Committee shrinks state royalty-audit lookback to five years
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Summary
The committee adopted an amendment to Senate Bill 168 cutting the statutory prescription period for state claims on bonuses, rentals and royalties to five years; the amendment passed 4-3 and the bill was moved as amended.
At an April meeting of the Senate Committee on Natural Resources, lawmakers adopted an amendment to Senate Bill 168 that shortens the period the state may go back to review and collect on bonuses, rentals, royalties and related mineral payments to five years.
Senator Womack, the bill sponsor, said the change creates a prescription period for claims on mineral leases and related payments that is currently open-ended. ‘‘This is a prescription period for 10 years... right now it's open ended,’’ Womack said when introducing the measure; the committee then considered reductions to that period.
Mike Monclov of LOGA (Louisiana Oil & Gas Association) told the committee that some members received state audits extending back decades, describing a recent audit notice that reached 40 years and calling such retroactive reviews ‘‘overburdensome’’ and not business friendly. Monclov compared other jurisdictions and federal practice, saying Oklahoma uses a five-year lookback and BOEM (Bureau of Ocean Energy Management) uses six years offshore.
Senator Facey offered an amendment to shorten the period from 10 years to five (amendment 57570). Senator DuPlessis objected to changing the sponsor's original 10-year proposal. The committee held a roll-call vote on the amendment. The recorded votes were: Senator Facey — yes; Senator Ale — yes; Senator DuPlessis — no; Senator Jenkins — no; Senator Kleinpeter — yes; Senator Lambert — no; Chairman Henskins — yes. The amendment carried 4 yeas to 3 nays and was adopted.
After the amendment passed, Senator Kleinpeter moved to report SB 168 as amended; with no objections, the committee moved SB 168 forward as amended.
Committee debate included questions about comparability to other states and concerns about potential consequences of limiting the state's lookback period. One senator said the 10-year proposal was intended to move the state from an effectively unlimited review period to something more workable; others argued a five-year period would better preserve competitiveness for drilling operations.
The committee's action changes the statute of limitations for state claims on mineral financials to a five-year prescription period as amended, subject to further action on the floor.
