§1726 Alternatives for Marginal Properties

Summary

Lets the Secretary and the State decide together, case by case, which low-producing oil or gas from a lease or well can get a one-time royalty prepayment or lighter accounting and audit rules. They must act to help production, cut paperwork, and raise net receipts. If the State does not agree, no prepayment or relief is allowed for that production. If no State gets royalty money from the lease, the Secretary can decide alone. The Secretary may accept a lump-sum prepayment instead of monthly royalties for the rest of a lease if the lessee agrees. Prepayments that average under $500 per month cannot be made earlier than two years after August 13, 1996. Prepayments that average over $500 per month cannot be made earlier than three years after August 13, 1996. The Secretary and the State can set terms so the United States does not lose money in present value, can require extra payments if production changes a lot, and can require regular production reports. Any prepayment is shared with the State the same way regular royalties are, and generally counts as full payment unless the agreed terms say otherwise. Within one year after August 13, 1996, the Secretary or a delegated State must offer accounting, reporting, and auditing relief to encourage continued production, but that relief is only available in States that agree (unless the lease does not share royalties with any State).