[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 924 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 924

            Entitled the ``Federal Royalty Certainty Act''.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 29, 1999

 Mr. Nickles (for himself, Ms. Landrieu, Mr. Murkowski, Mr. Domenici, 
and Mrs. Hutchison) introduced the following bill; which was read twice 
     and referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
            Entitled the ``Federal Royalty Certainty Act''.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Royalty Certainty Act.''

SEC. 2. AMENDMENT OF OUTER CONTINENTAL SHELF LANDS ACT.

    Section 8(b)(3) of the Outer Continental Shelf Lands Act, as 
amended (43 U.S.C. Sec. 1337(b)(3)), is amended by striking the 
semicolon and adding the following proviso: ``: Provided, That if the 
payment is in value or amount, the royalty due in value shall be based 
on the value of oil or gas production at the lease in marketable 
condition, and the royalty due in amount shall be based on the royalty 
share of production at the lease. If the payment in value or amount is 
calculated from a point away from the lease, the payment shall be 
adjusted for quality and location differentials, and the lessee shall 
be allowed reimbursements at a reasonable commercial rate for 
transportation (including transportation to the point where the 
production is put in marketable condition), marketing, processing, and 
other services beyond the lease through the point of sale, other 
disposition, or delivery.''.

SEC. 3. AMENDMENT OF MINERAL LEASING ACT.

    Section 17(c) of the Mineral Leasing Act, as amended (30 U.S.C. 
Sec. 226(c)), is amended by adding the following paragraph:
            ``(3) Royalty due in value shall be based on the value of 
        oil or gas production at the lease in marketable condition, and 
        the royalty due in amount shall be based on the royalty share 
        of production at the lease. If the payment in value or amount 
        is calculated from a point away from the lease, the payment 
        shall be adjusted for quality and location differentials, and 
        the lessee shall be allowed reimbursements at a reasonable 
        commercial rate for transportation (including transportation to 
        the point where the production is put in marketable condition), 
        marketing, processing and other services beyond the lease 
        through the point of sale, other disposition, or delivery.''.

SEC. 4. DEFINITIONS.

    As used in this Act:
            (a) The term ``reasonable commercial rate'' is--
                    (1) for an arm's-length contract, the actual cost 
                incurred by the lessee;
                    (2) for a non-arm's-length contract, the rate 
                charged in a contract for similar services in the same 
                area between parties with opposing economic interests; 
                or
                    (3) whenever there are no arm's-length contracts 
                for similar services in the same area, the just and 
                reasonable rate for the transportation service rendered 
                by the lessee or lessee's affiliate--disputes between 
                the Secretary and a lessee over what constitutes a just 
                and reasonable rate for such service will be resolved 
                by the Federal Energy Regulatory Commission.
            (b) The term ``marketable condition'' means lease 
        production which is sufficiently free from impurities and 
        otherwise in a condition that it will be accepted by a 
        purchaser under a sales contract typical for the field or area.

SEC. 5. INDIAN LANDS.

    (a) This Act shall not apply with respect to Indian lands.
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