Royalty Resiliency Act

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise to join my colleague, Chairman Westerman, in support of H.R. 7377, the Royalty Resiliency Act, sponsored by my colleague, Representative Hunt.

I have to say that not many oil and gas bills can make it through the Natural Resources Committee by unanimous consent and to the floor on suspension, so I commend my colleague for working on this reasonable, technical fix that has the support of the Biden administration.

This represents how we should, in fact, get things done, where we come together, where we work things out, and where we include the BLM so that we understand how to get the technical fix done.

As noted, under current law, oil and gas lessees who are on land that is partially Federally owned and partially owned by the State or private owners need to get a communitization agreement, or CA, approved by the Department of the Interior, which outlines how much of the royalty payments should be paid to each landowner.

While a lessee is waiting for approval on that CA from the Department of the Interior, they pay 100 percent of the royalties to the Federal Government, even in cases where the Federal Government does not own 100 percent of the land.

When the CA is finally approved, then the State or private landowners get reimbursed for their share of the

royalty payments. However, some Bureau of Land Management field offices are so understaffed right now that they have reportedly taken 800 days, in some cases, to approve a CA, resulting in a delay or loss of royalties to States who rightfully deserve those funds.

For an example, in New Mexico, we have hundreds of oil and gas lessees on Federal lands and State lands. Many of those are in my district in the San Juan and Permian Basin. Indeed, 54 percent of production in New Mexico impacts Federal land. This bill represents a technical fix that would make sure that royalties flow to the State of New Mexico or the State of Colorado or the Dakotas or Texas or the many other places where we have these shared land ownership arrangements, because do you know what, Mr. Speaker?

Our schools and our schoolchildren need that money to flow to them as quickly as possible.

Under the bill, rather than paying 100 percent to the Federal Government while waiting approval, a lessee would pay royalties to each landowner in accordance with the lessee's proposal. If that proposal proves to be wrong, the lessee is then required to backpay any missing royalty revenue.

While I believe we need to work together to find an off-ramp for States and communities that are overly dependent on fossil fuel revenue and we need to work on diversifying our economies, this legislation is straightforward and commonsense.

Mr. Speaker, I support the bill. I urge my colleagues to support the bill, and I reserve the balance of my time.

Mr. Speaker, during the Biden administration, we have had historic oil and gas production with many more leases coming online, and so this kind of legislation is precisely needed to make sure that we get the royalty revenues to where they should go, especially with all of the new leases that have come on.

Mr. Speaker, I have no further requests for time, and I am prepared to close. I urge my colleagues to support the legislation, and I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 7377) to amend the Federal Oil and Gas Royalty Management Act of 1982 to improve the management of royalties from oil and gas leases, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and to include extraneous material on H.R. 7377, the bill now under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in support of H.R. 7377, the Royalty Resiliency Act. H.R. 7377, introduced by Congressman Hunt, addresses issues in existing law with respect to how oil and gas royalties are paid to the Federal Government.

When an oil and gas project involving a Federal lease cannot be independently developed because of other State or private assets, the Bureau of Land Management utilizes communitization agreements, or CAs.

Although the BLM is required by law to approve CAs within 120 days of receipt, the agency has failed to meet this standard, with operators experiencing wait times of up to 3 years.

Currently, the Office of Natural Resources Revenue, often referred to as ONRR, requires oil and gas operators to pay a 100 percent royalty for projects all while they await BLM approval of a CA, even if only a fraction of their project involves Federal lands or minerals. As a result, many operators end up significantly overpaying royalties while they wait years for BLM approval.

This bill provides a commonsense fix that would allow operators to pay a royalty to ONRR that is based on the apportionment in their proposed CA.

This bill would not reduce the obligation owed by companies but would prevent overpayments that unnecessarily lock up capital and create a bureaucratic mess for the Department of the Interior. Furthermore, in the rare case that a proposed royalty is found to be incorrect when a CA is approved, the bill requires the lessee to pay the government within 3 months.

I would also like to note that the Committee on Natural Resources worked with the BLM to finalize this bill, and it is supported by the Department of the Interior.

This bill will benefit operators as well as Federal and State Governments while ensuring a fair and more predictable regulatory environment.

Mr. Speaker, I urge my colleagues to join me in support of H.R. 7377, and I reserve the balance of my time.

Mr. Speaker, I yield 5 minutes to the gentleman from Texas (Mr. Hunt), who is the lead sponsor of the bill.

Mr. Speaker, I thank my colleague from Texas (Mr. Hunt) for his work on the bill. H.R. 7377 will provide regulatory certainty and fairness in royalty management. I also thank the minority for their cooperation in passing this commonsense bill.

Mr. Speaker, I urge my colleagues to join us in supporting H.R. 7377, and I yield back the balance of my time.

Mr. Speaker, I rise today in support of my bill, H.R. 7377, the Royalty Resiliency Act.

This legislation is a commonsense fix to an accounting problem that has plagued both energy operators and personnel at the Department of the Interior for years.

Due to a myriad of reasons, including staff shortages and burdensome oversight, the BLM has encountered significant delays in approving communitization agreements, costing both the Federal Government and private industry billions of dollars.

Ensuring the Department of the Interior completes CAs in a timely fashion is something my office and the administration are continuing to work on, but this piece of legislation fixes an erroneous accounting issue that has been plaguing the Department of the Interior.

We all know that the Federal Government is not the best at returning your money, and the Department of the Interior realizes that timely and accurate royalty allocations are not only good for development but, more importantly, are the fairest way of conducting business.

That is why during a March 6, 2024, House of Representatives Natural Resources Committee hearing, Benjamin Gruber, Deputy Assistant Director for Energy, Minerals, and Realty Management supported my legislation.

Mr. Gruber stated: ``The department recognizes the importance of timely approval of units and CAs and supports H.R. 7377.''

I would also like to take a moment to recognize and thank my team on Natural Resources along with Eric Haley, who is on my staff.

Madam President, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 7377, which was received from the House.

I ask unanimous consent that the bill be considered read a third time and passed and that the motion to reconsider be considered made and laid upon the table.