§1353 — Title 43 Public Lands | U.S. Code

Summary

The United States can require that royalties or net profit shares from federal oil and gas leases be paid in oil or gas when the Secretary asks. The United States may also buy up to 16⅔% by volume of the oil and gas produced from those leases at the regulated price or, if no regulated price applies, at the fair market value at the wellhead. Oil or gas received as royalty or profit share counts toward that purchase limit. The Secretary can transfer ownership of any royalty, profit-share, or purchased oil or gas to the Secretary of Defense, the General Services Administration, or the Secretary of Energy for use by the federal government. The Secretary may sell royalty or purchased oil and gas by competitive bidding, but not for more than the regulated price or for less than fair market value. If small refiners lack fair access to oil, and after consulting the Secretary of Energy, the Secretary may run a lottery or make allocations to help them. The Secretary must publish notice at least 30 days before such sales with qualifications, amounts, and any purchase limits. For gas, if the Federal Energy Regulatory Commission finds an emergency shortage that threatens a region and gas can serve that region, the Secretary may allocate or hold a lottery for that gas after consulting FERC; prices must follow the same limits. If no acceptable bids come in, the lessee must take the federal oil or gas and pay cash equal to the regulated price or fair market value. “Regulated price” means the highest price allowed under certain federal price rules (including the Emergency Petroleum Allocation Act and the Natural Gas Act or other laws that set prices). “Small refiner” follows SBA standards in effect on September 18, 1978, or later revisions. The right to buy outer Continental Shelf oil under section 1341(b) remains in effect.

Title 43, §1353

Public Lands — Source: USLM XML via OLRC

(a)(1)Except as may be necessary to comply with the provisions of section 1335 and 1336 of this title, all royalties or net profit shares, or both, accruing to the United States under any oil and gas lease issued or maintained in accordance with this subchapter, shall, on demand of the Secretary, be paid in oil or gas.

(2)The United States shall have the right to purchase not to exceed 16⅔ per centum by volume of the oil and gas produced pursuant to a lease issued or maintained in accordance with this subchapter, at the regulated price, or, if no regulated price applies, at the fair market value at the well head of the oil and gas saved, removed, or sold, except that any oil or gas obtained by the United States as royalty or net profit share shall be credited against the amount that may be purchased under this subsection.

(3)Title to any royalty, net profit share, or purchased oil or gas may be transferred, upon request, by the Secretary to the Secretary of Defense, to the Administrator of the General Services Administration, or to the Secretary of Energy, for disposal within the Federal Government.

(b)(1)The Secretary, except as provided in this subsection, may offer to the public and sell by competitive bidding for not more than its regulated price, or, if no regulated price applies, not less than its fair market value, any part of the oil (A) obtained by the United States pursuant to any lease as royalty or net profit share, or (B) purchased by the United States pursuant to subsection (a)(2) of this section.

(2)Whenever, after consultation with the Secretary of Energy, the Secretary determines that small refiners do not have access to adequate supplies of oil at equitable prices, the Secretary may dispose of any oil which is taken as a royalty or net profit share accruing or reserved to the United States pursuant to any lease issued or maintained under this subchapter, or purchased by the United States pursuant to subsection (a)(2) of this section, by conducting a lottery for the sale of such oil, or may equitably allocate such oil among the competitors for the purchase of such oil, at the regulated price, or if no regulated price applies, at its fair market value. The Secretary shall limit participation in any allocation or lottery sale to assure such access and shall publish notice of such allocation or sale, and the terms thereof, at least thirty days in advance. Such notice shall include qualifications for participation, the amount of oil to be sold, and any limitation in the amount of oil which any participant may be entitled to purchase.

(3)The Secretary may only sell or otherwise dispose of oil described in paragraph (1) of this subsection in accordance with any provision of law, or regulations issued in accordance with such provisions, which provide for the Secretary of Energy to allocate, transfer, exchange, or sell oil in amounts or at prices determined by such provision of law or regulations.

(c)(1)Except as provided in paragraph (2) of this subsection, the Secretary, pursuant to such terms as he determines, many 11 So in original. Probably should be “may”. offer to the public and sell by competitive bidding for not more than its regulated price, or, if no regulated price applies, not less than its fair market value any part of the gas (A) obtained by the United States pursuant to a lease as royalty or net profit share, or (B) purchased by the United States pursuant to subsection (a)(2) of this section.

(2)Whenever, after consultation with and advice from the Secretary of Energy, the Federal Energy Regulatory Commission determines that an emergency shortage of natural gas is threatening to cause severe economic or social dislocation in any region of the United States and that such region can be serviced in a practical, feasible, and efficient manner by royalty, net profit share, or purchased gas obtained pursuant to the provisions of this section, the Secretary of the Interior may allocate or conduct a lottery for the sale of such gas, and shall limit participation in any allocation or lottery sale of such gas to any person servicing such region, but he shall not sell any such gas for more than its regulated price, or, if no regulated price applies, less than its fair market value. Prior to selling or allocating any gas pursuant to this subsection, the Secretary shall consult with the Federal Energy Regulatory Commission.

(d)The lessee shall take any Federal oil or gas for which no acceptable bids are received, as determined by the Secretary, and which is not transferred pursuant to subsection (a)(3) of this section, and shall pay to the United States a cash amount equal to the regulated price, or, if no regulated price applies, the fair market value of the oil or gas so obtained.

(e)As used in this section—

(1)the term “regulated price” means the highest price—

(A)at which oil many 1 be sold pursuant to the Emergency Petroleum Allocation Act of 1973 22 See References in Text note below. [15 U.S.C. 751 et seq.] and any rule or order issued under such Act;

(B)at which natural gas may be sold to natural-gas companies pursuant to the Natural Gas Act [15 U.S.C. 717 et seq.], any other Act, regulations governing natural gas pricing, or any rule or order issued under any such Act or any such regulations; or

(C)at which either Federal oil or gas may be sold under any other provision of law or rule or order thereunder which sets a price (or manner for determining a price) for oil or gas; and

(2)the term “small refiner” has the meaning given such term by Small Business Administration Standards 128.3–8(d) and (g), as in effect on September 18, 1978, or as there-after revised or amended.

(f)Nothing in this section shall prohibit the right of the United States to purchase any oil or gas produced on the outer Continental Shelf as provided by section 1341(b) of this title.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Emergency Petroleum Allocation Act of 1973, referred to in subsec. (e)(1)(A), is Pub. L. 93–159, Nov. 27, 1973, 87 Stat. 628, which was classified generally to chapter 16A (§ 751 et seq.) of Title 15, Commerce and Trade, and was omitted from the Code pursuant to section 760g of Title 15, which provided for the expiration of the President’s authority under that chapter on Sept. 30, 1981. The Natural Gas Act, referred to in subsec. (e)(1)(B), is act June 21, 1938, ch. 556, 52 Stat. 821, which is classified generally to chapter 15B (§ 717 et seq.) of Title 15. For complete classification of that Act to the Code, see section 717w of Title 15 and Tables.

Statutory Notes and Related Subsidiaries

Transfer of Functions

Functions vested in Secretary of Energy and Department of Energy under or with respect to subsec. (b)(2), (3) of this section, transferred to, and vested in, Secretary of the Interior, by section 100 of Pub. L. 97–257, 96 Stat. 841, set out as a note under section 7152 of Title 42, The Public Health and Welfare.

§1353 Federal purchase and disposition of oil and gas