Gas and Oil Rights in or Under Rights of Way

Whenever the Secretary of the Interior shall deem it to be consistent with the public interest, s/he is authorized to lease deposits of oil and gas in or under lands embraced in railroad or other rights of way acquired under any law of the United States, provided that no lease shall be executed except to the municipality, corporation, firm, association, or individual by whom such right of way was acquired, or to the lawful successor, assignee or transferee of such municipality, corporation, firm, association, or individual[i].

Before awarding any lease, the owner or lessee of adjoining lands should be notified and permitted to submit an offer or bid of the amount he or she will agree to pay for extraction, through wells on his/her adjoining land, of the oil or gas under, and from, such adjoining right-of-way, along with the bids of the holder of the right-of-way[ii].

The royalty to be paid to the United States under any lease to be issued, shall be determined by the Secretary of the Interior, and in no case shall be less than 12 1/2 per centum in amount or value of the production, nor for more than twenty years, provided that when the oil or gas is produced from land adjacent to the right of way the amount or value of the royalty to be paid to the United States shall be within the discretion of the Secretary of the Interior, provided that when the daily average production of any oil well does not exceed ten barrels per day said Secretary may, in his discretion, reduce the royalty on subsequent production[iii].  The Federal Oil and Gas Royalty Management Act govern the accounting, management, and enforcement of royalties for oil and gas on public lands[iv].

Any lease granted by the Secretary of the Interior, may, in the discretion of said Secretary, contain a provision granting the lessee the right, with the approval of said Secretary, to shut down the operation of any well or wells the operation of which is unprofitable, to resume operations when it may result in profit, and to abandon any well or wells that cease to produce oil and/or gas in paying quantities[v].

[i] 30 USCS § 301.

[ii] 30 USCS § 303.

[iii] 30 USCS § 305.

[iv] 30 USCS § 1701 through 1759.

[v] 30 USCS § 304.


Inside Gas and Oil Rights in or Under Rights of Way