Pete Domenici: “I want to commend Senator Nickles for developing this legislation. Simply stated, it stands for the proposition that…”

“I want to commend Senator Nickles for developing this legislation. Simply stated, it stands for the proposition that there has never been, is not now, nor ever shall be a ``duty to market.'' If you read a federal oil and gas lease there is no mention of a duty to market. It has been Mineral Management Services' (MMS) position that the duty to market is an implied covenant in the lease. And this legislation says that MMS is wrong. Let me back up, and explain the issue and why this legislation is needed. Oil and gas producers doing business on federal leases pay royalties to the federal government based on ``fair market value.'' Under the Clinton Administration, this is easier said than done. One of the long standing disputes between the Congress and the Mineral Management Service (MMS) has been the development of workable oil royalty valuation regulations that can articulate just exactly what fair market value is. Cynthia Quarterman, the former director of the MMS, set out the Interior Department's position that fair market value includes a ``duty to market the lease production for the mutual benefit of the lessee and the lessor,'' but without the federal government paying its share of the costs. Many of these costs are transportation costs and they are significant. MMS calls it a duty to market, I call it federal government mooching. This bill states Congressional intent: No duty to market, no federal government mooching.”