II

104TH CONGRESS

1ST SESSION S. 451

To encourage production of oil and gas within the United States by providing

tax incentives and easing regulatory burdens, and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 16 (legislative day, JANUARY 30), 1995

Mr. NICKLES (for himself, Mr. INHOFE, and Mr. DOLE) introduced the

following bill; which was read twice and referred to the Committee on Finance

A BILL

To encourage production of oil and gas within the United

States by providing tax incentives and easing regulatory

burdens, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Domestic Oil and Gas Production and Preservation Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—TAX INCENTIVES FOR OIL AND GAS PRODUCTION

Sec. 100. Amendment of 1986 Code.
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Subtitle A—Production Credit

Sec. 101. Tax credit for marginal and new domestic oil and natural gas production.

Subtitle B—Modifications to Percentage Depletion

Sec. 111. Elimination of net income limitation on percentage depletion for oil

and gas.

Sec. 112. All marginal production eligible for percentage depletion.

Sec. 113. Allocation of depletable quantities.

Sec. 114. Percentage depletion rate for marginal production.

Subtitle C—Other Provisions

Sec. 121. Election to expense geological and geophysical expenditures.

Sec. 122. Enhanced oil recovery credit.

Sec. 123. Election for optional 5-year writeoff of intangible drilling costs.

Sec. 124. Allocation of deductions in determining net income.

TITLE II—REGULATORY REFORM

Subtitle A—Oil Pollution Act Amendments

Sec. 201. Definition of responsible party.

Sec. 202. Amount of financial responsibility.

Subtitle B—Oil and Gas Royalties

Sec. 221. Period of limitation for collection of oil and gas royalties.

Sec. 222. Reduction of royalties.

Subtitle C—Private Property Rights

Sec. 231. Short title.

Sec. 232. Findings and purpose.

Sec. 233. Definitions.

Sec. 234. Protection of private property rights.

Sec. 235. Property owner consent for entry.

Sec. 236. Right to review and dispute data collected from private property.

Sec. 237. Right to an administrative appeal of wetlands decisions.

Sec. 238. Right to administrative appeal under the Endangered Species Act of

1973.

Sec. 239. Compensation for taking of private property.

Sec. 240. Private property owner participation in cooperative agreements.

Subtitle D—Risk Assessments

Sec. 251. Risk assessments.

TITLE III—REPEAL OF LIMITATIONS ON EXPORTS

Sec. 301. Repeal of limitations on exports.
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1 TITLE I—TAX INCENTIVES FOR

2 OIL AND GAS PRODUCTION

3 SEC. 100. AMENDMENT OF 1986 CODE.

4 Except as otherwise expressly provided, whenever in

5 this title an amendment or repeal is expressed in terms

6 of an amendment to, or repeal of, a section or other provi7 sion, the reference shall be considered to be made to a

8 section or other provision of the Internal Revenue Code

9 of 1986.

10 Subtitle A—Production Credit

11 SEC. 101. TAX CREDIT FOR MARGINAL AND NEW DOMESTIC

12 OIL AND NATURAL GAS PRODUCTION.

13 (a) CREDIT FOR PRODUCING OIL AND GAS FROM

14 NEW WELLS AND MARGINAL WELLS.—Subpart D of part

15 IV of subchapter A of chapter 1 (relating to business cred16 its) is amended by adding at the end the following new

17 section:

18 ‘‘SEC. 45C. CREDIT FOR PRODUCING OIL AND GAS FROM

19 NEW WELLS AND MARGINAL WELLS.

20 ‘‘(a) GENERAL RULE.—For purposes of section 38,

21 the new and marginal well production credit for any tax22 able year is an amount equal to the product of—

23 ‘‘(1) the credit amount, and
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1 ‘‘(2) the qualified crude oil production and the

2 qualified natural gas production which is attrib3 utable to the taxpayer.

4 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec5 tion—

6 ‘‘(1) IN GENERAL.—The credit amount is—

7 ‘‘(A) $3 per barrel of qualified crude oil

8 production, and

9 ‘‘(B) 50 cents per 1,000 cubic feet of

10 qualified natural gas production.

11 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN12 CREASE.—

13 ‘‘(A) IN GENERAL.—The $3 and 50 cents

14 amounts under paragraph (1) shall each be re15 duced (but not below zero) by an amount which

16 bears the same ratio to such amount (deter17 mined without regard to this paragraph) as—

18 ‘‘(i) the excess of the applicable ref19 erence price over $14 ($2.49 for qualified

20 natural gas production), bears to

21 ‘‘(ii) $6 ($1.06 for qualified natural

22 gas production).

23 The applicable reference price for a taxable

24 year is the reference price for the calendar year
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1 preceding the calendar year in which the tax2 able year begins.

3 ‘‘(B) INFLATION ADJUSTMENT.—In the

4 case of any taxable year beginning in a calendar

5 year after 1995, each of the dollar amounts

6 contained in subparagraph (A) shall be in7 creased to an amount equal to such dollar

8 amount multiplied by the inflation adjustment

9 factor for such calendar year (determined under

10 section 43(b)(3)(B) by substituting ‘1994’ for

11 ‘1990’).

12 ‘‘(C) REFERENCE PRICE.—For purposes of

13 this paragraph, the term ‘reference price’

14 means, with respect to any calendar year—

15 ‘‘(i) in the case of qualified crude oil

16 production, the reference price determined

17 under section 29(d)(2)(C), and

18 ‘‘(ii) in the case of qualified natural

19 gas production, the Secretary’s estimate of

20 the annual average wellhead price per

21 1,000 cubic feet for all domestic natural

22 gas.

23 ‘‘(c) QUALIFIED CRUDE OIL AND NATURAL GAS

24 PRODUCTION.—For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The terms ‘qualified crude

2 oil production’ and ‘qualified natural gas production’

3 mean domestic crude oil or natural gas which is pro4 duced from—

5 ‘‘(A) a marginal well, or

6 ‘‘(B) a new well.

7 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

8 WHICH MAY QUALIFY.—

9 ‘‘(A) IN GENERAL.—Crude oil or natural

10 gas produced during any taxable year from any

11 well shall not be treated as qualified crude oil

12 production or qualified natural gas production

13 to the extent production from the well during

14 the taxable year exceeds—

15 ‘‘(i) in the case of a marginal well,

16 1,095 barrels or barrel equivalents, or

17 ‘‘(ii) in the case of a new well—

18 ‘‘(I) 5,475 barrels in the case of

19 crude oil, or

20 ‘‘(II) 109,500,000 cubic feet in

21 the case of natural gas.

22 ‘‘(B) SPECIAL RULE WHERE WELL PRO23 DUCES BOTH.—In the case of a new well which

24 produces crude oil and natural gas, the limita25 tion for any taxable year applicable to natural
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1 gas produced from the well shall be reduced by

2 the barrel equivalents (expressed in cubic feet)

3 of the crude oil produced from the well during

4 the taxable year.

5 ‘‘(C) PROPORTIONATE REDUCTIONS.—

6 ‘‘(i) SHORT TAXABLE YEARS.—In the

7 case of a short taxable year, the limitations

8 under this paragraph shall be proportion9 ately reduced to reflect the ratio which the

10 number of days in the year bears to 365.

11 ‘‘(ii) WELLS NOT IN PRODUCTION EN12 TIRE YEAR.—In the case of a well which is

13 not capable of production during each day

14 of a taxable year, the limitations under

15 this paragraph applicable to the well shall

16 be proportionately reduced to reflect the

17 ratio which the number of days of produc18 tion bears to the total number of days in

19 the taxable year.

20 ‘‘(3) DEFINITIONS.—

21 ‘‘(A) MARGINAL WELL.—The term ‘mar22 ginal well’ means a domestic well (other than a

23 new well)—
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1 ‘‘(i) which during the taxable year has

2 marginal production (as defined in section

3 613A(c)(6)), or

4 ‘‘(ii) which, during the taxable year—

5 ‘‘(I) has average daily production

6 of not more than 25 barrel equiva7 lents, and

8 ‘‘(II) produces water at a rate

9 not less than 95 percent of total well

10 effluent.

11 ‘‘(B) NEW WELL.—The term ‘new well’

12 means a domestic well drilled after December

13 31, 1994.

14 ‘‘(C) CRUDE OIL, ETC.—The terms ‘crude

15 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have

16 the meanings given such terms by section

17 613A(e).

18 ‘‘(D) BARREL EQUIVALENT.—The term

19 ‘barrel equivalent’ means, with respect to natu20 ral gas, a conversion ratio of 6,000 cubic feet

21 of natural gas to 1 barrel of crude oil.

22 ‘‘(d) OTHER RULES.—

23 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX24 PAYER.—In the case of a marginal well or new well

25 in which there is more than one owner of operating
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1 interests in the well and the crude oil or natural gas

2 production exceeds the limitation under subsection

3 (c)(2), qualifying crude oil production or qualifying

4 natural gas production attributable to the taxpayer

5 shall be determined on the basis of the ratio which

6 taxpayer’s revenue interest in the production bears

7 to the aggregate of the revenue interests of all oper8 ating interest owners in the production.

9 ‘‘(2) OPERATING INTEREST REQUIRED.—Any

10 credit under this section may be claimed only on

11 production which is attributable to the holder of an

12 operating interest.

13 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

14 SOURCES EXCLUDED.—In the case of production

15 from a marginal well which is eligible for the credit

16 allowed under section 29 for the taxable year, no

17 credit shall be allowable under this section unless

18 the taxpayer elects not to claim the credit under sec19 tion 29 with respect to the well.’’

20 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec21 tion 38(b) is amended by striking ‘‘plus’’ at the end of

22 paragraph (10), by striking the period at the end of para23 graph (11) and inserting ‘‘, plus’’, and by adding at the

24 end the following new paragraph:
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1 ‘‘(12) the new and marginal oil and gas well

2 production credit determined under section 45C(a).’’

3 (c) CREDIT ALLOWED AGAINST REGULAR AND MINI4 MUM TAX.—

5 (1) IN GENERAL.—Subsection (c) of section 38

6 (relating to limitation based on amount of tax) is

7 amended by redesignating paragraph (3) as para8 graph (4) and by inserting after paragraph (2) the

9 following new paragraph:

10 ‘‘(3) SPECIAL RULES FOR OIL AND GAS PRO11 DUCTION CREDIT.—

12 ‘‘(A) IN GENERAL.—In the case of the oil

13 and gas production credit—

14 ‘‘(i) this section and section 39 shall

15 be applied separately with respect to the

16 credit, and

17 ‘‘(ii) in applying paragraph (1) to the

18 credit—

19 ‘‘(I) subparagraph (A) shall not

20 apply, and

21 ‘‘(II) the limitation under para22 graph (1) (as modified by subclause

23 (I)) shall be reduced by the credit al24 lowed under subsection (a) for the
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1 taxable year (other than the oil and

2 gas production credit).

3 ‘‘(B) OIL AND GAS PRODUCTION CRED4 IT.—For purposes of this subsection, the term

5 ‘oil and gas production credit’ means the credit

6 allowable under subsection (a) by reason of sec7 tion 45C(a).’’

8 (2) CONFORMING AMENDMENT.—Subclause (II)

9 of section 38(c)(2)(A)(ii) of such Code is amended

10 by inserting ‘‘or the oil and gas production credit’’

11 after ‘‘employment credit’’.

12 (d) COORDINATION WITH SECTION 29.—Section

13 29(a) is amended by striking ‘‘There’’ and inserting ‘‘At

14 the election of the taxpayer, there’’.

15 (e) CLERICAL AMENDMENT.—The table of sections

16 for subpart D of part IV of subchapter A of chapter 1

17 is amended by adding at the end the following item:

‘‘45C. Credit for producing oil and gas from new wells and marginal wells.’’

18 (f) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to production after the date of the

20 enactment of this Act.

21 Subtitle B—Modifications to

22 Percentage Depletion

23 SEC. 111. ELIMINATION OF NET INCOME LIMITATION ON

24 PERCENTAGE DEPLETION FOR OIL AND GAS.

25 (a) ELIMINATION.—
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1 (1) IN GENERAL.—Paragraph (1) of subsection

2 (d) of section 613A (relating to the limitation based

3 on taxable income for percentage depletion in the

4 case of oil and gas wells) is repealed.

5 (2) OTHER PRODUCTION.—The second sentence

6 of subsection (a) of section 613 of the Internal Reve7 nue Code of 1986 (relating to percentage depletion)

8 is amended to read as follows: ‘‘Except in the case

9 of oil and gas wells, such allowance shall not exceed

10 50 percent of the taxpayer’s taxable income from the

11 property (computed without allowance for deple12 tion).’’

13 (b) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to taxable years beginning after

15 December 31, 1994.

16 SEC. 112. ALL MARGINAL PRODUCTION ELIGIBLE FOR PER17 CENTAGE DEPLETION.

18 (a) IN GENERAL.—Paragraph (6) of section 613A(c)

19 (relating to marginal production) is amended to read as

20 follows:

21 ‘‘(6) SEPARATE APPLICATION TO MARGINAL

22 PRODUCTION.—

23 ‘‘(A) IN GENERAL.—Except as provided in

24 subsection (d)—
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1 ‘‘(i) the allowance for depletion under

2 section 611 with respect to all of a tax3 payer’s marginal production of domestic

4 crude oil and domestic natural gas shall be

5 computed in accordance with section 613,

6 except that, for purposes of section 613(a),

7 the applicable percentage shall be sub8 stituted for the percentage specified in sec9 tion 613(b), and

10 ‘‘(ii) such marginal production shall

11 not be taken into account under paragraph

12 (1), including for purposes of determining

13 the taxpayer’s average daily production of

14 domestic crude oil or domestic natural gas

15 eligible for application of paragraph (1).

16 ‘‘(B) APPLICABLE PERCENTAGE.—For

17 purposes of subparagraph (A), the term ‘appli18 cable percentage’ means the percentage (not

19 greater than 25 percent) equal to the sum of—

20 ‘‘(i) 15 percent, plus

21 ‘‘(ii) 1 percentage point for each

22 whole dollar by which $20 exceeds the ref23 erence price for crude oil for the calendar

24 year preceding the calendar year in which

25 the taxable year begins.
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1 For purposes of this paragraph, the term ‘ref2 erence price’ means, with respect to any cal3 endar year, the reference price determined for

4 such calendar year under section 29(d)(2)(C).

5 ‘‘(C) MARGINAL PRODUCTION.—The term

6 ‘marginal production’ means domestic crude oil

7 or domestic natural gas which is produced dur8 ing any taxable year from a property which—

9 ‘‘(i) is a stripper well property for the

10 calendar year in which the taxable year be11 gins, or

12 ‘‘(ii) is a property substantially all of

13 the production of which during such cal14 endar year is heavy oil.

15 ‘‘(D) STRIPPER WELL PROPERTY.—For

16 purposes of this paragraph, the term ‘stripper

17 well property’ means, with respect to any cal18 endar year, any property with respect to which

19 the amount determined by dividing—

20 ‘‘(i) the average daily production of

21 domestic crude oil and domestic natural

22 gas from producing wells on such property

23 for such calendar year, by

24 ‘‘(ii) the number of such wells,

25 is 15-barrel equivalents or less.
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1 ‘‘(E) HEAVY OIL.—For purposes of this

2 paragraph, the term ‘heavy oil’ means domestic

3 crude oil produced from any property if such

4 crude oil had a weighted average gravity of 20

5 degrees API or less (corrected to 60 degrees

6 Fahrenheit).’’

7 (b) CONFORMING AMENDMENT.—Paragraph (3) of

8 section 613A(c) (defining depletable oil quantity) is

9 amended to read as follows:

10 ‘‘(3) DEPLETABLE OIL QUANTITY.—For pur11 poses of paragraph (1), the taxpayer’s depletable oil

12 quantity is 1,000 barrels.’’

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to taxable years beginning after

15 December 31, 1994.

16 SEC. 113. ALLOCATION OF DEPLETABLE QUANTITIES.

17 (a) IN GENERAL.—Subparagraphs (A) and (B) of

18 section 613A(c)(7) (relating to special rules for production

19 in excess of depletable quantities) are each amended by

20 inserting ‘‘of such quantity allocated to the property by

21 the taxpayer, or, if the taxpayer elects not to make the

22 allocation, that amount’’ after ‘‘shall be that amount’’.

23 (b) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning after

25 December 31, 1994.
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1 SEC. 114. PERCENTAGE DEPLETION RATE FOR MARGINAL

2 PRODUCTION.

3 (a) IN GENERAL.—Subparagraph (B) of section

4 613A(c)(6), as amended by section 112(a), is amended to

5 read as follows:

6 ‘‘(B) APPLICABLE PERCENTAGE.—For

7 purposes of this paragraph, the term ‘applicable

8 percentage’ means the percentage (not greater

9 than 25 percent) equal to the sum of—

10 ‘‘(i) 15 percent, plus

11 ‘‘(ii) 1 percentage point for each

12 whole dollar by which $20 exceeds the ref13 erence price for crude oil for calendar year

14 1994 (determined under section

15 29(d)(2)(C)).’’

16 (b) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 December 31, 1994.

19 Subtitle C—Other Provisions

20 SEC. 121. ELECTION TO EXPENSE GEOLOGICAL AND GEO21 PHYSICAL EXPENDITURES.

22 (a) IN GENERAL.—Section 263 (relating to capital

23 expenditures) is amended by adding at the end the follow24 ing new subsection:

25 ‘‘(j) GEOLOGICAL AND GEOPHYSICAL EXPENDI26 TURES FOR DOMESTIC OIL AND GAS WELLS.—Notwith-
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1 standing subsection (a), a taxpayer may elect to treat geo2 logical and geophysical expenses incurred in connection

3 with the exploration for, or development of, oil or gas with4 in the United States (as defined in section 638) as ex5 penses which are not chargeable to capital account. Any

6 expenses so treated shall be allowed as a deduction in the

7 taxable year in which paid or incurred.’’

8 (b) CONFORMING AMENDMENT.—Section 263A(c)(3)

9 is amended by inserting ‘‘263(j),’’ after ‘‘263(i),’’.

10 (c) EFFECTIVE DATE.—

11 (1) IN GENERAL.—The amendments made by

12 this section shall apply to expenses paid or incurred

13 after the date of the enactment of this Act.

14 (2) TRANSITION RULE.—In the case of any ex15 penses described in section 263(j) of the Internal

16 Revenue Code of 1986 which were paid or incurred

17 on or before the date of the enactment of this Act,

18 the taxpayer may elect, at such time and in such

19 manner as the Secretary of the Treasury may pre20 scribe, to amortize the unamortized portion of such

21 expenses over the 36-month period beginning with

22 the month in which the date of the enactment of this

23 Act occurs. For purposes of this paragraph, the

24 unamortized portion of any expense is the amount
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1 remaining unamortized as of the first day of the 36-

2 month period.

3 SEC. 122. ENHANCED OIL RECOVERY CREDIT.

4 (a) EXPANSION OF PROJECTS ELIGIBLE FOR CRED5 IT.—

6 (1) IN GENERAL.—Clause (i) of section

7 43(c)(2)(A) (defining qualified enhanced oil recovery

8 project) is amended to read as follows:

9 ‘‘(i) which involves the application (in

10 accordance with sound engineering prin11 ciples) of 1 or more secondary or tertiary

12 recovery methods which can reasonably be

13 expected to result in more than an insig14 nificant increase in the amount of crude oil

15 or natural gas which ultimately will be re16 covered,’’.

17 (2) CONFORMING AMENDMENTS.—

18 (A) Subparagraph (C) of section 43(c)(1)

19 is amended to read as follows:

20 ‘‘(C) Any cost paid or incurred (whether or

21 not chargeable to capital account) for any

22 injectant or other costs which are used as part

23 of a qualified enhanced oil recovery project,

24 other than a recoverable hydrocarbon injectant

25 described in section 193(b)(2).’’
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1 (B) Section 43(c)(4) is amended to read as

2 follows:

3 ‘‘(4) SECONDARY AND TERTIARY RECOVERY

4 METHODS.—For purposes of paragraph (2), second5 ary and tertiary recovery methods shall include—

6 ‘‘(A) tertiary recovery methods described

7 in section 193(b)(3),

8 ‘‘(B) immiscible nonhydrocarbon gas dis9 placement, and

10 ‘‘(C) other secondary and tertiary recovery

11 methods certified in accordance with paragraph

12 (2)(B).’’

13 (b) CREDIT ALLOWABLE AGAINST MINIMUM TAX.—

14 (1) IN GENERAL.—Subsection (c) of section 38

15 (relating to limitation based on amount of tax), as

16 amended by section 101(c), is amended by redesig17 nating paragraph (4) as paragraph (5) and by in18 serting after paragraph (3) the following new para19 graph:

20 ‘‘(4) SPECIAL RULES FOR ENHANCED OIL RE21 COVERY CREDIT.—

22 ‘‘(A) IN GENERAL.—In the case of the en23 hanced oil recovery credit—
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1 ‘‘(i) this section and section 39 shall

2 be applied separately with respect to the

3 credit, and

4 ‘‘(ii) in applying paragraph (1) to the

5 credit—

6 ‘‘(I) subparagraph (A) shall not

7 apply, and

8 ‘‘(II) the limitation under para9 graph (1) (as modified by subclause

10 (I)) shall be reduced by the credit al11 lowed under subsection (a) for the

12 taxable year (other than the enhanced

13 oil recovery credit).

14 ‘‘(B) ENHANCED OIL RECOVERY CRED15 IT.—For purposes of this subsection, the term

16 ‘enhanced oil recovery credit’ means the credit

17 allowable under subsection (a) by reason of sec18 tion 43(a).’’

19 (2) CONFORMING AMENDMENTS.—

20 (A) Subclause (II) of section

21 38(c)(2)(A)(ii), as amended by section 101(c),

22 is amended by striking ‘‘or the oil and gas pro23 duction credit’’ and inserting ‘‘, the oil and gas

24 production credit, or the enhanced oil recovery

25 credit’’.
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1 (B) Subclause (II) of section

2 38(c)(3)(A)(ii) is amended by inserting ‘‘or the

3 enhanced oil recovery credit’’ after ‘‘production

4 credit’’.

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years beginning after

7 December 31, 1994.

8 SEC. 123. ELECTION FOR OPTIONAL 5-YEAR WRITEOFF OF

9 INTANGIBLE DRILLING COSTS.

10 (a) OPTIONAL ELECTION FOR MINIMUM TAX PUR11 POSES.—

12 (1) IN GENERAL.—Section 56(a) is amended by

13 adding at the end the following new paragraph:

14 ‘‘(9) INTANGIBLE DRILLING COSTS.—If the tax15 payer elects to have this paragraph apply, the tax16 payer may disregard, for purposes of computing the

17 taxpayer’s alternative minimum taxable income, an

18 election under section 59(e) with respect to any por19 tion of any qualified expenditure described in section

20 59(e)(2)(C).’’

21 (2) CONFORMING AMENDMENT.—Section 59(e)

22 is amended by adding at the end the following new

23 paragraph:
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1 ‘‘(7) EXCEPTION FOR INTANGIBLE DRILLING

2 COSTS.—

‘‘For election not to have this subsection apply in

computing alternative minimum taxable income, see

section 56(a)(9).’’

3 (b) TIME FOR MAKING ELECTIONS.—Subparagraph

4 (B) of section 59(e)(4) is amended to read as follows:

5 ‘‘(B) TIME FOR MAKING ELECTION.—

6 ‘‘(i) IN GENERAL.—An election under

7 this subsection may be made or revoked at

8 any time before the period for filing a

9 claim for credit or refund (determined

10 after any extension) expires.

11 ‘‘(ii) PERIOD OF LIMITATION FOR AS12 SESSMENT.—The period for assessing a

13 deficiency attributable to any election

14 under clause (i) (or any revocation thereof)

15 shall not expire before the date 1 year

16 after the date the Secretary is notified of

17 the election (or revocation).’’

18 (c) EFFECT OF ELECTION.—Paragraph (6) of section

19 59(e) is amended by adding at the end the following: ‘‘Any

20 deductions with respect to such portion shall not be treat21 ed as directly attributable to oil and gas properties for

22 purposes of section 57(a)(2)(C).’’
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1994.

4 SEC. 124. ALLOCATION OF DEDUCTIONS IN DETERMINING

5 NET INCOME.

6 (a) IN GENERAL.—Clause (ii) of section 57(a)(2)(C)

7 is amended by striking ‘‘allocable’’ and inserting ‘‘directly

8 attributable’’.

9 (b) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to taxable years beginning after

11 December 31, 1994.

12 TITLE II—REGULATORY REFORM

13 Subtitle A—Oil Pollution Act

14 Amendments

15 SEC. 201. DEFINITION OF RESPONSIBLE PARTY.

16 Section 1001(32)(C) of the Oil Pollution Act of 1990

17 (33 U.S.C. 2701(32)(C)) is amended—

18 (1) by striking ‘‘applicable State law or’’ and

19 inserting ‘‘applicable State law relating to exploring

20 for, drilling for, producing, or transporting oil on

21 submerged lands on the Outer Continental Shelf in

22 accordance with a license or permit issued for such

23 purpose, or under’’; and

24 (2) by striking ‘‘43 U.S.C. 1301–1356’’ and in25 serting ‘‘(43 U.S.C. 1301 et seq.),’’.
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1 SEC. 202. AMOUNT OF FINANCIAL RESPONSIBILITY.

2 Section 1016(c)(1) of the Oil Pollution Act of 1990

3 (33 U.S.C. 2716(c)(1)) is amended to read as follows:

4 ‘‘(1) IN GENERAL.—

5 ‘‘(A) EVIDENCE OF FINANCIAL RESPON6 SIBILITY REQUIRED.—Except as provided in

7 paragraph (2), each responsible party with re8 spect to an offshore facility described in section

9 1001(32)(C) located seaward of the United

10 States coastline that is—

11 ‘‘(i) used for drilling for, producing,

12 or processing oil; and

13 ‘‘(ii) has the capacity to transport,

14 store, transfer, or otherwise handle more

15 than 1,000 barrels of oil at any one time,

16 shall establish and maintain evidence of finan17 cial responsibility in the amount required under

18 subparagraph (B) or (C), as applicable.

19 ‘‘(B) AMOUNT REQUIRED GENERALLY.—

20 Except as provided in subparagraph (C), for

21 purposes of subparagraph (A) the amount of fi22 nancial responsibility required is $35,000,000.

23 ‘‘(C) GREATER AMOUNT.—If the President

24 determines that an amount of financial respon25 sibility greater than the amount required by

26 subparagraph (B) is appropriate for an offshore
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1 facility, based on an assessment of the risk

2 posed by the facility that includes consideration

3 of the relative operational, environmental,

4 human health, and other risks posed by the

5 quantity and quality of oil that is transported,

6 stored, transferred, or otherwise handled by the

7 facility, for purposes of subparagraph (A) the

8 amount of financial responsibility required shall

9 be some amount not exceeding $150,000,000,

10 determined by the Secretary on the basis of

11 clear and convincing evidence that the risks

12 posed justify the greater amount.

13 ‘‘(D) MULTIPLE FACILITIES.—In a case in

14 which a person is the responsible party for

15 more than one facility subject to this sub16 section, evidence of financial responsibility need

17 be established only to meet the maximum liabil18 ity applicable to the facility having the greatest

19 maximum liability.’’.

20 Subtitle B—Oil and Gas Royalties

21 SEC. 221. PERIOD OF LIMITATION FOR COLLECTION OF OIL

22 AND GAS ROYALTIES.

23 (a) IN GENERAL.—Except as provided in subsection

24 (b), no administrative proceeding or court action may be

25 commenced by the United States for recovery of a royalty
26

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1 due under an oil or gas lease entered into under the Act

2 entitled ‘‘An Act to promote the mining of coal, phosphate,

3 oil, oil shale, gas, and sodium on the public domain’’, ap4 proved February 25, 1920 (commonly known as the Min5 eral Lands Leasing Act) (30 U.S.C. 181 et seq.), the

6 Outer Continental Shelf Lands Act (43 U.S.C. 1331 et

7 seq.), or any other law, after the date that is 6 years after

8 the date on which payment of the royalty becomes due.

9 (b) FALSE OR FRAUDULENT STATEMENTS.—If the

10 lessee under a lease described in subsection (a) makes a

11 false or fraudulent statement to an officer or employee of

12 the United States with intent to evade, in whole or in part,

13 the payment of a royalty, payment of the royalty shall be

14 deemed to become due, for the purpose of subsection (a),

15 on the date on which the United States discovers that the

16 statement was false or fraudulent.

17 SEC. 222. REDUCTION OF ROYALTIES.

18 Notwithstanding any other law, the Secretary of the

19 Interior may reduce the amount of any royalty that will

20 be payable after the date of enactment of this Act under

21 an oil or gas lease entered into under the Act entitled ‘‘An

22 Act to promote the mining of coal, phosphate, oil, oil shale,

23 gas, and sodium on the public domain’’, approved Feb24 ruary 25, 1920 (commonly known as the Mineral Lands

25 Leasing Act) (30 U.S.C. 181 et seq.), the Outer Continen-
27

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1 tal Shelf Lands Act (43 U.S.C. 1331 et seq.), or any other

2 law.

3 Subtitle C—Private Property

4 Rights

5 SEC. 231. SHORT TITLE.

6 This subtitle may be cited as the ‘‘Private Property

7 Owners Bill of Rights’’.

8 SEC. 232. FINDINGS AND PURPOSE.

9 (a) FINDINGS.—Congress finds the following:

10 (1) Our democracy was founded on principles of

11 ownership, use, and control of private property.

12 These principles are embodied in the fifth amend13 ment to the Constitution, which prohibits the taking

14 of private property without the payment of just com15 pensation.

16 (2) A number of Federal environmental pro17 grams, specifically the Endangered Species Act of

18 1973 (16 U.S.C. 1531 et seq.) and section 404 of

19 the Federal Water Pollution Control Act (33 U.S.C.

20 1344), have been implemented by employees, agents,

21 and representatives of the Federal Government in a

22 manner that deprives private property owners of the

23 use and control of their property.

24 (3) As new Federal programs are proposed that

25 would limit and restrict the use of private property
28

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1 to provide habitat for plant and animal species, the

2 rights of private property owners must be recognized

3 and respected.

4 (4) Private property owners are being forced by

5 Federal policy to resort to extensive, lengthy, and

6 expensive litigation to protect certain basic civil

7 rights guaranteed by the Constitution.

8 (5) Since many private property owners do not

9 have the financial resources or the extensive commit10 ment of time to proceed in litigation against the

11 Federal Government, a clear Federal policy is need12 ed to guide and direct Federal agencies with respect

13 to the implementation by the agencies of environ14 mental laws that directly impact private property.

15 (6) While all private property owners should

16 and must abide by nuisance laws and should not use

17 their property in a manner that harms their neigh18 bors, these laws have traditionally been enacted, im19 plemented, and enforced at the State and local levels

20 where the laws are best able to protect the rights of

21 all private property owners and local citizens.

22 (7) While traditional pollution control laws are

23 intended to protect the health and physical welfare

24 of the general public, habitat protection programs in

25 effect on the date of enactment of this Act are in-
29

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1 tended to protect the welfare of plant and animal

2 species, while allowing recreational and aesthetic op3 portunities for the public.

4 (b) PURPOSE.—The purpose of this subtitle is to pro5 vide a consistent Federal policy to—

6 (1) encourage, support, and promote the private

7 ownership of property; and

8 (2) ensure that the constitutional and legal

9 rights of private property owners are protected by

10 the Federal Government and employees, agents, and

11 representatives of the Federal Government.

12 SEC. 233. DEFINITIONS.

13 As used in this subtitle:

14 (1) AGENCY HEAD.—The term ‘‘agency head’’

15 means the Secretary or Administrator with jurisdic16 tion or authority to take a final agency action under

17 1 or more of the applicable provisions of law.

18 (2) APPLICABLE PROVISIONS OF LAW.—The

19 term ‘‘applicable provisions of law’’ means the En20 dangered Species Act of 1973 (16 U.S.C. 1531 et

21 seq.) and section 404 of the Federal Water Pollution

22 Control Act (33 U.S.C. 1344).

23 (3) NON-FEDERAL PERSON.—The term ‘‘non24 Federal person’’ means a person other than an offi-
30

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1 cer, employee, agent, department, or instrumentality

2 of—

3 (A) the Federal Government; or

4 (B) a foreign government.

5 (4) PRIVATE PROPERTY OWNER.—The term

6 ‘‘private property owner’’ means a non-Federal per7 son (other than an officer, employee, agent, depart8 ment, or instrumentality of a State, municipality, or

9 political subdivision of a State, or a State, munici10 pality, or political subdivision of a State) that—

11 (A) owns property referred to in subpara12 graph (A) or (B) of paragraph (5); or

13 (B) holds property referred to in para14 graph (5)(C).

15 (5) PROPERTY.—The term ‘‘property’’ means—

16 (A) land;

17 (B) any interest in land; and

18 (C) any proprietary water right.

19 (6) QUALIFIED AGENCY ACTION.—The term

20 ‘‘qualified agency action’’ means an agency action

21 (as defined in section 551(13) of title 5, United

22 States Code) that is taken under 1 or more of the

23 applicable provisions of law.
31

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1 SEC. 234. PROTECTION OF PRIVATE PROPERTY RIGHTS.

2 (a) IN GENERAL.—In implementing and enforcing

3 the applicable provisions of law, each agency head shall—

4 (1) comply with applicable State and tribal gov5 ernment laws, including laws relating to private

6 property rights and privacy; and

7 (2) implement and enforce the applicable provi8 sions of law in a manner that has the least impact

9 on the constitutional and other legal rights of pri10 vate property owners.

11 (b) REGULATIONS.—Each agency head shall develop

12 and implement regulations for ensuring that the constitu13 tional and other legal rights of private property owners

14 are protected in any case in which the agency head makes,

15 or participates with other agencies in the making of, any

16 final decision that restricts the use of private property.

17 SEC. 235. PROPERTY OWNER CONSENT FOR ENTRY.

18 (a) IN GENERAL.—Subject to subsection (b), an

19 agency head may not enter privately owned property to

20 collect information regarding the property, unless the pri21 vate property owner has—

22 (1) consented in writing to the entry;

23 (2) after providing the consent, been provided

24 notice of the entry; and

25 (3) been notified that any raw data collected

26 from the property must be made available to the pri-
32

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1 vate property owner at no cost, if requested by the

2 private property owner.

3 (b) ENTRY FOR CONSENT OR NOTICE.—Subsection

4 (a) shall not prohibit entry onto property for the purpose

5 of obtaining consent or providing notice required under

6 subsection (a).

7 SEC. 236. RIGHT TO REVIEW AND DISPUTE DATA COL8 LECTED FROM PRIVATE PROPERTY.

9 An agency head may not use data that is collected

10 from privately owned property to implement or enforce

11 any of the applicable provisions of law, unless the agency

12 head has—

13 (1) provided to the private property owner—

14 (A) access to the information;

15 (B) a detailed description of the manner in

16 which the information was collected; and

17 (C) an opportunity to dispute the accuracy

18 of the information; and

19 (2) determined that the information is accurate,

20 if the private property owner disputes the accuracy

21 of the information pursuant to paragraph (1)(C).
33

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1 SEC. 237. RIGHT TO AN ADMINISTRATIVE APPEAL OF WET2 LANDS DECISIONS.

3 Section 404 of the Federal Water Pollution Control

4 Act (33 U.S.C. 1344) is amended by adding at the end

5 the following:

6 ‘‘(u) ADMINISTRATIVE APPEALS.—

7 ‘‘(1) IN GENERAL.—The Secretary or the Ad8 ministrator, after notice and opportunity for public

9 comment, shall issue rules to establish procedures to

10 provide private property owners, or authorized rep11 resentatives of the owners, an opportunity for an ad12 ministrative appeal of the following actions under

13 this section:

14 ‘‘(A) A determination of regulatory juris15 diction over a particular parcel of property.

16 ‘‘(B) The denial of a permit.

17 ‘‘(C) The terms and conditions of a permit.

18 ‘‘(D) The imposition of an administrative

19 penalty.

20 ‘‘(E) The imposition of an order requiring

21 the private property owner to restore or other22 wise alter the property.

23 ‘‘(2) DECISION.—The rules issued under para24 graph (1) shall provide that any administrative ap25 peal of an action described in paragraph (1) shall be

26 heard and decided by an official other than the offi-
34

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1 cial who took the action, and shall be conducted at

2 a location that is in the vicinity of the property in3 volved in the action.

4 ‘‘(3) DEFINITIONS.—In this subsection:

5 ‘‘(A) NON-FEDERAL PERSON.—The term

6 ‘non-Federal person’ means a person other than

7 an officer, employee, agent, department, or in8 strumentality of—

9 ‘‘(i) the Federal Government; or

10 ‘‘(ii) a foreign government.

11 ‘‘(B) PRIVATE PROPERTY OWNER.—The

12 term ‘private property owner’ means a non-Fed13 eral person (other than an officer, employee,

14 agent, department, or instrumentality of a

15 State, municipality, or political subdivision of a

16 State, or a State, municipality, or political sub17 division of a State) that—

18 ‘‘(i) owns property referred to in

19 clause (i) or (ii) of subparagraph (C); or

20 ‘‘(ii) holds property referred to in sub21 paragraph (C)(iii).

22 ‘‘(C) PROPERTY.—The term ‘property’

23 means—

24 ‘‘(i) land;

25 ‘‘(ii) any interest in land; and
35

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1 ‘‘(iii) any proprietary water right.’’.

2 SEC. 238. RIGHT TO ADMINISTRATIVE APPEAL UNDER THE

3 ENDANGERED SPECIES ACT OF 1973.

4 Section 11 of the Endangered Species Act of 1973

5 (16 U.S.C. 1540) is amended by adding at the end the

6 following:

7 ‘‘(i) ADMINISTRATIVE APPEALS.—

8 ‘‘(1) IN GENERAL.—The Secretary, after notice

9 and opportunity for public comment, shall issue

10 rules to establish procedures to provide private prop11 erty owners, or authorized representatives of the

12 owners, an opportunity for an administrative appeal

13 of the following actions under this Act:

14 ‘‘(A) A determination that a particular

15 parcel of property is critical habitat of a species

16 listed under section 4.

17 ‘‘(B) The denial of a permit for an inciden18 tal take.

19 ‘‘(C) The terms and conditions of a permit

20 for an incidental take.

21 ‘‘(D) The imposition of an administrative

22 penalty.

23 ‘‘(E) The imposition of an order prohibit24 ing or substantially limiting the use of the prop25 erty.
36

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1 ‘‘(2) DECISION.—The rules issued under para2 graph (1) shall provide that any administrative ap3 peal of an action described in paragraph (1) shall be

4 heard and decided by an official other than the offi5 cial who took the action, and shall be conducted at

6 a location that is in the vicinity of the parcel of

7 property involved in the action.

8 ‘‘(3) DEFINITIONS.—In this subsection:

9 ‘‘(A) NON-FEDERAL PERSON.—The term

10 ‘non-Federal person’ means a person other than

11 an officer, employee, agent, department, or in12 strumentality of—

13 ‘‘(i) the Federal Government; or

14 ‘‘(ii) a foreign government.

15 ‘‘(B) PRIVATE PROPERTY OWNER.—The

16 term ‘private property owner’ means a non-Fed17 eral person (other than an officer, employee,

18 agent, department, or instrumentality of a

19 State, municipality, or political subdivision of a

20 State, or a State, municipality, or political sub21 division of a State) that—

22 ‘‘(i) owns property referred to in

23 clause (i) or (ii) of subparagraph (C); or

24 ‘‘(ii) holds property referred to in sub25 paragraph (C)(iii).
37

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1 ‘‘(C) PROPERTY.—The term ‘property’

2 means—

3 ‘‘(i) land;

4 ‘‘(ii) any interest in land; and

5 ‘‘(iii) any proprietary water right.’’.

6 SEC. 239. COMPENSATION FOR TAKING OF PRIVATE PROP7 ERTY.

8 (a) ELIGIBILITY.—A private property owner that, as

9 a consequence of a final qualified agency action of an

10 agency head, is deprived of 33 percent or more of the fair

11 market value, or the economically viable use, of the af12 fected portion of the property of the owner, as determined

13 by a qualified appraisal expert, shall be entitled to receive

14 compensation in accordance with this section.

15 (b) DEADLINE.—Not later than 90 days after receipt

16 of a final decision of an agency head that deprives a pri17 vate property owner of the fair market value or viable use

18 of property for which compensation is required under sub19 section (a), the private property owner may submit in writ20 ing a request to the agency head for compensation in ac21 cordance with subsection (c).

22 (c) AGENCY HEAD’S OFFER.—Not later than 180

23 days after the receipt of a request for compensation under

24 subsection (b), the agency head shall stay the decision and

25 provide to the private property owner—
38

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1 (1) an offer to purchase the affected property

2 of the private property owner at the fair market

3 value that would apply if there were no use restric4 tions under the applicable provisions of law; and

5 (2) an offer to compensate the private property

6 owner for the difference between the fair market

7 value of the property without the restrictions and

8 the fair market value of the property with the re9 strictions.

10 (d) PRIVATE PROPERTY OWNER’S RESPONSE.—

11 (1) IN GENERAL.—A private property owner

12 shall have 60 days after the date of receipt of the

13 offers of the agency head under subsection (c) to ac14 cept 1 of the offers or to reject both offers.

15 (2) SUBMISSION TO ARBITRATION.—If the pri16 vate property owner rejects both offers, the private

17 property owner may submit the matter for arbitra18 tion to an arbitrator appointed by the agency head

19 from a list of arbitrators submitted to the agency

20 head by the American Arbitration Association. The

21 arbitration shall be conducted in accordance with the

22 real estate valuation arbitration rules of the associa23 tion. For the purposes of this section, an arbitration

24 shall be binding on the agency head and a private

25 property owner as to the amount, if any, of com-
39

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1 pensation owed to the private property owner and

2 whether for the purposes of this section the private

3 property owner has been deprived of the fair market

4 value or viable use of property for which compensa5 tion is required under subsection (a).

6 (e) JUDGMENT.—A qualified agency action of an

7 agency head that deprives a private property owner of

8 property as described in subsection (a), shall be deemed,

9 at the option of the private property owner, to be a taking

10 under the Constitution and a judgment against the United

11 States if the private property owner—

12 (1) accepts an offer of the agency head under

13 subsection (c); or

14 (2) submits to arbitration under subsection (d).

15 (f) PAYMENT.—An agency head shall pay a private

16 property owner any compensation required under the

17 terms of an offer of the agency head that is accepted by

18 the private property owner in accordance with subsection

19 (d), or under a decision of an arbitrator under that sub20 section, by not later than 60 days after the date of the

21 acceptance or the date of the issuance of the decision, re22 spectively.

23 (g) FORM OF PAYMENT.—Payment under this sec24 tion shall be in a form agreed to by the agency head and

25 the private property owner and may be in the form of—
40

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1 (1) payment of an amount that is equal to the

2 fair market value of the property on the day before

3 the date of the final qualified agency action with re4 spect to which the property or interest is acquired;

5 (2) payment of an amount that is equal to the

6 reduction in value of the property; or

7 (3) conveyance of real property or an interest in

8 real property that has a fair market value equal to

9 the amount referred to in paragraph (1) or (2).

10 (h) OTHER RIGHTS PRESERVED.—This section shall

11 not preempt, alter, or limit the availability of any remedy

12 for the taking of property or an interest in property that

13 is available under the Constitution or any other law.

14 (i) FINAL JUDGMENTS.—If a private property owner

15 unsuccessfully seeks compensation under this section and

16 thereafter files a claim for compensation under the fifth

17 amendment to the Constitution and is successful in ob18 taining a final judgment ordering compensation from the

19 United States Court of Federal Claims for the claim, the

20 agency head who made the final agency decision that re21 sults in the taking shall reimburse, from funds appro22 priated to the agency for the 2 fiscal years following pay23 ment of the compensation, the Treasury of the United

24 States for amounts appropriated under section 1304 of
41

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1 title 31, United States Code, to pay the judgment against

2 the United States.

3 SEC. 240. PRIVATE PROPERTY OWNER PARTICIPATION IN

4 COOPERATIVE AGREEMENTS.

5 Section 6(b) of the Endangered Species Act of 1973

6 (16 U.S.C. 1535(b)) is amended—

7 (1) by striking ‘‘The Secretary’’ and inserting

8 the following:

9 ‘‘(1) IN GENERAL.—The Secretary’’; and

10 (2) by adding at the end the following:

11 ‘‘(2) PARTICIPATION BY PRIVATE PROPERTY

12 OWNERS.—

13 ‘‘(A) IN GENERAL.—Notwithstanding any

14 other provision of this section, in any case in

15 which the Secretary enters into a management

16 agreement under paragraph (1) that establishes

17 restrictions on the use of property, the Sec18 retary shall notify all private property owners

19 or lessees of the property that is subject to the

20 management agreement and shall provide an

21 opportunity for each private property owner or

22 lessee to participate in the management agree23 ment.

24 ‘‘(B) DEFINITIONS.—In this paragraph:
42

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1 ‘‘(i) NON-FEDERAL PERSON.—The

2 term ‘non-Federal person’ means a person

3 other than an officer, employee, agent, de4 partment, or instrumentality of—

5 ‘‘(I) the Federal Government; or

6 ‘‘(II) a foreign government.

7 ‘‘(ii) PRIVATE PROPERTY OWNER.—

8 The term ‘private property owner’ means a

9 non-Federal person (other than an officer,

10 employee, agent, department, or instru11 mentality of a State, municipality, or polit12 ical subdivision of a State, or a State, mu13 nicipality, or political subdivision of a

14 State) that—

15 ‘‘(I) owns property referred to in

16 subclause (I) or (II) of clause (iii); or

17 ‘‘(II) holds property referred to

18 in clause (iii)(III).

19 ‘‘(iii) PROPERTY.—The term ‘prop20 erty’ means—

21 ‘‘(I) land;

22 ‘‘(II) any interest in land; and

23 ‘‘(III) any proprietary water

24 right.’’.
43

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1 Subtitle D—Risk Assessments

2 SEC. 251. RISK ASSESSMENTS.

3 (a) IN GENERAL.—Chapter 6 of title 5, United

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘SUBCHAPTER II—RISK ASSESSMENTS

7 ‘‘§ 621. Definitions

8 ‘‘In this subchapter—

9 ‘‘(1) AGENCY.—The term ‘agency’ has the

10 meaning stated in section 551(1).

11 ‘‘(2) BENEFIT.—The term ‘benefit’ means the

12 reasonably identifiable significant benefits, including

13 social and economic benefits, that are expected to re14 sult directly or indirectly from implementation of a

15 rule or an alternative to a rule.

16 ‘‘(3) BEST ESTIMATE.—The term ‘best esti17 mate’ means an estimate that, to the extent feasible

18 and scientifically appropriate, is based on one or

19 more of the following:

20 ‘‘(A) Central estimates of risk using the

21 most plausible assumptions.

22 ‘‘(B) An approach that combines multiple

23 estimates based on different scenarios and

24 weighs the probability of each scenario.
44

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1 ‘‘(C) Any other methodology designed to

2 provide the most unbiased representation of the

3 most plausible level of risk, given the current

4 scientific information available to the agency

5 concerned.

6 ‘‘(4) COST.—The term ‘cost’ means the reason7 ably identifiable significant costs and adverse effects,

8 including social and economic costs, reduced

9 consumer choice, substitution effects, and impeded

10 technological advancement, that are expected to re11 sult directly or indirectly from implementation of, or

12 compliance with, a rule or an alternative to a rule.

13 ‘‘(5) EMERGENCY.—The term ‘emergency’

14 means a clearly imminent and substantial

15 endangerment to public health, safety, or natural re16 sources.

17 ‘‘(6) MAJOR RULE.—The term ‘major rule’—

18 ‘‘(A) means—

19 ‘‘(i) a rule or a group of closely relat20 ed rules that the agency proposing the rule

21 or the President reasonably determines is

22 likely to have a gross annual effect on the

23 economy of $50,000,000 or more in rea24 sonably quantifiable increased direct and
45

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1 indirect costs, or has a significant impact

2 on a sector of the economy; or

3 ‘‘(ii) a rule or a group of closely relat4 ed rules that is otherwise designated a

5 major rule by the agency proposing the

6 rule, or by the President on the ground

7 that the rule is likely to result in—

8 ‘‘(I) a substantial increase in

9 costs or prices for wage earners, con10 sumers, individual industries, non11 profit organizations, Federal, State,

12 or local government agencies, or geo13 graphic regions; or

14 ‘‘(II) significant adverse effects

15 on competition, employment, invest16 ment, productivity, innovation, the en17 vironment, public health or safety, or

18 the ability of enterprises whose prin19 cipal places of business are in the

20 United States to compete in domestic

21 or export markets; but

22 ‘‘(B) does not include—

23 ‘‘(i) a rule that involves the internal

24 revenue laws of the United States; or
46

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1 ‘‘(ii) a rule that authorizes the intro2 duction into commerce, or recognizes the

3 marketable status, of a product.

4 ‘‘(7) PERSON.—The term ‘person’ has the

5 meaning stated in section 551(2).

6 ‘‘(8) PLAUSIBLE.—The term ‘plausible’ means

7 realistic and scientifically probable.

8 ‘‘(9) RISK ASSESSMENT.—The term ‘risk as9 sessment’ means—

10 ‘‘(A) the process of identifying hazards,

11 and quantifying (to the extent practicable) or

12 describing the degree of toxicity, exposure, or

13 other risk the hazards pose for exposed individ14 uals, populations, or resources; and

15 ‘‘(B) the document containing the expla16 nation of how the assessment process has been

17 applied to an individual substance, activity, or

18 condition.

19 ‘‘(10) RISK CHARACTERIZATION.—The term

20 ‘risk characterization’—

21 ‘‘(A) means the element of a risk assess22 ment that involves presentation of the degree of

23 risk to individuals and populations expected to

24 be protected, as presented in any regulatory

25 proposal or decision, report to Congress, or
47

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1 other document that is made available to the

2 public; and

3 ‘‘(B) includes discussions of uncertainties,

4 conflicting data, estimates, extrapolations, in5 ferences, and opinions.

6 ‘‘(11) RULE.—The term ‘rule’ has the meaning

7 stated in section 551(4).

8 ‘‘(12) SUBSTITUTION RISK.—The term ‘substi9 tution risk’ means a potential increased risk to

10 human health, safety, or the environment from a

11 regulatory option designed to decrease other risks.

12 ‘‘§ 622. Applicability

13 ‘‘(a) Except as provided in subsection (b), this sub14 chapter shall apply to all risk assessments and risk charac15 terizations prepared by, or on behalf of, or prepared by

16 others and adopted by, any agency in connection with

17 health, safety, and risk to natural resources.

18 ‘‘(b)(1) This subchapter shall not apply to risk as19 sessments or risk characterizations performed with respect

20 to—

21 ‘‘(A) a situation that the head of the agency

22 considers to be an emergency;

23 ‘‘(B) a rule that authorizes the introduction

24 into commerce, or recognizes the marketable status

25 of a product; or
48

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1 ‘‘(C) a screening analysis.

2 ‘‘(2)(A) An analysis shall not be treated as screening

3 analysis for the purposes of paragraph (1)(B) if the result

4 of the analysis is used—

5 ‘‘(i) as the basis for imposing a restriction on

6 a substance or activity; or

7 ‘‘(ii) to characterize a positive finding of risks

8 from a substance or activity in any agency document

9 or other communication made available to the public,

10 the media, or Congress.

11 ‘‘(B) Among the analyses that may be treated as a

12 screening analysis for the purposes of paragraph (1)(B)

13 are product registrations, reregistrations, tolerance set14 tings, and reviews of premanufacture notices and existing

15 chemicals under the Federal Insecticide, Fungicide and

16 Rodenticide Act (7 U.S.C. 136 et seq.) and the Toxic Sub17 stances Control Act (15 U.S.C. 2601 et seq.).

18 ‘‘(3) This subchapter shall not apply to any food,

19 drug, or other product label or to any risk characterization

20 appearing on any such label.

21 ‘‘§ 623. Rule of construction

22 ‘‘Nothing in this subchapter shall be construed to—

23 ‘‘(1) preclude the consideration of any data or

24 the calculation of any estimate to more fully describe
49

•S 451 IS

1 risk or provide examples of scientific uncertainty or

2 variability; or

3 ‘‘(2) require the disclosure of any trade secret

4 or other confidential information.

5 ‘‘§ 624. Requirement to prepare risk assessments

6 ‘‘(a) Except as provided in section 622, the head of

7 each agency shall prepare for each major rule relating to

8 human health, safety, or natural resources that is pro9 posed by the agency after the date of enactment of this

10 subchapter, is pending on the date of enactment of this

11 subchapter, or is subject to a granted petition for review

12 pursuant to section 627—

13 ‘‘(1) a risk assessment in accordance with this

14 subchapter;

15 ‘‘(2) for each such proposed or final rule, an as16 sessment, quantified to the extent feasible, of incre17 mental risk reduction or other benefits associated

18 with each significant regulatory alternative to the

19 rule or proposed rule; and

20 ‘‘(3) for each such proposed or final rule, quan21 tified to the extent feasible, a comparison of any

22 human health, safety, or natural resource risks ad23 dressed by the regulatory alternatives to other rel24 evant risks chosen by the head of the agency, includ25 ing at least 3 other risks regulated by the agency
50

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1 and to at least 3 other risks with which the public

2 is familiar.

3 ‘‘(b) A risk assessment prepared pursuant to this

4 subchapter shall be a component of and used to develop

5 the cost-benefit analysis required by subchapter II, and

6 shall be made part of the administrative record for judicial

7 review of any final agency action.

8 ‘‘§ 625. Principles for risk assessment

9 ‘‘(a)(1) The head of each agency shall apply the prin10 ciples set forth in subsection (b) when preparing any risk

11 assessment, whether or not required by section 624, to en12 sure that the risk assessment and all of its components—

13 ‘‘(A) distinguish scientific findings and best es14 timates of risk from other considerations;

15 ‘‘(B) are, to the maximum extent practicable

16 scientifically objective, unbiased and inclusive of all

17 relevant data; and

18 ‘‘(C) rely, to the extent available and prac19 ticable, on scientific findings.

20 ‘‘(2) Discussions or explanations required under this

21 section need not be repeated in each risk assessment docu22 ment as long as there is a reference to the relevant discus23 sion or explanation in another agency document.

24 ‘‘(b) The principles to be applied when preparing risk

25 assessments are as follows:
51

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1 ‘‘(1)(A) When assessing human health risks, a

2 risk assessment shall be based on the most reliable

3 laboratory, epidemiological, and exposure assessment

4 data that finds, or fails to find, a correlation be5 tween a health risk and a potential toxin or activity.

6 Other relevant data may be summarized.

7 ‘‘(B) When conflicts among such data appear to

8 exist, or when animal data are used as a basis to as9 sess human health, the assessment shall include dis10 cussion of possible reconciliation of conflicting infor11 mation, and, as appropriate, differences in study de12 signs, comparative physiology, routes of exposure,

13 bioavailability, pharmacokinetics, and any other rel14 evant factor, including the availability of raw data

15 for review. Greatest emphasis shall be placed on

16 data that indicates a biological basis of the resulting

17 harm in humans. Animal data shall be reviewed with

18 regard to relevancy to humans.

19 ‘‘(2) When a risk assessment involves selection

20 of any significant assumption, inference, or model,

21 the agency shall—

22 ‘‘(A) describe the plausible and alternative

23 assumptions, inferences, or models;

24 ‘‘(B) explain the basis for any choices

25 among such assumptions, inferences, or models;
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1 ‘‘(C) identify any policy or value judgments

2 involved in choosing from among such alter3 native assumptions, inferences, or models;

4 ‘‘(D) fully describe any model used in the

5 risk assessment and make explicit the assump6 tions incorporated in the model; and

7 ‘‘(E) indicate the extent to which any sig8 nificant model has been validated by, or con9 flicts with, empirical data.

10 ‘‘(3) A risk assessment shall be prepared at the

11 level of detail appropriate and practicable for rea12 soned decisionmaking on the matter involved, taking

13 into consideration the significance and complexity of

14 the decision and any need for expedition.

15 ‘‘§ 626. Principles for risk characterization and com16 munication

17 ‘‘In characterizing risk in any risk assessment docu18 ment, regulatory proposal or decision, report to Congress,

19 or other document that is made available to the public,

20 each agency characterizing the risk shall comply with each

21 of the following:

22 ‘‘(1)(A) The head of the agency shall describe

23 the populations or natural resources that are the

24 subject of the risk characterization.
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1 ‘‘(B) If a numerical estimate of risk is provided,

2 the head of the agency, to the extent feasible and

3 scientifically appropriate—

4 ‘‘(i) shall provide—

5 ‘‘(I) the best estimate or estimates for

6 the specific populations or natural re7 sources which are the subject of the char8 acterization (based on the information

9 available to the department, agency, or in10 strumentality) or, in lieu of a single best

11 estimate, an array of multiple estimates

12 (showing the distribution of estimates and

13 the best estimate) based on assumptions,

14 inferences, or models which are equally

15 plausible, given current scientific under16 standing;

17 ‘‘(II) a statement of the reasonable

18 range of scientific uncertainties; and

19 ‘‘(III) to the extent practicable and

20 appropriate, descriptions of the distribu21 tion and probability of risk estimates to re22 flect differences in exposure variability in

23 populations and uncertainties;

24 ‘‘(ii) in addition to a best estimate or esti25 mates, may present plausible upper-bound or
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1 conservative estimates, but only in conjunction

2 with equally plausible lower-bound estimates;

3 and

4 ‘‘(iii) shall ensure that, where a safety fac5 tor, as distinguished from inherent quantitative

6 or qualitative uncertainties, is used, such factor

7 shall be similar in degree to safety factors used

8 to ensure safety in human activities.

9 ‘‘(2) The head of the agency shall explain the

10 exposure scenarios used in any risk assessment, and,

11 to the extent feasible, provide a statement of the size

12 of the corresponding population or natural resource

13 at risk and the likelihood of such exposure scenarios.

14 ‘‘(3)(A) To the extent feasible, the head of the

15 agency shall provide a statement that places the na16 ture and magnitude of individual and population

17 risks to human health in context.

18 ‘‘(B) A statement under subparagraph (A)

19 shall—

20 ‘‘(i) include appropriate comparisons with

21 estimates of risks that are familiar to and rou22 tinely encountered by the general public as well

23 as other risks; and
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1 ‘‘(ii) identify relevant distinctions among

2 categories of risk and limitations to compari3 sons.

4 ‘‘(4) When an agency provides a risk assess5 ment or risk characterization for a proposed or final

6 regulatory action, such assessment or characteriza7 tion shall include a statement of any significant sub8 stitution risks to human health identified by the

9 agency or contained in information provided to the

10 agency by a commenter.

11 ‘‘(5) If—

12 ‘‘(A) an agency provides a public comment

13 period with respect to a risk assessment or reg14 ulation;

15 ‘‘(B) a commenter provides a risk assess16 ment, and a summary of results of such risk as17 sessment; and

18 ‘‘(C) such risk assessment is reasonably

19 consistent with the principles and the guidance

20 provided under this subtitle,

21 the agency shall present such summary in connec22 tion with the presentation of the agency’s risk as23 sessment or the regulation.
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1 ‘‘§ 627. Regulations; plan for assessing new informa2 tion

3 ‘‘(a)(1) Not later than 1 year after the date of enact4 ment of this subchapter, the President shall issue a final

5 regulation that has been subject to notice and comment

6 under section 553 for agencies to implement the risk as7 sessment and characterization principles set forth in sec8 tions 625 and 626 and shall provide a format for summa9 rizing risk assessment results.

10 ‘‘(2) The regulation under paragraph (1) shall be suf11 ficiently specific to ensure that risk assessments are con12 ducted consistently by the various agencies.

13 ‘‘(b)(1) Review of the risk assessment for any major

14 rule shall be conducted by the head of the agency on the

15 written petition of a person showing a reasonable likeli16 hood that—

17 ‘‘(A) the risk assessment is inconsistent with

18 the principles set forth in section 625 and 626;

19 ‘‘(B) the risk assessment produces substantially

20 different results;

21 ‘‘(C) the risk assessment is inconsistent with a

22 rule issued under subsection (a); or

23 ‘‘(D) the risk assessment does not take into ac24 count material significant new scientific data or sci25 entific understanding.
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1 ‘‘(2) Not later than 90 days after receiving a petition

2 under paragraph (1), the head of the agency shall respond

3 to the petition by agreeing or declining to review the risk

4 assessment referred to in the petition, and shall state the

5 basis for the decision.

6 ‘‘(3) If the head of the agency agrees to review the

7 petition, the agency shall complete its review within 180

8 days, unless the Director of the Office of Management and

9 Budget agrees in writing with an agency determination

10 that an extension is necessary in view of limitations on

11 agency resources.

12 ‘‘(4) Denial of a petition by the agency head shall

13 be subject to judicial review in accordance with chapter

14 7 of title 5, United States Code.

15 ‘‘(c) The regulations under this section shall be devel16 oped after notice and opportunity for public comment, and

17 after consultation with representatives of appropriate

18 State agencies and local governments, and such other de19 partments and agencies, offices, organizations, or persons

20 as may be advisable.

21 ‘‘(d) At least every 4 years, the President shall re22 view, and when appropriate, revise the regulations pub23 lished under this section.
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1 ‘‘§ 628. Decisional criteria

2 ‘‘For each major rule subject to this subchapter, the

3 head of the agency, subject to review by the President,

4 shall make a determination that—

5 ‘‘(1) the risk assessment under section 624 is

6 based on a scientific and unbiased evaluation, re7 flecting realistic exposure scenarios, of the risk ad8 dressed by the major rule and is supported by the

9 best available scientific data, as determined by a

10 peer review panel in accordance with section 640;

11 and

12 ‘‘(2) there is no alternative that is allowed by

13 the statute under which the major rule is promul14 gated that would provide greater net benefits or that

15 would achieve an equivalent reduction in risk in a

16 more cost-effective and flexible manner.

17 ‘‘§ 629. Regulatory priorities

18 ‘‘(a) In exercising authority under any laws protect19 ing human health and safety or the environment, the head

20 of an agency shall prioritize the use of the resources avail21 able under such laws to address the risks to human health,

22 safety, and natural resources that—

23 ‘‘(1) the agency determines are the most seri24 ous; and

25 ‘‘(2) can be addressed in a cost-effective man26 ner, with the goal of achieving the greatest overall
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1 net reduction in risks with the public and private

2 sector resources to be expended.

3 ‘‘(b) In identifying the sources of the most serious

4 risks under subsection (a), the head of the agency shall

5 consider, at a minimum—

6 ‘‘(1) the plausible likelihood and severity of the

7 effect; and

8 ‘‘(2) the plausible number and groups of indi9 viduals potentially affected.

10 ‘‘(c) The head of the agency shall incorporate the pri11 orities identified in subsection (a) into the budget, strate12 gic planning, and research activities of the agency by, in

13 the agency’s annual budget request to Congress—

14 ‘‘(1) identifying which risks the agency has de15 termined are the most serious and can be addressed

16 in a cost-effective manner under subsection (a), and

17 the basis for that determination;

18 ‘‘(2) explicitly identifying how the agency’s re19 quested funds will be used to address those risks;

20 ‘‘(3) identifying any statutory, regulatory, or

21 administrative obstacles to allocating agency re22 sources in accordance with the priorities established

23 under subsection (a); and

24 ‘‘(4) explicitly considering the requirements of

25 subsection (a) when preparing the agency’s regu-
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1 latory agenda or other strategic plan, and providing

2 an explanation of how the agenda or plan reflects

3 those requirements and the comparative risk analy4 sis when publishing any such agenda or strategic

5 plan.

6 ‘‘(d) In March of each year, the head of each agency

7 shall submit to Congress specific recommendations for re8 pealing or modifying laws that would better enable the

9 agency to prioritize its activities to address the risks to

10 human health, safety, and the environment that are the

11 most serious and can be addressed in a cost-effective man12 ner consistent with the requirements of subsection (a).

13 ‘‘§ 630. Establishment of program

14 ‘‘(a) The President shall develop a systematic pro15 gram for the peer review of work products covered by sub16 section (c), which program shall be used uniformly across

17 the agencies.

18 ‘‘(b) The program under subsection (a)—

19 ‘‘(1) shall provide for the creation of peer re20 view panels consisting of independent and external

21 experts who are broadly representative and balanced

22 to the extent feasible;

23 ‘‘(2) shall not exclude peer reviewers merely be24 cause they represent entities that may have a poten-
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1 tial interest in the outcome, if that interest is fully

2 disclosed;

3 ‘‘(3) shall exclude, to the maximum extent prac4 ticable, any peer reviewer who has been involved in

5 any previous analysis of the tests and evidence pre6 sented for certification by the peer review panel; and

7 ‘‘(4) shall provide for a timely completed peer

8 review, meeting agency deadlines, which contains a

9 balanced presentation of all considerations, including

10 minority reports and an agency response to all sig11 nificant peer review comments.

12 ‘‘(c) The peer review and the agency’s responses shall

13 be made available to the public and shall be made part

14 of the administrative record for purposes of judicial review

15 of any final agency action.

16 ‘‘(d) The proceedings of peer review panels under this

17 section shall be subject to the applicable provisions of the

18 Federal Advisory Committee Act (5 U.S.C. App.).’’.

19 (b) CONFORMING AMENDMENT AND TECHNICAL

20 CORRECTIONS.—

21 (1) CONFORMING AMENDMENTS.—Part I of

22 title 5, United States Code, is amended by striking

23 the chapter analysis for chapter 6 and inserting the

24 following:
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1 ‘‘CHAPTER 6—THE ANALYSIS OF

2 REGULATORY FUNCTIONS

‘‘SUBCHAPTER I—REGULATORY ANALYSIS

‘‘Sec.

‘‘601. Definitions.

‘‘602. Regulatory agenda.

‘‘603. Initial regulatory flexibility analysis.

‘‘604. Final regulatory flexibility analysis.

‘‘605. Avoidance of duplicative or unnecessary analyses.

‘‘606. Effect on other law.

‘‘607. Preparation of analyses.

‘‘608. Procedure for waiver or delay of completion.

‘‘609. Procedures for gathering comments.

‘‘610. Periodic review of rules.

‘‘611. Judicial review.

‘‘612. Reports and intervention rights.

‘‘SUBCHAPTER II—RISK ASSESSMENTS

‘‘621. Definitions.

‘‘622. Applicability.

‘‘623. Rule of construction.

‘‘624. Requirement to prepare risk assessments.

‘‘625. Principles for risk assessment.

‘‘626. Principles for risk characterization and communication.

‘‘627. Regulations; plan for assessing new information.

‘‘628. Decisional criteria.

‘‘629. Regulatory priorities.

‘‘640. Establishment of program.

3 ‘‘SUBCHAPTER I—REGULATORY ANALYSIS’’.

4 (2) TECHNICAL CORRECTIONS.—The part anal5 ysis for part I of title 5, United States Code, is

6 amended—

7 (A) in the item relating to chapter 5 by

8 striking ‘‘501’’ and inserting ‘‘500’’; and

9 (B) by inserting after the item relating to

10 chapter 5 the following:

‘‘6. The Analysis of Regulatory Functions ............................... 601’’.
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1 TITLE III—REPEAL OF

2 LIMITATIONS ON EXPORTS

3 SEC. 301. REPEAL OF LIMITATIONS ON EXPORTS.

4 (a) REPEAL.—Section 7 of the Export Administra5 tion Act of 1979 (50 U.S.C. App. 2406) is amended—

6 (1) in subsection (a), by adding at the end the

7 following new paragraph:

8 ‘‘(4) Notwithstanding paragraph (1) and any other

9 law, the President may not prohibit or curtail the export

10 of domestically produced crude oil other than crude oil

11 produced from the naval petroleum reserves (as defined

12 in section 7420 of title 10, United States Code).’’; and

13 (2) by striking subsection (d) and inserting the

14 following:

15 ‘‘(d) [Reserved].’’.

16 (b) CONFORMING AMENDMENTS.—

17 (1) MINERAL LANDS LEASING ACT.—Section 28

18 of the Act entitled ‘‘An Act to promote the mining

19 of coal, phosphate, oil, oil shale, gas, and sodium or

20 the public domain’’, approved February 25, 1920

21 (30 U.S.C. 185) is amended by striking subsection

22 (u) and inserting the following:

23 ‘‘(u) [Reserved].’’.
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1 (2) ENERGY POLICY AND CONSERVATION

2 ACT.—Section 103 of the Energy Policy and Con3 servation Act (42 U.S.C. 6212) is amended—

4 (A) in subsection (a) by inserting ‘‘(not in5 cluding crude oil)’’ after ‘‘feedstocks’’; and

6 (B) in subsection (b)—

7 (i) in paragraph (1)—

8 (I) by striking ‘‘crude oil and’’;

9 and

10 (II) by striking ‘‘crude oil or’’;

11 and

12 (ii) in paragraph (2) by striking

13 ‘‘crude oil or’’.

14 (3) OUTER CONTINENTAL SHELF LANDS ACT.—

15 Section 28 of the Outer Continental Shelf Lands Act

16 (43 U.S.C. 1354) is repealed.

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