109TH CONGRESS

2D SESSION S. 3711

AN ACT

To enhance the energy independence and security of the

United States by providing for exploration, development,

and production activities for mineral resources in the

Gulf of Mexico, 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.

4 This Act may be cited as the ‘‘Gulf of Mexico Energy

5 Security Act of 2006’’.
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1 SEC. 2. DEFINITIONS.

2 In this Act:

3 (1) 181 AREA.—The term ‘‘181 Area’’ means

4 the area identified in map 15, page 58, of the Pro5 posed Final Outer Continental Shelf Oil and Gas

6 Leasing Program for 1997–2002, dated August

7 1996, of the Minerals Management Service, available

8 in the Office of the Director of the Minerals Man9 agement Service, excluding the area offered in OCS

10 Lease Sale 181, held on December 5, 2001.

11 (2) 181 SOUTH AREA.—The term ‘‘181 South

12 Area’’ means any area—

13 (A) located—

14 (i) south of the 181 Area;

15 (ii) west of the Military Mission Line;

16 and

17 (iii) in the Central Planning Area;

18 (B) excluded from the Proposed Final

19 Outer Continental Shelf Oil and Gas Leasing

20 Program for 1997–2002, dated August 1996, of

21 the Minerals Management Service; and

22 (C) included in the areas considered for oil

23 and gas leasing, as identified in map 8, page 37

24 of the document entitled ‘‘Draft Proposed Pro25 gram Outer Continental Shelf Oil and Gas
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1 Leasing Program 2007–2012’’, dated February

2 2006.

3 (3) BONUS OR ROYALTY CREDIT.—The term

4 ‘‘bonus or royalty credit’’ means a legal instrument

5 or other written documentation, or an entry in an

6 account managed by the Secretary, that may be used

7 in lieu of any other monetary payment for—

8 (A) a bonus bid for a lease on the outer

9 Continental Shelf; or

10 (B) a royalty due on oil or gas production

11 from any lease located on the outer Continental

12 Shelf.

13 (4) CENTRAL PLANNING AREA.—The term

14 ‘‘Central Planning Area’’ means the Central Gulf of

15 Mexico Planning Area of the outer Continental

16 Shelf, as designated in the document entitled ‘‘Draft

17 Proposed Program Outer Continental Shelf Oil and

18 Gas Leasing Program 2007–2012’’, dated February

19 2006.

20 (5) EASTERN PLANNING AREA.—The term

21 ‘‘Eastern Planning Area’’ means the Eastern Gulf of

22 Mexico Planning Area of the outer Continental

23 Shelf, as designated in the document entitled ‘‘Draft

24 Proposed Program Outer Continental Shelf Oil and
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1 Gas Leasing Program 2007–2012’’, dated February

2 2006.

3 (6) 2002–2007 PLANNING AREA.—The term

4 ‘‘2002–2007 planning area’’ means any area—

5 (A) located in—

6 (i) the Eastern Planning Area, as des7 ignated in the Proposed Final Outer Conti8 nental Shelf Oil and Gas Leasing Program

9 2002–2007, dated April 2002, of the Min10 erals Management Service;

11 (ii) the Central Planning Area, as des12 ignated in the Proposed Final Outer Conti13 nental Shelf Oil and Gas Leasing Program

14 2002–2007, dated April 2002, of the Min15 erals Management Service; or

16 (iii) the Western Planning Area, as

17 designated in the Proposed Final Outer

18 Continental Shelf Oil and Gas Leasing

19 Program 2002–2007, dated April 2002, of

20 the Minerals Management Service; and

21 (B) not located in—

22 (i) an area in which no funds may be

23 expended to conduct offshore preleasing,

24 leasing, and related activities under sec25 tions 104 through 106 of the Department
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1 of the Interior, Environment, and Related

2 Agencies Appropriations Act, 2006 (Public

3 Law 109–54; 119 Stat. 521) (as in effect

4 on August 2, 2005);

5 (ii) an area withdrawn from leasing

6 under the ‘‘Memorandum on Withdrawal

7 of Certain Areas of the United States

8 Outer Continental Shelf from Leasing Dis9 position’’, from 34 Weekly Comp. Pres.

10 Doc. 1111, dated June 12, 1998; or

11 (iii) the 181 Area or 181 South Area.

12 (7) GULF PRODUCING STATE.—The term ‘‘Gulf

13 producing State’’ means each of the States of Ala14 bama, Louisiana, Mississippi, and Texas.

15 (8) MILITARY MISSION LINE.—The term ‘‘Mili16 tary Mission Line’’ means the north-south line at

17 86°41′ W. longitude.

18 (9) QUALIFIED OUTER CONTINENTAL SHELF

19 REVENUES.—

20 (A) IN GENERAL.—The term ‘‘qualified

21 outer Continental Shelf revenues’’ means—

22 (i) in the case of each of fiscal years

23 2007 through 2016, all rentals, royalties,

24 bonus bids, and other sums due and pay25 able to the United States from leases en-
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1 tered into on or after the date of enact2 ment of this Act for—

3 (I) areas in the 181 Area located

4 in the Eastern Planning Area; and

5 (II) the 181 South Area; and

6 (ii) in the case of fiscal year 2017 and

7 each fiscal year thereafter, all rentals, roy8 alties, bonus bids, and other sums due and

9 payable to the United States received on or

10 after October 1, 2016, from leases entered

11 into on or after the date of enactment of

12 this Act for—

13 (I) the 181 Area;

14 (II) the 181 South Area; and

15 (III) the 2002–2007 planning

16 area.

17 (B) EXCLUSIONS.—The term ‘‘qualified

18 outer Continental Shelf revenues’’ does not

19 include—

20 (i) revenues from the forfeiture of a

21 bond or other surety securing obligations

22 other than royalties, civil penalties, or roy23 alties taken by the Secretary in-kind and

24 not sold; or
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1 (ii) revenues generated from leases

2 subject to section 8(g) of the Outer Conti3 nental Shelf Lands Act (43 U.S.C.

4 1337(g)).

5 (10) COASTAL POLITICAL SUBDIVISION.—The

6 term ‘‘coastal political subdivision’’ means a political

7 subdivision of a Gulf producing State any part of

8 which political subdivision is—

9 (A) within the coastal zone (as defined in

10 section 304 of the Coastal Zone Management

11 Act of 1972 (16 U.S.C. 1453)) of the Gulf pro12 ducing State as of the date of enactment of this

13 Act; and

14 (B) not more than 200 nautical miles from

15 the geographic center of any leased tract.

16 (11) SECRETARY.—The term ‘‘Secretary’’

17 means the Secretary of the Interior.

18 SEC. 3. OFFSHORE OIL AND GAS LEASING IN 181 AREA AND

19 181 SOUTH AREA OF GULF OF MEXICO.

20 (a) 181 AREA LEASE SALE.—Except as provided in

21 section 4, the Secretary shall offer the 181 Area for oil

22 and gas leasing pursuant to the Outer Continental Shelf

23 Lands Act (43 U.S.C. 1331 et seq.) as soon as practicable,

24 but not later than 1 year, after the date of enactment of

25 this Act.
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1 (b) 181 SOUTH AREA LEASE SALE.—The Secretary

2 shall offer the 181 South Area for oil and gas leasing pur3 suant to the Outer Continental Shelf Lands Act (43

4 U.S.C. 1331 et seq.) as soon as practicable after the date

5 of enactment of this Act.

6 (c) LEASING PROGRAM.—The 181 Area and 181

7 South Area shall be offered for lease under this section

8 notwithstanding the omission of the 181 Area or the 181

9 South Area from any outer Continental Shelf leasing pro10 gram under section 18 of the Outer Continental Shelf

11 Lands Act (43 U.S.C. 1344).

12 (d) CONFORMING AMENDMENT.—Section 105 of the

13 Department of the Interior, Environment, and Related

14 Agencies Appropriations Act, 2006 (Public Law 109–54;

15 119 Stat. 522) is amended by inserting ‘‘(other than the

16 181 South Area (as defined in section 2 of the Gulf of

17 Mexico Energy Security Act of 2006))’’ after ‘‘lands lo18 cated outside Sale 181’’.

19 SEC. 4. MORATORIUM ON OIL AND GAS LEASING IN CER20 TAIN AREAS OF GULF OF MEXICO.

21 (a) IN GENERAL.—Effective during the period begin22 ning on the date of enactment of this Act and ending on

23 June 30, 2022, the Secretary shall not offer for leasing,

24 preleasing, or any related activity—
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1 (1) any area east of the Military Mission Line

2 in the Gulf of Mexico;

3 (2) any area in the Eastern Planning Area that

4 is within 125 miles of the coastline of the State of

5 Florida; or

6 (3) any area in the Central Planning Area that

7 is—

8 (A) within—

9 (i) the 181 Area; and

10 (ii) 100 miles of the coastline of the

11 State of Florida; or

12 (B)(i) outside the 181 Area;

13 (ii) east of the western edge of the Pensa14 cola Official Protraction Diagram (UTM X co15 ordinate 1,393,920 (NAD 27 feet)); and

16 (iii) within 100 miles of the coastline of

17 the State of Florida.

18 (b) MILITARY MISSION LINE.—Notwithstanding sub19 section (a), the United States reserves the right to des20 ignate by and through the Secretary of Defense, with the

21 approval of the President, national defense areas on the

22 outer Continental Shelf pursuant to section 12(d) of the

23 Outer Continental Shelf Lands Act (43 U.S.C. 1341(d)).

24 (c) EXCHANGE OF CERTAIN LEASES.—
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1 (1) IN GENERAL.—The Secretary shall permit

2 any person that, as of the date of enactment of this

3 Act, has entered into an oil or gas lease with the

4 Secretary in any area described in paragraph (2) or

5 (3) of subsection (a) to exchange the lease for a

6 bonus or royalty credit that may only be used in the

7 Gulf of Mexico.

8 (2) VALUATION OF EXISTING LEASE.—The

9 amount of the bonus or royalty credit for a lease to

10 be exchanged shall be equal to—

11 (A) the amount of the bonus bid; and

12 (B) any rental paid for the lease as of the

13 date the lessee notifies the Secretary of the de14 cision to exchange the lease.

15 (3) REVENUE DISTRIBUTION.—No bonus or

16 royalty credit may be used under this subsection in

17 lieu of any payment due under, or to acquire any in18 terest in, a lease subject to the revenue distribution

19 provisions of section 8(g) of the Outer Continental

20 Shelf Lands Act (43 U.S.C. 1337(g)).

21 (4) REGULATIONS.—Not later than 1 year after

22 the date of enactment of this Act, the Secretary

23 shall promulgate regulations that shall provide a

24 process for—
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1 (A) notification to the Secretary of a deci2 sion to exchange an eligible lease;

3 (B) issuance of bonus or royalty credits in

4 exchange for relinquishment of the existing

5 lease;

6 (C) transfer of the bonus or royalty credit

7 to any other person; and

8 (D) determining the proper allocation of

9 bonus or royalty credits to each lease interest

10 owner.

11 SEC. 5. DISPOSITION OF QUALIFIED OUTER CONTINENTAL

12 SHELF REVENUES FROM 181 AREA, 181 SOUTH

13 AREA, AND 2002–2007 PLANNING AREAS OF

14 GULF OF MEXICO.

15 (a) IN GENERAL.—Notwithstanding section 9 of the

16 Outer Continental Shelf Lands Act (43 U.S.C. 1338) and

17 subject to the other provisions of this section, for each ap18 plicable fiscal year, the Secretary of the Treasury shall

19 deposit—

20 (1) 50 percent of qualified outer Continental

21 Shelf revenues in the general fund of the Treasury;

22 and

23 (2) 50 percent of qualified outer Continental

24 Shelf revenues in a special account in the Treasury

25 from which the Secretary shall disburse—
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1 (A) 75 percent to Gulf producing States in

2 accordance with subsection (b); and

3 (B) 25 percent to provide financial assist4 ance to States in accordance with section 6 of

5 the Land and Water Conservation Fund Act of

6 1965 (16 U.S.C. 460l–8), which shall be consid7 ered income to the Land and Water Conserva8 tion Fund for purposes of section 2 of that Act

9 (16 U.S.C. 460l–5).

10 (b) ALLOCATION AMONG GULF PRODUCING STATES

11 AND COASTAL POLITICAL SUBDIVISIONS.—

12 (1) ALLOCATION AMONG GULF PRODUCING

13 STATES FOR FISCAL YEARS 2007 THROUGH 2016.—

14 (A) IN GENERAL.—Subject to subpara15 graph (B), effective for each of fiscal years

16 2007 through 2016, the amount made available

17 under subsection (a)(2)(A) shall be allocated to

18 each Gulf producing State in amounts (based

19 on a formula established by the Secretary by

20 regulation) that are inversely proportional to

21 the respective distances between the point on

22 the coastline of each Gulf producing State that

23 is closest to the geographic center of the appli24 cable leased tract and the geographic center of

25 the leased tract.
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1 (B) MINIMUM ALLOCATION.—The amount

2 allocated to a Gulf producing State each fiscal

3 year under subparagraph (A) shall be at least

4 10 percent of the amounts available under sub5 section (a)(2)(A).

6 (2) ALLOCATION AMONG GULF PRODUCING

7 STATES FOR FISCAL YEAR 2017 AND THEREAFTER.—

8 (A) IN GENERAL.—Subject to subpara9 graphs (B) and (C), effective for fiscal year

10 2017 and each fiscal year thereafter—

11 (i) the amount made available under

12 subsection (a)(2)(A) from any lease en13 tered into within the 181 Area or the 181

14 South Area shall be allocated to each Gulf

15 producing State in amounts (based on a

16 formula established by the Secretary by

17 regulation) that are inversely proportional

18 to the respective distances between the

19 point on the coastline of each Gulf pro20 ducing State that is closest to the geo21 graphic center of the applicable leased

22 tract and the geographic center of the

23 leased tract; and

24 (ii) the amount made available under

25 subsection (a)(2)(A) from any lease en-
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1 tered into within the 2002–2007 planning

2 area shall be allocated to each Gulf pro3 ducing State in amounts that are inversely

4 proportional to the respective distances be5 tween the point on the coastline of each

6 Gulf producing State that is closest to the

7 geographic center of each historical lease

8 site and the geographic center of the his9 torical lease site, as determined by the Sec10 retary.

11 (B) MINIMUM ALLOCATION.—The amount

12 allocated to a Gulf producing State each fiscal

13 year under subparagraph (A) shall be at least

14 10 percent of the amounts available under sub15 section (a)(2)(A).

16 (C) HISTORICAL LEASE SITES.—

17 (i) IN GENERAL.—Subject to clause

18 (ii), for purposes of subparagraph (A)(ii),

19 the historical lease sites in the 2002–2007

20 planning area shall include all leases en21 tered into by the Secretary for an area in

22 the Gulf of Mexico during the period be23 ginning on October 1, 1982 (or an earlier

24 date if practicable, as determined by the
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1 Secretary), and ending on December 31,

2 2015.

3 (ii) ADJUSTMENT.—Effective January

4 1, 2022, and every 5 years thereafter, the

5 ending date described in clause (i) shall be

6 extended for an additional 5 calendar

7 years.

8 (3) PAYMENTS TO COASTAL POLITICAL SUB9 DIVISIONS.—

10 (A) IN GENERAL.—The Secretary shall pay

11 20 percent of the allocable share of each Gulf

12 producing State, as determined under para13 graphs (1) and (2), to the coastal political sub14 divisions of the Gulf producing State.

15 (B) ALLOCATION.—The amount paid by

16 the Secretary to coastal political subdivisions

17 shall be allocated to each coastal political sub18 division in accordance with subparagraphs (B),

19 (C), and (E) of section 31(b)(4) of the Outer

20 Continental Shelf Lands Act (43 U.S.C.

21 1356a(b)(4)).

22 (c) TIMING.—The amounts required to be deposited

23 under paragraph (2) of subsection (a) for the applicable

24 fiscal year shall be made available in accordance with that
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1 paragraph during the fiscal year immediately following the

2 applicable fiscal year.

3 (d) AUTHORIZED USES.—

4 (1) IN GENERAL.—Subject to paragraph (2),

5 each Gulf producing State and coastal political sub6 division shall use all amounts received under sub7 section (b) in accordance with all applicable Federal

8 and State laws, only for 1 or more of the following

9 purposes:

10 (A) Projects and activities for the purposes

11 of coastal protection, including conservation,

12 coastal restoration, hurricane protection, and

13 infrastructure directly affected by coastal wet14 land losses.

15 (B) Mitigation of damage to fish, wildlife,

16 or natural resources.

17 (C) Implementation of a federally-approved

18 marine, coastal, or comprehensive conservation

19 management plan.

20 (D) Mitigation of the impact of outer Con21 tinental Shelf activities through the funding of

22 onshore infrastructure projects.

23 (E) Planning assistance and the adminis24 trative costs of complying with this section.
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1 (2) LIMITATION.—Not more than 3 percent of

2 amounts received by a Gulf producing State or

3 coastal political subdivision under subsection (b)

4 may be used for the purposes described in paragraph

5 (1)(E).

6 (e) ADMINISTRATION.—Amounts made available

7 under subsection (a)(2) shall—

8 (1) be made available, without further appro9 priation, in accordance with this section;

10 (2) remain available until expended; and

11 (3) be in addition to any amounts appropriated

12 under—

13 (A) the Outer Continental Shelf Lands Act

14 (43 U.S.C. 1331 et seq.);

15 (B) the Land and Water Conservation

16 Fund Act of 1965 (16 U.S.C. 460l–4 et seq.);

17 or

18 (C) any other provision of law.

19 (f) LIMITATIONS ON AMOUNT OF DISTRIBUTED

20 QUALIFIED OUTER CONTINENTAL SHELF REVENUES.—

21 (1) IN GENERAL.—Subject to paragraph (2),

22 the total amount of qualified outer Continental Shelf

23 revenues made available under subsection (a)(2)

24 shall not exceed $500,000,000 for each of fiscal

25 years 2016 through 2055.
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1 (2) EXPENDITURES.—For the purpose of para2 graph (1), for each of fiscal years 2016 through

3 2055, expenditures under subsection (a)(2) and shall

4 be net of receipts from that fiscal year from any

5 area in the 181 Area in the Eastern Planning Area

6 and the 181 South Area.

7 (3) PRO RATA REDUCTIONS.—If paragraph (1)

8 limits the amount of qualified outer Continental

9 Shelf revenue that would be paid under subpara10 graphs (A) and (B) of subsection (a)(2)—

11 (A) the Secretary shall reduce the amount

12 of qualified outer Continental Shelf revenue

13 provided to each recipient on a pro rata basis;

14 and

15 (B) any remainder of the qualified outer

16 Continental Shelf revenues shall revert to the

17 general fund of the Treasury.

Passed the Senate August 1, 2006.

Attest:

Secretary.
109TH CONGRESS

2D SESSION S. 3711

AN ACT

To enhance the energy independence and security

other purposes.eral resources in the Gulf of Mexico, and fordevelopment, and production activities for minof the United States by providing for exploration,