[Congressional Record Volume 170, Number 118 (Monday, July 22, 2024)]
[House]
[Pages H4650-H4651]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1615
                         ROYALTY RESILIENCY ACT

  Mr. WESTERMAN. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 7377) to amend the Federal Oil and Gas Royalty Management 
Act of 1982 to improve the management of royalties from oil and gas 
leases, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 7377

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Royalty Resiliency Act''.

     SEC. 2. DETERMINATION OF ALLOCATIONS OF PRODUCTION FOR UNITS 
                   AND COMMUNITIZATION AGREEMENTS.

       Section 111(j) of the Federal Oil and Gas Royalty 
     Management Act of 1982 (30 U.S.C. 1721(j)), as amended by the 
     Federal Oil and Gas Royalty Simplification and Fairness Act 
     of 1996 (Public Law 104-185), is amended to read as follows:
       ``(j) The Secretary shall issue all determinations of 
     allocations of production for units and communitization 
     agreements within 120 days of a request for determination. 
     Until the Secretary issues the determination, the lessee or 
     its designee of a lease in a unit or communitization 
     agreement shall report and pay royalties on oil and gas 
     production for each production month in accordance with the 
     terms of the proposed allocation of production for the unit 
     or communitization agreement. After the Secretary issues the 
     determination, the lessee or its designee shall, as 
     necessary, correct such reports and the amount of royalties 
     paid on oil and gas production under the unit or 
     communitization agreement by not later than the end of the 
     third month following the month in which the lessee or its 
     designee receives the determination from the Secretary. 
     Subject to the full and timely monthly payment of royalties 
     to all parties in accordance with the terms of the proposed 
     allocation of production for the unit or communitization 
     agreement, the Secretary shall waive interest due on 
     obligations subject to the determination until the end of the 
     third month following the month in which the lessee or its 
     designee receives the determination from the Secretary. This 
     subsection shall not apply to unit or communization 
     agreements containing Indian lands.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Arkansas (Mr. Westerman) and the gentlewoman from New Mexico (Ms. Leger 
Fernandez) each will control 20 minutes.
  The Chair recognizes the gentleman from Arkansas.


                             General Leave

  Mr. WESTERMAN. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks and to 
include extraneous material on H.R. 7377, the bill now under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Arkansas?
  There was no objection.
  Mr. WESTERMAN. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today in support of H.R. 7377, the Royalty 
Resiliency Act. H.R. 7377, introduced by Congressman Hunt, addresses 
issues in existing law with respect to how oil and gas royalties are 
paid to the Federal Government.
  When an oil and gas project involving a Federal lease cannot be 
independently developed because of other State or private assets, the 
Bureau of Land Management utilizes communitization agreements, or CAs.
  Although the BLM is required by law to approve CAs within 120 days of 
receipt, the agency has failed to meet this standard, with operators 
experiencing wait times of up to 3 years.
  Currently, the Office of Natural Resources Revenue, often referred to 
as ONRR, requires oil and gas operators to pay a 100 percent royalty 
for projects all while they await BLM approval of a CA, even if only a 
fraction of their project involves Federal lands or minerals. As a 
result, many operators end up significantly overpaying royalties while 
they wait years for BLM approval.
  This bill provides a commonsense fix that would allow operators to 
pay a royalty to ONRR that is based on the apportionment in their 
proposed CA.
  This bill would not reduce the obligation owed by companies but would 
prevent overpayments that unnecessarily lock up capital and create a 
bureaucratic mess for the Department of the Interior. Furthermore, in 
the rare case that a proposed royalty is found to be incorrect when a 
CA is approved, the bill requires the lessee to pay the government 
within 3 months.
  I would also like to note that the Committee on Natural Resources 
worked with the BLM to finalize this bill, and it is supported by the 
Department of the Interior.
  This bill will benefit operators as well as Federal and State 
Governments while ensuring a fair and more predictable regulatory 
environment.
  Mr. Speaker, I urge my colleagues to join me in support of H.R. 7377, 
and I reserve the balance of my time.
  Ms. LEGER FERNANDEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise to join my colleague, Chairman Westerman, in 
support of H.R. 7377, the Royalty Resiliency Act, sponsored by my 
colleague, Representative Hunt.
  I have to say that not many oil and gas bills can make it through the 
Natural Resources Committee by unanimous consent and to the floor on 
suspension, so I commend my colleague for working on this reasonable, 
technical fix that has the support of the Biden administration.
  This represents how we should, in fact, get things done, where we 
come together, where we work things out, and where we include the BLM 
so that we understand how to get the technical fix done.
  As noted, under current law, oil and gas lessees who are on land that 
is partially Federally owned and partially owned by the State or 
private owners need to get a communitization agreement, or CA, approved 
by the Department of the Interior, which outlines how much of the 
royalty payments should be paid to each landowner.
  While a lessee is waiting for approval on that CA from the Department 
of the Interior, they pay 100 percent of the royalties to the Federal 
Government, even in cases where the Federal Government does not own 100 
percent of the land.
  When the CA is finally approved, then the State or private landowners 
get reimbursed for their share of the

[[Page H4651]]

royalty payments. However, some Bureau of Land Management field offices 
are so understaffed right now that they have reportedly taken 800 days, 
in some cases, to approve a CA, resulting in a delay or loss of 
royalties to States who rightfully deserve those funds.
  For an example, in New Mexico, we have hundreds of oil and gas 
lessees on Federal lands and State lands. Many of those are in my 
district in the San Juan and Permian Basin. Indeed, 54 percent of 
production in New Mexico impacts Federal land. This bill represents a 
technical fix that would make sure that royalties flow to the State of 
New Mexico or the State of Colorado or the Dakotas or Texas or the many 
other places where we have these shared land ownership arrangements, 
because do you know what, Mr. Speaker?
  Our schools and our schoolchildren need that money to flow to them as 
quickly as possible.
  Under the bill, rather than paying 100 percent to the Federal 
Government while waiting approval, a lessee would pay royalties to each 
landowner in accordance with the lessee's proposal. If that proposal 
proves to be wrong, the lessee is then required to backpay any missing 
royalty revenue.
  While I believe we need to work together to find an off-ramp for 
States and communities that are overly dependent on fossil fuel revenue 
and we need to work on diversifying our economies, this legislation is 
straightforward and commonsense.
  Mr. Speaker, I support the bill. I urge my colleagues to support the 
bill, and I reserve the balance of my time.
  Mr. WESTERMAN. Mr. Speaker, I yield 5 minutes to the gentleman from 
Texas (Mr. Hunt), who is the lead sponsor of the bill.
  Mr. HUNT. Mr. Speaker, I rise today in support of my bill, H.R. 7377, 
the Royalty Resiliency Act.
  This legislation is a commonsense fix to an accounting problem that 
has plagued both energy operators and personnel at the Department of 
the Interior for years.
  Due to a myriad of reasons, including staff shortages and burdensome 
oversight, the BLM has encountered significant delays in approving 
communitization agreements, costing both the Federal Government and 
private industry billions of dollars.
  Ensuring the Department of the Interior completes CAs in a timely 
fashion is something my office and the administration are continuing to 
work on, but this piece of legislation fixes an erroneous accounting 
issue that has been plaguing the Department of the Interior.
  We all know that the Federal Government is not the best at returning 
your money, and the Department of the Interior realizes that timely and 
accurate royalty allocations are not only good for development but, 
more importantly, are the fairest way of conducting business.
  That is why during a March 6, 2024, House of Representatives Natural 
Resources Committee hearing, Benjamin Gruber, Deputy Assistant Director 
for Energy, Minerals, and Realty Management supported my legislation.
  Mr. Gruber stated: ``The department recognizes the importance of 
timely approval of units and CAs and supports H.R. 7377.''
  I would also like to take a moment to recognize and thank my team on 
Natural Resources along with Eric Haley, who is on my staff.
  Ms. LEGER FERNANDEZ. Mr. Speaker, during the Biden administration, we 
have had historic oil and gas production with many more leases coming 
online, and so this kind of legislation is precisely needed to make 
sure that we get the royalty revenues to where they should go, 
especially with all of the new leases that have come on.
  Mr. Speaker, I have no further requests for time, and I am prepared 
to close. I urge my colleagues to support the legislation, and I yield 
back the balance of my time.
  Mr. WESTERMAN. Mr. Speaker, I thank my colleague from Texas (Mr. 
Hunt) for his work on the bill. H.R. 7377 will provide regulatory 
certainty and fairness in royalty management. I also thank the minority 
for their cooperation in passing this commonsense bill.
  Mr. Speaker, I urge my colleagues to join us in supporting H.R. 7377, 
and I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Arkansas (Mr. Westerman) that the House suspend the 
rules and pass the bill, H.R. 7377, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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