43 U.S.C. § 1334 — Administration of leasing

Page 330 TITLE 43—PUBLIC LANDS § 1334 ing thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. § 1334. Administration of leasing (a) Rules and regulations; amendment; coopera- tion with State agencies; subject matter and scope of regulations The Secretary shall administer the provisions of this subchapter relating to the leasing of the outer Continental Shelf, and shall prescribe such rules and regulations as may be necessary to carry out such provisions. The Secretary may at any time prescribe and amend such rules and regulations as he determines to be necessary and proper in order to provide for the prevention of waste and conservation of the natural re- sources of the outer Continental Shelf, and the protection of correlative rights therein, and, notwithstanding any other provisions herein, such rules and regulations shall, as of their ef- fective date, apply to all operations conducted under a lease issued or maintained under the provisions of this subchapter. In the enforce- ment of safety, environmental, and conservation laws and regulations, the Secretary shall co- operate with the relevant departments and agencies of the Federal Government and of the affected States. In the formulation and promul- gation of regulations, the Secretary shall re- quest and give due consideration to the views of the Attorney General with respect to matters which may affect competition. In considering any regulations and in preparing any such views, the Attorney General shall consult with the Federal Trade Commission. The regulations prescribed by the Secretary under this sub- section shall include, but not be limited to, pro- visions— (1) for the suspension or temporary prohibi- tion of any operation or activity, including production, pursuant to any lease or permit (A) at the request of a lessee, in the national interest, to facilitate proper development of a lease or to allow for the construction or nego- tiation for use of transportation facilities, or (B) if there is a threat of serious, irreparable, or immediate harm or damage to life (includ- ing fish and other aquatic life), to property, to any mineral deposits (in areas leased or not leased), or to the marine, coastal, or human environment, and for the extension of any per- mit or lease affected by suspension or prohibi- tion under clause (A) or (B) by a period equiva- lent to the period of such suspension or prohi- bition, except that no permit or lease shall be so extended when such suspension or prohibi- tion is the result of gross negligence or willful violation of such lease or permit, or of regula- tions issued with respect to such lease or per- mit; (2) with respect to cancellation of any lease or permit— (A) that such cancellation may occur at any time, if the Secretary determines, after a hearing, that— (i) continued activity pursuant to such lease or permit would probably cause seri- ous harm or damage to life (including fish and other aquatic life), to property, to any mineral (in areas leased or not leased), to the national security or defense, or to the marine, coastal, or human environment; (ii) the threat of harm or damage will not disappear or decrease to an acceptable extent within a reasonable period of time; and (iii) the advantages of cancellation out- weigh the advantages of continuing such lease or permit force; (B) that such cancellation shall not occur unless and until operations under such lease or permit shall have been under suspension, or temporary prohibition, by the Secretary, with due extension of any lease or permit term continuously for a period of five years, or for a lesser period upon request of the les- see; (C) that such cancellation shall entitle the lessee to receive such compensation as he shows to the Secretary as being equal to the lesser of (i) the fair value of the canceled rights as of the date of cancellation, taking account of both anticipated revenues from the lease and anticipated costs, including costs of compliance with all applicable regu- lations and operating orders, liability for cleanup costs or damages, or both, in the case of an oilspill, and all other costs rea- sonably anticipated on the lease, or (ii) the excess, if any, over the lessee’s revenues, from the lease (plus interest thereon from the date of receipt to date of reimburse- ment) of all consideration paid for the lease and all direct expenditures made by the les- see after the date of issuance of such lease and in connection with exploration or devel- opment, or both, pursuant to the lease (plus interest on such consideration and such ex- penditures from date of payment to date of reimbursement), except that (I) with respect to leases issued before September 18, 1978, such compensation shall be equal to the amount specified in clause (i) of this sub- paragraph; and (II) in the case of joint leases which are canceled due to the failure of one or more partners to exercise due diligence, the innocent parties shall have the right to seek damages for such loss from the respon- sible party or parties and the right to ac- quire the interests of the negligent party or parties and be issued the lease in question; (3) for the assignment or relinquishment of a lease; (4) for unitization, pooling, and drilling agreements; (5) for the subsurface storage of oil and gas from any source other than by the Federal Government; (6) for drilling or easements necessary for exploration, development, and production; (7) for the prompt and efficient exploration and development of a lease area; and (8) for compliance with the national ambient air quality standards pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.), to the extent that activities authorized under this sub- chapter significantly affect the air quality of any State. Page 331 TITLE 43—PUBLIC LANDS § 1334 1 So in original. Probably should be ‘‘subparagraph’’. 2 So in original. Probably should be ‘‘lessee’’. (b) Compliance with regulations as condition for issuance, continuation, assignment, or other transfer of leases The issuance and continuance in effect of any lease, or of any assignment or other transfer of any lease, under the provisions of this sub- chapter shall be conditioned upon compliance with regulations issued under this subchapter. (c) Cancellation of nonproducing lease Whenever the owner of a nonproducing lease fails to comply with any of the provisions of this subchapter, or of the lease, or of the regulations issued under this subchapter, such lease may be canceled by the Secretary, subject to the right of judicial review as provided in this subchapter, if such default continues for the period of thirty days after mailing of notice by registered letter to the lease owner at his record post office ad- dress. (d) Cancellation of producing lease Whenever the owner of any producing lease fails to comply with any of the provisions of this subchapter, of the lease, or of the regulations issued under this subchapter, such lease may be forfeited and canceled by an appropriate pro- ceeding in any United States district court hav- ing jurisdiction under the provisions of this sub- chapter. (e) Pipeline rights-of-way; forfeiture of grant Rights-of-way through the submerged lands of the outer Continental Shelf, whether or not such lands are included in a lease maintained or issued pursuant to this subchapter, may be granted by the Secretary for pipeline purposes for the transportation of oil, natural gas, sul- phur, or other minerals, or under such regula- tions and upon such conditions as may be pre- scribed by the Secretary, or where appropriate the Secretary of Transportation, including (as provided in section 1347(b) of this title) assuring maximum environmental protection by utiliza- tion of the best available and safest tech- nologies, including the safest practices for pipe- line burial and upon the express condition that oil or gas pipelines shall transport or purchase without discrimination, oil or natural gas pro- duced from submerged lands or outer Conti- nental Shelf lands in the vicinity of the pipe- lines in such proportionate amounts as the Fed- eral Energy Regulatory Commission, in con- sultation with the Secretary of Energy, may, after a full hearing with due notice thereof to the interested parties, determine to be reason- able, taking into account, among other things, conservation and the prevention of waste. Fail- ure to comply with the provisions of this section or the regulations and conditions prescribed under this section shall be grounds for forfeiture of the grant in an appropriate judicial pro- ceeding instituted by the United States in any United States district court having jurisdiction under the provisions of this subchapter. (f) Competitive principles governing pipeline op- eration (1) Except as provided in paragraph (2), every permit, license, easement, right-of-way, or other grant of authority for the transportation by pipeline on or across the outer Continental Shelf of oil or gas shall require that the pipeline be operated in accordance with the following com- petitive principles: (A) The pipeline must provide open and non- discriminatory access to both owner and non- owner shippers. (B) Upon the specific request of one or more owner or nonowner shippers able to provide a guaranteed level of throughput, and on the condition that the shipper or shippers request- ing such expansion shall be responsible for bearing their proportionate share of the costs and risks related thereto, the Federal Energy Regulatory Commission may, upon finding, after a full hearing with due notice thereof to the interested parties, that such expansion is within technological limits and economic fea- sibility, order a subsequent expansion of throughput capacity of any pipeline for which the permit, license, easement, right-of-way, or other grant of authority is approved or issued after September 18, 1978. This subparapraph 1 shall not apply to any such grant of authority approved or issued for the Gulf of Mexico or the Santa Barbara Channel. (2) The Federal Energy Regulatory Commis- sion may, by order or regulation, exempt from any or all of the requirements of paragraph (1) of this subsection any pipeline or class of pipe- lines which feeds into a facility where oil and gas are first collected or a facility where oil and gas are first separated, dehydrated, or otherwise processed. (3) The Secretary of Energy and the Federal Energy Regulatory Commission shall consult with and give due consideration to the views of the Attorney General on specific conditions to be included in any permit, license, easement, right-of-way, or grant of authority in order to ensure that pipelines are operated in accordance with the competitive principles set forth in paragraph (1) of this subsection. In preparing any such views, the Attorney General shall con- sult with the Federal Trade Commission. (4) Nothing in this subsection shall be deemed to limit, abridge, or modify any authority of the United States under any other provision of law with respect to pipelines on or across the outer Continental Shelf. (g) Rates of production (1) The leasee 2 shall produce any oil or gas, or both, obtained pursuant to an approved develop- ment and production plan, at rates consistent with any rule or order issued by the President in accordance with any provision of law. (2) If no rule or order referred to in paragraph (1) has been issued, the lessee shall produce such oil or gas, or both, at rates consistent with any regulation promulgated by the Secretary of En- ergy which is to assure the maximum rate of production which may be sustained without loss of ultimate recovery of oil or gas, or both, under sound engineering and economic principles, and which is safe for the duration of the activity covered by the approved plan. The Secretary may permit the lessee to vary such rates if he finds that such variance is necessary. Page 332 TITLE 43—PUBLIC LANDS § 1334 3 So in original. No subpar. (B) has been enacted. (h) Federal action affecting outer Continental Shelf; notification; recommended changes The head of any Federal department or agency who takes any action which has a direct and sig- nificant effect on the outer Continental Shelf or its development shall promptly notify the Sec- retary of such action and the Secretary shall thereafter notify the Governor of any affected State and the Secretary may thereafter rec- ommend such changes in such action as are con- sidered appropriate. (i) Flaring of natural gas After September 18, 1978, no holder of any oil and gas lease issued or maintained pursuant to this subchapter shall be permitted to flare nat- ural gas from any well unless the Secretary finds that there is no practicable way to com- plete production of such gas, or that such flaring is necessary to alleviate a temporary emergency situation or to conduct testing or work-over op- erations. (j) Cooperative development of common hydro- carbon-bearing areas (1) Findings (A) 3 The Congress of the United States finds that the unrestrained competitive production of hydrocarbons from a common hydrocarbon- bearing geological area underlying the Federal and State boundary may result in a number of harmful national effects, including— (i) the drilling of unnecessary wells, the installation of unnecessary facilities and other imprudent operating practices that re- sult in economic waste, environmental dam- age, and damage to life and property; (ii) the physical waste of hydrocarbons and an unnecessary reduction in the amounts of hydrocarbons that can be produced from cer- tain hydrocarbon-bearing areas; and (iii) the loss of correlative rights which can result in the reduced value of national hydrocarbon resources and disorders in the leasing of Federal and State resources. (2) Prevention of harmful effects The Secretary shall prevent, through the co- operative development of an area, the harmful effects of unrestrained competitive production of hydrocarbons from a common hydrocarbon- bearing area underlying the Federal and State boundary. (Aug. 7, 1953, ch. 345, § 5, 67 Stat. 464; Pub. L. 95–372, title II, § 204, Sept. 18, 1978, 92 Stat. 636; Pub. L. 101–380, title VI, § 6004(a), Aug. 18, 1990, 104 Stat. 558; Pub. L. 109–58, title III, § 321(a), Aug. 8, 2005, 119 Stat. 694.) Editorial Notes REFERENCES IN TEXT The Clean Air Act, referred to in subsec. (a)(8), is act July 14, 1955, ch. 360, 69 Stat. 322, which is classified generally to chapter 85 (§ 7401 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 7401 of Title 42 and Tables. AMENDMENTS 2005—Subsec. (a)(5). Pub. L. 109–58 inserted ‘‘from any source’’ after ‘‘oil and gas’’. 1990—Subsec. (j). Pub. L. 101–380 added subsec. (j). 1978—Subsec. (a). Pub. L. 95–372 expanded provisions formerly contained in subsec. (a)(1) so as to include the enforcement of safety and environmental laws and reg- ulations, consultation with the Attorney General and the Federal Trade Commission, and regulations for the suspension or temporary prohibition of any operation or activity including production, the cancellation of leases or permits, the prompt and efficient exploration and development of a lease area, and compliance with the national ambient air quality standards to the ex- tent that activities authorized significantly affect the air quality of any State. Subsec. (b). Pub. L. 95–372 redesignated as subsec. (b) provisions formerly contained in subsec. (a)(2) condi- tioning the issuance and continuation of leases or of as- signments or other transfers of leases upon compliance with regulations, and struck out provisions that had set a penalty of a fine of not more than $2,000 or impris- onment for not more than six months or both for the knowing and willful violation of rules or regulations promulgated by the Secretary. See section 1350 of this title. Subsec. (c). Pub. L. 95–372 redesignated as subsec. (c) provisions formerly contained in subsec. (b)(1) covering the cancellation of nonproducing leases for failure of the owner to comply with any of the provisions of this subchapter, or of the lease, or of the regulations issued under this subchapter. Subsec. (d). Pub. L. 95–372 redesignated as subsec. (d) provisions formerly contained in subsec. (b)(2) covering the cancellation and forfeiture of producing leases for failure of the owner to comply with any of the provi- sions of this subchapter, the lease, or regulations pro- mulgated under this subchapter. Subsec. (e). Pub. L. 95–372 redesignated as subsec. (e) provisions formerly contained in subsec. (c) relating to pipeline rights-of-way and inserted provisions relating to regulations prescribed by the Secretary of Transpor- tation and assurances of maximum environmental pro- tection through the use of the best available and safest technologies including the safest practices for pipeline burial, and substituted references to the Federal En- ergy Regulatory Commission and the Secretary of En- ergy for existing references to the Federal Power Com- mission and the Interstate Commerce Commission. Subsecs. (f) to (i). Pub. L. 95–372 added subsecs. (f) to (i). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–380 applicable to incidents occurring after Aug. 18, 1990, see section 1020 of Pub. L. 101–380, set out as an Effective Date note under section 2701 of Title 33, Navigation and Navigable Waters. TRANSFER OF FUNCTIONS Functions vested in, or delegated to, Secretary of En- ergy and Department of Energy under or with respect to subsec. (g)(2) of this section, transferred to, and vest- ed 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. Functions of Secretary of the Interior to promulgate regulations under this subchapter which relate to fos- tering of competition for Federal leases, implementa- tion of alternative bidding systems authorized for award of Federal leases, establishment of diligence re- quirements for operations conducted on Federal leases, setting of rates for production of Federal leases, and specifying of procedures, terms, and conditions for ac- quisition and disposition of Federal royalty interests taken in kind, transferred to Secretary of Energy by section 7152(b) of Title 42. Section 7152(b) of Title 42 was repealed by Pub. L. 97–100, title II, § 201, Dec. 23, 1981, 95 Stat. 1407, and functions of Secretary of Energy re- turned to Secretary of the Interior. See House Report No. 97–315, pp. 25, 26, Nov. 5, 1981. Page 333 TITLE 43—PUBLIC LANDS § 1335 WEST DELTA FIELD Pub. L. 101–380, title VI, § 6004(b), Aug. 18, 1990, 104 Stat. 558, provided that: ‘‘Section 5(j) of the Outer Con- tinental Shelf Lands Act [43 U.S.C. 1334(j)], as added by this section, shall not be applicable with respect to Blocks 17 and 18 of the West Delta Field offshore Lou- isiana.’’ Executive Documents KEY LARGO CORAL REEF PRESERVE Secretary of the Interior to prescribe rules and regu- lations governing the protection and conservation of the coral and other mineral resources in the area des- ignated Key Largo Coral Reef Preserve, see Proc. No. 3339, Mar. 15, 1960, 25 F.R. 2352, set out as a note under section 320101 of Title 54, National Park Service and Related Programs. § 1335. Validation and maintenance of prior leases (a) Requirements for validation The provisions of this section shall apply to any mineral lease covering submerged lands of the outer Continental Shelf issued by any State (including any extension, renewal, or replace- ment thereof heretofore granted pursuant to such lease or under the laws of such State) if— (1) such lease, or a true copy thereof, is filed with the Secretary by the lessee or his duly authorized agent within ninety days from Au- gust 7, 1953, or within such further period or periods as provided in section 1336 of this title or as may be fixed from time to time by the Secretary; (2) such lease was issued prior to December 21, 1948, and would have been on June 5, 1950, in force and effect in accordance with its terms and provisions and the law of the State issuing it had the State had the authority to issue such lease; (3) there is filed with the Secretary, within the period or periods specified in paragraph (1) of this subsection, (A) a certificate issued by the State official or agency having jurisdic- tion over such lease stating that it would have been in force and effect as required by the pro- visions of paragraph (2) of this subsection, or (B) in the absence of such certificate, evidence in the form of affidavits, receipts, canceled checks, or other documents that may be re- quired by the Secretary, sufficient to prove that such lease would have been so in force and effect; (4) except as otherwise provided in section 1336 of this title hereof, all rents, royalties, and other sums payable under such lease be- tween June 5, 1950, and August 7, 1953, which have not been paid in accordance with the pro- visions thereof, or to the Secretary or to the Secretary of the Navy, are paid to the Sec- retary within the period or periods specified in paragraph (1) of this subsection, and all rents, royalties, and other sums payable under such lease after August 7, 1953, are paid to the Sec- retary, who shall deposit such payments in the Treasury in accordance with section 1338 of this title; (5) the holder of such lease certifies that such lease shall continue to be subject to the overriding royalty obligations existing on Au- gust 7, 1953; (6) such lease was not obtained by fraud or misrepresentation; (7) such lease, if issued on or after June 23, 1947, was issued upon the basis of competitive bidding; (8) such lease provides for a royalty to the lessor on oil and gas of not less than 121⁄2 per centum and on sulphur of not less than 5 per centum in amount or value of the production saved, removed, or sold from the lease, or, in any case in which the lease provides for a less- er royalty, the holder thereof consents in writ- ing, filed with the Secretary, to the increase of the royalty to the minimum herein speci- fied; (9) the holder thereof pays to the Secretary within the period or periods specified in para- graph (1) of this subsection an amount equiva- lent to any severance, gross production, or oc- cupation taxes imposed by the State issuing the lease on the production from the lease, less the State’s royalty interest in such pro- duction, between June 5, 1950, and August 7, 1953 and not heretofore paid to the State, and thereafter pays to the Secretary as an addi- tional royalty on the production from the lease, less the United States’ royalty interest in such production, a sum of money equal to the amount of the severance, gross production, or occupation taxes which would have been payable on such production to the State issuing the lease under its laws as they existed on August 7, 1953; (10) such lease will terminate within a period of not more than five years from August 7, 1953 in the absence of production or operations for drilling, or, in any case in which the lease pro- vides for a longer period, the holder thereof consents in writing, filed with the Secretary, to the reduction of such period so that it will not exceed the maximum period herein speci- fied; and (11) the holder of such lease furnishes such surety bond, if any, as the Secretary may re- quire and complies with such other reasonable requirements as the Secretary may deem nec- essary to protect the interests of the United States. (b) Conduct of operations under lease; sulphur rights Any person holding a mineral lease, which as determined by the Secretary meets the require- ments of subsection (a) of this section, may con- tinue to maintain such lease, and may conduct operations thereunder, in accordance with (1) its provisions as to the area, the minerals covered, rentals and, subject to the provisions of para- graphs (8)–(10) of subsection (a) of this section, as to royalties and as to the term thereof and of any extensions, renewals, or replacements au- thorized therein or heretofore authorized by the laws of the State issuing such lease, or, if oil or gas was not being produced in paying quantities from such lease on or before December 11, 1950, or if production in paying quantities has ceased since June 5, 1950, or if the primary term of such lease has expired since December 11, 1950, then for a term from August 7, 1953 equal to the term remaining unexpired on December 11, 1950, under the provisions of such lease or any extensions,