< Back to H.R. 5649 (109th Congress, 2005–2006)

Text of the Coastal Economic and Environmental Protection Act

This bill was introduced on June 20, 2006, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jun 20, 2006 (Introduced).

Download PDF

Source: GPO

I

109th CONGRESS

2d Session

H. R. 5649

IN THE HOUSE OF REPRESENTATIVES

June 20, 2006

introduced the following bill; which was referred to the Committee on Resources

A BILL

To provide for exploration, development, and production activities for mineral resources on the outer Continental Shelf, and for other purposes.

1.

Short title

This Act may be cited as the Coastal Economic and Environmental Protection Act.

2.

Policy

It is the policy of the United States that—

(1)

adjacent States are required by the circumstances to commit significant resources in support of exploration, development, and production activities for mineral resources on the outer Continental Shelf, and it is fair and proper for a portion of the receipts from such activities to be shared with Adjacent States and their local coastal governments;

(2)

the existing laws governing the leasing and production of the mineral resources of the outer Continental Shelf have reduced the production of mineral resources, have preempted Adjacent States from being sufficiently involved in the decisions regarding the allowance of mineral resource development;

(3)

the national interest is served by granting the Adjacent States more options related to whether or not mineral leasing should occur in the outer Continental Shelf within their Adjacent Zones;

(4)

transportation of oil from a leased tract might reasonably be foreseen, under limited circumstances, to have the potential to adversely affect resources near the coastline if the oil is within 50 miles of the coastline, but such potential to adversely affect such resources is likely no greater, and probably less, than the potential impacts from tanker transportation because tanker spills usually involve large releases of oil over a brief period of time; and

(5)

among other bodies of inland waters, the Great Lakes, Long Island Sound, Delaware Bay, Chesapeake Bay, Albemarle Sound, San Francisco Bay, and Puget Sound are not part of the outer Continental Shelf, and are not subject to leasing by the Federal Government for the exploration, development, and production of any mineral resources that might lie beneath them.

3.

Definitions under the Outer Continental Shelf Lands Act

Section 2 of the Outer Continental Shelf Lands Act (43 U.S.C. 1331) is amended—

(1)

by amending paragraph (f) to read as follows:

(f)

The term affected State means the Adjacent State.

;

(2)

by striking the semicolon at the end of each of paragraphs (a) through (o) and inserting a period;

(3)

by striking ; and at the end of paragraph (p) and inserting a period;

(4)

by adding at the end the following:

(r)

The term Adjacent State means, with respect to any program, plan, lease sale, leased tract or other activity, proposed, conducted, or approved pursuant to the provisions of this Act, any State the laws of which are declared, pursuant to section 4(a)(2), to be the law of the United States for the portion of the outer Continental Shelf on which such program, plan, lease sale, leased tract or activity appertains or is, or is proposed to be, conducted. For purposes of this paragraph, the term State includes Puerto Rico and the other Territories of the United States.

(s)

The term Adjacent Zone means, with respect to any program, plan, lease sale, leased tract, or other activity, proposed, conducted, or approved pursuant to the provisions of this Act, the portion of the outer Continental Shelf for which the laws of a particular Adjacent State are declared, pursuant to section 4(a)(2), to be the law of the United States.

(t)

The term miles means statute miles.

(u)

The term coastline has the same meaning as the term coast line as defined in section 2(c) of the Submerged Lands Act (43 U.S.C. 1301(c)).

(v)

The term Neighboring State means a coastal state having a common boundary at the coastline with the Adjacent State.

; and

(5)

in paragraph (a), by inserting after control the following: or lying within the United States exclusive economic zone adjacent to the Territories of the United States.

4.

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 in the first sentence by striking , and the President and all that follows through the end of the sentence and inserting the following: The lines extending seaward and defining each State’s Adjacent Zone, and each OCS Planning Area, are 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, all of which are dated September 2005 and on file in the Office of the Director, Minerals Management Service..

5.

Administration of leasing

Section 5 of the Outer Continental Shelf Lands Act (43 U.S.C. 1334) is amended by adding at the end the following:

(k)

Voluntary partial relinquishment of a lease

Any lessee of a producing lease may relinquish to the Secretary any portion of a lease that the lessee has no interest in producing and that the Secretary finds is geologically prospective. In return for any such relinquishment, the Secretary shall provide to the lessee a royalty incentive for the portion of the lease retained by the lessee, in accordance with regulations promulgated by the Secretary to carry out this subsection. The Secretary shall publish final regulations implementing this subsection within 365 days after the date of the enactment of the Coastal Economic and Environmental Protection Act.

(l)

Natural gas lease regulations

Not later than July 1, 2007, the Secretary shall publish a final regulation that shall—

(1)

establish procedures for entering into natural gas leases;

(2)

ensure that natural gas leases are only available for tracts on the outer Continental Shelf that are wholly within 125 miles of the coastline within an area withdrawn from disposition by leasing on the day after the date of enactment of the Coastal Economic and Environmental Protection Act;

(3)

provide that natural gas leases shall contain the same rights and obligations established for oil and gas leases, except as otherwise provided in the Coastal Economic and Environmental Protection Act;

(4)

provide that, in reviewing the adequacy of bids for natural gas leases, the value of any crude oil estimated to be contained within any tract shall be excluded;

(5)

provide that any crude oil produced from a well and reinjected into the leased tract shall not be subject to payment of royalty, and that the Secretary shall consider, in setting the royalty rates for a natural gas lease, the additional cost to the lessee of not producing any crude oil; and

(6)

provide that any Federal law that applies to an oil and gas lease on the outer Continental Shelf shall apply to a natural gas lease unless otherwise clearly inapplicable.

.

6.

Grant of leases by Secretary

Section 8 of the Outer Continental Shelf Lands Act (43 U.S.C. 1337) is amended—

(1)

in subsection (a)(1) by inserting after the first sentence the following: Further, the Secretary may grant natural gas leases in a manner similar to the granting of oil and gas leases and under the various bidding systems available for oil and gas leases.;

(2)

by adding at the end of subsection (b) the following: The Secretary may issue more than one lease for a given tract if each lease applies to a separate and distinct range of vertical depths, horizontal surface area, or a combination of the two. The Secretary may issue regulations that the Secretary determines are necessary to manage such leases consistent with the purposes of this Act.;

(3)

in subsection (p)(2)(B)—

(A)

by striking 27 and inserting 50; and

(B)

by striking 15 and inserting 200;

(4)

by adding at the end the following:

(q)

Natural Gas Leases

(1)

Right to produce natural gas

A lessee of a natural gas lease shall have the right to produce the natural gas from a natural gas leased tract if the Secretary estimates that the discovered field has at least 40 percent of the economically recoverable Btu content of the field contained within natural gas and such natural gas is economical to produce.

(2)

Right to produce crude oil

A lessee of a natural gas lease may produce crude oil from the lease unless the Governor and the legislature of the Adjacent State object to such production within 180 days after receipt of written notice from the lessee of intent to produce crude oil from the lease. If the leased tract is located within 50 miles of the nearest point on the coastline of a Neighboring State, the Governor and legislature of the Neighboring State shall also receive such notice and have the right to object to such production within 180 days after receipt of such notice.

(3)

Estimates of btu content

The Secretary shall make estimates of the natural gas Btu content of discovered fields on a natural gas lease only after the completion of at least one exploration well, the data from which has been tied to the results of a three-dimensional seismic survey of the field. The Secretary may not require the lessee to further delineate any discovered field prior to making such estimates.

(4)

Transportation of crude oil

If an Adjacent State or any applicable Neighboring State does not object to production of crude oil from a natural gas lease, the lessee shall be permitted to transport the crude oil from the leased tract through Adjacent State waters, and Neighboring State waters if applicable, to facilities onshore in the Adjacent State, and Neighboring State if applicable, unless the lessee agreed to other arrangements with the Adjacent State or Neighboring State, or both.

(5)

Repurchase of certain natural gas leases

Upon request of the lessee and certification by the Secretary of the Interior that a natural gas lease contains all or part of a commercial oil and gas discovery that is not allowed to be produced because it does not meet the standard set in paragraph (1), the Secretary of the Treasury shall repurchase the lease by issuance of a check or electronic payment from OCS Receipts to the lessee in full compensation for the repurchase. The Secretary shall recoup from the State and local governments any funds previously shared with them that were derived from the repurchased lease. Such recoupment shall only be from the State and local governments’ shares of OCS receipts that are payable after the date of repurchase.

(6)

Amount of compensation

Repurchase compensation for each lease repurchased under the authority of this section shall be in the amount of the lesser of the original bonus bid paid for the lease or, if the lessee is not the original lessee, the compensation paid by the current lessee to obtain its interest in the lease. In addition, the lessee shall be compensated for any expenses directly attributable to the lease that the lessee incurs after acquisition of its interest in the lease to be repurchased, including rentals, seismic acquisition costs, drilling costs, and other reasonable expenses on the lease, including expenses incurred in the repurchase process, to the extent that the lessee has not previously been compensated by the United States for such expenses. The lessee shall not be compensated for general overhead expenses or employee salaries.

(7)

Priority right to obtain future oil and gas lease

The lessee, or a designee of the lessee, of a repurchased natural gas leased tract shall have the right to repurchase such tract as an oil and gas lease, on a noncompetitive basis, by repaying the amount received by the lessee if the tract is made available for lease under an oil and gas lease within 30 years after the repurchase.

(8)

Definition of natural gas

For purposes of a natural gas lease, natural gas means natural gas and all substances produced in association with gas, including, but not limited to, hydrocarbon liquids (other than crude oil) that are obtained by the condensation of hydrocarbon vapors and separate out in liquid form from the produced gas stream.

(r)

Removal of restrictions on joint bidding in certain areas of the outer continental shelf

Restrictions on joint bidders shall no longer apply to tracts located in the Alaska OCS Region. Such restrictions shall not apply to tracts in other OCS regions determined to be frontier tracts or otherwise high cost tracts under final regulations that shall be published by the Secretary by not later than 365 days after the date of the enactment of the Coastal Economic and Environmental Protection Act.

;

(5)

by striking subsection (a)(3)(A) and redesignating the subsequent subparagraphs as subparagraphs (A) and (B), respectively;

(6)

in subsection (a)(3)(A) (as so redesignated) by striking In the Western and all that follows through the Secretary the first place it appears and inserting The Secretary; and

(7)

effective October 1, 2006, in subsection (g)—

(A)

by striking all after (g), except paragraph (3);

(B)

by striking the last sentence of paragraph (3); and

(C)

by striking (3).

7.

Disposition of receipts

Section 9 of the Outer Continental Shelf Lands Act (43 U.S.C. 1338) is amended—

(1)

by designating the existing text as subsection (a);

(2)

in subsection (a) (as so designated) by inserting , if not paid as otherwise provided in this title after receipts; and

(3)

by adding the following:

(b)

Treatment of OCS Receipts From Tracts Completely Within 100 Miles of the Coastline

(1)

Deposit

The Secretary shall deposit into a separate account in the Treasury the portion of OCS Receipts for each fiscal year that will be shared under paragraphs (2), (3), and (4).

(2)

Phased-in receipts sharing

(A)

Beginning October 1, 2005, the Secretary shall share OCS Receipts derived from the following areas:

(i)

Lease tracts located on portions of the Gulf of Mexico OCS Region completely beyond 4 marine leagues from any coastline and completely within 125 miles of any coastline that are available for leasing under the 2002–2007 5-Year Oil and Gas Leasing Program in effect prior to the date of the enactment of the Coastal Economic and Environmental Protection Act.

(ii)

Lease tracts in production prior to October 1, 2005, completely beyond 4 marine leagues from any coastline and completely within 125 miles of any coastline located on portions of the OCS that were not available for leasing under the 2002–2007 5-Year OCS Oil and Gas Leasing Program in effect prior to the date of the enactment of the Coastal Economic and Environmental Protection Act.

(iii)

Lease tracts for which leases are issued prior to October 1, 2005, located in the Alaska OCS Region completely beyond 4 marine leagues from any coastline and completely within 125 miles of the coastline.

(B)

The Secretary shall share the following percentages of OCS Receipts from the leases described in subparagraph (A) derived during the fiscal year indicated:

(i)

For fiscal year 2006, 6.0 percent.

(ii)

For fiscal year 2007, 7.0 percent.

(iii)

For fiscal year 2008, 8.0 percent.

(iv)

For fiscal year 2009, 9.0 percent.

(v)

For fiscal year 2010, 12.0 percent.

(vi)

For fiscal year 2011, 15.0 percent.

(vii)

For fiscal year 2012, 18.0 percent.

(viii)

For fiscal year 2013, 21.0 percent.

(ix)

For fiscal year 2014, 24.0 percent.

(x)

For fiscal year 2015, 27.0 percent.

(xi)

For fiscal year 2016, 30.0 percent.

(xii)

For fiscal year 2017, 33.0 percent.

(xiii)

For fiscal year 2018, 36.0 percent.

(xiv)

For fiscal year 2019, 39.0 percent.

(xv)

For fiscal year 2020, 42.0 percent.

(xvi)

For fiscal year 2021, 45.0 percent.

(xvii)

For fiscal year 2022 and each subsequent fiscal year, 50.0 percent.

(C)

The provisions of this paragraph shall not apply to leases that could not have been issued but for section 5(k) of this Act or section 6(2) of the Coastal Economic and Environmental Protection Act.

(3)

Immediate receipts sharing

Beginning October 1, 2005, the Secretary shall share 50 percent of OCS Receipts derived from all leases located completely beyond 4 marine leagues from any coastline and completely within 125 miles of any coastline not included within the provisions of paragraph (2).

(4)

Receipts sharing from tracts within 4 marine leagues of any coastline

Beginning October 1, 2005, the Secretary shall share 75 percent of OCS Receipts derived from all leases located completely or partially within 4 marine leagues from any coastline.

(5)

Allocations

The Secretary shall allocate the OCS Receipts deposited into the separate account established by paragraph (1) that are shared under paragraphs (2), (3), and (4) as follows:

(A)

Bonus bids

Deposits derived from bonus bids from a leased tract, including interest thereon, shall be allocated at the end of each fiscal year as follows:

(i)

87.5 percent to the Adjacent State.

(ii)

6.25 percent into the Treasury, which shall be allocated to the account established by section 14 of the Coastal Economic and Environmental Protection Act.

(iii)

5 percent into the account established by section 23 of the Coastal Economic and Environmental Protection Act.

(iv)

1.25 percent into the account established by section 26 of the Coastal Economic and Environmental Protection Act.

(B)

Royalties

Deposits derived from royalties from a leased tract, including interest thereon, shall be allocated at the end of each fiscal year as follows:

(i)

87.5 percent to the Adjacent State and any other producing State or States with a leased tract within its Adjacent Zone within 125 miles of its coastline that generated royalties during the fiscal year, if the other producing or States have a coastline point within 300 miles of any portion of the leased tract, in which case the amount allocated for the leased tract shall be—

(I)

one-third to the Adjacent State; and

(II)

two-thirds to each producing State, including the Adjacent State, inversely proportional to the distance between the nearest point on the coastline of the producing State and the geographic center of the leased tract.

(ii)

6.25 percent into the Treasury, which shall be allocated to the account established by section 14 of the Coastal Economic and Environmental Protection Act;

(iii)

5 percent into the account established by section 23 of the Coastal Economic and Environmental Protection Act; and

(iv)

1.25 percent into the account established by section 26 of the Coastal Economic and Environmental Protection Act.

(c)

Treatment of OCS Receipts From Tracts Partially or Completely Beyond 125 miles of the Coastline

(1)

Deposit

The Secretary shall deposit into a separate account in the Treasury the portion of OCS Receipts for each fiscal year that will be shared under paragraphs (2) and (3).

(2)

Phased-in receipts sharing

(A)

Beginning October 1, 2005, the Secretary shall share OCS Receipts derived from the following areas:

(i)

Lease tracts located on portions of the Gulf of Mexico OCS Region partially or completely beyond 125 miles of any coastline that are available for leasing under the 2002–2007 5-Year Oil and Gas Leasing Program in effect prior to the date of enactment of the Coastal Economic and Environmental Protection Act.

(ii)

Lease tracts in production prior to October 1, 2005, partially or completely beyond 125 miles of any coastline located on portions of the OCS that were not available for leasing under the 2002–2007 5-Year OCS Oil and Gas Leasing Program in effect prior to the date of enactment of the Coastal Economic and Environmental Protection Act.

(iii)

Lease tracts for which leases are issued prior to October 1, 2005, located in the Alaska OCS Region partially or completely beyond 125 miles of the coastline.

(B)

The Secretary shall share the following percentages of OCS Receipts from the leases described in subparagraph (A) derived during the fiscal year indicated:

(i)

For fiscal year 2006, 6.0 percent.

(ii)

For fiscal year 2007, 7.0 percent.

(iii)

For fiscal year 2008, 8.0 percent.

(iv)

For fiscal year 2009, 9.0 percent.

(v)

For fiscal year 2010, 12.0 percent.

(vi)

For fiscal year 2011, 15.0 percent.

(vii)

For fiscal year 2012, 18.0 percent.

(viii)

For fiscal year 2013, 21.0 percent.

(ix)

For fiscal year 2014, 24.0 percent.

(x)

For fiscal year 2015, 27.0 percent.

(xi)

For fiscal year 2016, 30.0 percent.

(xii)

For fiscal year 2017, 33.0 percent.

(xiii)

For fiscal year 2018, 36.0 percent.

(xiv)

For fiscal year 2019, 39.0 percent.

(xv)

For fiscal year 2020, 42.0 percent.

(xvi)

For fiscal year 2021, 45.0 percent.

(xvii)

For fiscal year 2022 and each subsequent fiscal year, 50.0 percent.

(C)

The provisions of this paragraph shall not apply to leases that could not have been issued but for section 5(k) of this Act or section 6(2) of the Coastal Economic and Environmental Protection Act.

(3)

Immediate receipts sharing

Beginning October 1, 2005, the Secretary shall share 50 percent of OCS Receipts derived on and after October 1, 2005, from all leases located partially or completely beyond 125 miles of any coastline not included within the provisions of paragraph (2).

(4)

Allocations

The Secretary shall allocate the OCS Receipts deposited into the separate account established by paragraph (1) that are shared under paragraphs (2) and (3) as follows:

(A)

Bonus bids

Deposits derived from bonus bids from a leased tract, including interest thereon, shall be allocated at the end of each fiscal year as follows:

(i)

87.5 percent to the Adjacent State.

(ii)

6.25 percent into the Treasury, which shall be allocated to the account established by section 14 of the Coastal Economic and Environmental Protection Act.

(iii)

5 percent into the account established by section 23 of the Coastal Economic and Environmental Protection Act.

(iv)

1.25 percent into the account established by section 26 of the Coastal Economic and Environmental Protection Act.

(B)

Royalties

Deposits derived from royalties from a leased tract, including interest thereon, shall be allocated at the end of each fiscal year as follows:

(i)

87.5 percent to the Adjacent State and any other producing State or States with a leased tract within its Adjacent Zone partially or completely beyond 125 miles of its coastline that generated royalties during the fiscal year, if the other producing State or States have a coastline point within 300 miles of any portion of the leased tract, in which case the amount allocated for the leased tract shall be—

(I)

one-third to the Adjacent State; and

(II)

two-thirds to each producing State, including the Adjacent State, inversely proportional to the distance between the nearest point on the coastline of the producing State and the geographic center of the leased tract.

(ii)

6.25 percent into the account established by section 14 of the Coastal Economic and Environmental Protection Act.

(iii)

5 percent into the account established by section 23 of the Coastal Economic and Environmental Protection Act.

(iv)

1.25 percent into the account established by section 26 of the Coastal Economic and Environmental Protection Act.

(d)

Transmission of Allocations

(1)

In general

Not later than 90 days after the end of each fiscal year, the Secretary shall transmit—

(A)

to each State two-thirds of such State’s allocations under subsections (b)(5)(A)(i), (b)(5)(B)(i), (c)(4)(A)(i), and (c)(4)(B)(i) for the immediate prior fiscal year;

(B)

to coastal county-equivalent and municipal political subdivisions of such State a total of one-third of such State’s allocations under subsections (b)(5)(A)(i), (b)(5)(B)(i), (c)(4)(A)(i), and (c)(4)(B)(i), together with all accrued interest thereon; and

(C)

the remaining allocations under subsections (b)(5) and (c)(4), together with all accrued interest thereon.

(2)

Allocations to coastal county-equivalent political subdivisions

The Secretary shall make an initial allocation of the OCS Receipts to be shared under paragraph (1)(B) as follows:

(A)

25 percent shall be allocated based on the ratio of such coastal county-equivalent political subdivision’s population to the coastal population of all coastal county-equivalent political subdivisions in the State.

(B)

25 percent shall be allocated based on the ratio of such coastal county-equivalent political subdivision’s coastline miles to the coastline miles of all coastal county-equivalent political subdivisions in the State as calculated by the Secretary. In such calculations, coastal county-equivalent political subdivisions without a coastline shall be considered to have 50 percent of the average coastline miles of the coastal county-equivalent political subdivisions that do have coastlines.

(C)

25 percent shall be allocated to all coastal county-equivalent political subdivisions having a coastline point within 300 miles of the leased tract for which OCS Receipts are being shared based on a formula that allocates the funds based on such coastal county-equivalent political subdivision’s relative distance from the leased tract.

(D)

25 percent shall be allocated to all coastal county-equivalent political subdivisions having a coastline point within 300 miles of the leased tract for which OCS Receipts are being shared based on the relative level of outer Continental Shelf oil and gas activities in a coastal political subdivision compared to the level of outer Continental Shelf activities in all coastal political subdivisions in the State. The Secretary shall define the term outer Continental Shelf oil and gas activities for purposes of this subparagraph to include, but not be limited to, construction of vessels, drillships, and platforms involved in exploration, production, and development on the outer Continental Shelf; support and supply bases, ports, and related activities; offices of geologists, geophysicists, engineers, and other professionals involved in support of exploration, production, and development of oil and gas on the outer Continental Shelf; pipelines and other means of transporting oil and gas production from the outer Continental Shelf; and processing and refining of oil and gas production from the outer Continental Shelf. For purposes of this subparagraph, if a coastal county-equivalent political subdivision does not have a coastline, its coastal point shall be the point on the coastline closest to it.

(3)

Allocations to coastal municipal political subdivisions

The initial allocation to each coastal county-equivalent political subdivision under paragraph (2) shall be further allocated to the coastal county-equivalent political subdivision and any coastal municipal political subdivisions located partially or wholly within the boundaries of the coastal county-equivalent political subdivision as follows:

(A)

One-third shall be allocated to the coastal county-equivalent political subdivision.

(B)

Two-thirds shall be allocated on a per capita basis to the municipal political subdivisions and the county-equivalent political subdivision, with the allocation to the latter based upon its population not included within the boundaries of a municipal political subdivision.

(e)

Investment of deposits

Amounts deposited under this section shall be invested by the Secretary of the Treasury in securities backed by the full faith and credit of the United States having maturities suitable to the needs of the account in which they are deposited and yielding the highest reasonably available interest rates as determined by the Secretary of the Treasury.

(f)

Use of Funds

A recipient of funds under this section may use the funds for one or more of the following:

(1)

To reduce in-State college tuition at public institutions of higher learning and otherwise support public education, including career technical education.

(2)

To make transportation infrastructure improvements.

(3)

To reduce taxes.

(4)

To promote and provide for—

(A)

coastal or environmental restoration;

(B)

fish, wildlife, and marine life habitat enhancement;

(C)

waterways maintenance;

(D)

shore protection; and

(E)

marine and oceanographic education and research.

(5)

To improve infrastructure associated with energy production activities conducted on the outer Continental Shelf.

(6)

To fund energy demonstration projects and supporting infrastructure for energy projects.

(7)

For any other purpose as determined by State law.

(g)

No Accounting Required

No recipient of funds under this section shall be required to account to the Federal Government for the expenditure of such funds, except as otherwise may be required by law. However, States may enact legislation providing for accounting for and auditing of such expenditures. Further, funds allocated under this section to States and political subdivisions may be used as matching funds for other Federal programs.

(h)

Effect of Future Laws

Enactment of any future Federal statute that has the effect, as determined by the Secretary, of restricting any Federal agency from spending appropriated funds, or otherwise preventing it from fulfilling its pre-existing responsibilities as of the date of enactment of the statute, unless such responsibilities have been reassigned to another Federal agency by the statute with no prevention of performance, to issue any permit or other approval impacting on the OCS oil and gas leasing program, or any lease issued thereunder, or to implement any provision of this Act shall automatically prohibit any sharing of OCS Receipts under this section directly with the States, and their coastal political subdivisions, for the duration of the restriction. The Secretary shall make the determination of the existence of such restricting effects within 30 days of a petition by any outer Continental Shelf lessee or producing State.

(i)

Definitions

In this section:

(1)

Coastal county-equivalent political subdivision

The term coastal county-equivalent political subdivision means a political jurisdiction immediately below the level of State government, including a county, parish, borough in Alaska, independent municipality not part of a county, parish, or borough in Alaska, or other equivalent subdivision of a coastal State, that lies within the coastal zone.

(2)

Coastal municipal political subdivision

The term coastal municipal political subdivision means a municipality located within and part of a county, parish, borough in Alaska, or other equivalent subdivision of a State, all or part of which coastal municipal political subdivision lies within the coastal zone.

(3)

Coastal population

The term coastal population means the population of all coastal county-equivalent political subdivisions, as determined by the most recent official data of the Census Bureau.

(4)

Coastal zone

The term coastal zone means that portion of a coastal State, including the entire territory of any coastal county-equivalent political subdivision at least a part of which lies, within 75 miles landward from the coastline, or a greater distance as determined by State law enacted to implement this section.

(5)

Bonus bids

The term bonus bids means all funds received by the Secretary to issue an outer Continental Shelf minerals lease.

(6)

Royalties

The term royalties means all funds received by the Secretary from production of oil or natural gas, or the sale of production taken in-kind, from an outer Continental Shelf minerals lease.

(7)

Producing state

The term producing State means an Adjacent State having an Adjacent Zone containing leased tracts from which OCS Receipts were derived.

(8)

OCS receipts

The term OCS Receipts means bonus bids and royalties.

.

8.

Review of outer Continental Shelf exploration plans

Subsections (c) and (d) of section 11 of the Outer Continental Shelf Lands Act (43 U.S.C. 1340) are amended to read as follows:

(c)

Plan Review; Plan Provisions

(1)

Except as otherwise provided in this Act, prior to commencing exploration pursuant to any oil and gas lease issued or maintained under this Act, the holder thereof shall submit an exploration plan (hereinafter in this section referred to as a plan) to the Secretary for review which shall include all information and documentation required under paragraphs (2) and (3). The Secretary shall review the plan for completeness within 10 days of submission. If the Secretary finds that the plan is not complete, the Secretary shall notify the lessee with a detailed explanation and require such modifications of such plan as are necessary to achieve completeness. The Secretary shall have 10 days to review a modified plan for completeness. Such plan may apply to more than one lease held by a lessee in any one region of the outer Continental Shelf, or by a group of lessees acting under a unitization, pooling, or drilling agreement, and the lessee shall certify that such plan is consistent with the terms of the lease and is consistent with all statutory and regulatory requirements in effect on the date of issuance of the lease. The Secretary shall have 30 days from the date the plan is deemed complete to conduct a review of the plan. If the Secretary finds the plan is not consistent with the lease and all such statutory and regulatory requirements, the Secretary shall notify the lessee with a detailed explanation of such modifications of such plan as are necessary to achieve compliance. The Secretary shall have 30 days to review any modified plan submitted by the lessee. The lessee shall not take any action under the exploration plan within the 30-day review period, or thereafter until the plan has been modified to achieve compliance as so notified.

(2)

An exploration plan submitted under this subsection shall include, in the degree of detail which the Secretary may by regulation require—

(A)

a schedule of anticipated exploration activities to be undertaken;

(B)

a description of equipment to be used for such activities;

(C)

the general location of each well to be drilled; and

(D)

such other information deemed pertinent by the Secretary.

(3)

The Secretary may, by regulation, require that such plan be accompanied by a general statement of development and production intentions which shall be for planning purposes only and which shall not be binding on any party.

(d)

Plan Revisions; Conduct of Exploration Activities

(1)

If a significant revision of an exploration plan under this subsection is submitted to the Secretary, the process to be used for the review of such revision shall be the same as set forth in subsection (c) of this section.

(2)

All exploration activities pursuant to any lease shall be conducted in accordance with an exploration plan or a revised plan which has been submitted to and reviewed by the Secretary.

.

9.

Reservation of lands and rights

Section 12 of the Outer Continental Shelf Lands Act (43 U.S.C. 1341) is amended—

(1)

in subsection (a) by adding at the end the following: The President may partially or completely revise or revoke any prior withdrawal made by the President under the authority of this section. The President may not revise or revoke a withdrawal that was initiated by a petition from a State and approved by the Secretary of the Interior under subsection (h). A withdrawal by the President may be for a term not to exceed 10 years. In considering a potential withdrawal under this subsection, to the maximum extent practicable the President shall accommodate competing interests and potential uses of the outer Continental Shelf.;

(2)

by adding at the end the following:

(g)

Option to Petition for Leasing Within Certain Areas of the Outer Continental Shelf

(1)

Prohibition against leasing

(A)

Prohibition prior to July 1, 2012

Except as otherwise provided in this subsection, prior to July 1, 2012, the Secretary shall not offer for leasing for oil and gas, or for natural gas, any area withdrawn from disposition by leasing in the Atlantic OCS Region or the Pacific OCS Region, or the Gulf of Mexico OCS Region Eastern Planning Area, as depicted on the map referred to within this paragraph, under the Memorandum on Withdrawal of Certain Areas of the United States Outer Continental Shelf from Leasing Disposition, 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 within the Florida Straits Planning Area as indicated on the map entitled Atlantic OCS Region State Adjacent Zones and OCS Planning Areas, both of which are dated September 2005 and on file in the Office of the Director, Minerals Management Service.

(B)

Prohibition from and after july 1, 2012

Except as otherwise provided in this subsection, from and after July 1, 2012, the Secretary shall not offer for leasing for oil and gas, or for natural gas, any area not available for leasing under subparagraph (A) located within 125 miles of the coastline.

(2)

Revocation of withdrawal

The provisions of the Memorandum on Withdrawal of Certain Areas of the United States Outer Continental Shelf from Leasing Disposition, 34 Weekly Comp. Pres. Doc. 1111, dated June 12, 1998, are hereby revoked and are no longer in effect regarding any areas 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. The 2002–2007 5-Year Outer Continental Shelf Oil and Gas Leasing Program is hereby amended to include the areas added to the Gulf of Mexico OCS Region Central Planning Area by this Act to the extent that such areas were included within the original boundaries of proposed Lease Sale 181. The amendment to such leasing program includes two sales in such additional areas, one of which shall be held in January 2007 and one of which shall be held in June 2007. The Final Environmental Impact Statement prepared for this area for Lease Sale 181 shall be deemed sufficient for all purposes for each lease sale in which such area is offered for lease during the 2002–2007 5-Year Outer Continental Shelf Oil and Gas Leasing Program without need for supplementation. Any tract only partially added to the Gulf of Mexico OCS Region Central Planning Area by this Act shall be eligible for leasing of the part of such tract that is included within the Gulf of Mexico OCS Region Central Planning Area, and the remainder of such tract that lies outside of the Gulf of Mexico OCS Region Central Planning Area may be developed and produced by the lessee of such partial tract using extended reach or similar drilling from a location on a leased area.

(3)

Petition for leasing

(A)

In general

The Governor of the State, upon concurrence of its legislature, may submit to the Secretary a petition requesting that the Secretary make available any area that is within the State’s Adjacent Zone, included within the provisions of paragraph (1), and that (i) is greater than 25 miles from any point on the coastline of a Neighboring State for the conduct of offshore leasing, pre-leasing, and related activities with respect to natural gas leasing; or (ii) is greater than 50 miles from any point on the coastline of a Neighboring State for the conduct of offshore leasing, pre-leasing, and related activities with respect to oil and gas leasing. The Adjacent State may also petition for leasing any other area within its Adjacent Zone if leasing is allowed in the similar area of the Adjacent Zone of the applicable Neighboring State, or if not allowed, if the Neighboring State, acting through its Governor, expresses its concurrence with the petition. The Secretary shall only consider such a petition upon making a finding that leasing is allowed in the similar area of the Adjacent Zone of the applicable Neighboring State or upon receipt of the concurrence of the Neighboring State. The date of receipt by the Secretary of such concurrence by the Neighboring State shall constitute the date of receipt of the petition for that area for which the concurrence applies. A petition for leasing any part of the Alabama Adjacent Zone that is a part of the Gulf of Mexico Eastern Planning Area, as indicated on the map entitled Gulf of Mexico OCS Region State Adjacent Zones and OCS Planning Areas which is dated September 2005 and on file in the Office of the Director, Minerals Management Service, shall require the concurrence of both Alabama and Florida.

(B)

Limitations on leasing

In its petition, a State with an Adjacent Zone that contains leased tracts may condition oil and gas, or natural gas, new leasing for tracts within 25 miles of the coastline by—

(i)

requiring a net reduction in the number of production platforms;

(ii)

requiring a net increase in the average distance of production platforms from the coastline;

(iii)

limiting permanent surface occupancy on new leases to areas that are more than 10 miles from the coastline;

(iv)

limiting some tracts to being produced from shore or from platforms located on other tracts; or

(v)

other conditions that the Adjacent State may deem appropriate as long as the Secretary does not determine that production is made economically or technically impracticable or otherwise impossible.

(C)

Action by secretary

Not later than 90 days after receipt of a petition under subparagraph (A), the Secretary shall approve the petition, unless the Secretary determines that leasing the area would probably cause serious harm or damage to the marine resources of the State’s Adjacent Zone. Prior to approving the petition, the Secretary shall complete an environmental assessment that documents the anticipated environmental effects of leasing in the area included within the scope of the petition.

(D)

Failure to act

If the Secretary fails to approve or deny a petition in accordance with subparagraph (C) the petition shall be considered to be approved 90 days after receipt of the petition.

(E)

Amendment of the 5-year leasing program

Notwithstanding section 18, within 180 days of the approval of a petition under subparagraph (C) or (D), the Secretary shall amend the current 5-Year Outer Continental Shelf Oil and Gas Leasing Program to include a lease sale or sales for the entire area covered by the approved petition, unless there are, from the date of approval, fewer than 12 months remaining in the current 5-Year Leasing Program in which case the Secretary shall include the areas covered by the approved petition within lease sales under the next 5-Year Leasing Program. For purposes of amending the 5-Year Program in accordance with this section, further consultations with States shall not be required. The environmental assessment performed under the provisions of the National Environmental Policy Act of 1969 to assess the effects of approving the petition shall be sufficient to amend the 5-Year Leasing Program.

(h)

Effect of Other Laws

Adoption by any Adjacent State of any constitutional provision, or enactment of any State statute, that has the effect, as determined by the Secretary, of restricting either the Governor or the Legislature, or both, from exercising full discretion related to subsection (g) or (h), or both, shall automatically (1) prohibit any sharing of OCS Receipts under this Act with the Adjacent State, and its coastal political subdivisions, and (2) prohibit the Adjacent State from exercising any authority under subsection (h), for the duration of the restriction. The Secretary shall make the determination of the existence of such restricting constitutional provision or State statute within 30 days of a petition by any outer Continental Shelf lessee or coastal State.

.

10.

Outer Continental Shelf leasing program

Section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344) is amended—

(1)

in subsection (a), by adding at the end of paragraph (3) the following: The Secretary shall, in each 5-year program, include lease sales that when viewed as a whole propose to offer for oil and gas or natural gas leasing at least 75 percent of the available unleased acreage within each OCS Planning Area. Available unleased acreage is that portion of the outer Continental Shelf that is not under lease at the time of the proposed lease sale, and has not otherwise been made unavailable for leasing by law.;

(2)

in subsection (c), by striking so much as precedes paragraph (3) and inserting the following:

(c)
(1)

During the preparation of any proposed leasing program under this section, the Secretary shall consider and analyze leasing throughout the entire Outer Continental Shelf without regard to any other law affecting such leasing. During this preparation the Secretary shall invite and consider suggestions from any interested Federal agency, including the Attorney General, in consultation with the Federal Trade Commission, and from the Governor of any coastal State. The Secretary may also invite or consider any suggestions from the executive of any local government in a coastal State that have been previously submitted to the Governor of such State, and from any other person. Further, the Secretary shall consult with the Secretary of Defense regarding military operational needs in the outer Continental Shelf. The Secretary shall work with the Secretary of Defense to resolve any conflicts that might arise regarding offering any area of the outer Continental Shelf for oil and gas or natural gas leasing. If the Secretaries are not able to resolve all such conflicts, any unresolved issues shall be elevated to the President for resolution.

(2)

After the consideration and analysis required by paragraph (1), including the consideration of the suggestions received from any interested Federal agency, the Federal Trade Commission, the Governor of any coastal State, any local government of a coastal State, and any other person, the Secretary shall publish in the Federal Register a proposed leasing program accompanied by a draft environmental impact statement prepared pursuant to the National Environmental Policy Act of 1969. After the publishing of the proposed leasing program and during the comment period provided for on the draft environmental impact statement, the Secretary shall submit a copy of the proposed program to the Governor of each affected State for review and comment. The Governor may solicit comments from those executives of local governments in the Governor’s State that the Governor, in the discretion of the Governor, determines will be affected by the proposed program. If any comment by such Governor is received by the Secretary at least 15 days prior to submission to the Congress pursuant to paragraph (3) and includes a request for any modification of such proposed program, the Secretary shall reply in writing, granting or denying such request in whole or in part, or granting such request in such modified form as the Secretary considers appropriate, and stating the Secretary’s reasons therefor. All such correspondence between the Secretary and the Governor of any affected State, together with any additional information and data relating thereto, shall accompany such proposed program when it is submitted to the Congress.

; and

(3)

by adding at the end the following:

(i)

Projection of State Adjacent Zone resources and State and local government shares of OCS receipts

Concurrent with the publication of the scoping notice at the beginning of the development of each 5-year outer Continental Shelf oil and gas leasing program, or as soon thereafter as possible, the secretary shall—

(1)

provide to each Adjacent State a current estimate of proven and potential oil and gas resources located within the State’s Adjacent Zone; and

(2)

provide to each Adjacent State, and coastal political subdivisions thereof, a best-efforts projection of the OCS Receipts that the Secretary expects will be shared with each Adjacent State, and its coastal political subdivisions, using the assumption that the unleased tracts within the State’s Adjacent Zone are fully made available for leasing, including long-term projected OCS Receipts. In addition, the Secretary shall include a macroeconomic estimate of the impact of such leasing on the national economy and each State’s economy, including investment, jobs, revenues, personal income, and other categories.

.

11.

Coordination with adjacent States

Section 19 of the Outer Continental Shelf Lands Act (43 U.S.C. 1345) is amended—

(1)

in subsection (a) in the first sentence by inserting , for any tract located within the Adjacent State’s Adjacent Zone, after government; and

(2)

by adding the following:

(f)
(1)

No Federal agency may permit or otherwise approve, without the concurrence of the Adjacent State, the construction of a crude oil or petroleum products (or both) pipeline within the part of the Adjacent State’s Adjacent Zone that is not available by law for oil and gas or natural gas leasing, except that such a pipeline may be approved to pass through such Adjacent Zone if at least 50 percent of the production projected to be carried by the pipeline within its first 10 years of operation is from areas of the Adjacent State’s Adjacent Zone.

(2)

No State may prohibit the construction within its Adjacent Zone or its State waters of a natural gas pipeline that will transport natural gas produced from the outer Continental Shelf. However, an Adjacent State may prevent a proposed natural gas pipeline landing location if it proposes two alternate landing locations in the Adjacent State, acceptable to the Adjacent State, located within 50 miles on either side of the proposed landing location.

.

12.

Environmental studies

Section 20(d) of the Outer Continental Shelf Lands Act (43 U.S.C. 1346) is amended—

(1)

by inserting (1) after (d); and

(2)

by adding at the end the following:

(2)

For all programs, lease sales, leases, and actions under this Act, the following shall apply regarding the application of the National Environmental Policy Act of 1969:

(A)

Granting or directing lease suspensions and the conduct of all preliminary activities on outer Continental Shelf tracts, including seismic activities, are categorically excluded from the need to prepare either an environmental assessment or an environmental impact statement, and the Secretary shall not be required to analyze whether any exceptions to a categorical exclusion apply for activities conducted under the authority of this Act.

(B)

The environmental impact statement developed in support of each 5-year oil and gas leasing program provides the environmental analysis for all lease sales to be conducted under the program and such sales shall not be subject to further environmental analysis.

(C)

Exploration plans shall not be subject to any requirement to prepare an environmental impact statement, and the Secretary may find that exploration plans are eligible for categorical exclusion due to the impacts already being considered within an environmental impact statement or due to mitigation measures included within the plan.

(D)

Within each OCS Planning Area, after the preparation of the first development and production plan environmental impact statement for a leased tract within the Area, future development and production plans for leased tracts within the Area shall only require the preparation of an environmental assessment unless the most recent development and production plan environmental impact statement within the Area was finalized more than 10 years prior to the date of the approval of the plan, in which case an environmental impact statement shall be required.

.

13.

Review of outer Continental Shelf development and production plans

Section 25 of the Outer Continental Shelf Lands Act (43 U.S.C. 1351(a)) is amended to read as follows:

25.

Review of outer continental shelf development and production plans

(a)

Development and Production Plans; Submission to Secretary; Statement of Facilities and Operation; Submission to Governors of Affected States and Local Governments

(1)

Prior to development and production pursuant to an oil and gas lease issued on or after September 18, 1978, for any area of the outer Continental Shelf, or issued or maintained prior to September 18, 1978, for any area of the outer Continental Shelf, with respect to which no oil or gas has been discovered in paying quantities prior to September 18, 1978, the lessee shall submit a development and production plan (hereinafter in this section referred to as a plan) to the Secretary for review.

(2)

A plan shall be accompanied by a statement describing all facilities and operations, other than those on the outer Continental Shelf, proposed by the lessee and known by the lessee (whether or not owned or operated by such lessee) that will be constructed or utilized in the development and production of oil or gas from the lease area, including the location and site of such facilities and operations, the land, labor, material, and energy requirements associated with such facilities and operations, and all environmental and safety safeguards to be implemented.

(3)

Except for any privileged or proprietary information (as such term is defined in regulations issued by the Secretary), the Secretary, within 30 days after receipt of a plan and statement, shall—

(A)

submit such plan and statement to the Governor of any affected State, and upon request to the executive of any affected local government; and

(B)

make such plan and statement available to any appropriate interstate regional entity and the public.

(b)

Development and Production Activities in Accordance With Plan as Lease Requirement

After enactment of the Coastal Economic and Environmental Protection Act, no oil and gas lease may be issued pursuant to this Act in any region of the outer Continental Shelf, unless such lease requires that development and production activities be carried out in accordance with a plan that complies with the requirements of this section. This section shall also apply to leases that do not have an approved development and production plan as of the date of enactment of the Coastal Economic and Environmental Protection Act.

(c)

Scope and Contents of Plan

A plan may apply to more than one oil and gas lease, and shall set forth, in the degree of detail established by regulations issued by the Secretary—

(1)

the general work to be performed;

(2)

a description of all facilities and operations located on the outer Continental Shelf that are proposed by the lessee or known by the lessee (whether or not owned or operated by such lessee) to be directly related to the proposed development, including the location and size of such facilities and operations, and the land, labor, material, and energy requirements associated with such facilities and operations;

(3)

the environmental safeguards to be implemented on the outer Continental Shelf and how such safeguards are to be implemented;

(4)

all safety standards to be met and how such standards are to be met;

(5)

an expected rate of development and production and a time schedule for performance; and

(6)

such other relevant information as the Secretary may by regulation require.

(d)

Completeness Review of the Plan

(1)

Prior to commencing any activity under a development and production plan pursuant to any oil and gas lease issued or maintained under this Act, the lessee shall certify that the plan is consistent with the terms of the lease and that it is consistent with all statutory and regulatory requirements in effect on the date of issuance of the lease. The plan shall include all required information and documentation required under subsection (c).

(2)

The Secretary shall review the plan for completeness within 30 days of submission. If the Secretary finds that the plan is not complete, the Secretary shall notify the lessee with a detailed explanation of such modifications of such plan as are necessary to achieve completeness. The Secretary shall have 30 days to review a modified plan for completeness.

(e)

Review for Consistency of the Plan

(1)

After a determination that a plan is complete, the Secretary shall have 120 days to conduct a review of the plan, to ensure that it is consistent with the terms of the lease, and that it is consistent with all such statutory and regulatory requirements applicable to the lease. The review shall ensure that the plan is consistent with lease terms, and statutory and regulatory requirements applicable to the lease, related to national security or national defense, including any military operating stipulations or other restrictions. The Secretary shall seek the assistance of the Department of Defense in the conduct of the review of any plan prepared under this section for a lease containing military operating stipulations or other restrictions and shall accept the assistance of the Department of Defense in the conduct of the review of any plan prepared under this section for any other lease when the Secretary of Defense requests an opportunity to participate in the review. If the Secretary finds that the plan is not consistent, the Secretary shall notify the lessee with a detailed explanation of such modifications of such plan as are necessary to achieve consistency.

(2)

The Secretary shall have 120 days to review a modified plan.

(3)

The lessee shall not conduct any activities under the plan during any 120-day review period, or thereafter until the plan has been modified to achieve compliance as so notified.

(4)

After review by the Secretary provided for by this section, a lessee may operate pursuant to the plan without further review or approval by the Secretary.

(f)

Review of Revision of the Approved Plan

The lessee may submit to the Secretary any revision of a plan if the lessee determines that such revision will lead to greater recovery of oil and natural gas, improve the efficiency, safety, and environmental protection of the recovery operation, is the only means available to avoid substantial economic hardship to the lessee, or is otherwise not inconsistent with the provisions of this Act, to the extent such revision is consistent with protection of the human, marine, and coastal environments. The process to be used for the review of any such revision shall be the same as that set forth in subsections (d) and (e).

(g)

Cancellation of Lease on Failure to Submit Plan or Comply With a Plan

Whenever the owner of any lease fails to submit a plan in accordance with regulations issued under this section, or fails to comply with a plan, the lease may be canceled in accordance with section 5(c) and (d). Termination of a lease because of failure to comply with a plan, including required modifications or revisions, shall not entitle a lessee to any compensation.

(h)

Production and Transportation of Natural Gas; Submission of Plan to Federal Energy Regulatory Commission; Impact Statement

If any development and production plan submitted to the Secretary pursuant to this section provides for the production and transportation of natural gas, the lessee shall contemporaneously submit to the Federal Energy Regulatory Commission that portion of such plan that relates to the facilities for transportation of natural gas. The Secretary and the Federal Energy Regulatory Commission shall agree as to which of them shall prepare an environmental impact statement pursuant to the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) applicable to such portion of such plan, or conduct studies as to the effect on the environment of implementing it. Thereafter, the findings and recommendations by the agency preparing such environmental impact statement or conducting such studies pursuant to such agreement shall be adopted by the other agency, and such other agency shall not independently prepare another environmental impact statement or duplicate such studies with respect to such portion of such plan, but the Federal Energy Regulatory Commission, in connection with its review of an application for a certificate of public convenience and necessity applicable to such transportation facilities pursuant to section 7 of the Natural Gas Act (15 U.S.C. 717f), may prepare such environmental studies or statement relevant to certification of such transportation facilities as have not been covered by an environmental impact statement or studies prepared by the Secretary. The Secretary, in consultation with the Federal Energy Regulatory Commission, shall promulgate rules to implement this subsection, but the Federal Energy Regulatory Commission shall retain sole authority with respect to rules and procedures applicable to the filing of any application with the Commission and to all aspects of the Commission’s review of, and action on, any such application.

.

14.

Federal Energy Natural Resources Enhancement Fund Act of 2006

(a)

Findings

The Congress finds the following:

(1)

Energy and minerals exploration, development, and production on Federal onshore and offshore lands, including bio-based fuel, natural gas, minerals, oil, geothermal, and power from wind, waves, currents, and thermal energy, involves significant outlays of funds by Federal and State wildlife, fish, and natural resource management agencies for environmental studies, planning, development, monitoring, and management of wildlife, fish, air, water, and other natural resources.

(2)

State wildlife, fish, and natural resource management agencies are funded primarily through permit and license fees paid to the States by the general public to hunt and fish, and through Federal excise taxes on equipment used for these activities.

(3)

Funds generated from consumptive and recreational uses of wildlife, fish, and other natural resources currently are inadequate to address the natural resources related to energy and minerals development on Federal onshore and offshore lands.

(4)

Funds available to Federal agencies responsible for managing Federal onshore and offshore lands and Federal-trust wildlife and fish species and their habitats are inadequate to address the natural resources related to energy and minerals development on Federal onshore and offshore lands.

(5)

Receipts derived from sales, bonus bids, and royalties under the mineral leasing laws of the United States are paid to the Treasury through the Minerals Management Service of the Department of the Interior.

(6)

None of the receipts derived from sales, bonus bids, and royalties under the minerals leasing laws of the United States are paid to the Federal or State agencies to examine, monitor, and manage wildlife, fish, air, water, and other natural resources related to natural gas, oil, and mineral exploration and development.

(b)

Purposes

It is the purpose of this section to—

(1)

establish a fund for the monitoring and management of wildlife and fish, and their habitats, and air, water, and other natural resources related to energy and minerals development on Federal onshore and offshore lands;

(2)

make available receipts derived from sales, bonus bids, and royalties from onshore and offshore gas, mineral, oil, and any additional form of energy exploration and development under the laws of the United States for the purposes of such fund;

(3)

distribute funds from such fund each fiscal year to the Secretary of the Interior and the States; and

(4)

use the distributed funds to secure the necessary trained workforce or contractual services to conduct environmental studies, planning, development, monitoring, and post-development management of wildlife and fish and their habitats and air, water, and other natural resources that may be related to bio-based fuel, gas, mineral, oil, wind, or other energy exploration, development, transportation, transmission, and associated activities on Federal onshore and offshore lands, including, but not limited to—

(A)

pertinent research, surveys, and environmental analyses conducted to identify any impacts on wildlife, fish, air, water, and other natural resources from energy and mineral exploration, development, production, and transportation or transmission;

(B)

projects to maintain, improve, or enhance wildlife and fish populations and their habitats or air, water, or other natural resources, including activities under the Endangered Species Act of 1973;

(C)

research, surveys, environmental analyses, and projects that assist in managing, including mitigating either onsite or offsite, or both, the impacts of energy and mineral activities on wildlife, fish, air, water, and other natural resources; and

(D)

projects to teach young people to live off the land.

(c)

Definitions

In this section:

(1)

Enhancement fund

The term Enhancement Fund means the Federal Energy Natural Resources Enhancement Fund established by subsection (d).

(2)

State

The term State means the State government agency primarily responsible for fish and wildlife trust resources within a State.

(d)

Establishment and use of Federal Energy Natural Resources Enhancement Fund

(1)

Enhancement fund

There is established in the Treasury a separate account to be known as the Federal Energy Natural Resources Enhancement Fund.

(2)

Funding

The Secretary of the Treasury shall deposit in the Enhancement Fund—

(A)

such sums as are provided by sections 9(b)(5)(A)(ii), 9(b)(5)(B)(ii), 9(c)(4)(A)(ii), and 9(c)(4)(B)(ii) of the Outer Continental Shelf Lands Act, as amended by this Act;

(B)
(i)

during the period of October 1, 2006, through September 30, 2015, 0.5 percent of all sums paid into the Treasury under section 35 of the Mineral Leasing Act (30 U.S.C. 191), and

(ii)

beginning October 1, 2015, and thereafter, 2.5 percent of all sums paid into the Treasury under section 35 of the Mineral Leasing Act (30 U.S.C. 191); and

(C)
(i)

during the period of October 1, 2006, through September 30, 2015, 0.5 percent of all sums paid into the Treasury from receipts derived from bonus bids and royalties from other mineral leasing on public lands, and

(ii)

beginning October 1, 2015, and thereafter, 2.5 percent of all sums paid into the Treasury from receipts derived from bonus bids and royalties from other mineral leasing on public lands.

(3)

Investments

The Secretary of the Treasury shall invest the amounts deposited under paragraph (2) and all accrued interest on the amounts deposited under paragraph (2) only in interest bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States.

(4)

Payment to Secretary of the Interior

(A)

In general

Beginning with fiscal year 2007, and in each fiscal year thereafter, one-third of amounts deposited into the Enhancement Fund, together with the interest thereon, shall be available, without fiscal year limitations, to the Secretary of the Interior for use for the purposes described in (b)(4).

(B)

Withdrawals and transfer of funds

The Secretary of the Treasury shall withdraw such amounts from the Enhancement Fund as the Secretary of the Interior may request, subject to the limitation in (A), and transfer such amounts to the Secretary of the Interior to be used, at the discretion of the Secretary of the Interior, by the Minerals Management Service, the Bureau of Land Management, and the United States Fish and Wildlife Service for use for the purposes described in subsection (b)(4).

(5)

Payment to states

(A)

In general

Beginning with fiscal year 2007, and in each fiscal year thereafter, two-thirds of amounts deposited into the Enhancement Fund, together with the interest thereon, shall be available, without fiscal year limitations, to the States for use for the purposes described in (b)(4).

(B)

Withdrawals and transfer of funds

Within the first 90 days of each fiscal year, the Secretary of the Treasury shall withdraw amounts from the Enhancement Fund and transfer such amounts to the States based on the proportion of all receipts that were collected the previous fiscal year from Federal leases within the boundaries of each State and each State’s outer Continental Shelf Adjacent Zone as determined in accordance with section 4(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)), as amended by this Act.

(C)

Use of payments by state

Each State shall use the payments made under subparagraph (B) only for carrying out projects and programs for the purposes described in (b)(4).

(D)

Encourage use of private funds by state

Each State shall use the payments made under subparagraph (B) to leverage private funds for carrying out projects for the purposes described in (b)(4).

(e)

Limitation on use

Amounts available under this section may not be used for the purchase of any interest in land.

(f)

Reports to Congress

(1)

In general

Beginning in fiscal year 2008 and continuing for each fiscal year thereafter, the Secretary of the Interior and each State receiving funds from the Enhancement Fund shall submit a report to the Committee on Energy and Natural Resources of the Senate and the Committee on Resources of the House of Representatives.

(2)

Required information

Reports submitted to the Congress by the Secretary of the Interior and States under this subsection shall include the following information regarding expenditures during the previous fiscal year:

(A)

A summary of pertinent scientific research and surveys conducted to identify impacts on wildlife, fish, and other natural resources from energy and mineral developments.

(B)

A summary of projects planned and completed to maintain, improve or enhance wildlife and fish populations and their habitats or other natural resources.

(C)

A list of additional actions that assist, or would assist, in managing, including mitigating either onsite or offsite, or both, the impacts of energy and mineral development on wildlife, fish, and other natural resources.

(D)

A summary of private (non-Federal) funds used to plan, conduct, and complete the plans and programs identified in paragraphs (2)(A) and (2)(B).

15.

Termination of effect of laws prohibiting the spending of appropriated funds for certain purposes

All provisions of existing Federal law prohibiting the spending of appropriated funds to conduct oil and natural gas leasing and preleasing activities for any area of the outer Continental Shelf shall have no force or effect.

16.

Outer Continental Shelf incompatible use

(a)

In general

No Federal agency may permit construction or operation (or both) of any facility, or designate or maintain a restricted transportation corridor or operating area on the Federal outer Continental Shelf or in State waters, that will be incompatible with, as determined by the Secretary of the Interior, oil and gas or natural gas leasing and substantially full exploration and production of tracts that are geologically prospective for oil or natural gas (or both).

(b)

Exceptions

Subsection (a) shall not apply to any facility, transportation corridor, or operating area the construction, operation, designation, or maintenance of which is or will be—

(1)

located in an area of the outer Continental Shelf that is unavailable for oil and gas or natural gas leasing by operation of law;

(2)

used for a military readiness activity (as defined in section 315(f) of Public Law 107–314; 16 U.S.C. 703 note); or

(3)

required in the national interest, as determined by the President.

17.

Repurchase of certain leases

(a)

Authority to Repurchase and Cancel Certain Leases

The Secretary of the Interior shall repurchase and cancel any Federal oil and gas, geothermal, coal, oil shale, tar sands, or other mineral lease, whether onshore or offshore, if the Secretary finds that such lease qualifies for repurchase and cancellation under the regulations authorized by this section.

(b)

Regulations

Not later than 365 days after the date of the enactment of this Act, the Secretary shall publish a final regulation stating 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. Such regulation shall include, but not be limited to, the following:

(1)

The Secretary shall repurchase and cancel a lease after written request by the lessee upon a finding by the Secretary that—

(A)

a request by the lessee for a required permit or other approval complied with applicable law, except the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.), and terms of the lease and such permit or other approval was denied;

(B)

a Federal agency failed to act on a request by the lessee for a required permit, other approval, or administrative appeal within a regulatory or statutory time-frame associated with the requested action, whether advisory or mandatory, or if none, within 180 days; or

(C)

a Federal agency attached a condition of approval, without agreement by the lessee, to a required permit or other approval if such condition of approval was not mandated by Federal statute or regulation in effect on the date of lease issuance, or was not specifically allowed under the terms of the lease.

(2)

A lessee shall not be required to exhaust administrative remedies regarding a permit request, administrative appeal, or other required request for approval for the purposes of this section.

(3)

The Secretary shall make a final agency decision on a request by a lessee under this section within 180 days of request.

(4)

Compensation to a lessee to repurchase and cancel a lease under this section shall be the amount that a lessee would receive in a restitution case for a material breach of contract.

(5)

Compensation shall be in the form of a check or electronic transfer from the Department of the Treasury from funds deposited into miscellaneous receipts under the authority of the same Act that authorized the issuance of the lease being repurchased.

(6)

Failure of the Secretary to make a final agency decision on a request by a lessee under this section within 180 days of request shall result in a 10 percent increase in the compensation due to the lessee if the lease is ultimately repurchased.

(c)

No Prejudice

This section shall not be interpreted to prejudice any other rights that the lessee would have in the absence of this section.

18.

Offsite environmental mitigation

Notwithstanding any other provision of law, any person conducting activities under the Mineral Leasing Act (30 U.S.C. 181 et seq.), the Geothermal Steam Act (30 U.S.C. 1001 et seq.), the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), the Weeks Act (16 U.S.C. 552 et seq.), the General Mining Act of 1872 (30 U.S.C. 22 et seq.), the Materials Act of 1947 (30 U.S.C. 601 et seq.), or the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), may in satisfying any mitigation requirements associated with such activities propose mitigation measures on a site away from the area impacted and the Secretary of the Interior shall accept these proposed measures if the Secretary finds that they generally achieve the purposes for which mitigation measures appertained.

19.

Amendments to the Mineral Leasing Act

Section 17(g) of the Mineral Leasing Act (30 U.S.C. 226(g)) is amended to read as follows:

(g)

Regulation of Surface-Disturbing Activities

(1)

Regulation of surface-disturbing activities

The Secretary of the Interior, or for National Forest lands, the Secretary of Agriculture, shall regulate all surface-disturbing activities conducted pursuant to any lease issued under this Act, and shall determine reclamation and other actions as required in the interest of conservation of surface resources.

(2)

Submission of exploration plan; completion review; compliance review

(A)

Prior to beginning oil and gas exploration activities, a lessee shall submit an exploration plan to the Secretary of the Interior for review.

(B)

The Secretary shall review the plan for completeness within 10 days of submission.

(C)

In the event the exploration plan is determined to be incomplete, the Secretary shall notify the lessee in writing and specify the items or information needed to complete the exploration plan.

(D)

The Secretary shall have 10 days to review any modified exploration plan submitted by the lessee.

(E)

To be deemed complete, an exploration plan shall include, in the degree of detail to be determined by the Secretary by rule or regulation—

(i)

a drilling plan containing a description of the drilling program;

(ii)

the surface and projected completion zone location;

(iii)

pertinent geologic data;

(iv)

expected hazards, and proposed mitigation measures to address such hazards;

(v)

a schedule of anticipated exploration activities to be undertaken;

(vi)

a description of equipment to be used for such activities;

(vii)

a certification from the lessee stating that the exploration plan complies with all lease, regulatory and statutory requirements in effect on the date of the issuance of the lease;

(viii)

evidence that the lessee has secured an adequate bond, surety, or other financial arrangement prior to commencement of any surface disturbing activity;

(ix)

a plan that details the complete and timely reclamation of the lease tract; and

(x)

such other relevant information as the Secretary may by regulation require.

(F)

Upon a determination that the exploration plan is complete, the Secretary shall have 30 days from the date the plan is deemed complete to conduct a review of the plan.

(G)

If the Secretary finds the exploration plan is not consistent with all statutory and regulatory requirements in effect on the date of issuance of the lease, the Secretary shall notify the lessee with a detailed explanation of such modifications of the exploration plan as are necessary to achieve compliance.

(H)

The lessee shall not take any action under the exploration plan within a 30 day review period, or thereafter until the plan has been modified to achieve compliance as so notified.

(I)

After review by the Secretary provided by this subsection, a lessee may operate pursuant to the plan without further review or approval by the Secretary.

(3)

Plan revisions; conduct of exploration activities

(A)

If a significant revision of an exploration plan under this subsection is submitted to the Secretary, the process to be used for the review of such revision shall be the same as set forth in paragraph (1) of this subsection.

(B)

All exploration activities pursuant to any lease shall be conducted in accordance with an exploration plan that has been submitted to and reviewed by the Secretary or a revision of such plan.

(4)

Submission of development and production plan; completeness review; compliance review

(A)

Prior to beginning oil and gas development and production activities, a lessee shall submit a development and exploration plan to the Secretary of the Interior. Upon submission, such plans shall be subject to a review for completeness.

(B)

The Secretary shall review the plan for completeness within 30 days of submission.

(C)

In the event a development and production plan is determined to be incomplete, the Secretary shall notify the lessee in writing and specify the items or information needed to complete the plan.

(D)

The Secretary shall have 30 days to review for completeness any modified development and production plan submitted by the lessee.

(E)

To be deemed complete, a development and production plan shall include, in the degree of detail to be determined by the Secretary by rule or regulation—

(i)

a drilling plan containing a description of the drilling program;

(ii)

the surface and projected completion zone location;

(iii)

pertinent geologic data;

(iv)

expected hazards, and proposed mitigation measures to address such hazards;

(v)

a statement describing all facilities and operations proposed by the lessee and known by the lessee (whether or not owned or operated by such lessee) that shall be constructed or utilized in the development and production of oil or gas from the leases areas, including the location and site of such facilities and operations, the land, labor, material, and energy requirements associated with such facilities and operations;

(vi)

the general work to be performed;

(vii)

the environmental safeguards to be implemented in connection with the development and production and how such safeguards are to be implemented;

(viii)

all safety standards to be met and how such standards are to be met;

(ix)

an expected rate of development and production and a time schedule for performance;

(x)

a certification from the lessee stating that the development and production plan complies with all lease, regulatory, and statutory requirements in effect on the date of issuance of the lease;

(xi)

evidence that the lessee has secured an adequate bond, surety, or other financial arrangement prior to commencement of any surface disturbing activity;

(xii)

a plan that details the complete and timely reclamation of the lease tract; and

(xiii)

such other relevant information as the Secretary may by regulation require.

(F)

Upon a determination that the development and production plan is complete, the Secretary shall have 120 days from the date the plan is deemed complete to conduct a review of the plan.

(G)

If the Secretary finds the development and production plan is not consistent with all statutory and regulatory requirements in effect on the date of issuance of the lease, the Secretary shall notify the lessee with a detailed explanation of such modifications of the development and production plan as are necessary to achieve compliance.

(H)

The lessee shall not take any action under the development and production plan within a 120 day review period, or thereafter until the plan has been modified to achieve compliance as so notified.

(5)

Plan revisions; conduct of development and production activities

(A)

If a significant revision of a development and production plan under this subsection is submitted to the Secretary, the process to be used for the review of such revision shall be the same as set forth in paragraph (4) of this subsection.

(B)

All development and production activities pursuant to any lease shall be conducted in accordance with an exploration plan that has been submitted to and reviewed by the Secretary or a revision of such plan.

(6)

Cancellation of lease on failure to submit plan or comply with approved plan

Whenever the owner of any lease fails to submit a plan in accordance with regulations issued under this section, or fails to comply with a plan, the lease may be canceled in accordance with section 31. Termination of a lease because of failure to comply with a plan, including required modifications or revisions, shall not entitle a lessee to any compensation.

.

20.

Minerals management service

The bureau known as the Minerals Management Service in the Department of the Interior shall be known as the National Ocean Resources and Royalty Service.

21.

Authority to use decommissioned offshore oil and gas platforms and other facilities for mariculture, artificial reef, scientific research, or other uses

(a)

Short Title

This section may be cited as the Rigs to Reefs Act of 2005.

(b)

In General

The Outer Continental Shelf Lands Act (43 U.S.C. 1301 et seq.) is amended by inserting after section 9 the following:

10.

Use of decommissioned offshore oil and gas platforms and other facilities for mariculture, artificial reef, scientific research, or other uses

(a)

In General

The Secretary shall issue regulations under which the Secretary may authorize use of an offshore oil and gas platform or other facility that is decommissioned from service for oil and gas purposes for culture of marine organisms, an artificial reef, scientific research, or any other use authorized under section 8(p).

(b)

Transfer Requirements

The Secretary shall not allow the transfer of a decommissioned offshore oil and gas platform or other facility to another person unless the Secretary is satisfied that the transferee is sufficiently bonded, endowed, or otherwise financially able to fulfill its obligations, including but not limited to—

(1)

ongoing maintenance of the platform or other facility;

(2)

any liability obligations that might arise;

(3)

removal of the platform or other facility if determined necessary by the Secretary; and

(4)

any other requirements and obligations that the Secretary may deem appropriate by regulation.

(c)

Plugging and Abandonment

The Secretary shall ensure that obligations of a lessee regarding the plugging and abandonment of wells are unaffected by implementation of this section.

(d)

Potential to Petition to Opt-Out of Regulations

An Adjacent State acting through a resolution of its legislature, with concurrence of its Governor, may petition to opt-out of the application of regulations promulgated under this section to platforms and other facilities located in the area of its Adjacent Zone within 25 miles of the coastline. The Secretary is authorized to except such area from the application of such regulations, and shall approve such petition, unless the Secretary finds that approving the petition would probably cause serious harm or damage to the marine resources of the State’s Adjacent Zone. Prior to acting on the petition, the Secretary shall complete an environmental assessment that documents the anticipated environmental effects of approving the petition.

(e)

Limitation on Liability

A person that had used an offshore oil and gas platform or other facility for oil and gas purposes and that no longer has any ownership or control of the platform or other facility shall not be liable under Federal law for any costs or damages arising from such platform or other facility after the date the platform or other facility is used for any purpose under subsection (a), unless such costs or damages arise from—

(1)

use of the platform or other facility by the person for development or production of oil or gas; or

(2)

another act or omission of the person.

(f)

Other Leasing and Use not Affected

This section, and the use of any offshore oil and gas platform or other facility for any purpose under subsection (a), shall not affect—

(1)

the authority of the Secretary to lease any area under this Act; or

(2)

any activity otherwise authorized under this Act.

.

(c)

Deadline for Regulations

The Secretary of the Interior shall issue regulations under subsection (b) by not later than 180 days after the date of the enactment of this Act.

(d)

Study and Report on Effects of Removal of Platforms

Not later than one year after the date of enactment of this Act, the Secretary of the Interior, in consultation with other Federal agencies as the Secretary deems advisable, shall study and report to the Congress regarding how the removal of offshore oil and gas platforms and other facilities from the outer Continental Shelf would affect existing fish stocks and coral populations.

22.

Repeal of requirement to conduct comprehensive inventory of ocs oil and natural gas resources

The Energy Policy Act of 2005 (Public Law 109–58) is amended—

(1)

by repealing section 357 (119 Stat. 720; 42 U.S.C. 15912); and

(2)

in the table of contents in section 1(b), by striking the item relating to such section 357.

23.

Onshore and offshore mineral lease fees

Notwithstanding any other provision of law, the Department of the Interior is prohibited from charging fees applicable to actions on Federal onshore and offshore oil and gas, coal, geothermal, and other mineral leases, including transportation of any production from such leases, if such fees were not established in final regulations prior to the date of issuance of the lease.

24.

Leases for areas located within 125 miles of California or Florida

(a)

Authorization to cancel and exchange certain existing oil and gas leases; prohibition on submittal of exploration plans for certain leases prior to June 30, 2012

(1)

Authority

Effective 180 days after the date of enactment of this Act, the lessee of an existing oil and gas lease for an area located completely within 125 miles of the coastline within the California or Florida Adjacent Zones shall have the option, without compensation, of exchanging such lease for a new oil and gas lease having a primary term of 5 years. For the area subject to the new lease, the lessee may select any unleased tract that is completely beyond 100 miles from the coastline of the Adjacent State and is located within the same Adjacent State’s Adjacent Zone as the lease being exchanged, except that leases being exchanged within the Florida Adjacent Zone may be exchanged for any unleased tract that is completely beyond 100 miles from the coastline of Florida and is located west of 86 degrees 41 minutes longitude.

(2)

Administrative process

The Secretary of the Interior shall establish a reasonable administrative process through which a lessee may exercise its option to exchange an oil and gas lease for a new oil and gas lease as provided for in this section. Such exchanges, including the issuance of new leases, shall not be considered to be major Federal actions for purposes of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). Further, such exchanges conducted in accordance with this section are deemed to be in compliance all provisions of the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.). 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 or otherwise unavailable for leasing under the provisions of any other law.

(3)

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 OCS tract covered by the new lease as may be applicable upon issuance.

(4)

Priority

The Secretary shall give priority in the lease exchange process based on the amount of the original bonus bid paid for the issuance of each lease to be exchanged. The Secretary shall allow leases covering partial tracts to be exchanged for leases covering full tracts conditioned upon payment of additional bonus bids on a per-acre basis as determined by the average per acre of the original bonus bid per acre for the partial tract being exchanged.

(5)

Exploration plans

Any exploration plan submitted to the Secretary of the Interior after the date of the enactment of this Act and before July 1, 2012, for an oil and gas lease for an area wholly within 125 miles of the coastline within the California Adjacent Zone or Florida Adjacent Zone shall not be treated as received by the Secretary until the earlier of July 1, 2012, or the date on which a petition by the Adjacent State for oil and gas leasing covering the area within which is located the area subject to the oil and gas lease was approved.

(b)

Further lease cancellation and exchange provisions

(1)

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.

(2)

Consent of lessees

All lessees holding an interest in a lease must consent to cancellation of their leasehold interests in order for the lease to be cancelled and exchanged under this section.

(3)

Waiver of rights

As a prerequisite to the exchange of a lease under this section, the lessee must waive any rights to bring any litigation against the United States related to the transaction.

(4)

Plugging and abandonment

The plugging and abandonment requirements for any wells 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.

(c)

Existing oil and gas lease defined

In this section the term existing oil and gas lease means an oil and gas lease in effect on the date of the enactment of this Act.

25.

Coastal impact assistance

Section 31 of the Outer Continental Shelf Lands Act (43 U.S.C. 1356a) is repealed.

26.

Oil shale and tar sands amendments

(a)

Repeal of requirement to establish payments

Section 369(o) of the Energy Policy Act of 2005 (Public Law 109–58; 119 Stat. 728; 42 U.S.C. 15927) is repealed.

(b)

Treatment of revenues

Section 21 of the Mineral Leasing Act (30 U.S.C. 241) is amended by adding at the end the following:

(e)

Revenues

(1)

In general

Notwithstanding the provisions of section 35, all revenues received from and under an oil shale or tar sands lease shall be disposed of as provided in this subsection.

(2)

Royalty rates for commercial leases

(A)

Initial production

For the first 10 years after initial production under each oil shale or tar sands lease issued under the commercial leasing program established under subsection (d), the Secretary shall set the royalty rate at not less than 1 percent nor more than 3 percent of the gross value of production. However, the initial production period royalty rate set by the Secretary shall not apply to production occurring more than 15 years after the date of issuance of the lease.

(B)

Subsequent periods

After the periods of time specified in subparagraph (A), the Secretary shall set the royalty rate on each oil shale or tar sands lease issued under the commercial leasing program established under subsection (d) at not less than 6 percent nor more than 9 percent of the gross value of production.

(C)

Reduction

The Secretary shall reduce any royalty otherwise required to be paid under subparagraphs (A) and (B) under any oil shale or tar sands lease on a sliding scale based upon market price, with a 10 percent reduction if the monthly average price of NYMEX West Texas Intermediate crude oil at Cushing, Oklahoma, (WTI) drops below $50 (in 2005 dollars) for the month in which the production is sold, and an 80 percent reduction if the monthly average price of WTI drops below $30 (in 2005 dollars) for the month in which the production is sold.

(3)

Disposition of revenues

(A)

Deposit

The Secretary shall deposit into a separate account in the Treasury all revenues derived from any oil shale or tar sands lease.

(B)

Allocations to states and local political subdivisions

The Secretary shall allocate 50 percent of the revenues deposited into the account established under subparagraph (A) to the State within the boundaries of which the leased lands are located, with a portion of that to be paid directly by the Secretary to the State’s local political subdivisions as provided in this paragraph.

(C)

Transmission of allocations

(i)

In general

Not later than the last business day of the month after the month in which the revenues were received, the Secretary shall transmit—

(I)

to each State two-thirds of such State’s allocations under subparagraph (B), and in accordance with clauses (ii) and (iii) to certain county-equivalent and municipal political subdivisions of such State a total of one-third of such State’s allocations under subparagraph (B), together with all accrued interest thereon; and

(II)

the remaining balance of such revenues deposited into the account that are not allocated under subparagraph (B), together with interest thereon, shall be transmitted to the miscellaneous receipts account of the Treasury, except that until a lease has been in production for 20 years 50 percent of such remaining balance derived from a lease shall be paid in accordance with subclause (I).

(ii)

Allocations to certain county-equivalent political subdivisions

The Secretary shall under clause (i)(I) make equitable allocations of the revenues to county-equivalent political subdivisions that the Secretary determines are closely associated with the leasing and production of oil shale and tar sands, under a formula that the Secretary shall determine by regulation.

(iii)

Allocations to municipal political subdivisions

The initial allocation to each county-equivalent political subdivision under clause (ii) shall be further allocated to the county-equivalent political subdivision and any municipal political subdivisions located partially or wholly within the boundaries of the county-equivalent political subdivision on an equitable basis under a formula that the Secretary shall determine by regulation.

(D)

Investment of deposits

The deposits in the Treasury account established under this section shall be invested by the Secretary of the Treasury in securities backed by the full faith and credit of the United States having maturities suitable to the needs of the account and yielding the highest reasonably available interest rates as determined by the Secretary of the Treasury.

(E)

Use of funds

A recipient of funds under this subsection may use the funds for any lawful purpose as determined by State law. Funds allocated under this subsection to States and local political subdivisions may be used as matching funds for other Federal programs without limitation. Funds allocated to local political subdivisions under this subsection may not be used in calculation of payments to such local political subdivisions under programs for payments in lieu of taxes or other similar programs.

(F)

No accounting required

No recipient of funds under this subsection shall be required to account to the Federal Government for the expenditure of such funds, except as otherwise may be required by law.

(4)

Definitions

In this subsection:

(A)

County-equivalent political subdivision

The term ‘county-equivalent political subdivision’ means a political jurisdiction immediately below the level of State government, including a county, parish, borough in Alaska, independent municipality not part of a county, parish, or borough in Alaska, or other equivalent subdivision of a State.

(B)

Municipal political subdivision

The term ‘municipal political subdivision’ means a municipality located within and part of a county, parish, borough in Alaska, or other equivalent subdivision of a State.

.