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Electronic Code of Federal Regulations

e-CFR Data is current as of November 19, 2014

Title 43Subtitle BChapter IISubchapter CPart 3500 → Subpart 3504


Title 43: Public Lands: Interior
PART 3500—LEASING OF SOLID MINERALS OTHER THAN COAL AND OIL SHALE


Subpart 3504—Fees, Rental, Royalty and Bonds


Contents

General Information

§3504.10   What fees must I pay?
§3504.11   What forms of payment will BLM and MMS accept?
§3504.12   What payments do I submit to BLM and what payments do I submit to MMS?

Rentals

§3504.15   How does BLM determine my rent?
§3504.16   When is my rental due after the first year of the lease?
§3504.17   What happens if I do not pay my rental on time?

Royalties

§3504.20   What are the requirements for paying royalties on production?
§3504.21   What are the minimum royalty rates?
§3504.22   How will I know what the royalty rate is on my lease production?
§3504.25   Do I have to produce a certain amount per year?
§3504.26   May I create overriding royalties on my Federal lease?

Bonding

§3504.50   Do I have to file a bond to receive a permit or lease?
§3504.51   How do I file my bond?
§3504.55   What types of bonds are acceptable?
§3504.56   If I have more than one permit or lease, may I combine bond coverage?
§3504.60   Under what circumstances might BLM elect to change the amount of my bond?
§3504.65   What happens to my bond if I do not meet my permit or lease obligations?
§3504.66   Must I restore my bond to the full amount if payment has been made from my bond?
§3504.70   When will BLM terminate the period of liability of my bond?
§3504.71   When will BLM release my bond?

General Information

§3504.10   What fees must I pay?

(a) The following table shows fees for various documents in this part.

DocumentProcessing fee
(1) Applications other than those listed belowAs found in the fee schedule in §3000.12 of this chapter.
(2) Prospecting permit applicationCase-by-case basis as described in §3000.11 of this chapter.
(3) Prospecting permit application amendmentAs found in the fee schedule in §3000.12 of this chapter.
(4) Prospecting permit extensionAs found in the fee schedule in §3000.12 of this chapter.
(5) Preference right lease applicationCase-by-case basis as described in §3000.11 of this chapter.
(6) Successful competitive lease applicationCase-by-case basis as described in §3000.11 of this chapter, and modified by §§3508.14 and 3508.21.
(7) Future or fractional interest lease applicationCase-by-case basis as described in §3000.11 of this chapter.
(8) Lease modification or fringe acreage leaseAs found in the fee schedule in §3000.12 of this chapter.
(9) Lease renewal applicationAs found in the fee schedule in §3000.12 of this chapter.
(10) Assignment, sublease, or transfer of operating rightsAs found in the fee schedule in §3000.12 of this chapter.
(11) Transfer of overriding royaltyAs found in the fee schedule in §3000.12 of this chapter.
(12) Application to waive, suspend, or reduce your rental, minimum royalty, or royalty rateCase-by-case basis as described in §3000.11 of this chapter.
(13) Use permitAs found in the fee schedule in §3000.12 of this chapter.

(b) Fees for exploration licenses are not administered under this section, but are administered under part 2920 of this chapter.

[72 FR 50887, Sept. 5, 2007]

§3504.11   What forms of payment will BLM and MMS accept?

Make your payments to BLM in cash, postal money order, negotiable instrument in U.S. currency, or such other method as BLM may authorize. See MMS regulations at 30 CFR part 218 for their payment requirements.

§3504.12   What payments do I submit to BLM and what payments do I submit to MMS?

(a) Fees and rentals. (1) Pay all filing and processing fees, all first-year rentals, and all bonus bids for leases to the BLM State Office that manages the lands you are interested in. Make your instruments payable to the U.S. Department of the Interior—Bureau of Land Management.

(2) Pay all second-year and subsequent rentals and all other payments for leases to the Minerals Management Service (MMS). See 30 CFR part 218 for MMS's payment procedures.

(b) Royalties. Pay all royalties on producing leases and all payments under leases in their minimum production period to the MMS.

[64 FR 53536, Oct. 1, 1999, as amended at 70 FR 58877, Oct. 7, 2005]

Rentals

§3504.15   How does BLM determine my rent?

We set your rent by multiplying the number of acres in your lease or permit by the rental rates shown below. The rates differ for different commodities and some rates increase over time. You must pay rent each year. We round up any fractional acreage to the next highest acre. If you do not know the exact acreage, compute the total acreage by assuming each of the smallest subdivisions is 40 acres. The minimum rental is $20 per permit or lease for all commodities. Pay the minimum rental or the per-acre rental, whichever is greater.

(a) Annual rental rates for prospecting permits for all commodities are $.50 per acre or fraction of an acre.

(b) Annual rental rates for leases for each commodity are shown in the table below. The rate shown is for each acre or fraction of an acre in the lease.

  Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 to end
(1) Phosphate$0.25$0.50$0.50$1.00$1.00$1.00
(2) Sodium0.250.500.500.500.501.00
(3) Potassium0.250.500.500.500.501.00
(4) Sulphur0.500.500.500.500.500.50
(5) Gilsonite0.500.500.500.500.500.50
(6) Hardrock1.001.001.001.001.001.00
(7) Asphalt0.250.500.500.500.501.00

[64 FR 53536, Oct. 1, 1999; 65 FR 11476, Mar. 3, 2000]

§3504.16   When is my rental due after the first year of the lease?

(a) For prospecting permits, pay your rental in advance each year before the anniversary date of the permit.

(b) For sodium, potassium or asphalt leases, pay your rental in advance before January 1 of each year.

(c) For phosphate leases pay your rental in advance on or before the anniversary date of the lease.

(d) For other mineral leases not covered in paragraph (b) or (c) of this section, pay the rental in advance each year before the anniversary of the effective date of the lease.

(e) MMS will credit your lease rental for any year against the first production royalties or minimum royalties (see §3504.25 of this part) as the royalties accrue under the lease during that year.

§3504.17   What happens if I do not pay my rental on time?

(a) If you do not pay your rental on time for a prospecting permit, your permit will automatically terminate.

(b) If you do not pay your rental for a lease on time, BLM will notify you that unless you pay within 30 days from receipt of the notification, BLM will take action to cancel your lease.

Royalties

§3504.20   What are the requirements for paying royalties on production?

You must pay royalties on any production from your lease in accordance with the terms specified in the lease. See §3504.21 of this part for minimum royalty rates. Your royalty rate will be a percentage of the quantity or gross value of the output of the produced commodity. Apply the royalty rate to the value of the production determined under MMS regulations in Title 30. For asphalt, the minimum royalty is calculated on a cents-per-ton basis. You may not pay your royalty in quantity without BLM's prior approval.

§3504.21   What are the minimum royalty rates?

CommodityMinimum royalty rate
(a) Phosphate5% of gross value of the output of phosphates or phosphate rock and associated or related minerals.
(b) Sodium2% of the quantity or gross value of the output of sodium compounds and related products at the point of shipment to market.
(c) Potassium2% of the quantity or gross value of the output of potassium compounds and related products at the point of shipment to market.
(d) Sulphur5% of the quantity or gross value of the output of sulphur at the point of shipment to market.
(e) GilsoniteNo minimum royalty rate.
(f) Hardrock MineralsNo minimum royalty rate.
(g) Asphalt25 cents per ton (2,000 pounds) of marketable production.

§3504.22   How will I know what the royalty rate is on my lease production?

BLM determines the rate for each lease before we offer it. If BLM offered the lease competitively, the rates are in the notice of lease sale. If you applied for a noncompetitive lease, BLM will send you a royalty rate schedule for your concurrence and signature before we issue you the lease. BLM attaches royalty rates to, and makes them a part of, all leases.

§3504.25   Do I have to produce a certain amount per year?

(a) If your mineral lease was issued, renewed or readjusted any time after April 22, 1986, you must either produce a minimum amount or pay a minimum royalty in lieu of production each lease year. This requirement begins in the sixth lease year or the first full year of a renewed or readjusted lease, whichever comes first. The minimum royalty payment is $3 per acre or fraction of an acre. For phosphate, sulphur, gilsonite and hardrock leases, pay the minimum royalty in advance before the lease anniversary date. For sodium, potassium and asphalt leases the minimum royalty is due in advance before January 1 of each year.

(b) MMS will credit any lease rental payment (see §3504.16(d) of this part) against the minimum royalty payment amount due under paragraph (a) of this section. MMS then will credit your minimum royalty as specified under paragraph (a) to your production royalties for that year only. For example, if you pay $1,000 in rental and you owe $3,000 in minimum royalties, you will pay a total of $3,000 for both. If during the lease year you accrue $10,000 in production royalties, MMS will credit $3,000 against that amount.

(c) Hardrock mineral leases or development or operating agreements subject to escalating rentals are exempt from minimum production and minimum royalty requirements.

§3504.26   May I create overriding royalties on my Federal lease?

Yes, but:

(a) BLM may order you to suspend or reduce your overriding royalties to as low as one percent if we determine your overriding royalty could:

(1) Cause you to abandon your lease prematurely; or

(2) Prevent mining of marginally economic or low-grade deposits.

(b) Where more than one overriding royalty interest is involved, BLM will apply any suspension or reduction to these interests in the manner agreed upon by the interest holders. If there is no agreement, we will order suspensions and reductions starting with the most recent interest and continuing in reverse order of the dates the overriding interests were created.

(c) If you apply for a royalty rate reduction under subpart 3513, of this part, we may request that you reduce your overriding royalties.

Bonding

§3504.50   Do I have to file a bond to receive a permit or lease?

Yes, unless paragraph (b) of this section applies.

(a) BLM will set permit and lease bond amounts for each lease or permit. We will consider the cost of complying with all permit and lease terms, including royalty and reclamation requirements, when setting bond amounts. The minimum bond amount for prospecting permits is $1000. The minimum bond amount for leases is $5000.

(b) BLM may enter into agreements with states to provide for your state reclamation bond to satisfy our reclamation bonding requirements. We may need additional information from you to determine whether your state bond will cover all of our reclamation requirements. If you have filed a current bond with a state where we have an agreement, and we determine that your state bond will satisfy all BLM reclamation bonding requirements, you will only need to file evidence of that state bond with BLM. We will require an additional bond from you if we determine your state bond does not cover all of our bonding requirements.

§3504.51   How do I file my bond?

File one copy of your bond in the BLM State office where you applied for a permit or lease. You must use an approved BLM form. You must sign the form if you are the principal of a personal bond. For surety bonds, both you and an acceptable surety must sign the form.

§3504.55   What types of bonds are acceptable?

You may file either a personal bond or a surety bond.

(a) Personal bonds may be in the form of:

(1) Cashier's check;

(2) Certified check; or

(3) Negotiable U.S. Treasury bonds equal in value to your bond amount. If you submit Treasury bonds, you must give the Secretary full authority to sell the securities if you default on your permit or lease obligations.

(b) Surety bonds must be issued by qualified surety companies approved by the Department of the Treasury. You can get a list of qualified sureties at any BLM State Office.

§3504.56   If I have more than one permit or lease, may I combine bond coverage?

Yes. Instead of filing separate bonds for each permit or lease, you may file a bond to cover all permits and leases for a specific mineral in any one state, or nationwide. We will establish the amount of the bond; however, the minimums are:

(a) $25,000 for statewide bonds. File these bonds in the BLM State Office for the state where your leases are located.

(b) $75,000 for nationwide bonds. File these bonds in any BLM State Office.

§3504.60   Under what circumstances might BLM elect to change the amount of my bond?

We may increase or decrease your bond amount when we determine that a change in coverage is appropriate, but we will not decrease your bond amount below the minimum.

§3504.65   What happens to my bond if I do not meet my permit or lease obligations?

BLM will demand payment from your bond to cover any obligations on which you default. Your bond will be reduced accordingly. If the surety makes a payment, we will reduce the face amount of the surety bond and the surety's liability by the amount of the payment.

§3504.66   Must I restore my bond to the full amount if payment has been made from my bond?

Yes. After any default, BLM will notify you of the amount you must pay to restore your bond. We will give you no more than six months to post a new bond or increase the existing bond to its pre-default level. You may elect to file separate or substitute bonds for each permit or lease. If you do not replace your bond, BLM may take action to cancel the leases or permits covered by the bond.

§3504.70   When will BLM terminate the period of liability of my bond?

BLM may terminate the period of liability for any bond only when you have filed an acceptable replacement bond or when you have met all your permit or lease terms and conditions.

§3504.71   When will BLM release my bond?

(a) BLM will release your bond when we have determined, after the passage of a reasonable period of time, that you have done the following:

(1) Paid all royalties, rentals, penalties, and assessments;

(2) Satisfied all permit or lease obligations;

(3) Reclaimed the site; and

(4) Taken effective measures to ensure that the mineral prospecting or development activities will not adversely affect surface or subsurface resources.

(b) If you assign your lease or permit, BLM will release your bond after we determine that you met the requirements of paragraphs (a)(1) and (a)(2) of this section. Also, your assignee must provide an acceptable bond or other surety.



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