§642 Exploration contracts

Summary

The Secretary can make exploration contracts with people, companies, or other legal groups and give federal money to help explore mineral areas. The contracts must say how the federal money will be paid back. Repayment will come as a royalty on the value of any production and include interest from the date of the loan. Interest must be at least the rate the Treasury would charge for similar borrowing, plus 2 percent per year for administrative costs. Royalty payments go into the Treasury’s miscellaneous receipts. No single contract can give the government’s money beyond $250,000. Money will only be provided if the applicant shows commercial loans are not available on reasonable terms. If the Secretary finds, within the contract time, that production may be possible, he must certify that fact. After certification, royalties are charged against production for the full contract period or until the debt is paid, but not more than 25 years from the contract date. If the Secretary decides not to certify, he will tell the contractor. The Secretary can also make royalty agreements as if the project were certified. He must make rules to run the program and may lower or shorten royalties when it is needed and in the public interest. No rule or contract requires anyone to produce minerals.