Late Payment & Underpayment Interest Tables
The Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA), required ONRR to pay interest on Federal oil and gas royalty overpayments. On December 4, 2015, the Fixing America’s Surface Transportation (FAST) Act was signed by the President. The FAST Act contained a provision that removed ONRR’s authority to pay interest on Federal oil and gas overpayments. It has been interpreted that ONRR retained authority to pay interest which had accrued prior to the effective date of the FAST Act on December 4, 2015, but not for periods beyond that date. The RSFA and the FAST Act applies only to Federal oil and gas payments, not to payments for Indian, Solid mineral, and geothermal obligations.
The Federal Oil and Gas Royalty Management Act of 1982 requires underpayment interest to be charged on late payments or any underpayment due. Underpayment interest on solid mineral and geothermal leases is calculated as simple interest using the United States Treasury Current Value of Funds Rate. Underpayment interest on oil and gas leases is calculated as compound interest using the Internal Revenue Service underpayment rate for corporate tax payers. Overpayment interest on oil and gas leases is calculated as compound interest using the Federal short-term rate plus 2 percentage points.
Rates Used to Calculate Interest
The following table contains the interest rates used to calculate underpayment and overpayment interest.
|Late Payments and Underpayments||Overpayments|
Oil & Gas
|Federal and Indian
and Geothermal Leases *
Oil and Gas Leases
Oil and Gas
* Solid Mineral interest rates are calculated as simple interest based on the US Treasury Current Value of Funds Rate shown in this column.