30 U.S.C. § 188 — Failure to comply with provisions of lease

Page 50 TITLE 30—MINERAL LANDS AND MINING § 187b tember 2, 1960 and held beyond its primary term by production, actual or suspended, or the pay- ment of compensatory royalty, the segregated lease of an undeveloped, assigned, or retained part shall continue for two years, and so long thereafter as oil or gas is produced in paying quantities. (Feb. 25, 1920, ch. 85, § 30A, formerly § 30a, as added Aug. 8, 1946, ch. 916, § 7, 60 Stat. 955; amended July 29, 1954, ch. 644, § 1(6), 68 Stat. 585; Pub. L. 86–705, § 6, Sept. 2, 1960, 74 Stat. 790; re- numbered § 30A and amended Pub. L. 100–203, title V, § 5103, Dec. 22, 1987, 101 Stat. 1330–258.) Editorial Notes AMENDMENTS 1987—Pub. L. 100–203 substituted third to fifth sen- tences for former third sentence which read as follows: ‘‘The Secretary shall disapprove the assignment or sub- lease only for lack of qualification of the assignee or sublessee or for lack of sufficient bond: Provided, how- ever, That the Secretary may, in his discretion, dis- approve an assignment of a separate zone or deposit under any lease, or of a part of a legal subdivision.’’ 1960—Pub. L. 86–705 amended last sentence to restrict automatic extensions after Sept. 2, 1960. 1954—Act July 29, 1954, authorized partial assignment of a lease in its extended term regardless of reason for extension. Statutory Notes and Related Subsidiaries SAVINGS PROVISION See note set out under section 181 of this title. LEASES ISSUED PRIOR TO SEPTEMBER 2, 1960 Pub. L. 86–705, § 6, Sept. 2, 1960, 74 Stat. 790, provided in part that: ‘‘The provisions of this section 6 [amend- ing this section] shall not be applicable to any lease issued prior to the effective date of this Act [Sept. 2, 1960].’’ § 187b. Oil or gas leases; written relinquishment of rights; release of obligations Notwithstanding any provision to the con- trary in section 187 of this title, a lessee may at any time make and file in the appropriate land office a written relinquishment of all rights under any oil or gas lease issued under the au- thority of this chapter or of any legal subdivi- sion of the area included within any such lease. Such relinquishment shall be effective as of the date of its filing, subject to the continued obli- gation of the lessee and his surety to make pay- ment of all accrued rentals and royalties and to place all wells on the lands to be relinquished in condition for suspension or abandonment in ac- cordance with the applicable lease terms and regulations; thereupon the lessee shall be re- leased of all obligations thereafter accruing under said lease with respect to the lands relin- quished, but no such relinquishment shall re- lease such lessee, or his bond, from any liability for breach of any obligation of the lease, other than an obligation to drill, accrued at the date of the relinquishment. (Feb. 25, 1920, ch. 85, § 30B, formerly § 30b, as added Aug. 8, 1946, ch. 916, § 8, 60 Stat. 956; re- numbered § 30B, Pub. L. 100–203, title V, § 5103, Dec. 22, 1987, 101 Stat. 1330–258.) Statutory Notes and Related Subsidiaries SAVINGS PROVISION See note set out under section 181 of this title. § 188. Failure to comply with provisions of lease (a) Forfeiture Except as otherwise herein provided, any lease issued under the provisions of this chapter may be forfeited and canceled by an appropriate pro- ceeding in the United States district court for the district in which the property, or some part thereof, is located whenever the lessee fails to comply with any of the provisions of this chap- ter, of the lease, or of the general regulations promulgated under this chapter and in force at the date of the lease; and the lease may provide for resort to appropriate methods for the settle- ment of disputes or for remedies for breach of specified conditions thereof. (b) Cancellation Any lease issued after August 21, 1935, under the provisions of section 226 of this title shall be subject to cancellation by the Secretary of the Interior after 30 days notice upon the failure of the lessee to comply with any of the provisions of the lease, unless or until the leasehold con- tains a well capable of production of oil or gas in paying quantities, or the lease is committed to an approved cooperative or unit plan or communitization agreement under section 226(m) of this title which contains a well capable of production of unitized substances in paying quantities. Such notice in advance of cancella- tion shall be sent the lease owner by registered letter directed to the lease owner’s record post- office address, and in case such letter shall be returned as undelivered, such notice shall also be posted for a period of thirty days in the United States land office for the district in which the land covered by such lease is situated, or in the event that there is no district land of- fice for such district, then in the post office nearest such land. Notwithstanding the provi- sions of this section, however, upon failure of a lessee to pay rental on or before the anniversary date of the lease, for any lease on which there is no well capable of producing oil or gas in paying quantities, the lease shall automatically termi- nate by operation of law: Provided, however, That when the time for payment falls upon any day in which the proper office for payment is not open, payment may be received the next official work- ing day and shall be considered as timely made: Provided, That if the rental payment due under a lease is paid on or before the anniversary date but either (1) the amount of the payment has been or is hereafter deficient and the deficiency is nominal, as determined by the Secretary by regulation, or (2) the payment was calculated in accordance with the acreage figure stated in the lease, or in any decision affecting the lease, or made in accordance with a bill or decision which has been rendered by him and such figure, bill, or decision is found to be in error resulting in a deficiency, such lease shall not automatically terminate unless (1) a new lease had been issued prior to May 12, 1970, or (2) the lessee fails to pay the deficiency within the period prescribed in a notice of deficiency sent to him by the Sec- retary. Page 51 TITLE 30—MINERAL LANDS AND MINING § 188 1 So in original. Probably should be ‘‘royalty’’. (c) Reinstatement Where any lease has been or is hereafter ter- minated automatically by operation of law under this section for failure to pay on or before the anniversary date the full amount of rental due, but such rental was paid on or tendered within twenty days thereafter, and it is shown to the satisfaction of the Secretary of the Inte- rior that such failure was either justifiable or not due to a lack of reasonable diligence on the part of the lessee, the Secretary may reinstate the lease if— (1) a petition for reinstatement, together with the required rental, including back rental accruing from the date of termination of the lease, is filed with the Secretary; and (2) no valid lease has been issued affecting any of the lands covered by the terminated lease prior to the filing of said petition. The Secretary shall not issue any new lease affect- ing any of the lands covered by such termi- nated lease for a reasonable period, as deter- mined in accordance with regulations issued by him. In any case where a reinstatement of a terminated lease is granted under this sub- section and the Secretary finds that the rein- statement of such lease will not afford the les- see a reasonable opportunity to continue oper- ations under the lease, the Secretary may, at his discretion, extend the term of such lease for such period as he deems reasonable: Pro- vided, That (A) such extension shall not exceed a period equivalent to the time beginning when the lessee knew or should have known of the termination and ending on the date the Secretary grants such petition; (B) such exten- sion shall not exceed a period equal to the un- expired portion of the lease or any extension thereof remaining at the date of termination; and (C) when the reinstatement occurs after the expiration of the term or extension thereof the lease may be extended from the date the Secretary grants the petition. (d) Additional grounds for reinstatement (1) Where any oil and gas lease issued pursuant to section 226(b) of this title or the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.) has been, or is hereafter, terminated auto- matically by operation of law under this section for failure to pay on or before the anniversary date the full amount of the rental due, and such rental is not paid or tendered within twenty days thereafter, and it is shown to the satisfac- tion of the Secretary of the Interior that such failure was justifiable or not due to lack of rea- sonable diligence on the part of the lessee, or, no matter when the rental is paid after termi- nation, it is shown to the satisfaction of the Secretary that such failure was inadvertent, the Secretary may reinstate the lease as of the date of termination for the unexpired portion of the primary term of the original lease or any exten- sion thereof remaining at the date of termi- nation, and so long thereafter as oil or gas is produced in paying quantities. In any case where a lease is reinstated under this subsection and the Secretary finds that the reinstatement of such lease (A) occurs after the expiration of the primary term or any extension thereof, or (B) will not afford the lessee a reasonable oppor- tunity to continue operations under the lease, the Secretary may, at his discretion, extend the term of such lease for such period as he deems reasonable, but in no event for more than two years from the date the Secretary authorizes the reinstatement and so long thereafter as oil or gas is produced in paying quantities. (2) No lease shall be reinstated under para- graph (1) of this subsection unless— (A) with respect to any lease that termi- nated under subsection (b) on or before August 8, 2005, a petition for reinstatement (together with the required back rental and royalty ac- cruing after the date of termination) is filed on or before the earlier of— (i) 60 days after the lessee receives from the Secretary notice of termination, wheth- er by return of check or by any other form of actual notice; or (ii) 15 months after the termination of the lease; or (B) with respect to any lease that terminates under subsection (b) after August 8, 2005, a pe- tition for reinstatement (together with the re- quired back rental and royalty accruing after the date of termination) is filed on or before the earlier of— (i) 60 days after receipt of the notice of ter- mination sent by the Secretary by certified mail to all lessees of record; or (ii) 24 months after the termination of the lease. (e) Conditions for reinstatement Any reinstatement under subsection (d) of this section shall be made only if these conditions are met: (1) no valid lease, whether still in existence or not, shall have been issued affecting any of the lands covered by the terminated lease prior to the filing of such petition: Provided, however, That after receipt of a petition for re- instatement, the Secretary shall not issue any new lease affecting any of the lands covered by such terminated lease for a reasonable period, as determined in accordance with regulations issued by him; (2) payment of back rentals and the inclu- sion in a reinstated lease issued pursuant to the provisions of section 226(b) of this title of a requirement for future rentals at a rate of not less than $20 per acre per year, as deter- mined by the Secretary; (3) payment of back royalties and the inclu- sion in a reinstated lease issued pursuant to the provisions of section 226(b) of this title of a requirement for future royalties at a rate of not less than 20 percent computed on a sliding scale based upon the average production per well per day, at a rate which shall be not less than 4 percentage points greater than the competitive royality 1 schedule then in force and used for royalty determination for com- petitive leases issued pursuant to such section as determined by the Secretary: Provided, That royalty on such reinstated lease shall be paid on all production removed or sold from Page 52 TITLE 30—MINERAL LANDS AND MINING § 188 2 So in original. Probably should be ‘‘subsection’’. such lease subsequent to the termination of the original lease; and (4) notice of the proposed reinstatement of a terminated lease, including the terms and con- ditions of reinstatement, shall be published in the Federal Register at least thirty days in ad- vance of the reinstatement. A copy of said notice, together with information concerning rental, royalty, volume of produc- tion, if any, and any other matter which the Secretary deemed significant in making this de- termination to reinstate, shall be furnished to the Committee on Natural Resources of the House of Representatives and the Committee on Energy and Natural Resources of the Senate at least thirty days in advance of the reinstate- ment. The lessee of a reinstated lease shall re- imburse the Secretary for the administrative costs of reinstating the lease, but not to exceed $500. In addition the lessee shall reimburse the Secretary for the cost of publication in the Fed- eral Register of the notice of proposed reinstate- ment. (f) Treatment of leases (1) Except as otherwise provided in this sec- tion, a reinstated lease shall be treated in the same manner as the original lease issued pursu- ant to section 226 of this title. (2) Notwithstanding any other provision of law, any lease issued pursuant to section 223 of this title shall be eligible for reinstatement under the terms and conditions set forth in sub- sections (c), (d), and (e) of this section, except that, upon reinstatement, such lease shall con- tinue for twenty years and so long thereafter as oil or gas is produced in paying quantities. (3) Notwithstanding any other provision of law, any lease issued pursuant to section 223 of this title shall, upon renewal on or after Novem- ber 15, 1990, continue for twenty years and so long thereafter as oil or gas is produced in pay- ing quantities. (g) Statutory provisions applicable to leases The minimum royalty provisions of section 226(m) of this title and the provisions of section 209 of this title shall be applicable to leases issued pursuant to subsection (d). (h) Royalty reduction in reinstated leases In acting on a petition for reinstatement pur- suant to subsection (d) or in response to a re- quest filed after reinstatement, or both, the Sec- retary is authorized to reduce the royalty in that reinstated lease on the entire leasehold or any tract or portion thereof segregated for roy- alty purposes if, in his judgment, there are un- economic or other circumstances which could cause undue hardship or premature termination of production; or because of any written action of the United States, its agents or employees, which preceded, and was a major consideration in, the lessee’s expenditure of funds to develop the property under the lease after the rent had become due and had not been paid; or if in the judgment of the Secretary it is equitable to do so for any reason. (i) Discretion of Secretary Where, in the judgment of the Secretary of the Interior, drilling operations were being dili- gently conducted on the last day of the primary term of the lease, and, except for nonpayment of rental, the lessee would have been entitled to extension of his lease, pursuant to section 226–1(d) of this title, the Secretary of the Inte- rior may reinstate such lease notwithstanding the failure of the lessee to have made payment of the next year’s rental, provided the condi- tions of subparagraphs (1) and (2) of section 2 (c) are satisfied. (Feb. 25, 1920, ch. 85, § 31, 41 Stat. 450; Aug. 8, 1946, ch. 916, § 9, 60 Stat. 956; July 29, 1954, ch. 644, § 1(7), 68 Stat. 585; Pub. L. 87–822, § 1, Oct. 15, 1962, 76 Stat. 943; Pub. L. 91–245, §§ 1, 2, May 12, 1970, 84 Stat. 206; Pub. L. 97–451, title IV, § 401, Jan. 12, 1983, 96 Stat. 2462; Pub. L. 100–203, title V, §§ 5102(d)(2), 5104, Dec. 22, 1987, 101 Stat. 1330–258, 1330–259; Pub. L. 101–567, § 1, Nov. 15, 1990, 104 Stat. 2802; Pub. L. 103–437, § 11(a)(1), Nov. 2, 1994, 108 Stat. 4589; Pub. L. 109–58, title III, § 371(b), Aug. 8, 2005, 119 Stat. 734; Pub. L. 117–169, title V, § 50262(a)(2), (c)(2), (e)(2), Aug. 16, 2022, 136 Stat. 2056–2058.) Editorial Notes REFERENCES IN TEXT The Mineral Leasing Act for Acquired Lands, referred to in subsec. (d)(1), is act Aug. 7, 1947, ch. 513, 61 Stat. 913, which is classified generally to chapter 7 (§ 351 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under sec- tion 351 of this title and Tables. AMENDMENTS 2022—Subsec. (d)(1). Pub. L. 117–169, § 50262(e)(2)(A), substituted ‘‘section 226(b) of this title’’ for ‘‘section 226(b) or (c) of this title’’. Subsec. (e)(2). Pub. L. 117–169, § 50262(e)(2)(B)(i), struck out ‘‘either’’ after ‘‘payment of back rentals and’’ and ‘‘or the inclusion in a reinstated lease issued pursuant to the provisions of section 226(c) of this title of a re- quirement that future rentals shall be at a rate not less than $5 per acre per year, all’’ before ‘‘as determined by the Secretary;’’. Pub. L. 117–169, § 50262(c)(2), substituted ‘‘$20’’ for ‘‘$10’’. Subsec. (e)(3). Pub. L. 117–169, § 50262(e)(2)(B)(ii), in- serted ‘‘and’’ after semicolon at end, struck out subpar. (A) designation before ‘‘payment’’, and struck out sub- par. (B) which read as follows: ‘‘payment of back royal- ties and inclusion in a reinstated lease issued pursuant to the provisions of section 226(c) of this title of a re- quirement for future royalties at a rate not less than 20 percent: Provided, That royalty on such reinstated lease shall be paid on all production removed or sold from such lease subsequent to the cancellation or ter- mination of the original lease; and’’. Pub. L. 117–169, § 50262(a)(2), substituted ‘‘20’’ for ‘‘162⁄3’’ in two places. Subsec. (f). Pub. L. 117–169, § 50262(e)(2)(F), (G), redes- ignated subsec. (g) as (f) and struck out former subsec. (f) which related to issuance of noncompetitive oil and gas lease. Subsec. (g). Pub. L. 117–169, § 50262(e)(2)(G), redesig- nated subsec. (h) as (g). Former subsec. (g) redesignated (f). Subsec. (g)(1). Pub. L. 117–169, § 50262(e)(2)(C)(i), sub- stituted ‘‘in the same manner as the original lease issued pursuant to section 226 of this title’’ for ‘‘as a competitive or a noncompetitive oil and gas lease in the same manner as the original lease issued pursuant to section 226(b) or (c) of this title’’. Page 53 TITLE 30—MINERAL LANDS AND MINING § 188a Subsec. (g)(2) to (4). Pub. L. 117–169, § 50262(e)(2)(C)(ii)–(iv), redesignated pars. (3) and (4) as (2) and (3), respectively, substituted ‘‘except’’ for ‘‘ap- plicable to leases issued under section 226(c) of this title except,’’ in par. (2), and struck out former par. (2) which read as follows: ‘‘Except as otherwise provided in this section, the issuance of a lease in lieu of an aban- doned patented oil placer mining claim shall be treated as a noncompetitive oil and gas lease issued pursuant to section 226(c) of this title.’’ Subsec. (h). Pub. L. 117–169, § 50262(e)(2)(G), redesig- nated subsec. (i) as (h). Former subsec. (h) redesignated (g). Pub. L. 117–169, § 50262(e)(2)(D), substituted ‘‘sub- section (d)’’ for ‘‘subsections (d) and (f) of this section’’. Subsec. (i). Pub. L. 117–169, § 50262(e)(2)(G), redesig- nated subsec. (j) as (i). Former subsec. (i) redesignated (h). Pub. L. 117–169, § 50262(e)(2)(E), substituted, in head- ing, ‘‘Royalty reduction in reinstated leases’’ for ‘‘Roy- alty reductions’’ and, in text, ‘‘In acting on a petition for reinstatement pursuant to subsection (d)’’ for ‘‘(1) In acting on a petition to issue a noncompetitive oil and gas lease, under subsection (f) of this section or in response to a request filed after issuance of such a lease, or both, the Secretary is authorized to reduce the royalty on such lease if in his judgment it is equitable to do so or the circumstances warrant such relief due to uneconomic or other circumstances which could cause undue hardship or premature termination of pro- duction. ‘‘(2) In acting on a petition for reinstatement pursu- ant to subsection (d) of this section’’. Subsec. (j). Pub. L. 117–169, § 50262(e)(2)(G), redesig- nated subsec. (j) as (i). 2005—Subsec. (d)(2)(A), (B). Pub. L. 109–58 added sub- pars. (A) and (B) and struck out former subpars. (A) and (B), which related to reinstatement with respect to any lease that terminated under subsec. (b) of this section prior to Jan. 12, 1983, and reinstatement with respect to any lease that terminated under subsec. (b) of this sec- tion on or after Jan. 12, 1983. 1994—Subsec. (e). Pub. L. 103–437 substituted ‘‘Natural Resources’’ for ‘‘Interior and Insular Affairs’’ before ‘‘of the House’’ in concluding provisions. 1990—Subsec. (g)(3), (4). Pub. L. 101–567 added pars. (3) and (4). 1987—Subsec. (b). Pub. L. 100–203, § 5104, amended first sentence generally. Prior to amendment, first sentence read as follows: ‘‘Any lease issued after August 21, 1935, under the provisions of section 226 of this title shall be subject to cancellation by the Secretary of the Interior after thirty days’ notice upon the failure of the lessee to comply with any of the provisions of the lease, un- less or until the land covered by any such lease is known to contain valuable deposits of oil or gas.’’ Subsec. (h). Pub. L. 100–203, § 5102(d)(2), substituted ‘‘section 226(m)’’ for ‘‘section 226(j)’’. 1983—Subsecs. (d) to (j). Pub. L. 97–451 added subsecs. (d) to (i) and redesignated former subsec. (d) as (j). 1970—Subsec. (b). Pub. L. 91–245, § 1, inserted proviso authorizing continuance of a lease where timely paid rent is nominally deficient or miscalculated due to an error either in acreage figure stated in the lease, in any decision affecting the lease, or in a bill or decision ren- dered by the Secretary, except where a new lease was issued prior to May 12, 1970 or the lessee failed to pay the deficiency within the period allowed by the Sec- retary. Subsec. (c). Pub. L. 91–245, § 2, inserted provisions al- lowing reinstatement of a lease despite a twenty-day delay in payment of rent, made the payment of back rental accruing from the date of termination of the lease a prerequisite to such reinstatement, restricted the Secretary’s power to issue a new lease on the lands covered by the terminated lease, gave the Secretary discretion to extend the term of a reinstated lease so as to afford the lessee a reasonable opportunity to con- tinue operations under the lease, and struck out re- quirement that the petition for reinstatement of any lease terminated prior to Oct. 15, 1962 be filed within 180 days after Oct. 15, 1962. 1962—Pub. L. 87–822 designated existing pars. as sub- secs. (a) and (b) and added subsecs. (c) and (d). 1954—Act July 29, 1954, provided for automatic termi- nation of a lease on failure to pay rental on or before anniversary date of lease, for any lease on which there is no well capable of producing oil or gas in paying quantities. 1946—Act Aug. 8, 1946, principally added second par. relating to cancellation of leases by Secretary of the Interior. Statutory Notes and Related Subsidiaries SAVINGS PROVISION See note set out under section 181 of this title. REINSTATEMENT OF LEASES Pub. L. 109–58, title III, § 371(a), Aug. 8, 2005, 119 Stat. 734, provided that: ‘‘Notwithstanding section 31(d)(2)(B) of the Mineral Leasing Act (30 U.S.C. 188(d)(2)(B)) as in effect before the effective date of this section [probably means the date of enactment of Pub. L. 109–58, Aug. 8, 2005], and notwithstanding the amendment made by subsection (b) of this section [amending this section], the Sec- retary of the Interior may reinstate any oil and gas lease issued under that Act [30 U.S.C. 181 et seq.] that was terminated for failure of a lessee to pay the full amount of rental on or before the anniversary date of the lease, during the period beginning on September 1, 2001, and ending on June 30, 2004, if— ‘‘(1) not later than 120 days after the date of enact- ment of this Act [Aug. 8, 2005], the lessee— ‘‘(A) files a petition for reinstatement of the lease; ‘‘(B) complies with the conditions of section 31(e) of the Mineral Leasing Act (30 U.S.C. 188(e)); and ‘‘(C) certifies that the lessee did not receive a no- tice of termination by the date that was 13 months before the date of termination; and ‘‘(2) the land is available for leasing.’’ AUTHORITY FOR ISSUANCE OF LEASES UNAFFECTED BY REINSTATEMENT OF LEASES Pub. L. 87–822, § 2, Oct. 15, 1962, 76 Stat. 943, provided that: ‘‘Nothing in this Act [amending this section] shall be construed as limiting the authority of the Sec- retary of the Interior to issue, during the periods in which petitions for reinstatement may be filed, oil and gas leases for any of the lands affected.’’ OUTER CONTINENTAL SHELF; CANCELLATION OF LEASES Cancellation of mineral leases on submerged lands of outer Continental Shelf, see sections 1334 and 1337 of Title 43, Public Lands. § 188a. Surrender of leases The Secretary of the Interior is authorized to accept the surrender of any lease issued pursu- ant to any of the provisions of this chapter, or any amendment thereof, where the surrender is filed in the Bureau of Land Management subse- quent to the accrual but prior to the payment of the yearly rental due under the lease, upon pay- ment of the accrued rental on a pro rata month- ly basis for the portion of the lease year prior to the filing of the surrender. The authority grant- ed to the Secretary of the Interior by this sec- tion shall extend only to cases in which he finds that the failure of the lessee to file a timely sur- render of the lease prior to the accrual of the rental was not due to a lack of reasonable dili- gence, but it shall not extend to claims or cases which have been referred to the Department of Justice for purposes of suit.