November 19, 2015, the Department filed the Joint
Motion for Voluntary Remand and the Court, in turn, entered the
Judgment of Remand. As a result of the remand, the 2015 final rule
never went into effect. Accordingly, the version of 25 CFR part 226
that was in effect prior to publication of the final rule remained
operative. To ensure that the correct version of the regulations
appeared in the CFR, the Department published a final rule formally
confirming that the prior version of 25 CFR part 226 (last updated in
1974) remained in full force and effect. See 81 FR 39572.

C. Current Rulemaking

Following remand of the 2015 final rule, the BIA determined that it
was appropriate to review the regulations in 25 CFR part 226 to
consider whether, and to what extent, the regulations should be revised
to strengthen the BIA's management and administration of the Osage
Mineral Estate. On September 22, 2016, the BIA mailed letters to the
Principal Chief of the Osage Nation and Chairman of the Osage Minerals
Council requesting government-to-government consultation (consultation)
regarding the need for such revisions. On October 25, 2016, the BIA
held a consultation with representatives from the Osage Nation
Executive and Legislative Branches, the Osage Minerals Council, and
their legal counsel, in Pawhuska, Oklahoma. The outcome of the
consultation was agreement by all parties that revision of the
regulations was necessary. See Section VI, Procedural Matters, for
additional information regarding the Tribal consultation process for
the proposed rule.
The current effort to revise the regulations in 25 CFR part 226 is
not a continuation of the negotiated rulemaking process undertaken
pursuant to the Settlement, nor is it a republication of the 2015 final
rule.

IV. Incorporation by Reference of Industry Standards

This proposed rule would incorporate industry standards and
recommended practices, either in whole or in part, without republishing
the standards in their entirety in the CFR. This practice is known as
incorporation by reference (IBR). These standards currently apply to
all federal and Indian lands except those within Osage County,
Oklahoma. The BIA reviewed these standards and determined that they
achieve the intent of 25 CFR 226.106 through 226.116 and 25 CFR 226.120
through 226.141 of the proposed rule. The proposed rule proposes to
incorporate the versions of the standards listed. Some of the standards
referenced would be incorporated in their entirety. For other
standards, the BIA would incorporate only those sections that are
relevant to the rule, meet the intent of 25 CFR 226.0, and do not
require further clarification.
The National Technology Transfer and Advancement Act (NTTAA),
Public Law 104-113, 15 U.S.C. 3701, et seq., states that ``all Federal
agencies and departments shall use technical standards that are
developed by consensus standards bodies, using such technical standards
as a means to carry out policy objectives or activities determined by
the agencies or departments,'' subject to certain exceptions. The BIA
may incorporate these standards into its regulations by reference
without republishing the standards in their entirety in the
regulations. The legal effect of IBR is that the incorporated standards
would become regulatory requirements. The incorporated standards, like
any other regulation, have the force and effect of law. Accordingly,
lessees and other regulated parties would be required to comply with
the standards incorporated by reference in the regulations.
The Office of the Federal Register (OFR) regulations governing IBR
are set forth in 1 CFR part 51. The industry standards for this
proposed rule are eligible for incorporation pursuant to 1 CFR 51.7
because, among other things, they substantially reduce the volume of
material published in the Federal Register; are published, bound,
numbered, and organized; and are readily available to the public free
of charge or through purchase from the standards organization or
through inspection at the BIA Osage Agency. The IBR language in Sec.
226.0 meets the requirements set forth in 1 CFR 51.9. Where
appropriate, the BIA would incorporate by reference an industry
standard governing a particular process and impose requirements that
add to, or modify, the requirements imposed by that standard (e.g., the
BIA sets a specific value for a variable where the industry standard
proposed a range of values or options).
All American Petroleum Institute (API) materials are available for
inspection and purchase at the API, 200 Massachusetts Avenue NW, Suite
1100, Washington, DC 20001, (202) 682-8000. API also offers free, read-
only access to the standards in the API IBR Reading Room at <a href="https://publications.api.org">https://publications.api.org</a>. All American Gas Association (AGA) standards are
available for inspection and purchase from AGA, 400 North Capitol
Street NW, Suite 450, Washington, DC 20001, (202) 824-7000, <a href="https://www.aga.org/publication-store">https://www.aga.org/publication-store</a>. All Gas Processors Association (GPA)
standards are available for inspection and purchase from GPA, 6526 E
60th Street, Tulsa, OK 74145, (918) 493-3872, <a href="https://my.midstreamassociation.org/publications-store/publications">https://my.midstreamassociation.org/publications-store/publications</a>.
The following industry standards and recommendations are proposed
for incorporation by reference, in whole or in part, in subpart J of
the proposed rule:
<bullet> API Manual of Petroleum Measurement Standards (MPMS),
Chapter 2--Tank Calibration, Section 2A, Measurement and Calibration of
Upright Cylindrical Tanks by the Manual Tank Strapping Method; First
Edition, February 1995; Reaffirmed 2017 (``API 2.2A''). This standard
describes calibration procedures for upright cylindrical tanks used for
storing oil.
<bullet> API MPMS Chapter 2--Tank Calibration, Section 2B,
Calibration of Upright Cylindrical Tanks Using the Optical Reference
Line Method; First Edition, March 1989; Reaffirmed April 2019; Addendum
1, October 2019 (``API 2.2B''). This standard describes measurement and
calibration procedures for determining the diameters of upright welded
cylindrical tanks or vertical cylindrical tanks with a smooth surface
and either floating or fixed roofs.
<bullet> API MPMS Chapter 2--Tank Calibration, Section 2C,
Calibration of Upright Cylindrical Tanks Using the Optical-
triangulation Method; First Edition, January 2002; Reaffirmed April
2019 (``API 2.2C''). This standard describes a calibration procedure
for tanks above 26 feet in diameter with cylindrical courses that are
substantially vertical.
<bullet> API MPMS Chapter 3.1A, Standard Practice for the Manual
Gauging of Petroleum and Petroleum Products; Third Edition, August
2013; Reaffirmed

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December 2018 (``API 3.1A''). This standard describes the: (a)
procedures for manually gauging the liquid level of petroleum and
petroleum products in non-pressure fixed roof tanks; (b) procedures for
manually gauging the level of free water that may be found with the
petroleum or petroleum products; (c) methods used to verify the length
of gauge tapes under field conditions and the influence of bob weights
and temperature on the gauge tape length; and (d) influences that may
affect the position of gauging reference point (either the datum plate
or the reference gauge point).
<bullet> API MPMS Chapter 3--Tank Gauging, Section 1B--Standard
Practice for Level Measurement of Liquid Hydrocarbons in Stationary
Tanks by Automatic Tank Gauging; Third Edition, April 2018 (``API
3.1B''). This standard describes the level measurement of liquid
hydrocarbons in stationary, above ground, atmospheric storage tanks
using ATGs. This standard also discusses automatic tank gauging in
general, including the accuracy, installation, commissioning,
calibration, and verification of ATGs that measure either innage or
ullage.
<bullet> API MPMS Chapter 3--Tank Gauging, Section 6, Measurement
of Liquid Hydrocarbons by Hybrid Tank Measurement Systems; First
Edition, February 2001; Errata September 2005; Reaffirmed January 2017
(``API 3.6''). This standard describes the selection, installation,
commissioning, calibration, and verification of Hybrid Tank Measurement
Systems. This standard also provides a method of uncertainty analysis
to enable users to select the correct components and configurations to
address for the intended application.
<bullet> API MPMS Chapter 4--Proving Systems, Section 1,
Introduction; Third Edition, February 2005; Reaffirmed June 2014 (``API
4.1''). Section 1 is a general introduction to the subject of proving
meters.
<bullet> API MPMS Chapter 4--Proving Systems, Section 2--
Displacement Provers; Third Edition, September 2003; Reaffirmed March
2011; Addendum February 2015 (``API 4.2''). This standard outlines the
essential elements of meter provers that do, and do not, accumulate a
minimum of 10,000 whole meter pulses between detector switches and
provides design and installation details for the types of displacement
provers that are currently in use. The provers discussed in this
chapter are designed for proving measurement devices under dynamic
operating conditions with single-phase liquid hydrocarbons.
<bullet> API MPMS Chapter 4.5, Master- Meter Provers; Fourth
Edition, June 2016 (``API 4.5''). This standard covers the use of
displacement and Coriolis meters as master meters. The requirements in
this standard are for single-phase liquid hydrocarbons.
<bullet> API MPMS Chapter 4--Proving Systems, Section 6, Pulse
Interpolation; Second Edition, May 1999; Errata April 2007; Reaffirmed
October 2013 (``API 4.6''). This standard describes how the double-
chronometry method of pulse interpolation, including system operating
requirements and equipment testing, is applied to meter proving.
<bullet> API MPMS Chapter 4.8, Operation of Proving Systems; Second
Edition, September 2013 (``API 4.8''). This standard provides
information for operating meter provers on single-phase liquid
hydrocarbons.
<bullet> API MPMS Chapter 4--Proving Systems, Section 9--Methods of
Calibration for Displacement and Volumetric Tank Provers, Part 2--
Determination of the Volume of Displacement and Tank Provers by the
Waterdraw Method of Calibration; First Edition, December 2005;
Reaffirmed July 2015 (``API 4.9.2''). This standard provides all the
procedures required to determine the field data necessary to calculate
a Base Prover Volume of Displacement Provers by the Waterdraw Method of
Calibration.
<bullet> API MPMS Chapter 5--Metering, Section 6--Measurement of
Liquid Hydrocarbons by Coriolis Meters; First Edition, October 2002;
Reaffirmed November 2013 (``API 5.6''). This standard applies to
custody-transfer applications for liquid hydrocarbons and covers the
API standards used in the operation of Coriolis meters, proving and
verification using volume-based methods, installation, operation, and
maintenance.
<bullet> API MPMS Chapter 6, Metering Assemblies, Section 1--Lease
Automatic Custody Transfer (LACT) Systems; Second Edition, May 1991;
Reaffirmed May 2012 (``API 6.1''). This standard describes the design,
installation, calibration, and operation of a LACT system.
<bullet> API MPMS Chapter 7, Temperature Determination, Section 1--
Liquid-in- Glass Thermometers; Second Edition, August 2017 (``API
7.1''). This standard describes how to use various types of liquid-in-
glass thermometers to accurately determine the temperatures of
hydrocarbon liquids. This standard is proposed for incorporation for
its standards covering the use of liquid-in-glass thermometers for
temperature determination in tank-gauging operations.
<bullet> API MPMS Chapter 7--Temperature Determination, Section 2--
Portable Electronic Thermometers; Third Edition, May 2018 (``API
7.2''). This standard describes the methods, equipment, and procedures
for manually determining the temperature of liquid petroleum and
petroleum products by use of a portable electronic thermometer. This
standard is proposed for incorporation for its standards covering the
use of portable electronic thermometers for temperature determination
in tank gauging operations.
<bullet> API MPMS Chapter 7--Temperature Determination, Section 4--
Dynamic Temperature Measurement; Second Edition, January 2018 (``API
7.4''). This standard describes methods, equipment, installation, and
operating procedures for the proper determination of the temperature of
hydrocarbon liquids under dynamic conditions in custody transfer
applications. This standard is proposed for incorporation for its
standards covering the use of dynamic temperature determination in LACT
and CMS operations.
<bullet> API MPMS Chapter 8.1, Standard Practice for Manual
Sampling of Petroleum and Petroleum Products; Fourth Edition, October
2013, (``API 8.1''). This standard covers procedures and equipment for
manually obtaining samples of liquid petroleum and petroleum products
from the sample point into the primary containers.
<bullet> API MPMS Chapter 8.2, Standard Practice for Automatic
Sampling of Petroleum and Petroleum Products; Fourth Edition, November
2016 (``API 8.2''). This standard describes general procedures and
equipment for automatically obtaining samples of liquid petroleum,
petroleum products, and crude oils from a sample point into a primary
container.
<bullet> API MPMS Chapter 8--Sampling, Section 3--Standard Practice
for Mixing and Handling of Liquid Samples of Petroleum and Petroleum
Products; First Edition, October 1995; Reaffirmed, March 2015 (``API
8.3''). This standard covers the handling, mixing, and conditioning
procedures required to ensure that a representative sample of the
liquid petroleum or petroleum product is delivered from the primary
sample container/receiver into the analytical test apparatus or into
intermediate containers.
<bullet> API MPMS Chapter 9.1, Standard Test Method for Density,
Relative Density, or API Gravity of Crude Petroleum and Liquid
Petroleum Products by Hydrometer Method; Third Edition, December 2012;
Reaffirmed, May 2017 (``API 9.1''). This standard

[[Page 2434]]

covers the determination of the density, relative density, or API
gravity of crude petroleum, petroleum products, or mixtures of
petroleum and non-petroleum products normally handed as liquids have a
Reid vapor pressure of 101.325 Kilopascal (kPa) (14.696 psi) or less,
using a glass hydrometer in conjunction with a series of calculations.
<bullet> API MPMS Chapter 9.2, Standard Test Method for Density or
Relative Density of Light Hydrocarbons by Pressure Hydrometer; Third
Edition, December 2012; Reaffirmed, May 2017 (``API 9.2''). This
standard covers the determination of the density or relative density of
light hydrocarbons including liquefied petroleum gases having a Reid
vapor pressure exceeding 101.325 kPa (14.696 psi).
<bullet> API MPMS Chapter 9.3, Standard Test Method for Density,
Relative Density, and API Gravity of Crude Petroleum and Liquid
Petroleum Products by Thermohydrometer Method; Third Edition, December
2012; Reaffirmed, May 2017 (``API 9.3''). This standard covers the
determination of the density, relative density, or API gravity of crude
petroleum, petroleum products, or mixtures of petroleum and non-
petroleum products normally handed as liquids and having a Reid vapor
pressure of 101.325 kPa (14.696 psi) or less, using a glass
thermohydrometer in conjunction with a series of calculations.
<bullet> API MPMS Chapter 10.4, Determination of Water and/or
Sediment in Crude Oil by the Centrifuge Method (Field Procedure);
Fourth Edition, October 2013; Errata, March 2015 (``API 10.4''). This
standard describes the field centrifuge method for determining both
water and sediment, or sediment only, in crude oil.
<bullet> API MPMS Chapter 11--Physical Properties Data, Section 1--
Temperature and Pressure Volume Correction Factors for Generalized
Crude Oils, Refined Products and Lubricating Oils; May 2004; Addendum
1, September 2007, Addendum 2, May 2019; Reaffirmed, August 2012 (``API
11.1''). This standard provides the algorithm and implementation
procedure for the correction of temperature and pressure effects on
density and the volume of liquid hydrocarbons that fall within the
categories of crude oil.
<bullet> API MPMS Chapter 12--Calculation of Petroleum Quantities,
Section 2--Calculation of Petroleum Quantities Using Dynamic
Measurement Methods and Volumetric Correction Factors, Part 2--
Measurement Tickets; Third Edition, June 2003; Reaffirmed February 2016
(``API 12.2.2''). This standard provides standardized calculation
methods for the quantification of liquids and specifies the equations
for computing correction factors, rules for rounding, calculation
sequences, and discrimination levels to be employed in the
calculations.
<bullet> API MPMS Chapter 12--Calculation of Petroleum Quantities,
Section 2--Calculation of Petroleum Quantities Using Dynamic
Measurement Methods and Volumetric Correction Factors, Part 3--Proving
Report; First Edition, October 1998; Reaffirmed May 2014 (``API
12.2.3''). This standard provides standardized calculation methods for
the determination of meter factors under defined conditions. The
criteria contained in this standard will allow entities using various
computer languages on different computer hardware (or by manual
calculations) to arrive at identical results using the same
standardized input data. This standard also specifies the equations for
computing correction factors, including the calculation sequence,
discrimination levels, and rules for rounding to be employed in the
calculations.
<bullet> API MPMS Chapter 12--Calculation of Petroleum Quantities,
Section 2--Calculation of Petroleum Quantities Using Dynamic
Measurement Methods and Volumetric Correction Factors, Part 4--
Calculation of Base Prover Volumes by the Waterdraw Method; First
Edition, December 1997; Errata July 2009; Reaffirmed September 2014
(``API 12.2.4''). This standard provides standardized calculation
methods for the quantification of liquids and determination of base
prover volumes under defined conditions. The criteria contained in this
standard allows individuals, using various computer languages on
different computer hardware (or manual calculations), to arrive at
identical results using the same standardized input data. This standard
specifies the equations for computing correction factors, rules for
rounding, the sequence of the calculations, and the discrimination
levels of all numbers to be used in these calculations.
<bullet> API MPMS Chapter 13.3, Measurement Uncertainty; Second
Edition, December 2017 (``API 13.3''). This standard establishes a
methodology for developing an uncertainty analysis.
<bullet> API MPMS Chapter 14, Section 3, Orifice Metering of
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 1, General Equations and Uncertainty
Guidelines; Fourth Edition, September 2012; Errata July 2013;
Reaffirmed, September 2017 (``API 14.3.1''). This standard provides
reference for engineering equations and uncertainty estimations.
<bullet> API MPMS Chapter 18--Custody Transfer, Section 1--
Measurement Procedures for Crude Oil Gathered from Lease Tanks by
Truck; Third Edition, May 2018 (``API 18.1''). This standard describes
the procedures, organized into a recommended sequence of steps, for
manually determining the quantity and quality of crude oil being
transferred under field conditions.
<bullet> API MPMS Chapter 21--Flow Measurement Using Electronic
Metering Systems, Section 2--Electronic Liquid Volume Measurement Using
Positive Displacement and Turbine Meters; First Edition, June 1998;
Reaffirmed October 2016 (``API 21.2''). This standard provides for the
effective utilization of electronic liquid measurement systems for
custody-transfer measurement of liquid hydrocarbons.
<bullet> API Recommended Practice (RP) 12R1, Setting, Maintenance,
Inspection, Operation and Repair of Tanks in Production Service; Fifth
Edition, August 1997; Reaffirmed April 2008; Addendum 1, December 2017
(``API RP 12R1''). This recommended practice is a guide on new tank
installations and the maintenance of existing tanks. Specific
provisions from this recommended practice are identified as
requirements.
<bullet> API RP 2556, Correction Gauge Tables for Incrustation;
Second Edition, August 1993; Reaffirmed November 2013 (``API RP
2556''). This recommended practice provides for correcting gauge tables
for incrustation applied to tank capacity tables. The tables in this
recommended practice show the percent of error of measurement caused by
varying thicknesses of uniform incrustation in tanks of various sizes.
The following industry standards and recommendations are proposed
for incorporation by reference, in whole or in part, in subpart K of
the proposed rule:
<bullet> API MPMS Chapter 14--Natural Gas Fluids Measurement,
Section 1--Collecting and Handling of Natural Gas Samples for Custody
Transfer; Seventh Edition, May 2016; Addendum, August 2017; Errata,
August 2017 (``API 14.1''). This standard provides comprehensive
guidelines for properly collecting, conditioning, and handling
representative samples of natural gas that are at or above their
hydrocarbon dew point.
<bullet> API MPMS, Chapter 14, Section 3, Orifice Metering of
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 1, General Equations and Uncertainty
Guidelines; Fourth Edition,

[[Page 2435]]

September 2012; Errata, July 2013 (``API 14.3.1''). This standard
provides engineering equations and uncertainty estimations for the
calculation of flow rate through concentric, square-edge, flange-tapped
orifice meters.
<bullet> API MPMS Chapter 14, Section 3, Orifice Metering of
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 2, Specification and Installation
Requirements; Fifth Edition, March 2016; Errata 1, March 2017; Errata
2, January 2019) (``API 14.3.2''). This standard provides construction
and installation requirements, and standardized implementation
recommendations, for the calculation of flow rate through concentric,
square-edge, flange-tapped orifice meters.
<bullet> API MPMS Chapter 14, Section 3, Orifice Metering of
Natural Gas and Other Related Hydrocarbon Fluids--Concentric, Square-
edged Orifice Meters, Part 3, Natural Gas Applications; Fourth Edition,
November 2013 (``API 14.3.3''). This standard is an application guide
for the calculation of natural gas flow through a flange-tapped,
concentric orifice meter.
<bullet> API MPMS, Chapter 14.5, Calculation of Gross Heating
Value, Relative Density, Compressibility and Theoretical Hydrocarbon
Liquid Content for Natural Gas Mixtures for Custody Transfer; Third
Edition, January 2009; Reaffirmed November 2020 (``API 14.5''). This
standard presents procedures for calculating the following properties
of natural gas mixtures at base conditions from composition: gross
heating value, relative density (real and ideal), compressibility
factor, and theoretical hydrocarbon liquid content.
<bullet> API MPMS Chapter 21.1, Flow Measurement Using Electronic
Metering Systems--Electronic Gas Measurement; Second Edition, February
2013 (``API 21.1''). This standard describes the minimum specifications
for electronic gas measurement systems (EGMs) used in the measurement
and recording of flow parameters of gaseous phase hydrocarbon and other
related fluids for custody transfer applications utilizing industry
recognized primary measurement devices.
<bullet> AGA Report No. 3, Orifice Metering of Natural Gas and
Other Related Hydrocarbon Fluids; Second Edition, September 1985 (``AGA
Report No. 3''). This report provides construction and installation
requirements, and standardized implementation recommendations, for the
calculation of flow rate through concentric, square-edged, flange-
tapped orifice meters.
<bullet> AGA Transmission Measurement Committee Report No. 8,
Compressibility Factors of Natural Gas and Other Related Hydrocarbon
Gases; Second Edition, November 1992 (``AGA Report No. 8''). This
report presents detailed information for precise computations of
compressibility factors and densities of natural gas and other
hydrocarbon gases, calculation uncertainty estimations, and FORTRAN
computer program listings.
<bullet> GPA Midstream Standard 2166-17, Obtaining Natural Gas
Samples for Analysis by Gas Chromatography, Reaffirmed 2017 (``GPA
2166-17''). This standard recommends procedures for obtaining samples
from flowing natural gas streams that represent the compositions of the
vapor phase portion of the system being analyzed.
<bullet> GPA Standard Midstream 2261-19, Analysis for Natural Gas
and Similar Gaseous Mixtures by Gas Chromatography; Revised 2019 (``GPA
2261-19''). This standard establishes a method to determine the
chemical composition of natural gas and similar gaseous mixtures within
set ranges using a gas chromatograph (CG).
<bullet> GPA Midstream Standard 2198-16, Selection, Preparation,
Validation, Care and Storage of Natural Gas and Natural Gas Liquids
Reference Standard Blends; Revised 2016 (``GPA 2198-16''). This
standard establishes procedures for selecting the proper natural gas
and natural gas liquids reference standards, preparing the reference
standards for use, verifying the accuracy of composition as reported by
the manufacturer, and the proper care and storage of those reference
standards to ensure their integrity while they are in use.

V. Discussion of Proposed Changes

This proposed rule adds new sections and redesignates or revises
current sections as set forth in the table below. The proposed rule
removes all references to the ``Osage Tribal Council,'' and replaces
them with ``Osage Nation'' or ``Osage Minerals Council,'' as
applicable, because the Osage Tribal Council ceased to exist upon
ratification of the Constitution of the Osage Nation in 2006.

----------------------------------------------------------------------------------------------------------------
New section Current section Proposed changes
----------------------------------------------------------------------------------------------------------------
226.0................................... N/A........................ The proposed rule identifies the API
standards incorporated by reference in
subpart J, Oil Measurement, and the API,
AGA, and GPA standards incorporated by
reference in subpart K, Gas Measurement.
226.1................................... 226.1...................... The proposed rule defines new key terms,
updates existing definitions, and
removes definitions of terms that are no
longer used in the regulations.
226.2 (new)............................. N/A........................ The proposed rule identifies the legal
authorities that govern oil and gas
leasing and development activities
within the Osage Mineral Estate.
226.3 (new)............................. N/A........................ The proposed rule describes the
Superintendent's authority and
responsibility to administer oil and gas
leasing and development of the Osage
Mineral Estate.
226.4 (new)............................. N/A........................ The proposed rule describes ONRR's
authority and responsibility to
administer the Osage royalty management
program.
226.5................................... 226.45..................... The proposed rule clarifies the
Superintendent's authority to issue
orders and notices and adds a provision
specifying ONRR's authority to issue
orders and notices.
226.6................................... 226.31..................... The proposed rule removes the provision
requiring lessees who reside outside the
state of Oklahoma to designate in-state
process agents for the purpose of
serving notice. The proposed rule also
removes the provision providing for the
Superintendent to serve notice on
employees present on the lease if the
designated process agent is
incapacitated or absent from the state
of Oklahoma. The proposed rule adds
provisions setting forth the procedures
the Superintendent and ONRR will use to
serve official correspondence.
226.7................................... 226.7...................... No substantive change.
226.8................................... 226.4...................... The proposed rule removes the language
allowing cash payments and updates the
accepted forms of payment to include
electronic funds transfer (EFT),
certified check, cashier's check, money
order, or commercial or personal check
drawn on a solvent bank.

[[Page 2436]]

226.9................................... 226.2(c)................... The proposed rule clarifies the
Superintendent's obligations to conduct
environmental reviews and cultural
surveys prior to approving leases and
operations involving new or additional
ground-disturbance.
226.10.................................. 226.46..................... The proposed rule updates this section to
reflect amendments to the Paperwork
Reduction Act promulgated after the
section was last revised requiring the
BIA to obtain OMB approval for the
information collections in 25 CFR part
226. The proposed rule also adds
language identifying the applicable OMB
Control Numbers.
226.11 (new)............................ N/A........................ The proposed rule informs submitters of
information that the BIA and ONRR will
make records available to the public
without prior notification, subject to
exceptions for trade secrets,
confidential commercial or financial
information, and information protected
by the Privacy Act.
226.12.................................. 226.2(f)................... The proposed rule clarifies that the OMC
must submit requests for the
Superintendent to negotiate leases in
writing and provide a resolution
authorizing such negotiation. This
change reflects the BIA's and OMC's
existing practices for the submission of
leasing requests.
226.13.................................. 226.2(f)................... The proposed rule clarifies that the OMC
must submit requests for the
Superintendent to advertise lease sales
in writing and provide a resolution
authorizing such advertising. This
change reflects the BIA's and OMC's
existing practices for the submission of
lease sale requests.
226.14.................................. 226.2(a)................... The proposed rule removes the nomination
fee for lease sales and clarifies the
content and submission requirements for
lease sale nominations. These
clarifications reflect the BIA's
existing requirements for lease sale
nominations.
226.15.................................. 226.2(b)................... The proposed rule specifies that the
Superintendent will publish the Notice
of Lease Sale at least 30 calendar days
prior to the date of the sale. This
change reflects the BIA's and OMC's
existing practices for publishing such
notices.
226.16.................................. 226.2(b), 226.6(a)......... The proposed rule specifies that
successful bidders must submit 25
percent of the bonus by 4:30 p.m.
central standard time on the day of the
sale. The proposed rule also removes the
language allowing cash payments and
updates the accepted forms of payment to
electronic funds transfer (EFT),
cashier's check, or money order.
226.17.................................. 226.2(b)................... No substantive change.
226.18.................................. 226.2(f)................... The proposed rule specifies what
information offerors must include in non-
competitive lease offers submitted to
the OMC.
226.19.................................. 226.6(a)................... The proposed rule requires successful
offerors of non-competitive leases to
submit the bonus and required
documentation to the Superintendent
within 20 calendar days of the OMC's
acceptance of the offer. This change
reflects the BIA's and OMC's existing
requirements for non-competitive leases
and is consistent with the requirements
for competitive leases in the new Sec.
226.16.
226.20.................................. 226.2(d)................... The proposed rule removes oil-only and
gas-only leases and requires all leases
executed after the effective date of the
final rule to be combination oil and gas
leases.
226.21.................................. 226.9(b), 226.10........... The proposed rule combines the
regulations regarding extension of the
primary term and the term of the lease
into one section. The proposed rule
specifies the actions that constitute
``actual drilling operations'' for
purposes of obtaining an extension of
the primary term.
226.22.................................. 226.5...................... No substantive change.
226.23.................................. 226.2(e)................... The proposed rule clarifies the
prohibition on U.S. Government employees
acquiring interests in leases of the
Osage Mineral Estate.
226.24.................................. 226.15(a).................. The proposed rule specifies that lessees
must submit cooperative agreements to
the Superintendent for approval at least
90 calendar days prior to expiration of
the leases covered by the agreements.
226.25.................................. 226.15(a).................. No substantive change.
226.26.................................. 226.15(b).................. No substantive change.
226.27.................................. 226.15(b).................. No substantive change.
226.28 (new)............................ N/A........................ The proposed rule specifies the effective
date of the transfer for lease
assignments.
226.29 (new)............................ N/A........................ The proposed rule specifies that
assignors are liable for lease
obligations and compliance issues that
accrue prior to approval of the
assignment.
226.30 (new)............................ N/A........................ The proposed rule specifies that
assignees are liable for lease
obligations and compliance issues that
accrue after approval of the assignment.
226.31.................................. 226.15(c).................. No substantive change.
226.32.................................. 226.15(d).................. The proposed rule removes the provision
authorizing the Superintendent to
approve drilling contracts because it is
contrary to law and clarifies that
lessees are simply required to file
copies of drilling contracts with the
Superintendent.
226.33.................................. 226.3...................... No substantive change.
226.34.................................. 226.9(a), 226.29(a)........ The proposed rule combines the
regulations regarding lease termination
and lessees' obligations upon
termination into one section. The
proposed rule adds a provision
specifying that leases in the extended
term terminate by operation of law as of
the date production in paying quantities
ceases. The provision regarding
termination in the extended term
reflects the BIA's existing practices.
226.35.................................. 226.9(a)................... The proposed rule increases the rental
rate for leases approved after the
effective date of the final rule. The
proposed rule also requires lessees to
pay advance annual rental for the full
primary term within 15 calendar days of
the Superintendent's approval of the
lease.

[[Page 2437]]

226.36.................................. 226.11(a)(1)............... The proposed rule removes the language
requiring a royalty rate of not less
than 20 percent when the quantity of oil
from all wells in a quarter-section or
fraction thereof during any calendar
month averages 100 bbl or greater per
well, per day. The proposed rule adds
language authorizing the Superintendent
to approve an oil royalty rate that is
below the minimum royalty rate in the
regulations if it is determined to be in
the best interest of the Osage Nation.
226.37.................................. 226.11(a)(2)............... The proposed rule requires the value of
oil to be calculated using the NYMEX
Calendar Month Average Price of oil at
Cushing, Oklahoma instead of the highest
posted price by a major purchaser in
Osage County, Oklahoma.
226.38 (new)............................ N/A........................ The proposed rule specifies how to
calculate the gravity adjustment of the
NYMEX Calendar Month Average Price of
oil.
226.39.................................. 226.11(b).................. The proposed rule adds language
authorizing the Superintendent to
approve a gas royalty rate that is below
the minimum royalty rate in the
regulations if it is determined to be in
the best interest of the Osage Nation.
226.40.................................. 226.11(b).................. The proposed rule requires the value of
gas to be calculated using the ONRR
Monthly Index Zone Price for Oklahoma
Zone 1 instead of the market value of
the gas and products extracted
therefrom.
226.41.................................. 226.11(c).................. The proposed rule requires lessees to
submit minimum royalty payments to ONRR
instead of the Superintendent.
226.42.................................. 226.11(a)(3)............... The proposed rule revises the royalty-in-
kind provision to allow the OMC to take
both oil and gas royalty-in-kind and
adds a provision setting forth notice
requirements for the OMC initiating and
terminating royalty-in-kind status.
226.43.................................. 226.13(a) and (c).......... The proposed rule requires lessees and
purchasers to submit royalty payments to
ONRR instead of the Superintendent and
establishes a new due date for royalty
payments. The proposed rule also adds a
provision specifying the procedure for
payors to recoup overpayments.
226.44.................................. 226.14..................... The proposed rule removes the language
requiring the Superintendent's approval
of royalty payment contracts and
division orders and clarifies that
lessees are simply required to file such
contracts and division orders with the
Superintendent prior to removing
production from the lease.
226.45.................................. 226.13(b).................. The proposed rule requires lessees to
submit royalty reports to ONRR
electronically, subject to certain
exceptions, and establishes a new due
date for reporting.
226.46.................................. 226.30..................... The proposed rule requires lessees to
retain rental, royalty, and payment
records for a minimum of six years
unless the Superintendent or ONRR direct
otherwise. The proposed rule also adds a
provision requiring lessees to make such
records available to ONRR upon request.
226.47.................................. 226.12..................... The proposed rule updates this section by
requiring the U.S. Government to
purchase oil produced from the Osage
Mineral Estate at the price set forth in
Sec. 226.37.
226.48 (new)............................ N/A........................ The proposed rule authorizes ONRR to
conduct audits and reviews of compliance
with rental, royalty, and other payment
and reporting requirements.
226.49 (new)............................ N/A........................ The proposed rule exempts existing lease
(quarter-section) and collective bonds
from certain changes to the bonding
requirements.
226.50.................................. 226.6...................... The proposed rule adds a provision
identifying the accepted types of
performance bonds.
226.51.................................. 226.6(a) and (c)........... The proposed rule replaces the $5,000
lease bond for each quarter-section or
fraction thereof covered by the lease
with an individual well bond of $6 per
foot of measured or projected well
depth.
226.52.................................. 226.6(a) and (b)........... The proposed rule combines the collective
and nationwide bond provisions into one
section. The proposed rule changes the
collective bond (covering all leases up
to 10,240 acres) to a countywide bond
covering only those operations in Osage
County up to 10,240 acres and increases
the bond amount from $50,000 to $75,000.
226.53.................................. 226.6(d)................... The proposed rule clarifies the
conditions that justify the
Superintendent increasing the required
bond amount and adds a provision placing
a limit on the amount of any such
increase.
226.54 (new)............................ N/A........................ The proposed rule specifies that the
Superintendent has authority to call for
the forfeiture of performance bonds and
clarifies lessees' obligations upon
default. This change reflects the
Superintendent's existing authority, as
all bonds are payable to the
Superintendent. The proposed rule adds a
provision specifying that the United
States or OMC may take action to recover
from lessees all costs in excess of the
amount collected under the bond if an
obligation in default exceeds the face
amount of the bond.
226.55 (new)............................ N/A........................ The proposed rule specifies that the
period of liability under a performance
bond will not terminate, and the bond
will not be released, until all lease
obligations have been satisfied. This
reflects the BIA's existing practices
for the release of bonds.
226.56 (new)............................ N/A........................ The proposed rule requires bonding for
geophysical exploration activities,
subject to certain exceptions for
existing lessees.
226.57 (new)............................ N/A........................ The proposed rule specifies that the
Superintendent has authority to call for
the forfeiture of geophysical
exploration bonds. This is consistent
with the Superintendent's authority for
performance bonds for all other oil and
gas operations within the Osage Mineral
Estate.

[[Page 2438]]

226.58 (new)............................ N/A........................ The proposed rule specifies that the
period of liability under a geophysical
exploration bond will not terminate, and
the bond will not be released, until all
permit obligations have been satisfied.
This is consistent with the BIA's
existing practices for the release of
performance bonds for all other oil and
gas operations within the Osage Mineral
Estate.
226.59.................................. 226.19(a).................. The proposed rule adds a provision
requiring lessees and permittees to
properly maintain installations and
equipment and comply with the National
Electrical Code.
226.60.................................. 226.30..................... The proposed rule clarifies the
Superintendent's authority to inspect
and investigate operations.
226.61.................................. 226.16(a).................. The proposed rule clarifies the language
regarding the commencement of
operations, expressly stating that
operations may not commence until the
Superintendent approves a lease or
geophysical exploration permit, as
applicable.
226.62.................................. 226.17..................... No substantive change.
226.63.................................. 226.18..................... The proposed rule adds a provision
requiring lessees and permittees to send
meeting requests to surface owners by
certified mail. The proposed rule also
adds a provision authorizing the
Superintendent to approve the
commencement of operations if a meeting
request cannot be delivered to the
surface owner's last known address or
the surface owner fails to accept the
request within 30 calendar days of
receiving it.
226.64.................................. 226.19(b) through (d)...... The proposed rule combines the
regulations regarding commencement money
for operations and tank siting fees into
one section. The proposed rule increases
the amount of commencement money for
drilling and reentering wells and siting
tanks and adds a provision requiring
lessees and permittees to pay
commencement money for the acreage
occupied during seismic surveys using
vibroseis. The proposed rule also adds a
provision stating that commencement
money that cannot be delivered to the
surface owner's last known address or
that the surface owner refuses is deemed
forfeited.
226.65.................................. 226.19(a), 226.24.......... The proposed rule combines the
regulations regarding the use of surface
lands and water into one section. No
substantive changes.
226.66.................................. 226.16(b)(1) and (c); The proposed rule combines the
226.33. regulations regarding drilling
operations and line drilling
requirements into one section. The
proposed rule specifies that lessees
must provide the Superintendent with
five calendar days' notice of drilling
operations. The proposed rule adds a
line drilling requirement imposing a
setback from certain water sources. This
setback is consistent with the BIA's
existing permit conditions under the
Osage County Oil and Gas Final
Environmental Impact Statement (2020).
226.67.................................. 226.36..................... The proposed rule requires lessees to
obtain the Superintendent's prior
approval to drill wells that deviate
significantly from the vertical and
conduct directional surveys if deviation
occurs without prior approval.
226.68.................................. 226.40..................... No substantive change.
226.69.................................. 226.16(b)(1) and (2), (c);. The proposed rule specifies that lessees
must provide the Superintendent with at
least five calendar days' notice of
workover operations. The proposed rule
adds a provision clarifying that prior
approval and a subsequent report of
operations are not required for certain
well maintenance activities. This change
reflects the BIA's existing practices
with respect to well maintenance
activities.
226.70 (new)............................ N/A........................ The proposed rule establishes testing,
training, operational, and safety
requirements for drilling and workover
operations in Hydrogen Sulfide (H2S)
areas.
226.71.................................. 226.32(b), (d)............. The proposed rule adds a provision
requiring lessees to conduct reasonable
tests of the mechanical integrity of
downhole equipment.
226.72.................................. 226.28(a).................. The proposed rule clarifies the language
regarding temporary abandonment, more
clearly stating that lessees must obtain
the Superintendent's approval to
temporarily abandon a well for more than
30 calendar days.
226.73.................................. 226.28(a) and (b); The proposed rule combines the
226.29(c) and (d). regulations regarding permanent
abandonment and plugging obligations
into one section. The proposed rule
removes the plugging application fee and
requirement that oil-only and gas-only
lessees offer wells to one another prior
to abandonment. The proposed rule
specifies that lessees must provide the
Superintendent with five calendar days'
notice of plugging operations.
226.74.................................. 226.32(a), (c), and (e).... The proposed rule requires lessees to
submit certain information together with
the subsequent report of hydraulic
fracturing operations and adds a
provision specifying the procedure for
lessees to withhold confidential
information regarding such operations.
The proposed rule also clarifies that
lessees must retain well records and
reports for a minimum of six years
unless the Superintendent directs
otherwise.
226.75.................................. 226.34..................... The proposed rule adds a provision
requiring lessees to mark wells that are
permanently plugged and abandoned.
226.76.................................. 226.22(a), 226.35.......... The proposed rule combines the
regulations regarding the prevention of
pollution and protection of formations
into one section. The proposed rule
specifies that lessees and permittees
must conduct surveys and tests of the
measures taken to protect fresh water
and mineral bearing formations and
provide the results to the
Superintendent upon request.

[[Page 2439]]

226.77.................................. 226.22(b) through (e)...... The proposed rule adds provisions
prohibiting lessees from constructing
pits in certain sensitive locations
consistent with the BIA's existing
permit conditions under the Osage County
Oil and Gas Final Environmental Impact
Statement (2020). The proposed rule also
adds a provision requiring the
Superintendent's prior approval for the
land application of drilling fluids.
226.78 (new)............................ N/A........................ The proposed rule requires lessees to
remove fire hazards from well sites and
facilities and safely dispose of waste
oil. These requirements are consistent
with the BIA's existing permit
conditions under the Osage County Oil
and Gas Final Environmental Impact
Statement (2020).
226.79 (new)............................ N/A........................ The proposed rule requires a geophysical
exploration permit to conduct
geophysical exploration operations on
both leased and unleased lands.
226.80 (new)............................ N/A........................ The proposed rule specifies that lessees
and permittees must provide the
Superintendent with five calendar days'
notice of geophysical exploration
operations.
226.81 (new)............................ N/A........................ The proposed rule requires lessees and
permittees to submit subsequent reports
of geophysical exploration operations to
the Superintendent.
226.82.................................. 226.20..................... No substantive change.
226.83.................................. 226.21..................... No substantive change.
226.84.................................. 226.9(a)................... The proposed rule specifies that lessees
must place oil and gas into marketable
condition at no cost to the lessor. This
change is consistent with current
industry practices within the Osage
Mineral Estate.
226.85.................................. 226.13(b).................. The proposed rule requires lessees to
submit production reports to ONRR
electronically, subject to certain
exceptions, and establishes a new due
date for production reports.
226.86 (new)............................ N/A........................ The proposed rule requires lessees to
submit site facility diagrams to the
Superintendent and specifies the format
and content of such diagrams.
226.87 (new)............................ N/A........................ The proposed rule requires lessees to use
FMP numbers when reporting production to
ONRR.
226.88 (new)............................ N/A........................ The proposed rule specifies what
information production records must
contain and requires lessees to maintain
such records for a minimum of six years
unless the Superintendent or ONRR direct
otherwise. The proposed rule also
requires lessees, purchasers, and
transporters to provide production
records to ONRR upon request.
226.89.................................. 226.23..................... No substantive change.
226.90.................................. 226.37..................... No substantive change.
226.91 (new)............................ N/A........................ The proposed rule requires lessees to pay
compensatory royalty for avoidably lost
or wasted production. This change
reflects the BIA's existing requirement
to pay royalty for lost and wasted
production. The proposed rule specifies
when production is considered avoidably
and unavoidably lost or wasted.
226.92 (new)............................ N/A........................ The proposed rule sets forth lessees'
responsibilities for protecting oil and
gas resources from drainage.
226.93 (new)............................ N/A........................ The proposed rule requires lessees to pay
compensatory royalty for drainage if
protective action is not taken within a
reasonable time and specifies how
compensatory royalty will be calculated.
226.94 (new)............................ N/A........................ The proposed rule requires the use of
seals on appropriate valves at oil
storage and sales facilities and
prohibits tampering with such valves.
226.95 (new)............................ N/A........................ The proposed rule requires the use of
seals on oil measurement system
components.
226.96 (new)............................ N/A........................ The proposed rule requires transporters
removing oil from storage tanks to
possess run tickets, trip logs, and
manifests.
226.97 (new)............................ N/A........................ The proposed rule requires any person
transporting oil or gas to possess
documentation indicating the first
purchaser and authorizes the
Superintendent and law enforcement to
conduct vehicle inspections.
226.98 (new)............................ N/A........................ The proposed rule requires lessees,
purchasers, and transporters to record
certain information when water is
drained from tanks holding oil.
226.99 (new)............................ N/A........................ The proposed rule requires lessees to
record certain information when oil is
removed from storage and used on the
lease or unit for hot oiling, clean up,
and completion operations. The proposed
rule also requires lessees to report all
production removed from storage and used
on a different lease to ONRR.
226.100 (new)........................... N/A........................ The proposed rule specifies the records
that lessees must maintain for each
seal.
226.101 (new)........................... N/A........................ The proposed rule requires lessees to
obtain the Superintendent's approval for
off-lease measurement of production.
226.102................................. 226.41..................... The proposed rule specifies that lessees
must report spills, thefts, mishandling
of production, accidents, and fires to
both the Superintendent and surface
owners immediately upon discovery and
requires lessees to submit incident
reports with proposed contingency or
remediation plans to the Superintendent.
This change reflects the BIA's current
requirements for reporting of such
incidents. The proposed rule adds a
provision requiring lessees to provide
surface owners with both emergency and
written notification of such incidents.
226.103 (new)........................... N/A........................ The proposed rule prohibits bypasses of
meters and tampering with oil
measurement devices, the components of
such devices, and the measurement
process and imposes the maximum penalty
for such violations.
226.104 (new)........................... N/A........................ The proposed rule establishes the
timeframe for complying with the new
requirements for oil measurement
equipment and procedures.
226.105................................. N/A........................ [Reserved]

[[Page 2440]]

226.106 (new)........................... N/A........................ The proposed rule establishes
requirements for oil volume uncertainty
levels, measurement bias, and equipment
verification.
226.107................................. 226.38..................... The proposed rule specifies that tank
gauging may be used to measure oil and
updates requirements for the use and
calibration of oil storage tanks.
226.108................................. 226.38..................... The proposed rule specifies the required
tank gauging procedures.
226.109................................. 226.38..................... The proposed rule specifies that Lease
Automatic Custody Transfer (LACT)
systems may be used to measure oil and
sets forth general requirements for LACT
systems.
226.110................................. 226.38..................... The proposed rule identifies required
LACT system equipment and sets forth
standards for operating LACT system
components.
226.111................................. 226.38..................... The proposed rule specifies that Coriolis
Measurement Systems (CMS) may be used to
measure oil and sets forth general
requirements for CMS and CMS components.
226.112................................. 226.38..................... The proposed rule establishes Coriolis
meter operating requirements.
226.113 (new)........................... N/A........................ The proposed rule sets forth requirements
for volumetric meter proving.
226.114 (new)........................... N/A........................ The proposed rule requires the completion
and submission of run tickets for tank
gauging, LACT systems, and CMS. This
change codifies the BIA's existing
requirements with respect to run
tickets.
226.115................................. 226.38..................... The proposed rule specifies that the
Superintendent's approval is required to
use methods of oil measurement other
than tank gauging, LACT system, or CMS.
226.116 (new)........................... N/A........................ The proposed rule prohibits the sale and
disposal of waste oil without the
Superintendent's approval. This change
codifies the BIA's existing requirement.
226.117 (new)........................... N/A........................ The proposed rule prohibits bypasses of
meters. The proposed rule also prohibits
tampering with any measurement device,
component of a measurement device, or
the measurement process. The proposed
rule imposes the maximum penalty for
such violations.
226.118 (new)........................... N/A........................ The proposed rule establishes the
timeframe for complying with the new
requirements for gas measurement
equipment and procedures.
226.119................................. N/A........................ [Reserved]
226.120 (new)........................... N/A........................ The proposed rule establishes
requirements for gas flow rate and
heating value uncertainty, measurement
bias, and equipment verification.
226.121................................. 226.39..................... The proposed rule specifies the standards
for orifice plates and meter tubes and
sets forth inspection requirements.
226.122................................. 226.39..................... The proposed rule establishes standards
for the use of mechanical recorders.
226.123 (new)........................... N/A........................ The proposed rule establishes
requirements for the verification and
calibration of mechanical recorders,
correction of reported gas volumes, and
certification of test equipment.
226.124 (new)........................... N/A........................ The proposed rule specifies what
information integration statements must
contain and requires lessees to retain
integration statements.
226.125................................. 226.39..................... The proposed rule establishes standards
for the use of electronic gas
measurement (EGM) systems.
226.126 (new)........................... N/A........................ The proposed rule establishes
requirements for the verification and
calibration of transducers, correction
of reported gas volumes, and
certification of test equipment.
226.127 (new)........................... N/A........................ The proposed rule provides the gas flow
rate, volume, and average value
calculations.
226.128 (new)........................... N/A........................ The proposed rule requires lessees to
retain certain logs and records and make
them available to the Superintendent
upon request.
226.129 (new)........................... N/A........................ The proposed rule specifies the methods
of gas sampling and analysis that may be
used.
226.130 (new)........................... N/A........................ The proposed rule establishes standards
for the location, design, and type of
sampling probes and sample tubing size.
226.131 (new)........................... N/A........................ The proposed rule establishes the general
requirements for taking spot samples.
226.132 (new)........................... N/A........................ The proposed rule specifies the methods
of spot sampling that may be used.
226.133 (new)........................... N/A........................ The proposed rule specifies the frequency
with which lessees must take and analyze
spot samples.
226.134 (new)........................... N/A........................ The proposed rule establishes
specifications for composite sampling
methods.
226.135 (new)........................... N/A........................ The proposed rule establishes
requirements for the installation,
operation, verification, and calibration
of on-line gas chromatographs.
226.136 (new)........................... N/A........................ The proposed rule establishes
requirements for the installation,
operation, verification, and calibration
of gas chromatographs.
226.137 (new)........................... N/A........................ The proposed rule identifies the
components of gas that must be analyzed
and the frequency with which component
analysis must occur.
226.138 (new)........................... N/A........................ The proposed rule specifies what
information gas analysis reports must
contain.
226.139 (new)........................... N/A........................ The proposed rule specifies the effective
date of a spot or composite gas sample.
226.140 (new)........................... N/A........................ The proposed rule establishes
requirements for calculating the heating
value, average heating value, and volume
of a gas sample.
226.141 (new)........................... N/A........................ The proposed rule establishes
requirements for reporting gross and
real heating values and volumes.
226.142................................. 226.27(b).................. The proposed rule updates the provision
by requiring the Osage Nation and Tribal
members to pay for gas at the price set
forth in Sec. 226.40.
226.143................................. 226.27(b).................. The proposed rule updates the provision
by requiring the lessee to pay royalty
on all gas furnished to the Osage Nation
and Tribal members at the rate set forth
in Sec. 226.39.

[[Page 2441]]

226.144................................. 226.11(a)(1) and (b)(2).... No substantive change.
226.145 (new)........................... N/A........................ The proposed rule identifies the uses of
production on a lease or unit that do
not require the Superintendent's prior
approval for royalty-free treatment.
226.146 (new)........................... N/A........................ The proposed rule identifies the uses of
production on a lease or unit that
require the Superintendent's prior
approval for royalty-free treatment.
226.147 (new)........................... N/A........................ The proposed rule identifies the uses of
production off the lease or unit that do
not require the Superintendent's prior
approval of royalty-free treatment.
226.148 (new)........................... N/A........................ The proposed rule identifies the uses of
production off the lease or unit that
require the Superintendent's prior
approval of royalty-free treatment.
226.149 (new)........................... N/A........................ The proposed rule sets forth requirements
for the measurement and reporting of
royalty-free volumes of oil and gas
used.
226.150 (new)........................... N/A........................ The proposed rule specifies that lessees
do not need to own or lease the
equipment or facility that uses royalty-
free oil and gas.
226.151 (new)........................... N/A........................ The proposed rule sets forth procedures
for requesting royalty-free use of oil
and gas.
226.152................................. 226.37..................... The proposed rule adds a provision
prohibiting the venting and flaring of
gas without the Superintendent's prior
approval. The proposed rule also
requires all flares and combustible
devices to be equipped with an automatic
ignition system. This reflects the BIA's
existing requirements for venting and
flaring and is consistent with the BIA's
existing permit conditions under the
Osage County Oil and Gas Final
Environmental Impact Statement (2020).
226.153 (new)........................... N/A........................ The proposed rule adds a provision
prohibiting the venting and flaring of
gas-well gas unless it is unavoidably
lost.
226.154 (new)........................... N/A........................ The proposed rule authorizes the venting
and flaring of oil-well gas in
accordance with Sec. Sec. 226.155,
226.156, and 226.157.
226.155 (new)........................... N/A........................ The proposed rule requires gas to be
flared, rather than vented, subject to
certain exceptions.
226.156 (new)........................... N/A........................ The proposed rule authorizes the venting
and flaring of gas during certain tests,
well maintenance activities, and
emergencies.
226.157 (new)........................... N/A........................ The proposed rule sets forth the
requirements for measuring and reporting
the volumes of gas vented and flared.
226.158................................. 226.42..................... The proposed rule identifies the remedies
the Superintendent may utilize to
address violations of lease or permit
terms and conditions, the regulations,
and orders or notices.
226.159................................. 226.43..................... The proposed rule updates the list of
lease operation violations that will
result in immediate assessments.
226.160 (new)........................... N/A........................ The proposed rule authorizes the
Superintendent to issue assessments if a
lessee fails to commence or perform an
operation within five calendar days of
an order to do so if the Superintendent
performs the operation or must retain a
third-party to perform the operation.
226.161 (new)........................... N/A........................ The proposed rule sets forth the
procedure the Superintendent will use to
notify lessees of lease violations that
have a period to correct prior to the
assessment of penalties and the penalty
amounts imposed if violations are not
timely corrected.
226.162 (new)........................... N/A........................ The proposed rule sets forth the
procedure the Superintendent will use to
notify lessees of lease violations that
do not have a period to correct prior to
the assessment of penalties and the
penalty amounts imposed for such
violations.
226.163 (new)........................... N/A........................ The proposed rule specifies the factors
the Superintendent will consider in
determining that amount of the penalty
to assess.
226.164................................. 226.28(c).................. The proposed rule clarifies the
circumstances under which the
Superintendent may take shut-in action.
226.165................................. 226.29(b); 226.42.......... The proposed rule specifies the
circumstances under which the
Superintendent may cancel a lease or
permit and the procedure for cancelling
a lease or permit.
226.166................................. 226.42..................... The proposed rule specifies that interest
on unpaid and underpaid civil penalties
and assessments will be charged at the
IRS underpayment rate or such other rate
as the Superintendent may prescribe.
226.167 (new)........................... N/A........................ The proposed rule identifies the remedies
ONRR may utilize to address violations
of lease or permit terms and conditions,
the regulations, and orders or notices.
226.168 (new)........................... N/A........................ The proposed rule authorizes ONRR to
issue assessments for incorrect or late
royalty and production reporting and
specifies the amount of such
assessments.
226.169 (new)........................... N/A........................ The proposed rule authorizes ONRR to
issue assessments for failing to submit
the correct payment amount or providing
inadequate or erroneous information and
specifies the amounts of such
assessments.
226.170 (new)........................... N/A........................ The proposed rule sets forth the
procedure ONRR will use to notify
reporters and payors of violations that
have a period to correct prior to the
assessment of penalties and the penalty
amounts imposed if violations are not
timely corrected.
226.171 (new)........................... N/A........................ The proposed rule sets forth the
procedure ONRR will use to notify
reporters and payors of violations that
do not have a period to correct prior to
the assessment of penalties and the
penalty amounts imposed.
226.172 (new)........................... N/A........................ The proposed rule specifies the factors
ONRR will consider in determining the
amount of the penalty to assess.
226.173 (new)........................... N/A........................ The proposed rule specifies the due date
for remitting payment of penalties and
assessments to ONRR and that interest on
unpaid and underpaid penalty and
assessment amounts will be charged at
the rate set forth in Sec. 226.166(b).

[[Page 2442]]

226.174 (new)........................... N/A........................ The proposed rule specifies the actions
ONRR may take to collect unpaid civil
penalties.
226.175 (new)........................... N/A........................ The proposed rule specifies that ONRR
will refer past due debts to the U.S.
Treasury for collection or tax refund
offset and may assess administrative
costs.
226.176................................. 226.43(j).................. No substantive change.
226.177................................. 226.44..................... The proposed rule clarifies the
procedures for filing administrative
appeals of decisions the Superintendent
and Regional Director issue.
226.178 (new)........................... N/A........................ The proposed rule sets forth the
procedures for filing administrative
appeals of orders that ONRR issues.
226.179 (new)........................... N/A........................ The proposed rule specifies the
conditions for suspension of compliance
with an ONRR order during an
administrative appeal.
226.180 (new)........................... N/A........................ The proposed rule sets forth the
requirements for posting an appeal bond
or other surety on an appellant's behalf
for administrative appeals of ONRR
orders.
226.181 (new)........................... N/A........................ The proposed rule specifies when an
obligation to comply with an ONRR order
is suspended due to judicial review.
226.182 (new)........................... N/A........................ The proposed rule specifies when ONRR
will collect bonds and other surety
instruments posted for administrative
appeals.
226.183 (new)........................... N/A........................ The proposed rule specifies that the ONRR
bond-approving officer's determination
of the required surety amount is not
subject to appeal.
226.184 (new)........................... N/A........................ The proposed rule sets forth the
standards for ONRR-specified surety
instruments.
226.185 (new)........................... N/A........................ The proposed rule explains how ONRR will
determine the bond or surety instrument
amount.
Appendix A.............................. N/A........................ Table of Atmospheric Pressures to be used
with Sec. Sec. 226.123(a)(7) and
(c)(10), 226.124(c), 226.126(a)(3), and
226.127(b).
----------------------------------------------------------------------------------------------------------------

VI. Procedural Matters

A. Regulatory Planning and Review (Executive Orders 12866 and 13563)

Executive Order 12866 provides that the Office of Information and
Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB)
will review all significant rules. OIRA determined that this proposed
rule is not significant.
Executive Order 13563 reaffirms the principles of Executive Order
12866, while calling for improvements in the Nation's regulatory system
to promote predictability, to reduce uncertainty, and to use the best,
most innovative, and least burdensome tools for achieving regulatory
ends. The Executive Order directs agencies to consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public where these approaches are relevant, feasible,
and consistent with regulatory objectives. Executive Order 13563
further emphasizes that regulations must be based on the best available
science and that the rulemaking process must allow for public
participation and an open exchange of ideas. We developed this proposed
rule in a manner consistent with these requirements.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) (RFA)
requires Federal agencies to prepare a regulatory flexibility analysis
for rules subject to notice-and-comment rulemaking requirements under
the Administrative Procedure Act (5 U.S.C. 500, et seq.) to determine
whether a regulation would have a significant economic impact on a
substantial number of small entities. The BIA does not believe the
proposed rule would have a significant economic impact on a substantial
number of small entities. Accordingly, a regulatory flexibility
analysis is not required by the RFA. Although such analysis is not
required, BIA performed an initial regulatory flexibility analysis
pursuant to section 603 of the RFA as part of its Regulatory Impact
Analysis (RIA). The IFRA, included as Appendix B to the RIA, analyzes
impacts on small entities that may be affected by the proposed rule and
is available upon request (see ADDRESSES). The IFRA for the proposed
rule uses the best available information to identify potential impacts
on small entities.
Small entities include small businesses, small governmental
jurisdictions, and small organizations, as defined by section 601 of
the RFA. A small entity is one that is independently owned and operated
and is not dominant in its field of operation. The small entities most
likely to be impacted by the proposed rule are small businesses in the
mining sector; impacts to small governmental jurisdictions and small
organizations are not anticipated. The Small Business Administration
(SBA) defines small businesses in the crude petroleum and natural gas
extraction industry as those with 1,250 employees or less. For
subsector mining support activities, the SBA defines small businesses
as drilling contractors with 1,000 employees or less and service
companies with less than $41.5 million per year in revenues. Under
these size standards, most oil and gas lessees and supporting entities
within the Osage Mineral Estate would be classified as small
businesses. Accordingly, the proposed rule would likely impact a
substantial number of small entities within the Osage Mineral Estate.
Using the best available data for the past three years of
production (2018-2020), there were an average of 223 lessees actively
and exclusively producing oil from the Osage Mineral Estate, 5 lessees
actively and exclusively producing gas from the Osage Mineral Estate,
and 59 lessees actively producing both oil and gas from the Osage
Mineral Estate, for a combined average of 286 lessees actively
producing oil and gas. The volume of production varies substantially
across lessees, with a substantial number of smaller lessees producing
marginal volumes of oil and gas and several larger lessees producing
the majority of annual production from the Osage Mineral Estate. For
example, two lessees produced over 250,000 barrels of oil annually
between 2018 and 2020, comprising 41 percent of all oil production from
the Osage Mineral Estate during that period. In contrast, approximately
100 lessees during the same period produced less than 1,000 barrels of
oil annually. The allocation of production for gas is similarly skewed.
To estimate the economic impacts on small entities, the IFRA
estimates costs of the proposed rule for ``average'' lessees (286
active lessees) by assuming that lessees produce an average volume

[[Page 2443]]

of oil and gas, that costs are shared equally across lessees, and that
small entities would bear all costs of the proposed rule. The estimated
costs of the proposed rule (including compliance costs, reporting and
recordkeeping costs, and other payments) are $18,000 to $26,000 per
year for ``average'' lessees, which could represent between 15 to 65
percent of annual profits depending on the lessee. As the IFRA assumes
that costs are shared equally across lessees, however, the estimated
per entity costs are higher than would be expected for lessees with
small production volumes and lower than would be expected for lessees
with large production volumes. For example, a lessee producing marginal
oil volumes will have lower impacts from a change in the valuation of
oil for royalty purposes than a lessee producing the ``average'' volume
of oil.
The BIA does not believe the proposed rule would conflict with,
duplicate, or overlap any relevant Federal rules in a way that would
unnecessarily add cumulative regulatory burdens on small entities
without any gain in regulatory benefits. BIA invites public comments
identifying any Federal rules that may conflict with, duplicate, or
overlap the proposed rule.

C. Small Business Regulatory Enforcement Fairness Act

This proposed rule is not a major rule under the Small Business
Regulatory Enforcement Fairness Act, 5 U.S.C. 804(2). This proposed
rule would not have an annual effect on the economy of $100 million or
more; would not cause a major increase in the costs or prices for
consumers, individual industries, Federal, State, local government
agencies, or geographic regions; and would not have significant adverse
effects on competition, employment, investment, productivity,
innovation, or the ability of U.S.-based enterprises to compete with
foreign-based enterprises.

D. Unfunded Mandates Reform Act

This proposed rule would not impose an unfunded mandate on State,
local, or Tribal governments or the private sector of $100 million or
more per year. The proposed rule would not have a significant or unique
effect on State, local, or Tribal governments or the private sector. A
statement containing the information required by the Unfunded Mandates
Reform Act, 2 U.S.C. 1531, et seq., is not required for this proposed
rule.

E. Takings (Executive Order 12630)

This proposed rule would not constitute a taking of private
property or otherwise have takings implications under Executive Order
12630. The proposed rule would revise certain operational and
administrative requirements for existing lessees. All such operations
are subject to lease terms and conditions and a current regulation
expressly requiring compliance with amendments to the regulations
except that the term of the lease, acreage, rental rate, and royalty
rate may not be changed absent agreement by both parties to the lease.
The proposed rule conforms to those requirements. A takings implication
assessment is not required.

F. Federalism (Executive Order 13132)

Under the criteria in Executive Order 13132, this proposed rule
would not have a substantial direct effect on the States, the
relationship between the Federal Government and the States, or the
distribution of power and responsibilities among the various levels of
government. A federalism impact statement is not required.

G. Civil Justice Reform (Executive Order 12988)

This proposed rule complies with the requirements of Executive
Order 12988. Specifically, this proposed rule was reviewed to eliminate
errors and ambiguity and written to minimize litigation. In addition,
this proposed rule was written in clear language and contains clear
legal standards.

H. Consultation With Indian Tribal Governments (Executive Order 13175)

The BIA evaluated this proposed rule under the criteria set forth
in Executive Order 13175 and in accordance with Departmental policy to
identify possible effects on federally recognized Indian Tribes and
Indian trust assets. This proposed rule applies to oil and gas leasing
and development activities within the Osage Mineral Estate in Osage
County, Oklahoma. As the Osage Mineral Estate is held in trust by the
United States for the benefit of the Osage Nation, this proposed rule
has the potential to affect the Osage Nation.
On September 22, 2016, the BIA sent letters to the Osage Nation and
Osage Minerals Council inviting their participation in government-to-
government consultation to discuss potential revision of the
regulations in this part. Both the Osage Nation and Osage Minerals
Council expressed an interest in such consultation. On October 25,
2016, the BIA held a consultation with the Osage Nation, Osage Minerals
Council, and their legal counsel in Pawhuska, Oklahoma and the parties
agreed that revision of the regulations was appropriate. As part of the
rulemaking effort, the BIA proposed that the process include an
opportunity for the Osage Nation and Osage Minerals Council to provide
input on proposed revisions to the regulations prior to the BIA
preparing the proposed rule for publication in the Federal Register.
The parties agreed that the BIA would prepare a discussion draft
revising the regulations, provide it to the Osage Nation and Osage
Minerals Council for review and comment, and hold a second government-
to-government consultation to discuss Tribal representatives' feedback.
Thereafter, the BIA would begin preparation of the proposed rule.
On August 18, 2020, the BIA provided the Osage Nation and Osage
Minerals Council with the discussion draft revising the regulations in
25 CFR part 226. The BIA proposed that the parties conduct the second
government-to-government consultation to receive the Tribe's feedback
on the discussion draft in November 2020. On October 7, 2020, the Osage
Minerals Council requested that the review period for the discussion
draft be extended to February 1, 2021. The BIA agreed to the extension.
On December 16, 2020, the Osage Minerals Council requested an
additional government-to-government consultation prior to providing
feedback on the discussion draft. The BIA agreed to conduct an
additional consultation, but the Osage Nation and Osage Minerals
Council did not respond to communications attempting to schedule the
consultation.
On February 11, 2021, the Director of the Bureau of Indian Affairs,
exercising the delegated authority of the Assistant Secretary--Indian
Affairs, sent a letter to the Osage Nation and Osage Minerals Council
advising of the deadline for scheduling the additional consultation
requested and providing feedback on the discussion draft. On February
25, 2021, the Osage Minerals Council responded and declined the BIA's
invitation to provide written feedback on the discussion draft and
participate in government-to-government consultations relating thereto.
The BIA advised the Osage Nation and Osage Minerals Council that they
would still have the opportunity to provide feedback following
publication of the proposed rule in the Federal Register.
On February 22, 2022, the Osage Minerals Council sent a letter to
the Assistant Secretary--Indian Affairs requesting that the BIA not
publish a proposed rule based on the discussion

[[Page 2444]]

draft the Council received in 2020 and, instead, work with the Council
to prepare a new set of regulations. The Assistant Secretary--Indian
Affairs spoke with the Chairman of the Osage Minerals Council by phone
and explained that the proposed rule had already been prepared and the
BIA was in the process of completing the procedural requirements for
publication. The Assistant Secretary--Indian Affairs advised that the
BIA remained open to consulting with the Osage Nation and Osage
Minerals Council following publication of the proposed rule in the
Federal Register and noted that written feedback can also be provided
as part of the public comment process.

I. Paperwork Reduction Act

All information collections require approval under the Paperwork
Reduction Act of 1995 (PRA), 44 U.S.C. 3501, et seq. We may not conduct
or sponsor, and you are not required to respond to, a collection of
information unless it displays a currently valid Office of Management
and Budget (OMB) Control Number. There are BIA and ONRR information
collection requirements in this proposed rule. The BIA is proposing to
renew its information collection with revisions (OMB Control No. 1076-
0180) and ONRR is proposing to renew two information collections with
revisions (OMB Control Nos. 1012-0004 and 1012-0006).
1. OMB Control Number 1076-0180 (BIA)
The OMB has reviewed and approved information collections for the
existing regulations in 25 CFR part 226, which are assigned OMB Control
No. 1076-0180. The BIA is proposing to renew information collection
1076-0180 with revisions. The following BIA revisions to reporting and
recordkeeping requirements in the proposed rule require OMB's approval:

----------------------------------------------------------------------------------------------------------------
Section(s) Proposed revision(s) to OMB 1076-0180 OMB 1076-0180 form(s)
----------------------------------------------------------------------------------------------------------------
226.6(b)................................ Lessees must provide the name and address Osage Form A--Lease
for a designated point of contact upon Contact of Record.
whom the Superintendent can serve
official correspondence regarding the
lease and operations thereon.
226.9(a)................................ Lessees may submit a draft environmental None.
assessment (EA) for proposed drilling
operations and any other proposed ground-
disturbing activities occurring outside
the existing well pad. This requirement
is the same as the requirement in
existing Sec. 226.2(c).
226.9(b)................................ Lessees must submit a Cultural Resources None.
Survey for proposed drilling operations
and any other proposed ground-disturbing
activities occurring outside the existing
well pad if the location of the
operations or activities is not covered
by a prior survey. This requirement is
the same as the requirement in existing
Sec. 226.2(c).
226.12(b)............................... The Osage Minerals Council (OMC) may None.
request that the Superintendent negotiate
a non-competitive lease with a
prospective lessee on its behalf by
submitting a Resolution authorizing the
Superintendent to undertake such action.
This requirement is the same as the
requirement in existing Sec. 226.2(f).
226.13(a)............................... The OMC may request that the None.
Superintendent advertise a competitive
lease sale by submitting a Resolution
that specifies the proposed location,
date, and time of the lease sale as well
as the minimum acceptable bid. This
requirement is the same as the
requirement in existing Sec. 226.2(f).
226.14(a)............................... An individual who wants to nominate a None.
tract for a competitive lease sale must
submit a nomination letter that includes
their name and address as well as the
legal description of the tract they are
nominating. This requirement is the same
as the requirement in existing Sec.
226.2(a).
226.17(a)(2) through (4)................ The successful bidder at a competitive Osage Form B--Evidence of
lease sale must submit an executed lease Authority to Execute
form, evidence of authority to execute Papers.
papers form, and certificate of good Osage Form C--Oil and/or
standing from the Oklahoma Secretary of Gas Mining Lease.
State. This requirement is the same as
the requirement in existing Sec.
226.2(b).
226.19(a)(2) through (4)................ A prospective lessee who negotiates a non- Osage Form B--Evidence of
competitive lease with the OMC must Authority to Execute
submit an executed lease form, evidence Papers.
of authority to execute papers form, and Osage Form C--Oil and/or
certificate of good standing from the Gas Mining Lease.
Oklahoma Secretary of State. This
requirement is the same as the
requirement in existing Sec. 226.2(f).
226.21(b)............................... Lessees may submit a lease amendment form Osage Form D--Lease
evidencing an agreement between the Amendment.
lessee and OMC to extend the primary term
of the lease. This requirement is the
same as the requirement in existing Sec.
226.9(b).
226.24(b)............................... The lessee or OMC may submit a proposed None.
cooperative agreement whereby the parties
agree to unitize or merge one or more
leases of the Osage Mineral Estate to
promote development. This requirement is
the same as the requirement in existing
Sec. 226.15(a).
226.24(c)............................... The lessee or OMC may submit an agreement None.
whereby the parties agree to modify,
amend, or terminate an approved
cooperative agreement. This requirement
is the same as the requirement in
existing Sec. 226.15(a).
226.26(c)............................... A lessee (assignor) may submit a lease Osage Form E--Assignment
assignment form transferring record title of Record Title Interest.
in an approved lease to another existing
or prospective lessee (assignee). This
requirement is the same as the
requirement in existing Sec. 226.15(b).
226.33(a)............................... Lessees must submit a request to surrender None.
all or part of an approved lease. This
requirement is the same as the
requirement in existing Sec. 226.3.
226.34(d)............................... Lessees must submit a copy of any None.
agreement with a surface owner where the
parties agree that the lessee can remove
permanent improvements from the lease
following termination. This requirement
is the same as the requirement in
existing Sec. 226.29(a).

[[Page 2445]]

226.36.................................. The OMC must submit a Resolution approving None.
a royalty rate for oil that is below the
regulatory minimum of 12\1/2\ percent.
This requirement is the same as the
requirement in existing Sec. 226.11(a).
226.39.................................. The OMC must submit a Resolution approving None.
a royalty rate for gas that is below the
regulatory minimum of 12\1/2\ percent.
This requirement is the same as the
requirement in existing Sec. 226.11(b).
226.42(b)............................... The OMC must submit a Resolution providing None.
notice of its intention to take oil and/
or gas royalty in kind. This requirement
is the same as the requirement in
existing Sec. 226.11(a), except that
the new provision allows the OMC to take
both oil and gas royalty in kind, instead
of allowing the OMC to only take oil
royalty in kind.
226.44(a)............................... Lessees must submit contracts or division None.
orders with purchasers of oil and gas.
This requirement is the same as the
requirement in existing Sec. 226.14,
except that the Superintendent's approval
of contracts and division orders is no
longer required.
226.46(b)............................... Lessees must make, retain, and preserve None.
royalty, rental, and payment records for
six years from the date upon which the
relevant transaction was recorded or such
longer period as the Superintendent or
ONRR may require. This requirement is the
same as the requirement in existing Sec.
226.30, except that it reduces the
burden by providing a specific timeframe
for record retention and clarifies that
both the Superintendent ONRR may request
the subject records.
226.51(c), 226.52(a) and (b)............ Lessees must file an individual well bond Osage Form F--Oil and Gas
for each well the lessee proposes to Lease Bond.
drill, reenter, recomplete, or accept
responsibility for through assignment; a
countywide bond covering all leases of
the Osage Mineral Estate (10,240 acres
maximum); or a nationwide bond covering
all leases within the United States to
which the lessee is a party. This
requirement is the same as the
requirement in existing Sec. 226.6(a).
226.56(a) and (c)....................... Lessees and permittees must file an Oil Osage Form G--Oil and Gas
and Gas Exploration Bond Form for Geophysical Exploration
geophysical exploration operations. An Bond.
existing lessee with a countywide or
nationwide Oil and Gas Lease Bond may
file a bond rider covering geophysical
exploration operations in lieu of filing
an Oil and Gas Exploration Bond. There is
no form for bond riders because they are
prepared by the surety.
226.65(b)............................... Lessees must submit a request to expand an None.
approved drilling site beyond the acreage
set forth in the approved EA. This
requirement is the same as the
requirement in existing Sec. 226.19(b).
226.66(a)............................... Lessees must submit an application for a Osage Form 139--
permit to drill or reenter a well. This Application for Permit to
requirement is the same as the Drill or Workover Wells.
requirement in existing Sec. 226.16(b),
but the burden on respondents is reduced
because Osage Form 139 is now a fillable
form that can be completed and submitted
electronically.
226.66(c)............................... Lessees must notify the Superintendent of None.
planned drilling and reentry operations
five days prior to the commencement
thereof. Notice may be provided by phone
or email. This requirement is the same as
the requirement in existing Sec.
226.16(c), except that the new provision
specifies that the timeframe for
providing notice is five days as opposed
to ``a reasonable time in advance.''.
226.66(d)............................... Lessees must submit a request to drill a None.
well within 300 feet of the lease
boundary or locate a well or tank within
200 feet of roads or highways maintained
for public use, water sources, and
residences, granaries, and barns. This
requirement is the same as the
requirement in existing Sec. 226.33.
226.67(b)............................... Lessees must submit a request to drill a None.
well that deviates significantly from the
vertical and report the drilling of any
well that deviates significantly from the
vertical without prior approval.
226.69(a)............................... Lessees must submit an application for a Osage Form 139--
permit to workover a well. This Application for a Permit
requirement is the same the requirement to Drill or Workover
in existing Sec. 226.16(b), but the Wells.
burden hours are reduced because Osage
Form 139 is now a fillable form that can
be completed and submitted electronically.
226.69(c)............................... Lessees must notify the Superintendent of None.
planned workover operations five days
prior to the commencement thereof. Notice
may be provided by phone or email. This
requirement is the same as the
requirement in existing Sec. 226.16(c),
except that the new provision specifies
that the timeframe for providing notice
is five days as opposed to ``a reasonable
time in advance.''.
226.70(a)............................... Lessees must submit the results of H2S None.
concentration tests upon request and
submit radius of exposure calculations
for any well or production facility with
an H2S concentration of 100 ppm or more.
226.70(b)(1) and (2).................... Lessees must report any release of a None.
potentially hazardous volume of H2S as
soon as practicable, but not later than
24 hours following identification of the
release. Notice must be provided by
phone. A lessee must submit a Public
Protection Plan for the potential release
of a hazardous volume of H2S if:
1. The 100 ppm radius of exposure is
greater than 50 feet and includes any
part of a residence, school, church,
park, place of business, or other area
the general public can reasonably be
expected to frequent;
2. The 500 ppm radius of exposure is
greater than 50 feet and includes any
part of a federal, state, county, or
municipal road or highway that is owned
and maintained for public use; or

[[Page 2446]]

3. The 100 ppm radius of exposure if
greater than or equal to 3,000 feet.
The regulations specify the information
that Public Protection Plans must
include.
226.70(d)............................... Lessees must maintain a record of all None.
tests of H2S monitoring systems and make
the records available to the
Superintendent upon request.
226.72.................................. Lessees must submit a request to None.
temporarily abandon a well for more than
30 calendar days. This requirement is the
same as the requirement in existing Sec.
226.28.
226.73(d)............................... Lessees must submit an application for a Osage Form 139--
permit to plug a well. This requirement Application for a Permit
is the same the requirement in existing to Drill, Workover, or
Sec. 226.28(a), (c), but the burden Plug Wells.
hours are reduced because Osage Form 139
is now a fillable form that can be
completed and submitted electronically.
226.73(f)............................... Lessees must notify the Superintendent of None.
planned plugging operations five days
prior to the commencement thereof. Notice
may be provided by phone or email. This
requirement is the same as the
requirement in existing Sec. 226.16(c),
except that the new provision specifies
that the timeframe for providing notice
is five days as opposed to ``a reasonable
time in advance.''.
226.73(h)............................... Lessees must submit any agreement with a None.
surface owner whereby the parties agree
that lessee will condition a well that is
being plugged for the surface owner's use
as a water supply well. This requirement
is the same as the requirement in
existing Sec. 226.29(d).
226.74(a)............................... Lessees must make all books and records None.
relating to lease operations available to
the Superintendent upon request. This
requirement is the same as the
requirement in existing Sec. 226.30.
226.74(c) through (f)................... Lessees must submit a report upon Osage Form 208--Well
completion of all approved drilling, Completion or
workover, and plugging operations, Recompletion Report.
together with copies of the results for Osage Form 209--Report of
all samples, tests, and surveys conducted Workover or Plugging
on the well; copies of the electrical, Operations.
mechanical, and radioactive logs or other Osage Form 210--
surveys of the wellbore; core analysis; Withholding of
and for plugging operations, cementing Proprietary Hydraulic
tickets. This requirement is the same as Fracturing Information.
the requirement in existing Sec.
226.32(a), (b) and (c).
Lessees must submit a report upon
completion of hydraulic fracturing
operations together with a report of the
fracking fluids used. The regulations
specify the information that such reports
of fracking fluids must include. Lessees
or owners of the fracking fluid
information may withhold proprietary
information that is exempt from public
disclosure by submitting a signed
withholding statement..
226.74(h)............................... Lessees must maintain well records and None.
reports for six years from the date they
were generated unless the Superintendent
requires a longer retention period due to
an audit or investigation. This
requirement is the same as the
requirement in existing Sec. 226.32(c),
except that the new provision specifies
the timeframe for retention.
226.76.................................. Lessees must submit the results of tests None.
and surveys performed to establish the
effectiveness of measures taken to
protect fresh water and mineral bearing
formations upon request. This requirement
is the same as the requirement in
existing Sec. 226.35.
226.77(c)............................... Lessees must submit a request to None.
construct, utilize, enlarge, or relocate
a pit. This requirement is the same as
the requirement in existing Sec.
226.22(d).
226.77(d)............................... Lessees must file a copy of any agreement None.
whereby the lessee and surface owner
reach an alternative agreement regarding
the emptying and leveling of pits. This
requirement is the same as the
requirement in existing Sec. 226.22(b).
226.77(f)............................... Lessees must submit a request for the land- None.
application of waste.
226.79(a)............................... A lessee or individual wishing to conduct Osage Form 339--
oil and gas geophysical exploration Application for Oil and
activities within the Osage Mineral Gas Geophysical
Estate must submit an Application for an Exploration Permit.
Oil and Gas Geophysical Exploration
Permit. This requirement is the same as
the requirement in existing Sec.
226.16(a), except that the Proposed Rule
provides a form for such applications.
226.80.................................. A lessee or permittee must notify the None.
Superintendent of planned oil and gas
geophysical operations five days prior to
the commencement thereof. Notice may be
provided by phone or email.
226.81.................................. A lessee or permittee must submit a Osage Form 408--Completion
Completion Report for Oil and Gas Report for Oil and Gas
Geophysical Exploration Operations Geophysical Exploration
providing a subsequent report of the Operations.
exploration operations performed.
226.82(d)............................... A person claiming an interest in leased None.
lands for the purpose of the settlement
of surface damages must notify the
Superintendent of that interest. This
requirement is the same as the
requirement in existing Sec. 226.20(d).
226.83(f)............................... A lessee or permittee must file a report None.
of each settlement agreement whereby the
lessee or permittee and an Indian
landowner agree to the amount of surface
damages to be paid. This requirement is
the same as the requirement in existing
Sec. 226.21(g).
226.84(e)............................... Lessees must report the emergency pumping None.
of oil into a pit. Emergency reports must
be submitted by phone.

[[Page 2447]]

226.86(a) through (e)................... Lessees must submit a site facility None.
diagram for all permanent facilities. The
regulations specify the information that
site facility diagrams must include and
the timeframe for submitting site
facility diagrams, which varies depending
on the date the relevant facilities
became operational. Lessees have an
ongoing obligation to update and amend
site facility diagrams if facilities are
modified to ensure that the diagrams
accurately represent facilities. Sample
site facility diagrams are available at
<a href="https://www.bia.gov/regional-offices/eastern-oklahoma/osage-agency">https://www.bia.gov/regional-offices/eastern-oklahoma/osage-agency</a>.
226.88(a) through (c)................... Lessees, purchasers, transporters, and None.
other persons involved in producing,
transporting, purchasing, selling, or
measuring oil and gas must retain all
records for a minimum of six years from
the date upon which the relevant
transaction was recorded unless the
Superintendent or ONRR requires retention
for a longer period. Such records must be
made available to the Superintendent or
ONRR upon request. The regulations
specify the information that production
records must include.
226.92(b)............................... A lessee may request the use of None.
alternative protective measures to
prevent drainage.
226.97(a) and (b)....................... Persons engaged in transporting oil by None.
motor vehicle or pipeline must maintain
documentation showing the amount, origin,
and intended first purchaser of the oil.
226.98.................................. Lessees, purchasers, or transporters who None.
drain water from a production storage
tank must document such draining
operations. The regulations specify the
information that documentation of water
draining operations must include.
226.99(a)............................... Lessees must document the removal of oil None.
from storage, temporary use of the oil
for operations, and return of the oil to
storage during hot-oil, clean-up, or
completion operations. The regulations
specify the information that
documentation for temporary removal of
oil from storage must include.
226.100................................. Lessees must maintain a record of the None.
seals used on valves and meter
components. The regulations specify the
information that seal records must
include.
226.101(a).............................. Lessees must submit a request for off- None.
lease measurement of production. The
regulations specify the information that
requests for off-lease measurement of
production must include.
226.102(a) and (c)...................... Lessees must report spills, theft, Osage Form H--Spill and
mishandling of production, blowouts, Remediation Report.
fires, and accidents that occur on the
lease by phone or email immediately upon
discovery, but not later than one
calendar day following discovery. Lessees
must also submit a written report of the
incident together with a proposed
contingency or remediation plan. The
initial report of spills, theft,
mishandling of production, blowouts,
fires, and accidents is provided by
phone. This requirement is the same as
the requirement in existing Sec. 226.41.
226.107(f).............................. Lessees measuring oil by tank gauging must None.
submit tank tables within 45 days after
calibrating a tank or recalculation of
the tables. This requirement is the same
as the requirement in existing Sec.
226.38, except that the new provision
specifies the timeframe for submitting
tank tables.
226.108(a).............................. Lessee must submit a request to use None.
automatic tank gauging for oil
measurement. The regulations specify the
information that requests to use
automatic tank gauging must include. This
requirement is the same as the
requirement in existing Sec. 226.38.
226.108(b)(5)(ii)(B).................... Lessees must submit a detailed log of None.
field verifications of automatic tank
gauges upon request. This requirement is
the same as the requirement in existing
Sec. 226.38.
226.109(e).............................. Lessees must provide notice of any LACT None.
system failures or equipment malfunctions
that may have resulted in measurement
error within 15 calendar days of
discovering such failure or malfunction.
226.112(c), (e), (f), and (g)........... Lessees must submit Coriolis meter None.
specifications upon request. Lessees must
maintain the following information on-
site at the FMP:
<bullet> Make, model, and size of each
sensor;
<bullet> Make, model, range, and
calibrated span of the pressure and
temperature transducers used to determine
gross standard volume; and
<bullet> A log of all meter factors, zero
verifications, and zero adjustments.
Lessees must retain QTRs, configuration
logs, event logs, and alarm logs for six
years from the date they were generated
or such longer period as the
Superintendent may require.
226.113(b).............................. Lessees must have a certificate of None.
calibration for the meter prover (e.g., a
device that verifies the accuracy of the
meter) on-site and available for review.
226.113(j).............................. Lessees must submit a report of meter None.
proving and volume adjustments within 14
days after any LACT system or CMS
malfunction, including excessive meter-
factor deviation.
226.114(d).............................. Lessees must submit run tickets on or None.
before the last calendar day of the month
following the production month. The
regulations specify the information that
run tickets for tank gauging, LACT, and
CMS must include. This requirement is the
same as the requirement in existing Sec.
226.16(b), except that the new provision
specifies the information run tickets
must contain. The information required is
consistent with what is currently
submitted and prevailing industry
standards.
226.115................................. Lessees must submit a request to use any None.
method of oil measurement other than tank
gauging, LACT system, or CMS.

[[Page 2448]]

226.116(c).............................. Lessees must submit a request to sell or None.
dispose of slop oil and, following the
approved sale or disposal of slop oil,
must submit a report identifying the
volume of slop oil sold or disposed of,
the method used to computer that volume,
and the gross revenue from the sale. This
provision codifies lessees' existing
practices for the sale or disposal of
slop oil. Accordingly, it does not impose

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