SECTION 1. TRANSFER OF BUREAU OF LAND MANAGEMENT LANDS.

    (a) Required Offer.--
            (1) In general.--Subject to valid existing rights and 
        except as otherwise provided in this Act, the Secretary of the 
        Interior shall offer to transfer all right, title, and interest 
        of the United States in and to all lands and interests in lands 
        administered by the Bureau of Land Management to the State in 
        which such lands and interests are located.
            (2) Lands and interests included.--The lands and interests 
        in lands referred to in paragraph (1) include--
                    (A) the fee simple interest where the United States 
                owns both the surface and mineral rights;
                    (B) the mineral rights where the surface estate is 
                owned by a non-Federal person, including a State or 
                political subdivision thereof; and
                    (C) water rights related to such lands or 
                interests.
            (3) Exclusion of mineral interests underlying indian 
        reservations.--Paragraph (1) does not apply with respect to the 
        mineral interests underlying a surface estate held by the 
        United States in trust for an Indian tribe.
    (b) Two-Year Period To Make Offer to Governor.--The offer required 
by subsection (a) with respect to a State shall be made to the Governor 
within two years after the date of the enactment of this Act.
    (c) Acceptance of Offer.--A State may only accept the offer of all 
such lands or reject such offer. Acceptance of an offer under 
subsection (a) may only be made by the Governor, in writing to the 
Secretary.
    (d) Effective Date of Transfer.--Any transfer of lands under this 
Act shall be effective with respect to a State on the date which is ten 
years after the date on which the offer to the Governor is accepted.
    (e) Surveys.--The Secretary is not required to conduct a survey of 
any lands prior to transferring such lands under this Act.

SEC. 2. LEASES, PERMITS, AND UNPATENTED MINING CLAIMS.

    (a) Valid Leases and Permits.--Each State receiving lands under 
this Act shall honor valid existing leases and permits on such lands 
for the term of such lease or permit and shall manage such leases and 
permits in accordance with their other terms and conditions.
    (b) Mining Claims.--(1) Except for those mining claims for which 
the holder is entitled to a patent as provided in paragraph (2), after 
the date on which lands subject to a mining claim are transferred to a 
State under this Act, the validity and continued existence of the 
mining claim shall be determined under the laws of the State to which 
the lands were transferred and shall be administered in accordance with 
such laws.
    (2) The holder of a mining claim is entitled to the issuance of a 
patent in the case of a mining claim on lands transferred to a State 
under this Act in the same manner and degree to which such holder would 
have been entitled to prior to the date of such transfer if, as of the 
date of the transfer a patent application was filed with the Secretary 
and all requirements--
            (A) under sections 2325 and 2326 of the Revised Statutes 
        (30 U.S.C. 29 and 30) for vein or lode claims;
            (B) under sections 2329, 2330, 2331, and 2333 of the 
        Revised Statues (30 U.S.C. 35, 36, 37) for placer claims; and
            (C) applicable to such patent application for mill site 
        claims,
were fully complied with.
    (c) Rights-of-Way.--Each State receiving lands under this Act shall 
respect all rights-of-way granted by the United States on such lands in 
accordance with the terms and conditions of the rights-of-way.

SEC. 3. MANAGEMENT OF LANDS TRANSFERRED UNDER THIS ACT.

    (a) Wilderness.--Lands transferred under this Act which have been 
designated by an Act of Congress as wilderness shall be managed by the 
State as wilderness in accordance with the requirements specified in 
the Wilderness Act, the Act of Congress which designated the lands as 
wilderness, and any other Act of Congress which specifically provides 
for the management of such lands, except that the State shall be 
substituted for the Secretary of the Interior.
    (b) Military Uses.--(1) Lands transferred by this Act which on the 
date of such transfer are subject to use for military purposes shall 
continue to be subject to the same military uses.
    (2) In the case of lands transferred to a State under this Act 
which are subject to a withdrawal from public use for military 
purposes, the State shall respect the withdrawal and military use for 
the term of the withdrawal and may not impose any fee or other charge 
on the United States with respect to the military purpose. At the end 
of such term, the Secretary of the military department concerned, or 
the Secretary of Defense, may negotiate with the Governor of the State 
for the continued use of such lands. Lands for which there is not a 
continued military use shall be decontaminated by the appropriate 
Secretary in accordance with the Act of Congress which withdrew such 
lands for military purposes or the withdrawal order, if any.
    (c) Records.--The Secretary of the Interior shall continue to hold 
all land records of the Secretary with respect to the lands transferred 
to a State under this Act. The Secretary shall provide to the State 
full copies of all applicable land records relating to lands which are 
transferred under this Act. The Secretary shall make such records 
available for public use as the Secretary determines appropriate.
    (d) Indian Lands.--The mineral interests described in section 
1(a)(3) shall be transferred from the administrative jurisidiction of 
the Bureau of Land Management and shall be held in trust for the Indian 
tribe for which the overlying surface estate is held in trust.

SEC. 4. WATER RIGHTS.

    (a) In General.--The Secretary shall transfer to a State receiving 
lands under this Act all water rights of the United States associated 
with the lands.
    (b) Certain Rights Not Affected.--A transfer of water rights under 
subsection (a) shall not be construed as--
            (1) affecting, impairing, diminishing, subordinating, or 
        enlarging--
                    (A) the rights of the United States or any State to 
                water under any international treaty, interstate 
                compact, or existing judicial decree;
                    (B) any obligation of the United States to Indians 
                or Indian tribes or any claim or right owned or held by 
                or for Indians or Indian tribes, including with respect 
                to any Indian water compact;
                    (C) any right to any quantity of water reserved or 
                used for governmental purposes or programs of the 
                United States at any time prior to the date of the 
                enactment of this Act; or
                    (D) any license or permit issued before the date of 
                the enactment of this Act; or
            (2) as a recognition, disclaimer, relinquishment, or 
        reduction of any water right of the United States reserved or 
        appropriated before the date of the enactment of this Act.

SEC. 5. REDUCTION IN BUDGET AUTHORITY FOR THE BUREAU OF LAND 
              MANAGEMENT.

    (a) Cap on Obligations and Expenditures.--Beginning with the fiscal 
year in which this Act is enacted, not more than $800,000,000 may be 
obligated or expended in any fiscal year by the Bureau of Land 
Management in carrying out its duties, functions, and responsibilities 
under any provision of law.
    (b) Priority for Use of Fiscal Resources.--The Secretary shall give 
priority to expending amounts available to the Bureau of Land 
Management to land management activities and to carrying out this Act.

SEC. 6. DEFINITIONS.

    As used in this Act--
            (1) the term ``Indian tribe'' means any Indian tribe, band, 
        nation, pueblo, or other organized group or community, 
        including any Alaska Native village or regional corporation as 
        defined in or established pursuant to the Alaska Native Claims 
        Settlement Act, which is recognized as eligible for the special 
        programs and services provided by the United States to Indians 
        because of their status as Indians; and
            (2) the term ``Secretary'' means the Secretary of the 
        Interior.
Requires the Secretary of the Interior to transfer all right, title, and interest of the United States in and to all lands and interests administered by the Bureau of Land Management (BLM) to the State in which such lands and interests are located, with the exception of the mineral interests underlying a surface estate held by the United States in trust for an Indian tribe.   Allows a State to only either accept the offer of all such lands or to reject such offer.  Directs each State receiving lands under this Act to:  (1) honor valid existing leases and permits; and (2)  respect all rights-of-way granted by the United States on such lands.  Requires the validity and existence of a transferred mining claim to be determined and administered under State law, with exceptions for the holders of specified patents.  Requires:  (1) transferred designated wilderness lands to continue to be managed as wilderness; and (2) transferred military purpose lands to continue to be military purpose lands. Transfers the administration of the mineral interests on Indian lands from the BLM. 
Sets forth provisions concerning the transfer of all water rights associated with the lands to the State receiving such lands.  Caps BLM obligations and expenditures.
A bill to transfer the lands administered by the Bureau of Land Management to the State in which the lands are located.