[Congressional Record Volume 142, Number 104 (Tuesday, July 16, 1996)]
[House]
[Pages H7597-H7607]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FEDERAL OIL AND GAS ROYALTY SIMPLIFICATION AND FAIRNESS ACT OF 1996
Mr. CALVERT. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 1975) to improve the management of royalties from Federal
and Outer Continental Shelf oil and gas leases, and for other purposes,
as amended.
The Clerk read as follows:
H.R. 1975
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federal Oil and Gas Royalty
Simplification and Fairness Act of 1996''.
SEC. 2. DEFINITIONS.
Section 3 of the Federal Oil and Gas Royalty Management Act
of 1982 (30 U.S.C. 1701 et seq.) is amended--
(1) by amending paragraph (7) to read as follows:
``(7) `lessee' means any person to whom the United States
issues an oil and gas lease or any person to whom operating
rights in a lease have been assigned;''; and
(2) by striking ``and'' at the end of paragraph (15), by
striking the period at the end of paragraph (16) and
inserting a semicolon, and by adding at the end the
following:
``(17) `adjustment' means an amendment to a previously
filed report on an obligation, and any additional payment or
credit, if any, applicable thereto, to rectify an
underpayment or overpayment on an obligation;
``(18) `administrative proceeding' means any Department of
the Interior agency process in which a demand, decision or
order issued by the Secretary or a delegated State is subject
to appeal or has been appealed;
``(19) `assessment' means any fee or charge levied or
imposed by the Secretary or a delegated State other than--
``(A) the principal amount of any royalty, minimum royalty,
rental bonus, net profit share or proceed of sale;
``(B) any interest; or
``(C) any civil or criminal penalty;
``(20) `commence' means--
``(A) with respect to a judicial proceeding, the service of
a complaint, petition, counterclaim, cross claim, or other
pleading seeking affirmative relief or seeking credit or
recoupment: Provided, That if the Secretary commences a
judicial proceeding against a designee, the Secretary shall
give notice of that commencement to the lessee who designated
the designee, but the Secretary is not required to give
notice to other lessees who may be liable pursuant to section
102(a) of this Act, for the obligation that is the subject of
the judicial proceeding; or
``(B) with respect to a demand, the receipt by the
Secretary or a delegated State or a lessee or its designee
(with written notice to the lessee who designated the
designee) of the demand;
``(21) `credit' means the application of an overpayment (in
whole or in part) against an obligation which has become due
to discharge, cancel or reduce the obligation;
``(22) `delegated State' means a State which, pursuant to
an agreement or agreements under section 205 of this Act,
performs authorities, duties, responsibilities, or activities
of the Secretary;
``(23) `demand' means--
``(A) an order to pay issued by the Secretary or the
applicable delegated State to a lessee or its designee (with
written notice to the lessee who designated the designee)
that has a reasonable basis to conclude that the obligation
in the amount of the demand is due and owing; or
``(B) a separate written request by a lessee or its
designee which asserts an obligation due the lessee or its
designee that provides a reasonable basis to conclude that
the obligation in the amount of the demand is due and owing,
but does not mean any royalty or production report, or any
information contained therein, required by the Secretary or a
delegated State;
``(24) `designee' means the person designated by a lessee
pursuant to section 102(a) of this Act, with such written
designation effective on the date such designation is
received by the Secretary and remaining in effect until the
Secretary receives notice in writing that the designation is
modified or terminated;
``(25) `obligation' means--
``(A) any duty of the Secretary or, if applicable, a
delegated State--
[[Page H7598]]
``(i) to take oil or gas royalty in kind; or
``(ii) to pay, refund, offset, or credit monies including
(but not limited to)--
``(I) the principal amount of any royalty, minimum royalty,
rental, bonus, net profit share or proceed of sale; or
``(II) any interest; and
``(B) any duty of a lessee or its designee (subject to the
provision of section 102(a) of this Act)--
``(i) to deliver oil or gas royalty in kind; or
``(ii) to pay, offset or credit monies including (but not
limited to)--
``(I) the principal amount of any royalty, minimum royalty,
rental, bonus, net profit share or proceed of sale;
``(II) any interest;
``(III) any penalty; or
``(IV) any assessment,
which arises from or relates to any lease administered by the
Secretary for, or any mineral leasing law related to, the
exploration, production and development of oil or gas on
Federal lands or the Outer Continental Shelf;
``(26) `order to pay' means a written order issued by the
Secretary or the applicable delegated State to a lessee or
its designee (with notice to the lessee who designated the
designee) which--
``(A) asserts a specific, definite, and quantified
obligation claimed to be due, and
``(B) specifically identifies the obligation by lease,
production month and monetary amount of such obligation
claimed to be due and ordered to be paid, as well as the
reason or reasons such obligation is claimed to be due, but
such term does not include any other communication or action
by or on behalf of the Secretary or a delegated State;
``(27) `overpayment' means any payment by a lessee or its
designee in excess of an amount legally required to be paid
on an obligation and includes the portion of any estimated
payment for a production month that is in excess of the
royalties due for that month;
``(28) `payment' means satisfaction, in whole or in part,
of an obligation;
``(29) `penalty' means a statutorily authorized civil fine
levied or imposed for a violation of this Act, any mineral
leasing law, or a term or provision of a lease administered
by the Secretary;
``(30) `refund' means the return of an overpayment;
``(31) `State concerned' means, with respect to a lease, a
State which receives a portion of royalties or other payments
under the mineral leasing laws from such lease;
``(32) `underpayment' means any payment or nonpayment by a
lessee or its designee that is less than the amount legally
required to be paid on an obligation; and
``(33) `United States' means the United States Government
and any department, agency, or instrumentality thereof, the
several States, the District of Columbia, and the territories
of the United States.''.
SEC. 3. DELEGATION OF ROYALTY COLLECTIONS AND RELATED
ACTIVITIES.
(a) General Authority.--Section 205 of the Federal Oil and
Gas Royalty Management Act of 1982 (30 U.S.C. 1735) is
amended to read as follows:
``SEC. 205. DELEGATION OF ROYALTY COLLECTIONS AND RELATED
ACTIVITIES.
``(a) Upon written request of any State, the Secretary is
authorized to delegate, in accordance with the provisions of
this section, all or part of the authorities and
responsibilities of the Secretary under this Act to:
``(1) conduct inspections, audits, and investigations;
``(2) receive and process production and financial reports;
``(3) correct erroneous report data;
``(4) perform automated verification; and
``(5) issue demands, subpoenas, and orders to perform
restructured accounting, for royalty management enforcement
purposes,
to any State with respect to all Federal land within the
State.
``(b) After notice and opportunity for a hearing, the
Secretary is authorized to delegate such authorities and
responsibilities granted under this section as the State has
requested, if the Secretary finds that--
``(1) it is likely that the State will provide adequate
resources to achieve the purposes of this Act;
``(2) the State has demonstrated that it will effectively
and faithfully administer the rules and regulations of the
Secretary under this Act in accordance with the requirements
of subsections (c) and (d) of this section;
``(3) such delegation will not create an unreasonable
burden on any lessee;
``(4) the State agrees to adopt standardized reporting
procedures prescribed by the Secretary for royalty and
production accounting purposes, unless the State and all
affected parties (including the Secretary) otherwise agree;
``(5) the State agrees to follow and adhere to regulations
and guidelines issued by the Secretary pursuant to the
mineral leasing laws regarding valuation of production; and
``(6) where necessary for a State to have authority to
carry out and enforce a delegated activity, the State agrees
to enact such laws and promulgate such regulations as are
consistent with relevant Federal laws and regulations
with respect to the Federal lands within the State.
``(c) After notice and opportunity for hearing, the
Secretary shall issue a ruling as to the consistency of a
State's proposal with the provisions of this section and
regulations under subsection (d) within 90 days after
submission of such proposal. In any unfavorable ruling, the
Secretary shall set forth the reasons therefor and state
whether the Secretary will agree to delegate to the State if
the State meets the conditions set forth in such ruling.
``(d) After consultation with State authorities, the
Secretary shall by rule promulgate, within 12 months after
the date of enactment of this section, standards and
regulations pertaining to the authorities and
responsibilities to be delegated under subsection (a),
including standards and regulations pertaining to--
``(1) audits to be performed;
``(2) records and accounts to be maintained;
``(3) reporting procedures to be required by States under
this section;
``(4) receipt and processing of production and financial
reports;
``(5) correction of erroneous report data;
``(6) performance of automated verification;
``(7) issuance of standards and guidelines in order to
avoid duplication of effort;
``(8) transmission of report data to the Secretary; and
``(9) issuance of demands, subpoenas, and orders to perform
restructured accounting, for royalty management enforcement
purposes.
Such standards and regulations shall be designed to provide
reasonable assurance that a uniform and effective royalty
management system will prevail among the States. The records
and accounts under paragraph (2) shall be sufficient to allow
the Secretary to monitor the performance of any State under
this section.
``(e) If, after notice and opportunity for a hearing, the
Secretary finds that any State to which any authority or
responsibility of the Secretary has been delegated under this
section is in violation of any requirement of this section or
any rule thereunder, or that an affirmative finding by the
Secretary under subsection (b) can no longer be made, the
Secretary may revoke such delegation. If, after providing
written notice to a delegated State and a reasonable
opportunity to take corrective action requested by the
Secretary, the Secretary determines that the State has failed
to issue a demand or order to a Federal lessee within the
State, that such failure may result in an underpayment of an
obligation due the United States by such lessee, and that
such underpayment may be uncollected without Secretarial
intervention, the Secretary may issue such demand or order in
accordance with the provisions of this Act prior to or absent
the withdrawal of delegated authority.
``(f) Subject to appropriations, the Secretary shall
compensate any State for those costs which may be necessary
to carry out the delegated activities under this Section.
Payment shall be made no less than every quarter during the
fiscal year. Compensation to a State may not exceed the
Secretary's reasonably anticipated expenditure for
performance of such delegated activities by the Secretary.
Such costs shall be allocable for the purposes of section
35(b) of the Act entitled `An act to promote the mining of
coal, phosphate, oil, oil shale, gas and sodium on the public
domain', approved February 25, 1920 (commonly known as the
Mineral Leasing Act) (30 U.S.C. 191 (b)) to the
administration and enforcement of laws providing for the
leasing of any onshore lands or interests in land owned by
the United States. Any further allocation of costs under
section 35(b) made by the Secretary for oil and gas
activities, other than those costs to compensate States for
delegated activities under this Act, shall be only those
costs associated with onshore oil and gas activities and may
not include any duplication of costs allocated pursuant to
the previous sentence. Nothing in this section affects the
Secretary's authority to make allocations under section 35(b)
for non-oil and gas mineral activities. All moneys received
from sales, bonuses, rentals, royalties, assessments and
interest, including money claimed to be due and owing
pursuant to a delegation under this section, shall be payable
and paid to the Treasury of the United States.
``(g) Any action of the Secretary to approve or disapprove
a proposal submitted by a State under this section shall be
subject to judicial review in the United States district
court which includes the capital of the State submitting the
proposal.
``(h) Any State operating pursuant to a delegation existing
on the date of enactment of this Act may continue to operate
under the terms and conditions of the delegation, except to
the extent that a revision of the existing agreement is
adopted pursuant to this section.''.
(b) Clerical Amendment.--The item relating to section 205
in the table of contents in section 1 of the Federal Oil and
Gas Royalty Management Act of 1982 (30 U.S.C. 1701) is
amended to read as follows:
``Sec. 205. Delegation of royalty collections and related
activities.''.
SEC. 4. SECRETARIAL AND DELEGATED STATES' ACTIONS AND
LIMITATION PERIODS.
(a) In General.--The Federal Oil and Gas Royalty Management
Act of 1982 (30 U.S.C. 1701 et seq.) is amended by adding
after section 114 the following new section:
``SEC. 115. SECRETARIAL AND DELEGATED STATES' ACTIONS AND
LIMITATION PERIODS.
``(a) In General.--The respective duties, responsibilities,
and activities with respect
[[Page H7599]]
to a lease shall be performed by the Secretary, delegated
States, and lessees or their designees in a timely manner.
``(b) Limitation Period.--
``(1) In general.--A judicial proceeding or demand which
arises from, or relates to an obligation, shall be commenced
within seven years from the date on which the obligation
becomes due and if not so commenced shall be barred. If
commencement of a judicial proceeding or demand for an
obligation is barred by this section, the Secretary, a
delegated State, or a lessee or its designee (A) shall not
take any other or further action regarding that obligation,
including (but not limited to) the issuance of any order,
request, demand or other communication seeking any document,
accounting, determination, calculation, recalculation,
payment, principal, interest, assessment, or penalty or the
initiation, pursuit or completion of an audit with respect to
that obligation; and (B) shall not pursue any other equitable
or legal remedy, whether under statute or common law, with
respect to an action on or an enforcement of said obligation
``(2) Rule of construction.--A judicial proceeding or
demand that is timely commenced under paragraph (1) against a
designee shall be considered timely commenced as to any
lessee who is liable pursuant to section 102(a) of this Act
for the obligation that is the subject of the judicial
proceeding or demand.
``(3) Application of certain limitations.--The limitations
set forth in sections 2401, 2415, 2416, and 2462 of title 28,
United States Code, and section 42 of the Mineral Leasing Act
(30 U.S.C. 226-2) shall not apply to any obligation to which
this Act applies. Section 3716 of title 31, United States
Code, may be applied to an obligation the enforcement of
which is not barred by this Act, but may not be applied to
any obligation the enforcement of which is barred by this
Act.
``(c) Obligation Becomes Due.--
``(1) In general.--For purposes of this Act, an obligation
becomes due when the right to enforce the obligation is
fixed.
``(2) Royalty obligations.--The right to enforce any
royalty obligation for any given production month for a lease
is fixed for purposes of this Act on the last day of the
calendar month following the month in which oil or gas is
produced.
``(d) Tolling of Limitation Period.--The running of the
limitation period under subsection (b) shall not be
suspended, tolled, extended, or enlarged for any obligation
for any reason by any action, including an action by the
Secretary or a delegated State, other than the following:
``(1) Tolling agreement.--A written agreement executed
during the limitation period between the Secretary or a
delegated State and a lessee or its designee (with notice to
the lessee who designated the designee) shall toll the
limitation period for the amount of time during which the
agreement is in effect.
``(2) Subpoena.--
``(A) The issuance of a subpoena to a lessee or its
designee (with notice to the lessee who designated the
designee, which notice shall not constitute a subpoena to the
lessee) in accordance with the provisions of subparagraph
(B)(i) shall toll the limitation period with respect to the
obligation which is the subject of a subpoena only for the
period beginning on the date the lessee or its designee
receives the subpoena and ending on the date on which (i) the
lessee or its designee has produced such subpoenaed records
for the subject obligation, (ii) the Secretary or a delegated
State receives written notice that the subpoenaed records for
the subject obligation are not in existence or are not in the
lessee's or its designee's possession or control, or (iii) a
court has determined in a final decision that such records
are not required to be produced, whichever occurs first.
``(B)(i) A subpoena for the purposes of this section which
requires a lessee or its designee to produce records
necessary to determine the proper reporting and payment of an
obligation due the Secretary may be issued only by an
Assistant Secretary of the Interior or an Acting Assistant
Secretary of the Interior who is a schedule C employee (as
defined by section 213.3301 of title 5, Code of Federal
Regulations), or the Director or Acting Director of the
respective bureau or agency, and may not be delegated to any
other person. If a State has been delegated authority
pursuant to section 205, the State, acting through the
highest State official having ultimate authority over the
collection of royalties from leases on Federal lands
within the State, may issue such subpoena, but may not
delegate such authority to any other person.
``(ii) A subpoena described in clause (i) may only be
issued against a lessee or its designee during the limitation
period provided in this section and only after the Secretary
or a delegated State has in writing requested the records
from the lessee or its designee related to the obligation
which is the subject of the subpoena and has determined
that--
``(I) the lessee or its designee has failed to respond
within a reasonable period of time to the Secretary's or the
applicable delegated State's written request for such records
necessary for an audit, investigation or other inquiry made
in accordance with the Secretary's or such delegated State's
responsibilities under this Act; or
``(II) the lessee or its designee has in writing denied the
Secretary's or the applicable delegated State's written
request to produce such records in the lessee's or its
designee's possession or control necessary for an audit,
investigation or other inquiry made in accordance with the
Secretary's or such delegated State's responsibilities under
this Act; or
``(III) the lessee or its designee has unreasonably delayed
in producing records necessary for an audit, investigation or
other inquiry made in accordance with the Secretary's or the
applicable delegated State's responsibilities under this Act
after the Secretary's or delegated State's written request.
``(C) In seeking records, the Secretary or the applicable
delegated State shall afford the lessee or its designee a
reasonable period of time after a written request by the
Secretary or such delegated State in which to provide such
records prior to the issuance of any subpoena.
``(3) Misrepresentation or concealment.--The intentional
misrepresentation or concealment of a material fact for the
purpose of evading the payment of an obligation in which case
the limitation period shall be tolled for the period of such
misrepresentation or such concealment.
``(4) Order to perform restructured accounting.--A)(i) The
issuance of a notice under subparagraph (D) that the lessee
or its designee has not substantially complied with the
requirement to perform a restructured accounting shall toll
the limitation period with respect to the obligation which is
the subject of the notice only for the period beginning on
the date the lessee or its designee receives the notice and
ending 120 days after the date on which (I) the Secretary or
the applicable delegated State receives written notice that
the accounting or other requirement has been performed, or
(II) a court has determined in a final decision that the
lessee is not required to perform the accounting, whichever
occurs first.
``(ii) If the lessee or its designee initiates an
administrative appeal or judicial proceeding to contest an
order to perform a restructured accounting issued under
subparagraph (B)(i), the limitation period in subsection (b)
shall be tolled from the date the lessee or its designee
received the order until a final, nonappealable decision is
issued in any such proceeding.
``(B)(i) The Secretary or the applicable delegated State
may issue an order to perform a restructured accounting to a
lessee or its designee when the Secretary or such delegated
State determines during an audit of a lessee or its designee
that the lessee or its designee should recalculate royalty
due on an obligation based upon the Secretary's or the
delegated State's finding that the lessee or its designee has
made identified underpayments or overpayments which are
demonstrated by the Secretary or the delegated State to be
based upon repeated, systemic reporting errors for a
significant number of leases or a single lease for a
significant number of reporting months with the same type of
error which constitutes a pattern of violations and which are
likely to result in either significant underpayments or
overpayments.
``(ii) The power of the Secretary to issue an order to
perform a restructured accounting may not be delegated below
the most senior career professional position having
responsibility for the royalty management program, which
position is currently designated as the `Associate Director
for Royalty Management', and may not be delegated to any
other person. If a State has been delegated authority
pursuant to section 205 of this Act, the State, acting
through the highest ranking State official having ultimate
authority over the collection of royalties from leases on
Federal lands within the State, may issue such order to
perform, which may not be delegated to any other person. An
order to perform a restructured accounting shall--
``(I) be issued within a reasonable period of time from
when the audit identifies the systemic, reporting errors;
``(II) specify the reasons and factual bases for such
order;
``(III) be specifically identified as an `order to perform
a restructured accounting';
``(IV) provide the lessee or its designee a reasonable
period of time (but not less than 60 days) within which to
perform the restructured accounting; and
``(V) provide the lessee or its designee 60 days within
which to file an administrative appeal of the order to
perform a restructured accounting.
``(C) An order to perform a restructured accounting shall
not mean or be construed to include any other action by or on
behalf of the Secretary or a delegated State.
``(D) If a lessee or its designee fails to substantially
comply with the requirement to perform a restructured
accounting pursuant to this subsection, a notice shall be
issued to the lessee or its designee that the lessee or its
designee has not substantially complied with the requirements
to perform a restructured accounting. A lessee or its
designee shall be given a reasonable time within which to
perform the restructured accounting. Such notice may be
issued under this section only by an Assistant Secretary of
the Interior or an acting Assistant Secretary of the Interior
who is a schedule C employee (as defined by section 213.3301
of title 5, Code of Federal Regulations) and may not be
delegated to any other person. If a State has been delegated
authority pursuant to section 205, the State, acting through
the highest State official having ultimate authority over the
collection of royalties from leases on Federal lands within
the State, may issue such notice, which may not be delegated
to any other person.
``(e) Termination of Limitations Period.--An action or an
enforcement of an obligation
[[Page H7600]]
by the Secretary or delegated State or a lessee or its
designee shall be barred under this section prior to the
running of the seven-year period provided in subsection (b)
in the event--
``(1) the Secretary or a delegated State has notified the
lessee or its designee in writing that a time period is
closed to further audit; or
``(2) the Secretary or a delegated State and a lessee or
its designee have so agreed in writing.
For purposes of this subsection, notice to, or an agreement
by, the designee shall be binding on any lessee who is liable
pursuant to section 102(a) for obligations that are the
subject of the notice or agreement.
``(f) Records Required for Determining Collections.--
Records required pursuant to section 103 of this Act by the
Secretary or any delegated State for the purpose of
determining obligations due and compliance with any
applicable mineral leasing law, lease provision, regulation
or order with respect to oil and gas leases from Federal
lands or the Outer Continental Shelf shall be maintained for
the same period of time during which a judicial proceeding or
demand may be commenced under subsection (b). If a judicial
proceeding or demand is timely commenced, the record holder
shall maintain such records until the final nonappealable
decision in such judicial proceeding is made, or with respect
to that demand is rendered, unless the Secretary or the
applicable delegated State authorizes in writing an earlier
release of the requirement to maintain such records.
Notwithstanding anything herein to the contrary, under no
circumstance shall a record holder be required to maintain or
produce any record relating to an obligation for any time
period which is barred by the applicable limitation in this
section. In connection with any hearing, administrative
proceeding, inquiry, investigation, or audit by the Secretary
or a delegated State under this Act, the Secretary or the
delegated State shall minimize the submission of multiple or
redundant information and make a good faith effort to locate
records previously submitted by a lessee or a designee to the
Secretary or the delegated State, prior to requiring the
lessee or the designee to provide such records.
``(g) Timely Collections.--In order to most effectively
utilize resources available to the Secretary to maximize the
collection of oil and gas receipts from lease obligations to
the Treasury within the seven-year period of limitations, and
consequently to maximize the State share of such receipts,
the Secretary should not perform or require accounting,
reporting, or audit activities if the Secretary and the State
concerned determine that the cost of conducting or requiring
the activity exceeds the expected amount to be collected by
the activity, based on the most current 12 months of
activity. This subsection shall not provide a defense to a
demand or an order to perform a restructured accounting. To
the maximum extent possible, the Secretary and delegated
States shall reduce costs to the United States Treasury and
the States by discontinuing requirements for unnecessary or
duplicative data and other information, such as separate
allowances and payor information, relating to obligations
due. If the Secretary and the State concerned determine that
collection will result sooner, the Secretary or the
applicable delegated State may waive or forego interest in
whole or in part.
``(h) Appeals and Final Agency Action.--
``(1) 33-month period.--Demands or orders issued by the
Secretary or a delegated State are subject to administrative
appeal in accordance with the regulations of the Secretary.
No State shall impose any conditions which would hinder a
lessee's or its designee's immediate appeal of an order to
the Secretary or the Secretary's designee. The Secretary
shall issue a final decision in any administrative
proceeding, including any administrative proceedings pending
on the date of enactment of this section, within 33 months
from the date such proceeding was commenced or 33 months from
the date of such enactment, whichever is later. The 33-month
period may be extended by any period of time agreed upon
in writing by the Secretary and the appellant.
``(2) Effect of failure to issue decision.--If no such
decision has been issued by the Secretary within the 33-month
period referred to in paragraph (1)--
``(A) the Secretary shall be deemed to have issued and
granted a decision in favor of the appellant as to any
nonmonetary obligation and any monetary obligation the
principal amount of which is less than $10,000; and
``(B) the Secretary shall be deemed to have issued a final
decision in favor of the Secretary, which decision shall be
deemed to affirm those issues for which the agency rendered a
decision prior to the end of such period, as to any monetary
obligation the principal amount of which is $10,000 or more,
and the appellant shall have a right to judicial review of
such deemed final decision in accordance with title 5 of the
United States Code.
``(i) Collections of Disputed Amounts Due.--To expedite
collections relating to disputed obligations due within the
seven-year period beginning on the date the obligation became
due, the parties shall hold not less than one settlement
consultation and the Secretary and the State concerned may
take such action as is appropriate to compromise and settle a
disputed obligation, including waiving or reducing interest
and allowing offsetting of obligations among leases.
``(j) Enforcement of a Claim for Judicial Review.--In the
event a demand subject to this section is properly and timely
commenced, the obligation which is the subject of the demand
may be enforced beyond the seven-year limitations period
without being barred by this statute of limitations. In the
event a demand subject to this section is properly and timely
commenced, a judicial proceeding challenging the final agency
action with respect to such demand shall be deemed timely so
long as such judicial proceeding is commenced within 180 days
from receipt of notice by the lessee or its designee of the
final agency action.
``(k) Implementation of Final Decision.--In the event a
judicial proceeding or demand subject to this section is
timely commenced and thereafter the limitation period in this
section lapses during the pendency of such proceeding, any
party to such proceeding shall not be barred from taking such
action as is required or necessary to implement a final
unappealable judicial or administrative decision, including
any action required or necessary to implement such decision
by the recovery or recoupment of an underpayment or
overpayment by means of refund or credit.
``(1) Stay of Payment Obligation Pending Review.--Any
person ordered by the Secretary or a delegated State to pay
any obligation (other than an assessment) shall be entitled
to a stay of such payment without bond or other surety
instrument pending an administrative or judicial proceeding
if the person periodically demonstrates to the satisfaction
of the Secretary that such person is financially solvent or
otherwise able to pay the obligation. In the event the person
is not able to demonstrate, the Secretary may require a bond
or other surety instrument satisfactory to cover the
obligation. Any person ordered by the Secretary or a
delegated State to pay an assessment shall be entitled to a
stay without bond or other surety instrument''.
(b) Clerical Amendment.--The table of contents in section 1
of the Federal Oil and Gas Royalty Management Act of 1982 (30
U.S.C. 1701) is amended by inserting after the item relating
to section 114 the following new item:
``Sec. 115. Secretarial and delegated States' actions and limitation
periods.''.
SEC. 5 ADJUSTMENT AND REFUNDS.
(a) In General.--The Federal Oil and Gas Royalty Management
Act of 1982 (30 U.S.C. 1701 et seq.) is amended by inserting
after section 111 the following:
``SEC. 111A. ADJUSTMENTS AND REFUNDS.
``(a) Adjustments to Royalties Paid to the Secretary or a
Delegated State.--
``(1) If, during the adjustment period, a lessee or its
designee determines that an adjustment or refund request is
necessary to correct an underpayment or overpayment of an
obligation, the lessee or its designee shall make such
adjustment or request a refund within a reasonable period of
time and only during the adjustment period. The filing of a
royalty report which reflects the underpayment or overpayment
of an obligation shall constitute prior written notice to the
Secretary or the applicable delegated State of an adjustment.
``(2)(A) For any adjustment, the lessee or its designee
shall calculate and report the interest due attributable to
such adjustment at the same time the lessee or its designee
adjusts the principle amount of the subject obligation,
except as provided by subparagraph (B).
``(B) In the case of a lessee or its designee who
determines that subparagraph (A) would impose a hardship, the
Secretary or such delegated State shall calculate the
interest due and notify the lessee or its designee within a
reasonable time of the amount of interest due, unless such
lessee or its designee elects to calculate and report
interest in accordance with subparagraph (A).
``(3) An adjustment or a request for a refund for an
obligation may be made after the adjustment period only upon
written notice to and approval by the Secretary or the
applicable delegated State, as appropriate, during an audit
of the period which includes the production month for which
the adjustment is being made. If an overpayment is identified
during an audit, then the Secretary or the applicable
delegated State, as appropriate, shall allow a credit or
refund in the amount of the overpayment.
``(4) For purposes of this section, the adjustment period
for any obligation shall be the six-year period following the
date on which an obligation became due. The adjustment period
shall be suspended, tolled, extended, enlarged, or terminated
by the same actions as the limitation period in section 115.
``(b) Refunds.--
``(1) In general.--A request for refund is sufficient if
it--
``(A) is made in writing to the Secretary and, for purposes
of section 115, is specifically identified as a demand;
``(B) identifies the person entitled to such refund;
``(C) provides the Secretary information that reasonably
enables the Secretary to identify the overpayment for which
such refund is sought; and
``(D) provides the reasons why the payment was an
overpayment.
``(2) Payment by secretary of the treasury.--The Secretary
shall certify the amount of the refund to be paid under
paragraph (1) to the Secretary of the Treasury
[[Page H7601]]
who shall make such refund. Such refund shall be paid from
amounts received as current receipts from sales, bonuses,
royalties (including interest charges collected under this
section) and rentals of the public lands and the Outer
Continental Shelf under the provisions of the Mineral Leasing
Act and the Outer Continental Shelf Lands Act, which are not
payable to a State or the Reclamation Fund. The portion of
any such refund attributable to any amounts previously
disbursed to a State, the Reclamation Fund, or any recipient
prescribed by law shall be deducted from the next
disbursements to that recipient made under the applicable
law. Such amounts deducted from subsequent disbursements
shall be credited to miscellaneous receipts in the Treasury.
``(3) Payment period.--A refund under this subsection shall
be paid or denied (with an explanation of the reasons for the
denial) within 120 days of the date on which the request for
refund is received by the Secretary. Such refund shall be
subject to later audit by the Secretary or the applicable
delegated State and subject to the provisions of this Act.
``(4) Prohibition against reduction of refunds or
credits.--In no event shall the Secretary or any delegated
State directly or indirectly claim or offset any amount or
amounts against, or reduce any refund or credit (or interest
accrued thereon) by the amount of any obligation the
enforcement of which is barred by section 115 of this Act.''.
(b) Clerical Amendment.--The table of contents in section 1
of the Federal Oil and Gas Royalty Management Act of 1982 (30
U.S.C. 1701) is amended by inserting after the item relating
to section 111 the following new item:
``Sec. 111A. Adjustments and refunds.''.
SEC. 6. ROYALTY TERMS AND CONDITIONS, INTEREST, AND
PENALTIES.
(a) Lessee or Designee Interest.--Section 111 of the
Federal Oil and Gas Royalty Management Act of 1982 (30 U.S.C.
1721) is amended by adding after subsection (g) the
following:
``(h) Interest shall be allowed and paid or credited on any
overpayment, with such interest to accrue from the date such
overpayment was made, at the rate obtained by applying the
provisions of subparagraphs (A) and (B) of section 6621(a)(1)
of the Internal Revenue Code of 1986, but determined without
regard to the sentence following subparagraph (B) of section
6621(a)(1). Interest which has accrued on any overpayment may
be applied to reduce an underpayment. This subsection applies
to overpayments made later than six months after the date of
enactment of this subsection or September 1, 1996, whichever
is later. Such interest shall be paid from amounts received
as current receipts from sales, bonuses, royalties (including
interest charges collected under this section) and rentals of
the public lands and the Outer Continental Shelf under the
provisions of the Mineral Leasing Act, and the Outer
Continental Shelf Lands Act, which are not payable to a State
or the Reclamation Fund. The portion of any such interest
payment attributable to any amounts previously disbursed to a
State, the Reclamation Fund, or any other recipient
designated by law shall be deducted from the next
disbursements to that recipient made under the applicable
law. Such amounts deducted from subsequent disbursements
shall be credited to miscellaneous receipts in the
Treasury.''.
(b) Limitation on Interest.--Section 111 of the Federal Oil
and Gas Royalty Management Act of 1982, as amended by
subsection (a), is further amended by adding at the end the
following:
``(i) Upon a determination by the Secretary that an
excessive overpayment (based upon all obligations of a lessee
or its designee for a given reporting month) was made for the
sole purpose of receiving interest, interest shall be paid on
the excessive amount of such overpayment. For purposes of
this Act, an `excessive overpayment' shall be the amount that
any overpayment a lessee or its designee pays for a given
reporting month (excluding payments for demands for
obligations determined to be due as a result of judicial or
administrative proceedings or agreed to be paid pursuant to
settlement agreements) for the aggregate of all of its
Federal leases exceeds 10 percent of the total royalties paid
that month for those leases.''.
(c) Estimated Payment.--Section 111 of the Federal Oil and
Gas Royalty Management Act of 1982 (30 U.S.C. 1721), as
amended by subsections (a) and (b), is further amended by
adding at the end the following:
``(j) A lessee or its designee may make a payment for the
approximate amount of royalties (hereinafter in this
subsection `estimated payment') that would otherwise be due
for such lease by the rate royalties are due for that lease.
When an estimated payment is made, actual royalties are
payable at the end of the month following the month in which
the estimated payment is made. If the estimated payment was
less than the amount of actual royalties due, interest is
owned on the underpaid amount. If the estimated payment
exceeds the actual royalties due, interest is owned on the
overpayment. If the lessee or its designee makes a payment
for such actual royalties, the lessee or its designee may
apply the estimated payment to future royalties. Any
estimated payment may be adjusted, recouped, or reinstated at
any time by the lessee or its designee.''.
(d) Volume Allocation of Oil and Gas Production.--Section
111 of the Federal Oil and Gas Royalty Management Act of 1982
(30 U.S.C. 1721), as amended by subsections (a) through (c),
is amended by adding at the end the following:
``(k)(1) Except as otherwise provided by this subsection--
``(A) a lessee or its designee of a lease in a unit or
communitization agreement which contains only Federal leases
with the same royalty rate and funds distribution shall
report and pay royalties on oil and gas production for each
production month base on the actual volume of production sold
by or on behalf of that lessee;
``(B) a lessee or its designee of a lease in any other unit
or communitization agreement shall report and pay royalties
on oil and gas production for each production month based on
the volume of oil and gas produced from such agreement and
allocated to the lease in accordance with the terms of the
agreement; and
``(C) a lessee or its designee of a lease that is not
contained in a unit or communitization agreement shall report
and pay royalties on oil and gas production for each
production month based on the actual volume of production
sold by or on behalf of that lessee.
``(2) This subsection applies only to requirements for
reporting and paying royalties. Nothing in this subsection is
intended to alter a lessee's liability for royalties on oil
or gas production based on the share of production allocated
to the lease in accordance with the terms of the lease, a
unit or communitization agreement, or any other agreement.
``(3) For any unit or communitization agreement if all
lessees contractually agree to an alternative method of
royalty reporting and payment, the lessees may submit such
alternative method to the Secretary or the delegated State
for approval and make payments in accordance with such
approved alternative method so long as such alternative
method does not reduce the amount of the royalty obligation.
``(4) The Secretary or the delegated State shall grant an
exception from the reporting and payment requirements for
marginal properties by allowing for any calendar year or
portion thereof royalties to be paid each month based on the
volume of production sold. Interest shall not accrue on the
difference for the entire calendar year or portion thereof
between the amount of oil and gas actually sold and the share
of production allocated to the lease until the beginning of
the month following such calendar year or portion thereof.
Any additional royalties dues or overpaid royalties and
associated interest shall be paid, refunded, or credited
within six months after the end of each calendar year in
which royalties are paid based on volumes of production sold.
For the purpose of this subsection, the term `marginal
property' means a lease that produces on average the combined
equivalent of less than 15 barrels of oil per well per day or
90 thousand cubic feet of gas per well per day, or a
combination thereof, determined by dividing the average daily
production of crude oil and natural gas from producing wells
on such lease by the number of such wells, unless the
Secretary, together with the State concerned, determines that
a different production is more appropriate.
``(5) Not later than two years after the date of the
enactment of this subsection, the Secretary shall issue any
appropriate demand for all outstanding royalty payment
disputes regarding who is required to report and pay
royalties on production from units and communitization
agreements outstanding on the date of the enactment of this
subsection, and collect royalty amounts owed on such
production.''.
(e) Production Allocation.--Section 111 of the Federal Oil
and Gas Royalty Management Act of 1982 (30 U.S.C. 1721), as
amended by subsections (a) through (d), is amended by adding
at the end the following:
``(l) The Secretary shall issue all determinations of
allocations of production for units and communitization
agreements within 120 days of a request for determination. If
the Secretary fails to issue a determination within such 120-
day period, the Secretary shall waive interest due on
obligations subject to the determination until the end of the
month following the month in which the determination is
made.''.
(f) New Assessment To Encourage Proper Royalty Payments.--
(1) In general.--The Federal Oil and Gas Royalty Management
Act of 1982 (30 U.S.C. 1721), as amended by section 4(a), is
further amended by adding at the end the following:
``SEC. 116. ASSESSMENTS.
``Beginning eighteen months after the date of enactment of
this section, to encourage proper royalty payment the
Secretary or the delegated State shall impose assessments on
a person who chronically submits erroneous reports under this
Act. Assessments under this Act may only be issued as
provided for in this section.''.
(2) Clerical amendment.--The table of contents in section 1
of such Act (30 U.S.C. 1701) is amended by adding after the
item relating to section 115 the following new item:
``Sec. 116. Assessments.''.
(g) Liability for Royalty Payments.--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 effective
collections of royalty and other payments, a lessee who is
required to make any royalty or other payment under a lease
or under the mineral leasing laws, shall make such payments
in the time and manner
[[Page H7602]]
as may be specified by the Secretary or the applicable
delegated State. A lessee may designate a person to make all
or part of the payments due under a lease on the lessee's
behalf and shall notify the Secretary or the applicable
delegated State in writing of such designation, in which
event said designated person may, in its own name, pay,
offset or credit monies, make adjustments, request and
receive refunds and submit reports with respect to payments
required by the lessee. Notwithstanding any other provision
of this Act to the contrary, a designee shall not be liable
for any payment obligation under the lease. The person owning
operating rights in a lease shall be primarily liable for its
pro rata share of payment obligations under the lease. If the
person owning the legal record title in a lease is other than
the operating rights owner, the person owning the legal
record title shall be secondarily liable for its pro rata
share of such payment obligations under the lease.''.
(h) Clerical Amendments.--(1) The heading of section 111 of
the Federal Oil and Gas Royalty management Act of 1982 (30
U.S.C. 1721) is amended to read as follows:
``ROYALTY TERMS AND CONDITIONS, INTEREST, AND PENALTIES''.
(2) The item relating to section 111 in the table of
contents in section 1 of such Act (30 U.S.C. 1701) is amended
to read as follows:
``Sec. 111. Royalty terms and conditions, interest, and penalties.''.
SEC. 7. ALTERNATIVES FOR MARGINAL PROPERTIES.
(a) In General.--The Federal Oil and Gas Royalty Management
Act of 1982 (30 U.S.C. 1701 et seq.), as amended by section 6
of this Act, is further amended by adding at the end the
following:
``SEC. 117. ALTERNATIVES FOR MARGINAL PROPERTIES.
``(a) Determination of Best Interests of State Concerned
and the United States.--The Secretary and the State
concerned, acting in the best interests of the United States
and the State concerned to promote production, reduce
administrative costs, and increase net receipts to the United
States and the States, shall jointly determine, on a case by
case basis, the amount of what marginal production from a
lease or leases or well or wells, or parts thereof, shall be
subject to a prepayment under subsection (b) or regulatory
relief under subsection (c). If the State concerned does not
consent, such prepayments or regulatory relief shall not be
made available under this section for such marginal
production: Provided, That if royalty payments from a lease
or leases, or well or wells are not shared with any State,
such determination shall be made solely by the Secretary.
``(b) Prepayment of Royalty.--
``(1) In general.--Notwithstanding the provisions of any
lease to the contrary, for any lease or leases or well or
wells identified by the Secretary and the State concerned
pursuant to subsection (a), the Secretary is authorized to
accept a prepayment for royalties in lieu of monthly royalty
payments under the lease for the remainder of the lease term
if the affected lessee so agrees. Any prepayment agreed to by
the Secretary, State concerned and lessee which is less than
an average $500 per month in total royalties shall be
effectuated under this section not earlier than two years
after the date of enactment of this section and, any
prepayment which is greater than an average $500 per month in
total royalties shall be effectuated under this section not
earlier than three years after the date of enactment of this
section. The Secretary and the State concerned may condition
their acceptance of the prepayment authorized under this
section on the lessee's agreeing to such terms and conditions
as the Secretary and the State concerned deem appropriate and
consistent with the purposes of this Act. Such terms may--
``(A) provide for prepayment that does not result in a loss
of revenue to the United States in present value terms;
``(B) include provisions for receiving additional
prepayments or royalties for developments in the lease or
leases or well or wells that deviate significantly from the
assumptions and facts on which the valuation is determined;
and
``(C) require the lessee or it designee to provide such
periodic production reports as may be necessary to allow the
Secretary and the State concerned to monitor production for
the purposes of subparagraph (B).
``(2) State share.--A prepayment under this section shall
be shared by the Secretary with any State or other recipient
to the same extent as any royalty payment for such lease.
``(3) Satisfaction of obligation.--Except as may be
provided in the terms and conditions established by the
Secretary under subsection (b), a lessee or its designee who
makes a prepayment under this section shall have satisfied in
full the lessee's obligation to pay royalty on the production
stream sold from the lease or leases or well or wells.
``(c) Alternative Accounting and Auditing Requirements.--
Within one year after the date of the enactment of this
section, the Secretary or the delegated State shall provide
accounting, reporting, and auditing relief that will
encourage lessees to continue to produce and develop
properties subject to subsection (a): Provided, That such
relief will only be available to lessees in a State that
concurs, which concurrence is not required if royalty
payments from the lease or leases or well or wells are not
shared with any State. Prior to granting such relief, the
Secretary and, if appropriate, the State concerned shall
agree that the type of marginal wells and relief provided
under this paragraph is in the best interest of the United
States and, if appropriate, the State concerned.''.
(b) Clerical Amendment.--The table of contents in section 1
of such Act (30 U.S.C. 1701) is amended by adding after the
item relating to section 116 the following new item:
``Sec. 117. Alternatives for marginal properties.''.
SEC. 8. APPLICABILITY.
(a) FOGRMA.--With respect to Federal lands, sections 202
and 307 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1732 and 1755), are no longer applicable. The
applicability of those sections to Indian leases is not
affected.
(b) OCSLA.--Effective on the date of the enactment of this
Act, section 10 of the Outer Continental Shelf Lands Act (43
U.S.C. 1339) is repealed.
SEC. 9. INDIAN LANDS.
The amendments made by this Act shall not apply with
respect to Indian lands, and the provisions of the Federal
Oil and Gas Royalty Management Act of 1982 as in effect on
the day before the date of enactment of this Act shall
continue to apply after such date with respect to Indian
lands.
SEC. 10. PRIVATE LANDS.
This Act shall not apply to any privately owned minerals.
SEC. 11. EFFECTIVE DATE.
Except as provided by section 115(h), section 111(h),
section 111(k)(5), and section 117 of the Federal Oil and Gas
Royalty Management Act of 1982 (as added by this Act), this
Act, and the amendments made by this Act, shall apply with
respect to the production of oil and gas after the first day
of the month following the date of the enactment of this Act.
SEC. 12. SAVINGS CLAUSE.
Nothing in this Act shall be construed to give a State a
property right or interest in any Federal lease or land.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
California [Mr. Calvert] and the gentleman from Hawaii [Mr.
Abercrombie] will each be recognized for 20 minutes.
The Chair recognizes the gentleman from California [Mr. Calvert].
(Mr. CALVERT asked and was given permission to revise and extend his
remarks.)
Mr. CALVERT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 1975, the Federal Oil and
Gas Royalty Simplification and Fairness Act of 1996. The purpose of
this bill is to improve the management of royalties from Federal oil
and gas leases onshore and on the Outer Continental Shelf, as well.
H.R. 1975 does this by establishing clear an equitable provisions for
the effective and efficient administration of leases by the Secretary
of the Interior to further exploration and development of oil and gas
resources.
Mr. Speaker, our existing laws, regulations, policies, and procedures
related to oil and gas leasing lack clarity and consistency and impose
unnecessary and unreasonable costs and burdens on lessees and the
Government alike. Because the Federal Royalty Program is so complex and
unfair a damper is placed upon competition for these leases--especially
among the smaller independent producers.
This complexity is an outgrowth of reforms mandated by conditions in
the late 1970's when States and Indian tribes which share in these
leasing receipts charged that the Federal agency then responsible for
collecting royalties could not adequately track payments against
obligations. The Commission on Fiscal Accountability of the Nation's
energy resources was chartered to study possible reforms, and made 60
recommendations for improvements. Nearly 14 years ago, Congress passed
the Federal Oil and Gas Royalty Management Act to implement many of the
panel suggestions, which, indeed, has clearly improved Federal royalty
management with increased revenues to the U.S. Treasury, and to the
States via the net receipts sharing formula for onshore leases and
certain OCS leases.
However, further improvements are necessary. For example, multiple
conflicting laws and recent lower court decisions holding that no
statute of limitations applies for royalty purposes have created
uncertainty and unfairness for lessees subject to indefinite audit
exposure.
Mr. Speaker, unlike the situation for taxpayers and the IRS, the
royalty books are never closed for a lessee of the Interior
Department--and because of this the Government doesn't act timely to
make payment demands of lessees. It simply is not a priority of the
Feds because the Department of the Interior can go back decades later
[[Page H7603]]
to audit and if necessary demand further payment. But, what kind of way
is this to run a multibillion dollar program? Money has a time value
and the Secretary's levy of interest on royalty underpayments does not
fully offset the many years delay in collecting what may be owed.
Furthermore, current law severely restricts Outer Continental Shelf
Lands Act lessees access to overpayments made to the Federal
Government, and does not provide for the time value of lessees'
overpayments, while at the same time underpayors definitely owe
interest. In other words, the playing field is so far tilted it's a
wonder anybody plays the game.
But, Mr. Speaker, the most overlooked reform recommended by the
Commission was to further involve the States in Federal royalty
collections. We must not forget that many States have auditors who are
ready, willing, and able to do the job, as well as the motivation to go
after each and every penny or royalty owed. Because for every dollar
collected from an onshore Federal lessee 50 cents will come back to the
State's treasury. For most of the States where the Federal acreage is
concentrated this revenue stream is a significant part of their
operating budgets for schools, roads, or other programs. For such
States, the lack of aggressive efforts by the Feds to collect these
moneys to be shared is very frustrating. And to top it all off, since
fiscal year 1991 the States have had to pay one-fourth of the Feds
costs to manage the mineral leasing program--from the land-use planning
stage through leasing, permitting, and, if the leases are productive,
the collection of royalties.
Mr. Speaker, in truth, this is why we are here today. Our States are
demanding a larger role in policing what they are owed from lessees and
H.R. 1975 will provide them such opportunity. The Vice President
proposed 1 year ago to totally devolve the royalty program to the
States. Although that proposal was pulled back after a few months, the
administration fully supports the State delegation language we are
voting upon today, indeed, the entire bill has the President's backing.
Quite frankly, I would have liked a stronger delegation provision
requiring the Secretary of the Interior to give primacy for royalty
collection to those States which are able to demonstrate an efficient
program, but that was not achievable this year. Instead, the Secretary
will have discretion to hand down these duties to States or maintain
the current Federal role. Given the realities of the Federal budget, I
believe enactment of H.R. 1975 will ultimately lead to expanded
delegation to the States simply because staffing in the Interior
Department will for all practical purposes dictate this result.
In conclusion, Mr. Speaker, the Congressional Budget Office estimates
this bill would increase revenues to the U.S. Treasury by $36 million
over 6 years, and cumulatively to the States by $9 million during the
same interval. This bill is good Government, pure and simple, and I ask
my colleagues for their support.
Mr. Speaker, I reserve the balance of my time.
Mr. ABERCROMBIE. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of the manager's amendment to H.R.
1975, the Federal Oil and Gas Royalty Fairness and Simplification Act.
May I say in that regard that I want to thank my colleague and friend,
the gentleman from California, Chairman Ken Calvert, and the staff on
his side for their fairness in helping to make this as simple a process
as possible.
As he has indicated in his remarks, this is an issue with which not
everyone may be familiar but which is fundamental to the sound fiscal
policy with respect to Federal oil and gas royalty fees.
I also note the presence on the floor of the chairman of our
Committee on Resources, Mr. Young, and I am very pleased to see him
here and I appreciate his kindness and fairness. I can no doubt add a
few other adjectives, depending on how much I sense from him that he
appreciates the same in me. I can see from his body language that he
understand the full import of my remarks.
Mr. Speaker, the manager's amendment will substitute the language
written by the Senate Committee on Energy and Natural Resources for the
language reported by the House Committee on Resources. The primary
difference between the House and Senate language is that the Senate
language authorizes but does not mandate the Secretary of the Interior
to delegate certain royalty management functions to willing and
qualified States.
This issue has been gone over in detail by the gentleman from
California [Mr. Calvert], so I will not repeat it.
This would resolve my major problem with the bill and removes the
President's veto threat on the bill. I would note that during committee
consideration of H.R. 1975 I offered an amendment which the majority
did not accept at that time that would have made this very change. I am
pleased to see that they now concur with me and that there is no reason
to require the Secretary of the Interior to transfer the royalty
functions to the States.
But while there are many positive features in the manager's
amendment, it still contains, in my estimation, some flaws. For
example, I continue to believe that is no reason to require the Federal
Government to pay interest on oil companies' overpayments to the
Federal Treasury, especially when these mistakes occur as a result of
sloppy accounting or possible sloppy accounting by oil and gas
companies. This new benefit for oil and gas corporations will create,
again in my estimation, a new Federal debt and possibly cost taxpayers
an estimated $44 million between 1997 and 2002 and possibly an
additional $10 million in direct spending each year thereafter.
However, in the interest of comity, I am willing to take the majority
at its word, particularly that of the gentleman from California,
Chairman Calvert, and the gentleman from Alaska, Chairman Young, and
accept the administration's assurance that this provision will not be
allowed to be abused by the oil and gas lessees. Knowing the gentleman
from Alaska [Mr. Young] as I do, I doubt that anybody can get away with
anything.
Improvement is always in order, and the majority has worked
diligently with the Clinton administration to effect this compromise
and, I would like to reiterate, has worked diligently with the minority
on the committee as well. If we are to govern, then we must be willing
to accept compromises. I do so with this bill, and in this context and
in this spirit of comity, we do not object to the passage of H.R. 1975,
as amended by the bill's manager, and recommend its acceptance.
Mr. Speaker, I reserve the balance of my time.
{time} 1600
Mr. CALVERT. Mr. Speaker, I yield 2 minutes to the gentleman from
Alaska [Mr. Young], chairman of the committee.
Mr. YOUNG of Alaska. Mr. Speaker, I thank the gentleman for yielding
me this time, and I thank the gentleman from Hawaii [Mr. Abercrombie]
for his kind words.
This is an ability here to work together, and I can assure the
gentleman we will be watching this very closely to make sure what we
have stated on the floor today. The gentleman from California [Mr.
Calvert] has done an excellent job, and of course the ranking member
has also done the job.
I would suggest respectfully that this is long overdue in the energy
field. It does in fact, as has been mentioned before, create $36 or $37
million for the Federal Government and $9 million for the State. And
may I suggest one thing. It is a level playing field with the IRS.
I want to suggest one thing I do agree with. If there is bad
accounting on the oil company's side, we will be watching this very
closely. But equally if there is bad accounting on the Interior side,
we will be watching that very closely. So no one should be to blame. We
should solve this problem, and that is what we are trying to do with
this legislation.
I would suggest though, Mr. Speaker, that we have a letter from a
bipartisan group of Governors, including my Governor, Tony Knowles, and
Gov. Pete Wilson, Gov. Philip Batt, Gov. Bill Graves, Gov. Marc Raciot,
Gov. Benjamin Nelson, Gov. Gary Johnson, Gov. Edward Schafer, Gov.
Frank Keating, Gov. George Bush, Gov. Michael Leavitt, and Gov. Jim
Geringer supporting this.
[[Page H7604]]
And, by the way, it says: ``This legislation provides the best
opportunities for Federal and State cooperation and partnerships in
natural resources policy that has ever emerged from this Congress.'' So
I want to suggest this is strongly supported by Governors and should be
supported, and I do welcome the support from the gentleman from Hawaii.
This ability, as he mentioned, to govern, is by doing the art of
possible, by coming to a solution, and I do support this legislation.
Mr. ABERCROMBIE. Mr. Speaker, could you kindly inform me of the time
remaining?
The SPEAKER pro tempore (Mr. Gutknecht). The gentleman from Hawaii
[Mr. Abercrombie] has 16 minutes remaining, and the gentleman from
California [Mr. Calvert] has 13 minutes remaining.
Mr. ABERCROMBIE. Mr. Speaker, I yield 5 minutes to the gentleman from
New Mexico [Mr. Richardson].
(Mr. RICHARDSON asked and was given permission to revise and extend
his remarks.)
Mr. RICHARDSON. Mr. Speaker, let me just say that this is a good
bipartisan bill, and there are five fundamental reasons why this is a
good bill.
First, it clarifies a collection time frame by establishing a 7-year
statute of limitations allowing for certain extensions by the
Secretary.
Second, it levels the playing field, provides for interest at
equivalent IRS rates to be paid on royalty overpayments and continues
interest payments on underpayments.
Third, it empowers the States. This gives the States a more rightful
role in the delegation of royalty functions that choose to perform the
duties. It gives the States, many oil and gas States, many in the West,
more involvement in collection, and that is critically important.
It scores positive. What we have is CBO estimating $36 million to the
Federal Government and an additional $9 million to the States over 6
years.
Last, the administration supports the bill. And because of the
changes coming from the Senate, I am informed that the ranking member
of our committee, the distinguished Member from California, George
Miller, is in support of the bill.
What we have is a piece of legislation that will allow individual
States to take over the responsibility of collecting royalty payments
for oil, gas and coal leases on Federal lands.
Needless to say, in my State of New Mexico this is critically
important. This is not, and I repeat ``not'' an environmentally
controversial bill, rather it corrects and updates accounting practices
for Federal oil and gas royalty collections. Current laws and rules
protecting land, air and water resources are not changed in any way by
this measure. The only thing green about H.R. 1975 is the color of the
money that will be going to Federal and State governments. This is
important.
As I mentioned before, the White House supports this measure, but
also the Department of the Interior, the Department of Energy, and a
bipartisan coalition of 14 Governors, including my own in New Mexico.
And, incidentally, 100 percent of Federal onshore royalties are
collected from the States of these 14 Governors.
As many know, my congressional district includes some of the highest
oil and natural gas production in the United States. Because my State
of New Mexico is the fourth largest natural gas producer and the
seventh largest oil producer, it is directly affected by how the
Federal Government collects royalty on that production. This will have
a positive impact.
Let me just relate an incident, a little story on why we need this
legislation. Several years ago a New Mexico independent producer was
wrongly and unfairly assessed $7,650 by the Minerals Management
Service, MMS.
This assessment related to the company's September 1991 royalty
report. The report was due by 4 p.m. on October 31, 1991. Due to a
crippling snow storm in Denver that day, Federal Express could not
deliver the report until November 1 at 10:05 a.m. More than 100 other
companies experienced this same problem. Unbelievably, all were
penalized with similar assessments.
Even though the New Mexico producer appealed his case to MMS,
Minerals Management Service, and argued that the snow storm was out of
control, he was still assessed $7,650. Unfortunately, a lot of time and
money was wasted in an effort to rectify the situation, but this
agency, Minerals Management Service, would not change its decision.
What this bill does, H.R. 1975, is that it addresses the problem by
implementing a more reasonable system for the imposition of agency
assessment. This is a reform bill. It is long overdue. We need to
govern the laws that govern the collection of oil and gas royalties.
This is not just an oil and gas giveaway or a giveaway to western
States. We make money. It is a bill that also makes the collection more
efficient. It is reform. It improves the bureaucracy.
If there are oil and gas producers in States, many of them are
hurting, they are talking about production problems and the price of
oil. They are not doing well. They are not those big oil and gas guys
that we think of in Cadillacs running around spending money. They are
men and women that are trying to make a living. And in my State, I can
tell my colleagues, it has been tough lately. This will be a slight
improvement. In passing this bill we will keep them from getting
snowballed like this constituent of mine in 1991.
In summary, this is a good bill. This is a bill that make sense.
First, the administration supports the bill, it is a good piece of
legislation and I urge its passage.
Mr. CALVERT. Mr. Speaker, I yield 3 minutes to the gentleman from
Texas [Mr. Thornberry].
Mr. THORNBERRY. Mr. Speaker, I thank the gentleman for yielding me
this time and I rise in support of this legislation.
Mr. Speaker, my constituents believe we need to be trying to move the
Federal Government in two directions; one to make the Federal
Government smaller, get it out of many of the aspects of our lives
where it has placed itself; and the second is to try to make the
Federal Government work smarter, to put a little dose of common sense
into many of the things that the Federal Government does.
That is exactly where this piece of legislation fits in because it
will simplify and streamline, and make more certain royalty collections
off of Federal lands and lands off the outer Continental Shelf. That
process today is an endless morass that I find very few people
completely understand and it costs an enormous amount of money to
comply with, both from the taxpayers' standpoint and from small
independent oil and gas companies.
As a result of simplifying and streamlining these procedures, we can
actually save the Federal Government a little money as well as the
States which are involved. We are not talking about a tremendous amount
of money, it is several million dollars, but it is a step in the right
direction and it seems to me we should do it. It gets the States more
involved in royalty collection, and I think that is a step in the right
direction.
Personally, I would like to go further in that respect. I would be
very interested in exploring a royalty in-kind program where the States
could actually get the crude oil or the gas as it is produced, but at
least this moves in the direction of having more State participation
and I think that is good.
The other thing this bill does is it provides opportunity to diminish
some of the regulatory burdens which are such a problem with oil and
gas business across the country at this point. We are in a situation
where the price of oil or gas is not terribly high and yet the cost of
production is terribly high. And the Federal Government adds to that
cost of production through taxes and regulations and paperwork such as
are involved in this bill. If we can reduce the cost of production, we
can prevent the thousands of wells from being shut in and that is
happening today.
The United States continues to grow more dependent upon foreign
sources of oil because we cannot economically produce oil in this
country. To the extent this bill takes a small but significant step
towards reducing the regulatory burdens that drive up the costs, we can
encourage exploration and hopefully encourage the production of
domestic oil and gas upon which our security is based.
Mr. Speaker, I think we need to do that not just on Federal lands but
[[Page H7605]]
throughout all of the private sector in oil and gas production to
increase our energy independence, but, again, this bill takes a step in
the right direction and, therefore, I urge its adoption.
Mr. ABERCROMBIE. Mr. Speaker, I yield 3 minutes to the gentleman from
California [Mr. Dooley], and in the process thank him for his
assistance with this bill. Without his cooperation, insight and input,
I do not think we would have reached such as successful conclusion.
(Mr. DOOLEY of California asked and was given permission to revise
and extend his remarks.)
Mr. DOOLEY of California. Mr. Speaker, first off, I would like to
thank both the gentleman from Hawaii [Mr. Abercrombie] and the
gentleman from California [Mr. Calvert] for their hard work. Certainly
I think it was their dedication to trying to move forward in a
responsible manner on this issue that has allowed us to end at this
point, where we have such strong bipartisan support for this
legislation, where we have the President and the administration in
support of this legislation, and where we have 14 Governors, bipartisan
in their composition, representing 99 percent of the oil which is
produced onshore which will be subject to these regulations, that are
also supporting it.
The reasons for their support, I think, are very clear and they have
been enunciated by I think all the speakers that have spoken up to this
time. This bill obviously is a good bill for producers and provides
greater certainty. It is a good bill for taxpayers and will generate
additional revenues. It is a good bill for both the State and the
Federal Government because with delegating some of this authority to
the States we have then an entity which has a vested interest and an
incentive to move forward in a very expedited fashion to collect the
royalties which are due both to them and to the Federal Government.
Now, there might be some criticism that might be voiced, and it will
be very limited in nature, where some people will be concerned that
this measure is going to have the impact of perhaps limiting the
ability of the Federal Government to collect on past royalties. That is
not the case. This bill will only apply to royalties collected in the
future.
There is also perhaps going to be some reservations expressed with
the statute of limitations, that this will impede the ability of the
State and the Federal Government to collect those royalties. That is
not true either. We are placing a 7-year time limit. There is
absolutely no reason why the State or the Federal Government and those
officials which are responsible for collecting those royalties cannot
do so within 7 years.
In those instances where a company might be guilty of fraud, that
exemption in that statute of limitations of 7 years does not apply.
Furthermore, if the State or the Federal Government or those officials
assess a royalty and make a claim, that also then is not subject to
that 7-year statute of limitations from that time forward.
I think we have a bill which again provides protections to the
taxpayers. It is a responsible bill. It is in the best interest of all
parties involved.
Once again I want to commend the bipartisan effort on behalf of the
two subcommittee chairmen that really led to the development of this
legislation.
Mr. CALVERT. Mr. Speaker, I yield 5 minutes to the gentleman from
Texas [Mr. Laughlin].
(Mr. LAUGHLIN asked and was given permission to revise and extend his
remarks.)
Mr. LAUGHLIN. Mr. Speaker, this bill should be noncontroversial. It
corrects and updates accounting practices for Federal oil and gas
royalty collections. After more than 1 year of intense detailed
negotiations we have an agreement on the legislative language before us
today.
Many Republicans and many democrats, in fact, 50 House Democrats,
have signed a letter of support. The President of the United States,
the Department of the Interior, the Department of Energy and 14
Governors, as the gentleman from Alaska [Mr. Young] read to us.
This is a bill that has national impact because when we look at the
map to my immediate left we can see all but about 10 of our States
colored in red.
{time} 1615
Those States colored in red are those States with Federal oil and gas
leases. I heard the gentleman from New Mexico speak about the State of
New Mexico. I just wish some of that or more of that were in my
district in the Gulf Coast of Texas.
The President of the United States has sent a letter stating strong
support for enactment of H.R. 1975. In fact the Clinton Gore campaign
has sent a letter signed by Ann Lewis, Deputy Campaign Manager, stating
the legislation simplifies the royalty collection process for onshore
and offshore natural gas and oil production.
She says in her letter: The President supports it because he believes
that it provides fairer rules governing the relationship between the
Federal Government and leaseholders on Federal lands. Getting all these
people to agree was not easy. But we have an agreement, and now is the
time to support the agreement.
Pass it today.
Members should not be confused or misinformed by rhetoric about the
environment. Our friend, the gentleman from new Mexico, spoke about why
this is not harmful to the environment. He had some phrase about green.
The only thing I can see green about this is the eyeshades of the
Government accountants who are cutting checks payable to the Federal
Government. That is the accountants from the oil companies.
This cannot be confused with the rhetoric we sometimes hear on the
House floor about corporate welfare. The most important part of this is
being fair to the corporate citizens just like individuals citizens of
our country.
An important part of the bill new to royalty policy is the
requirement that the Federal Government pay interest on royalty
overpayments.
There are two reasons to put this requirement into law. First, our
royalty reporting deadline requires companies to pay royalties within
30 days of production. In today's natural gas marketplace, a producer
frequently will not have the data he or she needs to accurately report
royalties.
That is just a function of the marketplace. Gas has moved to hub
centers where marketeers, usually third parties, sell the gas and
report back the precise sales price and volumes to the producer. This
can take months, but producers facing the 30-day deadline have to make
payments on the production. So they estimate price and volumes and make
payments on those estimates, usually adding additional funds to avoid
making underpayments, which are subject to automatic penalty and
interest payments. Unfortunately, producers have been discouraged from
this practice because the bureaucracy does not promptly process their
refunds, even though the Government is earning interest from day one on
their overpayments.
It is not a case of producers making mistakes or overpayment of
royalties. It is, rather, a case where the regulatory deadlines do not
give producers enough time to gather the accurate data they need to
make correct payments at the outset.
Now, the gentleman from Hawaii raised a valid point that this could
be misused. For that reason, the interest rate is fair to everyone
involved. In fact, there is a cap on the interest rate that was
designed to prevent companies from gaming the system. That cap provides
that in this bill no more payment could be paid on overpayment in
excess of 10 percent of the overpayment by the company. This is really
not any different than we do citizens of this country when they overpay
the IRS.
I well remember the days when the IRS charged penalty and interest
but, if you overpaid them and they owed you money, they did not pay you
any interest. Thank God that has been changed, and that is what we are
trying to do here.
Finally, Mr. Speaker, the interest provisions coupled with the
statute of limitations and litigation reform contribute to the
Congressional Budget Office determination that the Federal Treasury
will receive an additional $51 million and States will receive an
additional $33 million over 7 years. That indicates many reasons, Mr.
Speaker, why this bill should receive the strong support of Members of
the House. I urge its passage. I thank the gentleman very much for
yielding time to me.
[[Page H7606]]
Mr. ABERCROMBIE. Mr. Speaker, I yield 5 minutes and 15 seconds to the
gentlewoman from New York [Mrs. Maloney].
Mrs. MALONEY. Mr. Speaker, I rise in opposition to H.R. 1975, the
Federal Oil and Gas Royalty Simplification and Fairness Act.
I do so reluctantly because there is much to be said for many parts
of this measure.
The States have demonstrated that they are committed to collecting
the full and fair value of Federal royalty producting revenues which by
Federal law they share.
Unfortunately, while the Minerals Management Service has made several
cosmetic improvements to their program, my information suggests that
they are not as avid in assuring that the public receives its fair due
from the oil and gas industry's privilege of exploitation of public
resources.
The only reform enacted by this bill is a stranglehold on the Federal
Government's ability to collect money owed on oil and gas royalties.
H.R. 1975 would impose a 7-year statute of limitations on the Federal
Government and the States for all judicial proceedings and audits
regarding oil and gas royalties.
So, if we uncover evidence of money owed the Federal Government from
undervalued oil and gas in the future, our hands our tied--we would not
be able to collect money owed the American taxpayer.
This bill will enhance the oil industry's position at the public
cost.
My opposition is directed at those portions of the bill which
establish new provisions on a statute of limitations and the ability of
the Government to obtain needed records for the conduct of audits.
These provisions may preclude the Federal Government from collecting
millions of dollars in past due royalties owed.
The Subcommittee on Government Management, Information and Technology
of the House Government Reform and Oversight Committee recently
concluded hearings that showed that $856 million is owed in past due
royalties in the State of California alone.
I would like to be able to say that such uncollected debt will not
happen again.
Disregarding warnings that these royalties were outstanding, the
Minerals Management Service entered into agreements with several of the
companies that may preclude and will at least complicate any full
collection.
Only after I released a report with the project on Government
oversight pointing out the problem and after an Interior interagency
task force issued a detailed study did the department reluctantly
acknowledge the underpayment in California.
Without an adequate understanding of how the department has managed
the royalty program under present law and a complete explanation of how
it managed to overlook hundreds of millions of dollars,
I believe it reckless to change the law.
The hearings also indicated that the problem of undervaluation is not
confined to California alone and that there is good cause to believe
that even more money is owed from Federal public leases throughout and
offshore the Nation.
It is important to understand that half of the royalties collected by
the department from onshore oil production go to the States.
In California this revenue is used only for education.
Chairman Calvert of the Subcommittee on Energy and Mineral Resources
of the House Resources Committee has taken some laudatory steps to
resolve some ambiguous language in the bill through technical
amendments to the effective date provisions of H.R. 1975, and has
assured me that it is the intent of the drafters to apply only the
provisions specified in the effective date provision retroactively.
I remain concerned, however, that language in the bill may still
provide fodder for creative lawyers to delay collection of the
royalties owed because the industry's undervaluation even further.
One source of my concern is in section 115(f) of the bill which
states:
Notwithstanding anything herein to the contrary, under no
circumstance shall a record holder be required to maintain or
produce any record relating to an obligation for any time
period which is barred by the applicable limitation in this
section.
The reference to ``for any period'' is language reasonably construed
to call for retroactivity and, if so construed, would disable the
Department of the Interior from obtaining the information necessary to
proceed on an undervaluation claim.
At a minimum--to clearly avoid the retroactivity issue that Chairman
Calvert has assured me was not intended--this language should be
deleted.
Its deletion would not undercut the bill's remaining objectives.
In other words, this language is moving more toward proprietary
protection of these records.
More broadly, my investigation indicates that it is not the right
time for us to be placing time and records limitations on the
Department of the Interior.
Indeed, industry's highly questionable claims of confidentiality and
repeated litigation over document access has and will continue to
unduly delay any efforts by Interior to collect on undervaluation
claims.
Provisions in this bill will only serve to strengthen industry's lack
of cooperation.
Finally, transfer of more authority to the States, while laudatory,
will take its own toll on the timing and completion of the audits and
investigations that are a prerequisite for bringing claims of underpaid
royalties.
Certainly the Federal Government and State delegates should be
encouraged to conduct audits in a prompt manner.
For the time being, however, I believe that this should be pursued
administratively rather than legislatively.
And, the Department has taken steps to increase the timeliness of the
audit process.
We should be encouraging the Department to keep abreast of changes in
industry structure and operations that impact royalty collections in
order to adequately respond.
At this time, however, the Department is simply not capable of
collecting the royalties actually owed on Federal production.
It has not demonstrated an understanding of the very industry it
regulates.
And, it is forced to use after the fact audits to uncover basic
structural data concerning the industry.
Putting additional restraints on the Department, through time and
record access limitations, will only bring more of the same losses in
royalty revenues.
We should be looking at whether there are obstacles under existing
law that are hampering the Department's ability to do its job the right
way.
In sum, my investigations have shown that at this time we simply do
not have sufficient information concerning the difficulties of
collecting royalties faced by diligent auditors and administrators, and
the problems the Department of the Interior faces that are hampering
its ability to do what we instructed it to do--collect the full fair
market value in royalties owed the public.
We owe it to the public to conduct a more thorough inquiry into these
matters before we leap to make changes which, in my view, will lead to
further losses of needed revenues for the citizens and the States.
I want to ask the chairman from California if he will hold to his
testimony in front of my committee when he said,
In no way is the Federal Government barred from pursuing
demands for payment of royalties owed on oil and gas produced
prior to the enactment of my bill. The seven-year statute of
limitations affects only production post-enactment.
Mr. CALVERT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to reiterate, my bill expressly provides that the
statute of limitations created herein is prospective only and, of
course, in cases of fraud and concealment of records, it is void
anyway. The leases at issue in the interagency task force report
involved production from 1980 through 1993 or so. H.R. 1975 will in no
way bar the Federal Government from pursuing the allegations of
underpayment if that is what the Secretary of Interior decides to do.
My bill says, act in a timely manner, Mr. Secretary, the taxpayers
deserve no less or, alternatively, delegate your responsibility for
royalty collection to those States that wish to do the job more
efficiently and more timely.
Mr. Speaker, I reserve the balance of my time.
Mr. ABERCROMBIE. Mr. Speaker, I yield 2 minutes to the gentleman from
Texas [Mr. Bentsen].
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
[[Page H7607]]
Mr. BENTSEN. Mr. Speaker, I strongly support H.R. 1975, the Federal
Oil and Gas Royalty Simplification and Fairness Act. H.R. 1975 would
streamline our Federal royalty collection system by improving the
management of royalties from Federal and outer continental shelf oil
and gas leases.
Currently, about $4.2 billion is collected annually by the Federal
Government in mineral receipts--our Nation's third largest revenue
source. However, reform of our Nation's royalty collection system has
been needed for some time. H.R. 1975 achieves the goals set out by the
administration, the States, and industry to provide simplicity and
fairness in the partnership between the Federal Government and the
leaseholders of Federal lands.
Specifically, this legislation would establish a clear statute of
limitations on royalty collection, expand existing delegation to States
provisions, and set time limits on administrative appeal decisions.
This legislation also provides marginal well relief by reforming
royalty collections for low-production wells--an issue of great
importance to my home State of Texas.
At a time when we continue to see increasing reliance on oil imports,
this legislation provides the necessary relief to enhance domestic
production in both an economically efficient and environmentally sound
way. In addition, H.R. 1975 would help Congress in its efforts to
balance the budget by providing an additional $51 million in royalties
over the next 7 years.
H.R. 1975 is supported by the administration, a bipartisan delegation
of Members from Congress as well as 14 of our Nation's Governors who
represent most of our Federal onshore production. It is also supported
by the Interstate Oil and Gas Compact Commission and industry trade
associations representing our Nation's Federal lessees. I urge my
colleagues to support royalty simplification and fairness by voting in
favor of H.R. 1975.
Mr. CALVERT. Mr. Speaker, I reserve the balance of my time.
Mr. ABERCROMBIE. Mr. Speaker, I have no further requests for time.
I include for the Record a letter from the White House addressed to
me and signed by the Chief of Staff, Mr. Leon Panetta, in support of
the bill:
The White House,
Washington, DC, May 30, 1996.
Hon. Neil Abercrombie,
House of Representatives,
Washington, DC.
Dear Mr. Abercrombie: I am writing to inform you of the
Administration's position regarding the pending Oil and Gas
Royalty Simplification and Fairness legislation (S. 1014).
Let me assure you that the Administration remains committed
to ensuring the efficient management of Federal lands and
finding new ways for the States to work cooperatively and
creatively with the Federal Government. The President shares
your hope that an agreement can be reached on the State
delegation issue.
In an effort to resolve this issue, Administration
representatives, working with the staff of the Senate Energy
Committee, were successful in reaching an agreement on
language that would expand the list of delegable royalty
management authorities, without reducing the Secretary of the
Interior's responsibility with respect to the management of
Federal lands. That language was included in S. 1014, which
was reported out of the Senate Energy Committee on May 1st.
The Administration supports S. 1014 as reported out of
committee, but will seek a minor technical amendment. The
Administration believes this bill's State delegation language
is acceptable, unlike the language included in H.R. 1975, the
House Resources Committee bill on Royalty Simplification.
The Administration will continue to work with Congress as
the legislative process moves forward, and stands ready to
work in support of the language included in the Senate Energy
Committee bill. I appreciate your interest and support in
this important legislation.
Sincerely,
Leon E. Panetta,
Chief of Staff.
{time} 1630
Mr. Speaker, I yield back the balance of my time.
Mr. CALVERT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, in closing I would like to first thank the gentleman
from Hawaii [Mr. Abercrombie], my good friend. We worked through this
bill over the last year and had many occasions to go back and forth,
but in the end I think we ended up with a good piece of legislation
which is supported by most everyone here, and I certainly am
appreciative of the time and effort that both him and his staff have
put into this, and I thank him and look forward to other legislation in
the future; and also to the gentleman from California [Mr. Miller], the
ranking member of the subcommittee, for all of his, and the overall
committee, for all his help.
Mr. Speaker, this bill, in closing, will raise money for the Feds and
the States. It certainly has bipartisan support in the House, the
Senate and 14 Governors. It has the administration support from the
White House; the Secretary of Interior, Bruce Babbit. It enacts clear
and equitable reform, gives more power to the States. It establishes a
certain statute of limitation period.
It is a good bill, and I urge its passage.
Mr. MARKEY. Mr. Speaker, I rise in opposition to H.R. 1975. This ill-
named royalty fairness bill is yet another example of corporate welfare
for well-heeled oil and gas producers operating on public lands.
Just 2 months ago, press reports reveals that 10 oil companies may
have underpaid royalties and interest to the Federal Government by as
much as $856 million on land in California they lease from the Federal
Government to drill for oil.
What has the Republican-controlled Congress proposed in response to
this royalty rip-off?
First, the Republican majority in the House voted to repeal the gas
tax, a move that most economists agree the oil companies will quickly
pocket for themselves. Consumers are unlikely to actually see any of
this cut reflected in lower prices at the pump, as the Republicans
rejected all Democratic efforts to assure the savings would actually be
rebated to consumers.
And now today, with this bill, we will be providing the big oil and
gas companies with yet another windfall. H.R. 1975 will:
Result in more than $200 million being paid out to oil and gas
companies over the next 20 years by requiring the taxpayers to pay
interest payments to oil companies who--through their own stupidity,
mismanagement, or incompetent accounting--have overpaid royalties to
the Federal Government; and
Establish a 7-year statute of limitations that will undermine the
Federal Government's ability to collect moneys owed it by huge oil and
gas companies.
I think it's time we stopped providing Federal freebies to deadbeat
drillers. We should defeat this bill. It is bad energy policy and bad
fiscal policy. Thank you, and I yield back the balance of my time.
Mr. CALVERT. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Gutknecht). The question is on the
motion offered by the gentleman from California [Mr. Calvert] that the
House suspend the rules and pass the bill, H.R. 1975, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________