§ 15-74-709 - Default or delinquency by lessees or others responsible for payment of royalties. - Arkansas Statutes

15-74-709. Default or delinquency by lessees or others responsible for payment of royalties.

(a) (1) The Oil and Gas Commission is hereby authorized to receive and investigate complaints of oil and gas royalty owners that their lessees or others responsible for the payment of royalty are in default of their lease agreements, orders of the commission, or the requirements of law with respect thereto, and to conduct hearings thereon pursuant to the Arkansas Administrative Procedure Act, 25-15-201 et seq.

(2) After any such hearing, the commission may order the party or parties found responsible for the default that has resulted in the nonpayment or untimely or insufficient payment of royalty, herein called "delinquency", to pay to such owner within such time as the commission deems just and equitable the amount of the delinquency together with the amount of interest to which such owner is found by the commission to be entitled under 15-74-601 et seq. plus, as a penalty, an additional amount equal to the sum of those amounts, but which penalty shall not exceed one hundred thousand dollars ($100,000).

(b) (1) Where the amount of the penalty awarded under subsection (a) of this section is less than twenty-five thousand dollars ($25,000), the commission may levy, in addition thereto, a civil penalty in an amount not to exceed twenty-five thousand dollars ($25,000) less the penalty awarded under subsection (a).

(2) Any such additional penalty awarded under this subsection shall be paid into the general fund of the commission.

(3) The combined amount of penalties awarded under subsection (a) of this section and this subsection shall not exceed one hundred thousand dollars ($100,000) per claim.

(c) (1) Pending compliance with any order issued hereunder, the commission may order the operator of the well or wells from which the delinquency arose to suspend payment of all eight-eighths (8/8) of the revenue therefrom allocable to the party or entity responsible for compliance with such order. Where the revenue is being paid by the purchaser directly to such person or entity, the commission may order that it be suspended by the purchaser.

(2) The commission may order that all or any part of funds ordered to be suspended hereunder be applied to the payment of the delinquency, interest, and penalties.

(d) In aid of its investigation of claimed delinquencies, the commission may require the operators of the wells from which the royalty is derived to furnish the commission or its investigator any relevant information pertaining to such well or wells that is in its possession.

(e) The person or entity ordered to appear at a hearing held pursuant hereto shall have the right to join, as third party respondents, any parties to whom the oil or gas that is the subject of the hearing was sold and, upon a finding that such third party respondent, without justification, has caused or contributed to a delinquency, such party may be required to pay all or some part of the amounts ordered hereunder to be paid.