[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4364 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 4364
To amend the Mineral Leasing Act to make certain adjustments to the
fiscal terms for fossil fuel development and to make other reforms to
improve returns to taxpayers for the development of Federal energy
resources, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 17, 2019
Mr. McAdams (for himself and Mr. Rooney of Florida) introduced the
following bill; which was referred to the Committee on Natural
Resources
_______________________________________________________________________
A BILL
To amend the Mineral Leasing Act to make certain adjustments to the
fiscal terms for fossil fuel development and to make other reforms to
improve returns to taxpayers for the development of Federal energy
resources, and for other purposes.
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 ``Taxpayer Fairness for Resource
Development Act of 2019''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is the following:
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Onshore fossil fuel royalty rates.
Sec. 4. Minimum bid amount.
Sec. 5. Onshore oil and gas rental rates.
Sec. 6. Penalties.
Sec. 7. Royalty relief.
Sec. 8. Revision of Royalty Policy Committee charter.
Sec. 9. Royalty in kind.
Sec. 10. Amendments to definitions.
Sec. 11. Compliance reviews.
Sec. 12. Liability for royalty payments.
Sec. 13. Recordkeeping.
Sec. 14. Adjustments and refunds.
Sec. 15. Obligation period.
Sec. 16. Tolling agreements and subpoenas.
Sec. 17. Appeals.
Sec. 18. Assessments.
Sec. 19. Pilot project on automatic data transfer.
Sec. 20. Penalty for late or incorrect reporting of data.
Sec. 21. Required recordkeeping for natural gas plants.
Sec. 22. Shared penalties.
Sec. 23. Applicability to other minerals.
Sec. 24. Entitlements.
Sec. 25. Royalties on all extracted methane.
SEC. 3. ONSHORE FOSSIL FUEL ROYALTY RATES.
The Mineral Leasing Act (30 U.S.C. 181 et seq.) is amended--
(1) in section 7--
(A) by striking ``12\1/2\'' and inserting
``18.75''; and
(B) by adding at the end the following:
``(d) Periodic Evaluation of Royalty Rates.--The Secretary shall
establish a periodic process of evaluating increases in royalty rates
to achieve a fair market value return for the public. The process
should include:
``(1) publishing annually the average, weighted by relative
production per State, of the top fossil fuel royalty rates
charged by States for fossil fuels production on State-owned
public lands;
``(2) evaluating triennially increases in the Federal
fossil fuel royalty rates above the minimum rates required
under this Act to match the production-weighted average of
State royalty rates. The triennial review shall include and
benefit from public participation through written comment,
public hearings and other meetings open to all interested
parties; and
``(3) submitting the triennial evaluation to Congress,
including a summary of the views expressed in the public
participation processes related to the evaluation.''.
(2) in section 17, by--
(A) striking ``12.5'' each place such term appears
and inserting ``18.75''; and
(B) striking ``12\1/2\'' each place such term
appears and inserting ``18.75''; and
(3) in section 31(e), by striking ``16\2/3\'' both places
such term appears and inserting ``25''.
SEC. 4. MINIMUM BID AMOUNT.
Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is amended--
(1) in subsection (b)(1)(B)--
(A) by striking ``$2 per acre'' and inserting ``$5
per acre, except as otherwise provided by this
paragraph''; and
(B) by striking ``Federal Onshore Oil and Gas
Leasing Reform Act of 1987'' and inserting ``Taxpayer
Fairness for Resource Development Act of 2019'';
(2) in subsection (b)(2)(C), by striking ``$2 per acre''
and inserting ``$5 per acre''; and
(3) by adding at the end the following:
``(q) Inflation Adjustment.--The Secretary shall--
``(1) by regulation, at least once every 4 years, adjust
each of the dollar amounts that apply under subsections
(b)(1)(B), (b)(2)(C), and (d) to reflect the change in the
Consumer Price Index for All Urban Consumers published by the
Bureau of Labor Statistics; and
``(2) publish each such regulation in the Federal
Register.''.
SEC. 5. ONSHORE OIL AND GAS RENTAL RATES.
The Mineral Leasing Act (30 U.S.C. 181 et seq.) is amended--
(1) in section 17(d)--
(A) by striking ``$1.50 per acre'' and inserting
``$3 per acre''; and
(B) by striking ``$2 per acre'' and inserting ``$5
per acre''; and
(2) in section 31(e), by striking ``$10'' and inserting
``$20''.
SEC. 6. PENALTIES.
(a) Mineral Leasing Act.--Section 41 of the Mineral Leasing Act (30
U.S.C. 195) is amended--
(1) in subsection (b), by striking ``$500,000'' and
inserting ``$1,000,000''; and
(2) in subsection (c), by striking ``$100,000'' and
inserting ``$250,000''.
(b) Federal Oil and Gas Royalty Management Act of 1982.--The
Federal Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 1701 et
seq.) is amended--
(1) in section 109--
(A) in subsection (a), by striking ``$500'' and
inserting ``$1,500'';
(B) in subsection (b), by striking ``$5,000'' and
inserting ``$15,000'';
(C) in subsection (c), by striking ``$10,000'' and
inserting ``$25,000''; and
(D) in subsection (d), by striking ``$25,000'' and
inserting ``$75,000''; and
(2) in section 110, by striking ``$50,000'' and inserting
``$150,000''.
(c) Outer Continental Shelf Lands Act.--
(1) Civil penalty, generally.--Section 24(b) of the Outer
Continental Shelf Lands Act (43 U.S.C. 1350(b)) is amended to
read as follows:
``(b) Civil Penalties.--
``(1) In general.--Except as provided in paragraph (2), any
person who fails to comply with any provision of this Act, or
any term of a lease, license, or permit issued pursuant to this
Act, or any regulation or order issued under this Act, shall be
liable for a civil administrative penalty of not more than
$75,000 for each day of the continuance of such failure. The
Secretary may assess, collect, and compromise any such penalty.
``(2) Opportunity for a hearing.--No penalty shall be
assessed until the person charged with a violation has been
given an opportunity for a hearing.
``(3) Adjustment for inflation.--The Secretary shall, by
regulation at least every 3 years, adjust the penalty specified
in this paragraph to reflect any increases in the Consumer
Price Index (all items, United States city average) as prepared
by the Department of Labor.
``(4) Threat of harm.--If a failure described in paragraph
(1) constitutes or constituted a threat of harm or damage to
life, property, any mineral deposit, or the marine, coastal, or
human environment, a civil penalty of not more than $150,000
shall be assessed for each day of the continuance of the
failure.''.
(2) Knowing and willful violations.--Section 24(c) of the
Outer Continental Shelf Lands Act (43 U.S.C. 1350(c)) is
amended by striking ``$100,000'' and inserting ``$1,000,000''.
(3) Officers and agents of corporations.--Section 24(d) of
the Outer Continental Shelf Lands Act (43 U.S.C. 1350(d)) is
amended by striking ``knowingly and willfully authorized,
ordered, or carried out'' and inserting ``authorized, ordered,
carried out, or through reckless disregard of the law caused''.
SEC. 7. ROYALTY RELIEF.
(a) Gulf of Mexico Royalty Relief.--The following provisions of the
Energy Policy Act of 2005 (42 U.S.C. 15801 et seq.) are hereby
repealed:
(1) Section 344 (42 U.S.C. 15904) (relating to incentives
for natural gas production from deep wells in the shallow
waters of the Gulf of Mexico).
(2) Section 345 (42 U.S.C. 15905) (relating to royalty
relief for deep water production).
(b) Alaska Royalty Relief.--
(1) Provisions relating to planning areas offshore
alaska.--Section 8(a)(3)(B) of the Outer Continental Shelf
Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by striking
``and in the Planning Areas offshore Alaska'' after ``West
longitude''.
(2) Provisions relating to naval petroleum reserve in
alaska.--Section 107 of the Naval Petroleum Reserves Production
Act of 1976 (42 U.S.C. 6506a) is amended--
(A) in subsection (i)--
(i) by striking ``(1) In general''; and
(ii) by striking paragraphs (2) through
(6); and
(B) by striking subsection (k).
SEC. 8. REVISION OF ROYALTY POLICY COMMITTEE CHARTER.
Not later than one year after the date of enactment of this Act, or
March 29, 2021, whichever is earlier, the Secretary of the Interior
shall revise the charter of the Royalty Policy Committee (as signed on
March 29, 2017) to--
(1) require that of the 6 members of such Committee who are
representatives of the Governors of States, no more than 4
members may be representatives of Governors of the same
political party;
(2) increase to 6 the number of members who are
representatives of academia or the public, of whom--
(A) 2 members shall be representatives of academia;
(B) 2 members shall be representatives of public
interest groups; and
(C) 2 members shall be representatives of nonprofit
environmental groups; and
(3) require that for a person to be eligible to serve as a
member who is a representative of a person who is a mineral
stakeholder or energy stakeholder (or both) in Federal and
Indian royalty policy, the employer of that member shall
provide to the Secretary, who shall publish--
(A) for the preceding 10-year period--
(i) aggregated information on all Federal
royalty payments made by the employer, by year
and by commodity;
(ii) conclusions from compliance reviews
and audits conducted by Federal or State
revenue collection entities; and
(iii) a description of all enforcement
actions taken against the employer regarding
payment of Federal or State royalties; and
(B) records of--
(i) prices charged by the employer for
sales of minerals to captive affiliates of the
employer; and
(ii) prices charged by such affiliates for
subsequent resales of such minerals.
SEC. 9. ROYALTY IN KIND.
(a) Onshore Oil and Gas Lease Royalties.--Section 36 of the Mineral
Leasing Act (30 U.S.C. 192) is amended by inserting ``, except that the
Secretary may not demand such payment in oil or gas if the amount of
such payment would exceed the amount necessary to fill the strategic
petroleum reserve'' after ``in oil or gas''.
(b) Offshore Oil and Gas Lease Royalties.--Section 27(a)(1) of the
Outer Continental Shelf Lands Act (43 U.S.C. 1353(a)) is amended by
striking the period at the end and inserting ``, except that the
Secretary may not demand such payment in oil or gas if the amount of
such payment would exceed the amount necessary to fill the strategic
petroleum reserve.''.
SEC. 10. AMENDMENTS TO DEFINITIONS.
Section 3 of the Federal Oil and Gas Royalty Management Act of 1982
(30 U.S.C. 1702) is amended--
(1) in paragraph (20)(A), by striking ``: Provided, That''
and all that follows through ``subject of the judicial
proceeding'';
(2) in paragraph (20)(B), by striking ``(with written
notice to the lessee who designated the designee)'';
(3) in paragraph (23)(A), by striking ``(with written
notice to the lessee who designated the designee)'';
(4) by amending paragraph (24) to read as follows:
``(24) `designee' means a person who pays, offsets, or
credits monies, makes adjustments, requests and receives
refunds, or submits reports with respect to payments a lessee
must make pursuant to section 102(a);'';
(5) in paragraph (25), in subparagraph (B)--
(A) by striking ``(subject to the provisions of
section 102(a) of this Act)''; and
(B) in clause (ii), by striking subclause (IV) and
all that follows through the end of the subparagraph
and inserting the following:
``(IV) any assignment,
that arises from or relates to any lease,
easement, right-of-way, permit, or other
agreement regardless of form administered by
the Secretary for, or any mineral leasing law
related to, the exploration, production, and
development of oil and gas or other energy
resource on Federal lands or the Outer
Continental Shelf;'';
(6) in paragraph (29), by inserting ``or permit'' after
``lease''; and
(7) by striking ``and'' after the semicolon at the end of
paragraph (32), by striking the period at the end of paragraph
(33) and inserting a semicolon, and by adding at the end the
following new paragraphs:
``(34) `compliance review' means an examination of a
lessee's lease accounts to compare one or all elements of the
royalty equation (volume, value, royalty rate, and allowances)
against anticipated elements of the royalty equation to test
for variances; and
``(35) `marketing affiliate' means an affiliate of a lessee
whose function is to acquire the lessee's production and to
market that production.''.
SEC. 11. COMPLIANCE REVIEWS.
Section 101 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1711) is amended by adding at the end the following new
subsection:
``(d) The Secretary may, as an adjunct to audits of accounts for
leases, conduct compliance reviews of accounts. Such reviews shall not
constitute nor substitute for audits of lease accounts. The Secretary
shall immediately refer any disparity uncovered in such a compliance
review to a program auditor. The Secretary shall, before completion of
a compliance review, provide notice of the review to designees whose
obligations are the subject of the review.''.
SEC. 12. 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) Liability for Royalty Payments.--
``(1) Time and manner of payment.--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, easement, right-of-way, permit, or other
agreement, regardless of form, or under the mineral leasing
laws, shall make such payment in the time and manner as may be
specified by the Secretary or the applicable delegated State.
``(2) Designee.--Any person who pays, offsets, or credits
monies, makes adjustments, requests and receives refunds, or
submits reports with respect to payments the lessee must make
is the lessee's designee under this Act.
``(3) Liability.--Notwithstanding any other provision of
this Act, a designee shall be liable for any payment obligation
of any lessee on whose behalf the designee pays royalty under
the lease. The person owning operating rights in a lease and a
person owning legal record title in a lease shall be liable for
that person's pro rata share of payment obligations under the
lease.''.
SEC. 13. RECORDKEEPING.
Section 103(b) of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1713(b)) is amended by striking ``6'' and inserting
``7''.
SEC. 14. ADJUSTMENTS AND REFUNDS.
Section 111A of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1721a) is amended--
(1) in subsection (a)--
(A) by amending paragraph (3) to read as follows:
``(3)(A) 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.
``(B) Except as provided in subparagraph (C), no adjustment
may be made with respect to an obligation after the completion
of an audit or compliance review of such obligation unless such
adjustment is approved by the Secretary or the applicable
delegated State, as appropriate.
``(C) If an overpayment is identified during an audit, the
Secretary shall allow a credit in the amount of the
overpayment.''; and
(B) in paragraph (4)--
(i) by striking ``six-year'' and inserting
``four-year''; and
(ii) by striking ``period shall'' and
inserting ``period may''; and
(2) in subsection (b)(1)--
(A) in subparagraph (C), by striking ``and'';
(B) in subparagraph (D), by striking the period and
inserting ``; and''; and
(C) by adding at the end the following:
``(E) is made within the adjustment period for that
obligation.''.
SEC. 15. OBLIGATION PERIOD.
Section 115(c) of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1724(c)) is amended by adding at the end the following
new paragraph:
``(3) Adjustments.--In the case of an adjustment under
section 111A(a) in which a recoupment by the lessee results in
an underpayment of an obligation, the obligation becomes due on
the date the lessee or its designee makes the adjustment.''.
SEC. 16. TOLLING AGREEMENTS AND SUBPOENAS.
(a) Tolling Agreements.--Section 115(d)(1) of the Federal Oil and
Gas Royalty Management Act of 1982 (30 U.S.C. 1724(d)(1)) is amended by
striking ``(with notice to the lessee who designated the designee)''.
(b) Subpoenas.--Section 115(d)(2)(A) of the Federal Oil and Gas
Royalty Management Act of 1982 (30 U.S.C. 1724(d)(2)(A)) is amended by
striking ``(with notice to the lessee who designated the designee,
which notice shall not constitute a subpoena to the lessee)''.
SEC. 17. APPEALS.
Section 115(h) of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1724(h)) is amended--
(1) in paragraph (1), in the heading, by striking ``33-
month'' and inserting ``48-month'';
(2) by striking ``33 months'' each place it appears and
inserting ``48 months''; and
(3) by striking ``33-month'' each place it appears and
inserting ``48-month''.
SEC. 18. ASSESSMENTS.
Section 116 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1724) is repealed.
SEC. 19. PILOT PROJECT ON AUTOMATIC DATA TRANSFER.
(a) Pilot Project.--Not later than 2 years after the date of
enactment of this Act, the Secretary of the Interior shall complete a
pilot project with willing operators of oil and gas leases on the outer
Continental Shelf (as such term is defined in the Outer Continental
Shelf Lands Act (43 U.S.C. 1331 et seq.)) that assesses the costs and
benefits of automatic transmission of data regarding the volume and
quality of oil and gas produced under Federal leases on the outer
Continental Shelf in order to improve the production verification
systems used to ensure accurate royalty collection and audit.
(b) Report.--The Secretary shall submit to Congress a report on
findings and recommendations based on the pilot project not later than
3 years after the date of enactment of this Act.
SEC. 20. PENALTY FOR LATE OR INCORRECT REPORTING OF DATA.
(a) In General.--The Secretary of the Interior shall issue
regulations by not later than 1 year after the date of enactment of
this Act that establish a civil penalty for late or incorrect reporting
of data under the Federal Oil and Gas Royalty Management Act of 1982
(30 U.S.C. 1701 et seq.).
(b) Amount.--The amount of the civil penalty shall be--
(1) an amount (subject to paragraph (2)) that the Secretary
determines is sufficient to ensure filing of data in accordance
with that Act; and
(2) not less than $10 for each failure to file correct data
in accordance with that Act.
(c) Content of Regulations.--Except as provided in subsection (b),
the regulations issued under this section shall be substantially
similar to section 216.40 of title 30, Code of Federal Regulations, as
most recently in effect before the date of enactment of this Act.
SEC. 21. REQUIRED RECORDKEEPING FOR NATURAL GAS PLANTS.
Not later than 1 year after the date of enactment of this Act, the
Secretary of the Interior shall publish final regulations with respect
to required recordkeeping of natural gas measurement data as set forth
in section 250.1203 of title 30, Code of Federal Regulations (as in
effect on the date of enactment of this Act), to include operators and
other persons involved in the transporting, purchasing, or selling of
gas under the requirements of that rule, under the authority provided
in section 103 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1713).
SEC. 22. SHARED PENALTIES.
Section 206 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1736) is amended by striking ``Any payments under this
section shall be reduced by an amount equal to any payments provided or
due to such State or Indian tribe under the cooperative agreement or
delegation, as applicable, during the fiscal year in which the civil
penalty is received, up to the total amount provided or due for that
fiscal year.''.
SEC. 23. APPLICABILITY TO OTHER MINERALS.
Section 304 of the Federal Oil and Gas Royalty Management Act of
1982 (30 U.S.C. 1753) is amended by adding at the end the following new
subsection:
``(e) Applicability to Other Minerals.--
``(1) Notwithstanding any other provision of law, sections
107, 109, and 110 of this Act and the regulations duly
promulgated with respect thereto shall apply to any lease
authorizing the development of coal or any other solid mineral
on any Federal lands or Indian lands, to the same extent as if
such lease were an oil and gas lease, on the same terms and
conditions as those authorized for oil and gas leases.
``(2) Notwithstanding any other provision of law, sections
107, 109, and 110 of this Act and the regulations issued under
such sections shall apply with respect to any lease, easement,
right-of-way, or other agreement, regardless of form (including
any royalty, rent, or other payment due thereunder)--
``(A) under section 8(k) or 8(p) of the Outer
Continental Shelf Lands Act (43 U.S.C. 1337(k) and
1337(p)); or
``(B) under the Geothermal Steam Act (30 U.S.C.
1001 et seq.), to the same extent as if such lease,
easement, right-of-way, or other agreement were an oil
and gas lease on the same terms and conditions as those
authorized for oil and gas leases.
``(3) For the purposes of this subsection, the term `solid
mineral' means any mineral other than oil, gas, and geo-
pressured-geothermal resources, that is authorized by an Act of
Congress to be produced from public lands (as that term is
defined in section 103 of the Federal Land Policy and
Management Act of 1976 (43 U.S.C. 1702)).''.
SEC. 24. ENTITLEMENTS.
(a) Directed Rulemaking.--Not later than 180 days after the date of
enactment of this Act, the Secretary of the Interior shall publish
final regulations prescribing when a Federal lessee or designee must
report and pay royalties on--
(1) the volume of oil and gas such lessee or designee
produces or takes under a Federal lease or Indian lease; or
(2) the volume of oil and gas that such lessee or designee
is entitled to based on its ownership interest under a
unitization agreement for Federal leases or Indian leases.
(b) 100 Percent Entitlement Reporting and Paying.--The Secretary
shall give consideration to requiring 100 percent entitlement reporting
and paying based on Federal or Indian oil and gas lease ownership.
SEC. 25. ROYALTIES ON ALL EXTRACTED METHANE.
(a) Assessment on All Production.--
(1) In general.--Except as provided in paragraph (2),
royalties otherwise authorized or required under the mineral
leasing laws (as that term is defined in the Federal Oil and
Gas Royalty Management Act of 1982 (30 U.S.C. 1701 et seq.)) to
be paid for gas shall be assessed on all gas produced under the
mineral leasing laws, including--
(A) gas used or consumed within the area of the
lease tract for the benefit of the lease; and
(B) all gas that is consumed or lost by venting,
flaring, or fugitive releases through any equipment
during upstream operations.
(2) Exception.--Paragraph (1) shall not apply with respect
to--
(A) gas vented or flared for not longer than 48
hours in an acute emergency situation that poses a
danger to human health; and
(B) gas injected into the ground on a lease tract
in order to enhance production of an oil or gas well or
for some other purpose.
(b) Conforming Amendments.--
(1) Mineral leasing act.--The Mineral Leasing Act is
amended--
(A) in section 14 (30 U.S.C. 223), by adding at the
end the following: ``Notwithstanding any other
provision of this Act (including this section), royalty
shall be assessed with respect to oil and gas, other
than gas described in section 124(a)(2) of the
Sustainable Energy Development Reform Act, without
regard to whether oil or gas is removed or sold from
the leased land.'';
(B) in section 17 (30 U.S.C. 226), by striking
``removed or sold'' each place it appears;
(C) in section 22 (30 U.S.C. 251), by striking
``sold or removed''; and
(D) in section 31 (30 U.S.C. 188), by striking
``removed or sold'' each place it appears.
(2) Outer continental shelf lands act.--The Outer
Continental Shelf Lands Act is amended--
(A) in section 6(a)(8) (43 U.S.C. 1335(a)(8)), by
striking ``saved, removed, or sold'' each place it
appears; and
(B) in section 8(a) (43 U.S.C. 1337(a))--
(i) in paragraph (1), by striking ``saved,
removed, or sold'' each place it appears; and
(ii) by adding at the end the following:
``(9) Notwithstanding any other provision of this Act
(including this section), royalty under this Act shall be
assessed with respect to oil and gas, other than gas described
in section 124(a)(2) of the Sustainable Energy Development
Reform Act, without regard to whether oil or gas is removed or
sold from the leased land.''.
(c) Application.--The provisions of this section and the amendments
made by this section shall apply only with respect to leases issued on
or after the date of the enactment of this Act.
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