Federal Oil and Gas Leasing Act of 1985

Federal Oil and Gas Leasing Act of 1985 - Amends the Mineral Leasing Act of 1920 to permit the Secretary of the Interior (the Secretary) to lease onshore Federal lands for oil and gas development by competitive bidding only. Requires such bidding to be based upon those bidding systems set forth in the Outer Continental Shelf Lands Act which the Secretary determines would maximize competition.

Directs the Secretary, at least once each quarter, to invite public nomination of areas favorable for the discovery of oil or gas. Provides that any area which the Secretary determines to be available and suitable for oil and gas leasing shall automatically be offered for lease if the area receives either: (1) two or more public nominations; or (2) a single nomination in two successive quarters.

Directs the Secretary to hold quarterly competitive oil and gas lease sales, consisting of nominated tracts and any additional areas selected by the Secretary.

Increases the size of leasable tracts by a specified amount.

Provides for an initial lease period of five years and an extension of up to five years. Requires extension applications to include an exploration plan. Authorizes extensions only if the lessee could not explore during the initial lease period due to adverse technical, economic, or environmental conditions.

Increases the minimum annual rental fee from 50 cents to two dollars per acre. Prescribes an increased minimum royalty of four dollars per acre (up from one dollar) in lieu of rental.

Provides that actions taken by the Secretary pursuant to the bidding, nomination, and leasing procedures under this Act shall not be considered "major Federal actions" for purposes of the National Environmental Policy Act.

Permits the Secretary to disapprove an assignment of a lease in specified circumstances.

Directs the Secretary to issue regulations within 180 days of enactment.