Federal Oil and Gas Leasing Amendments Act of 1986

Federal Oil and Gas Leasing Amendments Act of 1986 - Amends the Mineral Leasing Act of 1920 to authorize the Secretary of the Interior (the Secretary), or the Secretary of Agriculture in the case of public domain National Forest System lands, to lease onshore Federal lands for oil and gas development by competitive bidding if the appropriate Secretary determines such lands to be suitable for such development. Increases land units for development from 640 acres to 2,560 acres.

Requires the Secretary to: (1) invite public nomination of areas favorable for oil and gas discovery at least once each calendar quarter; (2) automatically offer to lease any area receiving two or more such public nominations if the Secretary has determined such areas to be available and suitable for leasing; (3) hold competitive oil and gas lease sales on a quarterly basis; and (4) issue a lease to the highest responsible qualified bidder.

Authorizes the Secretary to extend the initial five-year lease term of a non-producing oil or gas lease only upon finding that the lessee could not adequately explore during the initial lease term due to certain circumstances not attributable to the lessee. Requires an extension application to include an exploration plan. Limits total extensions to five years.

Proscribes guidelines for rentals and royalties.

Requires the Secretary to: (1) report periodically to the Congress regarding fees, rentals, and royalty payments; (2) notify the appropriate State Governor and the general public of scheduled lease offerings and of the scheduled approval of lease development activities; (3) regulate all surface-disturbing operations conducted under a lease; and (4) determine surface-resources conservation activities.

Conditions the granting of a drilling permit on an oil or gas lease upon: (1) the Secretary's approval of an operations plan covering all surface-disturbing activities; and (2) the posting of sufficient bond by the lessee to ensure reclamation of surface disturbing activities.

Prohibits the Secretary from issuing any lease on national forest lands without the approval of the Secretary of Agriculture.

Conditions the issuance of oil and gas leases on public lands (or public domain national forest lands) upon evaluation and approval of such leases in a land use plan meeting specified environmental requirements.

Proscribes the issuance of oil and gas leases upon specified wilderness study lands. Authorizes either Secretary to issue permits for prospecting, seismic surveys, and core sampling not requiring road construction or improvements, if such activity is conducted in a manner compatible with the preservation of the wilderness environment. Prohibits the use of explosives in designated wilderness areas.

Requires an exploration license for the commercial exploration of oil and gas on lands subject to this Act. Sets forth a one-year term for such license.

Provides that exploration licenses for lands under the jurisdiction of other Federal agencies may only be issued by the Secretary upon such conditions as the surface management agency may prescribe regarding the use and protection of the nonmineral interest in those lands. Imposes a fine for commercial oil and gas exploration without a commercial exploration license.