§ 188. — Failure to comply with provisions of lease.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 30USC188]
TITLE 30--MINERAL LANDS AND MINING
CHAPTER 3A--LEASES AND PROSPECTING PERMITS
SUBCHAPTER I--GENERAL PROVISIONS
Sec. 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 proceeding 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
chapter, 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 settlement 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 contains 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
cancellation 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 office for such district, then in the
post office nearest such land. Notwithstanding the provisions 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 terminate 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 working 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
Secretary.
(c) Reinstatement
Where any lease has been or is hereafter terminated 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 Interior 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 affecting any
of the lands covered by such terminated lease for a reasonable
period, as determined in accordance with regulations issued by him.
In any case where a reinstatement of a terminated lease is granted
under this subsection and the Secretary finds that the reinstatement
of such lease will not afford the lessee a reasonable opportunity 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: Provided, 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 extension shall not exceed
a period equal to the unexpired 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) or
(c) of this title or the Mineral Leasing Act for Acquired Lands (30
U.S.C. 351 et seq.) has been, or is hereafter, terminated automatically
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 satisfaction of the Secretary of the Interior that such failure
was justifiable or not due to lack of reasonable diligence on the part
of the lessee, or, no matter when the rental is paid after termination,
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 extension thereof remaining at the date of
termination, 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 opportunity 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 paragraph (1) of this
subsection unless--
(A) with respect to any lease that terminated under subsection
(b) of this section prior to January 12, 1983:
(i) the lessee tendered rental prior to January 12, 1983,
and the final determination that the lease terminated was made
by the Secretary or a court less than three years before January
12, 1983, and
(ii) a petition for reinstatement together with the required
back rental and royalty accruing from the date of termination,
is filed with the Secretary on or before the one hundred and
twentieth day after January 12, 1983, or
(B) with respect to any lease that terminated under subsection
(b) of this section on or after January 12, 1983, a petition for
reinstatement together with the required back rental and royalty
accruing from the date of termination is filed on or before the
earlier of--
(i) sixty days after the lessee receives from the Secretary
notice of termination, whether by return of check or by any
other form of actual notice, or
(ii) fifteen months after 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 reinstatement, 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 either the inclusion 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 $10 per acre per year, or the inclusion in a reinstated
lease issued pursuant to the provisions of section 226(c) of this
title of a requirement that future rentals shall be at a rate not
less than $5 per acre per year, all as determined by the Secretary;
(3)(A) payment of back royalties and the inclusion 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 16\2/3\ 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
competitive 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 such lease subsequent
to the termination of the original lease;
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\1\ So in original. Probably should be ``royalty''.
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(B) payment of back royalties and inclusion in a reinstated
lease issued pursuant to the provisions of section 226(c) of this
title of a requirement for future royalties at a rate not less than
16\2/3\ 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 termination of the original lease;
and
(4) notice of the proposed reinstatement of a terminated lease,
including the terms and conditions of reinstatement, shall be
published in the Federal Register at least thirty days in advance of
the reinstatement.
A copy of said notice, together with information concerning rental,
royalty, volume of production, if any, and any other matter which the
Secretary deemed significant in making this determination 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 reinstatement. The lessee
of a reinstated lease shall reimburse 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 Federal Register of the notice of proposed
reinstatement.
(f) Issuance of noncompetitive oil and gas lease; conditions
Where an unpatented oil placer mining claim validly located prior to
February 24, 1920, which has been or is currently producing or is
capable of producing oil or gas, has been or is hereafter deemed
conclusively abandoned for failure to file timely the required
instruments or copies of instruments required by section 1744 of title
43, and it is shown to the satisfaction of the Secretary that such
failure was inadvertent, justifiable, or not due to lack of reasonable
diligence on the part of the owner, the Secretary may issue, for the
lands covered by the abandoned unpatented oil placer mining claim, a
noncompetitive oil and gas lease, consistent with the provisions of
section 226(e) of this title, to be effective from the statutory date
the claim was deemed conclusively abandoned. Issuance of such a lease
shall be conditioned upon:
(1) a petition for issuance of a noncompetitive oil and gas
lease, together with the required rental and royalty, including back
rental and royalty accruing from the statutory date of abandonment
of the oil placer mining claim, being filed with the Secretary--
(A) with respect to any claim deemed conclusively abandoned
on or before January 12, 1983, on or before the one hundred and
twentieth day after January 12, 1983, or
(B) with respect to any claim deemed conclusively abandoned
after January 12, 1983, on or before the one hundred and
twentieth day after final notification by the Secretary or a
court of competent jurisdiction of the determination of the
abandonment of the oil placer mining claim;
(2) a valid lease not having been issued affecting any of the
lands covered by the abandoned oil placer mining claim prior to the
filing of such petition: Provided, however, That after the filing of
a petition for issuance of a lease under this subsection, the
Secretary shall not issue any new lease affecting any of the lands
covered by such abandoned oil placer mining claim for a reasonable
period, as determined in accordance with regulations issued by him;
(3) a requirement in the lease for payment of rental, including
back rentals accruing from the statutory date of abandonment of the
oil placer mining claim, of not less than $5 per acre per year;
(4) a requirement in the lease for payment of royalty on
production removed or sold from the oil placer mining claim,
including all royalty on production made subsequent to the statutory
date the claim was deemed conclusively abandoned, of not less than
12\1/2\ percent; and
(5) compliance with the notice and reimbursement of costs
provisions of paragraph (4) of subsection (e) of this section but
addressed to the petition covering the conversion of an abandoned
unpatented oil placer mining claim to a noncompetitive oil and gas
lease.
(g) Treatment of leases
(1) Except as otherwise provided in this section, a reinstated lease
shall be treated 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.
(2) Except as otherwise provided in this section, the issuance of a
lease in lieu of an abandoned patented oil placer mining claim shall be
treated as a noncompetitive oil and gas lease issued pursuant to section
226(c) of this title.
(3) 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 subsections
(c), (d), and (e) of this section, applicable to leases issued under
section 226(c) of this title except, that, upon reinstatement, such
lease shall continue for twenty years and so long thereafter as oil or
gas is produced in paying quantities.
(4) Notwithstanding any other provision of law, any lease issued
pursuant to section 223 of this title shall, upon renewal on or after
November 15, 1990, continue for twenty years and so long thereafter as
oil or gas is produced in paying quantities.
(h) 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 subsections (d) and (f) of this section.
(i) Royalty reductions
(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 production.
(2) In acting on a petition for reinstatement pursuant to subsection
(d) of this section or in response to a request filed after
reinstatement, or both, the Secretary is authorized to reduce the
royalty in that reinstated lease on the entire leasehold or any tract or
portion thereof segregated for royalty purposes if, in his judgment,
there are uneconomic 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.
(j) Discretion of Secretary
Where, in the judgment of the Secretary of the Interior, drilling
operations were being diligently 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 Interior may
reinstate such lease notwithstanding the failure of the lessee to have
made payment of the next year's rental, provided the conditions of
subparagraphs (1) and (2) of subsection (c) of this section are
satisfied.
(Feb. 25, 1920, ch. 85, Sec. 31, 41 Stat. 450; Aug. 8, 1946, ch. 916,
Sec. 9, 60 Stat. 956; July 29, 1954, ch. 644, Sec. 1(7), 68 Stat. 585;
Pub. L. 87-822, Sec. 1, Oct. 15, 1962, 76 Stat. 943; Pub. L. 91-245,
Secs. 1, 2, May 12, 1970, 84 Stat. 206; Pub. L. 97-451, title IV,
Sec. 401, Jan. 12, 1983, 96 Stat. 2462; Pub. L. 100-203, title V,
Secs. 5102(d)(2), 5104, Dec. 22, 1987, 101 Stat. 1330-258, 1330-259;
Pub. L. 101-567, Sec. 1, Nov. 15, 1990, 104 Stat. 2802; Pub. L. 103-437,
Sec. 11(a)(1), Nov. 2, 1994, 108 Stat. 4589.)
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, as amended, which is
classified generally to chapter 7 (Sec. 351 et seq.) of this title. For
complete classification of this Act to the Code, see Short Title note
set out under section 351 of this title and Tables.
Amendments
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, Sec. 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, unless 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, Sec. 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, Sec. 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 rendered 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 Secretary.
Subsec. (c). Pub. L. 91-245, Sec. 2, inserted provisions allowing
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
continue operations under the lease, and struck out requirement 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 subsecs. (a) and
(b) and added subsecs. (c) and (d).
1954--Act July 29, 1954, provided for automatic termination 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.
Change of Name
Committee on Natural Resources of House of Representatives treated
as referring to Committee on Resources of House of Representatives by
section 1(a) of Pub. L. 104-14, set out as a note preceding section 21
of Title 2, The Congress.
Savings Provision
See note set out under section 181 of this title.
Authority for Issuance of Leases Unaffected by Reinstatement of Leases
Section 2 of Pub. L. 87-822 provided that: ``Nothing in this Act
[amending this section] shall be construed as limiting the authority of
the Secretary 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.
Section Referred to in Other Sections
This section is referred to in sections 275, 285, 1719, of this
title; title 10 sections 7421, 7435.
