To provide for gas-only leases and State requests to examine energy areas on the outer Continental Shelf.

1. Adds SEC. 390. GAS-ONLY LEASES; STATE REQUESTS TO EXAMINE ENERGY AREAS on page 327, line 21

   Adds a sectionPrinted page

   Inserted: SEC. 390. GAS-ONLY LEASES; STATE REQUESTS TO EXAMINE ENERGY AREAS.

   Inserted: (a) Gas-Only Leases.--Section 8 of the Outer Continental Shelf Lands Act (43 U.S.C. 1337) (as amended by section 321) is amended by adding at the end the following:

   Inserted: "(q) Gas-Only Leases.--

   Inserted: "(1) In general.--The Secretary may issue a lease under this section beginning in the 2007-2012 plan period that authorizes development and production only of gas and associated condensate in accordance with regulations issued under paragraph (2).

   Inserted: "(2) Regulations.--Not later than October 1, 2006, the Secretary shall issue regulations that, for purposes of this section--

   Inserted: "(A) define natural gas so that the definition--

   Inserted: "(i) includes--

   Inserted: "(I) hydrocarbons and other substances in a gaseous state at atmospheric pressure and a temperature of 60 degrees Fahrenheit;

   Inserted: "(II) liquids that condense from natural gas in the process of treatment, dehydration, decompression, or compression prior to the point for measuring volume and quality of the production established by the Minerals Management Service; and

   Inserted: "(III) natural gas liquefied for transportation; and

   Inserted: "(ii) excludes crude oil;

   Inserted: "(B) provide that gas-only leases shall contain the same rights and obligations established for oil and gas leases;

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   Inserted: "(C) provide that, in reviewing the adequacy of bids for gas-only leases, the Minerals Management Service shall exclude the value of any crude oil estimated to be discovered within the boundaries of the leasing area;

   Inserted: "(D) provide for cancellation of a gas-only lease, with payment of the fair value of the lease rights canceled, if the Secretary determines that any natural gas discovered within the boundaries of the leasing area cannot be produced without causing an unacceptable waste of crude oil discovered in association with the natural gas; and

   Inserted: "(E) provide that, at the request and with the consent of the Governor of the State adjacent to the lease area, as determined under section 18(i)(2)(B)(i), and with the consent of the lessee, an existing gas-only lease may be converted, without an increase in the rental or royalty rate and without further payment in the nature of a lease bonus, to a lease under subsection (b), in accordance with a process, to be established by the Secretary, that requires--

   Inserted: "(i) consultation by the Secretary with the Governor of the State and the lessee with respect to the operating conditions of the lease, taking into consideration environmental resource conservation and recovery, economic factors, and other factors, as the Secretary determines to be relevant; and

   Inserted: "(ii) compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).

   Inserted: "(3) Effect of other laws.--Any Federal law (including regulations) that applies to an oil and gas lease on the Outer Continental Shelf shall apply to a gas-only lease issued under this subsection.".

   Inserted: (b) State Requests to Examine Energy Areas.--Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) is amended by adding at the end the following:

   Inserted: "(i) State requests to examine energy areas.--

   Inserted: "(1) Definitions.--In this subsection:

   Inserted: "(A) Lease.--The term 'lease' includes a gas-only lease under section 8(q).

   Inserted: "(B) Moratorium area.--The term 'moratorium area' means--

   Inserted: "(i) any area withdrawn from disposition by leasing by the memorandum entitled 'Memorandum on Withdrawal of Certain Areas of the United States Outer Continental Shelf from Leasing Disposition' (34 Weekly Comp. Pres. Doc. 1111 (June 12, 1998)); and

   Inserted: "(ii) any area of the outer Continental Shelf as to which Congress has denied the use of appropriated funds or other means for preleasing, leasing, or related activities.

   Inserted: "(2) Resource estimates.--

   Inserted: "(A) Requests.--At any time, the Governor of an affected State, acting on behalf of the State, may request the Secretary to provide a current estimate of proven and potential gas, or oil and gas, resources in any moratorium area (or any part of the moratorium area the Governor identifies) adjacent to, or lying seaward of the coastline of, that State.

   Inserted: "(B) Response of secretary.--Not later than 45 days after the date on which the Governor of a State requests an estimate under subparagraph (A), the Secretary shall provide--

   Inserted: "(i) a delineation of the lateral boundaries between the coastal States, in accordance with--

   Inserted: "(I) any judicial decree or interstate compact delineating lateral offshore boundaries between coastal States:

   Inserted: "(II) any principles of domestic and international law governing the delineation of lateral offshore boundaries; and

   Inserted: "(III) to the maximum extent practicable, existing lease boundaries and block lines based on the official protraction diagrams of the Secretary;

   Inserted: "(ii) a current inventory of proven and potential gas, or oil and gas, resources in any moratorium areas within the area off the shore of a State, in accordance with the lateral boundaries delineated under clause (i), as requested by the Governor; and

   Inserted: "(iii) an explanation of the planning processes that could lead to the leasing, exploration, development, and production of the gas, or oil and gas, resources within the area identified.

   Inserted: "(3) Making certain areas available for leasing.--

   Inserted: "(A) Petition.--

   Inserted: "(i) In general.--On consideration of the information received from the Secretary, the Governor (acting on behalf of the State of the Governor) may submit to the Secretary a petition requesting that the Secretary make available for leasing any portion of a moratorium area off the coast of the State, in accordance with the lateral boundaries delineated under paragraph (2)(B)(i).

   Inserted: "(ii) Contents.--In a petition under clause (i), a Governor may request that an area described in that clause be made available for leasing under subsection (b) or (q), or both, of section 8.

   Inserted: "(B) Action by secretary.--Not later than 90 days after the date of receipt of a petition under subparagraph (A), the Secretary shall approve the petition unless the Secretary determines that leasing in the affected area presents a significant likelihood of incidents associated with the development of resources that would cause serious harm or damage to the marine resources of the area or of an adjacent State.

   Inserted: "(C) Failure to act.--If the Secretary fails to approve or deny a petition in accordance with subparagraph (B), the petition shall be considered to be approved as of the date that is 90 days after the date of receipt of the petition.

   Inserted: "(D) Treatment.--Notwithstanding any other provision of this section, not later than 180 days after the date on which a petition is approved, or considered to be approved, under subparagraph (B) or (C), the Secretary shall--

   Inserted: "(i) treat the petition of the Governor under subparagraph (A) as a proposed revision to a leasing program under this section; and

   Inserted: "(ii) except as provided in subparagraph (E), expedite the revision of the 5-year outer Continental Shelf oil and gas leasing program in effect as of that date to include any lease sale for any area covered by the petition.

   Inserted: "(E) Inclusion in subsequent plans.--

   Inserted: "(i) In general.--If there are fewer than 18 months remaining in the 5-year outer Continental Shelf oil and gas leasing program described in subparagraph (D)(ii), the Secretary, without consultation with any State, shall include the areas covered by the petition in lease sales under the subsequent 5-year outer Continental Shelf oil and gas leasing program.

   Inserted: "(ii) Environmental assessment.--Before modifying a 5-Year Outer Continental Shelf Oil and Gas Leasing Program under clause (i), the Secretary shall complete an environmental assessment that describes any anticipated environmental effect of leasing in the area under the petition.

   Inserted: "(F) Spending limitations.--Any Federal spending limitation with respect to preleasing, leasing, or a related activity in an area made available for leasing under this paragraph shall terminate as of the date on which the petition of the Governor relating to the area is approved, or considered to be approved, under subparagraph (B) or (C).

   Inserted: "(G) Coastal zone management.--For purposes of title III of the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.), any activity relating to leasing and subsequent production in an area made available for leasing under this paragraph shall--

   Inserted: "(i) if the leased area is located more than 20 miles offshore of an adjacent State (or the boundaries of the State as delineated under paragraph (2)(B)), be considered by the Secretary of Commerce to be necessary to the interest of national security and be carried out notwithstanding the objection of a State to a consistency certification under that Act; or

   Inserted: "(ii) if the leased area is located not greater than 20 miles offshore of an adjacent State, be subject to section 307(c) of that Act (16 U.S.C. 1456(c)).

   Inserted: "(4) Revenue sharing.--

   Inserted: "(A) Bonus bids.--If the Governor of a State requests the Secretary to allow gas, or oil or natural gas, leasing in the moratorium area and the Secretary allows that leasing, the State shall, without further appropriation or action, receive 25 percent of any bonus bid paid for leasing rights in the area.

   Inserted: "(B) Post leasing revenues.--In addition to bonus bids under subparagraph (A), a State described in subparagraph (A) shall receive 25 percent of--

   Inserted: "(i) any lease rental minimum royalty;

   Inserted: "(ii) any royalty proceeds from a sale of royalties taken in kind by the Secretary; and

   Inserted: "(iii) any other revenues from a bidding system under section 8.

   Inserted: "(C) Conservation royalties.--After making distributions in accordance with subparagraphs (A) and (B), and in accordance with section 31, the Secretary, in coordination with the Governor of a State, shall, without further appropriation or action, distribute a conservation royalty of 12.5 percent of Federal royalty revenues in an area leased under this section, not to exceed $1,250,000,000 for any year, to 1 or more of the following:

   Inserted: "(i) The Coastal and Estuary Habitat Restoration Trust Fund.

   Inserted: "(ii) The wildlife restoration fund established under section 3 of the Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 669b).

   Inserted: "(iii) The Land and Water Conservation Fund to provide financial assistance to States under section 6 of that Act (16 U.S.C. 460l-8).

   Inserted: "(5) Application.--This subsection shall not apply to--

   Inserted: "(A) any area designated as a national marine sanctuary or a national wildlife refuge;

   Inserted: "(B) the Lease Sale 181 planning area;

   Inserted: "(C) any area not included in the outer Continental Shelf;

   Inserted: "(D) the Great Lakes, as defined in section 118(a)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1268(a)(3));

   Inserted: "(E) the eastern coast of the State of Florida; OR

   Inserted: "(F) Bristol Bay.".

   Inserted: (c) Great Lakes Oil and Gas Drilling Ban.--No Federal or State permit or lease shall be issued for new oil and gas slant, directional, or offshore drilling in or under 1 or more of the Great Lakes (as defined in section 118(a)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1268(a)(3))).

   Original wording

   On page 327, after line 21, add the following:

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