Don Nickles: “Over time, serious problems have developed with the ways courts and consequently the Minerals Management Service [MMS]…”

“Over time, serious problems have developed with the ways courts and consequently the Minerals Management Service [MMS] have interpreted the Federal statute of limitations governing royalty collection. Basically the issue is: At what time does the statute of limitations begin to run on the underpayment of royalties? Some courts claim that the statute of limitations does not begin to run until the MMS 'should have known about the deficiency' in the amount the producer has paid [Mesa v. U.S. (10th Cir. 1994)]. Other courts have held that the current six year statute 'is tolled until such time as the government could reasonably have known about a fact material to its right of action.' [Phillips v. Lujan (10th Cir. 1993)]. Either of the above interpretations subject producers to unlimited liability--a period that well exceeds the statute of limitations on other agency actions regarding procedures. This situation has created a climate of deep uncertainty in the payment of royalties that was not intended by Congress and that is not in the best interests of consumers, producers, or ultimately the U.S. Government. Oil and gas producers pay billions of dollars every year for the opportunity to drill on Federal land. The payment of royalties is a routine part of doing business with the federal government. Their is no attempt here to alter that obligation to pay.”