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with the acreage held by such lessee on lands of the United States under other leases or with a proportionate share in such acreage as described hereinafter in this paragraph, will exceed a maximum of 2,560 acres within the geologic structure of the same producing oil or gas field or a maximum of 7,680 acres in any single State, except as provided in paragraph (c). Where the United States owns only an undivided fractional interest in the oil and gas resources of the lands involved, the area charged against the limits above prescribed shall be that part of the total acreage involved in the lease which is proportionate to the ownership by the United States of the oil and gas resources therein: Provided, That the total acreage of lands of the United States leased for oil and gas production to any person, firm, association, or corporation, where the United States owns undivided interests in the oil and gas deposits, shall not exceed 5,120 acres within the geologic structure of the same producing oil or gas field, or 15,360 acres within any single State.

(b) When a bidder or other applicant for a lease owns common stock of a corporation or is a member of a company or association, holding other oil or gas leases issued by the United States, a part of the leased acreage, proportionate to the applicant's ownership of the stock of the corporation or the applicant's interest in the company or association, shall be included in the applicant's aggregate acreage. When the applicant is a corporation whose common stock is owned by a holder of an oil or gas lease issued by the United States, or when the applicant is a company or association, a member of which holds such a lease, a part of the leased acreage, proportionate to the stockholder's ownership of common stock in the corporation or the member's interest in the company or association, shall be included in the applicant's aggregate acreage.

(c) In the interest of conservation of oil and gas resources, leased lands operated in conformity with a cooperative or unit plan of development covering a pool, field, or area, which plan has been approved by the Department of Agriculture or another Federal department, will not be subject to or included within the acreage limitations above prescribed.

$ 4.5 Compensation to the United States for oil and gas leases. Oil and gas leases will be granted only on the basis

of payment to the United States of an equitable compensation, which will normally be made in the three following forms:

(a) A bonus, to be paid for the issuance of an oil and gas lease. Such bonus will be the determining factor in the award of a lease when the lease is to be issued on the basis of competitive bidding.

(b) A rental, to be paid annually and in advance, for each acre or fraction thereof in the amount of 25¢ for the first lease year, 50¢ for the second lease year, 75¢ for the third lease year, and $1.00 for the fourth and each subsequent lease years: Provided, That if prior to the issuance of a lease a valuable deposit of oil or gas shall have been discovered within the limits of the geologic structure upon which all or a part of the leased lands are situated, the annual rental shall be $1.00 per acre or fraction thereof. If such a deposit shall be discovered after the issuance of a lease, the rental shall be $1.00 per acre or fraction thereof for each lease year beginning after such discovery.

If the interest of the United States in the oil and gas resources of the leased lands shall be less than the total or complete interest, the proportion of the rentals payable on account of each acre or fraction thereof shall be the same as the proportion which the interest of the United States in the oil and gas resources bears to the total interest.

The rental paid for any one lease year shall be credited on the royalty for that year.

(c) A royalty, consisting of a stipulated percentage of the total volume or value of the oil and gas produced from the leased lands, which percentage shall be computed in the manner hereinafter stated in this paragraph (c): Provided, That if the interest of the United States in the oil and gas resources of the leased lands shall be less than the total or complete interest, the proportion of production of oil and gas upon which the stipulated royalty shall be due and payable shall be the same as the proportion which the interest of the United States in the oil and gas resources bears to the total interest.

(1) When the price of oil used in computing royalty value is $1 or more per barrel, the per centum of royalty shall be as follows:

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When the average production for the calendar month in barrels per well per day is:

Not over 50, the royalty shall be 12.5 percent.

Over 50 but not over 60, the royalty shall be 13 percent.

Over 60 but not over 70, the royalty shall be 14 percent.

Over 70 but not over 80, the royalty shall be 15 percent.

Over 80 but not over 90, the royalty shall be 16 percent.

Over 90 but not over 110, the royalty shall be 17 percent.

Over 110 but not over 130, the royalty shall be 18 percent.

Over 130 but not over 150, the royalty shall be 19 percent.

Over 150 but not over 200, the royalty shall be 20 percent.

Over 200 but not over 250, the royalty shall be 21 percent.

Over 250 but not over 300, the royalty shall be 22 percent.

Over 300 but not over 350, the royalty shall be 23 percent.

Over 350 but not over 400, the royalty shall be 24 percent

Over 400 but not over 450, the royalty shall be 25 percent.

Over 450 but not over 500, the royalty shall be 26 percent.

Over 500 but not over 750, the royalty shall be 27 percent.

Over 750 but not over 1,000, the royalty shall be 28 percent.

Over 1,000 but not over 1,250, the royalty shall be 29 percent.

Over 1,250 but not over 1,500 the royalty shall be 30 percent.

Over 1,500 but not over 2,000, the royalty shall be 31 percent.

Over 2,000 the royalty shall be 32 percent.

When the price of oil used in computing royalty value is less than $1 per barrel, the per centum of royalty shall be the foregoing multiplied by the ratio of said price to a price of $1 per barrel: Provided, however, That the per centum of royalty shall never be less than 12.5.

If the United States shall take its royalty in oil, the price received by the lessee as well as that received by the lessor shall be considered in determining the price to govern the per centum of royalty, unless both prices are $1 or more per barrel.

(2) On gas, including inflammable gas, carbon dioxide and all other natural gases and mixtures thereof, and on natural or casinghead gasoline and other liquid products obtained from gas, the royalty shall be:

When the average production of gas per well per day for the calendar month

does not exceed 5,000,000 cubic feet, 1242 percent of the amount or value of the gas and liquid products produced; and when said production of gas exceeds 5,000,000 cubic feet, 1623 percent; said amount or value of such liquid products to be net after an allowance for the cost of manufacture: Provided, That the allowance for cost of manufacture may exceed twothirds of the amount or value of any product only on approval by the Secretary and that said value of gas and of liquid products shall be as determined by the Secretary.

(3) The average production per well per day for oil and for gas shall be determined under rules and regulations approved by the Secretary.

The foregoing to the contrary notwithstanding, during the period of the national emergency proclaimed by the President on May 27, 1941 (Proclamation 2487, 3 CFR Cum. Supp.), upon a determination by the Secretary of Agriculture that a new oil or gas field or deposit has been discovered by virtue of a well or wells drilled within the boundaries of lands described in a lease issued under these regulations, the royalty obligation to the United States of the lessee who drills such well or wells as to such new field or deposit shall be limited for a period of ten years following the date of such discovery to a flat rate of 1242 per centum. Any sand or zone situated at a stratigraphic level higher or lower than the known productive sands within the area of any geologic trap shall be deemed upon discovery to be a new deposit. The discovery of a new oil or gas field or deposit shall not affect the rate of royalties on production from deposits previously known to exist.

§ 4.6 Leasing of oil or gas resources in proved territory, or in unproved territory where competitive interest in leasing is evident. In territory proved by prior development of producing oil or gas wells or by geologic determination, or in unproved territory where competitive interest in leasing is evident, and where the United States is the full owner of the oil and gas resources in the lands involved or where the undivided fractional interest of the United States in the oil and gas resources is such that its separate disposal is practicable and equitable, oil and gas leases will be issued only after due publicity through advertisements in newspapers of local circulation and trade journals, posting of notices of intent in appropriate public places, and written announcements to persons known to be interested in the development of such resources, followed by the receipt and consideration of formal sealed bids. The award will be made to the qualified bidder who offers the largest sum of money as a bonus for the issuance of a lease.

$ 4.7 Leasing of oil and gas resources in unproved territory where competitive interest in leasing is not evident. In territory which has not been proved by prior development of producing oil or gas wells or by geologic determination and where competitive interest in leasing is not evident, on lands in which the United States is full owner of the oil and gas resources or where the undivided fractional interest of the United States in these resources is such that its separate disposal is practicable and equitable, oil and gas leases may be issued to a qualified applicant on the basis of negotiation without the requirement of competitive bidding, but under such terms and conditions as are found by the Secretary to be in the public interest. Applications for such leases shall be submitted on standard Departmental forms, obtainable from representatives of the Secretary in the field or in Washington, D. C., and shall be mailed or personally delivered to the Division of Purchase, Sales and Traffic, Department of Agriculture, Washington, D. C. An application so received shall be held for a period of ten working days following its receipt. If during such period other applications for leases on any or all of the same lands are received, or the Department is otherwise apprised of a competitive interest in leasing the lands involved, all applications will be rejected, and the procedure prescribed by $ 4.6 will be followed. Otherwise, if the applicant is qualified, the application will be recognized, at the expiration of the tenth working day following the day of its receipt, as affording the applicant priority in the issuance of a lease upon such terms and conditions as the Secretary may deem to be in the public interest; competitive bids will not be solicited nor will any application subsequently received be given precedence over the first application filed in the manner herein prescribed.

$4.8 Leasing of undivided fractional interests to co-owners. Where the United States is the owner of an undivided frac

tional interest in oil and gas resources and the disposal of such interest to persons other than the co-owner or coowners thereof is not practicable or equitable, leases may be granted to such Co-owner or co-owners or their lessees on the basis of negotiation without the requirement of competitive bidding and regardless of any other application which may be filed, but under such terms and conditions as are found by the Secretary to be in the public interest.

$ 4.9 Future interests. Where the United States owns a future interest in oil or gas, the Secretary may, where it is deemed in the public interest, enter into an agreement for the issuance of an oil and gas lease at some future time.

§ 4.10 Qualifications of lessees. In order to obtain an oil and gas lease, the prospective lessee must prove to the satisfaction of the Secretary that he is a citizen of the United States, that he has the legal capacity to enter into the lease, and that he has the financial ability to carry out the provisions of the lease. Proof of other qualifications may be required, in accordance with $ 4.20.

§ 4.11 Drainage. When the Secretary determines that wells drilled upon lands not owned by the United States are draining oil or gas from lands or deposits owned in whole or in part by the United States and administered by him, he may negotiate agreements whereby the United States, or the United States and its lessees, shall be compensated for such drainage, such agreements to be made with the consent of all the lessees affected thereby. Steps leading to the negotiation of such agreements may be initiated in the Department or by application of interested parties. The precise nature of any agreement negotiated will depend on all the conditions and circumstances involved.

§ 4.12 Assignment of oil and gas leases or interests therein. No oil and gas leases issued by or under the authority of the Secretary or any interest therein shall be assigned either by operating agreement, working or royalty interest, or otherwise, nor shall any portion of the leased premises be sublet, except (a) with the consent in writing of the Secretary obtained prior to the assignment, or (b) subject to the assignment being submitted to the Secretary within thirty days of the date of its execution and to his approval. All assign

ments must be submitted in triplicate and must contain all of the terms and conditions agreed upon by the parties thereto. If the assignment fails to describe the true consideration, an accompanying affidavit which describes the consideration in full detail must be submitted. Such affidavit will be treated as confidential and not for public inspection. No assignment will be recognized as valid which, exclusive of the royalty payable to the United States, shall create overriding royalty interests in the lease aggregating in excess of five percent. No assignment providing for other payments out of production which constitute a burden upon lease operations prejudicial to the interests of the United States will be approved.

$ 4.13 Inclusion of leased lands in unitization programs. The development and operation of any area, field, or pool under a Federally-approved cooperative or unit plan is favored in principle, and where the details of operation of such cooperative or unit plan are acceptable to the Secretary all lands within the limits thereof which are covered by oil and gas leases issued by him shall be subject to the provisions of such cooperative or unit plan.

§ 4.14 Bond requirements. Within fifteen days after the Secretary has sent to the lessee an oil and gas lease executed by all parties thereto or has notified the lessee that the lease has become effective, the lessee shall file with the designated representative of the Secretary and thereafter maintain a bond in the sum of $1,000 with acceptable surety to guarantee compliance with the terms of the lease, but prior to the initiation by the lessee of drilling operations the lessee shall substitute for that bond, and at all times thereafter maintain as required by the lessor, a bond in such penal sum as shall be stipulated in the lease, with approved corporate surety, or with deposit of United States bonds as surety therefor, conditioned upon compliance with the terms of the lease. The bond of any surety company approved by the Secretary of the Treasury will be accepted as security for performance of the lease.

§ 4.15 Leases on same land for minerals other than oil and gas. The granting of a lease for the development or production of oil or gas will not preclude the issuance of other leases or permits on

the same land for the mining of other minerals, where not incompatible with the development of the oil and gas resources, with suitable stipulations for joint occupancy by the holders of such leases or permits, to the end that the full development of the mineral resources may be secured.

§ 4.16 Non-discriminatory employment policies. All oil and gas leases shall stipulate that the lessee, in the performance of the lease, shall not discriminate against any employee or applicant for employment because of race, creed, color or national origin, and that the lessee shall include in all subcontracts a provision imposing a like obligation on subcontractors.

§ 4.17 Right to extract helium. Each oil and gas lease shall stipulate that the United States shall have the right to extract helium from all gas produced on the lands covered by the lease, provided that the said extraction shall be accomplished without substantial delay and shall not otherwise reduce the sale value of the gas; and each lessee must release to the United States any rights which he may have, or may acquire in the future, in said helium through ownership of, or contract with reference to, undivided interests in the oil and gas deposits underlying said lands.

$ 4.18 Officer in charge. A representative of the Secretary, to be designated by and to be under the direction of the chief of the bureau charged with the administrative responsibility for the leased property, will supervise and direct operations under each lease. He will be referred to in all leases, agreements, and regulations as the Officer in Charge. Each lessee will be advised as to who is the officer in charge of his particular lease.

§ 4.19 Lease forms and operating regulations. Leases will be issued on forms to be prescribed as provided in $ 4.20 and shall include provisions and operating regulations for the sound development of the oil and gas resources and for the protection of the surface uses of the land.

$ 4.20 Delegation to Land Use Coordinator and Director of Finance. The Land Use Coordinator and the Director of Finance shall jointly have the power to prescribe detailed procedures, forms, and operating regulations in accordance with the regulations in this part.

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Subchapter C—Regulations Under the Farm Products Inspection Act

66 Hops (inspection and certifica

tion). (Added]

61 Cottonseed sold or offered for sale

for crushing purposes (inspection, sampling and certification).

(Amended] 65 Official United States standards for

palatability scores for dried whole eggs. [Added)

Subchapter D-Warehouse Regulations

101 Cotton warehouses. (Amended)

Subchapter A-Commodity Standards and Standard Container

Regulations

PART 27-COTTON CLASSIFICATION

UNDER THE UNITED STATES COT-
TON FUTURES ACT
Subpart-Cotton and Fiber Spinning

Tests [Revised]

ADMINISTRATION Sec. 27.501 Authority. 27.502 Laboratories.

VIBER AND SPINNING TESTS

27.503 Testing of samples. 27.504 Requirements as to samples. 27.505 Costs of submitting samples. 27.506 Disposition of samples.

AUTHORITY: $ $ 27.501 to 27.512, inclusive. issued under 55 Stat. 131; 7 U.S.C., Sup., 473d.

SOURCE: $ $ 27.501 to 27.512, inclusive, contained in Regulations, War Food Administrator, Sept. 11, 1944, 9 F.R. 11251.

ADMINISTRATION $ 27.501 Authority. The Director of Distribution, War Food Administration, is charged with the administration of the provisions of the act of April 7, 1941 (55 Stat. 131; 7 U.S.C., Sup., 473d) and the regulations in this part and is authorized to issue such instructions as he may deem proper and necessary.

$ 27.502 Laboratories. Laboratories shall be maintained at points designated by the Director of Distribution.

FIBER AND SPINNING TESTS $ 27.503 Testing of samples. The Director of Distribution or his authorized representatives, upon written requests.

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