I
103D CONGRESS
1ST SESSION
H. R. 1282
To provide enhanced energy security through incentives to explore and develop
frontier areas of the Outer Continental Shelf and to enhance production
of the domestic oil and gas resources in deep water areas of the Outer
Continental Shelf.
IN THE HOUSE OF REPRESENTATIVES
MARCH 10, 1993
Mr. FIELDS of Texas (for himself, Mr. TAUZIN, Mr. YOUNG of Alaska, Mr.
LIVINGSTON, and Mr. LAUGHLIN) introduced the following bill; which was
referred jointly to the Committees on Natural Resources and Merchant
Marine and Fisheries
A BILL
To provide enhanced energy security through incentives to
explore and develop frontier areas of the Outer Continen-
tal Shelf and to enhance production of the domestic
oil and gas resources in deep water areas of the Outer
Continental Shelf.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Outer Continental
Shelf Enhanced Exploration and Deep Water Incentives
Act’’.
SEC. 2. AMENDMENTS TO THE OUTER CONTINENTAL
SHELF LANDS ACT.
(a) INCENTIVES.—Section 8(a)(3) of the Outer Con-
tinental Shelf Lands Act (43 U.S.C. 1337(a)(3)) is
amended to read as follows:
‘‘(3)(A) The Secretary, at his own discretion or on
petition of a lessee, in order—
‘‘(i) to promote development and new produc-
tion on producing or nonproducing leases, through
primary, secondary, or tertiary recovery means; or
‘‘(ii) to encourage production of marginal or un-
economic resources on producing or nonproducing
leases, which may include the use of primary, sec-
ondary, or tertiary recovery means,
may reduce, suspend, or eliminate any royalty or net profit
share set forth in the leases. In the case of a petition of
a lessee, the Secretary shall make a final determination
under this subparagraph within 6 months after the
submittal of such petition.
‘‘(B)(i) Notwithstanding any other provision of this
Act, except as provided in clauses (ii) and (iii) of this sub-
paragraph, no royalty payment shall be due on new pro-
duction from any lease located in water depths of 200 me-
ters or greater until the capital costs directly related to
such new production have been recovered by the lessee out
of the proceeds from such new production.
‘‘(ii) Notwithstanding clause (i), in any month during
which the arithmetic average of the closing prices for the
earliest delivery month on the New York Mercantile Ex-
change for Light Sweet crude oil exceeds $28.00 per bar-
rel, any production of oil described in clause (i) shall be
subject to royalties at the lease stipulated rate.
‘‘(iii) Notwithstanding clause (i), in any month dur-
ing which the arithmetic average of the closing prices for
the earliest delivery month on the New York Mercantile
Exchange for natural gas exceeds $3.50 per million Brit-
ish thermal units, any production of natural gas described
in clause (i) shall be subject to royalties at the lease stipu-
lated rate.
‘‘(iv) The prices referred to in clauses (ii) and (iii)
of this subparagraph shall be changed during any calendar
year after 1993 by the percentage if any by which the
consumer price index changed during the preceding cal-
endar year, as defined in section 111(f)(4) of the Internal
Revenue Code of 1986.
‘‘(v) Nothing in this subparagraph shall be construed
to affect any requirement under this section to pay bonus
bids.
‘‘(vi) For purposes of this subparagraph—
‘‘(I) the term ‘capital costs’ shall be defined by
the Secretary, shall include exploration costs in-
curred after the acquisition of the lease and develop-
ment and capital production costs directly related to
new production, shall not include any amounts paid
as bonus bids or paid as royalties pursuant to clause
(ii) or (iii), and shall be adjusted to reflect changes
in the consumer price index, as defined in section
111(f)(4) of the Internal Revenue Code of 1986; and
‘‘(II) the term ‘new production’ means any pro-
duction from a lease from which no royalties have
been due on production, other than test production,
prior to the date of the enactment of the Outer Con-
tinental Shelf Enhanced Exploration and Deep
Water Incentives Act, or any production resulting
from lease development activities under a develop-
ment and production plan approved by the Secretary
under section 25 after the date of the enactment of
the Outer Continental Shelf Enhanced Exploration
and Deep Water Incentives Act.’’.
(b) FRONTIER AREAS.—Section 18 of the Outer Con-
tinental Shelf Lands Act (43 U.S.C. 1344) is amended
by adding at the end the following new subsection:
‘‘(i) The Secretary shall, in each leasing program pre-
pared under this section, designate as frontier areas por-
tions of the outer Continental Shelf, if any, with respect
to which the Secretary will exercise authority under sec-
tion 8(a)(3)(A) to reduce, suspend, or eliminate the re-
quirement to pay royalties. Any such designation shall in-
clude a full description of the terms of such reduction, sus-
pension, or elimination. In designating frontier areas
under this subsection, the Secretary shall take into consid-
eration the increased capital costs associated with explo-
ration and development in coastal or marine environments,
including arctic environments, with special environmental
protection requirements.’’.
SEC. 3. REGULATIONS.
(a) INCENTIVES.—The Secretary shall, within 180
days after the date of the enactment of this Act, issue
such rules and regulations as are necessary to implement
the amendment made by section 2(a).
(b) FRONTIER AREAS.—The Secretary shall, within
1 year after the date of the enactment of this Act, issue
regulations defining the term ‘‘frontier area’’ for purposes
of carrying out section 18(i) of the Outer Continental
Shelf Lands Act.
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