FAQs - Frequently Asked Questions
How does the Inflation Reduction Act of 2022, effective August 16, 2022 affect oil & gas leasing?
On August 16, 2022, the Inflation Reduction Act (IRA) was enacted into law (P.L. 117-169, 136 Stat. 1818 (2022)). Four primary areas pertaining to oil and gas competitive leasing regulations implemented in the Mineral Leasing Act of 1920, as amended, the Mineral Leasing Act for Acquired Lands of 1947, as amended, and the Federal Onshore Oil and Gas Leasing Reform Act of 1987 have been modified:
(1) Nominating/Requesting lands for a sale:
A NONREFUNDABLE Expression Of Interest (EOI) / Nomination Application Fee of $5.00 USD per acre (rounded up to the nearest whole acre) is required to be paid for every submitted EOI Application. All EOI Applications must be submitted using the NFLSS public website.
Calculation:
Total Acres Requested in Application (rounded up to nearest whole number) x $5.00 USD = Total EOI Application Fee
Example:
2499.12 acres (2500 acres) x $5.00 USD = $12,500.00 USD
The calculated total EOI Application Fee must be paid to the appropriate Bureau of Land Management (BLM) State Office; otherwise, the application (EOI/Nomination) will not be reviewed for an oil and gas lease sale. If review of the lands in the application indicates the total acreage is incorrect resulting in insufficient monies initially paid, the application process will be discontinued until additional monies are received.
(2) Presale Oil and Gas Noncompetitive Offers:
The oil and gas noncompetitive leasing process has been eliminated; therefore, no presale oil and gas noncompetitive offers will be accepted (rejected) for future oil and gas lease sales.
(3) Competitive Lease Sales and Issued Competitive Leases:
Minimum Bonus Bid = $10.00 USD per acre
Competitive Lease Rental Rate:
Lease years 1 and 2 = $3.00 USD per acre
Lease years 3 through 8 = $5.00 USD per acre
Lease years 9 and 10 = $15.00 USD per acre
Competitive Lease Royalty Rate = 16.67 percent
After 10 years, the new amounts above will become the statutory minimum.
(4) Post-sale Oil and Gas Noncompetitive Offers:
The oil and gas noncompetitive leasing process has been eliminated; therefore, no post-sale noncompetitive offers will be accepted (rejected) for all Not Sold parcels on a competitive lease sale.
What is BLM's authority for leasing oil and gas?
The Mineral Leasing Act of 1920, as amended, and the Mineral Leasing Act for Acquired Lands of 1947, as amended, give the Bureau of Land Management (BLM) responsibility for oil and gas leasing on about 564 million acres of BLM, national forest, and other Federal lands, as well as State and private surface lands where mineral rights have been retained by the Federal Government. The BLM works to ensure that development of mineral resources is conducted in an environmentally responsible manner.
While the BLM provides technical assistance to Indian Tribes and Indian mineral owners, the BLM does not lease Indian minerals. For more information
What regulations govern BLM's oil and gas leasing program?
Regulations governing the BLM's oil and gas leasing program fall under Groups 3000 and 3100 of the Code of Federal Regulations. A copy of the regulations may also be obtained from any BLM State Office.
What kinds of oil and gas leases are there?
On December 22, 1987, Congress passed the Federal Onshore Oil and Gas Leasing Reform Act of 1987 (P.L. 100-203) (FOOGLRA) requiring all public lands available for oil and gas leasing be first offered on a competitive lease sale for competitive leasing and then by noncompetitive leasing if the parcel did not receive a competitive bid on the lease sale (parcel was not sold during the competitive lease sale).
As of August 16, 2022, (Inflation Reduction Act of 2022) the BLM will only issue competitive leases for oil and gas exploration and development on lands owned or controlled by the Federal Government. The noncompetitive oil and gas leasing process has been eliminated.
The maximum onshore oil and gas competitive lease size is 2,560 acres in the lower 48 States. NFLSS is only available for public submission of oil and gas EOI applications (nominations) within the lower 48 states in the nation and does not manage the leasing for Offshore leasing or onshore leasing for lands in Alaska, Hawaii, or Washington D.C.
What is the primary term on a new competitive Federal oil and gas lease?
As of December 22, 1987 (FOOGLRA) BLM competitive leases are issued for a primary term of 10-years. Any lease will automatically continue thereafter as long as -
(1) A well on the lease is capable of producing in paying quantities; or
(2) Allocation of production from an off-lease well is capable of producing in paying quantities.
Who is qualified to hold a lease?
You may qualify to hold an oil and gas lease if you are an adult citizen of the United States. Minors may not acquire leases, but the BLM is authorized to issue leases to a legal guardian or trustee on behalf of a minor. Associations of citizens and corporations organized under United States, State or municipal law may also qualify.
Aliens may hold interests in leases only by stock ownership in U.S. corporations holding leases and only if the laws of their country of citizenship do not deny similar privileges to United States citizens. Aliens may not hold a lease interest through units in a publicly traded limited partnership.
Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States
The Office of Investment Security, Department of the Treasury issued a final rule, effective February 13, 2020, establishing regulations to implement the provisions relating to real estate transactions in section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018. The final rule was published at 85 Fed. Reg. 3158 (Jan. 17, 2020), and codified at 31 C.F.R. part 802.
The new rule sets forth the process relating to the national security review by the Committee on Foreign Investment in the United States (CFIUS) of certain transactions, referred to in the rule as “covered real estate transactions,” that involve the purchase or lease (including an assignment or other transfer) by, or concession to, a foreign person of certain real estate in the United States. Covered real estate transactions could include some transactions involving the Federal mineral estate.
The CFIUS looks not only at the entities that are lessees, but also to any [legal] person with the ability to exercise control, as defined by the statute and its implementing regulations, over the lessee. CFIUS is authorized to review covered real estate transactions and to mitigate any risk to the national security of the United States that arises as a result of such transactions. This could result in the modification, suspension, or prohibition of a lease or interest therein.
Accordingly, BLM recommends that each potential bidder, lessee, or [other] interest holder review the final rule before bidding on or acquiring an interest in a Federal oil and gas lease.
For further information, please refer to the CFIUS page.
How may I bid for a competitive lease?
Oil and Gas and Geothermal competitive lease sales may be held either orally (in-person) or online. The bidding instructions for a specific BLM State Office Oil and Gas or Geothermal competitive lease sale can be found in the published Sale Notice located in the NFLSS Lease Sale Schedule link.
What are the lease terms and conditions?
As lessee, you may explore and drill for, extract, remove, and dispose of oil and gas deposits, except helium, that you may find on your lease.
Before conducting any surface-disturbing activities, you must obtain BLM approval. Drilling proposals are subject to the lease terms and stipulations that are attached to the lease and necessary mitigation measures that are consistent with the lease rights.
What bonding is required?
Before you conduct any surface-disturbing activities related to drilling, you must provide the BLM a bond to ensure your compliance with the lease terms, including environmental protection.
The financial coverage for a BLM bond can be a surety bond, personal bond accompanied by negotiable Treasury securities, cashier’s or certified check, certificate of deposit, or an irrevocable letter of credit. The current bond form and financial documentation backing the bond must be submitted to the appropriate BLM State Office for review and acceptance.
If you are an operator on the lease, you may use the bond of another party, such as the lessee, if the surety and the bond holder agree. When a new person or company becomes the operator on a lease, the new person or company must notify the BLM of the change in operator and must specify to what bond will cover the operations.
The BLM may require an increase in the bond amount whenever conditions warrant.
When is my competitive lease annual rental due and how do I make these payments?
Upon being the successful highest bidder for a competitive parcel on a held lease sale, the first year's rental payment along with the bonus bid and administrative fee must be paid directly to the proper BLM State Office within the required time based on the competitive oil and gas or geothermal lease sale regulations.
All subsequent rental payments (years 2 through 10 with the possibility of an 11th year), must be paid to the Department of the Interior's Office of Natural Resources Revenue (ONRR) on or before the lease effective date (also known as the anniversary date).
If the rental is not received by ONRR on or before the lease effective date, the lease will automatically terminate by operation of law. It is strongly recommended to make the rental payment at least a 7 to 10 days before the lease effective date.
Any lease rental payments misfiled to the BLM will not be forwarded to ONRR and a misfiled payment does not constitute an excuse for not making the payment on or before the lease effective date.
What is the current oil and gas competitive royalty rate and to what office do I submit payment?
The royalty rate of an oil and gas or geothermal lease depends on what oil and gas and geothermal regulations were active at the time of issuance of the lease and any current leasing management actions which may affect the lease royalty rate. All royalty payments must be paid to the Office of Natural Resources Revenue (ONRR).
Can I transfer a lease interest?
Yes, you can transfer lease interest to another party. Transfers include record title and overriding royalty assignments, operating rights transfers, mergers, name changes, and estate transfers.
All transfers of lease interest must be submitted to the appropriate BLM State Office for review using the current form or documents based on the selected transfer method along with any required administrative fees. A bond may be required.
What does Status mean in NFLSS?
Statuses in NFLSS are a real-time definition of the stage the nominated lands, sales, and protests are in during the oil and gas or geothermal lease sale process. There are several locations where statuses can be located, and each location has a different significance.
All Nominations Grid – Displays all Lands nominated for an oil and gas or geothermal lease sale both by the public and the BLM. The status on the All Nominations grid pertains to the individually nominated Land as it moves through the leasing process.
Track My Nomination – There are two statuses when viewing the data on the Track My Nomination page - the Nomination status and the Land status. The Nomination Status is the overall status of the entire nomination, and the Land status pertains to each individual land as it moves through the lease sale process.
My Nominations (Registered Account with Login) – Displays the overall Nomination Status and the Land Statuses for all lands in your submitted EOI application (also known as nomination) including additional land details not available on the All Nominations grid.
Noncompetitive Grid (Only Registered Account with Login,) – Displays the status of the Geothermal parcels in the Noncompetitive leasing process. The oil and gas noncompetitive leasing process has been eliminated; therefore, no oil and gas parcels are displayed on this grid.
Lease Sale Schedule – Displays the status of all historical, current, and future lease sales.
Protested Parcels – Displays the status of every Protest submitted on a competitive oil and gas lease sale.
Please download the NFLSS Statuses Defined document to learn more about the meaning of each specific status.