View all text of Subchapter I [§ 181 - § 196]
§ 188. Failure to comply with provisions of lease
(a) Forfeiture
(b) Cancellation
(c) ReinstatementWhere 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) 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) on or before August 8, 2005, a petition for reinstatement (together with the required back rental and royalty accruing 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, whether 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 petition for reinstatement (together with the required 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 termination 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 reinstatementAny 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:
(2) payment of back rentals and 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 $20 per acre per year, as determined by the Secretary;
(3) 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 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
1 So in original. Probably should be “royalty”.
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; 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) Treatment of leases
(1) Except as otherwise provided in this section, a reinstated lease shall be treated in the same manner as the original lease issued pursuant 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 subsections (c), (d), and (e) of this section, except that, upon reinstatement, such lease shall continue 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 November 15, 1990, continue for twenty years and so long thereafter as oil or gas is produced in paying quantities.
(g) Statutory provisions applicable to leases
(h) Royalty reduction in reinstated leases
(i) Discretion of Secretary
(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.)