Compliance

Overview

Compliance is the timely and correct reporting and payment of royalties and other obligations in accordance with the applicable laws, regulations, lease terms, and ONRR policies.

The strategic goal of ONRR’s comprehensive compliance program is to protect the integrity of Federal and Indian energy and mineral resources by holding industry accountable for compliance with statutes, regulations, and lease terms.

Our primary tools to verify and ensure compliance from companies are data mining reviews, compliance reviews, and audits. In all these activities, we review all components of the royalty reports in whole or in part. These include volume, value, allowances, and royalty rate.

Up-Front System Edits

Approximate timeframe: When reporting/1 month
Commodities: Oil, gas, geothermal

Up-front system OGOR edits and ONRR-2014 edits are in place that may reject your report when you submit.

Overrides

ONRR relies on accurate royalty reporting to accomplish our mission. Upfront edits are the first step in ensuring ONRR does not receive erroneous or inaccurate data. When a company submits a new report or corrects an existing report the document is validated against all edits. If there is a discrepancy between the report and the edit ONRR, will review it to determine if an override should be approved. If an override is approved, the report or correction will be accepted into the eCommerce system.

Data Mining Reviews

Approximate timeframe: 3-24 months after reporting
Commodities: Oil, gas

Data mining analysts perform reviews of reported royalty information, capturing possible anomalies. Most data mining reviews consist of volume measurement reviews. They look for under-reported or 100 percent missing royalties based on reported production data. Data mining also reviews companies that recoup more than they reported (net negatives) and new communitization agreements.

An image of the top portion of a Volume Comparison notice. The header shows that it is a submission for Preliminary Determination - Volume Comparison. This notice includes the case number, PAD number, request number, property numbers, and date of determination.

Compliance Reviews

Approximate timeframe: 2+ years after reporting; up to 7 years for federal oil & gas; no time limit for Indian leases, geothermal leases, and solids leases
Commodities: Oil, gas, geothermal, solids

Compliance reviews check that the royalty equation (volume, value, allowances, royalty rate) is reported and paid correctly. There are also compliance reviews for Indian Gas Major Portion pricing, Indian Oil Major Portion pricing, dual accounting, and coal advance royalties.

An image of the top portion of a Compliance Review notice. The header shows that it is a Preliminary Determination - Compliance Review notice. The form includes the case number, PAD number, request number, property number, date of determination, and why the company is receiving the notification.

Audits

We conduct audits to determine if companies are complying with lease terms, laws, and regulations. We apply Generally Accepted Government Auditing Standards and use 3rd party documentation to validate royalty reporting and payments. It is a longer, more formal process and requires a higher standard of verification in the form of evidence.

An image of the top portion of an Order to Report and Pay letter. The letter explains why the individual is receiving the letter and what they must do.

Compliance Authorities

Law Name	Citation	Date	Land Type	Description
Royalty Resiliency Act	30 U.S.C. 1701	Sept. 20, 2024	Federal Onshore, Indian, and Outer Continental Shelf	Modifies the process under which oil and gas leaseholders who have entered into certain joint drilling agreements to drill wells on leased land pay royalties to the Department of the Interior under the Federal Oil and Gas Royalty Management Act of 1982.
Federal Oil & Gas Royalty Management Act (FOGRMA) of 1982	Pub. L. 97-451	Jan. 12, 1983	Federal Onshore, Indian, and Outer Continental Shelf	Grants the Secretary of the Interior authority for managing and collecting oil and gas royalties from leases on Federal and Indian lands.
Amendments to the FOGRMA by the Federal Oil and Gas Royalty Simplification and Fairness Act (RSFA) in 1996 (PL 104-185)	Pub. L. 104-185	1996	Federal Onshore, Indian, and Outer Continental Shelf	Revising FOGRMA in 1996 to improve the management of royalties from federal onshore and offshore oil and gas leases, and to reduce disputes and litigation over royalty payments.
Energy Policy Act of 2005 (PDF)	Pub. L. 109-58	Aug. 8, 2005	Federal Onshore and Outer Continental Shelf	Addresses energy production in the United States, including the production, transportation, and transmission of energy on the Outer Continental Shelf from sources other than oil and gas (e.g., wind energy); incentives for oil and gas development; and provisions to access oil and gas resources on Federal lands.
Lease, Sale or Surrender of Allotted or Unallotted Lands	25 U.S.C. 396d	Jan. 7, 2003	Indian (Allotted)	States that all lands allotted to Indians, except those made to members of the Five Civilized Tribes and Osage, may be leased for mining purposes for any term of years as may be deemed advisable by the Secretary of the Interior. Section 396d establishes that all operations under any oil, gas, or other mineral lease issued pursuant to the terms of 25 U.S.C. 396a to 396g or any other Act affecting restricted Indian lands shall be subject to the rules and regulations promulgated by the Secretary of the Interior.
Indian Mineral Development Act of 1982	25 U.S.C. 2103	Jan. 22, 2002	Indian	Provides Indian tribes with flexibility in the development and sale of mineral resources, including opportunities to enter into joint venture agreements with mineral developers.
Geothermal Steam Act of 1970	30 U.S.C. 1001	1970	Federal Onshore	Allows the leasing of Federal lands under BLM’s administration for geothermal resource development, excluding prohibited lands.
Outer Continental Shelf Lands Act (OCSLA) of 1953	43 U.S.C. 1353	1953	Outer Continental Shelf	Gives the Secretary of the Interior responsibility for administering mineral and energy resources exploration, development, and production on the Outer Continental Shelf, subject to environmental safeguards. Mandates receipt of fair market value for mineral leasing.
Mineral Leasing Act (MLA) of 1920	30 U.S.C. 1923	1920	Federal Onshore (Public Domain)	Creates a system of leasing mineral resources on Federal lands for extraction and grants BLM authority to administer mineral leasing.