Washington, DC – Today, the American Exploration & Production Council’s CEO, Anne Bradbury, released the following statement after the Royalty Resiliency Act (H.R. 7377) was signed into law:

“The Royalty Resiliency Act will help restore commonsense policy to the management of our federal resources for oil and natural gas development.

“Energy companies will now be able to reinvest capital and resources to expand energy projects, hire additional employees, and contribute more to their communities and the American economy.

“We commend Rep. Hunt and the bipartisan efforts in the House, Senate, and White House for their work to stop the initial overcharging of energy royalties when the government fails to meet its own statutory deadlines for such royalty allocation agreements.

“The American people should be proud that even during a busy political season, their representatives in Washington came together on a bipartisan basis to bolster our economy, enhance our energy security, and advance our emissions reductions goals.

“The modern American energy economy demands smart, responsible use of our federal energy resources, and the Royalty Resiliency Act, coupled with broader permitting reform being discussed in the Senate and House, will promote American energy security and economic growth.”

RRA background:

• This bill amends the Federal Oil and Gas Royalty Management Act of 1982 to improve the federal government’s management of royalties from oil and natural gas leases.

• The Department of Interior (DOI) is responsible under existing law to approve revenue-sharing agreements, called communitization agreements, which call for the drilling of oil and gas wells that exist in locations with multiple leases.

• Proposed agreements are submitted to the Bureau of Land Management (BLM) by the operator prior to the date of first production or first sales. DOI must then issue all determinations of allocations of production for communitization agreements within 120 days of a request for determination.

• However, in reality, BLM frequently takes one to two years to review and approve communitization agreements and in some cases much longer than that. This is particularly the case in BLM’s busier state offices.

• Until a communization agreement is approved by DOI, the lessee is mandated by Office of Natural Resources Revenue (ONRR) to pay the Federal Government a 100% royalty rate on production, even in cases where the Federal Government does not own 100% of the minerals within a unit.

• The amount of money tied up in that delay is not inconsequential and can amount to hundreds of millions of dollars for some of the most active operators on federal lands. This ties up capital that operators could otherwise use to expand energy projects, hire additional employees, and contribute more to their communities and the American economy.

• The Royalty Resiliency Act ensures that the federal government only charges operators the accurate percentage that corresponds with their mineral ownership and helps the DOI simplify internal accounting errors associated with energy royalties without burdening taxpayers – while maintaining assurance that taxpayers still receive the full benefit for the development of these publicly owned resources.