I
106TH CONGRESS
1ST SESSION
H. R. 1269
To amend the Federal Oil and Gas Royalty Management Act of 1982 to
strengthen sanctions for violations of that Act relating to oil or gas royalties.
IN THE HOUSE OF REPRESENTATIVES
MARCH 24, 1999
Mr. GEORGE MILLER of Califronia (for himself and Mr. DEFAZIO) introduced
the following bill; which was referred to the Committee on Resources
A BILL
To amend the Federal Oil and Gas Royalty Management
Act of 1982 to strengthen sanctions for violations of
that Act relating to oil or gas royalties.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Federal Oil and Gas
Reform Act of 1999’’.
SEC. 2. SANCTIONS FOR VIOLATIONS RELATING TO FED-
ERAL OIL AND GAS ROYALTIES.
Section 109 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1719) is amended to read
as follows:
‘‘CIVIL PENALTIES
‘‘SEC. 109. (a) ROYALTY VIOLATIONS.—(1) No per-
son shall—
‘‘(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 pay-
ment in the amount or value required by any min-
eral leasing 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
liable—
‘‘(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
‘‘(B) in the case of any violation, for a civil
penalty of $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
person 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
‘‘(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
conveys to another, any oil or gas knowing or having
reason to know that such oil or gas was stolen or
unlawfully 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 Sec-
retary or an authorized designee of the Secretary deter-
mines 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.
‘‘(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 re-
lates.
‘‘(2) In addition to the penalty provided in paragraph
(1)(C), if the Secretary determines that any person has
repeatedly 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
reclamation of lease sites canceled or transferred, in-
cluding costs of disposing of lease property, facili-
ties, and equipment.
‘‘(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
subsection (a), (b), (c), or (d) shall be final, unless within
15 days after notification by the Secretary or designee the
person liable for such amount files an administrative ap-
peal in accordance with regulations issued by the Sec-
retary.
‘‘(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 remit-
ted or reduced, and in what amount, the Secretary shall
state on the record the reasons for his determinations.
‘‘(j) JUDICIAL REVIEW.—Any person who has re-
quested a hearing in accordance with subsection (e) within
the time the Secretary has prescribed for such a hearing
and who is aggrieved by a final order of the Secretary
under this section may seek review of such order in the
United States district court for the judicial district in
which the violation allegedly took place. Review by the dis-
trict court shall be only on the administrative record and
not de novo. Such an action shall be barred unless filed
within 90 days after the Secretary’s final order.
‘‘(k) FAILURE TO PAY.—If any person fails to pay
an assessment of a civil penalty under this Act—
‘‘(1) after the order making the assessment has
become a final order and if such person does not file
a petition for judicial review of the order in accord-
ance with subsection (j), or
‘‘(2) after a court in an action brought under
subsection (j) has entered a final judgment in favor
of the Secretary,
the court shall have jurisdiction to award the amount as-
sessed plus interest from the date of the expiration of the
90-day period referred to in subsection (j). Judgment by
the court shall include an order to pay.
‘‘(l) RELATIONSHIP TO MINERAL LEASING ACT.—No
person shall be liable for a civil penalty under subsection
(a) or (b) for failure to pay any rental for any lease auto-
matically terminated pursuant to section 31 of the Mineral
Leasing Act.
‘‘(m) TOLLING OF STATUTES OF LIMITATION.—(1)
Any determination by the Secretary or a designee of the
Secretary that a person has violated subsection (a), (b)(2),
or (b)(4) 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),
(b)(2), or (b)(4) shall maintain all records with respect
to the person’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).
‘‘(n) STATE SHARING OF PENALTIES.—Amounts re-
ceived by the United States in an action brought under
section 3730 of title 31, United States Code, that arises
from any underpayment of royalties owed to the United
States under any lease shall be treated as royalties paid
to the United States under that lease for purposes of the
mineral leasing laws and the Land and Water Conserva-
tion Fund Act of 1965 (16 U.S.C. 460l–4 et seq.).’’.
SEC. 3. SHARED CIVIL PENALTIES.
Section 206 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1736) is amended—
(1) by inserting ‘‘trebled royalties or’’ after ‘‘50
per centum of any’’ and before ‘‘civil penalty’’; and
(2) by striking the second sentence.
Æ