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Federal Mineral Leasing Act

The Mineral Leasing Act[i] empowers and governs leasing of public lands for developing deposits of coal, phosphates, oil, gas, sodium, potassium, oil shale, bituminous rock and other hydrocarbons.  The Act provides for leases and implements a new policy for the disposition of public lands open to exploration or entry by lease.

The Act promotes the orderly development of oil and gas deposits in public land by private enterprise.  The Mineral Leasing Act significantly influenced the mineral exploration and leasing provisions of the Outer Continental Shelf Lands Act of 1953 (and its 1978 amendment), as well as the Geothermal Steam Act of 1970.

The Bureau of Land Management, an agency of the U.S. Department of the Interior, is the principal administrator of the Mineral Leasing Act.  The Secretary of the Interior is in charge of the leasing for gas and oil purposes of U.S. lands and is authorized to prescribe essential rules and regulations[ii].  Both competitive and non-competitive leases issued under the Act are for a primary term of 10 years.

The Secretary is empowered to do all the necessary things to accomplish the objectives of the statute which includes the fixing of boundaries of oil fields, gas fields, and structures[iii].  The Secretary is empowered to grant rights-of-way for pipelines through federal lands for transportation of oil, natural gas, synthetic liquid or gaseous fuels.  Pipeline rights-of-way shall not be granted on lands in the National Park System, lands held in trust for an Indian or Indian tribe, and lands on the Outer Continental Shelf.  The Secretary is also empowered to issue regulations in connection with the rights-of-way or permits granted or renewed pursuant to the Act[iv].

The regulations so issued shall include requirements for restoration, re-vegetation and curtailment of surface erosion; fulfillment of applicable air and water quality standards; control or prevention of damage to the environment, which includes fish and wildlife habitat; protection of the interests of people who live in the right-of-way or permit area and who earn their living by relying on the fish, wildlife and biotic resources of the area.  In case of a non-compliance of any of the requirements, the right-of-way shall be suspended or terminated[v].

The federal government shall dispose of to citizens of the United States, associations of citizens, any corporation organized under federal, state, or territorial laws, and municipalities, deposits of oil, oil shale, and gas, and lands containing such deposits.  However, there shall be certain exceptions to this[vi].  Where oil and gas are discovered on lands that are not withdrawn from entry or classified as mineral when they were entered as agricultural, and where the entry was patented with the mineral rights reserved to the federal government, the entry-man has a preferential right to a lease for oil and gas[vii].

The Act details the lease conditions, inclusive of the term of the lease, annual rentals and royalties, and requirements of diligent development and continued operation.  A lessee is required to submit an operation and reclamation plan to the Secretary for his/her approval.  This should be done before the lessee takes any action which might cause significant disturbance of the environment and also within three years of issuance of the lease.  If the land is under the surface jurisdiction of another federal agency, then that agency should consent to the terms of the Secretary’s approval[viii].

The Act empowers the Secretary to lease lands subject to disposition under the Act that are believed to contain oil or gas deposits.  However, the Secretary is prohibited from issuing leases on National Forest System lands reserved from the public domain over the objection of the Secretary of Agriculture.  The Act also sets forth other provisions governing the leasing of lands that contain oil and gas and sets out special provisions for Alaska[ix].

The Secretary is empowered to lease deposits of oil shale and gilsonite which belong to the U.S. and as much of the surface of public lands containing the deposits, or adjacent land, as necessary for extracting and reducing the minerals.  In order to issue an offsite lease, the Secretary should consult with the governor and appropriate state, local, and tribal officials of the state where the lands to be leased are located and also with officials of additional states that are likely to be affected significantly by the effects of development under the lease[x].

The Secretary also has the right to grant prospecting permits that give exclusive right to prospects for chlorides, sulphates, carbonates, borates, silicates or nitrates of sodium in lands belonging to the U.S.  During the life of the lease, the Secretary shall grant to a lessee up to 40 acres of unoccupied non-mineral public land as necessary for development and use of the deposits[xi].

The Act prohibits organizing or participating in a scheme or arrangement to circumvent the Act’s provisions or the implementing regulations.  It also makes it unlawful to seek to obtain or obtain money or property through false statements of material facts or by failing to state material facts regarding the value of a lease, availability of land to lease, or the ability of a person to obtain leases.  Any such violations shall be subject to criminal and civil penalties pursuant to the Act.

A lease issued under the Act shall be waived or cancelled by appropriate court proceedings when the lessee fails to follow the provisions of the Act.  With certain provisions, the Secretary is authorized to cancel an oil and gas lease issued after August 21, 1935, if the lessee fails to follow the required lease provision.  The Act also explains the procedures for the lease reinstatement[xii].

[i] 30 USCS § 181 through 196.

[ii] 30 USCS § 226.

[iii] 30 USCS § 189.

[iv] 30 USCS § 185.

[v] 30 USCS § 185.

[vi] 30 USCS § 181.

[vii] 30 USCS § 229.

[viii] 30 USCS § 201 through 209.

[ix] 30 USCS § 223 through 226,251.

[x] 30 USCS § 241.

[xi] 30 USCS § 261 through 263.

[xii] 30 USCS §  188,195.

Inside Federal Mineral Leasing Act