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[House Report 107-202]
[From the U.S. Government Publishing Office]

107th Congress                                            Rept. 107-202
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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  USE OF RECEIPTS FROM MINERAL LEASING ACTIVITIES ON NAVAL OIL SHALE 
                                RESERVES

                                _______
                                

 September 10, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Hansen, from the Committee on Resources, submitted the following

                              R E P O R T

                        [To accompany H.R. 2187]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Resources, to whom was referred the bill 
(H.R. 2187) to amend title 10, United States Code, to make 
receipts collected from mineral leasing activities on certain 
naval oil shale reserves available to cover environmental 
restoration, waste management, and environmental compliance 
costs incurred by the United States with respect to the 
reserves, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. USE OF RECEIPTS FROM MINERAL LEASING ACTIVITIES ON CERTAIN 
                    NAVAL OIL SHALE RESERVES.

  Section 7439 of title 10, United States Code, is amended--
          (1) in subsection (f)(1), by striking the second sentence; 
        and
          (2) by adding at the end the following new subsection:
  ``(g) Use of Receipts.--(1) The Secretary of the Interior may use, 
without further appropriation, not more than $1,500,000 of the moneys 
covered into the Treasury under subsection (f)(1) to cover the cost of 
any additional analysis, site characterization, and geotechnical 
studies deemed necessary by the Secretary to support environmental 
restoration, waste management, or environmental compliance with respect 
to Oil Shale Reserve Numbered 3. Upon the completion of such studies, 
the Secretary of the Interior shall submit to Congress a report 
containing--
          ``(A) the results and conclusions of such studies; and
          ``(B) an estimate of the total cost of the Secretary's 
        preferred alternative to address environmental restoration, 
        waste management, and environmental compliance needs at Oil 
        Shale Reserve Numbered 3.
  ``(2) If the cost estimate required by paragraph (1)(B) does not 
exceed the total of the moneys covered into the Treasury under 
subsection (f)(1) and remaining available for obligation as of the date 
of submission of the report under paragraph (1), the Secretary of the 
Interior may access such moneys, beginning 60 days after submission of 
the report and without further appropriation, to cover the costs of 
implementing the preferred alternative to address environmental 
restoration, waste management, and environmental compliance needs at 
Oil Shale Reserve Numbered 3. If the cost estimate exceeds such 
available moneys, the Secretary of the Interior may only access such 
moneys as authorized by subsequent Act of Congress.''.

                          Purpose of the Bill

    The purpose of H.R. 2187 is to make receipts collected from 
mineral leasing activities on certain naval oil shale reserves 
available to cover environmental restoration, waste management, 
and environmental compliance costs incurred by the United 
States with respect to the reserves.

                  Background and Need for Legislation

    Tracts of federal land known as Naval Oil Shale Reserves 
(NOSRs) Numbered 1 and 3 lie within the Piceance Basin of 
northwestern Colorado. The NOSRs were originally reserved from 
the public domain in the 1920s when the Naval Petroleum 
Reserves were established as a future source of fuel for the 
Navy. At that time, the oil shale deposits they held were 
thought to hold promise as an abundant source of oil. Upon 
establishment of the of Department of Energy (DOE) during the 
Carter Administration, administrative control of the NOSRs was 
shifted from the Department of Defense to DOE.
    Decades ago, the former Bureau of Mines of the Department 
of Interior (DOI) studied oil shale extraction and built an 
experimental facility near Rifle, Colorado, known as Anvil 
Points. These efforts proved unfeasible and were discontinued. 
However, in the course of the experiment, spent oil shale was 
deposited in a large tailings dam facility in a ravine adjacent 
to a tributary of the Colorado River. Recent studies conducted 
by the Bureau of Land Management (BLM) and the State of 
Colorado determined that arsenic and other heavy metals are 
leaching from this pile into the surface and ground waters, 
posing a threat to human health and the environment.
    Beneath these oil shale deposits also lie oil and gas-
bearing strata, and the DOE operated gas wells within NOSR 3 
for several years. However, the DOE owned these wells outright 
and was not required to follow the provisions of the 1920 
Mineral Leasing Act which requires the sharing of mineral 
receipts with states which host federal production. The Strom 
Thurmond National Defense Act for Fiscal Year 1998 (P.L. 105-
85) transferred the administration and minerals management of 
NOSRs 1 and 3 from the DOE to DOI and directed the Secretary of 
the Interior to hold a lease sale for oil and gas pursuant to 
the 1920 Mineral Leasing Act. The provision specifically stated 
that receipts from the lease sale and royalties collected 
thereafter were to be used for the ``reimbursement of 
environmental restoration, waste management, and environmental 
compliance costs incurred by the United States with respect to 
the lands transferred * * *'' [P.L. 105-85, Title XXXIV, Sec. 
3404(a)].
    In addition, the royalties were to be used to reimburse the 
federal government for the capital costs incurred by DOE to 
install the gas wells and gas lines infrastructure. A 
competitive lease sale was held by BLM in 1999 and ownership of 
the gas leases and infrastructure was transferred to the 
highest commercial bidder.
    Under P.L. 105-85, once the Secretary of Energy and 
Secretary of Interior jointly certify to Congress that the 
environmental restoration has taken place and that the federal 
government has been reimbursed for the capital investment in 
the original gas wells, the royalties received thereafter shall 
be subject to the traditional state revenue sharing arrangement 
pursuant to the 1920 Mineral Leasing Act.
    Finally, P.L. 105-85 made the receipt and utilization of 
royalties derived from this sale subject to a specific 
Congressional authorization. H.R. 2187 provides such an 
authorization. Without its passage, the Secretary of Interior 
lacks the authority to use receipts from gas leasing for the 
stated environmental remediation, reimbursement of federal 
capital costs, or eventual revenue sharing with the states. 
Once enacted, the Secretary of Interior and the BLM will be 
able to work with the State of Colorado in contracting for 
cleanup of the leaching tailings over the next five fiscal 
years, limited by the funds available from leasing.

                            Committee Action

    H.R. 2187 was introduced on June 14, 2001, by Congressman 
Joel Hefley (R-CO) and referred to the Committee on Resources 
and, in addition, to the Committee on Energy and Commerce. On 
June 20, 2001, the bill was referred to the Subcommittee on 
Energy and Mineral Resources of the Resources Committee. On 
June 26, 2001, the Subcommittee held a hearing on the bill. On 
June 27, 2001, the Full Resources Committee met to mark up the 
bill. The Subcommittee on Energy and Mineral Resources was 
discharged from further consideration by unanimous consent. An 
amendment in the nature of a substitute was offered by 
Congresswoman Barbara Cubin (R-WY) to include conditions and 
limitations on the expenditure of receipts and to require a 
report to Congress from the Secretary of the Interior. The 
amendment was agreed to by voice vote. There were no other 
amendments offered. The bill, as amended, was then ordered 
favorably reported to the House by voice vote.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Resources' oversight findings and recommendations 
are reflected in the body of this report.

                   Constitutional Authority Statement

    Article I, section 8, and Article IV, section 3 of the 
Constitution of the United States grant Congress the authority 
to enact this bill.

                    Compliance With House Rule XIII

    1. Cost of Legislation.--Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that Rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act.--As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, credit 
authority, or an increase or decrease in revenues or tax 
expenditures. According to the Congressional Budget Office, 
this bill would increase direct spending by about $23 million 
over the 2002-2011 time period. However, spending could be less 
than that amount depending upon the method of environmental 
restoration chosen by the Department of Interior.
    3. General Performance Goals and Objectives.--As required 
by clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to make receipts collected from 
mineral leasing activities on certain naval oil shale reserves 
available to cover environmental restoration, waste management, 
and environmental compliance costs incurred by the United 
States with respect to the reserves.
    4. Congressional Budget Office Cost Estimate.--Under clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 17, 2001.
Hon. James V. Hansen,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2187, a bill to 
amend title 10, United States Code, to make receipts collected 
from mineral leasing activities on certain naval oil shale 
reserves available to cover environmental restoration, waste 
management, and environmental compliance costs incurred by the 
United States with respect to the reserves.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                        Steven M. Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 2187--A bill to amend title 10, United States Code, to make 
        receipts collected from mineral leasing activities on certain 
        naval oil shale reserves available to cover environmental 
        restoration, waste management, and environmental compliance 
        costs incurred by the United States with respect to the 
        reserves

    Summary: CBO estimates that enacting H.R. 2187 would 
increase direct spending by about $23 million over the 2002-
2011 period, primarily for cleanup costs at an oil shale 
retorting facility in Colorado. Spending under the bill could 
be lower than that amount, however, depending on the 
environmental cleanup option selected by the Department of the 
Interior. Because the bill would affect direct spending, pay-
as-you-go procedures would apply. H.R. 2187 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments. Enacting this 
legislation probably would benefit the state of Colorado.
    H.R. 2187 would amend current law to allow the Secretary of 
the Interior to spend certain mineral receipts from two naval 
oil shale reserves in Colorado to study the environmental 
cleanup costs at an oil shale retorting facility that was 
formerly operated by the federal government within one of those 
reserves. The bill would direct the Secretary to report the 
results of the study to the Congress, outline a preferred 
alternative for addressing environmental contamination at the 
site, and estimate the cost of that preferred alternative. 
Under H.R. 2187, if the estimated cost of the cleanup project 
is less than the mineral receipts available under the bill, the 
Secretary could spend the mineral receipts, without further 
appropriation, to implement the preferred alternative.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2187 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Estimated budget authority..........................         0         2         0        20         0         0
Estimated outlays...................................         0         1         1         7         6         3
----------------------------------------------------------------------------------------------------------------

Basis of estimate

    CBO estimates that enacting H.R. 2187 would increase direct 
spending for environmental analyses and cleanup by $22 million 
over the 2002-2011 period. We also estimate that the bill would 
increase direct spending by $1 million in 2011 for payments of 
certain mineral receipts to Colorado. (Additional payments 
would continue after 2011, while the reserves continue to 
produce mineral resources.) For this estimate, CBO assumes that 
H.R. 2187 will be enacted by the start of fiscal year 2002. 
Estimates of outlays are based on historical spending rates for 
similar activities.
            Environmental analyses and restoration
    H.R. 2187 would authorize the Secretary of the Interior to 
spend up to $1.5 million from mineral receipts identified in 
the bill to study the extent of contamination from the retorted 
oil shale pile at Anvil Points in Colorado. The bill would 
direct the Secretary to report to the Congress on the study's 
findings and the estimated cost of the Bureau of Land 
Management (BLM) plan for cleaning up the site. Based on 
information from BLM, we estimate that the agency would spend 
$1.5 million for these activities during the 2002-2003 period.
    Within 60 days of submitting the report, H.R. 2187 would 
authorize the Secretary to spend, without further 
appropriation, additional receipts necessary to implement the 
preferred plan, provided that its estimated cost does not 
exceed the mineral receipts that are available for obligation 
at that time. Based on information from BLM, CBO expects that 
the agency would submit its report by the start of fiscal year 
2004. According to BLM, the agency is considering several 
preliminary cleanup options with estimated costs ranging from 
about $1 million to $20 million. The most expensive option 
involves transporting waste to an offsite disposal facility, 
and is considered the most effective remedy by BLM.
    Because the extent of environmental damage at the site is 
unknown, the cost of BLM's cleanup plan is uncertain. Based on 
information from BLM regarding anticipated levels of natural 
gas production from the reserves, we estimate that after the 
costs of the study and report have been covered, remaining 
mineral receipts identified in the bill will total $20 million 
by 2004, when we expect the cleanup project could begin. We 
estimate that enacting H.R. 2187 would increase direct spending 
for environmental cleanup by $20 million over the 2004-2011 
period. If BLM is able to develop a suitable and a less costly 
cleanup alternative, the direct spending cost to implement this 
provision would be reduced.
            Receipt-sharing payments to Colorado
    Under current law, mineral receipts generated by the 
reserves identified in H.R. 2187 cannot be shared with the 
state of Colorado until the Secretaries of the interior and 
Energy certify that cumulative receipts are sufficient to 
offset the costs of the environmental cleanup projects and the 
Department of Energy's (DOE's) costs to install and operate 
several gas wells within the reserves. According to DOE, it 
spent about $38 million to develop these wells. Based on 
information from BLM regarding the anticipated level of annual 
receipts from the reserves in the future, CBO expects that the 
Secretaries' certification would occur during 2011, and that $1 
million would be paid to Colorado in that year. Additional 
payment would continue after 2011, while the reserves continue 
to generate mineral receipts.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects in the current year, 
the budget year, and the succeeding four years are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2001    2002    2003    2004    2005    2006    2007    2008    2009    2010    2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays..............................................       0       1       1       7       6       3       3       1       0       0       1
Changes in receipts.............................................                                       Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
H.R. 2187 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on State, local, or tribal 
governments. Enacting this legislation probably would benefit 
Colorado by allowing the state to begin receiving a share of 
the receipts from the leases earlier than under current law.
    Estimated impact on the private sector: The bill contains 
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal costs: Megan Carroll; Impact 
on State, local, and tribal governments: Scott Masters; Impact 
on the Private sector: Lauren Marks.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

              SECTION 7439 OF TITLE 10, UNITED STATES CODE

Sec. 7439. Certain oil shale reserves: transfer of jurisdiction and 
                    petroleum exploration, development, and production

  (a) * * *

           *       *       *       *       *       *       *

  (f) Treatment of Receipts.--(1) Notwithstanding section 35 of 
the Mineral Leasing Act (30 U.S.C. 191), all moneys received 
during the period specified in paragraph (2) from a lease under 
this section (including moneys in the form of sales, bonuses, 
royalties (including interest charges collected under the 
Federal Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 
1701 et seq.)), and rentals) shall be covered into the Treasury 
of the United States and shall not be subject to distribution 
to the States pursuant to subsection (a) of such section 35. 
[Subject to a specific authorization and appropriation for this 
purpose, such moneys may be used for reimbursement of 
environmental restoration, waste management, and environmental 
compliance costs incurred by the United States with respect to 
the lands transferred under subsection (a).]

           *       *       *       *       *       *       *

  (g) Use of Receipts.--(1) The Secretary of the Interior may 
use, without further appropriation, not more than $1,500,000 of 
the moneys covered into the Treasury under subsection (f)(1) to 
cover the cost of any additional analysis, site 
characterization, and geotechnical studies deemed necessary by 
the Secretary to support environmental restoration, waste 
management, or environmental compliance with respect to Oil 
Shale Reserve Numbered 3. Upon the completion of such studies, 
the Secretary of the Interior shall submit to Congress a report 
containing--
          (A) the results and conclusions of such studies; and
          (B) an estimate of the total cost of the Secretary's 
        preferred alternative to address environmental 
        restoration, waste management, and environmental 
        compliance needs at Oil Shale Reserve Numbered 3.
  (2) If the cost estimate required by paragraph (1)(B) does 
not exceed the total of the moneys covered into the Treasury 
under subsection (f)(1) and remaining available for obligation 
as of the date of submission of the report under paragraph (1), 
the Secretary of the Interior may access such moneys, beginning 
60 days after submission of the report and without further 
appropriation, to cover the costs of implementing the preferred 
alternative to address environmental restoration, waste 
management, and environmental compliance needs at Oil Shale 
Reserve Numbered 3. If the cost estimate exceeds such available 
moneys, the Secretary of the Interior may only access such 
moneys as authorized by subsequent Act of Congress.
                            A P P E N D I X

                              ----------                              

                          House of Representatives,
                          Committee on Energy and Commerce,
                                     Washington, DC, July 26, 2001.
Hon. James V. Hansen,
Chairman, Committee on Resources,
Longworth House Office Building, Washington, DC.
    Dear Chairman Hansen: I am writing with regard to H.R. 
2187, which was ordered reported with an amendment in the 
nature of a substance by the Committee on Resources on June 27, 
2001. As you know, the Committee on Energy and Commerce was 
named as an additional Committee of jurisdiction upon the 
bill's introduction.
    I recognize your desire to bring this bill before the House 
in an expeditious manner. Accordingly, I will not exercise the 
Committee's right to exercise its referral. By agreeing to 
waive its consideration of the bill, however, the Energy and 
Commerce Committee does not waive its jurisdiction over H.R. 
2187. In addition, the Energy and Commerce Committee reserves 
its authority to seek conferees on any provisions of the bill 
that are within its jurisdiction during any House-Senate 
conference that may be convened on this or similar legislation. 
I ask for your commitment to support any request by the Energy 
and Commerce Committee for conferees on H.R. 2187 or similar 
legislation.
    I request that you include this letter as a part of the 
Committee's report on H.R. 2187 and in the Congressional Record 
during debate on its provisions. Thank you for your attention 
to these matters.
            Sincerely,
                                     W.J. ``Billy'' Tauzin,
                                                          Chairman.

                                  
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