Loading (50 kb)...'
(continued)
expansion is within technological limits and economic
feasibility, order a subsequent expansion of throughput capacity
of any pipeline for which the permit, license, easement,
right-of-way, or other grant of authority is approved or issued
after September 18, 1978. This subparapraph (!1) shall not apply
to any such grant of authority approved or issued for the Gulf of
Mexico or the Santa Barbara Channel.
(2) The Federal Energy Regulatory Commission may, by order or
regulation, exempt from any or all of the requirements of paragraph
(1) of this subsection any pipeline or class of pipelines which
feeds into a facility where oil and gas are first collected or a
facility where oil and gas are first separated, dehydrated, or
otherwise processed.
(3) The Secretary of Energy and the Federal Energy Regulatory
Commission shall consult with and give due consideration to the
views of the Attorney General on specific conditions to be included
in any permit, license, easement, right-of-way, or grant of
authority in order to ensure that pipelines are operated in
accordance with the competitive principles set forth in paragraph
(1) of this subsection. In preparing any such views, the Attorney
General shall consult with the Federal Trade Commission.
(4) Nothing in this subsection shall be deemed to limit, abridge,
or modify any authority of the United States under any other
provision of law with respect to pipelines on or across the outer
Continental Shelf.
(g) Rates of production
(1) The leasee (!2) shall produce any oil or gas, or both,
obtained pursuant to an approved development and production plan,
at rates consistent with any rule or order issued by the President
in accordance with any provision of law.
(2) If no rule or order referred to in paragraph (1) has been
issued, the lessee shall produce such oil or gas, or both, at rates
consistent with any regulation promulgated by the Secretary of
Energy which is to assure the maximum rate of production which may
be sustained without loss of ultimate recovery of oil or gas, or
both, under sound engineering and economic principles, and which is
safe for the duration of the activity covered by the approved plan.
The Secretary may permit the lessee to vary such rates if he finds
that such variance is necessary.
(h) Federal action affecting outer Continental Shelf; notification;
recommended changes
The head of any Federal department or agency who takes any action
which has a direct and significant effect on the outer Continental
Shelf or its development shall promptly notify the Secretary of
such action and the Secretary shall thereafter notify the Governor
of any affected State and the Secretary may thereafter recommend
such changes in such action as are considered appropriate.
(i) Flaring of natural gas
After September 18, 1978, no holder of any oil and gas lease
issued or maintained pursuant to this subchapter shall be permitted
to flare natural gas from any well unless the Secretary finds that
there is no practicable way to complete production of such gas, or
that such flaring is necessary to alleviate a temporary emergency
situation or to conduct testing or work-over operations.
(j) Cooperative development of common hydrocarbon-bearing areas
(1) Findings
(A) (!3) The Congress of the United States finds that the
unrestrained competitive production of hydrocarbons from a common
hydrocarbon-bearing geological area underlying the Federal and
State boundary may result in a number of harmful national
effects, including -
(i) the drilling of unnecessary wells, the installation of
unnecessary facilities and other imprudent operating practices
that result in economic waste, environmental damage, and damage
to life and property;
(ii) the physical waste of hydrocarbons and an unnecessary
reduction in the amounts of hydrocarbons that can be produced
from certain hydrocarbon-bearing areas; and
(iii) the loss of correlative rights which can result in the
reduced value of national hydrocarbon resources and disorders
in the leasing of Federal and State resources.
(2) Prevention of harmful effects
The Secretary shall prevent, through the cooperative
development of an area, the harmful effects of unrestrained
competitive production of hydrocarbons from a common
hydrocarbon-bearing area underlying the Federal and State
boundary.
-SOURCE-
(Aug. 7, 1953, ch. 345, Sec. 5, 67 Stat. 464; Pub. L. 95-372, title
II, Sec. 204, Sept. 18, 1978, 92 Stat. 636; Pub. L. 101-380, title
VI, Sec. 6004(a), Aug. 18, 1990, 104 Stat. 558.)
-REFTEXT-
REFERENCES IN TEXT
The Clean Air Act, referred to in subsec. (a)(8), is act July 14,
1955, ch. 360, 69 Stat. 322, as amended, which is classified
generally to chapter 85 (Sec. 7401 et seq.) of Title 42, The Public
Health and Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 7401 of Title 42
and Tables.
-MISC1-
AMENDMENTS
1990 - Subsec. (j). Pub. L. 101-380 added subsec. (j).
1978 - Subsec. (a). Pub. L. 95-372 expanded provisions formerly
contained in subsec. (a)(1) so as to include the enforcement of
safety and environmental laws and regulations, consultation with
the Attorney General and the Federal Trade Commission, and
regulations for the suspension or temporary prohibition of any
operation or activity including production, the cancellation of
leases or permits, the prompt and efficient exploration and
development of a lease area, and compliance with the national
ambient air quality standards to the extent that activities
authorized significantly affect the air quality of any State.
Subsec. (b). Pub. L. 95-372 redesignated as subsec. (b)
provisions formerly contained in subsec. (a)(2) conditioning the
issuance and continuation of leases or of assignments or other
transfers of leases upon compliance with regulations, and struck
out provisions that had set a penalty of a fine of not more than
$2,000 or imprisonment for not more than six months or both for the
knowing and willful violation of rules or regulations promulgated
by the Secretary. See section 1350 of this title.
Subsec. (c). Pub. L. 95-372 redesignated as subsec. (c)
provisions formerly contained in subsec. (b)(1) covering the
cancellation of nonproducing leases for failure of the owner to
comply with any of the provisions of this subchapter, or of the
lease, or of the regulations issued under this subchapter.
Subsec. (d). Pub. L. 95-372 redesignated as subsec. (d)
provisions formerly contained in subsec. (b)(2) covering the
cancellation and forfeiture of producing leases for failure of the
owner to comply with any of the provisions of this subchapter, the
lease, or regulations promulgated under this subchapter.
Subsec. (e). Pub. L. 95-372 redesignated as subsec. (e)
provisions formerly contained in subsec. (c) relating to pipeline
rights-of-way and inserted provisions relating to regulations
prescribed by the Secretary of Transportation and assurances of
maximum environmental protection through the use of the best
available and safest technologies including the safest practices
for pipeline burial, and substituted references to the Federal
Energy Regulatory Commission and the Secretary of Energy for
existing references to the Federal Power Commission and the
Interstate Commerce Commission.
Subsecs. (f) to (i). Pub. L. 95-372 added subsecs. (f) to (i).
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-380 applicable to incidents occurring
after Aug. 18, 1990, see section 1020 of Pub. L. 101-380, set out
as an Effective Date note under section 2701 of Title 33,
Navigation and Navigable Waters.
-TRANS-
TRANSFER OF FUNCTIONS
Functions vested in, or delegated to, Secretary of Energy and
Department of Energy under or with respect to subsec. (g)(2) of
this section, transferred to, and vested in, Secretary of the
Interior, by section 100 of Pub. L. 97-257, 96 Stat. 841, set out
as a note under section 7152 of Title 42, The Public Health and
Welfare.
Functions of Secretary of the Interior to promulgate regulations
under this subchapter which relate to fostering of competition for
Federal leases, implementation of alternative bidding systems
authorized for award of Federal leases, establishment of diligence
requirements for operations conducted on Federal leases, setting of
rates for production of Federal leases, and specifying of
procedures, terms, and conditions for acquisition and disposition
of Federal royalty interests taken in kind, transferred to
Secretary of Energy by section 7152(b) of Title 42. Section 7152(b)
of Title 42 was repealed by Pub. L. 97-100, title II, Sec. 201,
Dec. 23, 1981, 95 Stat. 1407, and functions of Secretary of Energy
returned to Secretary of the Interior. See House Report No. 97-315,
pp. 25, 26, Nov. 5, 1981.
-MISC2-
WEST DELTA FIELD
Section 6004(b) of Pub. L. 101-380 provided that: "Section 5(j)
of the Outer Continental Shelf Lands Act [43 U.S.C. 1334(j)], as
added by this section, shall not be applicable with respect to
Blocks 17 and 18 of the West Delta Field offshore Louisiana."
KEY LARGO CORAL REEF PRESERVE
Secretary of the Interior to prescribe rules and regulations
governing the protection and conservation of the coral and other
mineral resources in the area designated Key Largo Coral Reef
Preserve, see Proc. No. 3339, Mar. 15, 1960, 25 F.R. 2352, set out
as a note under section 461 of Title 16, Conservation.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1335, 1337, 1340, 1351 of
this title; title 42 section 7627.
-FOOTNOTE-
(!1) So in original. Probably should be "subparagraph".
(!2) So in original. Probably should be "lessee".
(!3) So in original. No subpar. (B) has been enacted.
-End-
-CITE-
43 USC Sec. 1335 01/19/04
-EXPCITE-
TITLE 43 - PUBLIC LANDS
CHAPTER 29 - SUBMERGED LANDS
SUBCHAPTER III - OUTER CONTINENTAL SHELF LANDS
-HEAD-
Sec. 1335. Validation and maintenance of prior leases
-STATUTE-
(a) Requirements for validation
The provisions of this section shall apply to any mineral lease
covering submerged lands of the outer Continental Shelf issued by
any State (including any extension, renewal, or replacement thereof
heretofore granted pursuant to such lease or under the laws of such
State) if -
(1) such lease, or a true copy thereof, is filed with the
Secretary by the lessee or his duly authorized agent within
ninety days from August 7, 1953, or within such further period or
periods as provided in section 1336 of this title or as may be
fixed from time to time by the Secretary;
(2) such lease was issued prior to December 21, 1948, and would
have been on June 5, 1950, in force and effect in accordance with
its terms and provisions and the law of the State issuing it had
the State had the authority to issue such lease;
(3) there is filed with the Secretary, within the period or
periods specified in paragraph (1) of this subsection, (A) a
certificate issued by the State official or agency having
jurisdiction over such lease stating that it would have been in
force and effect as required by the provisions of paragraph (2)
of this subsection, or (B) in the absence of such certificate,
evidence in the form of affidavits, receipts, canceled checks, or
other documents that may be required by the Secretary, sufficient
to prove that such lease would have been so in force and effect;
(4) except as otherwise provided in section 1336 of this title
hereof, all rents, royalties, and other sums payable under such
lease between June 5, 1950, and August 7, 1953, which have not
been paid in accordance with the provisions thereof, or to the
Secretary or to the Secretary of the Navy, are paid to the
Secretary within the period or periods specified in paragraph (1)
of this subsection, and all rents, royalties, and other sums
payable under such lease after August 7, 1953, are paid to the
Secretary, who shall deposit such payments in the Treasury in
accordance with section 1338 of this title;
(5) the holder of such lease certifies that such lease shall
continue to be subject to the overriding royalty obligations
existing on August 7, 1953;
(6) such lease was not obtained by fraud or misrepresentation;
(7) such lease, if issued on or after June 23, 1947, was issued
upon the basis of competitive bidding;
(8) such lease provides for a royalty to the lessor on oil and
gas of not less than 12 1/2 per centum and on sulphur of not
less than 5 per centum in amount or value of the production
saved, removed, or sold from the lease, or, in any case in which
the lease provides for a lesser royalty, the holder thereof
consents in writing, filed with the Secretary, to the increase of
the royalty to the minimum herein specified;
(9) the holder thereof pays to the Secretary within the period
or periods specified in paragraph (1) of this subsection an
amount equivalent to any severance, gross production, or
occupation taxes imposed by the State issuing the lease on the
production from the lease, less the State's royalty interest in
such production, between June 5, 1950, and August 7, 1953 and not
heretofore paid to the State, and thereafter pays to the
Secretary as an additional royalty on the production from the
lease, less the United States' royalty interest in such
production, a sum of money equal to the amount of the severance,
gross production, or occupation taxes which would have been
payable on such production to the State issuing the lease under
its laws as they existed on August 7, 1953;
(10) such lease will terminate within a period of not more than
five years from August 7, 1953 in the absence of production or
operations for drilling, or, in any case in which the lease
provides for a longer period, the holder thereof consents in
writing, filed with the Secretary, to the reduction of such
period so that it will not exceed the maximum period herein
specified; and
(11) the holder of such lease furnishes such surety bond, if
any, as the Secretary may require and complies with such other
reasonable requirements as the Secretary may deem necessary to
protect the interests of the United States.
(b) Conduct of operations under lease; sulphur rights
Any person holding a mineral lease, which as determined by the
Secretary meets the requirements of subsection (a) of this section,
may continue to maintain such lease, and may conduct operations
thereunder, in accordance with (1) its provisions as to the area,
the minerals covered, rentals and, subject to the provisions of
paragraphs (8)-(10) of subsection (a) of this section, as to
royalties and as to the term thereof and of any extensions,
renewals, or replacements authorized therein or heretofore
authorized by the laws of the State issuing such lease, or, if oil
or gas was not being produced in paying quantities from such lease
on or before December 11, 1950, or if production in paying
quantities has ceased since June 5, 1950, or if the primary term of
such lease has expired since December 11, 1950, then for a term
from August 7, 1953 equal to the term remaining unexpired on
December 11, 1950, under the provisions of such lease or any
extensions, renewals, or replacements authorized therein, or
heretofore authorized by the laws of such State, and (2) such
regulations as the Secretary may under section 1334 of this title
prescribe within ninety days after making his determination that
such lease meets the requirements of subsection (a) of this
section: Provided, however, That any rights to sulphur under any
lease maintained under the provisions of this subsection shall not
extend beyond the primary term of such lease or any extension
thereof under the provisions of this subsection unless sulphur is
being produced in paying quantities or drilling, well reworking,
plant construction, or other operations for the production of
sulphur, as approved by the Secretary, are being conducted on the
area covered by such lease on the date of expiration of such
primary term or extension: Provided further, That if sulphur is
being produced in paying quantities on such date, then such rights
shall continue to be maintained in accordance with such lease and
the provisions of this subchapter: Provided further, That, if the
primary term of a lease being maintained under this subsection has
expired prior to August 7, 1953 and oil or gas is being produced in
paying quantities on such date, then such rights to sulphur as the
lessee may have under such lease shall continue for twenty-four
months from August 7, 1953 and as long thereafter as sulphur is
produced in paying quantities, or drilling, well working, plant
construction, or other operations for the production of sulphur, as
approved by the Secretary, are being conducted on the area covered
by the lease.
(c) Nonwaiver of United States claims
The permission granted in subsection (b) of this section shall
not be construed to be a waiver of such claims, if any, as the
United States may have against the lessor or the lessee or any
other person respecting sums payable or paid for or under the
lease, or respecting activities conducted under the lease, prior to
August 7, 1953.
(d) Judicial review of determination
Any person complaining of a negative determination by the
Secretary of the Interior under this section may have such
determination reviewed by the United States District Court for the
District of Columbia by filing a petition for review within sixty
days after receiving notice of such action by the Secretary.
(e) Lands beneath navigable waters
In the event any lease maintained under this section covers lands
beneath navigable waters, as that term is used in the Submerged
Lands Act [43 U.S.C. 1301 et seq.], as well as lands of the outer
Continental Shelf, the provisions of this section shall apply to
such lease only insofar as it covers lands of the outer Continental
Shelf.
-SOURCE-
(Aug. 7, 1953, ch. 345, Sec. 6, 67 Stat. 465.)
-REFTEXT-
REFERENCES IN TEXT
The Submerged Lands Act, referred to in subsec. (e), is act May
22, 1953, ch. 65, 67 Stat. 29, which is classified generally to
subchapters I (Sec. 1301 et seq.) and II (Sec. 1311 et seq.) of
this chapter. For complete classification of this Act to the Code,
see Short Title note set out under section 1301 of this title and
Tables.
-TRANS-
TRANSFER OF FUNCTIONS
Functions of Secretary of the Interior to promulgate regulations
under this subchapter which relate to fostering of competition for
Federal leases, implementation of alternative bidding systems
authorized for award of Federal leases, establishment of diligence
requirements for operations conducted on Federal leases, setting of
rates for production of Federal leases, and specifying of
procedures, terms, and conditions for acquisition and disposition
of Federal royalty interests taken in kind, transferred to
Secretary of Energy by section 7152(b) of Title 42, The Public
Health and Welfare. Section 7152(b) of Title 42 was repealed by
Pub. L. 97-100, title II, Sec. 201, Dec. 23, 1981, 95 Stat. 1407,
and functions of Secretary of Energy returned to Secretary of the
Interior. See House Report No. 97-315, pp. 25, 26, Nov. 5, 1981.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1331, 1336, 1337, 1353,
1356a of this title.
-End-
-CITE-
43 USC Sec. 1336 01/19/04
-EXPCITE-
TITLE 43 - PUBLIC LANDS
CHAPTER 29 - SUBMERGED LANDS
SUBCHAPTER III - OUTER CONTINENTAL SHELF LANDS
-HEAD-
Sec. 1336. Controversies over jurisdiction; agreements; payments;
final settlement or adjudication; approval of notice concerning
oil and gas operations in Gulf of Mexico
-STATUTE-
In the event of a controversy between the United States and a
State as to whether or not lands are subject to the provisions of
this subchapter, the Secretary is authorized, notwithstanding the
provisions of section 1335(a) and (b) of this title and with the
concurrence of the Attorney General of the United States, to
negotiate and enter into agreements with the State, its political
subdivision or grantee or a lessee thereof, respecting operations
under existing mineral leases and payment and impounding of rents,
royalties, and other sums payable thereunder, or with the State,
its political subdivision or grantee, respecting the issuance or
nonissuance of new mineral leases pending the settlement or
adjudication of the controversy. The authorization contained in the
preceding sentence of this section shall not be construed to be a
limitation upon the authority conferred on the Secretary in other
sections of this subchapter. Payments made pursuant to such
agreement, or pursuant to any stipulation between the United States
and a State, shall be considered as compliance with section
1335(a)(4) of this title. Upon the termination of such agreement or
stipulation by reason of the final settlement or adjudication of
such controversy, if the lands subject to any mineral lease are
determined to be in whole or in part lands subject to the
provisions of this subchapter, the lessee, if he has not already
done so, shall comply with the requirements of section 1335(a) of
this title, and thereupon the provisions of section 1335(b) of this
title shall govern such lease. The notice concerning "Oil and Gas
Operations in the Submerged Coastal Lands of the Gulf of Mexico"
issued by the Secretary on December 11, 1950 (15 F.R. 8835), as
amended by the notice dated January 26, 1951 (16 F.R. 953), and as
supplemented by the notices dated February 2, 1951 (16 F.R. 1203),
March 5, 1951 (16 F.R. 2195), April 23, 1951 (16 F.R. 3623), June
25, 1951 (16 F.R. 6404), August 22, 1951 (16 F.R. 8720), October
24, 1951 (16 F.R. 10998), December 21, 1951 (17 F.R. 43), March 25,
1952 (17 F.R. 2821), June 26, 1952 (17 F.R. 5833), and December 24,
1952 (18 F.R. 48), respectively, is approved and confirmed.
-SOURCE-
(Aug. 7, 1953, ch. 345, Sec. 7, 67 Stat. 467.)
-TRANS-
TRANSFER OF FUNCTIONS
Functions of Secretary of the Interior to promulgate regulations
under this subchapter which relate to fostering of competition for
Federal leases, implementation of alternative bidding systems
authorized for award of Federal leases, establishment of diligence
requirements for operations conducted on Federal leases, setting of
rates for production of Federal leases, and specifying of
procedures, terms, and conditions for acquisition and disposition
of Federal royalty interests taken in kind, transferred to
Secretary of Energy by section 7152(b) of Title 42, The Public
Health and Welfare. Section 7152(b) of Title 42 was repealed by
Pub. L. 97-100, title II, Sec. 201, Dec. 23, 1981, 95 Stat. 1407,
and functions of Secretary of Energy returned to Secretary of the
Interior. See House Report No. 97-315, pp. 25, 26, Nov. 5, 1981.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1335, 1337, 1353 of this
title.
-End-
-CITE-
43 USC Sec. 1337 01/19/04
-EXPCITE-
TITLE 43 - PUBLIC LANDS
CHAPTER 29 - SUBMERGED LANDS
SUBCHAPTER III - OUTER CONTINENTAL SHELF LANDS
-HEAD-
Sec. 1337. Grant of leases by Secretary
-STATUTE-
(a) Oil and gas leases; award to highest responsible qualified
bidder; method of bidding; royalty relief; Congressional
consideration of bidding system; notice
(1) The Secretary is authorized to grant to the highest
responsible qualified bidder or bidders by competitive bidding,
under regulations promulgated in advance, any oil and gas lease on
submerged lands of the outer Continental Shelf which are not
covered by leases meeting the requirements of subsection (a) of
section 1335 of this title. Such regulations may provide for the
deposit of cash bids in an interest-bearing account until the
Secretary announces his decision on whether to accept the bids,
with the interest earned thereon to be paid to the Treasury as to
bids that are accepted and to the unsuccessful bidders as to bids
that are rejected. The bidding shall be by sealed bid and, at the
discretion of the Secretary, on the basis of -
(A) cash bonus bid with a royalty at not less than 12 1/2 per
centum fixed by the Secretary in amount or value of the
production saved, removed, or sold;
(B) variable royalty bid based on a per centum in amount or
value of the production saved, removed, or sold, with either a
fixed work commitment based on dollar amount for exploration or a
fixed cash bonus as determined by the Secretary, or both;
(C) cash bonus bid, or work commitment bid based on a dollar
amount for exploration with a fixed cash bonus, and a diminishing
or sliding royalty based on such formulae as the Secretary shall
determine as equitable to encourage continued production from the
lease area as resources diminish, but not less than 12 1/2 per
centum at the beginning of the lease period in amount or value of
the production saved, removed, or sold;
(D) cash bonus bid with a fixed share of the net profits of no
less than 30 per centum to be derived from the production of oil
and gas from the lease area;
(E) fixed cash bonus with the net profit share reserved as the
bid variable;
(F) cash bonus bid with a royalty at no less than 12 1/2 per
centum fixed by the Secretary in amount or value of the
production saved, removed, or sold and a fixed per centum share
of net profits of no less than 30 per centum to be derived from
the production of oil and gas from the lease area;
(G) work commitment bid based on a dollar amount for
exploration with a fixed cash bonus and a fixed royalty in amount
or value of the production saved, removed, or sold;
(H) cash bonus bid with royalty at no less than 12 and 1/2
per centum fixed by the Secretary in amount or value of
production saved, removed, or sold, and with suspension of
royalties for a period, volume, or value of production determined
by the Secretary, which suspensions may vary based on the price
of production from the lease; or
(I) subject to the requirements of paragraph (4) of this
subsection, any modification of bidding systems authorized in
subparagraphs (A) through (G), or any other systems of bid
variables, terms, and conditions which the Secretary determines
to be useful to accomplish the purposes and policies of this
subchapter, except that no such bidding system or modification
shall have more than one bid variable.
(2) The Secretary may, in his discretion, defer any part of the
payment of the cash bonus, as authorized in paragraph (1) of this
subsection, according to a schedule announced at the time of the
announcement of the lease sale, but such payment shall be made in
total no later than five years after the date of the lease sale.
(3)(A) The Secretary may, in order to promote increased
production on the lease area, through direct, secondary, or
tertiary recovery means, reduce or eliminate any royalty or net
profit share set forth in the lease for such area.
(B) In the Western and Central Planning Areas of the Gulf of
Mexico and the portion of the Eastern Planning Area of the Gulf of
Mexico encompassing whole lease blocks lying west of 87 degrees, 30
minutes West longitude, the Secretary may, in order to -
(i) promote development or increased production on producing or
non-producing leases; or
(ii) encourage production of marginal resources on producing or
non-producing leases;
through primary, secondary, or tertiary recovery means, reduce or
eliminate any royalty or net profit share set forth in the
lease(s). With the lessee's consent, the Secretary may make other
modifications to the royalty or net profit share terms of the lease
in order to achieve these purposes.
(C)(i) Notwithstanding the provisions of this subchapter other
than this subparagraph, with respect to any lease or unit in
existence on November 28, 1995, meeting the requirements of this
subparagraph, no royalty payments shall be due on new production,
as defined in clause (iv) of this subparagraph, from any lease or
unit located in water depths of 200 meters or greater in the
Western and Central Planning Areas of the Gulf of Mexico, including
that portion of the Eastern Planning Area of the Gulf of Mexico
encompassing whole lease blocks lying west of 87 degrees, 30
minutes West longitude, until such volume of production as
determined pursuant to clause (ii) has been produced by the lessee.
(ii) Upon submission of a complete application by the lessee, the
Secretary shall determine within 180 days of such application
whether new production from such lease or unit would be economic in
the absence of the relief from the requirement to pay royalties
provided for by clause (i) of this subparagraph. In making such
determination, the Secretary shall consider the increased
technological and financial risk of deep water development and all
costs associated with exploring, developing, and producing from the
lease. The lessee shall provide information required for a complete
application to the Secretary prior to such determination. The
Secretary shall clearly define the information required for a
complete application under this section. Such application may be
made on the basis of an individual lease or unit. If the Secretary
determines that such new production would be economic in the
absence of the relief from the requirement to pay royalties
provided for by clause (i) of this subparagraph, the provisions of
clause (i) shall not apply to such production. If the Secretary
determines that such new production would not be economic in the
absence of the relief from the requirement to pay royalties
provided for by clause (i), the Secretary must determine the volume
of production from the lease or unit on which no royalties would be
due in order to make such new production economically viable;
except that for new production as defined in clause (iv)(I), in no
case will that volume be less than 17.5 million barrels of oil
equivalent in water depths of 200 to 400 meters, 52.5 million
barrels of oil equivalent in 400-800 meters of water, and 87.5
million barrels of oil equivalent in water depths greater than 800
meters. Redetermination of the applicability of clause (i) shall be
undertaken by the Secretary when requested by the lessee prior to
the commencement of the new production and upon significant change
in the factors upon which the original determination was made. The
Secretary shall make such redetermination within 120 days of
submission of a complete application. The Secretary may extend the
time period for making any determination or redetermination under
this clause for 30 days, or longer if agreed to by the applicant,
if circumstances so warrant. The lessee shall be notified in
writing of any determination or redetermination and the reasons for
and assumptions used for such determination. Any determination or
redetermination under this clause shall be a final agency action.
The Secretary's determination or redetermination shall be
judicially reviewable under section 702 of title 5, only for
actions filed within 30 days of the Secretary's determination or
redetermination.
(iii) In the event that the Secretary fails to make the
determination or redetermination called for in clause (ii) upon
application by the lessee within the time period, together with any
extension thereof, provided for by clause (ii), no royalty payments
shall be due on new production as follows:
(I) For new production, as defined in clause (iv)(I) of this
subparagraph, no royalty shall be due on such production
according to the schedule of minimum volumes specified in clause
(ii) of this subparagraph.
(II) For new production, as defined in clause (iv)(II) of this
subparagraph, no royalty shall be due on such production for one
year following the start of such production.
(iv) For purposes of this subparagraph, the term "new production"
is -
(I) any production from a lease from which no royalties are due
on production, other than test production, prior to November 28,
1995; or
(II) any production resulting from lease development activities
pursuant to a Development Operations Coordination Document, or
supplement thereto that would expand production significantly
beyond the level anticipated in the Development Operations
Coordination Document, approved by the Secretary after November
28, 1995.
(v) During the production of volumes determined pursuant to
clauses (!1) (ii) or (iii) of this subparagraph, in any year during
which the arithmetic average of the closing prices on the New York
Mercantile Exchange for light sweet crude oil exceeds $28.00 per
barrel, any production of oil will be subject to royalties at the
lease stipulated royalty rate. Any production subject to this
clause shall be counted toward the production volume determined
pursuant to clause (ii) or (iii). Estimated royalty payments will
be made if such average of the closing prices for the previous year
exceeds $28.00. After the end of the calendar year, when the new
average price can be calculated, lessees will pay any royalties
due, with interest but without penalty, or can apply for a refund,
with interest, of any overpayment.
(vi) During the production of volumes determined pursuant to
clause (ii) or (iii) of this subparagraph, in any year during which
the arithmetic average of the closing prices on the New York
Mercantile Exchange for natural gas exceeds $3.50 per million
British thermal units, any production of natural gas will be
subject to royalties at the lease stipulated royalty rate. Any
production subject to this clause shall be counted toward the
production volume determined pursuant to clauses (!1) (ii) or
(iii). Estimated royalty payments will be made if such average of
the closing prices for the previous year exceeds $3.50. After the
end of the calendar year, when the new average price can be
calculated, lessees will pay any royalties due, with interest but
without penalty, or can apply for a refund, with interest, of any
overpayment.
(vii) The prices referred to in clauses (v) and (vi) of this
subparagraph shall be changed during any calendar year after 1994
by the percentage, if any, by which the implicit price deflator for
the gross domestic product changed during the preceding calendar
year.
(4)(A) The Secretary of Energy shall submit any bidding system
authorized in subparagraph (H) of paragraph (1) to the Senate and
House of Representatives. The Secretary may institute such bidding
system unless either the Senate or the House of Representatives
passes a resolution of disapproval within thirty days after receipt
of the bidding system.
(B) Subparagraphs (C) through (J) of this paragraph are enacted
by Congress -
(i) as an exercise of the rulemaking power of the Senate and
the House of Representatives, respectively, and as such they are
deemed a part of the rules of each House, respectively, but they
are applicable only with respect to the procedures to be followed
in that House in the case of resolutions described by this
paragraph, and they supersede other rules only to the extent that
they are inconsistent therewith; and
(ii) with full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and to
the same extent as in the case of any other rule of that House.
(C) A resolution disapproving a bidding system submitted pursuant
to this paragraph shall immediately be referred to a committee (and
all resolutions with respect to the same request shall be referred
to the same committee) by the President of the Senate or the
Speaker of the House of Representatives, as the case may be.
(D) If the committee to which has been referred any resolution
disapproving the bidding system of the Secretary has not reported
the resolution at the end of ten calendar days after its referral,
it shall be in order to move either to discharge the committee from
further consideration of the resolution or to discharge the
committee from further consideration of any other resolution with
respect to the same bidding system which has been referred to the
committee.
(E) A motion to discharge may be made only by an individual
favoring the resolution, shall be highly privileged (except that it
may not be made after the committee has reported a resolution with
respect to the same recommendation), and debate thereon shall be
limited to not more than one hour, to be divided equally between
those favoring and those opposing the resolution. An amendment to
the motion shall not be in order, and it shall not be in order to
move to reconsider the vote by which the motion is agreed to or
disagreed to.
(F) If the motion to discharge is agreed to or disagreed to, the
motion may not be renewed, nor may another motion to discharge the
committee be made with respect to any other resolution with respect
to the same bidding system.
(G) When the committee has reported, or has been discharged from
further consideration of, a resolution as provided in this
paragraph, it shall be at any time thereafter in order (even though
a previous motion to the same effect has been disagreed to) to move
to proceed to the consideration of the resolution. The motion shall
be highly privileged and shall not be debatable. An amendment to
the motion shall not be in order, and it shall not be in order to
move to reconsider the vote by which the motion is agreed to or
disagreed to.
(H) Debate on the resolution is limited to not more than two
hours, to be divided equally between those favoring and those
opposing the resolution. A motion further to limit debate is not
debatable. An amendment to, or motion to recommit, the resolution
is not in order, and it is not in order to move to reconsider the
vote by which the resolution is agreed to or disagreed to.
(I) Motions to postpone, made with respect to the discharge from
the committee, or the consideration of a resolution with respect to
a bidding system, and motions to proceed to the consideration of
other business, shall be decided without debate.
(J) Appeals from the decisions of the Chair relating to the
application of the rules of the Senate or the House of
Representatives, as the case may be, to the procedure relating to a
resolution with respect to a bidding system shall be decided
without debate.
(5)(A) During the five-year period commencing on September 18,
1978, the Secretary may, in order to obtain statistical information
to determine which bidding alternatives will best accomplish the
purposes and policies of this subchapter, require, as to no more
than 10 per centum of the tracts offered each year, each bidder to
submit bids for any area of the outer Continental Shelf in
accordance with more than one of the bidding systems set forth in
paragraph (1) of this subsection. For such statistical purposes,
leases may be awarded using a bidding alternative selected at
random for the acquisition of valid statistical data if such
bidding alternative is otherwise consistent with the provisions of
this subchapter.
(B) The bidding systems authorized by paragraph (1) of this
subsection, other than the system authorized by subparagraph (A),
shall be applied to not less than 20 per centum and not more than
60 per centum of the total area offered for leasing each year
during the five-year period beginning on September 18, 1978, unless
the Secretary determines that the requirements set forth in this
subparagraph are inconsistent with the purposes and policies of
this subchapter.
(6) At least ninety days prior to notice of any lease sale under
subparagraph (D), (E), (F), or, if appropriate, (H) of paragraph
(1), the Secretary shall by regulation establish rules to govern
the calculation of net profits. In the event of any dispute between
the United States and a lessee concerning the calculation of the
net profits under the regulation issued pursuant to this paragraph,
the burden of proof shall be on the lessee.
(7) After an oil and gas lease is granted pursuant to any of the
work commitment options of paragraph (1) of this subsection -
(A) the lessee, at its option, shall deliver to the Secretary
upon issuance of the lease either (i) a cash deposit for the full
amount of the exploration work commitment, or (ii) a performance
bond in form and substance and with a surety satisfactory to the
Secretary, in the principal amount of such exploration work
commitment assuring the Secretary that such commitment shall be
faithfully discharged in accordance with this section,
regulations, and the lease; and for purposes of this
subparagraph, the principal amount of such cash deposit or bond
may, in accordance with regulations, be periodically reduced upon
proof, satisfactory to the Secretary, that a portion of the
exploration work commitment has been satisfied;
(B) 50 per centum of all exploration expenditures on, or
directly related to, the lease, including, but not limited to (i)
geological investigations and related activities, (ii)
geophysical investigations including seismic, geomagnetic, and
gravity surveys, data processing and interpretation, and (iii)
exploratory drilling, core drilling, redrilling, and well
completion or abandonment, including the drilling of wells
sufficient to determine the size and a real extent of any newly
discovered field, and including the cost of mobilization and
demobilization of drilling equipment, shall be included in
satisfaction of the commitment, except that the lessee's general
overhead cost shall not be so included against the work
commitment, but its cost (including employee benefits) of
employees directly assigned to such exploration work shall be so
included; and
(C) if at the end of the primary term of the lease, including
any extension thereof, the full dollar amount of the exploration
work commitment has not been satisfied, the balance shall then be
paid in cash to the Secretary.
(8) Not later than thirty days before any lease sale, the
Secretary shall submit to the Congress and publish in the Federal
Register a notice -
(A) identifying any bidding system which will be utilized for
such lease sale and the reasons for the utilization of such
bidding system; and
(B) designating the lease tracts selected which are to be
offered in such sale under the bidding system authorized by
subparagraph (A) of paragraph (1) and the lease tracts selected
which are to be offered under any one or more of the bidding
systems authorized by subparagraphs (B) through (H) of paragraph
(1), and the reasons such lease tracts are to be offered under a
particular bidding system.
(b) Terms and provisions of oil and gas leases
An oil and gas lease issued pursuant to this section shall -
(1) be for a tract consisting of a compact area not exceeding
five thousand seven hundred and sixty acres, as the Secretary may
determine, unless the Secretary finds that a larger area is
necessary to comprise a reasonable economic production unit;
(2) be for an initial period of -
(A) five years; or
(B) not to exceed ten years where the Secretary finds that
such longer period is necessary to encourage exploration and
development in areas because of unusually deep water or other
unusually adverse conditions,
and as long after such initial period as oil or gas is produced
from the area in paying quantities, or drilling or well reworking
operations as approved by the Secretary are conducted thereon;
(3) require the payment of amount or value as determined by one
of the bidding systems set forth in subsection (a) of this
section;
(4) entitle the lessee to explore, develop, and produce the oil
and gas contained within the lease area, conditioned upon due
diligence requirements and the approval of the development and
production plan required by this subchapter;
(5) provide for suspension or cancellation of the lease during
the initial lease term or thereafter pursuant to section 1334 of
this title;
(6) contain such rental and other provisions as the Secretary
may prescribe at the time of offering the area for lease; and
(7) provide a requirement that the lessee offer 20 per centum
of the crude oil, condensate, and natural gas liquids produced on
such lease, at the market value and point of delivery applicable
to Federal royalty oil, to small or independent refiners as
defined in the Emergency Petroleum Allocation Act of 1973 (!2)
[15 U.S.C. 751 et seq.].
(c) Antitrust review of lease sales
(1) Following each notice of a proposed lease sale and before the
acceptance of bids and the issuance of leases based on such bids,
the Secretary shall allow the Attorney General, in consultation
with the Federal Trade Commission, thirty days to review the
results of such lease sale, except that the Attorney General, after
consultation with the Federal Trade Commission, may agree to a
shorter review period.
(2) The Attorney General may, in consultation with the Federal
Trade Commission, conduct such antitrust review on the likely
effects the issuance of such leases would have on competition as
the Attorney General, after consultation with the Federal Trade
Commission, deems appropriate and shall advise the Secretary with
respect to such review. The Secretary shall provide such
information as the Attorney General, after consultation with the
Federal Trade Commission, may require in order to conduct any
antitrust review pursuant to this paragraph and to make
recommendations pursuant to paragraph (3) of this subsection.
(3) The Attorney General, after consultation with the Federal
Trade Commission, may make such recommendations to the Secretary,
including the nonacceptance of any bid,as may be appropriate to (continued)