30 U.S.C. § 226 : US Code - Section 226: Lease of oil and gas lands

Search 30 U.S.C. § 226 : US Code - Section 226: Lease of oil and gas lands

(a) Authority of Secretary
All lands subject to disposition under this chapter which are
known or believed to contain oil or gas deposits may be leased by
the Secretary.
(b) Lands within known geologic structure of a producing oil or gas
field; lands within special tar sand areas; competitive bidding;
royalties
(1)(A) All lands to be leased which are not subject to leasing
under paragraphs (2) and (3) of this subsection shall be leased as
provided in this paragraph to the highest responsible qualified
bidder by competitive bidding under general regulations in units of
not more than 2,560 acres, except in Alaska, where units shall be
not more than 5,760 acres. Such units shall be as nearly compact as
possible. Lease sales shall be conducted by oral bidding. Lease
sales shall be held for each State where eligible lands are
available at least quarterly and more frequently if the Secretary
of the Interior determines such sales are necessary. A lease shall
be conditioned upon the payment of a royalty at a rate of not less
than 12.5 percent in amount or value of the production removed or
sold from the lease. The Secretary shall accept the highest bid
from a responsible qualified bidder which is equal to or greater
than the national minimum acceptable bid, without evaluation of the
value of the lands proposed for lease. Leases shall be issued
within 60 days following payment by the successful bidder of the
remainder of the bonus bid, if any, and the annual rental for the
first lease year. All bids for less than the national minimum
acceptable bid shall be rejected. Lands for which no bids are
received or for which the highest bid is less than the national
minimum acceptable bid shall be offered promptly within 30 days for
leasing under subsection (c) of this section and shall remain
available for leasing for a period of 2 years after the competitive
lease sale.
(B) The national minimum acceptable bid shall be $2 per acre for
a period of 2 years from December 22, 1987. Thereafter, the
Secretary, subject to paragraph (2)(B), may establish by regulation
a higher national minimum acceptable bid for all leases based upon
a finding that such action is necessary: (i) to enhance financial
returns to the United States; and (ii) to promote more efficient
management of oil and gas resources on Federal lands. Ninety days
before the Secretary makes any change in the national minimum
acceptable bid, the Secretary shall notify the Committee on Natural
Resources of the United States House of Representatives and the
Committee on Energy and Natural Resources of the United States
Senate. The proposal or promulgation of any regulation to establish
a national minimum acceptable bid shall not be considered a major
Federal action subject to the requirements of section 4332(2)(C) of
title 42.
(2)(A)(i) If the lands to be leased are within a special tar sand
area, they shall be leased to the highest responsible qualified
bidder by competitive bidding under general regulations in units of
not more than 5,760 acres, which shall be as nearly compact as
possible, upon the payment by the lessee of such bonus as may be
accepted by the Secretary.
(ii) Royalty shall be 12(!1/2) per centum in amount or value of
production removed or sold from the lease, subject to subsection
(k)(1)(c) (!1) of this section.
(iii) The Secretary may lease such additional lands in special
tar sand areas as may be required in support of any operations
necessary for the recovery of tar sands.
(iv) No lease issued under this paragraph shall be included in
any chargeability limitation associated with oil and gas leases.
(B) For any area that contains any combination of tar sand and
oil or gas (or both), the Secretary may issue under this chapter,
separately -
(i) a lease for exploration for and extraction of tar sand; and
(ii) a lease for exploration for and development of oil and
gas.
(C) A lease issued for tar sand shall be issued using the same
bidding process, annual rental, and posting period as a lease
issued for oil and gas, except that the minimum acceptable bid
required for a lease issued for tar sand shall be $2 per acre.
(D) The Secretary may waive, suspend, or alter any requirement
under section 183 of this title that a permittee under a permit
authorizing prospecting for tar sand must exercise due diligence,
to promote any resource covered by a combined hydrocarbon lease.
(3)(A) If the United States held a vested future interest in a
mineral estate that, immediately prior to becoming a vested present
interest, was subject to a lease under which oil or gas was being
produced, or had a well capable of producing, in paying quantities
at an annual average production volume per well per day of either
not more than 15 barrels per day of oil or condensate, or not more
than 60,000 cubic feet of gas, the holder of the lease may elect to
continue the lease as a noncompetitive lease under subsection
(c)(1) of this section.
(B) An election under this paragraph is effective -
(i) in the case of an interest which vested after January 1,
1990, and on or before October 24, 1992, if the election is made
before the date that is 1 year after October 24, 1992;
(ii) in the case of an interest which vests within 1 year after
October 24, 1992, if the election is made before the date that is
2 years after October 24, 1992; and
(iii) in any case other than those described in clause (i) or
(ii), if the election is made prior to the interest becoming a
vested present interest.
(C) Notwithstanding the consent requirement referenced in section
352 of this title, the Secretary shall issue a noncompetitive lease
under subsection (c)(1) of this section to a holder who makes an
election under subparagraph (A) and who is qualified to hold a
lease under this chapter. Such lease shall be subject to all terms
and conditions under this chapter that are applicable to leases
issued under subsection (c)(1) of this section.
(D) A lease issued pursuant to this paragraph shall continue so
long as oil or gas continues to be produced in paying quantities.
(E) This paragraph shall apply only to those lands under the
administration of the Secretary of Agriculture where the United
States acquired an interest in such lands pursuant to the Act of
March 1, 1911 (36 Stat. 961 and following).
(c) Lands subject to leasing under subsection (b); first qualified
applicant
(1) If the lands to be leased are not leased under subsection
(b)(1) of this section or are not subject to competitive leasing
under subsection (b)(2) of this section, the person first making
application for the lease who is qualified to hold a lease under
this chapter shall be entitled to a lease of such lands without
competitive bidding, upon payment of a non-refundable application
fee of at least $75. A lease under this subsection shall be
conditioned upon the payment of a royalty at a rate of 12.5 percent
in amount or value of the production removed or sold from the
lease. Leases shall be issued within 60 days of the date on which
the Secretary identifies the first responsible qualified applicant.
(2)(A) Lands (i) which were posted for sale under subsection
(b)(1) of this section but for which no bids were received or for
which the highest bid was less than the national minimum acceptable
bid and (ii) for which, at the end of the period referred to in
subsection (b)(1) of this section no lease has been issued and no
lease application is pending under paragraph (1) of this
subsection, shall again be available for leasing only in accordance
with subsection (b)(1) of this section.
(B) The land in any lease which is issued under paragraph (1) of
this subsection or under subsection (b)(1) of this section which
lease terminates, expires, is cancelled or is relinquished shall
again be available for leasing only in accordance with subsection
(b)(1) of this section.
(d) Annual rentals
All leases issued under this section, as amended by the Federal
Onshore Oil and Gas Leasing Reform Act of 1987, shall be
conditioned upon payment by the lessee of a rental of not less than
$1.50 per acre per year for the first through fifth years of the
lease and not less than $2 per acre per year for each year
thereafter. A minimum royalty in lieu of rental of not less than
the rental which otherwise would be required for that lease year
shall be payable at the expiration of each lease year beginning on
or after a discovery of oil or gas in paying quantities on the
lands leased.
(e) Primary terms
Competitive and noncompetitive leases issued under this section
shall be for a primary term of 10 years: Provided, however, That
competitive leases issued in special tar sand areas shall also be
for a primary term of ten years. Each such lease shall continue so
long after its primary term as oil or gas is produced in paying
quantities. Any lease issued under this section for land on which,
or for which under an approved cooperative or unit plan of
development or operation, actual drilling operations were commenced
prior to the end of its primary term and are being diligently
prosecuted at that time shall be extended for two years and so long
thereafter as oil or gas is produced in paying quantities.
(f) Notice of proposed action; posting of notice; terms and maps
At least 45 days before offering lands for lease under this
section, and at least 30 days before approving applications for
permits to drill under the provisions of a lease or substantially
modifying the terms of any lease issued under this section, the
Secretary shall provide notice of the proposed action. Such notice
shall be posted in the appropriate local office of the leasing and
land management agencies. Such notice shall include the terms or
modified lease terms and maps or a narrative description of the
affected lands. Where the inclusion of maps in such notice is not
practicable, maps of the affected lands shall be made available to
the public for review. Such maps shall show the location of all
tracts to be leased, and of all leases already issued in the
general area. The requirements of this subsection are in addition
to any public notice required by other law.
(g) Regulation of surface-disturbing activities; approval of plan
of operations; bond or surety; failure to comply with reclamation
requirements as barring lease; opportunity to comply with
requirements
The Secretary of the Interior, or for National Forest lands, the
Secretary of Agriculture, shall regulate all surface-disturbing
activities conducted pursuant to any lease issued under this
chapter, and shall determine reclamation and other actions as
required in the interest of conservation of surface resources. No
permit to drill on an oil and gas lease issued under this chapter
may be granted without the analysis and approval by the Secretary
concerned of a plan of operations covering proposed surface-
disturbing activities within the lease area. The Secretary
concerned shall, by rule or regulation, establish such standards as
may be necessary to ensure that an adequate bond, surety, or other
financial arrangement will be established prior to the commencement
of surface-disturbing activities on any lease, to ensure the
complete and timely reclamation of the lease tract, and the
restoration of any lands or surface waters adversely affected by
lease operations after the abandonment or cessation of oil and gas
operations on the lease. The Secretary shall not issue a lease or
leases or approve the assignment of any lease or leases under the
terms of this section to any person, association, corporation, or
any subsidiary, affiliate, or person controlled by or under common
control with such person, association, or corporation, during any
period in which, as determined by the Secretary of the Interior or
Secretary of Agriculture, such entity has failed or refused to
comply in any material respect with the reclamation requirements
and other standards established under this section for any prior
lease to which such requirements and standards applied. Prior to
making such determination with respect to any such entity the
concerned Secretary shall provide such entity with adequate
notification and an opportunity to comply with such reclamation
requirements and other standards and shall consider whether any
administrative or judicial appeal is pending. Once the entity has
complied with the reclamation requirement or other standard
concerned an oil or gas lease may be issued to such entity under
this chapter.
(h) National Forest System Lands
The Secretary of the Interior may not issue any lease on National
Forest System Lands reserved from the public domain over the
objection of the Secretary of Agriculture.
(i) Termination
No lease issued under this section which is subject to
termination because of cessation of production shall be terminated
for this cause so long as reworking or drilling operations which
were commenced on the land prior to or within sixty days after
cessation of production are conducted thereon with reasonable
diligence, or so long as oil or gas is produced in paying
quantities as a result of such operations. No lease issued under
this section shall expire because operations or production is
suspended under any order, or with the consent, of the Secretary.
No lease issued under this section covering lands on which there is
a well capable of producing oil or gas in paying quantities shall
expire because the lessee fails to produce the same unless the
lessee is allowed a reasonable time, which shall be not less than
sixty days after notice by registered or certified mail, within
which to place such well in producing status or unless, after such
status is established, production is discontinued on the leased
premises without permission granted by the Secretary under the
provisions of this chapter.
(j) Drainage agreements; primary term of lease, extension
Whenever it appears to the Secretary that lands owned by the
United States are being drained of oil or gas by wells drilled on
adjacent lands, he may negotiate agreements whereby the United
States, or the United States and its lessees, shall be compensated
for such drainage. Such agreements shall be made with the consent
of the lessees, if any, affected thereby. If such agreement is
entered into, the primary term of any lease for which compensatory
royalty is being paid, or any extension of such primary term, shall
be extended for the period during which such compensatory royalty
is paid and for a period of one year from discontinuance of such
payment and so long thereafter as oil or gas is produced in paying
quantities.
(k) Mining claims; suspension of running time of lease
If, during the primary term or any extended term of any lease
issued under this section, a verified statement is filed by any
mining claimant pursuant to subsection (c) of section 527 of this
title, whether such filing occur prior to September 2, 1960 or
thereafter, asserting the existence of a conflicting unpatented
mining claim or claims upon which diligent work is being prosecuted
as to any lands covered by the lease, the running of time under
such lease shall be suspended as to the lands involved from the
first day of the month following the filing of such verified
statement until a final decision is rendered in the matter.
(l) Exchange of leases; conditions
The Secretary of the Interior shall, upon timely application
therefor, issue a new lease in exchange for any lease issued for a
term of twenty years, or any renewal thereof, or any lease issued
prior to August 8, 1946, in exchange for a twenty-year lease, such
new lease to be for a primary term of five years and so long
thereafter as oil or gas is produced in paying quantities and at a
royalty rate of not less than 12 1/2 per centum in amount or value
of the production removed or sold from such leases, except that the
royalty rate shall be 12 1/2 per centum in amount or value of the
production removed or sold from said leases as to (1) such leases,
or such parts of the lands subject thereto and the deposits
underlying the same, as are not believed to be within the
productive limits of any producing oil or gas deposit, as such
productive limits are found by the Secretary to have existed on
August 8, 1946; and (2) any production on a lease from an oil or
gas deposit which was discovered after May 27, 1941, by a well or
wells drilled within the boundaries of the lease, and which is
determined by the Secretary to be a new deposit; and (3) any
production on or allocated to a lease pursuant to an approved
cooperative or unit plan of development or operation from an oil or
gas deposit which was discovered after May 27, 1941, on land
committed to such plan, and which is determined by the Secretary to
be a new deposit, where such lease, or a lease for which it is
exchanged, was included in such plan at the time of discovery or
was included in a duly executed and filed application for the
approval of such plan at the time of discovery.
(m) Cooperative or unit plan; authority of Secretary of the
Interior to alter or modify; communitization or drilling
agreements; term of lease, conditions; Secretary to approve
operating, drilling or development contracts, and subsurface
storage
For the purpose of more properly conserving the natural resources
of any oil or gas pool, field, or like area, or any part thereof
(whether or not any part of said oil or gas pool, field, or like
area, is then subject to any cooperative or unit plan of
development or operation), lessees thereof and their
representatives may unite with each other, or jointly or separately
with others, in collectively adopting and operating under a
cooperative or unit plan of development or operation of such pool,
field, or like area, or any part thereof, whenever determined and
certified by the Secretary of the Interior to be necessary or
advisable in the public interest. The Secretary is thereunto
authorized, in his discretion, with the consent of the holders of
leases involved, to establish, alter, change, or revoke drilling,
producing, rental, minimum royalty, and royalty requirements of
such leases and to make such regulations with reference to such
leases, with like consent on the part of the lessees, in connection
with the institution and operation of any such cooperative or unit
plan as he may deem necessary or proper to secure the proper
protection of the public interest. The Secretary may provide that
oil and gas leases hereafter issued under this chapter shall
contain a provision requiring the lessee to operate under such a
reasonable cooperative or unit plan, and he may prescribe such a
plan under which such lessee shall operate, which shall adequately
protect the rights of all parties in interest, including the United
States.
Any plan authorized by the preceding paragraph which includes
lands owned by the United States may, in the discretion of the
Secretary, contain a provision whereby authority is vested in the
Secretary of the Interior, or any such person, committee, or State
or Federal officer or agency as may be designated in the plan, to
alter or modify from time to time the rate of prospecting and
development and the quantity and rate of production under such
plan. All leases operated under any such plan approved or
prescribed by the Secretary shall be excepted in determining
holdings or control under the provisions of any section of this
chapter.
When separate tracts cannot be independently developed and
operated in conformity with an established well-spacing or
development program, any lease, or a portion thereof, may be pooled
with other lands, whether or not owned by the United States, under
a communitization or drilling agreement providing for an
apportionment of production or royalties among the separate tracts
of land comprising the drilling or spacing unit when determined by
the Secretary of the Interior to be in the public interest, and
operations or production pursuant to such an agreement shall be
deemed to be operations or production as to each such lease
committed thereto.
Any lease issued for a term of twenty years, or any renewal
thereof, or any portion of such lease that has become the subject
of a cooperative or unit plan of development or operation of a
pool, field, or like area, which plan has the approval of the
Secretary of the Interior, shall continue in force until the
termination of such plan. Any other lease issued under any section
of this chapter which has heretofore or may hereafter be committed
to any such plan that contains a general provision for allocation
of oil or gas shall continue in force and effect as to the land
committed so long as the lease remains subject to the plan:
Provided, That production is had in paying quantities under the
plan prior to the expiration date of the term of such lease. Any
lease heretofore or hereafter committed to any such plan embracing
lands that are in part within and in part outside of the area
covered by any such plan shall be segregated into separate leases
as to the lands committed and the lands not committed as of the
effective date of unitization: Provided, however, That any such
lease as to the nonunitized portion shall continue in force and
effect for the term thereof but for not less than two years from
the date of such segregation and so long thereafter as oil or gas
is produced in paying quantities. The minimum royalty or discovery
rental under any lease that has become subject to any cooperative
or unit plan of development or operation, or other plan that
contains a general provision for allocation of oil or gas, shall be
payable only with respect to the lands subject to such lease to
which oil or gas shall be allocated under such plan. Any lease
which shall be eliminated from any such approved or prescribed
plan, or from any communitization or drilling agreement authorized
by this section, and any lease which shall be in effect at the
termination of any such approved or prescribed plan, or at the
termination of any such communitization or drilling agreement,
unless relinquished, shall continue in effect for the original term
thereof, but for not less than two years, and so long thereafter as
oil or gas is produced in paying quantities.
The Secretary of the Interior is hereby authorized, on such
conditions as he may prescribe, to approve operating, drilling, or
development contracts made by one or more lessees of oil or gas
leases, with one or more persons, associations, or corporations
whenever, in his discretion, the conservation of natural products
or the public convenience or necessity may require it or the
interests of the United States may be best subserved thereby. All
leases operated under such approved operating, drilling, or
development contracts, and interests thereunder, shall be excepted
in determining holdings or control under the provisions of this
chapter.
The Secretary of the Interior, to avoid waste or to promote
conservation of natural resources, may authorize the subsurface
storage of oil or gas, whether or not produced from federally owned
lands, in lands leased or subject to lease under this chapter. Such
authorization may provide for the payment of a storage fee or
rental on such stored oil or gas or, in lieu of such fee or rental,
for a royalty other than that prescribed in the lease when such
stored oil or gas is produced in conjunction with oil or gas not
previously produced. Any lease on which storage is so authorized
shall be extended at least for the period of storage and so long
thereafter as oil or gas not previously produced is produced in
paying quantities.
(n) Conversion of oil and gas leases and claims on hydrocarbon
resources to combined hydrocarbon leases for primary term of 10
years; application
(1)(A) The owner of (1) an oil and gas lease issued prior to
November 16, 1981, or (2) a valid claim to any hydrocarbon
resources leasable under this section based on a mineral location
made prior to January 21, 1926, and located within a special tar
sand area shall be entitled to convert such lease or claim to a
combined hydrocarbon lease for a primary term of ten years upon the
filing of an application within two years from November 16, 1981,
containing an acceptable plan of operations which assures
reasonable protection of the environment and diligent development
of those resources requiring enhanced recovery methods of
development or mining. For purposes of conversion, no claim shall
be deemed invalid solely because it was located as a placer
location rather than a lode location or vice versa, notwithstanding
any previous adjudication on that issue.
(B) The Secretary shall issue final regulations to implement this
section within six months of November 16, 1981. If any oil and gas
lease eligible for conversion under this section would otherwise
expire after November 16, 1981, and before six months following the
issuance of implementing regulations, the lessee may preserve his
conversion right under such lease for a period ending six months
after the issuance of implementing regulations by filing with the
Secretary, before the expiration of the lease, a notice of intent
to file an application for conversion. Upon submission of a
complete plan of operations in substantial compliance with the
regulations promulgated by the Secretary for the filing of such
plans, the Secretary shall suspend the running of the term of any
oil and gas lease proposed for conversion until the plan is finally
approved or disapproved. The Secretary shall act upon a proposed
plan of operations within fifteen months of its submittal.
(C) When an existing oil and gas lease is converted to a combined
hydrocarbon lease, the royalty shall be that provided for in the
original oil and gas lease and for a converted mining claim, 12 1/2
per centum in amount or value of production removed or sold from
the lease.
(2) Except as provided in this section, nothing in the Combined
Hydrocarbon Leasing Act of 1981 shall be construed to diminish or
increase the rights of any lessee under any oil and gas lease
issued prior to November 16, 1981.
(o) Certain outstanding oil and gas deposits
(1) Prior to the commencement of surface-disturbing activities
relating to the development of oil and gas deposits on lands
described under paragraph (5), the Secretary of Agriculture shall
require, pursuant to regulations promulgated by the Secretary, that
such activities be subject to terms and conditions as provided
under paragraph (2).
(2) The terms and conditions referred to in paragraph (1) shall
require that reasonable advance notice be furnished to the
Secretary of Agriculture at least 60 days prior to the commencement
of surface disturbing activities.
(3) Advance notice under paragraph (2) shall include each of the
following items of information:
(A) A designated field representative.
(B) A map showing the location and dimensions of all
improvements, including but not limited to, well sites and road
and pipeline accesses.
(C) A plan of operations, of an interim character if necessary,
setting forth a schedule for construction and drilling.
(D) A plan of erosion and sedimentation control.
(E) Proof of ownership of mineral title.
Nothing in this subsection shall be construed to affect any
authority of the State in which the lands concerned are located to
impose any requirements with respect to such oil and gas
operations.
(4) The person proposing to develop oil and gas deposits on lands
described under paragraph (5) shall either -
(A) permit the Secretary to market merchantable timber owned by
the United States on lands subject to such activities; or
(B) arrange to purchase merchantable timber on lands subject to
such surface disturbing activities from the Secretary of
Agriculture, or otherwise arrange for the disposition of such
merchantable timber, upon such terms and upon such advance notice
of the items referred to in subparagraphs (A) through (E) of
paragraph (3) as the Secretary may accept.
(5)(A) The lands referred to in this subsection are those lands
referenced in subparagraph (B) which are under the administration
of the Secretary of Agriculture where the United States acquired an
interest in such lands pursuant to the Act of March 1, 1911 (36
Stat. 961 and following), but does not have an interest in oil and
gas deposits that may be present under such lands. This subsection
does not apply to any such lands where, under the provisions of its
acquisition of an interest in the lands, the United States is to
acquire any oil and gas deposits that may be present under such
lands in the future but such interest has not yet vested with the
United States.
(B) This subsection shall only apply in the Allegheny National
Forest.
(p) Deadlines for consideration of applications for permits
(1) In general
Not later than 10 days after the date on which the Secretary
receives an application for any permit to drill, the Secretary
shall -
(A) notify the applicant that the application is complete; or
(B) notify the applicant that information is missing and
specify any information that is required to be submitted for
the application to be complete.
(2) Issuance or deferral
Not later than 30 days after the applicant for a permit has
submitted a complete application, the Secretary shall -
(A) issue the permit, if the requirements under the National
Environmental Policy Act of 1969 [42 U.S.C. 4321 et seq.] and
other applicable law have been completed within such timeframe;
or
(B) defer the decision on the permit and provide to the
applicant a notice -
(i) that specifies any steps that the applicant could take
for the permit to be issued; and
(ii) a list of actions that need to be taken by the agency
to complete compliance with applicable law together with
timelines and deadlines for completing such actions.
(3) Requirements for deferred applications
(A) In general
If the Secretary provides notice under paragraph (2)(B), the
applicant shall have a period of 2 years from the date of
receipt of the notice in which to complete all requirements
specified by the Secretary, including providing information
needed for compliance with the National Environmental Policy
Act of 1969.
(B) Issuance of decision on permit
If the applicant completes the requirements within the period
specified in subparagraph (A), the Secretary shall issue a
decision on the permit not later than 10 days after the date of
completion of the requirements described in subparagraph (A),
unless compliance with the National Environmental Policy Act of
1969 and other applicable law has not been completed within
such timeframe.
(C) Denial of permit
If the applicant does not complete the requirements within
the period specified in subparagraph (A) or if the applicant
does not comply with applicable law, the Secretary shall deny
the permit.