MMS rule to allow federal royalty delegation to states

The U.S. Minerals Management Service has proposed changing its rules to authorize the delegation of additional federal royalty management functions to states. It said the changes are in re- sponse to requirements of the Oil and Gas Royalty Simplification and Fairness Act, which took effect last August. MMS Director Cynthia Quarterman said, "This is an issue of great interest to states eligible to perform delegable functions, and as the law requires, we have consulted extensively with them in

May 5, 1997

2 min read

The U.S. Minerals Management Service has proposed changing its rules to authorize the delegation of additional federal royalty management functions to states.

It said the changes are in re- sponse to requirements of the Oil and Gas Royalty Simplification and Fairness Act, which took effect last August. MMS Director Cynthia Quarterman said, "This is an issue of great interest to states eligible to perform delegable functions, and as the law requires, we have consulted extensively with them in developing this proposal."

The 1982 Oil and Gas Royalty Management Act allowed the delegation of audits, inspections, and investigations to states, but the latest law expanded that authority to include: receiving and processing production and royalty reports; correcting erroneous report data; performing automated verification; and issuing demands, oil and gas subpoenas, orders to perform restructured accounting, and related tolling agreements and notices to lessees. The law also requires the issuance of standards pertaining to those delegable functions and other relevant responsibilities.

Quarterman said, "MMS is also proposing the delegation of many of these functions associated with solid mineral, geothermal, and certain offshore leases. We believe that it is most efficient to delegate functions for these other leases since they comprise a significant amount of activity in several states."

The 1996 law required the standards and regulations to be issued by Aug. 13 and MMS is requesting public comments be filed on them by May 24.