30 U.S.C. § 226 — Leasing of oil and gas parcels

(a) Leasing authorized: (1) In general: If a parcel of federal land might contain oil or gas, the Secretary of the Interior must make it available for leasing within 18 months after someone tells the Secretary they're interested in leasing it — as long as the land is open to oil and gas leasing under the approved resource management plan covering that area on the day the interest was submitted. (2) Resource management plans: (A) Any lease for that parcel must follow the terms of the approved resource management plan, and the Secretary cannot add conditions the plan doesn't already include. (B) Starting to update the resource management plan does not stop or delay making the parcel available for leasing under the plan still in effect, as long as everything else required has been done. (b) Lands within a known geologic structure of a producing field, and special tar sand areas; competitive bidding; royalties: (1)(A) Land not covered by paragraphs (2) or (3) must be leased through competitive bidding to the highest qualified bidder, in blocks of no more than 2,560 acres (5,760 acres in Alaska), kept as compact as possible. Sales normally use oral bidding, except where internet bidding is allowed under subparagraph (C), and must happen at least quarterly in each state with available land, more often if the Secretary decides it's needed. "Eligible lands" are lands that can be leased under this chapter and aren't blocked by another statute. "Available" land is land marked open under a land-use plan and nominated for leasing, land at risk of drainage without a lease, or land the Secretary otherwise designates as available. Every lease must carry a royalty of at least 12.5 percent of the value of what's produced and sold. The Secretary must accept the highest bid that meets or beats the national minimum acceptable bid, without separately judging the land's value. Leases must be issued within 60 days after the winning bidder pays the rest of the bonus bid, if any, and the first year's rent. Bids below the minimum are rejected. Land that gets no bids, or whose highest bid is too low, must be offered within 30 days for leasing under subsection (c), and stays available there for 2 years after the failed sale. (B) The national minimum acceptable bid is $10 per acre for the 10 years starting August 16, 2022. After that, the Secretary may raise the minimum by regulation, but only after finding it's necessary to increase financial returns to the United States or to manage federal oil and gas resources more efficiently. The Secretary must notify the House Natural Resources Committee and the Senate Energy and Natural Resources Committee 90 days before any change. Proposing or issuing a new minimum-bid regulation does not count as a "major Federal action" requiring environmental review under 42 U.S.C. § 4332(2)(C). (C) To diversify and expand the onshore leasing program, get a better return for taxpayers, reduce fraud, and make the process more secure, the Secretary may hold onshore lease sales through internet-based bidding. Each individual internet-based sale must conclude within 7 days. (2)(A)(i) Land within a special tar sand area is leased to the highest qualified bidder by competitive bidding, in units of no more than 5,760 acres, kept as compact as possible, for whatever bonus the Secretary accepts. (ii) Royalty is 12.5 percent of the value of production removed or sold, subject to subsection (k)(1)(c). (iii) The Secretary may lease additional land in special tar sand areas as needed to support tar-sands recovery operations. (iv) These leases don't count toward any chargeability limit on oil and gas leases. (B) For an area with both tar sand and oil or gas, the Secretary may issue two separate leases: one for exploring and extracting tar sand, and one for exploring and developing oil and gas. (C) A tar-sand lease uses the same bidding process, annual rental, and posting period as an oil-and-gas lease, except its minimum acceptable bid is $10 per acre. (D) The Secretary may waive, suspend, or change the due-diligence requirement under section 183 for a tar-sand prospecting permit, to help develop resources under a combined hydrocarbon lease. (3)(A) If the United States held a future interest in a mineral estate that, right before becoming a present interest, was under a lease producing oil or gas — or had a well capable of small-scale production, no more than 15 barrels of oil per day or 60,000 cubic feet of gas per day — the lease holder may choose to keep the lease as a noncompetitive lease under subsection (c)(1). (B) That choice must be made: (i) within 1 year after October 24, 1992, if the interest vested between January 1, 1990 and October 24, 1992; (ii) within 2 years after October 24, 1992, if the interest vests within a year after that date; or (iii) before the interest becomes a present interest, in any other case. (C) Even though section 352 normally requires consent, the Secretary must issue a noncompetitive lease under subsection (c)(1) to a qualified holder who makes this election; that lease follows all the usual terms and conditions for subsection (c)(1) leases. (D) The lease continues as long as oil or gas is produced in paying quantities. (E) This paragraph applies only to land managed by the Secretary of Agriculture that the United States acquired under the Act of March 1, 1911. (c) Lands subject to leasing under subsection (b); first qualified applicant: (1) If land is not leased under subsection (b)(1) or isn't subject to competitive leasing under subsection (b)(2), the first qualified person to apply gets a lease without competitive bidding, after paying a non-refundable fee of at least $75. This lease requires a royalty of 12.5 percent of production value. The Secretary must issue the lease within 60 days of identifying the first qualified applicant. (2)(A) Land that was posted for sale under subsection (b)(1) but got no bids, or only bids below the minimum, and that still has no lease and no pending application under paragraph (1) by the end of that period, becomes available for leasing only under subsection (b)(1) again. (B) Land from a lease issued under paragraph (1) or subsection (b)(1) that terminates, expires, is cancelled, or is given up becomes available for leasing only under subsection (b)(1) again. (d) Annual rentals: Every lease under this section requires the lessee to pay rent by the acre each year. For most new leases: at least $3 per acre during the first 2 years, then $5 per acre for the next 6 years, then at least $15 per acre after that. For leases issued during the 10 years starting August 16, 2022: $3 per acre for the first 2 years, then $5 per acre for the next 6 years, then $15 per acre after that. Once oil or gas is discovered in paying quantities, a minimum royalty at least equal to what the rent would have been must be paid instead of rent, at the end of each lease year. (e) Primary terms: Competitive and noncompetitive leases run for an initial 10-year term; tar-sand leases in special tar sand areas also get 10 years. After the primary term, a lease continues as long as oil or gas is produced in paying quantities. If drilling started before the primary term ended and is still being actively pursued when the term ends, the lease is extended 2 years, and then continues as long as production continues. (f) Notice of proposed action; posting of notice; terms and maps: Before offering land for lease, the Secretary must give at least 45 days' notice; before approving a drilling permit or substantially changing lease terms, at least 30 days' notice. Notice must be posted at the appropriate local land-management office and must include the lease terms (or modified terms) and either maps or a written description of the affected land. If maps can't be included in the notice, they must still be made available for public review. Maps must show every tract to be leased and every lease already issued nearby. These notice requirements are on top of any other public-notice law that applies. (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: The Secretary of the Interior (or, for National Forest land, the Secretary of Agriculture) must regulate all surface-disturbing activities under any lease issued under this chapter, and decide what reclamation and other actions are needed to protect surface resources. No drilling permit may be granted without the Secretary first analyzing and approving a plan of operations covering the proposed surface work. The Secretary must, by rule, set standards requiring an adequate bond, surety, or other financial arrangement before surface-disturbing work starts, to ensure the leased land is fully and promptly reclaimed and any harmed land or surface water is restored after operations stop. The Secretary cannot issue a lease, or approve assigning a lease, to a person, company, or its subsidiary or affiliate, during any period the Secretary determines that entity has failed or refused to meet reclamation requirements and standards on a prior lease. Before making that determination, the Secretary must give the entity adequate notice and a chance to comply, and must consider whether an administrative or judicial appeal is still pending. Once the entity complies, it can be issued a new lease. (h) National Forest System Lands: The Secretary of the Interior may not issue a lease on National Forest System land reserved from the public domain if the Secretary of Agriculture objects. (i) Termination: A lease that could otherwise end because production stopped does not terminate for that reason as long as reworking or drilling operations started before, or within 60 days after, production stopped, and are being pursued with reasonable diligence, or as long as oil or gas is produced in paying quantities as a result. A lease also does not expire because operations or production were suspended under a Secretary's order or with the Secretary's consent. And a lease covering land with a well capable of producing does not expire just because the lessee isn't currently producing, as long as the lessee gets at least 60 days after written notice by registered or certified mail to put the well back into producing status — unless production is later stopped again without the Secretary's permission. (j) Drainage agreements; primary term of lease, extension: If the Secretary believes federal land is being drained of oil or gas by wells on adjacent land, the Secretary may negotiate an agreement to compensate the United States, or the United States and its lessees, for that drainage. Any affected lessees must consent. If such an agreement is made, the primary term of the lease paying the compensatory royalty — or any extension of that term — is extended for as long as the royalty is paid, plus one more year after payments stop, and then continues as long as oil or gas is produced in paying quantities. (k) Mining claims; suspension of running time of lease: If, during a lease's primary or extended term, a mining claimant files a verified statement under section 527(c) claiming a competing unpatented mining claim with diligent work happening on land covered by the lease, the lease's clock stops running for that land, starting the first day of the month after the statement is filed, until the dispute is finally decided. (l) Exchange of leases; conditions: On timely application, the Secretary must issue a new lease in exchange for an old 20-year lease (or its renewal, or a lease from before August 8, 1946). The new lease has a 5-year primary term, then continues as long as oil or gas is produced in paying quantities, at a royalty of at least 12.5 percent. That 12.5 percent rate applies to: (1) leases, or parts of the leased land, not believed to be within the producing limits of a known oil or gas deposit as of August 8, 1946; (2) production from a deposit discovered after May 27, 1941, by a well drilled inside the lease boundaries, that the Secretary determines is a new deposit; and (3) production allocated to a lease under an approved cooperative or unit development plan, from a deposit discovered after May 27, 1941 on land committed to that plan, that the Secretary determines is a new deposit — as long as the lease (or the lease it was exchanged for) was already part of the plan, or a pending application for one, when the deposit was discovered. (m) Cooperative or unit plan; authority to alter or modify; communitization or drilling agreements; term of lease; approval of contracts and subsurface storage: To better conserve the resources of a shared oil or gas pool, field, or area, lessees may join together — with each other or with others — under a cooperative or unit development plan whenever the Secretary certifies that doing so is necessary or advisable in the public interest. With the consent of the affected lessees, the Secretary may establish, change, or cancel the drilling, production, rental, minimum-royalty, and royalty terms for leases in the plan, and may make regulations for running it, as needed to protect the public interest. The Secretary may require future leases to include a clause requiring the lessee to operate under such a plan, and may prescribe the plan itself, in a way that adequately protects everyone's interests, including the United States'. If the plan covers federal land, it may give the Secretary, or another named person, committee, or state or federal agency, authority to change the pace of drilling, development, and production over time. Leases run under an approved or prescribed plan are excepted when figuring holdings or control limits under this chapter. When separate tracts can't be developed independently under a normal spacing or development program, a lease, or part of it, may be pooled with other land — federal or not — under a communitization or drilling agreement that splits production or royalties among the tracts, when the Secretary decides this serves the public interest; operations or production under that agreement count as operations or production under each lease committed to it. A 20-year lease, its renewal, or part of it that becomes subject to an approved unit or cooperative plan stays in force until the plan ends. Any other lease committed to a plan with a general rule for allocating oil or gas stays in force for the committed land as long as the lease remains subject to the plan, provided production in paying quantities happens under the plan before the lease's original expiration date. A lease committed to a plan that covers land partly inside and partly outside the plan's area is split into separate leases for the committed and non-committed land as of the date the plan took effect; the lease covering the non-committed land continues for its original term, but for at least 2 years from that split, and then as long as oil or gas is produced in paying quantities. The minimum royalty or discovery rental on a lease subject to such a plan applies only to the land the plan actually allocates oil or gas to. A lease eliminated from an approved plan or communitization/drilling agreement, or still in effect when such a plan or agreement ends, continues for its original term (but at least 2 years) and then as long as oil or gas is produced in paying quantities, unless it is given up. The Secretary may also approve operating, drilling, or development contracts between one or more lessees and other parties, on conditions the Secretary sets, when doing so helps conserve resources, serves the public interest, or best serves the interests of the United States; leases run under approved contracts like this are also excepted from holdings or control limits. Finally, to avoid waste or promote conservation, the Secretary may authorize underground storage of oil or gas — whether or not it was produced from federal land — on land leased or subject to lease under this chapter. This authorization may include a storage fee or rental, or, instead, a different royalty when the stored oil or gas is produced along with oil or gas not previously produced. A lease authorized for storage is extended for at least the storage period, and then as long as previously unproduced oil or gas continues to be produced. (n) Conversion of oil and gas leases and claims on hydrocarbon resources to combined hydrocarbon leases for a 10-year primary term: (1)(A) The owner of an oil and gas lease issued before November 16, 1981, or a valid claim to hydrocarbon resources based on a mineral location made before January 21, 1926 and located within a special tar sand area, may convert that lease or claim into a combined hydrocarbon lease with a 10-year primary term, by filing an application within 2 years of November 16, 1981 that includes an acceptable plan of operations assuring reasonable environmental protection and diligent development using enhanced recovery methods. A claim cannot be treated as invalid for conversion purposes just because it was located as a placer claim instead of a lode claim, or vice versa, even if there was an earlier ruling on that question. (B) The Secretary had to issue final implementing regulations within 6 months of November 16, 1981. If an eligible oil and gas lease would otherwise expire after November 16, 1981 but before six months after those regulations were issued, the lessee could preserve the conversion right by filing, before the lease expired, a notice of intent to apply for conversion, protecting that right until six months after the regulations were issued. Once a complete plan of operations substantially matching the Secretary's regulations was submitted, the Secretary had to suspend the lease's running term until the plan was finally approved or disapproved, and had to act on the plan within 15 months of its submission. (C) When an oil and gas lease is converted, the royalty is whatever the original oil and gas lease required; for a converted mining claim, the royalty is 12.5 percent of production value. (2) Except as this section provides, nothing in the Combined Hydrocarbon Leasing Act of 1981 reduces or increases the rights of a lessee under any oil and gas lease issued before November 16, 1981. (o) Certain outstanding oil and gas deposits: (1) Before surface-disturbing activities to develop oil and gas deposits begin on land described in paragraph (5), the Secretary of Agriculture must, by regulation, require that those activities follow the terms and conditions in paragraph (2). (2) Those terms and conditions must require reasonable advance notice to the Secretary of Agriculture, at least 60 days before surface-disturbing activities begin. (3) That advance notice must include: (A) a designated field representative; (B) a map showing the location and size of all planned improvements, including well sites, roads, and pipeline access; (C) a plan of operations, which may be interim, setting out a construction and drilling schedule; (D) a plan for controlling erosion and sedimentation; and (E) proof of ownership of the mineral title. Nothing in this paragraph limits any state's authority over the same oil and gas operations. (4) The person developing the oil and gas deposits must either (A) let the Secretary of Agriculture sell merchantable timber the United States owns on the affected land, or (B) arrange to buy that timber from the Secretary of Agriculture, or otherwise arrange for its disposal, on terms and with the advance notice the Secretary accepts. (5)(A) The land covered by this subsection is Forest Service land, acquired under the Act of March 1, 1911, where the United States does not own the oil and gas deposits that may be underneath — this subsection does not apply where the United States is set to acquire those oil and gas rights in the future but hasn't yet. (B) This subsection applies only in the Allegheny National Forest. (p) Deadlines for consideration of applications for permits: (1) In general: Within 10 days after receiving a drilling permit application, the Secretary must tell the applicant either that the application is complete, or exactly what information is missing. (2) Issuance or deferral: Within 30 days after the applicant submits a complete application, the Secretary must either (A) issue the permit, if National Environmental Policy Act review and other applicable law are already finished, or (B) defer the decision and notify the applicant of the steps the applicant could take, and the actions the agency still needs to complete, with timelines and deadlines. (3) Requirements for deferred applications: (A) After a deferral notice, the applicant has 2 years to complete everything the Secretary specified, including anything needed for NEPA compliance. (B) If the applicant finishes within that 2-year period, the Secretary must decide on the permit within 10 days after completion, unless NEPA review and other applicable law still are not finished. (C) If the applicant does not finish within the 2-year period, or does not comply with applicable law, the Secretary must deny the permit. (4) Term: A drilling permit approved under this subsection is valid for a single, non-renewable 4-year period starting on the date it is approved. (q) Commingling of production: The Secretary must approve applications to commingle — combine — production from two or more sources, such as a lease area, a drilling spacing unit, a unit participating area, a communitized area, or non-federal property, before the production is measured for royalty purposes. This applies regardless of ownership, royalty rates, or the number or share of acres involved for each source, as long as the applicant agrees to install measurement devices for each source and either keep measurement uncertainty within plus or minus 2 percent on a monthly basis, or use an approved periodic well-testing method. Production from multiple leases, drilling spacing units, communitized areas, or participating areas that share a single wellbore is treated as a single source. This subsection does not stop the Secretary from continuing to use discretion to allow higher uncertainty levels when there is appropriate technical and economic justification.