| (A) Penalties on delinquencies. Any royalty not paid
when due, or any required report or document not submitted when due,
is delinquent and penalties as provided in this subsection shall be
added. Royalty payments or any required reports or documents that
do not identify GLO lease numbers and annual submission certification
numbers, if any, and any royalty payments not accompanied by any required
reports or documents are also delinquent. The penalties on delinquent
royalties specified in this subsection shall not be assessed in cases
of title dispute as to the state's portion of the royalty or to that
portion of the royalty in dispute as the market value of the production.
(i) For royalties and reports due on or after September
1, 1985, including those for oil and gas produced since July 1, 1985,
the GLO shall add:
(I) a penalty of 5.0% of the delinquent amount or $25,
whichever is greater, to any royalty which is delinquent 30 days or
less;
(II) a penalty of 10% of the delinquent amount or $25,
whichever is greater, to any royalty which is more than 30 days delinquent;
(III) at its discretion, a penalty of $10 per document
for each 30-day period that each report, affidavit, or other document
is delinquent. The GLO shall impose this penalty of $10 per document
only after the commissioner or a designated representative has notified
the lessee in writing that reports, affidavits, or documents are not
being filed correctly and that the GLO will assess the penalty on
subsequent reporting errors.
(ii) For royalties and reports due before September
1, 1985, including those for oil and gas produced prior to July 1,
1985, the GLO shall add:
(I) a penalty of 1.0% of the delinquent amount or $5.00,
whichever is greater, for each 30-day period that any royalty is delinquent;
(II) a penalty of $5.00 per document for each 30-day
period that each report, affidavit, or other document is delinquent.
(iii) For royalties and reports due before September
1, 1975, including those for oil and gas produced prior to August
1, 1975, the GLO shall impose no penalty for delinquent royalties
or delinquent reports.
(B) Interest on delinquencies. Any royalty not paid
when due is delinquent and shall accrue interest as provided in this
subsection.
(i) For royalties due on or after September 1, 1985,
including those for oil and gas produced since July 1, 1985:
(I) interest shall accrue on all delinquent royalties
at the rate of 12% per year (simple interest) pursuant to the Texas
Natural Resources Code, §52.131(g);
(II) interest shall begin to accrue 60 days after the
due date.
(ii) For royalties due before September 1, 1985, including
those for oil and gas produced prior to July 1, 1985:
(I) interest shall accrue on all delinquent royalties
at the rate of 6.0% per year compounded daily pursuant to Texas Civil
Statutes, Article 5069-1.03;
(II) interest shall begin to accrue 30 days after the
date due.
(C) Penalties for fraud. The commissioner shall add
a penalty of 25% of the delinquent amount if any part of the delinquency
is due to fraud or an attempt to evade the provisions of statutes
or rules governing payment of royalty. The GLO shall apply this penalty
in cases of title dispute as to the state's portion of the royalty
or to that portion of the royalty in dispute as to the fair market
value. The GLO shall apply this penalty in addition to any other penalty
assessed.
(D) Forfeiture. The state's power to forfeit a lease
is not affected by the assessment or payment of any delinquency, penalty,
or interest as provided in this subsection. Specifically, the lessee's
failure to pay royalties and other sums of money within 30 days of
the due date or the failure to file reports completed in the form
and manner prescribed by this section shall subject a lease to forfeiture
under §9.95 of this title (relating to Forfeiture).
(E) Reduction of penalty and/or interest. For royalties
due on or after February 26, 2010, the interest rate assessed on delinquent
royalties shall be determined as of the date of the first business
day of the year the royalty becomes delinquent and will be reduced
to prime plus one percent.
(i) As used herein "Prime" shall mean the prime interest
rate, as published daily in the Wall Street Journal that is not a
Saturday, Sunday, or legal holiday. For royalties due on a Saturday,
"Prime" shall refer to the prime interest rate published on the next
business day that is not a legal holiday.
(ii) The interest rate shall never exceed the percentage
rate as stated in the Texas Natural Resource Code at §52.131(g).
(iii) Interest rates assessed hereunder shall be reset
on the first business day of each calendar year; if the underlying
royalties have not been paid they may be revised upward should the
prime interest rate on the first business day be higher.
(iv) A lessee may request in writing a reduction of
interest charged or penalties assessed under Texas Natural Resource
Code §52.131 or any other interest or penalties assessed by the
commissioner relating to unpaid or delinquent royalties, or late filed
reports. The board may consider any factors when considering such
a request, including the facts and circumstances supporting the lessee's
request for a reduction, any history of delinquency by the lessee,
any good faith attempts of the lessee to rectify the consequences
of the delinquency, including by paying the amount of the unpaid or
delinquent royalty, the recommendations of staff, and the costs and
risks associated with litigation. For governmental efficiency, the
board may delegate to the commissioner and/or to staff designated
by the commissioner for this purpose the authority to reduce interest
charged or penalties assessed relating to unpaid or delinquent royalties
if the aggregate unreduced amount of such penalties and interest is
equal to or less than a de minimis amount established by the board
from time to time at a regular or special public meeting.
(4) Corrections and adjustments to royalty payments
and reports.
(A) Nonroutine corrections and/or adjustments, as used
in this subsection, are defined as those corrections and adjustments
by which someone seeks to change, on a lease basis, the originally
reported royalty due for oil or the originally reported royalty due
for gas by at least $25,000 or 25%.
(B) The GLO Royalty Management Division must receive
at least 30 days advance written notice of the lessee's intention
to take a nonroutine correction and/or adjustment which will result
in a credit with written documentation explaining and supporting the
requested credit. The credit may be taken 30 days after that GLO division
receives such notice if by that date, the GLO has not, in writing,
denied lessee permission to take the credit. If the GLO denies permission,
the GLO will set forth its reasons for such denial. Any nonroutine
credit improperly taken may not be used to offset royalty due on current
reports. The improper application of credits will result in a current
month delinquency and the assessment of associated penalties and interest.
(C) Effective with the production month of March 1989,
all prior month adjustments must be submitted on GLO-1 and GLO-2 report
documents separate from the reports containing the current month royalty
activity. The GLO-1 or GLO-2 containing prior month adjustments must
be labeled as "Amended Reports" (underlined).
(5) Temporary reduction of gas royalty rates.
(A) Prerequisites. Application for a temporary reduction
of the royalty rates established may be considered by SLB if:
(i) the lease covers any of the state lands described
in §9.21 of this title (relating to Leasing Guide)
(ii) state land was leased by SLB on the basis of a
royalty bid and at a royalty rate exceeding 25%; and
(iii) the lease has not been pooled or unitized with
other leases.
(B) Amount of reduction. If the value of gas from such
lands is at or below $3.00 for each 1,000 cubic feet of gas, the board
may reduce the royalty rate for gas produced from such lands for any
term set by SLB, such term to be set after September 1, 1987, and
before September 1, 1990, as follows:
(i) for gas valued as $1.50 or less per Mcf of gas,
the board may reduce a royalty rate to 25%;
(ii) for gas valued from $1.51 to $2.00 per Mcf of
gas, the board may reduce a royalty rate to 30%;
(iii) for gas valued from $2.01 to $2.50 per Mcf of
gas, the board may reduce a royalty rate to 35%;
Cont'd... |
