§ 1702 TITLE 30—MINERAL LANDS AND MINING Page 334

(Pub. L. 97–451, §2, Jan. 12, 1983, 96 Stat. 2448.)

EFFECTIVE DATE OF 1996 AMENDMENT

Pub. L. 104–185, §11, Aug. 13, 1996, 110 Stat. 1717, provided that: ‘‘Except as provided by section 115(h) [30

U.S.C. 1724(h)], section 111(h) [30 U.S.C. 1721(h)], section

111(k)(5) [30 U.S.C. 1721(k)(5)], and section 117 [30 U.S.C.

1726] of the Federal Oil and Gas Royalty Management

Act of 1982 (as added by this Act), this Act [see Short

Title of 1996 Amendment note below], and the amendments made by this Act, shall apply with respect to the

production of oil and gas after the first day of the

month following the date of the enactment of this Act

[Aug. 13, 1996].’’

EFFECTIVE DATE

Section 305 of Pub. L. 97–451 provided that: ‘‘The provisions of this Act [enacting this chapter, amending

sections 188 and 191 of this title, and enacting provisions set out as notes under this section and sections

1714 and 1752 of this title] shall apply to oil and gas

leases issued before, on, or after the date of the enactment of this Act [Jan. 12, 1983], except that in the case

of a lease issued before such date, no provision of this

Act or any rule or regulation prescribed under this Act

shall alter the express and specific provisions of such a

lease.’’

SHORT TITLE OF 1996 AMENDMENT

Pub. L. 104–185, §1, Aug. 13, 1996, 110 Stat. 1700, provided that: ‘‘This Act [enacting sections 1721a and 1724

to 1726 of this title, amending sections 1702, 1712, 1721,

and 1735 of this title, repealing section 1339 of Title 43,

Public Lands, and enacting provisions set out as notes

under this section, section 1732 of this title, and section

1339 of Title 43] may be cited as the ‘Federal Oil and

Gas Royalty Simplification and Fairness Act of 1996’.’’

SHORT TITLE

Section 1 of Pub. L. 97–451 provided that: ‘‘This Act

[enacting this chapter, amending sections 188 and 191 of

this title, and enacting provisions set out as notes

under this section and sections 1714 and 1752 of this

title] may be cited as the ‘Federal Oil and Gas Royalty

Management Act of 1982’.’’

APPLICABILITY OF 1996 AMENDMENT

Pub. L. 104–185, §9, Aug. 13, 1996, 110 Stat. 1717, provided that: ‘‘The amendments made by this Act [see

Short Title of 1996 Amendment note above] shall not

apply with respect to Indian lands, and the provisions

of the Federal Oil and Gas Royalty Management Act of

1982 [30 U.S.C. 1701 et seq.] as in effect on the day before

the date of enactment of this Act [Aug. 13, 1996] shall

continue to apply after such date with respect to Indian lands.’’

Pub. L. 104–185, §10, Aug. 13, 1996, 110 Stat. 1717, provided that: ‘‘This Act [see Short Title of 1996 Amendment note above] shall not apply to any privately

owned minerals.’’

CONSTRUCTION OF 1996 AMENDMENT

Pub. L. 104–185, §12, Aug. 13, 1996, 110 Stat. 1717, provided that: ‘‘Nothing in this Act [see Short Title of 1996

Amendment note above] shall be construed to give a

State a property right or interest in any Federal lease

or land.’’

§ 1702. Definitions

For the purposes of this chapter, the term—

(1) ‘‘Federal land’’ means all land and interests in land owned by the United States which

are subject to the mineral leasing laws, including mineral resources or mineral estates

reserved to the United States in the conveyance of a surface or nonmineral estate;

(2) ‘‘Indian allottee’’ means any Indian for

whom land or an interest in land is held in

trust by the United States or who holds title

subject to Federal restriction against alienation;

(3) ‘‘Indian lands’’ means any lands or interest in lands of an Indian tribe or an Indian allottee held in trust by the United States or

which is subject to Federal restriction against

alienation or which is administered by the

United States pursuant to section 1613(g) of

title 43, including mineral resources and mineral estates reserved to an Indian tribe or an

Indian allottee in the conveyance of a surface

or nonmineral estate, except that such term

does not include any lands subject to the provisions of section 3 of the Act of June 28, 1906

(34 Stat. 539);

(4) ‘‘Indian tribe’’ means any Indian tribe,

band, nation, pueblo, community, rancheria,

colony, or other group of Indians, including

the Metlakatla Indian Community of Annette

Island Reserve, for which any land or interest

in land is held by the United States in trust or

which is subject to Federal restriction against

alienation or which is administered by the

United States pursuant to section 1613(g) of

title 43;

(5) ‘‘lease’’ means any contract, profit-share

arrangement, joint venture, or other agreement issued or approved by the United States

under a mineral leasing law that authorizes

exploration for, extraction of, or removal of

oil or gas;

(6) ‘‘lease site’’ means any lands or submerged lands, including the surface of a severed mineral estate, on which exploration for,

or extraction or removal of, oil or gas is authorized pursuant to a lease;

(7) ‘‘lessee’’ means any person to whom the

United States issues an oil and gas lease or

any person to whom operating rights in a lease

have been assigned;

(8) ‘‘mineral leasing law’’ means any Federal

law administered by the Secretary authorizing

the disposition under lease of oil or gas;

(9) ‘‘oil or gas’’ means any oil or gas originating from, or allocated to, the Outer Continental Shelf, Federal, or Indian lands;

(10) ‘‘Outer Continental Shelf’’ has the same

meaning as provided in the Outer Continental

Shelf Lands Act (Public Law 95–372);

(11) ‘‘operator’’ means any person, including

a lessee, who has control of, or who manages

operations on, an oil and gas lease site on Federal or Indian lands or on the Outer Continental Shelf;

(12) ‘‘person’’ means any individual, firm,

corporation, association, partnership, consortium, or joint venture;

(13) ‘‘production’’ means those activities

which take place for the removal of oil or gas,

including such removal, field operations,

transfer of oil or gas off the lease site, operation monitoring, maintenance, and workover

drilling;

(14) ‘‘royalty’’ means any payment based on

the value or volume of production which is due

to the United States or an Indian tribe or an

Indian allottee on production of oil or gas

from the Outer Continental Shelf, Federal, or

Indian lands, or any minimum royalty owed to

the United States or an Indian tribe or an Indian allottee under any provision of a lease;
Page 335 TITLE 30—MINERAL LANDS AND MINING § 1702

(15) ‘‘Secretary’’ means the Secretary of the

Interior or his designee;

(16) ‘‘State’’ means the several States of the

Union, the District of Columbia, Puerto Rico,

the territories and possessions of the United

States, and the Trust Territory of the Pacific

Islands;

(17) ‘‘adjustment’’ means an amendment to a

previously filed report on an obligation, and

any additional payment or credit, if any, applicable thereto, to rectify an underpayment

or overpayment on an obligation;

(18) ‘‘administrative proceeding’’ means any

Department of the Interior agency process in

which a demand, decision or order issued by

the Secretary or a delegated State is subject

to appeal or has been appealed;

(19) ‘‘assessment’’ means any fee or charge

levied or imposed by the Secretary or a delegated State other than—

(A) the principal amount of any royalty,

minimum royalty, rental bonus, net profit

share or proceed of sale;

(B) any interest; or

(C) any civil or criminal penalty;

(20) ‘‘commence’’ means—

(A) with respect to a judicial proceeding,

the service of a complaint, petition, counterclaim, cross claim, or other pleading seeking

affirmative relief or seeking credit or

recoupment: Provided, That if the Secretary

commences a judicial proceeding against a

designee, the Secretary shall give notice of

that commencement to the lessee who designated the designee, but the Secretary is

not required to give notice to other lessees

who may be liable pursuant to section

1712(a) of this title, for the obligation that is

the subject of the judicial proceeding; or

(B) with respect to a demand, the receipt

by the Secretary or a delegated State or a

lessee or its designee (with written notice to

the lessee who designated the designee) of

the demand;

(21) ‘‘credit’’ means the application of an

overpayment (in whole or in part) against an

obligation which has become due to discharge,

cancel or reduce the obligation;

(22) ‘‘delegated State’’ means a State which,

pursuant to an agreement or agreements

under section 1735 of this title, performs authorities, duties, responsibilities, or activities

of the Secretary;

(23) ‘‘demand’’ means—

(A) an order to pay issued by the Secretary

or the applicable delegated State to a lessee

or its designee (with written notice to the

lessee who designated the designee) that has

a reasonable basis to conclude that the obligation in the amount of the demand is due

and owing; or

(B) a separate written request by a lessee

or its designee which asserts an obligation

due the lessee or its designee that provides a

reasonable basis to conclude that the obligation in the amount of the demand is due and

owing, but does not mean any royalty or

production report, or any information contained therein, required by the Secretary or

a delegated State;

(24) ‘‘designee’’ means the person designated

by a lessee pursuant to section 1712(a) of this

title, with such written designation effective

on the date such designation is received by the

Secretary and remaining in effect until the

Secretary receives notice in writing that the

designation is modified or terminated;

(25) ‘‘obligation’’ means—

(A) any duty of the Secretary or, if applicable, a delegated State—

(i) to take oil or gas royalty in kind; or

(ii) to pay, refund, offset, or credit monies including (but not limited to)—

(I) the principal amount of any royalty, minimum royalty, rental, bonus,

net profit share or proceed of sale; or

(II) any interest; and

(B) any duty of a lessee or its designee

(subject to the provisions of section 1712(a)

of this title)—

(i) to deliver oil or gas royalty in kind;

or

(ii) to pay, offset or credit monies including (but not limited to)—

(I) the principal amount of any royalty, minimum royalty, rental, bonus,

net profit share or proceed of sale;

(II) any interest;

(III) any penalty; or

(IV) any assessment,

which arises from or relates to any lease

administered by the Secretary for, or any

mineral leasing law related to, the exploration, production and development of oil

or gas on Federal lands or the Outer Continental Shelf;

(26) ‘‘order to pay’’ means a written order issued by the Secretary or the applicable delegated State to a lessee or its designee (with

notice to the lessee who designated the designee) which—

(A) asserts a specific, definite, and quantified obligation claimed to be due, and

(B) specifically identifies the obligation by

lease, production month and monetary

amount of such obligation claimed to be due

and ordered to be paid, as well as the reason

or reasons such obligation is claimed to be

due, but such term does not include any

other communication or action by or on behalf of the Secretary or a delegated State;

(27) ‘‘overpayment’’ means any payment by a

lessee or its designee in excess of an amount

legally required to be paid on an obligation

and includes the portion of any estimated payment for a production month that is in excess

of the royalties due for that month;

(28) ‘‘payment’’ means satisfaction, in whole

or in part, of an obligation;

(29) ‘‘penalty’’ means a statutorily authorized civil fine levied or imposed for a violation

of this chapter, any mineral leasing law, or a

term or provision of a lease administered by

the Secretary;

(30) ‘‘refund’’ means the return of an overpayment;

(31) ‘‘State concerned’’ means, with respect

to a lease, a State which receives a portion of

royalties or other payments under the mineral

leasing laws from such lease;
§ 1711 TITLE 30—MINERAL LANDS AND MINING Page 336

(32) ‘‘underpayment’’ means any payment or

nonpayment by a lessee or its designee that is

less than the amount legally required to be

paid on an obligation; and

(33) ‘‘United States’’ means the United

States Government and any department, agency, or instrumentality thereof, the several

States, the District of Columbia, and the territories of the United States.

(Pub. L. 97–451, §3, Jan. 12, 1983, 96 Stat. 2448;

Pub. L. 92–203, §29(f)(1), as added Pub. L. 100–241,

§15, Feb. 3, 1988, 101 Stat. 1813; Pub. L. 104–185,

§2, Aug. 13, 1996, 110 Stat. 1700; Pub. L. 104–200,

§1(1), Sept. 22, 1996, 110 Stat. 2421.)

REFERENCES IN TEXT

Section 3 of the Act of June 28, 1906 (34 Stat. 539), referred to in par. (3), is not classified to the Code.

‘‘Outer Continental Shelf’’ as provided in the Outer

Continental Shelf Lands Act (Public Law 95–372), referred to in par. (10), is defined in section 1331(a) of

Title 43, Public Lands.

AMENDMENTS

1996—Par. (7). Pub. L. 104–185, §2(1), amended par. (7)

generally. Prior to amendment, par. (7) read as follows:

‘‘‘lessee’ means any person to whom the United States,

an Indian tribe, or an Indian allottee, issues a lease, or

any person who has been assigned an obligation to

make royalty or other payments required by the

lease;’’.

Pars. (17) to (25). Pub. L. 104–185, §2(2), added pars. (17)

to (25).

Par. (25)(B). Pub. L. 104–200, substituted ‘‘provisions

of section 1712(a)’’ for ‘‘provision of section 1712(a)’’ in

introductory provisions.

Pars. (26) to (33). Pub. L. 104–185, §2(2), added pars. (26)

to (33).

1988—Pars. (3), (4). Pub. L. 92–203 inserted ‘‘or which

is administered by the United States pursuant to section 1613(g) of title 43’’ after ‘‘alienation’’.

EFFECTIVE DATE OF 1996 AMENDMENT

Amendment by Pub. L. 104–185 applicable with respect to production of oil and gas after the first day of

the month following Aug. 13, 1996, see section 11 of Pub.

L. 104–185, set out as a note under section 1701 of this

title.

EFFECTIVE DATE OF 1988 AMENDMENT

Section 29(f)(2) of Pub. L. 92–203, as added by Pub. L.

100–241, §15, Feb. 3, 1988, 101 Stat. 1813, provided that:

‘‘The amendment made by paragraph (1) [amending this

section] shall be effective as if originally included in

section 3 of Public Law 97–451 [this section].’’

APPLICABILITY OF 1996 AMENDMENT

Amendment by Pub. L. 104–185 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 a note under section 1701 of this title.

TERMINATION OF TRUST TERRITORY OF THE PACIFIC

ISLANDS

For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title

48, Territories and Insular Possessions.

SUBCHAPTER I—FEDERAL ROYALTY

MANAGEMENT AND ENFORCEMENT

§ 1711. Duties of Secretary

(a) Establishment of inspection, collection, and

accounting and auditing system

The Secretary shall establish a comprehensive

inspection, collection and fiscal and production

accounting and auditing system to provide the

capability to accurately determine oil and gas

royalties, interest, fines, penalties, fees, deposits, and other payments owed, and to collect and

account for such amounts in a timely manner.

(b) Annual inspection of lease sites; training

The Secretary shall—

(1) establish procedures to ensure that authorized and properly identified representatives of the Secretary will inspect at least

once annually each lease site producing or expected to produce significant quantities of oil

or gas in any year or which has a history of

noncompliance with applicable provisions of

law or regulations; and

(2) establish and maintain adequate programs providing for the training of all such

authorized representatives in methods and

techniques of inspection and accounting that

will be used in the implementation of this

chapter.

(c) Audit and reconciliation of lease accounts;

contracts with certified public accountants;

availability of books, accounts, records, etc.,

necessary for audit

(1) The Secretary shall audit and reconcile, to

the extent practicable, all current and past lease

accounts for leases of oil or gas and take appropriate actions to make additional collections or

refunds as warranted. The Secretary shall conduct audits and reconciliations of lease accounts

in conformity with the business practices and

recordkeeping systems which were required of

the lessee by the Secretary for the period covered by the audit. The Secretary shall give priority to auditing those lease accounts identified

by a State or Indian tribe as having significant

potential for underpayment. The Secretary may

also audit accounts and records of selected lessees and operators.

(2) The Secretary may enter into contracts or

other appropriate arrangements with independent certified public accountants to undertake

audits of accounts and records of any lessee or

operator relating to the lease of oil or gas. Selection of such independent certified public accountants shall be by competitive bidding in accordance with the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252), except that the Secretary may not enter into a

contract or other arrangement with any independent certified public accountant to audit any

lessee or operator where such lessee or operator

is a primary audit client of such certified public

accountant.

(3) All books, accounts, financial records, reports, files, and other papers of the Secretary, or

used by the Secretary, which are reasonably

necessary to facilitate the audits required under

this section shall be made available to any person or governmental entity conducting audits

under this chapter.

(Pub. L. 97–451, title I, §101, Jan. 12, 1983, 96 Stat.

2449.)

REFERENCES IN TEXT

The Federal Property and Administrative Services

Act of 1949, referred to in subsec. (c)(2), is act June 30,

1949, ch. 288, 63 Stat. 377, as amended. Provisions of the

Act relating to contracts are classified generally to