Legal Background
The Mineral Leasing Act of 1920 (MLA) authorizes the Department of the Interior to lease public lands to private parties for the production of oil and gas. In 1982, Congress enacted the Federal Oil and Gas Royalty Management Act (FOGRMA) to address inadequacies with the system of accounting for royalties due on oil and gas produced from lease sites. FOGRMA ordered the Secretary of the Interior to audit those leases and collect what was owed the government. The Secretary, in turn, has assigned these duties to the Department of the Interior’s Minerals Management Service (MMS).
If MMS concludes that the lessee owes royalties greater than what it has paid, MMS issues an order requiring payment of the amount due. There is no dispute that a lawsuit in court to recover royalties owed is covered by a general six-year statute of limitations for Government contract actions.
Read more about this topic: BP America Production Co. V. Burton
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