and evolutionary functions, patterns, and proc-
esses; and 
(B) a physical, chemical, geological, and 
microbial environment that is necessary to 
achieve such diversity. 
(12) MINERAL.—The term ‘‘mineral’’ has the 
same meaning that the term ‘‘minerals’’ has in sec-
tion 2(q) of the Outer Continental Shelf Lands Act 
(43 U.S.C. 1331(q)). 
(13) NONRENEWABLE
ENERGY
RESOURCE.— 
The term ‘‘nonrenewable energy resource’’ means oil 
and natural gas. 
(14) OUTER CONTINENTAL SHELF.—The term 
‘‘Outer Continental Shelf’’ has the meaning that the 
term ‘‘outer Continental Shelf’’ has in the Outer 
Continental Shelf Lands Act (43 U.S.C. 1331 et 
seq.). 
(15) PUBLIC LAND STATE.—The term ‘‘public 
land State’’ means— 
(A) each of the eleven contiguous Western 
States (as that term is defined in section 103 
of the Federal Land Policy and Management 
Act of 1976 (43 U.S.C. 1702)); and 
(B) Alaska. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(16) REGIONAL
OCEAN
PARTNERSHIP.—The 
term ‘‘Regional Ocean Partnership’’ means vol-
untary, collaborative management initiatives devel-
oped and entered into by the Governors of two or 
more coastal States or created by an interstate com-
pact to implement policies and activities identified 
under special area management plans or other 
agreements developed and approved by the Gov-
ernors through authority granted to them under the 
Coastal Zone Management Act (16 U.S.C. 1451 et 
seq.). 
(17) RENEWABLE
ENERGY
RESOURCE.—The 
term ‘‘renewable energy resource’’ means each of the 
following: 
(A) Wind energy. 
(B) Solar energy. 
(C) Geothermal energy. 
(D) Biomass or landfill gas. 
(E) A hydropower resource that is a quali-
fied energy resource (as that term is defined in 
section 45(c)(1) of the Internal Revenue of 
1986, as amended by section 1301(c) of the 
Energy Policy Act of 2005 (119 Stat. 987)). 
(F) Marine and hydrokinetic renewable en-
ergy, as that term is defined in section 632 of 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
the Energy Independence and Security Act of 
2007 (42 U.S.C. 17211). 
(18) SECRETARIES.—The term ‘‘Secretaries’’ 
means the Secretary of the Interior and the Sec-
retary of Commerce. 
(19) 
SECRETARY.—The 
term 
‘‘Secretary’’ 
means the Secretary of the Interior, except as other-
wise provided in this Act. 
(20) SURFACE USE PLAN OF OPERATIONS.— 
The term ‘‘surface use plan of operations’’ means a 
plan for surface use, disturbance, and reclamation of 
Federal lands for energy development that is sub-
mitted by a lessee and approved by the relevant land 
management agency. 
(21) TERMS DEFINED IN OTHER LAW.—Each 
of the terms ‘‘Federal land’’, ‘‘lease’’, ‘‘lease site’’, 
and ‘‘mineral leasing law’’ has the meaning that 
term has under the Federal Oil and Gas Royalty 
Management Act of 1982 (30 U.S.C. 1701 et seq.). 
(22) TRIBE.—The term ‘‘tribe’’ has the same 
meaning as that term has in section 4 of the Indian 
Self-Determination and Education Assistance Act 
(25 U.S.C. 450b(e)). 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
TITLE 
I—CONSOLIDATION 
OF 
DEPARTMENT OF THE INTE-
RIOR ENERGY AND MINERALS 
LEASING PROGRAMS 
SEC. 101. ESTABLISHMENT OF THE OFFICE OF FEDERAL 
ENERGY AND MINERALS LEASING. 
(a) ESTABLISHMENT.—There is established in the 
Department of the Interior the Office of Federal Energy 
and Minerals Leasing, which shall be under the direction 
and control of the Director. 
(b) FUNCTIONS.— 
(1) TRANSFERRED FUNCTIONS.—Within 1 year 
after the date of enactment of this Act, the Sec-
retary of the Interior shall transfer to the Director 
of the Leasing Office— 
(A) the functions of the Minerals Manage-
ment Service as it existed on June 1, 2009, ex-
cept for the auditing and compliance manage-
ment section; 
(B) the functions of the Oil and Gas Man-
agement program of the Bureau of Land Man-
agement as in existence as of June 1, 2009, ex-
cept as provided by this Act; and 
(C) any other functions assigned by the 
Secretary to those programs after June 1, 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
2009, and before the date of the enactment of 
this Act. 
(2) OTHER
FUNCTIONS.—In addition to the 
functions transferred under paragraph (1), the func-
tions of the Office shall include the following: 
(A) Management of the leasing and devel-
opment otherwise authorized by law of all Fed-
eral waters on the Outer Continental Shelf for 
purposes of mineral, nonrenewable, and renew-
able energy resource exploration, siting, produc-
tion, and development in a manner protective of 
the marine, coastal, and human environment. 
(B) Management of the following leasing 
activities associated with development of renew-
able energy resources and oil and natural gas 
energy resources located on lands managed by 
the Bureau of Land Management and the For-
est Service in a manner protective of natural 
ecosystems and the human environment: 
(i) Establishment of fair market value 
for onshore lease sales. 
(ii) Conduct of lease sales. 
(iii) Issuance and oversight of onshore 
leases. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(iv) Issuance of permits to drill on 
lands that are within areas that have been 
approved for energy development by the 
relevant land management agency under a 
surface use plan of operations. 
(v) Compliance activities, including 
timely payments of rentals, royalties and 
other fees, production verification, inspec-
tion and enforcement. 
(C) Administration of a program to ensure 
the timely and accurate collection, distribution, 
and accounting for revenues owed by holders of 
mineral, renewable, and nonrenewable energy 
leases on Federal lands and offshore and Indian 
lands. 
(c) TRIBAL LANDS.—Except as provided in sub-
section (b)(2)(C), nothing in this title shall apply with re-
spect to Indian lands. 
(d) ADMINISTRATION.—The Office shall administer 
its functions by such means as are reasonably necessary 
to carry out the purposes of this Act, the Outer Conti-
nental Shelf Lands Act (43 U.S.C. 1301 et seq.), the Min-
eral Leasing Act (30 U.S.C. 181 et seq.), the Mineral 
Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), 
the Federal Oil and Gas Royalty Management Act of 1982 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(30 U.S.C. 1701 et seq.), the Energy Policy Act of 2005 
(Public Law 109–58), the Federal Oil and Gas Royalty 
Simplification and Fairness Act of 1996 (Public Law 104– 
185), the Forest and Rangeland Renewable Resources 
Planning Act of 1974 (16 U.S.C. 1600 et seq.), the Fed-
eral Land Policy and Management Act of 1976 (43 U.S.C. 
1701 et seq.), and all other applicable Federal laws. 
(e) LAND USE PLANNING.—Nothing in this title af-
fects the land use planning authorities of the Bureau of 
Land Management under the Federal Land Policy and 
Management Act of 1976 or of the Forest Service under 
the National Forest Management Act of 1976 (Public Law 
94–588). 
(f) RESPONSIBILITIES
OF
LAND
MANAGEMENT 
AGENCIES.—In addition to the land use planning respon-
sibilities authorized under the Federal Land Policy Man-
agement Act of 1976, the National Forest Management 
Act of 1976, and the Forest and Rangeland Renewable 
Resources Planning Act of 1974, the Director of the Bu-
reau of Land Management and the Chief of the Forest 
Service shall be responsible for the following activities re-
lated to energy leasing, exploration, and development on 
land under his or her authority: 
(1) Establishment of best management prac-
tices for environmentally sound energy production. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(2) Review and approval of general land use 
plans that identify areas in which energy develop-
ment would not conflict with other land uses. 
(3) Determination and enforcement of condi-
tions for surface occupancy. 
(4) Authorization of any modification, waiver, 
or exception to a stipulation or other condition to be 
included in a lease issued by the Leasing Office. 
(5) Establishment and enforcement of reclama-
tion requirements. 
(6) Establishment and enforcement of financial 
assurances that shall be sufficient to assure the com-
pletion of reclamation and restoration satisfying the 
requirements of appropriate law if the work were to 
be performed by the Secretary concerned in the 
event of forfeiture, including the construction and 
maintenance costs for any treatment facilities nec-
essary to meet Federal and State environmental re-
quirements. The calculation of such amount shall 
take into account the maximum level of financial ex-
posure that may arise during the leasing activity and 
administrative costs associated with a government 
agency reclaiming the site. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(7) Inspection of areas of operation to ensure 
that operations are in compliance with approved sur-
face use land plans. 
(8) Issuance of notices of noncompliance lease 
cancellation for noncompliance with terms of permits 
and plans. 
(9) Such other activities that either of the Sec-
retaries determines are necessary to ensure that en-
ergy development on Bureau of Land Management 
and Forest Service lands is accomplished in a man-
ner protective of natural ecosystems and the human 
environment. 
(g) INSPECTION AUTHORITY.—The responsibilities 
delineated in subsection (f) do not limit the authority of 
the Director of the Leasing Office to issue notices of non- 
compliance, assess civil penalties, or provide for lease can-
cellation in the event that an employee of the Leasing Of-
fice identifies violations of a surface use plan of operations 
while conducting production inspections or other inspec-
tions under the auspices of the Leasing Office. 
(h) AUDITS.—In order to ensure that the fiduciary 
duties of the United States on behalf of the American peo-
ple, as they relate to development of Federal energy and 
mineral resources, are fully realized, no later than one 
year after the date of enactment, the Secretary shall 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
transfer to the Inspector General of the Department of 
the Interior the functions of the Audit and Compliance 
Management Section of the Minerals Management Serv-
ice. 
SEC. 102. OFFICERS AND EMPLOYEES. 
(a) DIRECTOR.— 
(1) APPOINTMENT.—The Director shall be ap-
pointed by the President, by and with the advice and 
consent of the Senate, on the basis of— 
(A) professional competence; and 
(B) capacity to— 
(i) administer the provisions of this 
Act; and 
(ii) ensure that the fiduciary duties of 
the United States Government on behalf of 
the American people, as they relate to de-
velopment of energy resources, are duly 
met. 
(2) COMPENSATION.—The Director shall be 
compensated at the rate provided for Level V of the 
Executive Schedule under section 5315 of title 5, 
United States Code. 
(3) CONFORMING AMENDMENT.—Section 5315 
of title 5, United States Code, is amended by adding 
at the end the following new item: 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
‘‘Director, Office of Federal Energy and Min-
erals Leasing.’’. 
(b) OTHER OFFICERS AND EMPLOYEES.— 
(1) IN GENERAL.—There shall also be in the 
Leasing Office such subordinate officers and employ-
ees as may be appropriated for by Congress. 
(2) TRANSFERS.—Within one year after the 
date of enactment of this Act, the Secretary shall 
permanently transfer from the Bureau of Land 
Management and the Minerals Management Service 
and or other bureaus of the Department of the Inte-
rior to the Leasing Office such personnel as nec-
essary to administer the programs authorized to be 
carried out or managed by the Leasing Office under 
this Act. 
(c) REGULATIONS.—Not later than 2 years after the 
date of enactment of this Act, the Secretary shall issue 
regulations that— 
(1) require that all Leasing Office employees 
that conduct audits or compliance reviews for the 
Leasing Office shall meet professional auditor quali-
fications that are consistent with the latest revision 
of the Government Auditing Standards published by 
the Government Accountability Office; and 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(2) ensure that all such audits conducted by the 
Department of the Interior are performed in accord-
ance with such standards. 
SEC. 103. ETHICS. 
The Secretary shall certify annually that all Leasing 
Office employees having regular, direct contact with les-
sees and operators as a function of their official duties 
are in full compliance with all Federal employee ethics 
laws and regulations, under the Ethics in Government Act 
of 1978 (5 U.S.C. App.) and part 2635 of title 5, Code 
of Federal Regulations. 
TITLE II—OIL AND GAS ROYALTY 
REFORM 
SEC. 201. AMENDMENTS TO DEFINITIONS. 
Section 3 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1702) is amended— 
(1) in paragraph (8), by striking the semicolon 
and inserting ‘‘including but not limited to the Act 
of October 20, 1914 (38 Stat. 741); the Act of Feb-
ruary 25, 1920 (41 Stat. 437); the Act of April 17, 
1926 (44 Stat. 301); the Act of February 7, 1927 
(44 Stat. 1057); and all Acts heretofore or hereafter 
enacted that are amendatory of or supplementary to 
any of the foregoing Acts;’’ 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(2) in paragraph (20)(A), by striking ‘‘: Pro-
vided, That’’ and all that follows through ‘‘subject of 
the judicial proceeding’’; 
(3) in paragraph (20)(B), by striking ‘‘(with 
written notice to the lessee who designated the des-
ignee)’’; 
(4) in paragraph (23)(A), by striking ‘‘(with 
written notice to the lessee who designated the des-
ignee)’’; 
(5) by striking paragraph (24) and inserting 
the following: 
‘‘(24) ‘designee’ means a person who pays, off-
sets, or credits monies, makes adjustments, requests 
and receives refunds, or submits reports with respect 
to payments a lessee must make pursuant to section 
102(a);’’; 
(6) in paragraph (25)(B)— 
(A) by striking ‘‘(subject to the provisions 
of section 102(a) of this Act)’’; and 
(B) in clause (ii) by striking the matter 
after subclause (IV) and inserting the following: 
‘‘that arises from or relates to any lease, 
easement, right-of-way, permit, or other 
agreement regardless of form administered 
by the Secretary for, or any mineral leas-
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
ing law related to, the exploration, produc-
tion, and development of oil and gas or 
other energy resource on Federal lands or 
the Outer Continental Shelf;’’; 
(7) in paragraph (29), by inserting ‘‘or permit’’ 
after ‘‘lease’’; and 
(8) by striking ‘‘and’’ after the semicolon at the 
end of paragraph (32), by striking the period at the 
end of paragraph (33) and inserting a semicolon, 
and by adding at the end the following new para-
graphs: 
‘‘(34) ‘compliance review’ means a full-scope or 
a limited-scope examination of a lessee’s lease ac-
counts to compare one or all elements of the royalty 
equation (volume, value, royalty rate, and allow-
ances) against anticipated elements of the royalty 
equation to test for variances; and 
‘‘(35) ‘marketing affiliate’ means an affiliate of 
a lessee whose function is to acquire the lessee’s pro-
duction and to market that production.’’. 
SEC. 202. COMPLIANCE REVIEWS. 
Section 101 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1711) is amended by 
adding at the end the following new subsection: 
VerDate Nov 24 2008 
05:05 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(d) The Secretary may, as an adjunct to audits of 
accounts for leases, utilize compliance reviews of accounts. 
Such reviews shall not constitute nor substitute for audits 
of lease accounts. Any disparity uncovered in such a com-
pliance review shall be immediately referred to a program 
auditor. The Secretary shall, before completion of a com-
pliance review, provide notice of the review to designees 
whose obligations are the subject of the review.’’. 
SEC. 203. CLARIFICATION OF LIABILITY FOR ROYALTY PAY-
MENTS. 
Section 102(a) of the Federal Oil and Gas Royalty 
Management Act of 1982 (30 U.S.C. 1712(a)) is amended 
to read as follows: 
‘‘(a) In order to increase receipts and achieve effec-
tive collections of royalty and other payments, a lessee who 
is required to make any royalty or other payment under 
a lease, easement, right-of-way, permit, or other agree-
ment, regardless of form, or under the mineral leasing 
laws, shall make such payment in the time and manner 
as may be specified by the Secretary or the applicable dele-
gated State. Any person who pays, offsets, or credits mon-
ies, makes adjustments, requests and receives refunds, or 
submits reports with respect to payments the lessee must 
make is the lessee’s designee under this Act. Notwith-
standing any other provision of this Act to the contrary, 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
a designee shall be liable for any payment obligation of 
any lessee on whose behalf the designee pays royalty under 
the lease. The person owning operating rights in a lease 
and a person owning legal record title in a lease shall be 
liable for that person’s pro rata share of payment obliga-
tions under the lease.’’. 
SEC. 204. REQUIRED RECORDKEEPING. 
Section 103(b) of the Federal Oil and Gas Royalty 
Management Act of 1982 (30 U.S.C. 1712(a)) is amended 
by striking ‘‘6’’ and inserting ‘‘7’’. 
SEC. 205. FINES AND PENALTIES. 
Section 109 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1719) is amended— 
(1) in subsection (a) in the matter following 
paragraph (2), by striking ‘‘$500’’ and inserting 
‘‘$1,000’’; 
(2) in subsection (a)(2)(B), by inserting ‘‘(i)’’ 
after ‘‘such person’’, and by striking the period at 
the end and inserting ‘‘; and (ii) has not received no-
tice, pursuant to paragraph (1), of more than two 
prior violations in the current calendar year.’’; 
(3) in subsection (b), by striking ‘‘$5,000’’ and 
inserting ‘‘$10,000’’; 
(4) in subsection (c)— 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(A) in paragraph (2), by striking ‘‘; or’’ 
and inserting ‘‘, including any failure or refusal 
to promptly tender requested documents;’’; 
(B) in paragraph (3)— 
(i) by striking ‘‘$10,000’’ and insert-
ing ‘‘$20,000’’; and 
(ii) by striking the period at the end 
and inserting a semicolon; and 
(C) by adding at the end the following new 
paragraphs: 
‘‘(4) knowingly or willfully fails to make any 
royalty payment in the amount or value as specified 
by statute, regulation, order, or terms of the lease; 
or 
‘‘(5) fails to correctly report and timely provide 
operations or financial records necessary for the Sec-
retary or any authorized designee of the Secretary to 
accomplish lease management responsibilities,’’; 
(5) in subsection (d), by striking ‘‘$25,000’’ 
and inserting ‘‘$50,000’’; 
(6) in subsection (h), by striking ‘‘by registered 
mail’’ and inserting ‘‘a common carrier that provides 
proof of delivery’’; and 
(7) by adding at the end the following sub-
section: 
VerDate Nov 24 2008 
05:05 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(l)(1) Any determination by the Secretary or a des-
ignee of the Secretary that a person has committed a vio-
lation under subsection (a), (c), or (d)(1) shall toll any 
applicable statute of limitations for all oil and gas leases 
held or operated by such person, until the later of— 
‘‘(A) the date on which the person corrects the 
violation and certifies that all violations of a like na-
ture have been corrected for all of the oil and gas 
leases held or operated by such person; or 
‘‘(B) the date a final, nonappealable order has 
been issued by the Secretary or a court of competent 
jurisdiction. 
‘‘(2) A person determined by the Secretary or a des-
ignee of the Secretary to have violated subsection (a), (c), 
or (d)(1) shall maintain all records with respect to the per-
son’s oil and gas leases until the later of— 
‘‘(A) the date the Secretary releases the person 
from the obligation to maintain such records; and 
‘‘(B) the expiration of the period during which 
the records must be maintained under section 
103(b).’’. 
SEC. 206. INTEREST ON OVERPAYMENTS. 
Section 111 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1721) is amended— 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(A) by striking ‘‘or overpaid royalties and 
associated interest’’; and 
(B) by striking ‘‘, refunded, or credited’’. 
SEC. 207. ADJUSTMENTS AND REFUNDS. 
Section 111A of the Federal Oil and Gas Royalty 
Management Act of 1982 (30 U.S.C. 1721a) is amend-
ed— 
(1) in subsection (a)(3), by inserting ‘‘(A)’’ 
after ‘‘(3)’’, and by striking the last sentence and in-
serting the following: 
‘‘(B) Except as provided in subparagraph 
(C), no adjustment may be made with respect 
to an obligation that is the subject of an audit 
or compliance review after completion of the 
audit or compliance review, respectively, unless 
such adjustment is approved by the Secretary 
or the applicable delegated State, as appro-
priate. 
‘‘(C) If an overpayment is identified during 
an audit, the Secretary shall allow a credit in 
the amount of the overpayment.’’; 
(2) in subsection (a)(4)— 
(A) by striking ‘‘six’’ and inserting ‘‘four’’; 
and 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(B) by striking ‘‘shall’’ and inserting 
‘‘may’’; and 
(3) in subsection (b)(1) by striking ‘‘and’’ after 
the semicolon at the end of subparagraph (C), by 
striking the period at the end of subparagraph (D) 
and inserting ‘‘; and’’, and by adding at the end the 
following: 
‘‘(E) is made within the adjustment period 
for that obligation.’’. 
SEC. 208. CONFORMING AMENDMENT. 
Section 114 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 is repealed. 
SEC. 209. OBLIGATION PERIOD. 
Section 115(c) of the Federal Oil and Gas Royalty 
Management Act of 1982 (30 U.S.C. 1724(c)) is amended 
by adding at the end the following new paragraph: 
‘‘(3) ADJUSTMENTS.—In the case of an adjust-
ment under section 111A(a) in which a recoupment 
by the lessee results in an underpayment of an obli-
gation, for purposes of this Act the obligation be-
comes due on the date the lessee or its designee 
makes the adjustment.’’. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
SEC. 210. NOTICE REGARDING TOLLING AGREEMENTS AND 
SUBPOENAS. 
(a) TOLLING AGREEMENTS.—Section 115(d)(1) of 
the Federal Oil and Gas Royalty Management Act of 1982 
(30 U.S.C. 1724(d)(1)) is amended by striking ‘‘(with no-
tice to the lessee who designated the designee)’’. 
(b) SUBPOENAS.—Section 115(d)(2)(A) of the Fed-
eral Oil and Gas Royalty Management Act of 1982 (30 
U.S.C. 1724(d)(2)(A)) is amended by striking ‘‘(with no-
tice to the lessee who designated the designee, which notice 
shall not constitute a subpoena to the lessee)’’. 
SEC. 211. APPEALS AND FINAL AGENCY ACTION. 
Paragraphs (1) and (2) of section 115(h) the Federal 
Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 
1724(h)) are amended by striking ‘‘33’’ each place it ap-
pears and inserting ‘‘48’’. 
SEC. 212. ASSESSMENTS. 
Section 116 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1724) is repealed. 
SEC. 
213. 
COLLECTION 
AND 
PRODUCTION 
ACCOUNT-
ABILITY. 
(a) PILOT PROJECT.—Within two years after the 
date of enactment of this Act, the Secretary shall complete 
a pilot project with willing operators of oil and gas leases 
on the Outer Continental Shelf that assesses the costs and 
benefits of automatic transmission of oil and gas volume 
VerDate Nov 24 2008 
05:05 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
and quality data produced under Federal leases on the 
Outer Continental Shelf in order to improve the produc-
tion verification systems used to ensure accurate royalty 
collection and audit. 
(b) REPORT.—The Secretary shall submit to Con-
gress a report on findings and recommendations of the 
pilot project within 3 years after the date of enactment 
of this Act. 
SEC. 214. NATURAL GAS REPORTING. 
The Secretary shall, within 180 days after the date 
of enactment of this Act, implement the steps necessary 
to ensure accurate determination and reporting of BTU 
values of natural gas from all Federal oil and gas leases 
to ensure accurate royalty payments to the United States. 
Such steps shall include, but not be limited to— 
(1) establishment of consistent guidelines for 
onshore and offshore BTU information from gas 
producers; 
(2) development of a procedure to determine 
the potential BTU variability of produced natural 
gas on a by-reservoir or by-lease basis; 
(3) development of a procedure to adjust BTU 
frequency requirements for sampling and reporting 
on a case-by-case basis; 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(4) systematic and regular verification of BTU 
information; and 
(5) revision of the ‘‘MMS–2014’’ reporting 
form to record, in addition to other information al-
ready required, the natural gas BTU values that 
form the basis for the required royalty payments. 
SEC. 215. PENALTY FOR LATE OR INCORRECT REPORTING 
OF DATA. 
(a) IN GENERAL.—The Secretary shall issue regula-
tions by not later than 1 year after the date of enactment 
of this Act that establish a civil penalty for late or incor-
rect reporting of data under the Federal Oil and Gas Roy-
alty Management Act of 1982 (30 U.S.C. 1701 et seq.). 
(b) AMOUNT.—The amount of the civil penalty shall 
be— 
(1) an amount (subject to paragraph (2)) that 
the Secretary determines is sufficient to ensure filing 
of data in accordance with that Act; and 
(2) not less than $10 for each failure to file 
correct data in accordance with that Act. 
(c) CONTENT OF REGULATIONS.—Except as provided 
in subsection (b), the regulations issued under this section 
shall be substantially similar to part 216.40 of title 30, 
Code of Federal Regulations, as most recently in effect 
before the date of enactment of this Act. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
SEC. 216. REQUIRED RECORDKEEPING. 
Within 1 year after the date of enactment of this Act, 
the Secretary shall publish final regulations concerning re-
quired recordkeeping of natural gas measurement data as 
set forth in part 250.1203 of title 30, Code of Federal 
Regulations (as in effect on the date of enactment of this 
Act), to include operators and other persons involved in 
the transporting, purchasing, or selling of gas under the 
requirements of that rule, under the authority provided 
in section 103 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1713). 
SEC. 217. LIMITATION ON ROYALTY IN-KIND PROGRAM. 
(a) MINERAL LEASING ACT.—Section 36 of the Min-
eral Leasing Act (30 U.S.C. 192) is amended by inserting 
before the period at the end of the first paragraph the 
following: ‘‘, except that the Secretary shall not conduct 
a regular program to take oil and gas lease royalties in 
oil or gas’’. 
(b) OUTER CONTINENTAL SHELF LANDS ACT.—Sec-
tion 27(a) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1353(a)) is amended by striking so much as pre-
cedes paragraph (2) and inserting the following: 
‘‘SEC. 27. FEDERAL PURCHASE AND DISPOSITION OF OIL 
AND GAS. 
‘‘Except as may be necessary to comply with sections 
6 and 7 of this Act, all royalties or net profit shares, or 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
both, accruing to the United States under any oil and gas 
lease issued or maintained in accordance with this Act, 
shall, on demand of the Secretary, be paid in oil or gas, 
except that the Secretary shall not conduct a regular pro-
gram to take oil and gas lease royalties in oil or gas.’’. 
SEC. 218. SHARED CIVIL PENALTIES. 
Section 206 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1724) is amended by 
striking ‘‘Such amount shall be deleted from any com-
pensation due such State or Indian Tribe under section 
202 or section 205 or such State under section 205.’’. 
SEC. 219. APPLICABILITY TO OTHER MINERALS. 
Section 304 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1753) is amended by 
adding at the end the following new subsection: 
‘‘(e) APPLICABILITY TO OTHER MINERALS.— 
‘‘(1) Notwithstanding any other provision of 
law, sections 107, 109, and 110 of this Act and the 
regulations duly promulgated with respect thereto 
shall apply to any lease authorizing the development 
of coal or any other solid mineral on any Federal 
lands or Indian lands, to the same extent as if such 
lease were an oil and gas lease, on the same terms 
and conditions as those authorized for oil and gas 
leases. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
‘‘(2) Notwithstanding any other provision of 
law, sections 107, 109, and 110 of this Act and the 
regulations duly promulgated with respect thereto 
shall apply with respect to any lease, easement, 
right-of-way, or other agreement, regardless of form 
(including any royalty, rent, or other payment due 
thereunder)— 
‘‘(A) under section 8(k) or 8(p) of the 
Outer Continental Shelf Lands Act (43 U.S.C. 
1337(k) and 1337(p)); or 
‘‘(B) under the Geothermal Steam Act (30 
U.S.C. 1001 et seq.), to the same extent as if 
such lease, easement, right-of-way, or other 
agreement were an oil and gas lease on the 
same terms and conditions as those authorized 
for oil and gas leases. 
‘‘(3) For the purposes of this subsection, the 
term ‘solid mineral’ means any mineral other than 
oil, gas, and geo-pressured-geothermal resources, 
that is authorized by an Act of Congress to be pro-
duced from public lands (as that term is defined in 
section 103 of the Federal Land Policy and Manage-
ment Act of 1976 (43 U.S.C. 1702)).’’. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
SEC. 220. ENTITLEMENTS. 
Not later than 180 days after the date of enactment 
of this Act, the Secretary shall publish final regulations 
prescribing when a Federal lessee or designee must report 
and pay royalties on the volume of oil and gas it takes 
under either a Federal or Indian lease or on the volume 
to which it is entitled to based upon its ownership interest 
in the Federal or Indian lease. The Secretary shall give 
consideration to requiring 100 percent entitlement report-
ing and paying based upon the lease ownership. 
TITLE III—OIL AND GAS 
LEASING REFORMS 
SEC. 301. DILIGENT DEVELOPMENT. 
(a) REGULATIONS.—The Secretary shall issue regula-
tions within one year after the date of enactment of this 
Act that define ‘‘diligent development’’ for purposes of all 
new leases issued under the Mineral Leasing Act (30 
U.S.C. 181 et seq.) and all new leases issued under the 
Outer Continental Shelf Lands Act (43 U.S.C. 1331 et 
seq.). Such regulations shall— 
(1) include benchmarks for oil and gas develop-
ment that will ensure that leaseholders take all ap-
propriate measures necessary to produce oil and gas 
from each lease that contains commercial quantities 
of oil and gas within the original term of the lease; 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
(2) require each leaseholder to submit to the 
Secretary a diligent development plan showing how 
the lessee will meet the benchmarks; 
(3) provide accommodation for development 
delays, including lease suspensions, directed by the 
Secretary that restrict diligent development in order 
to meet environmental stipulations and consider-
ations; and 
(4) require submission of diligent development 
plans in an electronic format proscribed by the Sec-
retary, which the Secretary shall make available for 
public review. 
(b) FAILURE TO COMPLY WITH REQUIREMENTS.— 
If any person fails to comply with the requirements of any 
regulation issued under this section, or any order issued 
to implement such a regulation, with respect to a lease, 
such lease may be terminated by the Secretary. 
SEC. 302. REPORTING REQUIREMENTS. 
(a) BIANNUAL REPORTS.—The Secretary shall re-
quire biannual reports from each Federal oil and gas les-
see that holds a nonproducing lease on the actions the les-
see has taken to diligently develop each Federal lease the 
lessee holds. 
(b) ELECTRONIC DATABASE.—The Secretary shall 
establish and maintain an electronic database that is avail-
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS
able to the public that identifies each Federal oil and gas 
lease, each lessee under such lease, the acreage held by 
each such lessee, and the progress made toward produc-
tion under each such lease. 
SEC. 303. NOTICE REQUIREMENTS. 
Section 17(f) of the Mineral Leasing Act (30 U.S.C. 
226(f)) is amended— 
(1) by striking all through the first 2 sentences 
and inserting the following: 
‘‘(f)(1) At least 45 days before offering lands for 
lease under this section, and at least 30 days before ap-
proving applications for permits to drill under the provi-
sions of a lease or substantially modifying the terms of 
any lease issued under this section, the Secretary shall 
provide notice of the proposed action to— 
‘‘(A) the general public by posting such no-
tice in the appropriate local office and on the 
electronic website of the leasing and land man-
agement agencies offering the lands for lease; 
‘‘(B) all surface land owners in the area of 
the lands being offered for lease; and 
‘‘(C) the holders of special recreation per-
mits for commercial use, competitive events, 
and other organized activities on the lands 
being offered for lease. 
VerDate Nov 24 2008 
04:00 Sep 09, 2009
Jkt 079200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H3534.IH
H3534
smartinez on DSKB9S0YB1PROD with BILLS