II
109th CONGRESS
2d Session
S. 2290
IN THE SENATE OF THE UNITED STATES
February 15, 2006
Mr. Pryor (for himself, Mr. Warner, and Mr. Talent) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources
A BILL
To provide for affordable natural gas by rebalancing domestic supply and demand and to promote the production of natural gas from domestic resources.
Short title; table of contents
Short title
This Act may be cited
as the Reliable and Affordable Natural
Gas Energy Reform Act of 2006
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Natural gas leases.
Sec. 3. Determination of adjacent zones and planning areas.
Sec. 4. Leasing moratoria in the OCS.
Sec. 5. Option to petition for extension of withdrawal from leasing within certain areas of the outer Continental Shelf.
Sec. 6. State requests to examine energy areas.
Sec. 7. Availability of certain areas for leasing.
Sec. 8. Neighboring State concurrence.
Sec. 9. Revenue sharing from moratorium areas.
Sec. 10. Revenue sharing from nonmoratorium areas.
Sec. 11. Repeal of requirement to conduct comprehensive inventory of OCS natural gas resources.
Sec. 12. Leases for areas located within 100 miles off California or Florida.
Sec. 13. Repurchase of certain leases.
Natural gas leases
Section 8 of the Outer Continental Shelf Lands Act (43 U.S.C. 1337) is amended by adding at the end the following:
Natural gas leases
In general
Beginning with the 5-year outer Continental Shelf oil and gas leasing program for 2007 through 2012, the Secretary may issue a lease under this section that authorizes development and production of gas and associated condensate and other hydrocarbon liquids in a moratorium area (as defined in section 18(j)(1)) in accordance with regulations issued under paragraph (2).
Regulations
Not later than October 1, 2006, the Secretary shall issue regulations that, for purposes of this section—
define natural gas in a manner that includes—
hydrocarbons and other substances in a gaseous state at atmospheric pressure and a temperature of 60 degrees Fahrenheit;
liquids that condense (gas liquids) 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 Secretary, acting through the Minerals Management Service;
other associated hydrocarbon liquids if the predominant component is natural gas and gas liquids; and
natural gas liquefied for transportation;
provide that natural gas leases shall contain the same rights and obligations as oil and gas leases;
provide that, in reviewing the adequacy of bids for natural gas leases, the Secretary, acting through the Minerals Management Service, shall exclude the value of any crude oil estimated to be discovered within the boundaries of the leasing area;
provide for cancellation of a natural gas lease, with payment of the fair value of the lease rights canceled, if the Secretary determines that hydrocarbons other than natural gas and natural gas liquids will be the predominant production from the lease; and
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(j)(2)(B)(i), and with the consent of the lessee, an existing natural gas lease may be converted, without an increase in the rental 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—
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
compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
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 natural gas lease issued under this subsection.
.
Determination of adjacent zones and planning areas
Section 4(a)(2)(A) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)(2)(A)) is amended—
by designating the first, second, and third sentences as clause (i), (iii), and (iv), respectively;
in clause (i) (as
so designated), by striking , and the President
and all that
follows through the end of the sentence; and
by inserting after clause (i) (as so designated) the following:
The lines extending seaward and defining the Adjacent Zone of each State, and each Planning Area of the outer Continental Shelf, shall be as indicated on the maps for each outer Continental Shelf region entitled—
Alaska OCS Region State
Adjacent Zone and OCS Planning Areas
;
Pacific OCS Region State
Adjacent Zones and OCS Planning Areas
;
Gulf of Mexico OCS Region
State Adjacent Zones and OCS Planning Areas
; and
Atlantic OCS Region State
Adjacent Zones and OCS Planning Areas
;
.
Leasing moratoria in the OCS
Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) is amended by adding at the end the following:
Leasing within certain areas of the outer Continental Shelf
Prohibition against leasing
Except as otherwise provided in this subsection and subsection (k), prior to June 30, 2012, the Secretary shall not offer for leasing for natural gas—
any area
withdrawn from disposition by leasing in the Atlantic OCS Region, the Pacific
OCS Region, or the Gulf of Mexico OCS Region Eastern Planning Area, as depicted
on the applicable map described in subparagraph (B), under the
Memorandum on Withdrawal of Certain Areas of the United States Outer
Continental Shelf from Leasing Disposition
, from 34 Weekly Comp. Pres.
Doc. 1111, dated June 12, 1998; or
any area not withdrawn under that Memorandum that is included within—
the Gulf of
Mexico OCS Region Eastern Planning Area as indicated on the map entitled
Gulf of Mexico OCS Region State Adjacent Zones and OCS Planning
Areas
; or
the Florida
Straits Planning Area as indicated on the map entitled Atlantic OCS
Region State Adjacent Zones and OCS Planning Areas
;
Revocation of withdrawal
In general
The withdrawal of any area from disposition by leasing
under the Memorandum on Withdrawal of Certain Areas of the United States
Outer Continental Shelf from Leasing Disposition
, from 34 Weekly Comp.
Pres. Doc. 1111, dated June 12, 1998, shall have no force or effect with
respect to any area included within the Gulf of Mexico OCS Region Central
Planning Area as indicated on the map entitled Gulf of Mexico OCS Region
State Adjacent Zones and OCS Planning Areas
, dated September 2005 and
on file in the Office of the Director, Minerals Management Service.
Additional areas
The Secretary shall amend the 5-year outer Continental Shelf oil and gas leasing program for 2002 through 2007 to include—
the areas added to the Gulf of Mexico OCS Region Central Planning Area by this paragraph to the extent that the areas were included within the original boundaries of proposed Lease Sale 181; and
2 sales in such additional areas, 1 of which shall be held not later than January 2007 and 1 of which shall be held not later than June 2007.
Environmental impact statement
The final environmental impact statement prepared for an area covered by this paragraph for Lease Sale 181 shall be considered sufficient for all purposes for each lease sale in which the area is offered for lease during the 5-year outer Continental Shelf oil and gas leasing program for 2002 through 2007 without need for supplementation.
Partial tracts
Part within Planning Area
Any tract only partially added to the Gulf of Mexico OCS Region Central Planning Area by this paragraph shall be eligible for leasing of the part of the tract that is included within the Gulf of Mexico OCS Region Central Planning Area.
Part outside Planning Area
The remainder of the tract that lies outside of the Gulf of Mexico OCS Region Central Planning Area may be developed and produced by the lessee of the partial tract using extended reach or similar drilling from a location on a leased area.
.
Option to petition for extension of withdrawal from leasing within certain areas of the outer Continental Shelf
Option to petition
In general
The Governor of a State may submit to the Secretary a petition requesting that the Secretary extend for a period of time described in paragraph (2) the withdrawal from leasing for all or part of any area within the Adjacent Zone of the State within 125 miles of the coastline of the State.
Length of extension
In general
The period of time requested in a petition submitted under paragraph (1) shall not exceed 5 years for each petition.
Limitation
The Secretary shall not grant a petition submitted under paragraph (1) that extends the remaining period of a withdrawal of an area from leasing for a total of more than 10 years.
Multiple petitions
A State may petition multiple times for a particular area, but not more than once per calendar year for any particular area.
Contents of petition
A petition submitted under paragraph (1) may—
apply to natural gas leasing; and
request some areas to be withdrawn from all leasing and some areas only withdrawn from one type of leasing.
Alabama Adjacent Zone
A petition for extending the withdrawal from
leasing of any part of the Alabama Adjacent Zone that is a part of the Gulf of
Mexico OCS Region Eastern Planning Area, as indicated on the map entitled
Gulf of Mexico OCS Region State Adjacent Zones and OCS Planning
Areas
, dated September 2005 and on file in the Office of the Director,
Minerals Management Service, may be made by either the Governor of Alabama or
the Governor of Florida.
Action by Secretary
Not later than 90 days after receipt of a petition submitted under subsection (a), the Secretary shall approve the petition, unless the Secretary determines that extending the withdrawal from leasing would likely have an adverse effect on the availability of necessary energy resources, which would contribute to significant economic hardship on a national or regional basis, or would otherwise not be in the national interest.
Failure to act
If the Secretary fails to approve or deny a petition in accordance with subsection (b), the petition shall be considered to be approved 90 days after the date on which the Secretary received the petition.
State requests to examine energy areas
Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) (as amended by section 4) is amended by adding at the end the following:
State requests to examine energy areas
Definitions
In this subsection through subsection (m):
Lease
The term lease includes a natural gas lease under section 8(q).
Moratorium area
The term moratorium area means—
any area
withdrawn from disposition by leasing by the Memorandum on Withdrawal of
Certain Areas of the United States Outer Continental Shelf from Leasing
Disposition
, from 34 Weekly Comp. Pres. Doc. 1111, dated June 12, 1998;
and
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.
Resource estimates
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 natural gas resources that may result, and resulting State revenues, 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.
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—
a current estimate of proven and potential natural gas resources in any moratorium areas off the shore of a State;
an estimate of potential revenues that could be shared under this Act if resources were developed and produced; and
an explanation of the planning processes that could lead to the leasing, exploration, development, and production of the natural gas resources within the area identified.
.
Availability of certain areas for leasing
Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) (as amended by section 6) is amended by adding at the end the following:
Availability of certain areas for leasing
Petition
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 in the Adjacent Zone of the State.
Contents
In a petition under subparagraph (A), a Governor may request that an area described in subparagraph (A) be made available for leasing under subsection (b) or (q), or both, of section 8.
Action by Secretary
Not later than 90 days after the date of receipt of a petition under paragraph (1), 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.
Failure to act
If the Secretary fails to approve or deny a petition in accordance with paragraph (2), the petition shall be considered to be approved as of the date that is 90 days after the date of receipt of the petition.
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 paragraph (2) or (3), the Secretary shall—
treat the petition of the Governor under paragraph (1) as a proposed revision to a leasing program under this section; and
except as provided in paragraph (5), 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.
Inclusion in subsequent plans
In general
If there are less than 18 months remaining in the 5-year outer Continental Shelf oil and gas leasing program described in paragraph (4)(B), 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.
Environmental assessment
Before modifying a 5-Year outer Continental Shelf oil and gas leasing program under subparagraph (A), the Secretary shall complete an environmental assessment that describes any anticipated environmental effect of leasing in the area covered by the petition.
Spending limitations
Any Federal spending limitation with respect to preleasing, leasing, or a related activity in an area made available for leasing under this subsection 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 paragraph (2) or (3).
Application
This subsection shall not apply to—
any area designated as a national marine sanctuary or a national wildlife refuge;
any area not included in the outer Continental Shelf;
the Great Lakes (as defined in section 118(a)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1268(a)(3));
the eastern coast of the State of Florida; or
Bristol Bay.
Great Lakes
The Great Lakes (as defined in section 118(a)(3) of the Federal Water Pollution Control Act (33 U.S.C. 1268(a)(3)))—
shall not be considered part of the outer Continental Shelf under this Act; and
shall not be subject to production.
.
Neighboring State concurrence
Notice
The Secretary of the Interior shall provide notice to a neighboring State of any proposed lease of natural gas if the lease would be located within 20 miles of the nearest point on the coastline of the State.
Objection
Not later than 30 days after receiving the notice, the Governor of the State may object to the issuance of the lease on grounds that the lease presents a significant risk to environmental and economic resources of the State.
Secretary Review
If the Secretary, after review of the objection and consultation with the adjacent State, concurs that the lease presents a significant risk described in subsection (b), and that the risk cannot be reasonably mitigated—
the Secretary shall not approve an exploration plan for the lease; and
the lease shall be eligible for repurchase in accordance with section 13.
Nonapplicability
This section does not apply to a State covered by section 12.
Revenue sharing from moratorium areas
Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) (as amended by section 7) is amended by adding at the end the following:
Revenue sharing from moratorium areas
Bonus bids
If the Governor of a State requests the Secretary to allow natural gas leasing in a moratorium area and the Secretary allows the leasing, the State shall, without further appropriation or action, receive 50 percent of any bonus bid paid for leasing rights in the area.
Post leasing revenues
In addition to bonus bids under paragraph (1), a State described in paragraph (1) shall receive, from leasing of the area, 50 percent of—
any lease rental minimum royalty;
any royalty proceeds from a sale of royalties taken in kind by the Secretary; and
any other revenues from a bidding system under section 8.
Conservation royalties
After making distributions in accordance with paragraphs (1) and (2) and in accordance with section 31, the Secretary shall, without further appropriation or action, distribute a conservation royalty equal to 12.5 percent of Federal royalty revenues derived from an area leased under this section in an amount not to exceed $1,250,000,000 from all areas leased under this section for any year, into the following programs that distribute conservation funds to States:
The Federal aid to wildlife restoration fund established under section 3(a)(1) of the Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 669b(a)(1)).
The land and water conservation fund established under section 2 of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–5) to provide financial assistance to States under section 6 of that Act (16 U.S.C. 460l–8).
.
Revenue sharing from nonmoratorium areas
Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) (as amended by section 9) is amended by adding at the end the following:
Revenue sharing from nonmoratorium area
Revenues from production that occurs beginning on the date that is 5 years after the date of enactment of this subsection in an area that is not a moratorium area shall be distributed in the same proportion and for the same uses as provided in subsection (l).
.
Repeal of requirement to conduct comprehensive inventory of OCS natural gas resources
Section 357 of the Energy Policy Act of 2005 (42 U.S.C. 15912) is repealed.
Leases for areas located within 100 miles off California or Florida
In general
Effective beginning on the date that is 180 days after the date of enactment of this Act, the lessee of a natural gas lease in existence on the date of enactment of this Act for an area located completely within 100 miles of the coastline and within the California or Florida Adjacent Zones shall have the option, without compensation, of exchanging the lease for a new natural gas lease having a primary term of 5 years.
Tracts
For the area subject to the new lease, the lessee may select any unleased tract—
at least part of which is located within the area between 100 and 125 miles from the coastline; and
that is located—
completely beyond 100 miles from the coastline; and
within the same Adjacent Zone of the adjacent State as the lease being exchanged.
Administrative process
In general
The Secretary of the Interior (referred to in this section as the Secretary) shall establish a reasonable administrative process through which a lessee may exercise the option of the lessee to exchange a natural gas lease for a new natural gas lease in accordance with this section.
Relationship to other laws
An exchange of leases conducted in accordance with this section (including the issuance of a new lease)—
shall not be considered to be a major Federal action for purposes of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.); and
shall be considered in compliance with the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.).
Withdrawal
The Secretary shall issue a new lease in exchange for the lease being exchanged notwithstanding that the area that will be subject to the lease may be withdrawn from leasing under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) or otherwise unavailable for leasing under any other law.
Operating restrictions
A new lease issued in exchange for an existing lease under this section shall be subject to such national defense operating restrictions on the outer Continental Shelf tract covered by the new lease as apply on the date of issuance of the new lease.
Priority
Bonus bid
The Secretary shall give priority in the lease exchange process under this section based on the amount of the original bonus bid paid for the issuance of each lease to be exchanged.
Exchange of partial tracts for full tracts
The Secretary shall allow leases covering partial tracts to be exchanged for leases covering full tracts under this section conditioned on payment of additional bonus bids on a per-acre basis, as determined based on the average per acre of the original bonus bid per acre for the partial tract being exchanged.
Exploration plans
An exploration plan submitted to the Secretary during the period beginning on the date of enactment of this Act and ending June 30, 2012, for a natural gas lease for an area wholly within 100 miles of the coastline within the California Adjacent Zone or the Florida Adjacent Zone shall not be treated as received by the Secretary until the earlier of—
July 1, 2012; or
the date of approval of a petition by the Adjacent State for natural gas leasing covering the area within which is located the area subject to the natural gas lease.
Cancellation of lease
As part of the lease exchange process under this section, the Secretary shall cancel a lease that is exchanged under this section.
Conditions for lease exchange
For a lease to be cancelled and exchanged under this section—
each lessee holding an interest in the lease must consent to cancellation of the leasehold interest of the lessee;
each lessee must waive any rights to bring any litigation against the United States related to the transaction; and
the plugging and abandonment requirements for any well located on any lease to be cancelled and exchanged under this section must be complied with by the lessees prior to the cancellation and exchange.
Area partially within 100 miles of Florida
A natural gas lease in existence on the date of enactment of this Act for an area located partially within 100 miles of the coastline within the Florida Adjacent Zone may only be developed and produced under this section using wells drilled from well-head locations at least 100 miles from the coastline to any bottom-hole location on the area of the lease.
Repurchase of certain leases
In general
The Secretary of the Interior (referred to in this section as the Secretary) shall repurchase and cancel any Federal natural gas lease in the outer Continental Shelf, if the Secretary finds that the lease qualifies for repurchase and cancellation under the regulations authorized by this section.
Regulations
In general
Not later than 1 year after the date of enactment of this Act, the Secretary shall publish a final regulation prescribing the conditions under which a lease referred to in subsection (a) would qualify for repurchase and cancellation, and the process to be followed regarding repurchase and cancellation, in a manner consistent with this subsection.
Finding
The Secretary shall repurchase and cancel a lease under this section on a written request by the lessee and a finding by the Secretary that—
a request by the lessee for a required permit or other approval complied with applicable law (other than the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.)) and terms of the lease and the permit or other approval was denied;
a Federal agency failed to act on a request by the lessee for a required permit, other approval, or administrative appeal—
within a time period established by law (including regulations) for the requested action, whether advisory or mandatory; or
if no such period is established, within 180 days after receipt of the request; or
a Federal agency attached a condition of approval, without agreement by the lessee, to a required permit or other approval that—
was not required by Federal law (including regulations) in effect on the date of lease issuance; or
was not specifically allowed under the terms of the lease.
Exhaustion of remedies
A lessee shall not be required to exhaust administrative remedies regarding a permit request, administrative appeal, or other required request for approval under this section.
Deadline
The Secretary shall make a final agency decision on a request by a lessee under this section not later than 180 days after receipt of the request.
Compensation
Amount
The amount of compensation to a lessee to repurchase and cancel a lease under this section shall be equal to the amount that a lessee would receive in a restitution case for a material breach of contract.
Form
The compensation shall be in the form of a check or electronic transfer from the Secretary of the Treasury from funds deposited into miscellaneous receipts under the authority of the Act that authorized the issuance of the lease being repurchased.
Deadline
The failure of the Secretary to make a final agency decision on a request by a lessee under this section in accordance with paragraph (4) shall result in a percent increase in the compensation due to the lessee if the lease is ultimately repurchased.
Other rights
This section does not affect any other right the lessee may have in the absence of this section.