Discretion to Grant Oil and Gas Lease Reinstatements

This IM sets out policy to ensure that oil and gas lease reinstatements are reviewed in accordance with the Mineral Leasing Act of 1920, as amended (MLA) (30 U.S.C. § 188) and other applicable laws, and that reinstatements consider the findings contained in the November 2021 Department of the Interior (DOI) Report on the Federal Oil and Gas Leasing Program. As an overarching policy, consistent with BLM’s discretion under the mineral leasing laws and the multiple-use and sustained yield mandate of the Federal Land Policy and Management Act, BLM should ensure that oil and gas development is not necessarily prioritized over other uses. The BLM should carefully consider the lands subject to a lease reinstatement in terms of expected yields of oil and gas, prospects of earning a fair return for U.S. taxpayers when applicable, and conflicts with other uses, such as outdoor recreation and wildlife habitat.

In addition, complying with the National Environmental Policy Act (NEPA) for reinstating a lease often requires the equivalent workload of issuing a new lease, as specified in Permanent IM (PIM) 2018-010, NEPA Compliance for Oil and Gas Reinstatement Petitions. Considering this workload, the BLM will verify that reinstating a terminated lease, as opposed to offering a new lease, is in the public interest. This IM provides guidance on how to implement this verification process and exercise BLM’s discretion when receiving and reviewing a reinstatement application.

Criteria for Reinstatement Specified in Statute and Implementing Regulations

Where a federal oil and gas lease has terminated automatically by operation of law due to the failure of the lessee to pay rentals timely, the MLA and regulations provide the BLM with the discretion to reinstate the lease under certain conditions (30 U.S.C. § 188; 43 CFR § 3108.2-2, § 3108.2-3):

• The BLM may grant a “Class I” reinstatement (reinstatement at existing rental and royalty rates) where the lessee has paid the rental due within 20 days of the anniversary date of the lease and the lessee demonstrates that the failure to submit the rental due was either justified or not due to a lack of reasonable diligence on the part of the lessee (30 U.S.C. § 188(c); 43 CFR § 3108.2-2).
• Where the lessee has not paid the rental for the terminated lease within 20 days of the anniversary date of the lease, the BLM may grant a “Class II” reinstatement (reinstatement at higher rental and royalty rates) if the lessee demonstrates that the failure to submit the rental due was either justified or not due to a lack of reasonable diligence on the part of the lessee (30 U.S.C. § 188(d)-(e); 43 CFR § 3108.2-3). Before issuing a lease reinstatement, the BLM should review IM 2023-008.
• Finally, the BLM may grant a Class II reinstatement regardless of when the lessee has paid the rental if the lessee demonstrates that the failure to pay the rental on time was “inadvertent” (30 U.S.C. § 188(d); 43 CFR § 3108.2-3). Before issuing the lease reinstatement, the BLM should review IM 2023-008.

The lessee has the burden of demonstrating that the necessary conditions for reinstatement are met.

Public Interest

Upon receipt of a petition for lease reinstatement and before the initiation of the required environmental and plan conformance review, the SO will conduct a review of the terminated lease. To best inform the agency’s exercise of its significant discretion over reinstatement, the BLM must consider whether, in light of the below-listed criteria, a proposed reinstatement is in the public interest before approving a reinstatement application. A lease reinstatement should generally be denied if a review of the terminated lease demonstrates that it is not in the public interest to reinstate the lease. To assist with the reinstatement review, use BLM Checklist for Reinstatement Petitions, in Attachment 1, to document the comprehensive review of the petition for reinstatement. Criteria to consider include:

1. Current proposed or ongoing operations on the terminated lease (e.g., ongoing drilling operations, existing permit(s), etc.),
2. The potential of the terminated lease for oil and gas development (e.g., as evidenced by the oil and gas potential maps developed by the BLM for its resource management plans),
3. The proximity of the terminated lease to existing federal or non-federal oil and gas development or operations,
4. The existing habitats or connectivity areas surrounding or within the terminated lease (e.g., crucial winter range, priority greater sage grouse habitat management areas, etc.),
5. The existing cultural resource values and areas surrounding or within the terminated lease (e.g., historic properties and/or resources protected under the National Historic Preservation Act, American Indian Religious Freedom Act, Native American Graves Protection and Repatriation Act, E.O.13007, etc.),
6. The existing resources or uses surrounding or within the terminated lease, and
7. Other considerations as determined by the authorized officer.

Decrease Likelihood of Reinstatements

Both the BLM and lessees prefer to avoid reinstatements entirely. The need for a reinstatement occurs when a lessee does not pay the annual rental before a lease’s anniversary. To assist all entities, BLM offices will include the Notice for New Lease Interest Owners, in Attachment 2, when approving a transfer or assignment or issuing a new lease. The intent of this notice is to inform new lease interest holders of the requirements related to rental payments upon receipt of interest in a lease.

Application

This IM governs BLM procedure and organization and is not a rule, regulation, or other legally binding instrument, and the recommendations it contains may not apply to a particular situation, depending on case-specific facts and circumstances. Nothing in this IM is intended to modify or amend any Federal laws or regulations, nor create any rights or cause of action or trust obligation that any person or party may enforce through litigation or otherwise against the United States Government or any of its employees or officers. This IM is not legally enforceable. To the extent that there is any inconsistency between the provisions of this IM and any Federal regulations or laws, the regulations or laws will control.