Deep Water Royalty Relief ACT of 1995 Unambiguously Grants Royalty Suspension for New Leases

摘要

The U.S. Fifth-Circuit Court of Appeals has held that the Deep Water Royalty Relief Act of 1995 (Act), see 43 U..S..C. para. 1337, unambiguously grants royalty suspensions for new leases. Santa Fe Snyder Corp v, Norton, 385 F.3d 884 (5th Cir. 2004) Furthermore, as a result of this case, 30 C F.R. para. 260.113, pertaining to when an eligible lease qualifies for royalty suspension, was invalidated. Minerals Management Service (MMS) offered Lease OCS-G 18192 on Mississippi Canyon Block 110 (the Lease) as part of an area-wide lease sale held on March 5,1997. The Lease qualified as a "New Lease" under the Act because of the (1) location, (2) water depth, and (3) date of sale of the Lease. Later, however, MMS assigned the Lease to the Mississippi Canyon 108 Field, which contained leases that had produced prior to the enactment of the Act. Based upon the Act's implementing regulations promulgated by MMS, the MMS then decided that the Lease no longer qualified for royalty suspension, as the pertinent regulation provides that royalty suspension is not available for leases in fields in which any well in the field produced oil or gas prior to the enactment of the Act. See 30 C.F.R. para. 260.113.