§ 1724. — Secretarial and delegated States' actions and limitation periods.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 30USC1724]
TITLE 30--MINERAL LANDS AND MINING
CHAPTER 29--OIL AND GAS ROYALTY MANAGEMENT
SUBCHAPTER I--FEDERAL ROYALTY MANAGEMENT AND ENFORCEMENT
Sec. 1724. Secretarial and delegated States' actions and
limitation periods
(a) In general
The respective duties, responsibilities, and activities with respect
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 1712(a)
of this title 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 and section 226-2 of this title shall not apply to any
obligation to which this chapter applies. Section 3716 of title 31
may be applied to an obligation the enforcement of which is not
barred by this chapter, but may not be applied to any obligation the
enforcement of which is barred by this chapter.
(c) Obligation becomes due
(1) In general
For purposes of this chapter, 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 chapter
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) of this
section 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
1735 of this title, 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 chapter; 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 chapter; 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 chapter
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) of this section 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 1735 of this title, 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
1735 of this title, 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 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) of this section 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 1712(a) of this title for obligations that are the subject of
the notice or agreement.
(f) Records required for determining collections
Records required pursuant to section 1713 of this title 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) of this section. 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 chapter, 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 August 13, 1996,
within 33 months from the date such proceeding was commenced or 33
months from August 13, 1996, 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.
(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 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.
(l) 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 so 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.
(Pub. L. 97-451, title I, Sec. 115, as added Pub. L. 104-185, Sec. 4(a),
Aug. 13, 1996, 110 Stat. 1704; amended Pub. L. 104-200, Sec. 1(2), Sept.
22, 1996, 110 Stat. 2421.)
Codification
Pub. L. 104-185, Sec. 4(a), which directed the addition of this
section after section 114 of the Federal Oil and Gas Royalty Management
Act of 1982, Pub. L. 97-451, was executed by adding this section after
section 113 to reflect the probable intent of Congress because Pub. L.
97-451 did not contain a section 114.
Amendments
1996--Subsec. (l). Pub. L. 104-200 inserted ``so'' after ``the
person is not able to''.
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 subsec. (h) of 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.
Section Referred to in Other Sections
This section is referred to in section 1721a of this title.
