[Federal Register Volume 59, Number 81 (Thursday, April 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10120]
[Federal Register: April 28, 1994]
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Part VIII
Department of the Interior
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Bureau of Indian Affairs
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25 CFR Part 226
Leasing of Osage Reservation Lands for Oil and Gas Mining; Final Rule
DEPARTMENT OF THE INTERIOR
Bureau of Indian Affairs
25 CFR Part 226
RIN 1076-AC09
Leasing of Osage Reservation Lands for Oil and Gas Mining
April 8, 1994.
AGENCY: Bureau of Indian Affairs, Interior.
ACTION: Final rule.
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SUMMARY: The Bureau of Indian Affairs (BIA) amends the regulations
contained in the Code of Federal Regulations to eliminate premium,
bonus, or other like payments from consideration in the calculation of
the royalty price for crude oil in Osage County, Oklahoma.
EFFECTIVE DATE: May 31, 1994.
FOR FURTHER INFORMATION CONTACT: Gordon Jackson, Superintendent, Osage
Agency, Bureau of Indian Affairs, Pawhuska, Oklahoma 74056, telephone
(918) 287-1032.
SUPPLEMENTARY INFORMATION: The purpose of this final rule is to amend
25 CFR 226.11(a)(2) to eliminate premium, bonus, or other like payments
from consideration in the calculation of the royalty price for crude
oil in Osage County.
Prior to amendment the regulations were the subject of
administrative appeals by numerous oil producers over the meaning of:
``and settlement shall be based on the highest of the bona fide selling
price, posted or offered price by a major purchaser (as defined in Sec.
226.1(h) of this Part) in Osage County, who purchases production from
Osage oil leases.'' The Bureau of Indian Affairs has interpreted that
language to mean that when a higher price is offered and paid for crude
oil in Osage County, that price shall be used for royalty computation
for all oil of the same quality sold in the county. However, there is
reason to believe that this interpretation has discouraged purchasers
from offering bonus prices.
The Interior Board of Indian Appeals (IBIA) issued its decision in
favor of the producers on February 5, 1993, in Okie Crude Co., et al.
v. Muskogee Area Director, Bureau of Indian Affairs, IBIA 92-18-A, et
al. The IBIA concluded that the then existent regulations required a
producer to pay royalty on the highest price available to that
producer, whether or not that producer actually received that price.
Prices not available to a producer would not be used to calculate
royalties due from that producer. This final rule eliminates the
language that caused the differences in interpretation that led to the
appeals to the IBIA.
This rule was published as a proposed rule on November 5, 1993 (58
FR 59142). The last day for public comment was January 4, 1994. No
comments were received.
It is the consensus of the BIA and the Osage Tribal Council that
this amendment to 25 CFR 226.11(a)(2) will create a positive economic
benefit in the form of increased royalty income to the Osage headright
holders. This rule change removes the existing disincentive to
purchasers to remain in Osage County resulting from bonus payments paid
to some producers but not all. The producers in Osage County will now
have incentive to receive bonus payments, which will increase mineral
activity in the Osage mineral estate.
The Department of the Interior has determined that this rule is not
a significant regulatory action under Executive Order 12866, and
therefore will not be reviewed by the Office of Management and Budget.
In addition, the Department of the Interior has determined that this
rule will not have a significant economic effect on a substantial
number of small entities under the Regulatory Flexibility Act (5 U.S.C.
601, et seq.). The amendment may cause small producers to pool their
oil production in an effort to secure bonus or premium pay. However,
under the amended rule they will not be penalized for premium pay to
other lessee/producers.
In accordance with the Executive Order 12630, the Department has
determined that this rule does not have significant takings
implications.
In accordance with Executive Order No. 12612, the Department has
determined that this rule does not have significant federalism effects.
The Department has certified to the Office of Management and Budget
that these final regulations meet the applicable standards provided in
Sections 2(a) and 2(b)(2) of Executive Order 12778.
The Department of the Interior has determined that this final rule
does not constitute a major Federal action significantly affecting the
quality of the human environment and that no detailed statement is
required pursuant to the National Environmental Policy Act of 1969.
The information collections contained in 25 CFR Part 226 are
required by the Secretary , Department of the Interior, and are
necessary to comply with the requirements of Office of Management and
Budget (OMB) Circular No. A-102. The Standard Form 424 and attachments
prescribed by such circular are approved by OMB under 44 U.S.C. 3501,
et seq. (1982) and assigned approval number 0348-0006. These sections
describe the types of information that would satisfy the requirements
of Circular A-102. The information will be utilized in leasing of Osage
lands for oil and gas mining. Response is mandatory.
William Haney, Field Solicitor, was the primary author of this
document. For further information contact Gordon Jackson,
Superintendent, Osage Agency, at (918) 287-1032.
List of Subjects in 25 CFR Part 226
Indian-lands, Mineral resources, Mines, Oil and gas exploration.
Words of Issuance:
For the reasons set out in the preamble, part 226 of chapter I,
title 25 of the Code of Federal regulations is amended as set forth
below.
PART 226--LEASING OF OSAGE RESERVATION LANDS FOR OIL AND GAS MINING
1. The authority citation for 25 CFR Part 226 continues to read as
follows:
Authority: Sec. 3, 34 Stat. 543; secs. 1, 2, 45 Stat. 1478; sec.
3, 52 Stat. 1034, 1035; sec. 2(a), 92 Stat. 1660.
2. Section 226.11(a)(2) is revised to read as follows:
Sec. 226.11 Royalty payments.
(a) * * * * *
(2) Unless the Osage Tribal Council, with approval of the
Secretary, shall elect to take the royalty in kind, payment is owing at
the time of sale or removal of the oil, except where payments are made
on division orders, and settlement shall be based on the actual selling
price, but at not less than the highest posted price by a major
purchaser (as defined in Sec. 226.1(h)) in Osage County, Oklahoma, who
purchases production from Osage oil leases.
* * * * *
Ada E. Deer,
Assistant Secretary--Indian Affairs.
[FR Doc. 94-10120 Filed 4-26-94; 8:45 am]
BILLING CODE 4310-02-P
