```

[House Report 115-1083]
[From the U.S. Government Publishing Office]

115th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {     115-1083

======================================================================

 
           DOMESTIC OFFSHORE ENERGY REINVESTMENT ACT OF 2018

                                _______
                                

 December 19, 2018.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Bishop of Utah, from the Committee on Natural Resources, submitted 
                             the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 6771]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 6771) to amend the Gulf of Mexico Energy 
Security Act of 2006, and for other purposes, 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. SHORT TITLE.

  This Act may be cited as the ``Domestic Offshore Energy Reinvestment 
Act of 2018''.

SEC. 2. AMENDMENTS TO THE GULF OF MEXICO ENERGY SECURITY ACT OF 2006.

  (a) In General.--Section 105(a) of the Gulf of Mexico Energy Security 
Act of 2006 (43 U.S.C. 1331 note) is amended--
          (1) in paragraph (1), by striking ``50'' and inserting 
        ``37.5''; and
          (2) in paragraph (2)--
                  (A) in the matter preceding subparagraph (A), by 
                striking ``50'' and inserting ``62.5'';
                  (B) in subparagraph (A), by striking ``75'' and 
                inserting ``80''; and
                  (C) in subparagraph (B), by striking ``25'' and 
                inserting ``20''.
  (b) Limitations on Authorized Uses.--Section 105(d) of the Gulf of 
Mexico Energy Security Act of 2006 (43 U.S.C. 1331 note) is amended--
          (1) in paragraph (1), by adding at the end the following:
                  ``(F) Planning, engineering, design, construction, 
                operations, and maintenance of one or more projects 
                that are specifically authorized by any other Act for 
                ecosystem restoration, hurricane protection, or flood 
                damage prevention.''; and
          (2) by striking paragraph (2) and inserting the following:
          ``(2) Limitation.--Of the amounts received by a Gulf 
        producing State or coastal political subdivision under 
        subsection (b)--
                  ``(A) not more than 3 percent may be used for the 
                purposes described in paragraph (1)(E); and
                  ``(B) not less than 25 percent may be used for the 
                purposes described in paragraph (1)(F), and shall be 
                applied proportionally to the applicable Federal and 
                non-Federal share pursuant to such specific project 
                authorization.''.
  (c) Repeal of Limitation.--Section 105(f) of the Gulf of Mexico 
Energy Security Act of 2006 (43 U.S.C. 1331 note) is amended--
          (1) by striking paragraph (1); and
          (2) by redesignating paragraphs (2) and (3) as paragraphs (1) 
        and (2), respectively.

SEC. 3. CONVEYANCE TO STATES OF PROPERTY INTEREST IN STATE SHARE OF 
                    ROYALTIES AND OTHER PAYMENTS.

  (a) In General.--Section 35 of the Mineral Leasing Act (30 U.S.C. 
191) is amended--
          (1) in the first sentence of subsection (a), by striking 
        ``shall be paid into the Treasury'' and inserting ``shall, 
        except as provided in subsection (b), be paid into the 
        Treasury'';
          (2) by striking subsection (b) and inserting the following:
  ``(b) Conveyance to States of Property Interest in State Share.--
          ``(1) In general.--Notwithstanding any other provision of 
        law, on request of a State and in lieu of any payments to the 
        State under subsection (a), the Secretary of the Interior shall 
        convey to the State all right, title, and interest in and to 
        the percentage specified in that subsection for that State of 
        all amounts otherwise required to be paid into the Treasury 
        under that subsection from sales, bonuses, royalties (including 
        interest charges), and rentals for all public land or deposits 
        located in the State.
          ``(2) Amount.--Notwithstanding any other provision of law, 
        after a conveyance to a State under paragraph (1), any person 
        shall pay directly to the State any amount owed by the person 
        for which the right, title, and interest has been conveyed to 
        the State under this subsection.
          ``(3) Notice.--The Secretary of the Interior shall promptly 
        provide to each holder of a lease of public land to which 
        subsection (a) applies that are located in a State to which 
        right, title, and interest is conveyed under this subsection 
        notice that--
                  ``(A) the Secretary of the Interior has conveyed to 
                the State all right, title, and interest in and to the 
                amounts referred to in paragraph (1); and
                  ``(B) the leaseholder is required to pay the amounts 
                directly to the State.''; and
          (3) in subsection (c)(1), by inserting ``and except as 
        provided in subsection (b)'' before ``, any rentals''.
  (b) Conforming Amendments.--
          (1) Section 6(a) of the Mineral Leasing Act for Acquired 
        Lands (30 U.S.C. 355(a)) is amended--
                  (A) in the first sentence, by striking ``Subject to 
                the provisions of section 35(b) of the Mineral Leasing 
                Act (30 U.S.C. 191(b)), all'' and inserting ``All''; 
                and
                  (B) in the second sentence, by striking ``of the Act 
                of February 25, 1920 (41 Stat. 450; 30 U.S.C. 191)'' 
                and inserting ``of the Mineral Leasing Act (30 U.S.C. 
                191)''.
          (2) Section 20(a) of the Geothermal Steam Act of 1970 (30 
        U.S.C. 1019(a)) is amended in the matter preceding paragraph 
        (1), in the second sentence, by striking ``the provisions of 
        subsection (b) of section 35 of the Mineral Leasing Act (30 
        U.S.C. 191(b)) and''.
          (3) Section 205(f) of the Federal Oil and Gas Royalty 
        Management Act of 1982 (30 U.S.C. 1735(f)) is amended by 
        striking the fourth, fifth, and sixth sentences.

                          Purpose of the Bill

    The purpose of H.R. 6771 is to amend the Gulf of Mexico 
Energy Security Act of 2006.

                  Background and Need for Legislation

    For decades, the Gulf of Mexico coast has served as the 
home for one of the most prolific oil and gas basins in the 
world. In 2017 alone, it averaged nearly 1.7 million barrels of 
oil per day, resulting in $3.8 billion in revenue to the U.S. 
Treasury.\1\ Coupled with the millions of barrels imported and 
exported through the Texas port districts of Port Arthur and 
Houston-Galveston, Gulf coast oil and gas operations play a key 
role in the economic health of this country.\2\
---------------------------------------------------------------------------
    \1\U.S. Department of the Interior, Office of Natural Resource 
Revenue, Natural Resources Revenue Data, Explore Data--Gulf of Mexico 
(https://revenuedata.doi.gov/explore/offshore-gulf/).
    \2\George, Rebecca. ``The port district of Houston-Galveston became 
a net exporter of crude oil in April.'' U.S. Energy Information 
Administration. Aug 20, 2018. (https://www.eia.gov/todayinenergy/
detail.php?id=36932).
---------------------------------------------------------------------------
    Despite the national and international importance of this 
region, the Gulf coastline faces an environmental crisis, 
precipitated by river control systems, severe weather, and 
hydrocarbon infrastructure development. H.R. 6771, the Domestic 
Offshore Energy Reinvestment Act of 2018, will increase 
revenues shared with Gulf States to restore the health of the 
Gulf coast and support the offshore energy industry into the 
future.
    Gulf communities must contend with mounting environmental 
and infrastructure vulnerabilities. These vulnerabilities, as 
highlighted by the 2005 hurricane season, are constantly 
stressed by land subsidence and major storm events. If left 
unchecked, land loss and storm damage threaten up to $136 
billion in economic activity,\3\ and could result in the 
exposure of 610 miles of pipeline by 2040.\4\ Although thick 
swamp, natural marshland, and barrier islands collectively 
absorb severe flooding and storm surges, human engineering has 
resulted in the weakening of these systems.\5\
---------------------------------------------------------------------------
    \3\``Louisiana fights the sea, and loses,'' The Economist, Aug 26, 
2017 (https://www.economist.com/news/united-states/21727099-has-
lessons-americas-climate-change-policy-louisiana-fights-sea-and-loses).
    \4\``Economic Evaluation of Coastal Land Loss in Louisiana,'' 
Louisiana State University--E.J. Ourso College of Business, Dec 2015 
(http://coastal.la.gov/wp-content/uploads/2015/12/LSU-
Rand_Report_on_Economics_of_Land_Loss-2.pdf), p.33.
    \5\``Louisiana's Comprehensive Master Plan for a Sustainable 
Coast.'' Coastal Protection and Restoration Authority of Louisiana, 
State of Louisiana. P. ES-2. June 2, 2017. (http://coastal.la.gov/wp-
content/uploads/2017/04/2017-Coastal-Master-Plan_Web-Single-
Page_CFinal-with-Effective-Date-06092017.pdf).
---------------------------------------------------------------------------
    In 2006, Congress recognized the needs of the Gulf by 
enacting the Gulf of Mexico Energy Security Act of 2006 
(GOMESA, Public Law 109-432),\6\ which established a revenue 
sharing program for the Gulf energy-producing States of Texas, 
Louisiana, Mississippi, and Alabama. Under GOMESA, revenues 
shared with the Gulf producing States must be used for coastal 
restoration and related purposes. Louisiana has taken this 
mandate even further, dedicating all GOMESA revenues towards 
coastal restoration, to be performed by the State's Coastal 
Protection and Restoration Authority (CPRA).\7\ According to 
the CPRA Master Plan, $17.7 billion will be dedicated towards 
marsh creation, $19 billion towards structural reinforcements, 
and $5.1 billion towards sediment diversion.\8\ Louisiana 
planned on GOMESA serving as the long-term funding mechanism 
for the lion's share of coastal restoration,\9\ but due to the 
nature of qualified revenues under GOMESA, it has served as an 
unreliable source of revenue.
---------------------------------------------------------------------------
    \6\43 U.S.C. 1331 note.
    \7\``Coastal Protection and Restoration Authority Gulf of Mexico 
Energy Security Act- Infrastructure Funding Program'', (http://
coastal.la.gov/wp-content/uploads/2016/08/Final-GOMESA-Infrastructure-
Process.pdf).
    \8\Supra note 5.P. ES-16.
    \9\Id., p.128.
---------------------------------------------------------------------------
    GOMESA requires 37.5% of all qualified Gulf revenues to be 
directed to the four States in accordance with a formula based 
on OCS lease block distance from each State's coast. The 
qualifications for revenue disbursements are associated with 
two phases under GOMESA. Phase I, which began in fiscal year 
2007, limited disbursements to revenues generated by select 
leases. Phase II, which began in fiscal year 2017, expands the 
definition of revenues eligible for disbursement to include all 
revenues generated by leases issued after 2006.\10\ 
Consequently while Gulf States received only minor 
disbursements under Phase I, Phase II is anticipated to produce 
much larger revenues to the Gulf States.\11\
---------------------------------------------------------------------------
    \10\Bureau of Ocean Energy Management, Gulf of Mexico Energy 
Security Act (GOMESA), (https://www.boem.gov/Revenue-Sharing/).
    \11\``States get $188 million as GOMESA revenue-sharing enters 2nd 
phase.'' Oil & Gas Journal. May 8, 2018. (https://www.ogj.com/articles/
print/volume-116/issue-5/general-interest/states-get-188-million-as-
gomesa-revenue-sharing-enters-2nd-phase.html).
---------------------------------------------------------------------------
    Additionally, GOMESA directs 12.5% of those qualified 
offshore revenues to the Land and Water Conservation Fund 
(LWCF, 54 U.S.C. 200301 et seq.) to be used for State 
recreation programs by all 50 States. It should be noted that 
the $900 million annual authorization level of the LWCF Fund is 
met almost exclusively by offshore energy revenues, and the 
GOMESA monies are on top of the $900 million annual 
authorization.\12\ Unlike other monies in the LWCF, the GOMESA 
money is not subject to appropriation.\13\
---------------------------------------------------------------------------
    \12\Hardy-Vincent, Carol, ``Land and Water Conservation Fund: 
Overview, Funding History, and Issues,'' Sep 6, 2016 (http://
www.crs.gov/Reports/
RL33531?source=search&guid=995b8347d35543cba6a9650d2f3da87b&index=2).
    \13\GOMESA, Sec. 105(e).
---------------------------------------------------------------------------
    The Outer Continental Shelf Lands Act (OCSLA, 43 U.S.C. 
1331 et seq.) governs the management of the minerals within 
federal offshore territory. However, unlike this statute's 
onshore equivalent, the Minerals Leasing Act (MLA, 30 U.S.C. 
181 et seq.), OCSLA did not establish a revenue-sharing scheme 
for mineral revenues to affected States. Under the MLA, 50% of 
revenues generated from hydrocarbon production are shared with 
the producing State.\14\ Due to the phase-ins and statutory 
caps of GOMESA (and the lack of a historic revenue sharing 
structure under OCSLA), a disparity exists between the revenues 
received by States for onshore production and offshore 
production.\15\
---------------------------------------------------------------------------
    \14\30 U.S.C. 191.
    \15\The Department of the Interior, Office of Natural Resource 
Revenue, ``Analysis of NR disbursements FY2003-2017''; Comay, Laura, 
``Louisiana FY2017 OCS Revenues`` Email Correspondence, Apr 20, 2018.
---------------------------------------------------------------------------
    Furthermore, payments under GOMESA to Gulf producing States 
and LWCF are currently capped at $500 million per year.\16\ 
Therefore, Gulf producing States are only eligible to receive 
up to $375 million per year, split among the four Gulf 
producing States, with the remaining $125 million disbursed to 
LWCF. Although GOMESA disbursements have not remotely 
approached the levels envisioned by the cap, there have been 
numerous legislative efforts to raise or eliminate these caps 
to establish parity with the onshore revenue sharing structure.
---------------------------------------------------------------------------
    \16\Public Law 109-432.
---------------------------------------------------------------------------
    With so much offshore revenue directed away from the coast, 
ongoing restoration projects are severely threatened. Amending 
GOMESA's revenue sharing structure to increase support to 
producing States will ensure the long-term health of the Gulf 
and will help secure this critical federal income stream into 
the future.

      Section-by-Section Analysis of the Bill as Ordered Reported

Section 2. Amendments to the Gulf of Mexico Energy Security Act of 2006

     Amends GOMESA to increase the percentage of 
revenues shared with Gulf producing States from 50% to 62.5%.
     Preserves the allocation of 12.5% of qualified 
revenues to the Land and Water Conservation Fund.
     Expands authorized uses of shared revenues to 
include the design and planning of ecosystem restoration, 
hurricane protection, or flood damage prevention.
     Requires not less than 25% of revenues shared be 
dedicated towards planning, engineering, design, construction, 
operations, and maintenance of one or more projects that are 
specifically authorized by any other Acts for ecosystem 
restoration, hurricane protection, or flood damage prevention.
     Eliminates the cap on revenues distributed to Gulf 
producing States and LWCF.

Section 3. Conveyance to States of property interest in State share of 
        royalties and other payments

     Amends the MLA to allow the Secretary of the 
Interior to convey a property interest in the revenues that 
States are allocated under the MLA from onshore oil and gas 
development.
     If the property interest is conveyed to the State, 
then the holder of a lease will pay the amount owed directly to 
the State, rather than to the Secretary for distribution to the 
State.
     The intent behind this provision is to eliminate 
the need for administrative costs to be deducted by the 
Secretary before the State share is distributed.

                            Committee Action

    H.R. 6771 was introduced on September 12, 2018, by 
Congressman Garret Graves (R-LA). The bill was referred to the 
Committee on Natural Resources. On September 13, 2018, the 
Natural Resources Committee met to consider the bill. 
Congressman Raul M. Grijalva (D-AZ) offered an amendment 
designated #1; it was not adopted by voice vote. Congresswoman 
Liz Cheney (R-WY) offered an amendment designated 083; it was 
adopted by voice vote. No amendments further were offered, and 
the bill, as amended, was ordered favorably reported to the 
House of Representatives 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 Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

      Compliance With House Rule XIII and Congressional Budget Act

    1. Cost of Legislation and the Congressional Budget Act. 
With respect to the requirements of clause 3(c)(2) and (3) of 
rule XIII of the Rules of the House of Representatives and 
sections 308(a) and 402 of the Congressional Budget Act of 
1974, the Committee has received the following estimate for the 
bill from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, December 17, 2018.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6771, the Domestic 
Offshore Energy Reinvestment Act of 2018.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 6771--Domestic Offshore Energy Reinvestment Act of 2018

    Summary: H.R. 6771 would change the disposition of the 
proceeds from federal oil and gas leases in the Outer 
Continental Shelf (OCS) and other federal lands. Under the Gulf 
of Mexico Energy Security Act of 2006, half of the proceeds 
from OCS leases issued after 2006 are deposited in the Treasury 
and the remainder is available for spending without further 
appropriation, subject to annual caps on spending that expire 
after 2055. This bill would repeal the annual spending limits 
and would increase the portion of OCS receipts available for 
spending to 62.5 percent. In addition, the bill would increase 
the share of proceeds paid to states from onshore mineral 
leases from 49 percent to 50 percent.
    CBO estimates that enacting H.R. 6771 would increase direct 
spending by $2.5 billion over the 2019-2028 period, largely as 
a result of provisions increasing the portion of OCS receipts 
that could be spent without further appropriation.
    Because enacting H.R. 6771 would affect direct spending, 
pay-as-you-go procedures apply. The bill would not affect 
revenues.
    CBO estimates that enacting H.R. 6771 would increase net 
direct spending and on-budget deficits by more than $5 billion 
in each of the four consecutive 10-year periods beginning in 
2029.
    H.R. 6771 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would benefit states by increasing the share of proceeds 
they receive from oil and gas production in the OCS and other 
federal lands.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 6771 is shown in the following table. 
The costs of the legislation fall within budget functions 300 
(natural resources and the environment) and 800 (general 
government).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars----
                                                     ---------------------------------------------------------------------------------------------------
                                                       2019   2020   2021    2022    2023    2024    2025    2026    2027    2028   2019-2023  2019-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              INCREASES IN DIRECT SPENDINGa
 
Outer Continental Shelf Oil and Gas Receipts
    Estimated Budget Authority......................      0     50     130     145     190     190     230     315     400     575       515      2,225
    Estimated Outlays...............................      0     60     130     140     175     180     220     295     375     530       505      2,105
Onshore Oil and Gas Receipts
    Estimated Budget Authority......................     24     32      33      34      35      36      37      38      38      38       158        345
    Estimated Outlays...............................     24     32      33      34      35      36      37      38      38      38       158        345
        Total.......................................
    Estimated Budget Authority......................     24     82     163     179     225     226     267     353     438     613       673      2,570
    Estimated Outlays...............................     24     92     163     174     210     216     257     333     413     568       663     2,450
--------------------------------------------------------------------------------------------------------------------------------------------------------
a. H.R. 6771 would increase the portion of receipts paid to states. Because those payment are disbursed more quickly than payments from the Land and
  Water Conservation Fund, the net effect of the bill on outlays in 2020 is estimated to be larger than the net change in budget authority.

    Basis of estimate: CBO estimates that enacting H.R. 6771 
would increase direct spending by $2.5 billion over the 2019-
2028 period, with $2.1 billion of that cost stemming from 
provisions that would increase the portion of OCS receipts that 
could be spent without further appropriation. For this 
estimate, CBO assumes the legislation will be enacted by the 
end of 2018.

Outer Continental Shelf Oil and Gas Receipts

    Federally owned oil and gas resources are developed under a 
system of leasing that requires companies to pay bonus bids 
when leases are issued, annual rental payments on nonproducing 
leases, and royalty payments based on the value of any oil and 
gas production. Those payments are recorded in the budget as 
offsetting receipts or as reduction in direct spending. Under 
current law, 50 percent of the offsetting receipts from leases 
issued after 2006 in the Central and Western Gulf of Mexico are 
paid to certain states and spent by the Land and Water 
Conservation Fund (LWCF) without further appropriation, subject 
to certain limits. CBO estimates that such spending will total 
$4.8 billion over the 2019-2028 period, reflecting provisions 
in current law that generally cap total spending at $500 
million a year through 2055.\1\
---------------------------------------------------------------------------
    \1\There are some statutory exceptions to the $500 million limit on 
annual spending. The cap on the spending of proceeds from post-2006 
leases is $650 million in each of the years 2020 and 2021. In addition, 
spending of receipts from two specific geographic areas is exempt from 
the annual caps.
---------------------------------------------------------------------------
    H.R. 6771 would increase such spending by repealing the 
caps on annual spending and by increasing the portion that may 
be paid to certain states and spent by the LWCF from 50 percent 
to 62.5 percent. The bill also would change the share of the 
proceeds allocated to states and the LWCF.
    Under the technical and economic assumptions in the April 
2018 baseline, CBO projects that offsetting receipts from oil 
and gas leases in the OCS will total about $52 billion over the 
2019-2028 period. CBO estimates that the receipts attributable 
to post-2006 leases will equal roughly 25 percent of the total 
over the next 10 years, as more projects produce oil and gas 
and pay additional royalties.\2\
---------------------------------------------------------------------------
    \2\By comparison, CBO estimates that leases issued after 2006 
accounted for about 17 percent of the OCS receipts collected over the 
previous 10-year period. CBO expects that the share of receipts 
attributable to those leases will increase in the future, because most 
of the production from OCS leases occurs more than 10 years after the 
parcel is leased. For more information, see Congressional Budget 
Office, Options for increasing Federal Income from crude Oil and 
Natural Gas on Federal Land, (April, 2016), www.cbo.gov/publication/
51421.
---------------------------------------------------------------------------
    Because payments derived from OCS leases are made the year 
after income is collected, CBO expects that the new formulas in 
the bill would apply to receipts accrued from January, 2019 
through the end of fiscal year 2027. After adjusting for the 
timing of payments to states and spending patterns of the LWCF 
program, CBO estimates that enacting H.R. 6771 would increase 
direct spending of OCS receipts by $2.1 billion over the 2019-
2028 period.

Onshore Oil and Gas Receipts

    Under the Mineral Leasing Act, states receive 49 percent of 
all royalties, rents, and bonus bids from onshore mineral 
leases. Those payments are made on a monthly basis and in the 
same year that the receipts are collected. H.R. 6771 would 
direct the Department of the Interior to convey to states an 
additional 1 percent of those receipts upon request by a state. 
CBO expects that all states would request that additional 
payment upon enactment. Using CBO's April 2018 baseline 
estimates of receipts from onshore oil and gas leases, we 
estimate that implementing the provision would increase direct 
spending by $345 million over the 2019-2028 period.
    Uncertainty: In estimating the effects of H.R. 6771, CBO 
had to account for several sources of uncertainty:
           CBO does not know how much oil and gas will 
        be produced from OCS leases issued after 2006. Spending 
        could be higher or lower than estimated depending the 
        technical and economic characteristics of each parcel.
           CBO cannot predict the timing of bonus 
        payments or royalties from leases issued after 2006, 
        which depend on investment decisions made by private 
        companies. Differences in the timing of payments could 
        affect the years in which costs are incurred.
           CBO cannot predict future oil or gas prices, 
        which affect royalties and bonus payments for both 
        offshore and onshore leases. Differences between 
        estimated and actual prices would have a corresponding 
        effect on the cost of the legislation.
    Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

 CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 6771, THE DOMESTIC OFFSHORE ENERGY REINVESTMENT ACT OF 2018, AS ORDERED REPORTED BY THE HOUSE COMMITTEE
                                                       ON NATURAL RESOURCES ON SEPTEMBER 13, 2018.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2019    2020    2021    2022    2023    2024    2025    2026    2027    2028   2019-2023  2019-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Effect....................      24      92     163     174     210     216     257     333     413     568        663      2,450
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting H.R. 6771 would increase net direct 
spending and on-budget deficits by more than $5 billion in each 
of the four consecutive 10-year periods beginning in 2029.
    Mandates: H.R. 6771 contains no intergovernmental or 
private-sector mandates as defined in UMRA. The bill would 
benefit states--primarily those along the Gulf Coast--by 
increasing the share of proceeds they receive from oil and gas 
production in the OCS and from other federal lands. Over the 
2019-2028 period, CBO estimates those states would receive 
about $2.5 billion more in proceeds, relative to current law, 
as a result of the legislation. Most of that amount would come 
from increasing the share of production proceeds, but states 
would also receive a small portion of those proceeds in the 
form of federal grants through the Land and Water Conservation 
Fund.
    Estimate prepared by: Federal Costs: Kathleen Gramp and 
Janani Shankaran; Mandates: Jon Sperl.
    Estimate reviewed by: Kim P. Cawley, Unit Chief, Natural 
Resources Cost Estimate Unit; H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.
    2. 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 amend the Gulf of Mexico Energy 
Security Act of 2006.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                       Compliance With H. Res. 5

    Directed Rule Making. This bill does not contain any 
directed rule makings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                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, and existing law in which no 
change is proposed is shown in roman):

               GULF OF MEXICO ENERGY SECURITY ACT OF 2006

           *       *       *       *       *       *       *
                      DIVISION C--OTHER PROVISIONS

TITLE I--GULF OF MEXICO ENERGY SECURITY

           *       *       *       *       *       *       *

SEC. 105. DISPOSITION OF QUALIFIED OUTER CONTINENTAL SHELF REVENUES 
                    FROM 181 AREA, 181 SOUTH AREA, AND 2002-2007 
                    PLANNING AREAS OF GULF OF MEXICO.

  (a) In General.--Notwithstanding section 9 of the Outer 
Continental Shelf Lands Act (43 U.S.C. 1338) and subject to the 
other provisions of this section, for each applicable fiscal 
year, the Secretary of the Treasury shall deposit--
          (1) [50] 37.5 percent of qualified outer Continental 
        Shelf revenues in the general fund of the Treasury; and
          (2) [50] 62.5 percent of qualified outer Continental 
        Shelf revenues in a special account in the Treasury 
        from which the Secretary shall disburse--
                  (A) [75] 80 percent to Gulf producing States 
                in accordance with subsection (b); and
                  (B) [25] 20 percent to provide financial 
                assistance to States in accordance with section 
                200305 of title 54, UnitedStates Code, which 
                shall be considered income to the Land and 
                Water Conservation Fund for purposes of section 
                200302 of that title.
  (b) Allocation Among Gulf Producing States and Coastal 
Political Subdivisions.--
          (1) Allocation among gulf producing states for fiscal 
        years 2007 through 2016.--
                  (A) In general.--Subject to subparagraph (B), 
                effective for each of fiscal years 2007 through 
                2016, the amount made available under 
                subsection (a)(2)(A) shall be allocated to each 
                Gulf producing State in amounts (based on a 
                formula established by the Secretary by 
                regulation) that are inversely proportional to 
                the respective distances between the point on 
                the coastline of each Gulf producing State that 
                is closest to the geographic center of the 
                applicable leased tract and the geographic 
                center of the leased tract.
                  (B) Minimum allocation.--The amount allocated 
                to a Gulf producing State each fiscal year 
                under subparagraph (A) shall be at least 10 
                percent of the amounts available under 
                subsection (a)(2)(A).
          (2) Allocation among gulf producing states for fiscal 
        year 2017 and thereafter.--
                  (A) In general.--Subject to subparagraphs (B) 
                and (C), effective for fiscal year 2017 and 
                each fiscal year thereafter--
                          (i) the amount made available under 
                        subsection (a)(2)(A) from any lease 
                        entered into within the 181 Area or the 
                        181 South Area shall be allocated to 
                        each Gulf producing State in amounts 
                        (based on a formula established by the 
                        Secretary by regulation) that are 
                        inversely proportional to the 
                        respective distances between the point 
                        on the coastline of each Gulf producing 
                        State that is closest to the geographic 
                        center of the applicable leased tract 
                        and the geographic center of the leased 
                        tract; and
                          (ii) the amount made available under 
                        subsection (a)(2)(A) from any lease 
                        entered into within the 2002-2007 
                        planning area shall be allocated to 
                        each Gulf producing State in amounts 
                        that are inversely proportional to the 
                        respective distances between the point 
                        on the coastline of each Gulf producing 
                        State that is closest to the geographic 
                        center of each historical lease site 
                        and the geographic center of the 
                        historical lease site, as determined by 
                        the Secretary.
                  (B) Minimum allocation.--The amount allocated 
                to a Gulf producing State each fiscal year 
                under subparagraph (A) shall be at least 10 
                percent of the amounts available under 
                subsection (a)(2)(A).
                  (C) Historical lease sites.--
                          (i) In general.--Subject to clause 
                        (ii), for purposes of subparagraph 
                        (A)(ii), the historical lease sites in 
                        the 2002-2007 planning area shall 
                        include all leases entered into by the 
                        Secretary for an area in the Gulf of 
                        Mexico during the period beginning on 
                        October 1, 1982 (or an earlier date if 
                        practicable, as determined by the 
                        Secretary), and ending on December 31, 
                        2015.
                          (ii) Adjustment.--Effective January 
                        1, 2022, and every 5 years thereafter, 
                        the ending date described in clause (i) 
                        shall be extended for an additional 5 
                        calendar years.
          (3) Payments to coastal political subdivisions.--
                  (A) In general.--The Secretary shall pay 20 
                percent of the allocable share of each Gulf 
                producing State, as determined under paragraphs 
                (1) and (2), to the coastal political 
                subdivisions of the Gulf producing State.
                  (B) Allocation.--The amount paid by the 
                Secretary to coastal political subdivisions 
                shall be allocated to each coastal political 
                subdivision in accordance with subparagraphs 
                (B), (C), and (E) of section 31(b)(4) of the 
                Outer Continental Shelf Lands Act (43 U.S.C. 
                1356a(b)(4)).
  (c) Timing.--The amounts required to be deposited under 
paragraph (2) of subsection (a) for the applicable fiscal year 
shall be made available in accordance with that paragraph 
during the fiscal year immediately following the applicable 
fiscal year.
  (d) Authorized Uses.--
          (1) In general.--Subject to paragraph (2), each Gulf 
        producing State and coastal political subdivision shall 
        use all amounts received under subsection (b) in 
        accordance with all applicable Federal and State laws, 
        only for 1 or more of the following purposes:
                  (A) Projects and activities for the purposes 
                of coastal protection, including conservation, 
                coastal restoration, hurricane protection, and 
                infrastructure directly affected by coastal 
                wetland losses.
                  (B) Mitigation of damage to fish, wildlife, 
                or natural resources.
                  (C) Implementation of a federally-approved 
                marine, coastal, or comprehensive conservation 
                management plan.
                  (D) Mitigation of the impact of outer 
                Continental Shelf activities through the 
                funding of onshore infrastructure projects.
                  (E) Planning assistance and the 
                administrative costs of complying with this 
                section.
                  (F) Planning, engineering, design, 
                construction, operations, and maintenance of 
                one or more projects that are specifically 
                authorized by any other Act for ecosystem 
                restoration, hurricane protection, or flood 
                damage prevention.
          [(2) Limitation.--Not more than 3 percent of amounts 
        received by a Gulf producing State or coastal political 
        subdivision under subsection (b) may be used for the 
        purposes described in paragraph (1)(E).]
          (2) Limitation.--Of the amounts received by a Gulf 
        producing State or coastal political subdivision under 
        subsection (b)--
                  (A) not more than 3 percent may be used for 
                the purposes described in paragraph (1)(E); and
                  (B) not less than 25 percent may be used for 
                the purposes described in paragraph (1)(F), and 
                shall be applied proportionally to the 
                applicable Federal and non-Federal share 
                pursuant to such specific project 
                authorization.
  (e) Administration.--Amounts made available under subsection 
(a)(2) shall--
          (1) be made available, without further appropriation, 
        in accordance with this section;
          (2) remain available until expended; and
          (3) be in addition to any amounts appropriated 
        under--
                  (A) the Outer Continental Shelf Lands Act (43 
                U.S.C. 1331 et seq.);
                  (B) chapter 2003 of title 54, United States 
                Code; or
                  (C) any other provision of law.
  (f) Limitations on Amount of Distributed Qualified Outer 
Continental Shelf Revenues.--
          [(1) In general.--Subject to paragraph (2), the total 
        amount of qualified outer Continental Shelf revenues 
        made available under subsection (a)(2) shall not 
        exceed--
                  [(A) $500,000,000 for each of fiscal years 
                2016 through2019;
                  [(B) $650,000,000 for each of fiscal years 
                2020 and2021; and
                  [(C) $500,000,000 for each of fiscal years 
                2022 through2055.
          [(2)] (1) Expenditures.--For the purpose of paragraph 
        (1), for each of fiscal years 2016 through 2055, 
        expenditures under subsection (a)(2) shall be net of 
        receipts from that fiscal year from any area in the 181 
        Area in the Eastern Planning Area and the 181 South 
        Area.
          [(3)] (2) Pro rata reductions.--If paragraph (1) 
        limits the amount of qualified outer Continental Shelf 
        revenue that would be paid under subparagraphs (A) and 
        (B) of subsection (a)(2)--
                  (A) the Secretary shall reduce the amount of 
                qualified outer Continental Shelf revenue 
                provided to each recipient on a pro rata basis; 
                and
                  (B) any remainder of the qualified outer 
                Continental Shelf revenues shall revert to the 
                general fund of the Treasury.
                              ----------                              

                          MINERAL LEASING ACT

           *       *       *       *       *       *       *
  Sec. 35. (a) All money received from sales, bonuses, 
royalties including interest charges collected under the 
Federal Oil and Gas Royalty Management Act of 1982, and rentals 
of the public lands under the provisions of this Act and the 
Geothermal Steam Act of 1970, [shall be paid into the Treasury] 
shall, except as provided in subsection (b), be paid into the 
Treasury of the United States; 50 per centum thereof shall be 
paid by the Secretary of the Treasury to the State other than 
Alaska within the boundaries of which the leased lands or 
deposits are or were located; said moneys paid to any of such 
States on or after January 1, 1976, to be used by such State 
and its subdivisions, as the legislature of the State may 
direct giving priority to those subdivisions of the State 
socially or economically impacted by development of minerals 
leased under this Act, for (i) planning, (ii) construction and 
maintenance of public facilities, and (iii) provision of public 
service; and excepting those from Alaska, 40 per centum thereof 
shall be paid into, reserved, appropriated, as part of the 
reclamation fund created by the Act of Congress known as the 
Reclamation Act, approved June 17, 1902, and of those from 
Alaska as soon as practicable after March 31 and September 30 
of each year, 90 per centum thereof shall be paid to the State 
of Alaska for disposition by the legislature thereof: Provided, 
That all moneys which may accrue to the United States under the 
provisions of this Act and the Geothermal Steam Act of 1970 
from lands within the naval petroleum reserves shall be 
deposited in the Treasury as ``miscellaneous receipts'', as 
provided by section 8733(b) of title 10, United States Code. 
All moneys received under the provisions of this Act and the 
Geothermal Steam Act of 1970 not otherwise disposed of by this 
section shall be credited to miscellaneous receipts. Payments 
to States under this section with respect to any moneys 
received by the United States, shall be made not later than the 
last business day of the month in which such moneys are 
warranted by the United States Treasury to the Secretary as 
having been received, except for any portion of such moneys 
which is under challenge and placed in a suspense account 
pending resolution of a dispute. Such warrants shall be issued 
by the United States Treasury not later than 10 days after 
receipt of such moneys by the Treasury. Moneys placed in a 
suspense account which are determined to be payable to a State 
shall be made not later than the last business day of the month 
in which such dispute is resolved. Any such amount placed in a 
suspense account pending resolution shall bear interest until 
the dispute is resolved.
  [(b) Deduction for Administrative Costs.--In determining the 
amount of payments to the States under this section, beginning 
in fiscal year 2014 and for each year thereafter, the amount of 
such payments shall be reduced by 2 percent for any 
administrative or other costs incurred by the United States in 
carrying out the program authorized by this Act, and the amount 
of such reduction shall be deposited to miscellaneous receipts 
of the Treasury.]
  (b) Conveyance to States of Property Interest in State 
Share.--
          (1) In general.--Notwithstanding any other provision 
        of law, on request of a State and in lieu of any 
        payments to the State under subsection (a), the 
        Secretary of the Interior shall convey to the State all 
        right, title, and interest in and to the percentage 
        specified in that subsection for that State of all 
        amounts otherwise required to be paid into the Treasury 
        under that subsection from sales, bonuses, royalties 
        (including interest charges), and rentals for all 
        public land or deposits located in the State.
          (2) Amount.--Notwithstanding any other provision of 
        law, after a conveyance to a State under paragraph (1), 
        any person shall pay directly to the State any amount 
        owed by the person for which the right, title, and 
        interest has been conveyed to the State under this 
        subsection.
          (3) Notice.--The Secretary of the Interior shall 
        promptly provide to each holder of a lease of public 
        land to which subsection (a) applies that are located 
        in a State to which right, title, and interest is 
        conveyed under this subsection notice that--
                  (A) the Secretary of the Interior has 
                conveyed to the State all right, title, and 
                interest in and to the amounts referred to in 
                paragraph (1); and
                  (B) the leaseholder is required to pay the 
                amounts directly to the State.
  (c)(1) Notwithstanding the first sentence of subsection (a) 
and except as provided in subsection (b), any rentals received 
from leases in any State (other than the State of Alaska) on or 
after the date of enactment of this subsection shall be 
deposited in the Treasury, to be allocated in accordance with 
paragraph (2).
  (2) Of the amounts deposited in the Treasury under paragraph 
(1)--
          (A) 50 percent shall be paid by the Secretary of the 
        Treasury to the State within the boundaries of which 
        the leased land is located or the deposits were 
        derived; and
          (B) 50 percent shall be deposited in a special fund 
        in the Treasury, to be known as the ``BLM Permit 
        Processing Improvement Fund'' (referred to in this 
        subsection as the ``Fund'').
          (3) Use of fund.--
                  (A) In general.--The Fund shall be available 
                to the Secretary of the Interior for 
                expenditure, without further appropriation and 
                without fiscal year limitation, for the 
                coordination and processing of oil and gas use 
                authorizations on onshore Federal and Indian 
                trust mineral estate land.
                  (B) Accounts.--The Secretary shall divide the 
                Fund into--
                          (i) a Rental Account (referred to in 
                        this subsection as the ``Rental 
                        Account'') comprised of rental receipts 
                        collected under this section; and
                          (ii) a Fee Account (referred to in 
                        this subsection as the ``Fee Account'') 
                        comprised of fees collected under 
                        subsection (d).
          (4) Rental account.--
                  (A) In general.--The Secretary shall use the 
                Rental Account for--
                          (i) the coordination and processing 
                        of oil and gas use authorizations on 
                        onshore Federal and Indian trust 
                        mineral estate land under the 
                        jurisdiction of the Project offices 
                        identified under section 365(d) of the 
                        Energy Policy Act of 2005 (42 U.S.C. 
                        15924(d)); and
                          (ii) training programs for 
                        development of expertise related to 
                        coordinating and processing oil and gas 
                        use authorizations.
                  (B) Allocation.--In determining the 
                allocation of the Rental Account among Project 
                offices for a fiscal year, the Secretary shall 
                consider--
                          (i) the number of applications for 
                        permit to drill received in a Project 
                        office during the previous fiscal year;
                          (ii) the backlog of applications 
                        described in clause (i) in a Project 
                        office;
                          (iii) publicly available industry 
                        forecasts for development of oil and 
                        gas resources under the jurisdiction of 
                        a Project office; and
                          (iv) any opportunities for 
                        partnership with local industry 
                        organizations and educational 
                        institutions in developing training 
                        programs to facilitate the coordination 
                        and processing of oil and gas use 
                        authorizations.
          (5) Fee account.--
                  (A) In general.--The Secretary shall use the 
                Fee Account for the coordination and processing 
                of oil and gas use authorizations on onshore 
                Federal and Indian trust mineral estate land.
                  (B) Allocation.--The Secretary shall transfer 
                not less than 75 percent of the revenues 
                collected by an office for the processing of 
                applications for permits to the State office of 
                the State in which the fees were collected.
  (d), BLM Oil and Gas Permit Processing Fee.--
          (1) In general.--Notwithstanding any other provision 
        of law, for each of fiscal years 2016 through 2026, the 
        Secretary, acting through the Director of the Bureau of 
        Land Management, shall collect a fee for each new 
        application for a permit to drill that is submitted to 
        the Secretary.
          (2) Amount.--The amount of the fee shall be $9,500 
        for each new application, as indexed for United States 
        dollar inflation from October 1, 2015 (as measured by 
        the Consumer Price Index).
          (3) Use.--Of the fees collected under this subsection 
        for a fiscal year, the Secretary shall transfer--
                  (A) for each of fiscal years 2016 through 
                2019--
                          (i) 15 percent to the field offices 
                        that collected the fees and used to 
                        process protests, leases, and permits 
                        under this Act, subject to 
                        appropriation; and
                          (ii) 85 percent to the BLM Permit 
                        Processing Improvement Fund established 
                        under subsection (c)(2)(B) (referred to 
                        in this subsection as the ``Fund''); 
                        and
                  (B) for each of fiscal years 2020 through 
                2026, all of the fees to the Fund.
          (4) Additional costs.--During each of fiscal years of 
        2016 through 2026, the Secretary shall not implement a 
        rulemaking that would enable an increase in fees to 
        recover additional costs related to processing 
        applications for permits to drill.

           *       *       *       *       *       *       *

                              ----------                              

                 MINERAL LEASING ACT FOR ACQUIRED LANDS

           *       *       *       *       *       *       *
  Sec. 6. (a) [Subject to the provisions of section 35(b) of 
the Mineral Leasing Act (30 U.S.C. 191(b)), all] All receipts 
derived from leases issued under the authority of this Act 
shall be paid into the same funds or accounts in the Treasury 
and shall be distributed in the same manner as prescribed for 
other receipts from the lands affected by the lease, the 
intention of this provision being that this Act shall not 
affect the distribution of receipts pursuant to legislation 
applicable to such lands: Provided, however, That receipts from 
leases or permits for minerals in lands set apart for Indian 
use, including lands the jurisdiction of which has been 
transferred to the Department of the Interior by the Executive 
order for Indian use, shall be deposited in a special fund in 
the Treasury until final disposition thereof by the Congress. 
Notwithstanding the preceding provisions of this section, all 
receipts derived from leases on lands acquired for military or 
naval purposes, except the naval petroleum reserves and 
national oil shale reserves, shall be paid into the Treasury of 
the United States and disposed of in the same manner as 
provided under section 35 [of the Act of February 25, 1920 (41 
Stat. 450; 30 U.S.C. 191)] of the Mineral Leasing Act (30 
U.S.C. 191), in the case of receipts from sales, bonuses, 
royalties, and rentals of the public lands under that Act.
  (b) Notwithstanding any other provision of law, any payment 
to a State under this section shall be made by the Secretary of 
the Interior and shall be made not later than the last business 
day of the month following the month in which such moneys or 
associated reports are received by the Secretary of the 
Interior, whichever is later. The preceding sentence shall also 
apply to any payment to a State derived from a lease for 
mineral resources issued by the Secretary of the Interior under 
the last paragraph under the heading ``forest service.'' in the 
Act of March 4, 1917 (Chapter 179; 16 U.S.C. 520). The 
Secretary shall pay interest to a State on any amount not paid 
to the State within that time at the rate prescribed under 
section 111 of the Federal Oil and Gas Royalty Management Act 
of 1982 from the date payment was required to be made under 
this subsection until the date payment is made.

           *       *       *       *       *       *       *

                              ----------                              

                      GEOTHERMAL STEAM ACT OF 1970

           *       *       *       *       *       *       *
SEC. 20. DISPOSAL OF MONEYS FROM SALES, BONUSES, RENTALS, AND 
                    ROYALTIES.

  (a) In General.--Except with respect to lands in the State of 
Alaska, all monies received by the United States from sales, 
bonuses, rentals, and royalties under this Act shall be paid 
into the Treasury of the United States. Of amounts deposited 
under this subsection, subject to [the provisions of subsection 
(b) of section 35 of the Mineral Leasing Act (30 U.S.C. 191(b)) 
and] section 5(a)(2) of this Act--
          (1) 50 percent shall be paid to the State within the 
        boundaries of which the leased lands or geothermal 
        resources are or were located; and
          (2) 25 percent shall be paid to the county within the 
        boundaries of which the leased lands or geothermal 
        resources are or were located.
  (b) Use of Payments.--Amounts paid to a State or county under 
subsection (a) shall be used consistent with the terms of 
section 35 of the Mineral Leasing Act (30 U.S.C. 191).

           *       *       *       *       *       *       *

                              ----------                              

           FEDERAL OIL AND GAS ROYALTY MANAGEMENT ACT OF 1982

           *       *       *       *       *       *       *
TITLE II--STATES AND INDIAN TRIBES

           *       *       *       *       *       *       *

SEC. 205. DELEGATION OF ROYALTY COLLECTIONS AND RELATED ACTIVITIES.

          (a) Upon written request of any State, the Secretary 
        is authorized to delegate, in accordance with the 
        provisions of this section, all or part of the 
        authorities and responsibilities of the Secretary under 
        this Act to:
                  (1) conduct inspections, audits, and 
                investigations;
                  (2) receive and process production and 
                financial reports;
                  (3) correct erroneous report data;
                  (4) perform automated verification; and
                  (5) issue demands, subpoenas, and orders to 
                perform restructured accounting, for royalty 
                management enforcement purposes,
to any State with respect to all Federal land within the State.
  (b) After notice and opportunity for a hearing, the Secretary 
is authorized to delegate such authorities and responsibilities 
granted under this section as the State has requested, if the 
Secretary finds that--
          (1) it is likely that the State will provide adequate 
        resources to achieve the purposes of this Act;
          (2) the State has demonstrated that it will 
        effectively and faithfully administer the rules and 
        regulations of the Secretary under this Act in 
        accordance with the requirements of subsections (c) and 
        (d) of this section;
          (3) such delegation will not create an unreasonable 
        burden on any lessee;
          (4) the State agrees to adopt standardized reporting 
        procedures prescribed by the Secretary for royalty and 
        production accounting purposes, unless the State and 
        all affected parties (including the Secretary) 
        otherwise agree;
          (5) the State agrees to follow and adhere to 
        regulations and guidelines issued by the Secretary 
        pursuant to the mineral leasing laws regarding 
        valuation of production; and
          (6) where necessary for a State to have authority to 
        carry out and enforce a delegated activity, the State 
        agrees to enact such laws and promulgate such 
        regulations as are consistent with relevant Federal 
        laws and regulations
with respect to the Federal lands within the State.
  (c) After notice and opportunity for hearing, the Secretary 
shall issue a ruling as to the consistency of a State's 
proposal with the provisions of this section and regulations 
under subsection (d) within 90 days after submission of such 
proposal. In any unfavorable ruling, the Secretary shall set 
forth the reasons therefor and state whether the Secretary will 
agree to delegate to the State if the State meets the 
conditions set forth in such ruling.
  (d) After consultation with State authorities, the Secretary 
shall by rule promulgate, within 12 months after the date of 
enactment of this section, standards and regulations pertaining 
to the authorities and responsibilities to be delegated under 
subsection (a), including standards and regulations pertaining 
to--
          (1) audits to be performed;
          (2) records and accounts to be maintained;
          (3) reporting procedures to be required by States 
        under this section;
          (4) receipt and processing of production and 
        financial reports;
          (5) correction of erroneous report data;
          (6) performance of automated verification;
          (7) issuance of standards and guidelines in order to 
        avoid duplication of effort;
          (8) transmission of report data to the Secretary; and
          (9) issuance of demands, subpoenas, and orders to 
        perform restructured accounting, for royalty management 
        enforcement purposes.
Such standards and regulations shall be designed to provide 
reasonable assurance that a uniform and effective royalty 
management system will prevail among the States. The records 
and accounts under paragraph (2) shall be sufficient to allow 
the Secretary to monitor the performance of any State under 
this section.
  (e) If, after notice and opportunity for a hearing, the 
Secretary finds that any State to which any authority or 
responsibility of the Secretary has been delegated under this 
section is in violation of any requirement of this section or 
any rule thereunder, or that an affirmative finding by the 
Secretary under subsection (b) can no longer be made, the 
Secretary may revoke such delegation. If, after providing 
written notice to a delegated State and a reasonable 
opportunity to take corrective action requested by the 
Secretary, the Secretary determines that the State has failed 
to issue a demand or order to a Federal lessee within the 
State, that such failure may result in an underpayment of an 
obligation due the United States by such lessee, and that such 
underpayment may be uncollected without Secretarial 
intervention, the Secretary may issue such demand or order in 
accordance with the provisions of this Act prior to or absent 
the withdrawal of delegated authority.
  (f) Subject to appropriations, the Secretary shall compensate 
any State for those costs which may be necessary to carry out 
the delegated activities under this Section. Payment shall be 
made no less than every quarter during the fiscal year. 
Compensation to a State may not exceed the Secretary's 
reasonably anticipated expenditure for performance of such 
delegated activities by the Secretary. [Such costs shall be 
allocable for the purposes of section 35(b) of the Act entitled 
``An act to promote the mining of coal, phosphate, oil, oil 
shale, gas and sodium on the public domain'', approved February 
25, 1920 (commonly known as the Mineral Leasing Act) (30 U.S.C. 
191 (b)) to the administration and enforcement of laws 
providing for the leasing of any onshore lands or interests in 
land owned by the United States. Any further allocation of 
costs under section 35(b) made by the Secretary for oil and gas 
activities, other than those costs to compensate States for 
delegated activities under this Act, shall be only those costs 
associated with onshore oil and gas activities and may not 
include any duplication of costs allocated pursuant to the 
previous sentence. Nothing in this section affects the 
Secretary's authority to make allocations under section 35(b) 
for non-oil and gas mineral activities.] All moneys received 
from sales, bonuses, rentals, royalties, assessments and 
interest, including money claimed to be due and owing pursuant 
to a delegation under this section, shall be payable and paid 
to the Treasury of the United States.
  (g) Any action of the Secretary to approve or disapprove a 
proposal submitted by a State under this section shall be 
subject to judicial review in the United States district court 
which includes the capital of the State submitting the 
proposal.
  (h) Any State operating pursuant to a delegation existing on 
the date of enactment of this Act may continue to operate under 
the terms and conditions of the delegation, except to the 
extent that a revision of the existing agreement is adopted 
pursuant to this section.

           *       *       *       *       *       *       *

                            DISSENTING VIEWS

    H.R. 6771 would unfairly direct billions of dollars of 
offshore oil and gas revenue to just four states' on the Gulf 
of Mexico, instead of having that money benefit all the 
American people, as it does now. Although the sponsor of the 
legislation repeatedly attempts to draw a parallel with onshore 
drilling on federal lands--where states in which the drilling 
occurs receive roughly half of the revenue from mineral 
production--to insist that Louisiana and the other Gulf states 
are being treated unfairly, the situation is not analogous.
    The obvious difference is that onshore drilling on federal 
lands occurs within the borders of a state, whereas drilling on 
the Outer Continental Shelf is in federal waters that are 
outside state borders. In fact, Congress has already been quite 
generous with respect to coastal states. In multiple cases, the 
Supreme Court ruled that states had no ownership of the 
submerged lands, nor the resources contained in them, seaward 
of the low-water mark of the coast.\1\ Congress passed the 
Submerged Lands Act of 1953\2\ to give coastal states title to 
the first three miles seaward of the coast; since then, 
Louisiana has received the royalty and tax revenue from over 
1.7 billion barrels of oil that have been produced from its 
state waters.\3\ In 1978, Congress amended the Outer 
Continental Shelf Lands Act to provide coastal states with 27 
percent of revenues for production from the first three miles 
of federal waters,\4\ and in 2006 the Gulf of Mexico Energy 
Security Act (GOMESA) gave the states of Louisiana, Texas, 
Alabama, and Mississippi an additional 37.5 percent of revenues 
generated from new leases in the Gulf of Mexico, up to a 
maximum of $375 million per year.\5\ In Public Law 115-97, that 
maximum was increased to $487.5 million for Fiscal Years 2020 
and 2021.\6\ Due to GOMESA, the four Gulf states will receive 
considerably more funding from offshore oil and gas production 
in federal waters than other states where such production is 
occurring, such as California and Alaska.
---------------------------------------------------------------------------
    \1\U.S. v. California, 332 U.S. 19 (1947); U.S. v. Texas, 339 U.S. 
707 (1950); U.S. v. Louisiana, 339 U.S. 399 (1950).
    \2\43 U.S.C. 1301-1315.
    \3\Louisiana Department of Natural Resources, Louisiana Energy 
Facts Annual 2017, Table 3 (from http://www.dnr.louisiana.gov/assets/
TAD/OGTables/Table03.pdf, with data back to 1945).
    \4\43 U.S.C. 1337(g).
    \5\43 U.S.C. 1331 note.
    \6\Section 20002, P.L. 115-97.
---------------------------------------------------------------------------
    We support Louisiana's dedication of GOMESA revenues to 
coastal restoration and hurricane protection through its 
Coastal Master Plan. However, the State of Louisiana is only 
projected to receive approximately 27 percent of GOMESA funds. 
Coastal parishes and the other three Gulf of Mexico states, and 
their coastal counties, receive the remainder, and those 
entities may use that funding for a variety of uses, including 
``onshore infrastructure projects'' to ``mitigate the impact of 
outer Continental Shelf activities''--a very broad category 
that does not require the projects to mitigate ``direct 
impacts'' of those activities, despite the claims made by the 
sponsor during markup. Laudably, H.R. 6771 does require that at 
least 25 percent of all GOMESA revenues be used for ecosystem 
restoration, hurricane protection, or flood damage prevention 
projects, but that still allows for the bulk of the funding to 
be used on potentially less-worthy projects.
    As we have seen repeatedly in recent years, coastal 
hurricane protection is becoming increasingly critical as 
climate change drives an increase in the average strength of 
storms. But this need is not limited to four states in the Gulf 
of Mexico. Ranking Member Grijalva offered an amendment in 
markup that would have made all coastal states and territories 
eligible for ecosystem restoration and hurricane protection 
funding under GOMESA. Unfortunately, the amendment was opposed 
by the Majority.
    It is important to note that the Gulf Coast states, and 
their representatives in Congress, are among the most energetic 
champions of expanded drilling and deepening our dependence on 
fossil fuels. These same delegations are also among the most 
active opponents of any steps toward a cleaner energy economy. 
To cheerlead for increased greenhouse gas emissions, and then 
demand increased federal funding to deal with the harmful 
impacts of those emissions, is hypocritical at best.
    By raising the percentage of federal offshore oil and gas 
revenues that the Gulf states receive, and eliminating the cap 
on those revenues, H.R. 6771 would transfer billions of 
dollars, if not tens of billions, from the Treasury to just 
four states over the life of GOMESA. We believe this is not 
equitable and not warranted, and therefore oppose this 
legislation.

                                   Raul M. Grijalva,
                                           Ranking Member, Committee on 
                                               Natural Resources.
                                   Grace F. Napolitano.
                                   Alan Lowenthal.

                                  [all]
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