MMS proposes deepwater royalty relief amendments

The US Minerals Management Service proposed changes to its Outer Continental Shelf deepwater royalty relief regulations on Dec. 21 to conform to a 2004 federal court decision.

Nick Snow
Washington Editor
WASHINGTON, DC, Dec. 26 -- The US Minerals Management Service proposed changes to its Outer Continental Shelf deepwater royalty relief regulations on Dec. 21 to conform to a 2004 federal court decision.

A US Court of Appeals for the Fifth Circuit found provisions of the US Department of the Interior's interpretation of Section 304 of the 1995 Deepwater Royalty Relief Act to be contrary to the statute's requirements, MMS said. That court ruling came in a case involving Santa Fe Snyder Corp.

MMS said that the court found that a lease issued under that section could not be excluded from royalty relief if it was part of a field already in production before the deepwater royalty relief legislation became law.

The court also found that royalty suspension volumes prescribed in Section 304 should apply to each lease and not jointly to all leases in a particular field, MMS said.

It issued an information bulletin on Aug. 8, 2005, to alert affected lessees that MMS would respect the court decision and would revise its regulations accordingly.

MMS announced a proposal on Dec. 21, and the agency will accept comments on the proposal for 60 days following publication by the federal government.
Contact Nick Snow at nicks@pennwell.com

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