United States Code

§ 1302. Authorization of appropriations

CREDITING PERFORMANCE BOND FORFEITURES

Pub. L. 105-277, div. A, §101(e) [title I], Oct. 21, 1998, 112 Stat. 2681-231, 2681-244, provided in part that: "Notwithstanding 31 U.S.C. 3302, an additional amount shall be credited to this account, to remain available until expended, from performance bond forfeitures in fiscal year 1999 and thereafter."

COST-BASED FEES FOR PRODUCTS OF MINE MAP
REPOSITORY

Pub. L. 105-277, div. A, §101(e) [title I], Oct. 21, 1998, 112 Stat. 2681-231, 2681-244, provided in part that: "Beginning in fiscal year 1999 and thereafter, cost-based fees for the products of the Mine Map Repository shall be established (and revised as needed) in Federal Register Notices, and shall be collected and credited to this account, to be available until expended for the costs of administering this program."

CHAPTER 26-DEEP SEABED HARD MINERAL RESOURCES

§ 1403. Definitions

CONTIGUOUS ZONE OF UNITED STATES

For extension of contiguous zone of United States, see Proc. No. 7219, Sept. 2, 1999, 64 F.R. 48701, set out as a note under section 1331 of Title 43, Public Lands. SUBCHAPTER I-REGULATION OF EXPLORATION AND COMMERCIAL RECOVERY BY UNITED STATES CITIZENS

SUBCHAPTER REFERRED TO IN OTHER SECTIONS This subchapter is referred to in sections 1403, 1441, 1442, 1444, 1464, 1465, 1468, 1470 of this title.

§ 1415. License and permit terms, conditions, and restrictions; issuance and transfer of licenses and permits

[See main edition for text]

(As amended Pub. L. 104-208, div. A, title I, § 101(a) [title II, §211(b)], Sept. 30, 1996, 110 Stat. 3009, 3009-41.)

AMENDMENTS

1996 Subsec. (d). Pub. L. 104-208 made technical amendment to reference in original act which appears in text as reference to section 1852 of title 16.

EFFECTIVE DATE OF 1996 AMENDMENT

Section 101(a) [title II, §211(b)] of div. A of Pub. L. 104-208 provided that the amendment made by that section is effective 15 days after Oct. 11, 1996.

SUBCHAPTER III-ENFORCEMENT AND

MISCELLANEOUS PROVISIONS

§1472. Deep Seabed Revenue Sharing Trust Fund; establishment

REFERENCES IN TEXT

Sections 4495 and 4498 of title 26, referred to in subsecs. (b)(1) and (f), were repealed by Pub. L. 105-34, title XIV. §1432(b)(1). Aug. 5, 1997, 111 Stat. 1050.

§ 1473. Revenue and customs or tariff treatment of deep seabed mining unaffected

REFERENCES IN TEXT

Sections 4495 to 4498 of title 26, referred to in text, were in the original "section 402", meaning section 402 of Pub. L. 96-283, title IV, June 28, 1980, 94 Stat. 582,

which enacted sections 4495 to 4498 of Title 26, Internal Revenue Code, and enacted a provision set out as a note under section 4495 of Title 26. Sections 4495 to 4498 of title 26 were repealed by Pub. L. 105-34, title XIV, §1432(b)(1), Aug. 5, 1997, 111 Stat. 1050.

Sec. 1721a.

1724.

1725.

1726.

CHAPTER 29-OIL AND GAS ROYALTY MANAGEMENT

SUBCHAPTER I-FEDERAL ROYALTY MANAGEMENT AND ENFORCEMENT

Adjustments and refunds.

(a) Adjustments to royalties paid to Secretary or delegated State.

(b) Refunds.

Secretarial and delegated States' actions and limitation periods.

(a) In general.

(b) Limitation period.

(d) Tolling of limitation period.

(e) Termination of limitations period.

(f) Records required for determining collections.

(g) Timely collections.

(h) Appeals and final agency action.

(i) Collections of disputed amounts due.

(j) Enforcement of claim for judicial review.

(k) Implementation of final decision. (1) Stay of payment obligation pending review.

Assessments.

Alternatives for marginal properties.

(a) Determination of best interests of State concerned and United States. (b) Prepayment of royalty.

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in section 191 of this title; title 10 section 7439. §1701.-Congressional statement of findings and purposes

EFFECTIVE DATE OF 1996 AMENDMENT

Pub. L. 104-185, §11, Aug. 13, 1996, 110 Stat. 1717, provided that: "Except as provided by section 115(h) [30 U.S.C. 1724(h)], section 111(h) (30 U.S.C. 1721(h)], section 111(k)(5) [30 U.S.C. 1721(k)(5)], and section 117 [30 U.S.C. 1726] of the Federal Oil and Gas Royalty Management Act of 1982 (as added by this Act), this Act [see Short Title of 1996 Amendment note below], 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 [Aug. 13, 1996]."

SHORT TITLE OF 1996 AMENDMENT

Pub. L. 104-185, §1, Aug. 13, 1996, 110 Stat. 1700, provided that: "This Act [enacting sections 1721a and 1724 to 1726 of this title, amending sections 1702, 1712, 1721, and 1735 of this title, repealing section 1339 of Title 43, Public Lands, and enacting provisions set out as notes under this section, section 1732 of this title, and section 1339 of Title 43] may be cited as the 'Federal Oil and Gas Royalty Simplification and Fairness Act of 1996'."

APPLICABILITY OF 1996 AMENDMENT

Pub. L. 104-185, §9, Aug. 13, 1996, 110 Stat. 1717, provided that: "The amendments made by this Act [see Short Title of 1996 Amendment note above] shall not apply with respect to Indian lands, and the provisions of the Federal Oil and Gas Royalty Management Act of 1982 [30 U.S.C. 1701 et seq.] as in effect on the day before

the date of enactment of this Act [Aug. 13, 1996] shall continue to apply after such date with respect to Indian lands."

Pub. L. 104-185, §10, Aug. 13, 1996, 110 Stat. 1717, provided that: "This Act [see Short Title of 1996 Amendment note above] shall not apply to any privately owned minerals."

CONSTRUCTION OF 1996 AMENDMENT

Pub. L. 104-185, §12, Aug. 13, 1996, 110 Stat. 1717. provided that: "Nothing in this Act [see Short Title of 1996 Amendment note above] shall be construed to give a State a property right or interest in any Federal lease or land."

§1702. Definitions

For the purposes of this chapter, the term

[See main edition for text of (1) to (6)]

(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;

[See main edition for text of (8) to (14)]

(15) "Secretary" means the Secretary of the Interior or his designee;

(16) "State" means the several States of the Union, the District of Columbia, Puerto Rico, the territories and possessions of the United States, and the Trust Territory of the Pacific Islands;

(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

(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 1712(a) of this title, 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 1735 of this title, 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 1712(a) of this title, 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

(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 provisions of section 1712(a) of this title)

(i) to deliver oil or gas royalty in kind;

(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 chapter, 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.

(As amended Pub. L. 104-185, §2, Aug. 13, 1996, 110 Stat. 1700; Pub. L. 104-200, §1(1), Sept. 22, 1996, 110 Stat. 2421.)

AMENDMENTS

1996-Par. (7). Pub. L. 104–185. §2(1), amended par. (7) generally. Prior to amendment, par. (7) read as follows: 'lessee' means any person to whom the United States, an Indian tribe, or an Indian allottee, issues a lease, or any person who has been assigned an obligation to make royalty or other payments required by the lease;".

Pars. (17) to (25). Pub. L. 104-185, §2(2), added pars. (17) to (25).

Par. (25)(B). Pub. L. 104-200, substituted "provisions of section 1712(a)" for "provision of section 1712(a)" in introductory provisions.

Pars. (26) to (33). Pub. L. 104–185, § 2(2), added pars. (26) to (33).

EFFECTIVE DATE OF 1996 AMENDMENT

Amendment by Pub. L. 104-185 applicable with respect to production of oil and gas after the first day of the month following Aug. 13, 1996, see section 11 of Pub. L. 104-185, set out as a note under section 1701 of this title.

APPLICABILITY OF 1996 AMENDMENT

Amendment by Pub. L. 104-185 not applicable to any privately owned minerals or with respect to Indian lands, see sections 9 and 10 of Pub. L. 104-185, set out as a note under section 1701 of this title.

SUBCHAPTER I-FEDERAL ROYALTY
MANAGEMENT AND ENFORCEMENT

§ 1712. Duties of lessees, operators, and motor vehicle transporters

(a) Liability for royalty payments

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 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 chapter 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.

[See main edition for text of (b) and (c)] (As amended Pub. L. 104–185, §6(g), Aug. 13, 1996, 110 Stat. 1715.)

AMENDMENTS

1996 Subsec. (a). Pub. L. 104-185 inserted heading and amended text generally. Prior to amendment, text read as follows: "A lessee

"(1) 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 as may be specified by the Secretary; and

"(2) shall notify the Secretary, in the time and manner as may be specified by the Secretary, of any assignment the lessee may have made of the obligation to make any royalty or other payment under a lease or under the mineral leasing laws."

EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104-185 applicable with respect to the production of oil and gas after the first day of the month following Aug. 13, 1996, see section 11 of Pub. L. 104-185, set out as a note under section 1701 of this title.

APPLICABILITY OF 1996 AMENDMENT

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 1702, 1719, 1724 of this title.

§ 1713. Required recordkeeping

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 1724 of this title. § 1719. Civil penalties

REFERENCES IN TEXT

Section 1712(a) of this title, referred to in subsec. (a)(2), was amended generally by Pub. L. 104-185, §6(g), Aug. 13. 1996, 110 Stat. 1715, and, as so amended, no longer contains a par. (2). See section 1712(a) of this title.

§ 1721. Royalty terms and conditions, interest, and penalties

[See main edition for text of (a) to (f)]

(g) Omitted

(h) Lessee or designee interest

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 title 26, 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 August 13, 1996, 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 [30 U.S.C. 181 et seq.], and the Outer Continental Shelf Lands Act [43 U.S.C. 1331 et seq.], 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.

(i) Limitation on interest

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 not be paid on the excessive amount of such overpayment. For purposes of this chapter, 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.

(j) Estimated payment

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 date 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 owed on the underpaid amount. If the estimated payment exceeds the actual royalties due, interest is owed 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.

(k) Volume allocation of oil and gas production (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 based 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 due 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 August 13, 1996, 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 August 13, 1996, and collect royalty amounts owed on such production.

(1) Production allocation

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 120day 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.

(Pub. L. 97-451, title I, §111, Jan. 12, 1983, 96 Stat. 2455; Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 104-185, §6(a)-(e), (h)(1), Aug. 13, 1996, 110 Stat. 1712-1715; Pub. L. 104-200, §1(3)–(6), Sept. 22, 1996, 110 Stat. 2421.)

REFERENCES IN TEXT

The Mineral Leasing Act, referred to in subsec. (h), is act Feb. 25, 1920, ch. 85, 41 Stat. 437, as amended, which is classified generally to chapter 3A (§181 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 181 of this title and Tables.

The Outer Continental Shelf Lands Act, referred to in subsec. (h), is act Aug. 7, 1953, ch. 345, 67 Stat. 462, as amended, which is classified generally to subchapter III (§ 1331 et seq.) of chapter 29 of Title 43, Public Lands. For complete classification of this Act to the Code, see Short Title note set out under section 1301 of Title 43 and Tables.

CODIFICATION

Section is comprised of section 111 of Pub. L. 97-451. Subsec. (g) of section 111 of Pub. L. 97-451 amended section 191(a) of this title.

AMENDMENTS

1996-Pub. L. 104-185, §6(h)(1), substituted "Royalty terms and conditions, interest, and penalties" for "Royalty interest, penalties and payments" in section catchline.

Subsec. (h). Pub. L. 104-185, § 6(a), added subsec. (h). Subsec. (i). Pub. L. 104-200, §1(3), inserted "not" after "receiving interest, interest shall".

Pub. L. 104-185, § 6(b), added subsec. (i).

Subsec. (j). Pub. L. 104-200, §1(4), (5), substituted "date royalties are due" for "rate royalties are due", "interest is owed on the underpaid amount” for “interest is owned on the underpaid amount", and "interest is owed on the overpayment" for "interest is owned on the overpayment”.

Pub. L. 104-185, § 6(c), added subsec. (j).

Subsec. (k). Pub. L. 104–185, §6(d), added subsec. (k). Subsec. (k)(4). Pub. L. 104-200, §1(6), substituted "additional royalties due" for "additional royalties dues". Subsec. (1). Pub. L. 104-185, §6(e), added subsec. (1).

EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104-185 applicable with respect to production of oil and gas after the first day of the month following Aug. 13, 1996, except as provided by

subsecs. (h) and (k)(5) of this section, see section 11 of Pub. L. 104-185, set out as a note under section 1701 of this title.

APPLICABILITY OF 1996 AMENDMENT

§ 1721a. Adjustments and refunds

(a) Adjustments to royalties paid to 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 principle1 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 sixyear 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 1724 of this title. (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 1724 of this title, is specifically identified as a demand;

(B) identifies the person entitled to such refund;

1 So in original. Probably should be "principal".

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