Mineral Leasing Act — Oil, Gas & Coal on Federal Lands

The Mineral Leasing Act of 1920 (30 U.S.C. §§ 181–287) is the foundational law governing the extraction of oil, natural gas, coal, phosphate, sodium, potassium, sulfur, and gilsonite from federal public lands. Rather than selling mineral rights outright (as under the General Mining Law of 1872 for many hardrock minerals), the Mineral Leasing Act established a leasing system: the federal government retains ownership of the minerals and leases extraction rights to private companies in exchange for bonus bids, rents, royalties, and compliance with federal operating rules. Administered primarily by the Bureau of Land Management (BLM), the program covers roughly 700 million acres of federal subsurface mineral estate. Offshore resources are governed separately under the Outer Continental Shelf Lands Act.

Current Law (2026)

Legal Authority

• 30 U.S.C. § 181 — Lands subject to disposition (deposits of coal, phosphate, sodium, potassium, oil, oil shale, gilsonite, and gas in lands belonging to the United States may be disposed of only under the leasing provisions of this chapter)
• 30 U.S.C. § 184 — Limitations on leases (no person, association, or corporation may hold more than 246,080 acres of oil and gas leases in any one state; acreage limitations also apply to coal, phosphate, and sodium)
• 30 U.S.C. § 185 — Rights-of-way for pipelines (authorizes rights-of-way through federal lands for oil and gas pipelines, subject to environmental conditions; this is the authority under which the Trans-Alaska Pipeline was permitted)
• 30 U.S.C. § 191 — Disposition of moneys received (contains the federal distribution rules for receipts from many onshore federal mineral leases; for ordinary public-domain onshore receipts, the common baseline formula is 50% to the state of origin, 40% to the Reclamation Fund, and 10% to the Treasury, subject to statutory exceptions for certain lands and states)
• 30 U.S.C. § 201 — Coal leases and exploration (coal leases issued through competitive bidding; fair market value must be received; environmental considerations required)
• 30 U.S.C. § 226 — Leasing of oil and gas parcels (oil and gas leases issued through competitive bidding; minimum bid, annual rental, and royalty requirements; diligent development obligations)

How It Works

Competitive leasing is the core mechanism for both oil and gas and coal. For oil and gas, BLM holds quarterly lease sales in each state with eligible parcels. Companies nominate parcels for leasing; BLM screens nominations for environmental concerns and resource conflicts; qualifying parcels are offered at competitive auction. The winning bidder pays a bonus bid (minimum $10/acre under the IRA-era fiscal terms), then annual rentals and production royalties. Coal leasing follows a competitive process as well, typically through lease-by-application procedures that require fair-market-value review and additional environmental analysis.

The Inflation Reduction Act of 2022 materially changed the fiscal terms for new federal onshore oil and gas leases. It raised the minimum bid, increased the minimum royalty rate from 12.5% to 16.67%, and increased rental rates. BLM's 2024 leasing rule then implemented those updated statutory terms and revised several operating requirements, including bonding and idled-well provisions. The One Big Beautiful Bill Act of 2025 (OBBBA, Pub. L. 119-21, July 4, 2025) reversed the IRA royalty increase: § 50101 reinstated the historical 12.5% minimum royalty for federal onshore leases issued on or after July 4, 2025, while existing 16.67% leases continue under their original terms. OBBBA also directed Interior to set 12.5% royalties for new offshore Gulf of America and Cook Inlet leases.

Revenue sharing is a critical component. For many onshore public-domain mineral leases, the state where extraction occurs generally receives 50% of bonus bids, rentals, and royalties, with 40% going to the Reclamation Fund and 10% to the Treasury. That revenue is especially important for Western states with large federal land holdings, although special statutory formulas apply in some settings such as Alaska and certain acquired lands.

Environmental review is required before leasing. BLM must comply with NEPA, consulting with the Fish & Wildlife Service under the Endangered Species Act and considering impacts on air quality, water resources, wildlife habitat, cultural resources, and existing land uses. Lease stipulations may restrict surface disturbance in sensitive areas, require seasonal timing limitations for drilling operations, or prohibit surface occupancy entirely in the most sensitive locations.

Lease acreage limitations prevent monopolization. No person, association, or corporation may hold more than 246,080 acres of oil and gas leases in any single state, with separate statutory rules and exceptions applying in certain contexts, including Alaska. Similar acreage caps apply to coal, phosphate, and sodium.

Pipeline rights-of-way (§ 185) authorize the use of federal lands for oil and gas pipelines, subject to environmental conditions and safety requirements. This provision was the legal foundation for the Trans-Alaska Pipeline and continues to govern the permitting of new pipeline infrastructure across federal lands.

How It Affects You

State Variations

Implementing Regulations

• 43 CFR Parts 3000–3480 — BLM mineral leasing regulations covering general administration, oil and gas leasing, rights-of-way, and solid-mineral leasing subparts including coal

• 43 CFR Parts 3100–3190 — Core BLM onshore oil and gas leasing and operations regulations covering lease issuance, competitive bidding, rentals and royalties, bonding, APDs, production measurement, and related field operations. The competitive leasing mechanics within this range are governed by 43 CFR Part 3120:

  43 CFR Part 3120 — Competitive Leases: governs BLM's quarterly competitive oil and gas lease auction process for federal lands. Key mechanics:

  • § 3120.11 — Lands available: all BLM-administered lands eligible for oil and gas leasing may be offered at competitive auction, including lands where a prior noncompetitive lease has expired and lands nominated through an expression of interest
  • § 3120.12 — Quarterly sales requirement: each BLM state office must hold competitive lease sales at least quarterly if eligible lands are available; sales are conducted by competitive auction (sealed or oral bids) — the most common modern format is an online electronic competitive bidding system
  • § 3120.21 — Primary term: competitive leases run for a primary term of 10 years and continue as long as oil or gas is produced in paying quantities; if no production is established within 10 years, the lease expires unless extended under specific diligence provisions
  • § 3120.23 — Lease size: each offered parcel may not exceed 2,560 acres outside Alaska or 5,760 acres within Alaska — size caps that balance meaningful exploration blocks against concentration of federal mineral estate; tracts are configured to be as compact as possible consistent with legal description boundaries
  • §§ 3120.31–3120.33 — Expression of interest (EOI) process: any person may submit an EOI requesting that BLM offer a specific tract at competitive sale; the EOI must identify the tract, the reason for interest, and acknowledge that submitting an EOI confers no priority right — BLM evaluates EOIs against land use plans, outstanding lease applications, and conservation objectives before deciding whether to schedule the tract for sale; the IRA (2022) added a provision (§ 3120.33) requiring BLM to maintain an agency-wide tracking system for leasing relative to renewable energy right-of-way activity through 2032
  • §§ 3120.41–3120.51 — Notice and sale conduct: BLM publishes a Notice of Competitive Lease Sale at least 45 days before the sale date; the notice identifies each parcel by legal description, specifies the minimum acceptable bid, and sets the sale terms; winning bidders must submit the bid amount plus the first year's rental immediately; the lease is issued only after payment; unsuccessful bids are returned

  Oil and gas leases obtained through the competitive process are subject to the same rental, royalty, bonding, and operating requirements as all onshore BLM leases — historically a 12.5% royalty on production, raised to a minimum of 16.67% by the IRA (2022), and reverted to a 12.5% minimum for new onshore leases issued on or after July 4, 2025 by OBBBA § 50101, annual rental payments, and a performance bond. The competitive process replaced most noncompetitive lease issuance for federal onshore oil and gas lands following the Federal Oil and Gas Royalty Management Act (FOGRMA) reform era.

  43 CFR Part 3180 — Onshore Oil and Gas Unit Agreements (Unproven Areas): governs the formation of unit agreements — cooperative arrangements between multiple federal oil and gas lessees and private landowners to develop a defined geographic area as a single unit rather than as separate independent leases. Unitization serves conservation goals: by treating multiple leases as one production unit, operators can optimize well placement, pressure maintenance, and enhanced recovery techniques that would be impossible under a patchwork of separately operated leases. Part 3180 applies to unitization of unproven areas — formations not yet demonstrated to be productive:

  • § 3180.0-2 — Policy: unitization under Part 3180 is voluntary — BLM cannot compel unitization of unproven areas, but will approve unit agreements that promote sound engineering and conservation practices and fair participation by all parties; the authorized officer has supervisory authority over all unit operations
  • § 3181.1 — Model unit agreement: BLM maintains a model unit agreement acceptable for unproven areas; parties who want to use non-standard terms must demonstrate that the modification is consistent with conservation and fair-participation requirements
  • § 3181.2 — Designation of unit area: the parties must submit an application for BLM designation of the unit area; BLM determines the area logically subject to development as a unit and the depth to which the test well must penetrate; the well depth designation ensures that the exploration obligation covers the target formation
  • § 3181.3 — Parties to the agreement: all owners of rights in the oil and gas deposits to be unitized — federal lessee, private mineral owners, state lessees — must join the agreement or, if non-consenting, must accept the consequences of being force-pooled into the unit under state law; federal lessees in the unit area must consent; non-consent by a federal lessee can preclude federal approval of the unit
  • § 3181.4 — Inclusion of non-federal lands: where state-owned lands or private mineral tracts are included in the unit, BLM coordinates with the relevant state agency or private owner; state approval is required before BLM approves unit agreements covering state-owned mineral land; this multi-party coordination is the most complex aspect of large unit agreements in basins like the Permian or Anadarko where federal, state, and private mineral estates are interleaved

• 43 CFR Parts 3400–3480 — Federal coal-management regulations covering exploration licenses, lease-by-application procedures, competitive sales, diligence, readjustment, and lease administration

  • 43 CFR Part 3430 — Noncompetitive (Preference Right) Coal Leases (59 sections across 4 subparts): a historical residual category created by the Federal Coal Leasing Amendments Act of 1976 (30 U.S.C. § 201(b)), which mandated competitive coal leasing going forward but preserved the right of pre-1976 prospectors who had legally explored federal coal lands to receive a "preference right lease" if they could demonstrate their exploration had found coal in commercial quantities. Part 3430 governs this adjudication process — a disappearing category of applications as the pre-1976 cohort ages out:

    • § 3430.1-1 — Entitlement showing: the applicant must demonstrate that (1) the prospecting permit was valid before the 1976 amendments; (2) the exploration was conducted in good faith; (3) a valuable coal deposit was discovered in commercial quantities; and (4) no competing valid rights exist; the commercial quantity standard is a legal determination based on the results of the exploration work
    • § 3430.2 — Lease terms: preference right leases are issued with the same terms as competitive leases — current royalty rates (minimum 12.5%), primary term of 20 years, annual rental payment — but without the competitive bidding premium; the issuance is a ministerial obligation once entitlement is established
    • § 3430.3 — Diligence requirements: once a preference right lease is issued, the same diligence mining and production requirements apply as to competitive leases; the preference right does not confer a perpetual prospecting right, only the right to convert to a lease upon demonstrated entitlement
    • § 3430.4 — Appeal procedures: adverse determinations on entitlement are appealable through BLM's standard administrative review process (43 CFR Part 4)

    As of 2026, virtually no new Part 3430 applications are filed — the prospecting permit authority was repealed 50 years ago and the remaining applications have been largely adjudicated. The regulations remain on the books to process any outstanding applications and to govern the administration of preference right leases that were issued and remain in production.

Pipeline Rights-of-Way (43 CFR Part 2880)

The BLM regulations implementing 30 U.S.C. § 185 pipeline rights-of-way on federal lands live at 43 CFR Part 2880 — Rights-of-Way under the Mineral Leasing Act. Key provisions:

• § 2881.11 — When a BLM grant is required: any pipeline carrying oil, natural gas, synthetic liquid or gaseous fuels, or other products that crosses or occupies federal lands must obtain a right-of-way grant from BLM; no pipeline may be constructed, operated, or maintained across federal lands without prior BLM authorization — the provision that made the Trans-Alaska Pipeline's authorization legally necessary
• § 2881.12 — Temporary Use Permits (TUPs): when pipeline construction requires use of federal lands beyond the permanent right-of-way corridor (for staging areas, access roads, or workspace), BLM may issue TUPs for the construction period; TUPs expire when construction is complete, and the holder must restore the temporary use area to pre-disturbance conditions
• § 2882.10 — Lands available for grants: BLM may grant rights-of-way across public lands and National Forest System lands; rights-of-way are generally not available across lands with withdrawals, reservations, or designations incompatible with pipeline development — making early-stage land-status review critical to route selection
• § 2883.10–2883.11 — Qualification requirements: applicants must be citizens or nationals of the United States, state or local governments, or domestic corporations, associations, or partnerships; alien ownership or control of a right-of-way grantee is prohibited, reflecting longstanding restrictions on foreign control of strategic energy infrastructure on federal lands
• § 2884.10–2884.11 — Pre-application consultation and application process: before filing a formal right-of-way application, applicants must consult with BLM to discuss the proposed route, identify potential conflicts, and assess the scope of environmental review required; the formal application is submitted on Standard Form 299 (Application for Transportation and Utility Systems and Facilities on Federal Lands) and must include project maps, engineering data, environmental information, and financial capability documentation

The Part 2880 framework governs both the initial approval of new pipeline rights-of-way and the ongoing operation, maintenance, and eventual termination of granted rights-of-way. BLM may condition grants with environmental stipulations, setbacks from sensitive resources, access road limitations, and bonding requirements. For major oil and gas pipeline projects crossing substantial federal land acreage, the grant process overlaps with NEPA review, tribal consultation under NHPA, and ESA consultation — making right-of-way approval one of the most complex federal authorizations in energy infrastructure development.

National Petroleum Reserve–Alaska Oil and Gas Leasing (43 CFR Part 3130)

The National Petroleum Reserve–Alaska (NPR-A) — approximately 22.8 million acres on Alaska's North Slope, west of Prudhoe Bay — is managed under a distinct leasing framework at 43 CFR Part 3130 that operates separately from the standard Mineral Leasing Act onshore leasing rules. Congress transferred administration of NPR-A from the Navy to Interior in 1977 and authorized a competitive oil and gas leasing program under the Naval Petroleum Reserves Production Act of 1976 (42 U.S.C. §§ 6501–6509). The NPR-A contains an estimated 8.7 billion barrels of recoverable oil and significant natural gas resources, making its leasing status a major energy and environmental policy flashpoint. Key provisions:

• § 3130.0-2 — Policy: the NPR-A leasing program must be conducted in accordance with Interior's direction — balancing petroleum resource development with protection of surface values including wildlife habitat, subsistence resources for Alaska Native communities, and the fragile Arctic ecosystem; this dual mandate has driven persistent tension between development and conservation
• § 3130.1 — Attorney General review: before issuing any lease, the Secretary must notify the Attorney General to allow antitrust review; this provision ensures that competitive lease sales do not concentrate NPR-A reserves in a single company
• § 3130.2 — Limitations on judicial review: actions challenging the adequacy of environmental impact statements for NPR-A leasing must be filed within 90 days of the final EIS — a strict statute of limitations designed to prevent indefinite litigation delays
• § 3130.4-1 — Tract size: each lease tract may not exceed 60,000 acres (far larger than typical MLA onshore lease tracts of 640 acres or AML sections)
• § 3130.4-2 — Lease term: primary lease term is 10 years (same as standard BLM oil and gas leases); leases continue in force as long as oil and gas are produced in paying quantities
• § 3131.1–3131.3 — Leasing schedule and nominations: BLM Alaska publishes calls for tract nominations and comments; special stipulations addressing wildlife (caribou migration corridors, bird nesting areas) and subsistence must be developed for each sale; stipulations have included seasonal drilling bans, setbacks from water bodies, and restrictions on surface infrastructure density
• § 3131.4 — Lease sales: notice of sale must be published in the Federal Register; sealed competitive bidding with cash bonuses; minimum acceptable bid is set by BLM Alaska; sales historically occur every 2-3 years rather than on a regular quarterly schedule
• § 3132.1 — Eligibility: leases may be held only by U.S. citizens, nationals, permanent residents, U.S. companies, or state and local governments
• § 3132.2–3132.5 — Bidding and award: separate sealed bids for each tract; bidders must submit a one-fifth cash deposit with the bid; BLM opens bids publicly and awards to the highest qualified bidder if the bid meets or exceeds the minimum acceptable amount

The NPR-A leasing program has been among the most contested in federal lands policy. The Biden administration's 2024 rule restricted leasing across approximately 13 million of the 22.8 million acres for conservation, drawing immediate legal challenges from Alaska and the oil industry. The Trump administration has moved to reopen those areas. The NPR-A's connection to the Trans-Alaska Pipeline System (TAPS) — which requires oil flow to remain economically viable — gives its development status regional economic and geopolitical significance beyond the lease revenues involved.

• 43 CFR Part 3580 — Special Leasing Areas (62 sections across 6 subparts): BLM regulations for mineral leasing on lands that fall outside the standard competitive and noncompetitive lease frameworks because of their unusual legal status — primarily private land grants and confirmed private land claims in the Southwest where the original Spanish or Mexican land grant did not convey subsurface mineral rights to the grantee. Key subparts:

  • Subpart 3581 — Confirmed Private Land Grant Areas: when a court decree confirming a Spanish or Mexican land grant specifically excluded mineral rights from the grant, BLM retains authority to issue mineral leases on those lands even though the surface is privately owned; the surface owner (the land-grant successor) is the only entity that may apply for and receive a lease (§ 3581.2), preventing third-party mineral speculation on private land; leases are issued under the same royalty structure as standard MLA leases; this framework applies primarily to confirmed private land grants in New Mexico and Arizona — remnants of the Treaty of Guadalupe Hidalgo land-grant adjudication process from 1848 to 1904
  • Subpart 3582 — Lands within National Parks and Similar Reservations: BLM may issue mineral leases on lands within or adjacent to national parks, monuments, or similar reservations only with the consent of the responsible department (Interior, Agriculture) — reflecting congressional recognition that energy development near protected areas requires cross-agency coordination; the consent requirement effectively gives the Park Service or Forest Service veto authority over mineral leasing on adjacent private land claims or grant lands that happen to be within park boundaries
  • Subpart 3583 — Acquired Lands: the United States has acquired certain private lands whose subsurface minerals were not previously public-domain — these "acquired lands" require specific leasing authority under 30 U.S.C. § 351 rather than the standard MLA; Part 3580's Subpart 3583 provides the leasing framework for acquired lands not covered by Part 3100 (standard oil and gas) or Part 3400 (coal)
  • Subpart 3584 — Ceded Indian Lands: when tribal lands are ceded to the federal government but the cession agreement retained certain tribal mineral interests or revenue sharing rights, BLM leases those lands under the standard MLA framework but remits a portion of bonus bids, rentals, and royalties to the applicable tribe pursuant to the cession agreement terms

  The Part 3580 framework is a legal housekeeping structure for the irregularities in western public land history — the places where Spanish and Mexican sovereignty, treaty obligations, and congressional land grants created overlapping or ambiguous mineral rights that the standard Part 3100 competitive leasing system cannot accommodate. The confirmed-land-grant subpart (3581) is the most legally complex: the claimant's rights run through the Court of Private Land Claims decree (1891-1904), which must be examined to determine whether mineral rights were expressly or implicitly excluded. Title insurance and mineral rights examination in central New Mexico often requires tracing Part 3580 applicability. Recent rulemaking: No major Part 3580 amendments in the past 10 years — the regulations have remained stable because the land-grant areas subject to them are geographically fixed and do not expand; the volume of leasing activity under Part 3580 is small relative to standard MLA leasing.

Pending Legislation (119th Congress)

As of April 8, 2026, no enacted federal law has displaced the core Mineral Leasing Act framework summarized here. Congress continues to debate public-lands energy policy, coal-leasing policy, hardrock-mineral reform, and the extent to which federal leasing should be expanded or constrained, but this page should be read against the current 30 U.S.C. §§ 181-287 structure unless Congress enacts a change.

Recent Developments

• April 2024: BLM finalized the Fluid Mineral Leases and Leasing Process rule, its first comprehensive update of federal onshore oil and gas leasing regulations in decades. The rule implemented IRA fiscal terms, revised leasing preference criteria, updated idled-well rules, and sharply increased minimum bond amounts.
• 2025: BLM continued implementing that rule and publicly emphasized the new bonding framework, including the phase-in schedule for higher lease and statewide bond amounts designed to better reflect plugging and reclamation costs.
• July 2025 and after: BLM issued implementation guidance on commingling after the One Big Beautiful Bill Act, signaling that some operational aspects of federal oil and gas administration continued to evolve even though the Mineral Leasing Act's core leasing structure remained in place.
• March 2026: BLM issued IM 2026-009 on APDs for litigated leases, clarifying how field offices should process drilling applications when lease-sale litigation exists but the leases have not been vacated or cancelled.
• As of April 8, 2026: The most important current-law developments are operational and administrative, especially leasing-rule implementation, bond compliance timing, APD processing, and the continuing use of quarterly sale procedures for eligible federal parcels.