The term “Royalty” means any payment based on the value or volume of production which is due to the United States or an Indian tribe or an Indian allottee on production of oil or gas from the Outer Continental Shelf, Federal, or Indian lands, or any minimum royalty owed to the United States or an Indian tribe or an Indian allottee under any provision of a lease.
It is the duty of the Secretary of Interior to establish a comprehensive inspection, collection and accounting and auditing system to provide the capability to determine oil and gas royalties, interest, fines, penalties, fees and other payments owed, and to collect and account for such amounts in a timely manner.
The Secretary holds responsibility to make audit and reconcile all lease accounts for leases of oil or gas and take appropriate actions to make additional collections or refunds, if any. The Secretary conducts audits and reconciliations of lease accounts in accordance with the business practices. The Secretary may also audit accounts and records of selected lessees and operators as he deems fit and proper.
The Secretary, if required, may enter into contracts with independent certified public accountants to make audits of accounts and records of any lessee or operator relating to the lease of oil or gas.
Any person who fails or refuses to comply with any requirements of the mineral leasing law, or the terms of any lease or permit issued there under or fails to permit authorised inspection or fails to notify the Secretary of any assignment is liable for a penalty of up to $500 per violation for each day such violation continues.
If remedial action in not taken within 40 days, such person is liable for a civil penalty of not more than $5,000 per violation for each day such violation continues.
Any person who wilfully fails to make any royalty payment by the specified date or refuses to permit lawful entry, inspection, or audit is liable for a penalty of up to $10,000 per violation for each day such violation continues.
Any person who wilfully prepares or submits false and inaccurate reports, notices, affidavits, data, or other written information and purchases or sells any oil or gas knowing that such oil or gas was stolen or unlawfully removed is liable for a penalty of up to $25,000 per violation for each day such violation continues.
