§ 1726. — Alternatives for marginal properties.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 30USC1726]
TITLE 30--MINERAL LANDS AND MINING
CHAPTER 29--OIL AND GAS ROYALTY MANAGEMENT
SUBCHAPTER I--FEDERAL ROYALTY MANAGEMENT AND ENFORCEMENT
Sec. 1726. Alternatives for marginal properties
(a) Determination of best interests of State concerned and 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) of this section or regulatory relief under subsection (c)
of this section. 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) of this section, 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 August 13, 1996,
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 August 13, 1996. 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 chapter. 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 its 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) of this section, 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 August 13, 1996, 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) of this section: 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.
(Pub. L. 97-451, title I, Sec. 117, as added Pub. L. 104-185, Sec. 7(a),
Aug. 13, 1996, 110 Stat. 1715; amended Pub. L. 104-200, Sec. 1(7), Sept.
22, 1996, 110 Stat. 2421.)
Codification
Pub. L. 104-185, Sec. 4(a), which directed the addition of this
section at the end of the Federal Oil and Gas Royalty Management Act of
1982, was executed by adding this section at the end of title I of that
Act to reflect the probable intent of Congress.
Amendments
1996--Subsec. (b)(1)(C). Pub. L. 104-200, Sec. 1(7), substituted
``its designee'' for ``it designee''.
Effective Date
Section applicable with respect to production of oil and gas after
the first day of the month following Aug. 13, 1996, except as provided
by this section, see section 11 of Pub. L. 104-185, set out as an
Effective Date of 1996 Amendment note under section 1701 of this title.
Applicability
Section 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 an Applicability of 1996 Amendment note under section 1701 of
this title.
