I

104TH CONGRESS

1ST SESSION H. R. 1975

To improve the management of royalties from Federal and Outer Continental

Shelf oil and gas leases, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 30, 1995

Mr. CALVERT (for himself, Mr. BREWSTER, Mr. DOOLEY, Mr. TAUZIN, and

Mr. LUCAS) introduced the following bill; which was referred to the Committee on Resources

A BILL

To improve the management of royalties from Federal and

Outer Continental Shelf oil and gas leases, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as ‘‘The

5 Federal Oil and Gas Royalty Simplification and Fairness

6 Act of 1995’’.

7 (b) TABLE OF CONTENTS.—The table of contents for

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definitions.
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Sec. 3. Limitation periods.

Sec. 4. Overpayments: offsets and refunds.

Sec. 5. Required recordkeeping.

Sec. 6. Royalty interest, penalties, and payments.

Sec. 7. Limitation on assessments.

Sec. 8. Cost-effective audit and collection requirements.

Sec. 9. Elimination of notice requirement.

Sec. 10. Royalty in kind.

Sec. 11. Time and manner of royalty payment.

Sec. 12. Repeals.

Sec. 13. Indian lands.

Sec. 14. Effective date.

1 SEC. 2. DEFINITIONS.

2 Section 3 of the Federal Oil and Gas Royalty Man3 agement Act of 1982 (30 U.S.C. 1701 et seq.) is amended

4 as follows:

5 (1) In paragraph (5), by inserting ‘‘(including

6 any unit agreement and communitization agree7 ment)’’ after ‘‘agreement’’.

8 (2) By amending paragraph (7) to read as fol9 lows:

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

11 United States issues a lease.’’.

12 (3) By striking ‘‘and’’ at the end of paragraph

13 (15), by striking the period at the end of paragraph

14 (16) and inserting ‘‘; and’’; and by adding at the

15 end the following:

16 ‘‘(17) ‘administrative proceeding’ means any

17 agency process for rulemaking, adjudication or li18 censing, as defined in and governed by chapter 5 of

19 title 5, United States Code (relating to administra20 tive procedures);
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1 ‘‘(18) ‘assessment’ means any fee or charge lev2 ied or imposed by the Secretary or the United States

3 other than—

4 ‘‘(A) the principal amount of any royalty,

5 minimum royalty, rental, bonus, net profit

6 share or proceed of sale;

7 ‘‘(B) any interest; and

8 ‘‘(C) any civil or criminal penalty;

9 ‘‘(19) ‘commence’ means—

10 ‘‘(A) with respect to a judicial proceeding,

11 the service of a complaint, petition, counter12 claim, cross-claim, or other pleading seeking af13 firmative relief or seeking offset or recoupment;

14 ‘‘(B) with respect to an administrative pro15 ceeding—

16 ‘‘(i) the receipt by a lessee of an order

17 to pay issued by the Secretary, or

18 ‘‘(ii) the receipt by the Secretary of a

19 written request or demand by a lessee, or

20 any person acting on behalf of a lessee

21 which asserts an obligation due the lessee;

22 ‘‘(20) ‘credit’ means the method by which an

23 overpayment is utilized to discharge, cancel, reduce

24 or offset an obligation in whole or in part;
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1 ‘‘(21) ‘obligation’ means a duty of the Sec2 retary, the United States, or a lessee—

3 ‘‘(A) to deliver or take oil or gas in kind;

4 or

5 ‘‘(B) to pay, refund, credit or offset mon6 ies, including (but not limited to) a duty to cal7 culate, determine, report, pay, refund, credit or

8 offset—

9 ‘‘(i) the principal amount of any roy10 alty, minimum royalty, rental, bonus, net

11 profit share or proceed of sale;

12 ‘‘(ii) any interest;

13 ‘‘(iii) any penalty; or

14 ‘‘(iv) any assessment,

15 which arises from or relates to any lease admin16 istered by the Secretary for, or any mineral

17 leasing law related to, the exploration, produc18 tion and development of oil or gas on Federal

19 lands or the Outer Continental Shelf;

20 ‘‘(22) ‘offset’ means the act of applying an

21 overpayment (in whole or in part) against an obliga22 tion which has become due to discharge, cancel or

23 reduce the obligation;

24 ‘‘(23) ‘order to pay’ means a written order is25 sued by the Secretary or the United States which—
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1 ‘‘(A) asserts a definite and quantified obli2 gation due the Secretary or the United States;

3 and

4 ‘‘(B) specifically identifies the obligation by

5 lease, production month and amount of such

6 obligation ordered to be paid, as well as the rea7 son or reasons such obligation is claimed to be

8 due,

9 but such term does not include any other commu10 nication by or on behalf of the Secretary or the

11 United States;

12 ‘‘(24) ‘overpayment’ means any payment (in13 cluding any estimated royalty payment) by a lessee

14 or by any person acting on behalf of a lessee in ex15 cess of an amount legally required to be paid on an

16 obligation;

17 ‘‘(25) ‘payment’ means satisfaction, in whole or

18 in part, of an obligation due the Secretary or the

19 United States;

20 ‘‘(26) ‘penalty’ means a statutorily authorized

21 civil fine levied or imposed by the Secretary or the

22 United States for a violation of this Act, a mineral

23 leasing law, or a term or provision of a lease admin24 istered by the Secretary;
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1 ‘‘(27) ‘refund’ means the return of an overpay2 ment by the Secretary or the United States by the

3 drawing of funds from the United States Treasury;

4 ‘‘(28) ‘underpayment’ means any payment by a

5 lessee or person acting on behalf of a lessee that is

6 less than the amount legally required to be paid on

7 an obligation; and

8 ‘‘(29) ‘United States’ means—

9 ‘‘(A) the United States Government and

10 any department, agency, or instrumentality

11 thereof, and

12 ‘‘(B) when such term is used in a geo13 graphic sense, includes the several States, the

14 District of Columbia, Puerto Rico, and the ter15 ritories and possessions of the United States.’’.

16 SEC. 3. LIMITATION PERIODS.

17 (a) IN GENERAL.—The Federal Oil and Gas Royalty

18 Management Act of 1982 (30 U.S.C. 1701 et seq.) is

19 amended by adding after section 114 the following new

20 section:

21 ‘‘SEC. 115. LIMITATION PERIODS.

22 ‘‘(a) IN GENERAL.—

23 ‘‘(1) SIX-YEAR PERIOD.—A judicial or adminis24 trative proceeding which arises from, or relates to,

25 an obligation may not be commenced unless such
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1 proceeding is commenced within 6 years from the

2 date on which such obligation becomes due.

3 ‘‘(2) LIMIT ON TOLLING OF LIMITATION PE4 RIOD.—The running of the limitation period under

5 paragraph (1) shall not be suspended or tolled by

6 any action of the United States or an officer or

7 agency thereof other than the commencement of a

8 judicial or administrative proceeding under para9 graph (1) or an agreement under paragraph (3).

10 ‘‘(3) FRAUD OR CONCEALMENT.—For the pur11 pose of computing the limitation period under para12 graph (1), there shall be excluded therefrom any pe13 riod during which there has been fraud or conceal14 ment by a lessee in an attempt to defeat or evade

15 payment of any such obligation.

16 ‘‘(4) REASONABLE PERIOD FOR PROVIDING IN17 FORMATION.—In seeking information on which to

18 base an order to pay, the Secretary shall afford the

19 lessee or person acting on behalf of the lessee a rea20 sonable period in which to provide such information

21 before the end of the period under paragraph (1).

22 ‘‘(b) FINAL AGENCY ACTION.—The Director of the

23 Minerals Management Service shall issue a final Director’s

24 decision in any administrative proceeding before the Direc25 tor within one year from the date such proceeding was
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1 commenced. The Secretary shall issue a final agency deci2 sion in any administrative proceeding within 3 years from

3 the date such proceeding was commenced. If no such deci4 sion has been issued by the Director or Secretary within

5 the prescribed time periods referred to above:

6 ‘‘(1) the Director’s or Secretary’s decision, as

7 the case may be, shall be deemed issued and granted

8 in favor of the lessee or lessees as to any

9 nonmonetary obligation and any obligation the prin10 cipal amount of which is less than $2,500; and

11 ‘‘(2) in the case of a monetary obligation the

12 principal amount of which is $2,500 or more, the

13 Director’s or Secretary’s decision, as the case may

14 be, shall be deemed issued and final, and the lessee

15 shall have a right of de novo judicial review and ap16 peal of such final agency action.

17 ‘‘(c) TOLLING BY AGREEMENT.—Prior to the expira18 tion of any period of limitation under subsections (a) or

19 (c), the Secretary and a lessee may consent in writing to

20 extend such period as it relates to any obligation under

21 the mineral leasing laws. The period so agreed upon may

22 be extended by subsequent agreement or agreements in

23 writing made before the expiration of the period previously

24 agreed upon.
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1 ‘‘(d) LIMITATION ON CERTAIN ACTIONS BY THE

2 UNITED STATES.—When an action on or enforcement of

3 an obligation under the mineral leasing laws is barred

4 under subsection (a) or (b), the United States or an officer

5 or agency thereof may not take any other or further action

6 regarding that obligation including (but not limited to) the

7 issuance of any order, request, demand or other commu8 nication seeking any document, accounting, determination,

9 calculation, recalculation, principal, interest, assessment,

10 penalty or the initiation, pursuit or completion of an audit.

11 ‘‘(e) OBLIGATION BECOMES DUE.—

12 ‘‘(1) IN GENERAL.—For purposes of subsection

13 (a), an obligation becomes due when the right to en14 force the obligation is fixed.

15 ‘‘(2) SPECIAL RULE REGARDING ROYALTY OBLI16 GATION.—The right to enforce any royalty obligation

17 is fixed for the purposes of this Act on the last day

18 of the calendar month following the month in which

19 oil or gas is produced, except that with respect to

20 any such royalty obligation which is altered by a ret21 roactive redetermination of working interest owner22 ship pursuant to a unit or communitization agree23 ment, the right to enforce such royalty obligation in

24 such amended unit or communitization agreement is

25 fixed for the purposes of this Act on the last day of
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1 the calendar month in which such redetermination is

2 made. The Secretary shall issue any such redeter3 mination within 180 days of receipt of a request for

4 redetermination.

5 ‘‘(f) JUDICIAL REVIEW OF ADMINISTRATIVE PRO6 CEEDINGS.—In the event an administrative proceeding

7 subject to subsection (a) is timely commenced and there8 after the limitation period in subsection (a) lapses during

9 the pendency of the administrative proceeding, no party

10 to such administrative proceeding shall be barred by this

11 section from commencing a judicial proceeding challenging

12 the final agency action in such administrative proceeding

13 so long as such judicial proceeding is commenced within

14 90 days from receipt of notice of the final agency action.

15 ‘‘(g) IMPLEMENTATION OF FINAL DECISION.—In the

16 event a judicial or administrative proceeding subject to

17 subsection (a) is timely commenced and thereafter the lim18 itation period in subsection (a) lapses during the pendency

19 of such proceeding, any party to such proceeding shall not

20 be barred from taking such action as is required or nec21 essary to implement the final unappealable judicial or ad22 ministrative decision, including any action required or nec23 essary to implement such decision by the recovery or

24 recoupment of an underpayment or overpayment by means

25 of refund, credit or offset.
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1 ‘‘(h) STAY OF PAYMENT OBLIGATION PENDING RE2 VIEW.—Any party ordered by the Secretary or the United

3 States to pay any obligation (including any interest, as4 sessment or penalty) shall be entitled to a stay of such

5 payment without bond or other surety pending administra6 tive or judicial review unless the Secretary demonstrates

7 that such party is or may become financially insolvent or

8 otherwise unable to pay the obligation, in which case the

9 Secretary may require a bond or other surety satisfactory

10 to cover the obligation.

11 ‘‘(i) INAPPLICABILITY OF THE OTHER STATUTES OF

12 LIMITATION.—The limitations set forth in sections 2401,

13 2415, 2416, and 2462 of title 28, United States Code,

14 section 42 of the Mineral Leasing Act (30 U.S.C. 226–

15 2), and section 3716 of title 31, United States Code, shall

16 not apply to any obligation to which this Act applies.’’.

17 (b) CLERICAL AMENDMENT.—The table of contents

18 in section 1 of such Act (30 U.S.C. 1701) is amended by

19 adding after the item relating to section 114 the following

20 new item:

‘‘Sec. 115. Limitation period.’’.

21 SEC. 4. OVERPAYMENTS: OFFSETS AND REFUNDS.

22 (a) IN GENERAL.—The Federal Oil and Gas Royalty

23 Management Act of 1982 (30 U.S.C. 1701 et seq.) is

24 amended by adding after section 111 the following new

25 section:
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1 ‘‘SEC. 111A. OVERPAYMENTS: OFFSETS AND REFUNDS.

2 ‘‘(a) OFFSETS.—

3 ‘‘(1) MANNER.—For each reporting month, a

4 lessee or person acting on behalf of a lessee shall

5 offset all underpayments and overpayments made for

6 that reporting month for all leases within the same

7 royalty distribution category established under per8 manent indefinite appropriations.

9 ‘‘(2) OFFSET AGAINST OBLIGATIONS.—The net

10 overpayment resulting within each category from the

11 offsetting described in paragraph (1) may be offset

12 and credited against any obligation for current or

13 subsequent reporting months which have become due

14 on leases within the same royalty distribution cat15 egory.

16 ‘‘(3) PRIOR APPROVAL NOT REQUIRED.—The

17 offsetting or crediting of any overpayment, in whole

18 or part, shall not require the prior request to or ap19 proval by the Secretary.

20 ‘‘(4) EXCLUSION OF CERTAIN UNDER- AND

21 OVERPAYMENTS.—Any underpayment or overpay22 ment upon which an order has been issued which is

23 subject to appeal shall be excluded from the offset24 ting provisions of this section.

25 ‘‘(b) REFUNDS.—
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1 ‘‘(1) IN GENERAL.—A refund request may be

2 made to the Secretary not before one year after the

3 subject reporting month. After such one-year period

4 and when a lessee or a person acting on behalf of

5 a lessee has made a net overpayment to the Sec6 retary or the United States and has offset or cred7 ited in accordance with subsection (a), the Secretary

8 shall, upon request, refund to such lessee or person

9 the net overpayment, with accumulated interest

10 thereon determined in accordance with section 111.

11 If for any reason, a lessee or person acting on behalf

12 of a lessee is no longer accruing obligations on any

13 lease within a category, then such lessee or person

14 may immediately file a request for a refund of any

15 net overpayment and accumulated interest.

16 ‘‘(2) REQUEST.—The request for refund is suf17 ficient if it—

18 ‘‘(A) is made in writing to the Secretary;

19 ‘‘(B) identifies the person entitled to such

20 refund;

21 ‘‘(C) provides the Secretary information

22 that reasonably enables the Secretary to iden23 tify the overpayment for which such refund is

24 sought.
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1 ‘‘(3) TREATMENT AS WRITTEN REQUEST OR

2 DEMAND.—Service of a request for refund shall be

3 a ‘written request or demand’ sufficient to com4 mence an administrative proceeding.

5 ‘‘(4) PAYMENT BY SECRETARY OF THE TREAS6 URY.—The Secretary shall certify the amount of the

7 refund to be paid under paragraph (1) to the Sec8 retary of the Treasury who is authorized and di9 rected to make such refund.

10 ‘‘(5) PAYMENT PERIOD.—A refund under this

11 subsection shall be paid within 90 days of the date

12 on which the request for refund was received by the

13 Secretary.

14 ‘‘(c) LIMITATION ON OFFSETS AND REFUNDS.—

15 ‘‘(1) LIMITATION PERIOD FOR OFFSETS AND

16 REFUNDS.—Except as provided by paragraph (2), a

17 lessee or person acting on behalf of a lessee may not

18 offset or receive a refund of any overpayment which

19 arises from or relates to an obligation unless such

20 offset or refund request is initiated within six years

21 from the date on which the obligation which is the

22 subject of the overpayment became due.

23 ‘‘(2) EXCEPTION.—(A) For any overpayment

24 the recoupment of which (in whole or in part) by off25 set or refund, or both, may occur beyond the six-
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1 year limitation period provided in paragraph (1),

2 where the issue of whether an overpayment occurred

3 has not been finally determined, or where

4 recoupment of the overpayment has not been accom5 plished within said six-year period, the lessee or per6 son acting on behalf of a lessee may preserve its

7 right to recover or recoup the overpayment beyond

8 the limitation period by filing a written notice of the

9 overpayment with the Secretary within the six-year

10 period.

11 ‘‘(B) Notice under subparagraph (A) shall be

12 sufficient if it—

13 ‘‘(i) identifies the person who made such

14 overpayment;

15 ‘‘(ii) asserts the obligation due the lessee

16 or person; and

17 ‘‘(iii) identifies the obligation by lease, pro18 duction month and amount, as well as the rea19 son or reasons such overpayment is due.

20 ‘‘(d) PROHIBITION AGAINST REDUCTION OF RE21 FUNDS OR OFFSETS.—In no event shall the Secretary di22 rectly or indirectly claim any amount or amounts against,

23 or reduce any offset or refund (or interest accrued there24 on) by, the amount of any obligation the enforcement of

25 which is barred by section 115.’’.
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1 (b) CLERICAL AMENDMENT.—The table of contents

2 in section 1 of such Act (30 U.S.C. 1701) is amended by

3 adding after the item relating to section 111 the following

4 new item:

‘‘Sec. 111A. Overpayments: offsets and refunds.’’.

5 SEC. 5. REQUIRED RECORDKEEPING.

6 Section 103 of the Federal Oil and Gas Royalty Man7 agement Act of 1982 (30 U.S.C. 1713(b)) is amended by

8 adding at the end the following:

9 ‘‘(c) Records required by the Secretary for the pur10 pose of determining compliance with an applicable mineral

11 leasing law, lease provision, regulation or order with re12 spect to oil and gas leases from Federal lands or the Outer

13 Continental Shelf shall be maintained for six years after

14 an obligation becomes due unless the Secretary com15 mences a judicial or administrative proceeding with re16 spect to an obligation within the time period prescribed

17 by section 115 in which such records may be relevant. In

18 that event, the Secretary may direct the record holder to

19 maintain such records until the final nonappealable deci20 sion in such judicial or administrative proceeding is ren21 dered. Under no circumstance shall a record holder be re22 quired to maintain or produce any record covering a time

23 period for which a substantive claim with respect to an

24 obligation to which the record relates would be barred by

25 the applicable statute of limitation in section 115.’’.
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1 SEC. 6. ROYALTY INTEREST, PENALTIES, AND PAYMENTS.

2 (a) INTEREST CHARGED ON LATE PAYMENTS AND

3 UNDERPAYMENTS.—Section 111(a) of the Federal Oil

4 and Gas Royalty Management Act of 1982 (30 U.S.C.

5 1721(a)) is amended to read as follows:

6 ‘‘(a) In the case of oil and gas leases where royalty

7 payments are not received by the Secretary on the date

8 that such payments are due, or are less than the amount

9 due, the Secretary shall charge interest on a net late pay10 ment or underpayment at the rate published by the De11 partment of the Treasury as the Treasury Current Value

12 Of Funds Rate. The Secretary may waive or forego such

13 interest in whole or in part. In the case of a net

14 underpayment for a given reporting month, interest shall

15 be computed and charged only on the amount of the net

16 underpayment and not on the total amount due from the

17 date of the net underpayment. The net underpayment is

18 determined by offsetting in the same manner as required

19 under paragraphs (1) and (2) of section 111A(a). Interest

20 may only be billed by the Secretary for any net

21 underpayment not less than one year following the subject

22 reporting month.’’.

23 (b) CHARGE ON LATE PAYMENT MADE BY THE SEC24 RETARY.—Section 111(b) of the Federal Oil and Gas Roy25 alty Management Act of 1982 (30 U.S.C. 1721(b)) is

26 amended to read as follows:
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1 ‘‘(b) Any payment made by the Secretary to a State

2 under section 35 of the Mineral Leasing Act, and any

3 other payment made by the Secretary which is not paid

4 on the date required under such section 35, shall include

5 an interest charge computed at the rate published by the

6 Department of the Treasury as the Treasury Current

7 Value of Funds Rate. The Secretary shall not be required

8 to pay interest under this paragraph until collected or

9 when such interest has been waived or is otherwise not

10 collected. With respect to any obligation, the Secretary

11 may waive or forgo interest otherwise required under sec12 tion 3717 of title 31, United States Code.’’.

13 (c) PERIOD.—Section 111(f) of the Federal Oil and

14 Gas Royalty Management Act of 1982 (30 U.S.C.

15 1721(f)) is amended to read as follows:

16 ‘‘(f) Unless waived or not collected pursuant to sub17 sections (a)(2) and (b)(2), interest shall be charged under

18 this section only for the number of days a payment is

19 late.’’.

20 (d) LESSEE INTEREST.—Section 111 of the Federal

21 Oil and Gas Royalty Management Act of 1982 (30 U.S.C.

22 1721) is amended by adding the following after subsection

23 (g):

24 ‘‘(h) If a net overpayment, as determined by offset25 ting as required under section 111A(1) and (2) for a re-
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1 porting month, interest shall be allowed and paid or cred2 ited on such net overpayment, with such interest to accrue

3 from the date such net overpayment was made, at the rate

4 published by the Department of the Treasury as the

5 Treasury Current Value of Funds Rate.’’.

6 (e) PAYMENT EXCEPTION FOR MINIMAL PRODUC7 TION.—Section 111 of the Federal Oil and Gas Royalty

8 Management Act of 1982 (30 U.S.C. 1721) is amended

9 by adding the following after subsection (h):

10 ‘‘(i) For any well on a lease which produces on aver11 age less than 250 thousand cubic feet of gas per day or

12 25 barrels of oil per day, the royalty on the actual or allo13 cated lease production may be paid—

14 ‘‘(A) for a 12-month period, only based on ac15 tual production removed or sold from the lease; and

16 ‘‘(B) 6 months following such period, for addi17 tional production allocated to the lease during the

18 period.

19 No interest shall be allowed or accrued on any

20 underpayment resulting from this payment methodology

21 until the month following the applicable 12-month pe22 riod.’’.
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1 SEC. 7. LIMITATION ON ASSESSMENTS.

2 Section 111 of the Federal Oil and Gas Royalty Man3 agement Act of 1982 (30 U.S.C. 1721) is amended by

4 adding the following after subsection (i):

5 ‘‘(j) The Secretary may levy or impose an assessment

6 upon any person not to exceed $250 for any reporting

7 month for the inaccurate reporting of information required

8 under subsection (k). No assessment may be levied or im9 posed upon any person for any underpayment, late pay10 ment, or estimated payment or for any erroneous or in11 complete royalty or production related report for informa12 tion not required by subsection (k) absent a showing of

13 gross negligence or willful misconduct.’’.

14 SEC. 8. COST-EFFECTIVE AUDIT AND COLLECTION RE15 QUIREMENTS.

16 Section 101 of the Federal Oil and Gas Royalty Man17 agement Act of 1982 (30 U.S.C. 1701 et seq.) is amended

18 by adding the following after subsection (c):

19 ‘‘(d)(1) If the Secretary determines that the cost of

20 accounting for and collecting of any obligation due for any

21 oil or gas production exceeds or is likely to exceed the

22 amount of the obligation to be collected, the Secretary

23 shall waive such obligation.

24 ‘‘(2) The Secretary shall develop a lease level report25 ing and audit strategy which eliminates multiple or redun26 dant reporting of information.
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1 ‘‘(3) In carrying out this section, for onshore produc2 tion from any well which is less than 250 thousand cubic

3 feet of gas per day or 25 barrels of oil per day, or for

4 offshore production for any well less than 1,500,000 cubic

5 feet of gas per day or 150 barrels of oil per day, the Sec6 retary shall only require the lessee to submit the informa7 tion described in section 111(k). For such onshore and

8 offshore production, the Secretary shall not conduct roy9 alty reporting compliance and enforcement activities, levy

10 or impose assessments described in such section 111(k)

11 and shall not bill for comparisons between royalty report12 ing and production information. The Secretary may only

13 conduct audits on such leases if the Secretary has reason

14 to believe that the lessee has not complied with payment

15 obligations for at least three months during a twelve

16 month period. The Secretary shall not perform such audit

17 if the Secretary determines that the cost of conducting the

18 audit exceeds or is likely to exceed the additional royalties

19 expected to be received as a result of such audit.’’.

20 SEC. 9. ELIMINATION OF NOTICE REQUIREMENT.

21 Section 23(a)(2) of the Outer Continental Shelf

22 Lands Act (43 U.S.C. 1349(a)(2)) is amended to read as

23 follows:

24 ‘‘(2) Except as provided in paragraph (3) of this sub25 section, no action may be commenced under subsection
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1 (a)(1) of this section if the Attorney General has com2 menced and is diligently prosecuting a civil action in a

3 court of the United States or a State with respect to such

4 matter, but in any such action in a court of the United

5 States any person having a legal interest which is or may

6 be adversely affected may intervene as a matter of right.’’.

7 SEC. 10. ROYALTY IN KIND.

8 (a) IN GENERAL.—Section 27(a)(1) of the Outer

9 Continental Shelf Lands Act (43 U.S.C. 1353(a)(1)) and

10 the first undesignated paragraph of section 36 of the Min11 eral Leasing Act (30 U.S.C. 192) are each amended by

12 adding at the end the following: ‘‘Any royalty or net profit

13 share of oil or gas accruing to the United States under

14 any lease issued or maintained by the Secretary for the

15 exploration, production and development of oil and gas on

16 Federal lands or the Outer Continental Shelf, at the Sec17 retary’s option, may be taken in kind at or near the lease

18 upon 90 days prior written notice to the lessee. Once the

19 United States has commenced taking royalty in kind, it

20 shall continue to do so until 90 days after the Secretary

21 has provided written notice to the lessee that it will resume

22 taking royalty in value. Delivery of royalty in kind by the

23 lessee shall satisfy in full the lessee’s royalty obligation.

24 Once the oil or gas is delivered in kind, the lessee shall

25 not be subject to the reporting and recordkeeping require-
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1 ments, including requirements under section 103, except

2 for those reports and records necessary to verify the vol3 ume of oil or gas produced and delivered prior to or at

4 the point of delivery.’’.

5 (b) SALE.—Section 27(c)(1) of the Outer Continental

6 Shelf Lands Act (43 U.S.C. 1353(c)(1)) is amended by

7 striking ‘‘competitive bidding for not more than its regu8 lated price, or if no regulated price applies, not less than

9 its fair market value’’ and inserting ‘‘competitive bidding

10 or private sale’’.

11 SEC. 11. TIME, MANNER, AND INFORMATION REQUIRE12 MENTS FOR ROYALTY PAYMENT AND RE13 PORTING.

14 Section 111 of the Federal Oil and Gas Royalty Man15 agement Act of 1982 (30 U.S.C. 1721) is amended by

16 adding the following after subsection (j):

17 ‘‘(k)(1) Any royalty payment on an obligation due the

18 United States for oil or gas produced pursuant to an oil

19 and gas lease administered by the Secretary shall be pay20 able at the end of the month following the month in which

21 oil or gas is removed or sold from such lease.

22 ‘‘(2) Royalty reporting with respect to any obligation

23 shall be by lease and shall include only the following infor24 mation:

25 ‘‘(A) identification of the lease;
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1 ‘‘(B) product type;

2 ‘‘(C) volume (quantity) of such oil or gas pro3 duced;

4 ‘‘(D) quality of such oil or gas produced;

5 ‘‘(E) method of valuation and value, including

6 deductions; and

7 ‘‘(F) royalty due the United States.

8 ‘‘(3) Other than the reporting required under para9 graph (2), the Secretary shall not require additional re10 ports or information for production or royalty accounting,

11 including (but not limited to) information or reports on

12 allowances, payor information, selling arrangements, and

13 revenue source.

14 ‘‘(4) No assessment may be imposed on retroactive

15 adjustment with respect to royalty information made on

16 a net basis for reports described in paragraph (2).

17 ‘‘(5) The Secretary shall establish reporting thresh18 olds for de minimis production, which is defined as less

19 than 100 thousand cubic feet of gas per day or 10 barrels

20 of oil per day per lease. For such de minimis production,

21 the lessee shall report retroactive adjustments with the

22 current month royalty payment, and the Secretary shall

23 not bill for, or collect, comparisons to production, assess24 ments, or interest.
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1 ‘‘(6) If the deadline for tendering a royalty payment

2 imposed by paragraph (1) cannot be met for one or more

3 leases, an estimated royalty payment in the approximate

4 amount of royalties that would otherwise be due may be

5 made by a lessee or person acting on behalf of a lessee

6 for such leases to avoid late payment interest charges.

7 When such estimated royalty payment is established, ac8 tual royalties become due at the end of the second month

9 following the month the production was removed or sold

10 for as long as the estimated balance exists. Such estimated

11 royalty payment may be carried forward and not reduced

12 by actual royalties paid. Any estimated balance may be

13 adjusted, recouped, or reinstated, at any time. The re14 quirements of paragraph (2) shall not apply to any esti15 mated royalty payment.’’.

16 SEC. 12. REPEALS.

17 (a) FOGRMA.—Section 307 of the Federal Oil and

18 Gas Royalty Management Act of 1982 (30 U.S.C. 1755),

19 is repealed. Section 1 of such Act (relating to the table

20 of contents) is amended by striking out the item relating

21 to section 307.

22 (b) OCSLA.—Effective on the date of the enactment

23 of this Act, section 10 of the Outer Continental Shelf

24 Lands Act (43 U.S.C. 1339) is repealed.
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1 SEC. 13. INDIAN LANDS.

2 The amendments made by this Act shall not apply

3 with respect to Indian lands, and the provisions of the

4 Federal Oil and Gas Royalty Management Act of 1982

5 as in effect on the day before the date of enactment of

6 this Act shall apply after such date only with respect to

7 Indian lands.

8 SEC. 14. EFFECTIVE DATE.

9 This Act, and the amendments made by this Act,

10 shall take effect on the date of the enactment of this Act

11 with respect to any obligation which becomes due on or

12 after such date of enactment.

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