Taxpayer Fairness for Resource Development Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4364 To amend the Mineral Leasing Act to make certain adjustments to the fiscal terms for fossil fuel development and to make other reforms to improve returns to taxpayers for the development of Federal energy resources, and for other purposes. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 17, 2019 Mr. MCADAMS (for himself and Mr. ROONEY of Florida) introduced the following bill; which was referred to the Committee on Natural Resources A BILL To amend the Mineral Leasing Act to make certain adjust- ments to the fiscal terms for fossil fuel development and to make other reforms to improve returns to tax- payers for the development of Federal energy resources, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Taxpayer Fairness for 4 Resource Development Act of 2019’’. 5 SEC. 2. TABLE OF CONTENTS. 6 The table of contents for this Act is the following: 7 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 2 •HR 4364 IH Sec. 1. Short title. Sec. 2. Table of contents. Sec. 3. Onshore fossil fuel royalty rates. Sec. 4. Minimum bid amount. Sec. 5. Onshore oil and gas rental rates. Sec. 6. Penalties. Sec. 7. Royalty relief. Sec. 8. Revision of Royalty Policy Committee charter. Sec. 9. Royalty in kind. Sec. 10. Amendments to definitions. Sec. 11. Compliance reviews. Sec. 12. Liability for royalty payments. Sec. 13. Recordkeeping. Sec. 14. Adjustments and refunds. Sec. 15. Obligation period. Sec. 16. Tolling agreements and subpoenas. Sec. 17. Appeals. Sec. 18. Assessments. Sec. 19. Pilot project on automatic data transfer. Sec. 20. Penalty for late or incorrect reporting of data. Sec. 21. Required recordkeeping for natural gas plants. Sec. 22. Shared penalties. Sec. 23. Applicability to other minerals. Sec. 24. Entitlements. Sec. 25. Royalties on all extracted methane. SEC. 3. ONSHORE FOSSIL FUEL ROYALTY RATES. 1 The Mineral Leasing Act (30 U.S.C. 181 et seq.) is 2 amended— 3 (1) in section 7— 4 (A) by striking ‘‘121⁄2’’ and inserting 5 ‘‘18.75’’; and 6 (B) by adding at the end the following: 7 ‘‘(d) PERIODIC EVALUATION OF ROYALTY RATES.— 8 The Secretary shall establish a periodic process of evalu- 9 ating increases in royalty rates to achieve a fair market 10 value return for the public. The process should include: 11 ‘‘(1) publishing annually the average, weighted 12 by relative production per State, of the top fossil 13 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 3 •HR 4364 IH fuel royalty rates charged by States for fossil fuels 1 production on State-owned public lands; 2 ‘‘(2) evaluating triennially increases in the Fed- 3 eral fossil fuel royalty rates above the minimum 4 rates required under this Act to match the produc- 5 tion-weighted average of State royalty rates. The tri- 6 ennial review shall include and benefit from public 7 participation through written comment, public hear- 8 ings and other meetings open to all interested par- 9 ties; and 10 ‘‘(3) submitting the triennial evaluation to Con- 11 gress, including a summary of the views expressed in 12 the public participation processes related to the eval- 13 uation.’’. 14 (2) in section 17, by— 15 (A) striking ‘‘12.5’’ each place such term 16 appears and inserting ‘‘18.75’’; and 17 (B) striking ‘‘121⁄2’’ each place such term 18 appears and inserting ‘‘18.75’’; and 19 (3) in section 31(e), by striking ‘‘162⁄3’’ both 20 places such term appears and inserting ‘‘25’’. 21 SEC. 4. MINIMUM BID AMOUNT. 22 Section 17 of the Mineral Leasing Act (30 U.S.C. 23 226) is amended— 24 (1) in subsection (b)(1)(B)— 25 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 4 •HR 4364 IH (A) by striking ‘‘$2 per acre’’ and insert- 1 ing ‘‘$5 per acre, except as otherwise provided 2 by this paragraph’’; and 3 (B) by striking ‘‘Federal Onshore Oil and 4 Gas Leasing Reform Act of 1987’’ and insert- 5 ing ‘‘Taxpayer Fairness for Resource Develop- 6 ment Act of 2019’’; 7 (2) in subsection (b)(2)(C), by striking ‘‘$2 per 8 acre’’ and inserting ‘‘$5 per acre’’; and 9 (3) by adding at the end the following: 10 ‘‘(q) INFLATION ADJUSTMENT.—The Secretary 11 shall— 12 ‘‘(1) by regulation, at least once every 4 years, 13 adjust each of the dollar amounts that apply under 14 subsections (b)(1)(B), (b)(2)(C), and (d) to reflect 15 the change in the Consumer Price Index for All 16 Urban Consumers published by the Bureau of Labor 17 Statistics; and 18 ‘‘(2) publish each such regulation in the Fed- 19 eral Register.’’. 20 SEC. 5. ONSHORE OIL AND GAS RENTAL RATES. 21 The Mineral Leasing Act (30 U.S.C. 181 et seq.) is 22 amended— 23 (1) in section 17(d)— 24 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 5 •HR 4364 IH (A) by striking ‘‘$1.50 per acre’’ and in- 1 serting ‘‘$3 per acre’’; and 2 (B) by striking ‘‘$2 per acre’’ and insert- 3 ing ‘‘$5 per acre’’; and 4 (2) in section 31(e), by striking ‘‘$10’’ and in- 5 serting ‘‘$20’’. 6 SEC. 6. PENALTIES. 7 (a) MINERAL LEASING ACT.—Section 41 of the Min- 8 eral Leasing Act (30 U.S.C. 195) is amended— 9 (1) in subsection (b), by striking ‘‘$500,000’’ 10 and inserting ‘‘$1,000,000’’; and 11 (2) in subsection (c), by striking ‘‘$100,000’’ 12 and inserting ‘‘$250,000’’. 13 (b) FEDERAL OIL AND GAS ROYALTY MANAGEMENT 14 ACT OF 1982.—The Federal Oil and Gas Royalty Man- 15 agement Act of 1982 (30 U.S.C. 1701 et seq.) is amend- 16 ed— 17 (1) in section 109— 18 (A) in subsection (a), by striking ‘‘$500’’ 19 and inserting ‘‘$1,500’’; 20 (B) in subsection (b), by striking ‘‘$5,000’’ 21 and inserting ‘‘$15,000’’; 22 (C) in subsection (c), by striking 23 ‘‘$10,000’’ and inserting ‘‘$25,000’’; and 24 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 6 •HR 4364 IH (D) in subsection (d), by striking 1 ‘‘$25,000’’ and inserting ‘‘$75,000’’; and 2 (2) in section 110, by striking ‘‘$50,000’’ and 3 inserting ‘‘$150,000’’. 4 (c) OUTER CONTINENTAL SHELF LANDS ACT.— 5 (1) CIVIL PENALTY, GENERALLY.—Section 6 24(b) of the Outer Continental Shelf Lands Act (43 7 U.S.C. 1350(b)) is amended to read as follows: 8 ‘‘(b) CIVIL PENALTIES.— 9 ‘‘(1) IN GENERAL.—Except as provided in para- 10 graph (2), any person who fails to comply with any 11 provision of this Act, or any term of a lease, license, 12 or permit issued pursuant to this Act, or any regula- 13 tion or order issued under this Act, shall be liable 14 for a civil administrative penalty of not more than 15 $75,000 for each day of the continuance of such fail- 16 ure. The Secretary may assess, collect, and com- 17 promise any such penalty. 18 ‘‘(2) OPPORTUNITY FOR A HEARING.—No pen- 19 alty shall be assessed until the person charged with 20 a violation has been given an opportunity for a hear- 21 ing. 22 ‘‘(3) ADJUSTMENT FOR INFLATION.—The Sec- 23 retary shall, by regulation at least every 3 years, ad- 24 just the penalty specified in this paragraph to reflect 25 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 7 •HR 4364 IH any increases in the Consumer Price Index (all 1 items, United States city average) as prepared by 2 the Department of Labor. 3 ‘‘(4) THREAT OF HARM.—If a failure described 4 in paragraph (1) constitutes or constituted a threat 5 of harm or damage to life, property, any mineral de- 6 posit, or the marine, coastal, or human environment, 7 a civil penalty of not more than $150,000 shall be 8 assessed for each day of the continuance of the fail- 9 ure.’’. 10 (2) KNOWING AND WILLFUL VIOLATIONS.—Sec- 11 tion 24(c) of the Outer Continental Shelf Lands Act 12 (43 U.S.C. 1350(c)) is amended by striking 13 ‘‘$100,000’’ and inserting ‘‘$1,000,000’’. 14 (3) OFFICERS AND AGENTS OF CORPORA- 15 TIONS.—Section 24(d) of the Outer Continental 16 Shelf Lands Act (43 U.S.C. 1350(d)) is amended by 17 striking ‘‘knowingly and willfully authorized, or- 18 dered, or carried out’’ and inserting ‘‘authorized, or- 19 dered, carried out, or through reckless disregard of 20 the law caused’’. 21 SEC. 7. ROYALTY RELIEF. 22 (a) GULF OF MEXICO ROYALTY RELIEF.—The fol- 23 lowing provisions of the Energy Policy Act of 2005 (42 24 U.S.C. 15801 et seq.) are hereby repealed: 25 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 8 •HR 4364 IH (1) Section 344 (42 U.S.C. 15904) (relating to 1 incentives for natural gas production from deep wells 2 in the shallow waters of the Gulf of Mexico). 3 (2) Section 345 (42 U.S.C. 15905) (relating to 4 royalty relief for deep water production). 5 (b) ALASKA ROYALTY RELIEF.— 6 (1) PROVISIONS RELATING TO PLANNING AREAS 7 OFFSHORE ALASKA.—Section 8(a)(3)(B) of the 8 Outer Continental Shelf Lands Act (43 U.S.C. 9 1337(a)(3)(B)) is amended by striking ‘‘and in the 10 Planning Areas offshore Alaska’’ after ‘‘West lon- 11 gitude’’. 12 (2) PROVISIONS RELATING TO NAVAL PETRO- 13 LEUM RESERVE IN ALASKA.—Section 107 of the 14 Naval Petroleum Reserves Production Act of 1976 15 (42 U.S.C. 6506a) is amended— 16 (A) in subsection (i)— 17 (i) by striking ‘‘(1) IN GENERAL’’; and 18 (ii) by striking paragraphs (2) 19 through (6); and 20 (B) by striking subsection (k). 21 SEC. 8. REVISION OF ROYALTY POLICY COMMITTEE CHAR- 22 TER. 23 Not later than one year after the date of enactment 24 of this Act, or March 29, 2021, whichever is earlier, the 25 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 9 •HR 4364 IH Secretary of the Interior shall revise the charter of the 1 Royalty Policy Committee (as signed on March 29, 2017) 2 to— 3 (1) require that of the 6 members of such Com- 4 mittee who are representatives of the Governors of 5 States, no more than 4 members may be representa- 6 tives of Governors of the same political party; 7 (2) increase to 6 the number of members who 8 are representatives of academia or the public, of 9 whom— 10 (A) 2 members shall be representatives of 11 academia; 12 (B) 2 members shall be representatives of 13 public interest groups; and 14 (C) 2 members shall be representatives of 15 nonprofit environmental groups; and 16 (3) require that for a person to be eligible to 17 serve as a member who is a representative of a per- 18 son who is a mineral stakeholder or energy stake- 19 holder (or both) in Federal and Indian royalty pol- 20 icy, the employer of that member shall provide to the 21 Secretary, who shall publish— 22 (A) for the preceding 10-year period— 23 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 10 •HR 4364 IH (i) aggregated information on all Fed- 1 eral royalty payments made by the em- 2 ployer, by year and by commodity; 3 (ii) conclusions from compliance re- 4 views and audits conducted by Federal or 5 State revenue collection entities; and 6 (iii) a description of all enforcement 7 actions taken against the employer regard- 8 ing payment of Federal or State royalties; 9 and 10 (B) records of— 11 (i) prices charged by the employer for 12 sales of minerals to captive affiliates of the 13 employer; and 14 (ii) prices charged by such affiliates 15 for subsequent resales of such minerals. 16 SEC. 9. ROYALTY IN KIND. 17 (a) ONSHORE OIL AND GAS LEASE ROYALTIES.— 18 Section 36 of the Mineral Leasing Act (30 U.S.C. 192) 19 is amended by inserting ‘‘, except that the Secretary may 20 not demand such payment in oil or gas if the amount of 21 such payment would exceed the amount necessary to fill 22 the strategic petroleum reserve’’ after ‘‘in oil or gas’’. 23 (b) OFFSHORE OIL AND GAS LEASE ROYALTIES.— 24 Section 27(a)(1) of the Outer Continental Shelf Lands Act 25 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 11 •HR 4364 IH (43 U.S.C. 1353(a)) is amended by striking the period at 1 the end and inserting ‘‘, except that the Secretary may 2 not demand such payment in oil or gas if the amount of 3 such payment would exceed the amount necessary to fill 4 the strategic petroleum reserve.’’. 5 SEC. 10. AMENDMENTS TO DEFINITIONS. 6 Section 3 of the Federal Oil and Gas Royalty Man- 7 agement Act of 1982 (30 U.S.C. 1702) is amended— 8 (1) in paragraph (20)(A), by striking ‘‘: Pro- 9 vided, That’’ and all that follows through ‘‘subject of 10 the judicial proceeding’’; 11 (2) in paragraph (20)(B), by striking ‘‘(with 12 written notice to the lessee who designated the des- 13 ignee)’’; 14 (3) in paragraph (23)(A), by striking ‘‘(with 15 written notice to the lessee who designated the des- 16 ignee)’’; 17 (4) by amending paragraph (24) to read as fol- 18 lows: 19 ‘‘(24) ‘designee’ means a person who pays, off- 20 sets, or credits monies, makes adjustments, requests 21 and receives refunds, or submits reports with respect 22 to payments a lessee must make pursuant to section 23 102(a);’’; 24 (5) in paragraph (25), in subparagraph (B)— 25 VerDate Sep 11 2014 02:11 Sep 19, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4364.IH H4364 kjohnson on DSK79L0C42 with BILLS 12 •HR 4364 IH (A) by striking ‘‘(subject to the provisions 1 of section 102(a) of this Act)’’; and 2 (B) in clause (ii), by striking subclause 3 (IV) and all that follows through the end of the 4 subparagraph and inserting the following: 5 ‘‘(IV) any assignment, 6 that arises from or relates to any lease, 7 easement, right-of-way, permit, or other 8 agreement regardless of form administered 9 by the Secretary for, or any mineral leas- 10 ing law related to, the exploration, produc- 11 tion, and development of oil and gas or 12 other energy resource on Federal lands or 13 the Outer Continental Shelf;’’; 14 (6) in paragraph (29), by inserting ‘‘or permit’’ 15 after ‘‘lease’’; and 16 (7) by striking ‘‘and’’ after the semicolon at the 17 end of paragraph (32), by striking the period at the 18 end of paragraph (33) and inserting a semicolon, 19 and by adding at the end the following new para- 20 graphs: 21 ‘‘(34) ‘compliance [Text truncated for display. 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