(c) Oil Shale.-Federal oil shale deposits may be leased in the discretion of the Secretary through competitive leasing with bonus bidding and fixed royalty. (d) Geothermal Energy.-Federal geothermal resources may be leased in the discretion of the Secretary. For tracts within Known Geothermal Resource Areas (KGRA), leases may be issued by competitive leasing with bonus bidding and fixed royalty. For tracts not within KGRA, leases may be issued without competitive bidding. Geothermal tracts subject to valid "grandfather claims" if they are outside of KGRA may be issued to the claimant as a conversion of his mineral lease or permit or mining claims to a lease. If the "grandfather claim" is within a KGRA, a competitive lease sale must be held. The lease may be issued to the claimant if he matches the high bid. (e) Onshore Oil and Gas.-Federal onshore oil and gas leases may be issued in the discretion of the Secretary. Leases are issued either competitively or noncompetitively. Leases for lands within a Known Geological Structure (KGS) must be issued competitively with bonus bidding and fixed rovalty. Leases for other lands are issued nencompetitively. Noncompetitive leases for lands outside KGS's may be issued under specified circumstances through the simultaneous filing system. All applications for the lands meeting these last requirements for each particular month are considered to be filed simultaneously and a drawing is held to determine the successful applicant. (f) Uranium.-For Federal lands subject to uranium leases (ie., the acquired lands and the lands embraced within AEC withdrawals). known valuable uranium mineral deposits may be leased through competitive leasing with bonus bidding and fixed royalty. Those Federal lands subject to uranium leasing that do not contain a known valuable. uranium mineral deposit may be leased through a prospecting permit system with a preference right to lease upon discovery of a valuable deposit. All the unreserved public domain is open to the location of uranium mining claims under the provisions of the 1872 Mining Law. A valid location entitles the mining claimant to extract the ore. The claimant may patent his mining claim after satisfying certain requirements of the law. He then receives fee title to the surface, including any mineral deposits thereunder (excluding leaseable minerals known to be valuable at the time of patent). Question 5. What initiative or action is required by a private party to obtain rights to each resource? Answer 5. OCS A private party may obtain rights to OCS mineral resources only by participating in competitive lease sales or by acquiring interests in leases that were earlier issued by competitive bidding. He may, from tme to time, express his interest in having particular OCS tracts offered for competitive lease sale by submitting nominations to the Department, either on his own motion or pursuant to a formal Departmental call for nominations. Onshore Generally, a private party may obtain leasing or prospecting rights to a leasable onshore mineral resource by submitting a prospecting permit application or lease offer with the BLM land office having jurisdiction over the lands. The subject is treated in further detail in the answers to question 4. In the case of oil shale and geothermal energy, a private party may nominate tracts for lease when the Department invites nominations. Question 6. What discretionary authority, if any, has the Interior Department to lease or not to lease, or otherwise to open or close lands to development of each resource? (a) Specify the source of the authority (statute or regulations) and identify the criteria which determine the conditions and purposes for which the authority may be exercised. (b) Is the existing authority for each energy resource adequate to protect other resources and values found on and associated with the public lands? Answer 6. OCS (a) The Secretary of the Interior has complete discretionary authority under the Outer Continential Shelf Lands Act to lease or not to lease mineral resources on the OCS. Under Section 12(a) of the Act, the President may formally withdraw from disposition any of the unleased lands of the OCS. (b) As the authority to lease is discretionary and as there is great flexibility in fixing the terms and conditions of the leases that are issued, there exists substantial legal authority to protect resources and values associated with OCS lands. Onshore The Secretary has a wide area of discretionary authority to lease or not to lease, or otherwise to open or close lands to development of each onshore leasable resource. This authority is given in the Geothermal Steam Act of 1970 (30 U.S.C. §§ 1001-1025) for geothermal resources and in the Mineral Leasing Act of February 25, 1920 as amended and supplemented (30 U.S.C. §§ 181-287) and the Acquired Lands Leasing Act of August 7, 1947 (30 U.S.C. §§ 351-359) for other leasable minerals. Leasing generally has been on the basis of industry expressions of interest. (a) The criteria which determine the conditions and purposes for which the authority may be exercised are discussed generally under answer 4. (b) The existing authority for each onshore energy resource except uranium deposits subject to location under the 1872 Mining Law, is adequate to protect other resources and values found on and associated with the public lands. With respect to uranium subject to location under the 1872 Mining Law, major revisions of the existing mining law are necessary to adequately protect other resources and values found on and associated with the public lands. Question 7. What discretionary authority, if any, has the agency with jurisdiction over the surface (if other than Interior) to open or close lands to development of each resource? Answer 7. OCS No agency other than the Department of the Interior has general administrative jurisdiction of the submerged lands of the OCS, or of the waters, which allows for discretionary authority to close the area to mineral resource development. There is, however, authority under the Act of February 28, 1958 (43 U.S.C. Secs. 155-158), for the restriction for the Department of Defense of OCS lands if the restriction does not exceed 5,000 acres. Restrictions of over 5,000 acres may be made only with the consent of Congress. The Defense Department has, however, designated large areas of the OCS, particularly offshore the East coast and the Gulf Coast of Florida, for Air Force and Navy Training and testing purposes. The Interior Department coordinates closely with Defense before initiating mineral leasing actions in those areas. Onshore minerals Section 3 of the Mineral Leasing Act for Acquired Lands (30 U.S.C. 352) provides that "No mineral deposit covered by this section shall be leased except with the consent of the head of the Executive Department, independent establishment, or instrumentality having jurisdiction over the lands containing such deposit..." Therefore, the agency with jurisdiction over the surface of acquired lands has absolute discretion to prevent the issuance of a prospecting permit or of a lease other than one based upon preferential rights obtained under a prospecting permit, but only the Secretary has authority to issue a prospecting permit or lease. Where a permit confers on the permittee an unqualified right to a lease upon the fulfillment of certain conditions, the Secretary has no discretion to refuse to issue the lease if those conditions are fulfilled. For public domain lands, the discretionary authority rests with the Secretary of the Interior, but the surface administering agency may file its objections to the issuance of a lease. Question 8. How is the price determined that is paid to the government for each resource or the right to develop it? To what exent is the system of pricing and/or the specific price prescribed by law, and what, if any, discretionary authority has the Interior Department over them? Answer 8. OCS The price paid to the Government for OCS mineral leases is determined through cash bonuses submitted on tracts in a competitive sealed bidding system. A bid submitted on a tract reflects the individual bidder's resource evaluation of that tract along with associated market factors including the national and the bidder's supply and demand situations, the bidder's financial and reserve position. and the anticipated level of competition for tracts. The OCS Lands Act prescribes that leases for oil and gas tracts on the OCS are to be offered competitively either by cash bonus bidding with a fixed rovalty or by royalty bidding with a fixed cash bonus. The Secretary has authority to choose the method of bidding and to fix the royalty rate with a cash bonus bidding system or to fix the cash bonus to be naid with a rovalty bidding system. When the sealed bids on all tracts have been publicly opened and read, it is the responsibility of the BLM Manager of the New Orleans OCS Office to decide whether or not leases shall issue to the high bidders on tracts. To aid the Manager in this decision-making process. a system has been developed which analyzes pertinent factors impacting on the Department's three leasing goals of receipt of fair market value, environmental protection and orderly and timely resource development. (Further discussion of the system and factors are found in the answer to question 40.) The royalty, under either a sealed bonus bidding with fixed royalty or royalty bidding with a fixed cash bonus, is, by law, not to be less than 121% for oil and gas leases. Onshore The following discusses the extent the specific price is prescribed by law and the discretionary authority exercised by the Department: the amount of the minimum bonus is discretionary in all cases and the amount is determined through the evaluation system discussed under answer 3. Coal Rental by law is prescribed at not less than 25 cents per acre for the first year. 50 cents per acre for years two through five, and $1.00 per acre for years six on. Royalty by law is prescribed at not less than 5 cents per ton of mined coal. Recently, the Department has specified the royalty as a percentage of the value of the coal produced, but not less than 5 cents per ton. Onshore Oil and Gas Rental. by law, is not less than 50 cents per acre for non-competitive leases and not less than $2.00 per acre for competitive leases. Royalty, by law, is not less than 12%2% of the oil and gas produced. with a minimum royalty of $1.00 per acre. Oil Shale Rental, by law, is not less than 50 cents per acre. Geothermal Energy Rental, by law, is not less than $1.00 per acre. Royalty, by law, is not less than 10%, nor more than 15% of the value of steam or other energy produced. However, upon readjustment 35 years after steam is produced, royalty may be raised to a maximum of 221%%. By-products are generally not less than 5% of the value produced. Uranium Neither rental nor royalty is collected on public domain mining claims. Uranium deposits subject to location under the 1872 Mining Law are not subject to any fees levied by the Federal Government. There is no statutory provision for payment of any bonus, rental, or royalty, nor is there any Secretarial discretion to impose such fees. If the claimant patents his claim he must pay a purchase price of $5.00 per acre for a lode claim or $2.50 per acre for a placer claim. Rental and royalty on uranium leases are generally within the discretion of the responsible agency head on acquired lands. Question 9. What is the term of a lease, permit, sale, or other right to each resource? (a) Can the contract provisions be reviewed and amended arithin this term, and if so, with respect to what conditions? (b) To what extent are the term and the scope of review and amendment prescribed by law, or within the discretionary authority of the Interior Department? Answer 9. OCS The OCS Lands Act prescribes that Oil and gas leases be issued for a period of five years and so long thereafter, as oil or gas may be produced in paying quantities. (a) The conservation and waste prevention provisions of an OCS oil and gas lease may, in effect, be amended during the lease term because each lease incorporates by reference the provisions of the Department's regulations and is specifically made subject "... to regulations hereafter issued by the Secretary as he may determine to be necessary and proper in order to provide for the prevention of waste and for the conservation of natural resources," etc. (b) The amendment of the conservation and waste prevention regulations from time to time lies within the discretionary authority of the Secretary of the Interior. The OCS Lands Act prescribes that oil and gas leases be issued subject to such regulations as the Secretary may promulgate. Onshore The Mineral Leasing Act and the Mineral Leasing Act for Acquired Lands do not provide for amendment of contract provisions during the life of oil and gas leases. Existing leases generally have not provided for any amendment during the term of the lease. Nevertheless, some latitude for discretion does exist for the inclusion in leases of conditions for adjustment of environmental protection requirements during the lease term. However, leases for coal, oil shale, and geothermal steam must provide for renewal periods and the adjustment of terms and conditions of the lease at the time of renewal. It is the policy of the Department that exploration and development of minerals must include adequate measures to avoid, minimize, or correct damage to the environment and to avoid, minimize, or correct hazards to the public health and safety. To accomplish this, exploration or development plans must be submitted and approved before operations which will create land disturbance are undertaken. Onshore Oil and Gas By law, the oil and gas primary lease term is 10 years and so long thereafter as oil or gas is produced in paying quantities. Coal Coal prospecting permit terms, by law, are for two years and may extended for an additional period of two years under certain conditions. Coal leases (preference right and competitive), by law, are issued for indeterminate periods upon condition of diligent development and continued operation with a further condition that readjustment of terms will be made at the end of each twenty-year period as the Secretary may determine. |