By the OGJ Online Staff
HOUSTON, Oct. 23 -- Industry groups have praised a recent 10th US Circuit Court of Appeals decision that could limit the US government's ability to collect oil and gas royalties on public lands prior to Sept. 1, 1996.
It was uncertain whether the government will appeal its case to the US Supreme Court.
Under the Oct. 10 decision, the Denver appeals court ruled in favor of Occidental Petroleum Inc., which sued the US Department of Interior in US District Court in Tulsa, Okla. Oxy had contested a 1996 order by the Minerals Management Service to pay additional royalties of $551,963 plus interest for oil produced from federal lands between 1980 and 1983.
The Independent Petroleum Association of America said Oxy won by arguing that a general law, not specific to petroleum royalties, set a 6-year statute of limitations on such retroactive collections.
The Independent Petroleum Association of Mountain States said the court's decision "makes clear" MMS cannot force producers to make additional royalty payments without limitations on the time under review. MMS has argued that it can seek to collect allegedly underpaid royalties extending far into the past.
IPAMS said the court's decision applies specifically to production from federal lands in Colorado, Kansas, Oklahoma, New Mexico, Utah, and Wyoming, but could be applied to states covered by other circuit courts.
On Sept. 1, 1996, Congress amended the Federal Oil and Gas Royalty Simplification and Fairness Act to set a 7-year statute of limitations for federal royalties produced after that date. The law does not apply to Indian lands.