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On August 1, 2024, Congressman Wesley Hunt's legislation H.R. 7377, known as The Royalty Resiliency Act, passed the House. This bill amends the Federal Oil and Gas Royalty Management Act of 1982 to improve the management of royalties from oil and gas leases.
Currently, until a communization agreement (CA) is approved by the Department of Interior (DOI), lessees are mandated by the Office of Natural Resources Revenue (ONRR) to pay the Federal Government a 100% royalty rate on production, even when the Federal Government does not own 100% of the land used during a project. The new legislation stipulates that lessees or their designees in a unit or communitization agreement must report and pay royalties on oil and gas production for each production month according to the terms of the proposed allocation of production for that agreement.
The bill aims to ensure that the Federal Government charges operators only the correct percentage corresponding with their land ownership. It also seeks to help the Department of Interior simplify internal accounting errors associated with energy royalties without burdening taxpayers.
"The Royalty Resiliency Act is a tremendous step in the right direction for America’s oil and gas industry to ensure their resources and capital are not tied up in administrative bureaucratic processes. Once passed into law, this unleashed capital will be directed towards additional projects, additional employees, and invested back into the American economy thereby reducing energy prices," said Congressman Hunt.
Another supporter remarked, "This legislation will lower domestic energy prices for American families struggling under the Biden Administration’s policies, and eliminate red tape and burdensome fees unfairly placed on domestic energy producers. I'd like to thank Congressman Hunt for his leadership on this legislation, and I look forward to working closely with him in continued support of U.S. energy dominance."