---
kind: "section"
citation: "30 U.S.C. § 1726"
title: "30"
title_heading: "Mineral Lands and Mining"
number: "1726"
heading: "Alternatives for marginal properties"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/30/1726"
units:
  - "Chapter 29 — Oil and Gas Royalty Management"
  - "Subchapter I — Federal Royalty Management and Enforcement"
---

# §1726. Alternatives for marginal properties

- (a) **Determination of best interests of State concerned and United States—** The [Secretary](/usc/30/1702.md?p=15) and the [State concerned](/usc/30/1702.md?p=31), acting in the best interests of the [United States](/usc/30/1702.md?p=33) and the [State concerned](/usc/30/1702.md?p=31) to promote [production](/usc/30/1702.md?p=13), reduce administrative costs, and increase net receipts to the [United States](/usc/30/1702.md?p=33) and the [States](/usc/30/1702.md?p=16), shall jointly determine, on a case by case basis, the amount of what marginal [production](/usc/30/1702.md?p=13) from a [lease](/usc/30/1702.md?p=5) or [leases](/usc/30/1702.md?p=5) or well or wells, or parts thereof, shall be subject to a prepayment under [subsection (b)](#b) or regulatory relief under [subsection (c)](#c). If the [State concerned](/usc/30/1702.md?p=31) does not consent, such prepayments or regulatory relief shall not be made available under this section for such marginal [production](/usc/30/1702.md?p=13): Provided, That if [royalty](/usc/30/1702.md?p=14) [payments](/usc/30/1702.md?p=28) from a [lease](/usc/30/1702.md?p=5) or [leases](/usc/30/1702.md?p=5), or well or wells are not shared with any [State](/usc/30/1702.md?p=16), such determination shall be made solely by the [Secretary](/usc/30/1702.md?p=15).
- (b) **Prepayment of royalty—**
  - (1) **In general—** Notwithstanding the provisions of any [lease](/usc/30/1702.md?p=5) to the contrary, for any [lease](/usc/30/1702.md?p=5) or [leases](/usc/30/1702.md?p=5) or well or wells identified by the [Secretary](/usc/30/1702.md?p=15) and the [State concerned](/usc/30/1702.md?p=31) pursuant to [subsection (a)](#a), the [Secretary](/usc/30/1702.md?p=15) is authorized to accept a prepayment for [royalties](/usc/30/1702.md?p=14) in lieu of monthly [royalty](/usc/30/1702.md?p=14) [payments](/usc/30/1702.md?p=28) under the [lease](/usc/30/1702.md?p=5) for the remainder of the [lease](/usc/30/1702.md?p=5) term if the affected [lessee](/usc/30/1702.md?p=7) so agrees. Any prepayment agreed to by the [Secretary](/usc/30/1702.md?p=15), [State concerned](/usc/30/1702.md?p=31) and [lessee](/usc/30/1702.md?p=7) which is less than an average $500 per month in total [royalties](/usc/30/1702.md?p=14) shall be effectuated under this section not earlier than two years after August 13, 1996, and, any prepayment which is greater than an average $500 per month in total [royalties](/usc/30/1702.md?p=14) shall be effectuated under this section not earlier than three years after August 13, 1996. The [Secretary](/usc/30/1702.md?p=15) and the [State concerned](/usc/30/1702.md?p=31) may condition their acceptance of the prepayment authorized under this section on the [lessee](/usc/30/1702.md?p=7)’s agreeing to such terms and conditions as the [Secretary](/usc/30/1702.md?p=15) and the [State concerned](/usc/30/1702.md?p=31) deem appropriate and consistent with the purposes of this chapter. Such terms may—
    - (A) provide for prepayment that does not result in a loss of revenue to the [United States](/usc/30/1702.md?p=33) in present value terms;
    - (B) include provisions for receiving additional prepayments or [royalties](/usc/30/1702.md?p=14) for developments in the [lease](/usc/30/1702.md?p=5) or [leases](/usc/30/1702.md?p=5) or well or wells that deviate significantly from the assumptions and facts on which the valuation is determined; and
    - (C) require the [lessee](/usc/30/1702.md?p=7) or its [designee](/usc/30/1702.md?p=24) to provide such periodic [production](/usc/30/1702.md?p=13) reports as may be necessary to allow the [Secretary](/usc/30/1702.md?p=15) and the [State concerned](/usc/30/1702.md?p=31) to monitor [production](/usc/30/1702.md?p=13) for the purposes of [subparagraph (B)](#b-1-B).
  - (2) **State share—** A prepayment under this section shall be shared by the [Secretary](/usc/30/1702.md?p=15) with any [State](/usc/30/1702.md?p=16) or other recipient to the same extent as any [royalty](/usc/30/1702.md?p=14) [payment](/usc/30/1702.md?p=28) for such [lease](/usc/30/1702.md?p=5).
  - (3) **Satisfaction of obligation—** Except as may be provided in the terms and conditions established by the [Secretary](/usc/30/1702.md?p=15) under [subsection (b)](#b), a [lessee](/usc/30/1702.md?p=7) or its [designee](/usc/30/1702.md?p=24) who makes a prepayment under this section shall have satisfied in full the [lessee](/usc/30/1702.md?p=7)’s [obligation](/usc/30/1702.md?p=25) to pay [royalty](/usc/30/1702.md?p=14) on the [production](/usc/30/1702.md?p=13) stream sold from the [lease](/usc/30/1702.md?p=5) or [leases](/usc/30/1702.md?p=5) or well or wells.
- (c) **Alternative accounting and auditing requirements—** Within one year after August 13, 1996, the [Secretary](/usc/30/1702.md?p=15) or the [delegated State](/usc/30/1702.md?p=22) shall provide accounting, reporting, and auditing relief that will encourage [lessees](/usc/30/1702.md?p=7) to continue to produce and develop properties subject to [subsection (a)](#a): Provided, That such relief will only be available to [lessees](/usc/30/1702.md?p=7) in a [State](/usc/30/1702.md?p=16) that concurs, which concurrence is not required if [royalty](/usc/30/1702.md?p=14) [payments](/usc/30/1702.md?p=28) from the [lease](/usc/30/1702.md?p=5) or [leases](/usc/30/1702.md?p=5) or well or wells are not shared with any [State](/usc/30/1702.md?p=16). Prior to granting such relief, the [Secretary](/usc/30/1702.md?p=15) and, if appropriate, the [State concerned](/usc/30/1702.md?p=31) shall agree that the type of marginal wells and relief provided under this paragraph is in the best interest of the [United States](/usc/30/1702.md?p=33) and, if appropriate, the [State concerned](/usc/30/1702.md?p=31).

## Source credit

(Pub. L. 97–451, title I, § 117, as added Pub. L. 104–185, § 7(a), Aug. 13, 1996, 110 Stat. 1715; amended Pub. L. 104–200, § 1(7), Sept. 22, 1996, 110 Stat. 2421.)

## Notes

### Editorial Notes

### Codification

Pub. L. 104–185, § 4(a), which directed the addition of this section at the end of the Federal Oil and Gas Royalty Management Act of 1982, was executed by adding this section at the end of title I of that Act to reflect the probable intent of Congress.

### Amendments

1996—Subsec. (b)(1)(C). Pub. L. 104–200, § 1(7), substituted “its designee” for “it designee”.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section applicable with respect to production of oil and gas after the first day of the month following Aug. 13, 1996, except as provided by this section, see section 11 of Pub. L. 104–185, set out as an Effective Date of 1996 Amendment note under section 1701 of this title.

### Applicability

Section not applicable to any privately owned minerals or with respect to Indian lands, see sections 9 and 10 of Pub. L. 104–185, set out as an Applicability of 1996 Amendment note under section 1701 of this title.