§642 Exploration Contracts

Summary

The Secretary can make exploration contracts with people, companies, or other groups and provide federal money when it is in the national interest. Contracts must say how the money will be paid back, usually as a royalty based on the value of any production. Interest begins on the loan date. The interest rate must be at least the rate the Department of the Interior would pay if it borrowed from the Treasury based on comparable U.S. marketable obligations, plus 2 percent per year. Royalty payments go into the Treasury’s miscellaneous receipts. When the Secretary finds that production may be possible, he must certify that within the time set in the contract. After certification, royalties are charged against production for the contract period or until paid off, but never for more than 25 years from the contract date. If the Secretary decides not to certify, he must tell the contractor. The Secretary can make rules to run the program, change contracts to lower royalties if needed in the public interest, and may make royalty agreements even without formal certification. No single contract can give the government more than $250,000, and federal money is allowed only if the applicant shows private funds are not available on reasonable terms.