the purpose of filling the Strategic Petroleum Re-
serve.’’. 
SEC. 202. AUDITS. 
(a) REQUIREMENT TO INCREASE THE NUMBER OF AU-
DITS.—The Secretary of the Interior shall ensure that by 
fiscal year 2009 the Minerals Management Service shall 
perform no less that 550 audits of oil and gas leases each 
fiscal year. 
(b) STANDARDS.—Not later than 120 days after the 
date of enactment of this Act, the Secretary of the Interior 
shall issue regulations that require that all employees that 
conduct audits or compliance reviews must meet profes-
sional auditor qualifications that are consistent with the 
latest revision of the Government Auditing Standards pub-
lished by the Government Accountability Office. Such regu-
lations shall also ensure that all audits conducted by the 
Department of the Interior are performed in accordance 
with such standards. 
SEC. 203. FINES AND PENALTIES. 
(a) SANCTIONS FOR VIOLATIONS RELATING TO FED-
ERAL OIL AND GAS ROYALTIES.—Section 109 of the Fed-
eral Oil and Gas Royalty Management Act of 1982 (30 
U.S.C. 1719) is amended to read as follows: 
‘‘CIVIL PENALTIES 
‘‘SEC. 109. (a) ROYALTY VIOLATIONS.—(1) No person 
shall— 
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‘‘(A) after due notice of violation or after such 
violation has been reported under paragraph (3)(A), 
fail or refuse to comply with any requirement of any 
mineral leasing law or any regulation, order, lease, or 
permit under such a law; 
‘‘(B) fail or refuse to make any royalty payment 
in the amount or value required by any mineral leas-
ing law or any regulation, order, or lease under such 
a law; 
‘‘(C) fail or refuse to make any royalty payment 
by the date required by any mineral leasing law or 
any regulation, order, or lease under such a law; or 
‘‘(D) prepare, maintain, or submit any false, in-
accurate, or misleading report, notice, affidavit, 
record, data, or other written information or filing 
related to royalty payments that is required under 
any mineral leasing law or regulation issued under 
any mineral leasing law. 
‘‘(2) A person who violates paragraph (1) shall be lia-
ble— 
‘‘(A) in the case of a violation of subparagraph 
(B) or (C) of paragraph (1) for an amount equal to 
3 times the royalty the person fails or refuses to pay, 
plus interest on that trebled amount measured from 
the first date the royalty payment was due; and 
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‘‘(B) in the case of any violation, for a civil pen-
alty of up to $25,000 per violation for each day the 
violation continues. 
‘‘(3) Paragraph (2) shall not apply to a violation of 
paragraph (1) if the person who commits the violation, 
within 30 days of the violation— 
‘‘(A) reports the violation to the Secretary or a 
representative designated by the Secretary; and 
‘‘(B) corrects the violation. 
‘‘(b) LEASE ADMINISTRATION VIOLATIONS.—Any per-
son who— 
‘‘(1) fails to notify the Secretary of— 
‘‘(A) any designation by the person under 
section 102(a); or 
‘‘(B) any other assignment of obligations or 
responsibilities of the person under a lease; 
‘‘(2) fails or refuses to permit— 
‘‘(A) lawful entry; 
‘‘(B) inspection, including any inspection 
authorized by section 108; or 
‘‘(C) audit, including any failure or refusal 
to promptly tender requested documents; 
‘‘(3) fails or refuses to comply with subsection 
102(b)(3) (relating to notification regarding begin-
ning or resumption of production); or 
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‘‘(4) 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, 
shall be liable for a penalty of up to $10,000 per violation 
for each day such violation continues. 
‘‘(c) THEFT.—Any person who— 
‘‘(1) knowingly or willfully takes or removes, 
transports, uses or diverts any oil or gas from any 
lease site without having valid legal authority to do 
so; or 
‘‘(2) purchases, accepts, sells, transports, or con-
veys to another, any oil or gas knowing or having 
reason to know that such oil or gas was stolen or un-
lawfully removed or diverted, 
shall be liable for a penalty of up to $25,000 per violation 
for each day such violation continues without correction. 
‘‘(d) REPEATED VIOLATIONS.—(1)(A) If the Secretary 
or an authorized designee of the Secretary determines that 
any person has repeatedly violated subsection (a), (b), or 
(c), the Secretary or designee shall notify the person of the 
violation and demand compliance. 
‘‘(B) A person notified pursuant to subparagraph (A) 
shall correct the violations by not later than 30 calendar 
days after the date of the notification. 
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‘‘(C) Any person who fails to comply with a demand 
under subparagraph (A) shall be liable to the United States 
for a civil penalty equal to 3 times the amount of any civil 
penalty that otherwise applies under subsection (a), (b), or 
(c) to the violations to which the demand relates. 
‘‘(2) In addition to the penalty provided in paragraph 
(1)(C), if the Secretary determines that any person has re-
peatedly violated subsection (a), (b), or (c) or any lease 
management order, the Secretary may— 
‘‘(A) shut in and cease production of any oil or 
gas lease held by the person; 
‘‘(B) prohibit the person— 
‘‘(i) from acquiring any additional oil or 
gas lease, including by transfer or assignment; 
and 
‘‘(ii) from being designated under section 
102(a) to make payments due under any lease; 
‘‘(C) cancel or transfer any interest in an oil or 
gas lease held by the person; and 
‘‘(D) collect from the person reimbursement, in-
cluding interest, of all costs of release, transfer, or rec-
lamation of lease sites canceled or transferred, includ-
ing costs of disposing of lease property, facilities, and 
equipment. 
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‘‘(e) ADMINISTRATIVE APPEAL.—(1) Any determina-
tion by the Secretary or a designee of the Secretary of the 
amount of any royalties or civil penalties owed under sub-
section (a), (b), (c), or (d) shall be final, unless within 15 
days after notification by the Secretary or designee the per-
son liable for such amount files an administrative appeal 
in accordance with regulations issued by the Secretary. 
‘‘(2) If a person files an administrative appeal pursu-
ant to paragraph (1), the Secretary or designee shall make 
a final determination in accordance with the regulations 
referred to in paragraph (1). 
‘‘(f) DEDUCTION.—The amount of any penalty under 
this section, as finally determined may be deducted from 
any sums owing by the United States to the person charged. 
‘‘(g) COMPROMISE AND REDUCTION.—On a case-by- 
case basis the Secretary may compromise or reduce civil 
penalties under this section. 
‘‘(h) NOTICE.—Notice under this subsection (a) shall 
be by personal service by an authorized representative of 
the Secretary or by registered mail. Any person may, in 
the manner prescribed by the Secretary, designate a rep-
resentative to receive any notice under this subsection. 
‘‘(i) RECORD OF DETERMINATION.—In determining 
the amount of such penalty, or whether it should be remitted 
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