These calculations are only required on the day that the BLM would issue a wind or solar energy right-of-way; therefore, the BLM has not made any changes to the final rule based on this comment. The BLM will look at providing a mechanism for both the BLM and the public to generate reports and such calculations on demand. The BLM proposed eliminating operator bonds because they are seldom used and because the bonds are obsolete.
- (c) The authorized officer will not approve an application for a suspension of a lease where the applicant only cites, as the basis for the suspension, a pending application for permit to drill filed less than 90 calendar days prior to the expiration date of the lease.
- The value of production subject to compensatory royalty payment will be determined pursuant to 30 CFR part 206, provided that no additional royalty will be due on any production subject to compensatory royalty under this provision.
- Each assignment of record title must describe the lands involved in the same manner as the lands are described in the lease, except no land description is required when 100 percent of the entire area encompassed within a lease is conveyed.
- If any well drilled under this section by a non-unit operator that obtains production in quantities insufficient to justify the inclusion of the land upon which such well is situated in a participating area, such well may be operated and produced by the party drilling the same, subject to the conservation requirements of this agreement.
- Once the lands have been reclaimed and the BLM has accepted an abandonment notice, the public may use the lands for recreation, provided the applicable RMP allows for such use.
- The RFA requires agencies to analyze alternatives to their rules with an eye towards minimizing significant impacts on small entities.
Some commenters expressed a concern that the lack of an APD extension would disadvantage project proponents in situations where drilling was delayed for a variety of on-the-ground reasons and there is not a way to seek an APD extension. Another commenter mentioned the need for extensions when there is litigation challenging the NEPA compliance for the lease or APD because the BLM cannot take any action on an APD when there is ongoing litigation. Upon review of the comments, the BLM recognizes that there is a valid concern related to litigation challenging the issuance of leases; therefore, the BLM added paragraph (e), which will allow the BLM to adjust an APD’s term when the lease is suspended. The new paragraph (e) states, “The valid period for an approved APD on a lease suspended under subpart 3103 will be adjusted to account for the suspension. Beginning on the date the suspension is lifted, the valid period of the approved APD will be extended by the time that was remaining on the term of the approved APD on the effective date of the suspension.” This addition will allow the BLM to extend the term of an approved APD based upon an oil and gas lease suspension of operations and/or production. The BLM will not grant general extensions as the 3-year APD term will provide sufficient time for the Federal operator to drill a well under an approved APD.
A. Regulatory Planning and Review (E.O. 12866, E.O. 14094, E.O.
Each bidder must submit with the bid a statement over the bidder’s signature with respect to compliance with 43 CFR subpart 3102. (c) The notice will include an identification of, and a copy of, stipulations applicable to each parcel. Lands may be offered in leasing units of not more than 2,560 acres outside accounting for lease termination lessor Alaska, or 5,760 acres within Alaska, which may be as nearly compact in form as possible. (b) Notwithstanding paragraph (a) of this section, the authorized officer may suspend the offering of a specific parcel while considering a protest against its inclusion in a Notice of Competitive Lease Sale.
Another comment on the definitions for “responsible bidder” and “responsible lessee” questioned the inclusion of the phrase “history of noncompliance” with applicable regulations and lease terms, stating that the meaning of a “history of noncompliance” is unclear. As noted above in the summary of comments outside the scope of this rulemaking effort, the BLM received a comment requesting the development of a blueprint for outdoor recreation. Such a revision is beyond the scope of this rulemaking as it would involve revising regulations in Title 43 of the CFR, Subchapter H, and those regulations do not pertain to oil and gas leasing and development, which is the focus of this effort.
Initial direct costs
Given how rare royalty rate reductions are, the BLM has not established a requirement to notify the States. The BLM will consider whether a notification to the States should become a matter of policy in the future. After consideration of these comments, the final rule splits paragraph (a) into two paragraphs for clarity.
- The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
- There are several scenarios that we’ll cover in this article to illustrate how to account for lease terminations and partial lease terminations under ASC 842.
- This section of the preamble summarizes the major categories of public comments that the BLM received in response to the proposed rule, as well as the BLM’s responses.
- (2) Result in the bond obligor or principal being referred to the Department’s Suspension and Debarment Program under 2 CFR part 1400 to determine if the person will be suspended or debarred from doing business with the Federal Government.
Payments made to the BLM may be made by other arrangements such as by electronic funds transfer or credit card when specifically authorized by the BLM. In the case of payments made to the ONRR, such payments may also be made by electronic funds transfer. (b) The amounts in the fiscal terms table are not subject to appeal to the Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E. (b) If any person is found to hold accountable acreage in violation of the provisions of these regulations, lease(s) or interests therein will be subject to cancellation or forfeiture in their entirety, until sufficient acreage has been eliminated to comply with the acreage limitation.
H. Consultation and Coordination With Indian Tribal Governments (E.O. 13175 and Departmental Policy)
As stated in the proposed rule, for bond adequacy reviews, the BLM state office, which manages the nationwide bond, must coordinate with every field and state office with wells covered by this type of bond. The BLM administrative state office will usually contact between 4 (2 field offices and 2 state offices) and 40 (32 field offices and 8 state offices) offices and request these offices to conduct a bond adequacy review, which entails pulling the operator’s well and inspection records. This is needed as the environmental and development situations may vary between offices. The administrative state office, while familiar with its field offices, would not be familiar with field offices in other administrative state offices. This will result in staff spending approximately 1 hour per office conducting the bond adequacy review and the administrative state office spending approximately 10 hours consolidating the reviews. With coordination required with between 4 and 40 offices, this would result in approximately $700 to $2,500 per bond adequacy review (assuming $50 hourly cost).
In that circumstance, this provision would allow the BLM to move the operations up to 800 meters to minimize the impacts to the sage grouse lek. As stated in the 1988 final rule preamble for the existing regulations, “Similarly, the authority of the BLM to prescribe “reasonable,” but more stringent, protection measures is not affected by the final rulemaking,” see 53 FR (May 16, 1988). This section does not apply to the protection of resource values that are already addressed in lease stipulations. The BLM proposed to add two new sections and remove four sections from part 3120 to provide clarity and to ensure these provisions are consistent with other changes being made.
The relevant performance obligation would be the effective ‘transfer’ of the asset to the lessor by the previous owner (now the lessee). The Handlery court did not, however, discuss a scenario where a lessor terminates a lease to sell the property. An earlier decision, Shirley Hill Coal Co., 6 B.T.A. 935 (1927), held that, in this situation, the lease termination payment must be capitalized as part of the basis of the property sold, which appears to be consistent with the rules above. Analysis of the treatment of a lease termination payment requires a clear understanding of the motivation behind the termination and the steps that are expected to follow. Variable lease payments that aren’t included in the measurement of the net investment in the lease are recognised in P/L as they are earned. The fair value of a leasehold interest can be defined as the underlying asset’s fair value minus its present residual value.
In Latter, the documents stated that the lessees were “willing to assign and transfer all their right, title and interest in their said existing lease.” The package from the lessor also included payments to reimburse the lessees for their improvements. The court applied its lease termination analysis to the payments without regard to the contract language or the specific purpose for which the payments were designated. When there is a reduction in the lease term, the lessee remeasures the lease liability based on the future lease payments; the balancing journal entry goes to the right of use asset. The IASB decided that under IFRS 16, a reduction in the lease term does warrant a gain/loss calculation. Except as noted herein, this agreement may be terminated at any time prior to the discovery of unitized substances which can be produced in paying quantities by not less than 75 per centum, on an acreage basis, of the working interest owners signatory hereto, with the approval of the AO.