A variety of interrelated statutes and agency regulations govern leasing and permitting foroil and gas development on federal lands. The national mining and minerals policy fosters andencourages the following activities: private enterprise in ... the development of economicallysound and stable domestic mining, minerals, metal and mineral reclamation industries [and] theorderly and economic development of domestic mineral resources, reserves, and reclamation ofmetals and minerals to help assure satisfaction of industrial, security and environmental needs. (1) The Bureau of Land Management (BLM) -- part of the U.S. Department of the Interior -- managesmost federal mineral development and is largely responsible for implementing this policy. (2) BLM also manages a largeamount of federal lands. Federal land in the National Forest System (NFS) is under the jurisdictionof the Forest Service, which is part of the U.S. Department of Agriculture. The Forest Service playsa role in authorizing mineral development on NFS lands. This report addresses the leasing and permitting of onshore, federal public domain lands. "Public domain lands" encompass lands obtained "by treaty, conquest, cession by States, and[certain] purchase[s]." (3) The historical distinction between public domain lands and other federal lands is reflected in thedifferent statutes that apply to the different types of lands. This report first analyzes the legal framework for oil and gas leasing and permitting onfederal public domain lands managed by BLM and the Forest Service. Second, this report assesseshow the recently enacted Energy Policy of 2005 affects these laws. Finally, this report analyzesselected judicial and administrative decisions regarding what steps federal environmental lawsrequire agencies to take before issuing coalbed methane leases. Coalbed methane is a type of naturalgas that is trapped in coal seams by water pressure; it is leased separately from the coal. At the dawn of the twentieth century, private entities could explore, develop, and purchasefederal public domain lands containing oil with relative ease. The federal government permittedmineral exploration of such lands without any charge. Oil could be developed as a placermineral. (4) Full ownershipof oil lands "could be obtained for a nominal amount." (5) However, Congress's enactment of the Mineral Lands Leasing Actof 1920 (MLLA) ended the private acquisition of title to federal oil lands by authorizing theSecretary of the Interior (Secretary) to issue permits for exploration and to lease lands containing oiland gas and other defense-related minerals. (6) The first section of this report details the legal framework for suchoil and gas leasing. "Public domain lands" encompass lands obtained "by treaty, conquest, cession by States, and[certain] purchase[s]." (7) The historical distinction between public domain lands and other federal lands is reflected in thedifferent statutes that apply to the various types of lands. The scope of this report does not encompass "acquired lands," which are lands "granted or sold to the United States by a State orcitizen." (8) The MLLA authorizes the Secretary to lease oil and gas deposits and onshore public domainlands containing oil and gas deposits, with the federal government retaining title to the lands. (9) This leasing authority appliesto National Forest System (NFS) lands that are reserved from the public domain, and to mostreserved subsurface mineral estates. (10) However, it excludes numerous categories of lands such asnational parks and monuments, as well as lands in incorporated cities, towns, and villages. (11) Areas within the NationalWilderness Preservation System cannot be leased, but valid rights existing as of 1984 arepreserved. (12) In sum,all public lands subject to the Secretary's authority under MLLA "which are known or believed tocontain oil or gas deposits may be leased by the Secretary." (13) However, the Secretary of the Interior cannot issue any lease for National Forest Systemlands reserved from the public domain if the Secretary of Agriculture objects. (14) In addition, the U.S. ForestService has issued separate regulations governing certain aspects of leasing and permitting for oiland gas development on lands within its jurisdiction. The Secretary is also authorized to withdraw public lands managed by BLM so that some orall potential land uses are proscribed on those lands. (15) A withdrawal involves "withholding an area of Federal landfrom settlement, sale, location, or entry, under some or all of the general land laws, for the purposeof limiting activities under those laws in order to maintain other public values in the area or reservingthe area for a particular public purpose or program." (16) However, limitations on the Secretary's withdrawal authorityexist. (17) For example,Congress can make withdrawals, and the Secretary may not modify or revoke a congressionalwithdrawal. (18) U.S. Department of the Interior The BLM manages approximately 262 million acres of public lands under the Federal LandPolicy and Management Act of 1976 (FLPMA). (19) The Secretary of the Interior must develop and revise "land useplans" for the public lands -- officially known as Resource Management Plans (RMPs) -- thatconsider the present and potential future uses for public lands managed by BLM. (20) These RMPs serve as theinitial determinant of which lands may be subject to leasing. All activities performed on these landsmust be consistent with the RMPs. (21) Thus, an RMP must allow oil and gas development in an areain order for it to take place there. (22) The Secretary generally must apply "multiple use" and "sustained yield" principles whendeveloping RMPs. (23) "Multiple use" principles involve judiciously managing lands in a manner that takes into account theenvironmental, historical, and natural resource values of the lands and prevents their permanentimpairment. (24) "Sustained yield" means maintaining "high-level annual or regular periodic output of the variousrenewable resources of the public lands." (25) In addition, the Secretary is required to provide opportunitiesfor the public and various levels of government to participate in the development of RMPs. (26) This can includeprocedures such as holding public hearings, when appropriate. (27) Regulations require thepreparation of an Environmental Impact Statement (EIS) or an Environmental Assessment (EA)when producing an RMP. (28) The Secretary's mandate to formulate and revise RMPs extends to all BLM-managed publiclands, no matter how they had been classified before the enactment of FLPMA in 1976. (29) The land use provisionsalso apply to lands that had previously been withdrawn. (30) In addition, FLPMA requires that public lands within BLM'sjurisdiction be inventoried and identified on a continuing basis. (31) U.S. Forest Service The Forest Service also manages its lands under multiple use and sustained yieldpolicies. (32) It developsland management plans for NFS lands by considering the desired conditions, objectives, suitabilityof areas for various uses, and other criteria. (33) As with the Department of the Interior's planning process, thelaws governing Forest Service land management and implementation require public notification andopportunities for public participation. (34) When analyzing Forest Service lands for potential leasing, theForest Service classifies lands into three categories: (1) lands that will be "[o]pen to development subject to the terms andconditions of the standard oil and gas lease form" (2) lands that will be "[o]pen to development but subject to constraints that willrequire the use of lease stipulations" (3) lands that will be "[c]losed to leasing, distinguishing between those areasthat are being closed through exercise of management direction, and those closed by law, regulation,etc." (35) The Forest Service must also comply with the National Environmental Policy Act of 1969(NEPA) when analyzing NFS lands for potential leasing. (36) Once the Forest Service has completed its analysis of which NFSlands will be available for leasing, it notifies BLM of its decisions. (37) Forest Serviceauthorization for BLM to lease specific lands may follow. (38) The MLLA authorizes both competitive and noncompetitive leasing procedures. Usuallylands go through the competitive leasing process first. When BLM posts a list of lands available forcompetitive leasing, private entities may respond by submitting nominations for parcels to beauctioned. (39) No unitbeing auctioned can exceed 2,560 acres, except in Alaska, where the maximum unit acreage is 5,760acres. (40) In addition,each unit must be "as nearly compact as possible." (41) The Secretary must provide forty-five days notice before offering public lands for leasing,including a thirty-day period for receiving public comments after notice is published in the FederalRegister. (42) Competitive bidding must be held on a quarterly basis in each state where public lands are availablefor leasing. (43) TheSecretary may also authorize additional opportunities for bidding if he considers them to benecessary. (44) Once the public notice requirements have been satisfied, the public lands are offered forcompetitive leasing through an oral auction. (45) A national minimum acceptable bid of $2 per acre applies to theauction. (46) Any bidsfor less than the national minimum bid must be rejected. (47) A competitive bid constitutes a legally binding commitment andcannot be withdrawn. (48) The MLLA requires the Secretary to accept the highest bid from a responsible qualified bidderwhose bid meets or exceeds the national minimum acceptable bid.