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Geological Survey,

Department of the Interior,
Washington 25, D.C.

or Field Officers, Geological Survey. The regions which they serve and their Post Office addresses are as follows:

Region I: Alaska, Idaho, Montana, Oregon, and Washington_Geological Survey, South 157 Howard Street, Spokane 4, Washington. Applicants for Alaska projects may file applications with the United States Bureau of Mines, P.O. Box 2688, Juneau, Alaska, for forwarding to the Field Officer, Region I.

Region II-California, Hawaii, and Nevada-Geological Survey, 113 Custom House, 555 Battery Street, San Francisco 11, Callfornia.

Region III: Arizona, Colorado, Kansas, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, and Wyoming-Geological Survey, Federal Center, Denver 25, Colorado.

Region IV: Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, and Wisconsin-Geological Survey, Room 11, Post Office Building, Knoxville 2, Tennessee.

§ 229.6

Information required.

(a) Each application shall fully describe the proposed exploration, and shall include all detailed data called for by the application form. The Secretary may require the filing of additional information, including financial statements, reports, maps, or charts, and exhibits and such physical on-site examination as he deems necessary.

(b) The application must include evidence that funds for the exploration work are unavailable on resonable terms from commercial sources. The evidence shall include information as to the commercial sources to which applications were made, the amounts requested, and the reasons why loans were not obtained.

(c) The application must include a certification by the applicant that he would not normally undertake the exploration at his sole expense under current conditions or circumstances.

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of:

(1) The necessary, reasonable, and direct actual costs of performing the exploration, including the costs Labor, supervision, and outside consultants; operating materials, supplies, and equipment; initial rehabilitation or repair of existing buildings, installations, fixtures, and operating equipment; construction of buildings, fixed improvements, and installations; repairs and maintenance of operating equipment; analytical work, accounting, payroll and sales taxes, and employers' liability or employees' compensation insurance; payments by the operator to independent contractors; and such other necessary, reasonable, and direct actual costs as may be approved by the Government in the course of work; and

(2) The fixed unit costs agreed upon by the operator and the Government in terms of units of work to be performed (per foot of drifting, per foot of drilling, etc.) in lieu of actual costs.

(b) The Government will not contribute to costs incurred before the date of the contract, or to costs of or incident to:

(1) Acquiring, owning or possessing land with any existing improvements, facilities, buildings, installations, and appurtenances, or the depreciation and depletion thereof;

(2) General overhead, corporate management, interest and taxes (other than payroll and sales taxes);

(3) Insurance (other than employers' liability or employees' compensation insurance); and

(4) Damages to persons or property (other than authorized repair to or replacement of equipment or other property used in the work).

§ 229.11 Repayment by the operator.

(a) If the Secretary considers that as a result of the exploration, mineral or metal production from the area covered by the contract may be possible, he shall so certify in writing to the operator within the time specified in the contract.

(b) When the Secretary determines not to certify, he shall promptly so notify the operator provided the operator has completed all obligations under the contract.

(c) The operator shall pay the Government a royalty on all minerals or metals produced from the land described in the contract and any other royalty as may be provided therein:

(1) Irrespective of any certification of possible production-from the date of the contract to the date of notice that certification will not be made, or until the total amount contributed by the Government with interest is fully repaid, whichever occurs first; or

(2) Irrespective of any certification of possible production-if the Secretary, deeming it necessary and in the public interest, enters into an agreement to provide for royalty payments.

(3) If a certification of possible production is issued-for a period of ten years (or other period fixed by the con

tract not exceeding 25 years) from the date of the contract, or until the total amount contributed by the Government, with interest, is fully repaid, whichever occurs first.

(d) The Government's royalty shall be 5 percent of the "gross proceeds" (including any bonuses, premiums, allowances, or other benefits) from the production sold, in the form sold (ore, concentrate, metal, or equivalent) at the point of delivery (the f.o.b. point) except, that charges of the buyer (not the operator or producer) arising in the regular course of his business, and shown on the buyer's settlement sheets as deductions (such as treatment processes performed by the buyer, sampling and assaying to determine the value of the production sold, and freight payable by the buyer to a carrier (not the operator or producer) shall be allowed as deductions in arriving at the "gross proceeds" as that term is used in this section. No costs of the operator or producer are deductible in arriving at the "gross proceeds" as that term is used in this section. The term "treatment processes", as used in this paragraph means those processes (such as milling, concentrating, smelting, refining, or equivalent) applied to the crude ore or other production after it is extracted from the ground to put it into a commercially marketable form, excluding fabricating

or manufacturing.

(e) If any production (ore, concentrate, metal, or equivalent) remains unsold or is not used by the operator or producer in integrated manufacturing or fabricating operations (for instance, if it is stockpiled) after the lapse of six months from the date it is extracted from the ground, the Government, at its option, may require the computation and payment of its royalty on the value of such production in the form (ore, concentrate, metal, or equivalent) it is in at the time the Government elects to exercise its option. If any production is used by the operator or producer in integrated manufacturing or fabricating operations, the Government's royalty on such production shall be computed on the "value" thereof in the form in which and at the time when it is used. "Value" as used in this section means what is or

would be gross income from mining operations for percentage depletion purposes in Federal income tax determination, or the market value, whichever is greater.

(f) (1) To secure the payment of the Government's royalty, the contract shall provide for a lien upon the operator's interest in the land, upon any production from the land, and upon any interests in the land other than the operator's interest. However, the Secretary may accept the undertaking of a surety company or third person in lieu of a lien upon interests in the land other than the operator's interest. In circumstances where the Secretary deems it to be in the public interest, the requirement for a lien or other undertaking concerning interests in land, other than the lien upon the operator's interest, may be omitted from the Contract.

(2) If the operator is not the producer (for example, if the operator transfers or does not retain his interest in production or in the land), the operator shall remain liable for the payment of the Government's royalty.

(g) If, in any particular case, the Secretary finds that it would be more economical or practicable to compute the Government's royalty upon some basis other than "gross proceeds" or "value", as these terms are used in this section, or upon the production in some form other than that in which it is sold, held, or used in integrated operations, he may agree with the operator, either in the original exploration contract or by an amendment thereof, upon some other basis of computation.

(h) Nothing in this part shall be construed as imposing any obligation on the operator to engage in any mining or production operations.

(i) The Secretary may modify and adjust the terms and conditions of any contract to reduce the amount and terms of any royalty payment when he shall determine that such action is necessary and in the public interest. § 229.12

Interest on amount of Government participation.

(a) Simple interest is calculated from the first day of the month following the

dates Federal funds are made available until the period specified for royalty payments expires or until the amount of Federal funds contributed, including interest, is fully repaid, whichever occurs first.

(b) The rate of interest shall be fixed by the Secretary at not less than the rate the Department of the Interior would be required to pay if it borrowed from the Treasury, plus a two percent interest charge in lieu of the actual cost to the Government of administering the contract.

(c) Paragraphs (a) and (b) of this section shall not be construed to increase the rate of royalty or to extend the period for which the royalty is payable as set forth in § 229.11.

§ 229.13 Limitation on the amount of Government participation.

No single contract shall authorize Government participation in excess of $250,000.

§ 229.14 Government not obligated to buy.

Nothing in this part or in any contract entered into pursuant to this part shall be construed as imposing any obligation on the Government to purchase any materials mined or produced from the land which is the subject of such contract.

§ 229.15

Title to and disposition of property.

Facilities, buildings, fixtures, equipment, or other items or groups of items (such as pipe, rail, steel, etc.), costing more than $50.00 each, paid for or purchased with funds contributed jointly by the operator and the Government, although title may be taken in the name of the operator, shall belong to the operator and the Government jointly, in proportion to their respective contributions to the extent set forth in the contract. The exploration contract shall make suitable provisions also for their disposal for the joint account of the operator and the Government.

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231.5

231.6

231.7

231.8

231.9

231.10

231.11

Maps and plans required prior to beginning commercial operations; modification thereof; departure

therefrom; operations in advance of approval thereof or not in conformity therewith.

Requirements for maps of underground workings and surface operations and equipment; accuracy to be attested before notary public; posting.

Other maps; what to be shown.

PROSPECT BORE HOLES

Submission of core or test hole records; cores, samples, cuttings, mill products; cementing and casing of drill holes.

WELFARE AND SAFETY Sanitary, welfare, and safety arrangements.

Reports of accidents, inundations, or fires to be promptly mailed; fatal accidents and serious or threatening damages to be reported by telegraph or telephone.

Protection of employees; mechanical equipment; dangerous walks or passages; moving parts of machinery or belts.

MINING METHODS

231.12 Lessee shall observe good practice. 231.13 Operations shall be conducted in a manner to yield ultimate maximum recovery; information recorded and copy furnished district mining supervisor.

231.14 Sufficient pillars shall be left. 231.15 Working places; traveling way. 231.16 Mining or prospecting minerals soluble in water; brines; minerals taken in solution.

PRODUCTION RECORDS AND AUDIT

Books of account to be kept.

Sale price basis not less than highest market price; Secretary of the Interior may determine and declare market price.

231.28 Audit of lessee's accounts and books semiannually or at other times; lessee to furnish audit free of cost. INSPECTION, ISSUANCE OF ORDER AND ENFORCEMENT OF ORDERS

231.29 Lessees shall provide means for inspection of underground and surface conditions; surveying, estimating, and study.

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231.32 Enforcement of orders; suspension of operations; temporary waiver of suspension order pending appeal and review. 231.33 Appeal; time allowed.

AUTHORITY: The provisions of this Part 231 issued under sec. 32, 41 Stat. 450, secs. 1, 1, 3, 5, 5, 44 Stat. 301, as amended, 1057, 710, 302, 1058, as amended, sec. 10, 61 Stat. 915; 30 U.S.C. 189, 271, 281, 293, 275, 285, 359.

SOURCE: The provisions of this Part 231 contained in Operating Regulations, June 2, 1927, unless otherwise noted.

ADMINISTRATION OF REGULATIONS AND DEFINITIONS

§ 231.1 Authority, purpose, and scope of the regulations in this part.

(a) Pursuant to the authority vested in the Secretary of the Interior the regulations in this part have been issued to govern the methods of mining on the public domain for the discovery, mining, and treating of potash, oil shale, sodium, phosphate, sulphur, gold, silver, or quicksilver. The regulations in this part shall

66-067 0-67-22

also apply to deposits of silica sand and other nonmetallic minerals within lands withdrawn by Executive Order No. 5105 of May 3, 1929, and to minerals in acquired lands (except coal, oil, and gas) under the regulations in 43 CFR Part 200. On and after July 1, 1944, the administration of the regulations in this part, save and except for those provisions dealing with inspections for the safety and welfare of miners engaged in operations covered by the regulations in this part shall be vested in the Geological Survey. Department of the Interior.

(b) Effective July 1, 1944, the function of making inspections for the safety and welfare of miners under the regulations in this part providing for such inspections shall be vested in the Bureau of Mines, Department of the Interior.

(c) The enforcement of the regulations in this part will remain the function of the Geological Survey.

[13 F. R. 9496, Dec. 31, 1948]

CROSS REFERENCE: For leases of silica sands and other non-metallic minerals in certain areas in Nevada, see 43 CFR, Part 199.

§ 231.2 Definitions.

The following terms used in the regulations in this part shall have the meanings here given:

(a) Mining supervisor (Chief, Mining Branch). The agent appointed by and acting for the Secretary of the Interior to supervise all prospecting and mining operations under the Mineral Leasing Acts.

(b) District mining supervisor, deputy mining supervisor, mining engineer. Any person appointed by the Secretary of the Interior to supervise, under the direction of the mining supervisor, prospecting and mining operations under the regulations in this part.

(c) Lessee. Any person or persons, partnership, association, firm, corporation or municipality, or State to whom a mining lease or permit is issued under the Mineral Leasing Acts.

(d) Leased lands, leased premises, or leased tract. Any lands or deposits occupied under lease or permit, granted in accordance with the Mineral Leasing Acts, for the purpose of prospecting for or mining potash, oil shale, sodium, phosphate, sulphur, gold, silver, or quicksilver.

§ 231.3 Powers and duties of mining supervisor.

It shall be the duty of the mining supervisor, individually or through his subordinates, and under the direction of the Director of the Geological Survey:

(a) Make inspectional visits; supervise operations to prevent waste or damage; promote safety, health, and welfare of workmen; issue necessary orders or instructions. To visit from time to time leased lands where operations for the discovery or mining or treating of potash, oil shale, sodium, phosphate, sulphur, gold, silver, or quicksilver are carried on or are to be conducted; to inspect and supervise such operations, including operations at accessory plants, for the purpose of preventing waste of mineral substances, or damage to formations or deposits containing them, and of promoting the safety, health, and welfare of workmen in accordance with the provision of the acts; and to issue, in accordance with the provisions of the lease and the regulations in this part, such necessary orders or instructions not in conflict with the laws of the State in which the leased lands are situated as will effectively carry out the purposes aforementioned.

(b) Make reports on condition of leased property and manner of operations; make recommendations for safeguarding lives and health of employees and protection of property. To make reports to the Director of the Geological Survey and to the Secretary of the Interior as to the general condition of the leased property and the manner in which operations are being conducted and orders or instructions are being complied with, and to submit from time to time information and recommendations for safeguarding and protecting the lives and health of the employees, the property, the minerals, and the mineralbearing formations.

(c) Prescribe manner and form of records, reports, and notices. To prescribe, subject to the approval of the Secretary of the Interior, the manner and form in which all records of operations, reports, and notices shall be made.

(d) Obtain and check records of production; report amount of production and value of accrued rentals and royal

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