PRIA, Government Policy, Made Personal

Summary

If the Secretary of the Interior is satisfied that oil or gas has been found inside a prospecting permit, the permit holder has the right to lease one-fourth of the permit area, up to 160 acres. The holder must pick a reasonably compact area. If the land is already surveyed, it will be described by the usual public-land survey sections. If not, the Government will survey it at the applicant’s cost under rules set by the Secretary. Survey deposits will be used for that purpose and any extra money will be returned to the payer. That lease lasts 20 years, carries a 5% royalty on production, and requires an annual advance rental of $1 per acre, with that rental credited against royalties for the same year. The holder also gets the first chance to lease the remaining permit land at a royalty of at least 12.5% and no more than the rate in effect on January 1, 1935 for secondary leases. The final royalty may be set by competitive bidding or another method the Secretary creates, and the Secretary may reject any or all bids. Leases otherwise continue as prescribed in section 226 for leases issued prior to August 21, 1935.

Title 30, §223

Mineral Lands and Mining, Source: USLM XML via OLRC

Upon establishing to the satisfaction of the Secretary of the Interior that valuable deposits of oil or gas have been discovered within the limits of the land embraced in any permit, the permittee shall be entitled to a lease for one-fourth of the land embraced in the prospecting permit: Provided, That the permittee shall be granted a lease for as much as one hundred and sixty acres of said lands, if there be that number of acres within the permit. The area to be selected by the permittee, shall be in reasonably compact form and, if surveyed, to be described by the legal subdivisions of the public-land surveys; if unsurveyed, to be surveyed by the Government at the expense of the applicant for lease in accordance with rules and regulations to be prescribed by the Secretary of the Interior, and the lands leased shall be conformed to and taken in accordance with the legal subdivisions of such surveys; deposits made to cover expense of surveys shall be deemed appropriated for that purpose, and any excess deposits may be repaid to the person or persons making such deposit or their legal representatives. Such leases shall be for a term of twenty years upon a royalty of 5 per centum in amount or value of the production and the annual payment in advance of a rental of $1 per acre, the rental paid for any one year to be credited against the royalties as they accrue for that year, and shall continue in force otherwise as prescribed in section 226 of this title for leases issued prior to August 21, 1935. The permittee shall also be entitled to a preference right to a lease for the remainder of the land in his prospecting permit at a royalty of not less than 12½ per centum in amount or value of the production nor more than the royalty rate prescribed by regulation in force on January 1, 1935, for secondary leases issued under this section, and under such other conditions as are fixed for oil or gas leases issued under section 226 of this title the royalty to be determined by competitive bidding or fixed by such other method as the Secretary may by regulations prescribe: Provided further, That the Secretary shall have the right to reject any or all bids.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1935—Act Aug. 21, 1935, inserted “reasonably” before “compact form” and substituted “and shall continue in force otherwise as prescribed in section 226 of this title for leases issued prior to August 21, 1935” and “oil or gas leases issued under section 226 of this title” for “with the right of renewal as prescribed in section 226 of this title” and “oil or gas leases in this chapter”, respectively.

Statutory Notes and Related Subsidiaries

Limitation of Royalty on Discoveries During War PeriodAct Dec. 24, 1942, ch. 812, 56 Stat. 1080, limiting royalty obligation of oil or gas lessee who drills well resulting in discovery of new deposit on public domain during the national emergency was repealed by Joint Res. July 25, 1947, ch. 327, § 1, 61 Stat. 449. Outer Continental Shelf; LeasesGrant by Secretary of the Interior of oil, gas, and other mineral leases on submerged lands of outer Continental Shelf, see section 1331 et seq. of Title 43, Public Lands.

§223 Leases; Amount and Survey of Land; Term of Lease; Royalties and Annual Rental