I
106TH CONGRESS
1ST SESSION
H. R. 1985
To improve the administration of oil and gas leases on Federal land, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 27, 1999
Mrs. CUBIN (for herself and Mr. SKEEN) introduced the following bill; which
was referred to the Committee on Resources
A BILL
To improve the administration of oil and gas leases on
Federal land, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Federal Oil and Gas Lease Management Improvement
Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. No property right.
try and subject their programs to periodic peer re-
view through the Commission;
(3) it is significantly less expensive for State
governments than for the Federal Government to
regulate oil and gas lease operations on Federal
land;
(4) significant cost savings could be achieved,
with no reduction in environmental protection or in
the conservation of oil and gas resources, by having
the Federal Government defer to State regulation of
oil and gas lease operations on Federal land;
(5) State governments carry out regulatory
oversight on Federal, State, and private land; oil
and gas companies operating on Federal land are
burdened with the additional cost and time of dupli-
cative oversight by both Federal and State conserva-
tion authorities; additional cost savings could be
achieved within the private sector by having the Sec-
retary defer to State regulation;
(6) the Federal Government is presently cast in
opposing roles as a mineral owner and regulator;
State regulation of oil and gas operations on Federal
land would eliminate this conflict of interest;
(7) it remains the responsibility of the Sec-
retary of the Interior to carry out the Federal policy
set forth in the Mining and Minerals Policy Act of
1970 (30 U.S.C. 21a) to foster and encourage pri-
vate sector enterprise in the development of eco-
nomically sound and stable domestic mineral indus-
tries, and the orderly and economic development of
domestic mineral resources and reserves, including
oil and gas resources; and
(8) resource management analyses and surveys
conducted under the conservation laws of the United
States benefit the public at large and are an expense
properly borne by the Federal Government.
(b) PURPOSES.—The purposes of this Act are—
(1) to transfer from the Secretary to each State
in which Federal land is present authority to regu-
late oil and gas operations on leased tracts and re-
lated operations as fully as if the operations were oc-
curring on privately owned land;
(2) to share the costs saved through more effi-
cient State enforcement among State governments
and the Federal treasury;
(3) to prevent the imposition of unwarranted
delays and recoupments of Federal administrative
costs on Federal oil and gas lessees;
(4) to effect no change in the administration of
Indian land; and
(5) to ensure that funds deducted from the
States’ net receipt share are directly tied to adminis-
trative costs related to mineral leasing on Federal
land.
SEC. 3. DEFINITIONS.
In this Act:
(1) APPLICATION FOR A PERMIT TO DRILL.—
The term ‘‘application for a permit to drill’’ means
a drilling plan including design, mechanical, and en-
gineering aspects for drilling a well.
(2) FEDERAL LAND.—
(A) IN
GENERAL.—The term ‘‘Federal
land’’ means all land and interests in land
owned by the United States that are subject to
the mineral leasing laws, including mineral re-
sources or mineral estates reserved to the
United States in the conveyance of a surface or
nonmineral estate.
(B) 
EXCLUSION.—The 
term 
‘‘Federal
land’’ does not include—
(i) Indian land (as defined in section
3 of the Federal Oil and Gas Royalty Man-
agement Act of 1982 (30 U.S.C. 1702));
or
(ii) submerged land on the outer Con-
tinental Shelf (as defined in section 2 of
the Outer Continental Shelf Lands Act (43
U.S.C. 1331)).
(3) OIL AND GAS CONSERVATION AUTHORITY.—
The term ‘‘oil and gas conservation authority’’
means the agency or agencies in each State respon-
sible for regulating for conservation purposes oper-
ations to explore for and produce oil and natural
gas.
(4) PROJECT.—The term ‘‘project’’ means an
activity by a lessee, an operator, or an operating
rights owner to explore for, develop, produce, or
transport oil or gas resources.
(5) 
SECRETARY.—The 
term 
‘‘Secretary’’
means—
(A) the Secretary of the Interior, with re-
spect to land under the administrative jurisdic-
tion of the Department of the Interior; and
(B) the Secretary of Agriculture, with re-
spect to land under the administrative jurisdic-
tion of the Department of Agriculture.
(6) SURFACE USE PLAN OF OPERATIONS.—The
term ‘‘surface use plan of operations’’ means a plan
for surface use, disturbance, and reclamation.
SEC. 4. NO PROPERTY RIGHT.
Nothing in this Act gives a State a property right
or interest in any Federal lease or land.
TITLE I—STATE OPTION TO REG-
ULATE OIL AND GAS LEASE
OPERATIONS 
ON 
FEDERAL
LAND
SEC. 101. TRANSFER OF AUTHORITY.
(a) NOTIFICATION.—Not before the date that is 180
days after the date of enactment of this Act, a State may
notify the Secretary of its intent to accept authority for
regulation of operations, as described in subparagraphs
(A) through (K) of subsection (b)(2), under oil and gas
leases on Federal land within the State.
(b) TRANSFER OF AUTHORITY.—
(1) IN GENERAL.—Effective 180 days after the
Secretary receives the State’s notice, authority for
the regulation of oil and gas leasing operations is
transferred from the Secretary to the State.
(2) AUTHORITY
INCLUDED.—The authority
transferred under paragraph (1) includes—
(A) processing and approving applications
for permits to drill, subject to surface use
agreements and other terms and conditions de-
termined by the Secretary;
(B) production operations;
(C) well testing;
(D) well completion;
(E) well spacing;
(F) communization;
(G) conversion of a producing well to a
water well;
(H) well abandonment procedures;
(I) inspections;
(J) enforcement activities; and
(K) site security.
(c) RETAINED AUTHORITY.—The Secretary shall—
(1) retain authority over the issuance of leases
and the approval of surface use plans of operations
and project-level environmental analyses; and
(2) spend appropriated funds to ensure that
timely decisions are made respecting oil and gas
leasing, taking into consideration multiple uses of
Federal land, socioeconomic and environmental im-
pacts, and the results of consultations with State
and local government officials.
SEC. 102. ACTIVITY FOLLOWING TRANSFER OF AUTHORITY.
(a) FEDERAL AGENCIES.—Following the transfer of
authority, no Federal agency shall exercise the authority
formerly held by the Secretary as to oil and gas lease oper-
ations and related operations on Federal land.
(b) STATE AUTHORITY.—
(1) IN GENERAL.—Following the transfer of au-
thority, each State shall enforce its own oil and gas
conservation laws and requirements pertaining to
transferred oil and gas lease operations and related
operations with due regard to the national interest
in the expedited, environmentally sound development
of oil and gas resources in a manner consistent with
oil and gas conservation principles.
(2) APPEALS.—Following a transfer of author-
ity under section 101, an appeal of any decision
made by a State oil and gas conservation authority
shall be made in accordance with State administra-
tive procedures.
(c) PENDING ENFORCEMENT ACTIONS.—The Sec-
retary may continue to enforce any pending actions re-
specting acts committed before the date on which author-
ity is transferred to a State under section 101 until those
proceedings are concluded.
(d) PENDING APPLICATIONS.—
(1) TRANSFER TO STATE.—All applications re-
specting oil and gas lease operations and related op-
erations on Federal land pending before the Sec-
retary on the date on which authority is transferred
under section 101 shall be immediately transferred
to the oil and gas conservation authority of the
State in which the lease is located.
(2) ACTION BY THE STATE.—The oil and gas
conservation authority shall act on the application in
accordance with State laws (including regulations)
and requirements.
TITLE II—USE OF COST SAVINGS
FROM STATE REGULATION
SEC. 201. COMPENSATION FOR COSTS.
(a) IN GENERAL.—Subject to the availability of ap-
propriations, the Secretary shall compensate any State for
costs incurred to carry out the authorities transferred
under section 101.
(b) PAYMENT SCHEDULE.—Payments shall be made
not less frequently than every quarter.
(c) COST BREAKDOWN REPORT.—Each State seek-
ing compensation shall report to the Secretary a cost
breakdown for the authorities transferred.
(d) LIMITATION ON AMOUNT.—
(1) IN
GENERAL.—Compensation to a State
may not exceed 50 percent of the Secretary’s allo-
cated cost for oil and gas leasing activities under
section 35(b) of the Act of February 25, 1920 (com-
monly known as the ‘‘Mineral Leasing Act’’) (30
U.S.C. 191(b)) for the State for fiscal year 1997.
(2) ADJUSTMENT.—The Secretary shall adjust
the maximum level of cost compensation at least
once every 2 years to reflect any increases in the
Consumer Price Index (all items, United States city
average) as prepared by the Department of Labor,
using 1997 as the baseline year.
SEC. 202. EXCLUSION OF COSTS OF PREPARING PLANNING
DOCUMENTS AND ANALYSES.
Section 35 of the Act of February 25, 1920 (30
U.S.C. 191(b)) is amended by adding at the end the fol-
lowing:
‘‘(6) The Secretary shall not include, for the
purpose of calculating the deduction under para-
graph (1), costs of preparing resource management
planning documents and analyses for areas in which
mineral leasing is excluded or areas in which the pri-
mary activity under review is not mineral leasing
and development.’’.
SEC. 203. RECEIPT SHARING.
Section 35(b) of the Act of February 25, 1920 (30
U.S.C. 191(b)) is amended by striking ‘‘paid to States’’
and inserting ‘‘paid to States (other than States that ac-
cept a transfer of authority under section 101 of the Fed-
eral Oil and Gas Lease Management Act of 1999)’’.
TITLE III—STREAMLINING AND
COST REDUCTION
SEC. 301. APPLICATIONS.
(a) LIMITATION
ON COST RECOVERY.—Notwith-
standing sections 304 and 504 of the Federal Land Policy
and Management Act of 1976 (43 U.S.C. 1734, 1764) and
section 9701 of title 31, United States Code, the Secretary
shall not recover the Secretary’s costs with respect to ap-
plications and other documents relating to oil and gas
leases.
(b) COMPLETION OF PLANNING DOCUMENTS AND
ANALYSES.—
(1) IN GENERAL.—The Secretary shall complete
any resource management planning documents and
analyses not later than 90 days after receiving any
offer, application, or request for which a planning
document or analysis is required to be prepared.
(2) PREPARATION BY APPLICANT OR LESSEE.—
If the Secretary is unable to complete the document
or analysis within the time prescribed by paragraph
(1), the Secretary shall notify the applicant or lessee
of the opportunity to prepare the required document
or analysis for the agency’s review and use in deci-
sionmaking.
(c) REIMBURSEMENT FOR COSTS OF NEPA ANAL-
YSES, DOCUMENTATION, AND STUDIES.—If—
(1) adequate funding to enable the Secretary to
timely prepare a project-level analysis required
under the National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.) with respect to an oil
or gas lease is not appropriated; and
(2) the lessee, operator, or operating rights
owner voluntarily pays for the cost of the required
analysis, documentation, or related study;
the Secretary shall reimburse the lessee, operator, or oper-
ating rights owner for its costs through royalty credits at-
tributable to the lease, unit agreement, or project area.
SEC. 302. TIMELY ISSUANCE OF DECISIONS.
(a) IN GENERAL.—The Secretary shall ensure the
timely issuance of Federal agency decisions respecting oil
and gas leasing and operations on Federal land.
(b) OFFER TO LEASE.—
(1) DEADLINE.—The Secretary shall accept or
reject an offer to lease not later than 90 days after
the filing of the offer.
(2) FAILURE TO MEET DEADLINE.—If an offer
is not acted upon within that time, the offer shall be
deemed to have been accepted.
(c) APPLICATION FOR PERMIT TO DRILL.—
(1) DEADLINE.—The Secretary and a State
that has accepted a transfer of authority under sec-
tion 101 shall approve or disapprove an application
for permit to drill not later than 30 days after re-
ceiving a complete application.
(2) FAILURE TO MEET DEADLINE.—If the ap-
plication is not acted on within the time prescribed
by paragraph (1), the application shall be deemed to
have been approved.
(d) SURFACE USE PLAN OF OPERATIONS.—The Sec-
retary shall approve or disapprove a surface use plan of
operations not later than 30 days after receipt of a com-
plete plan.
(e) ADMINISTRATIVE APPEALS.—
(1) DEADLINE.—From the time that a Federal
oil and gas lessee or operator files a notice of admin-
istrative appeal of a decision or order of an officer
or employee of the Department of the Interior or the
Forest Service respecting a Federal oil and gas Fed-
eral lease, the Secretary shall have 2 years in which
to issue a final decision in the appeal.
(2) FAILURE TO MEET DEADLINE.—If no final
decision has been issued within the time prescribed
by paragraph (1), the appeal shall be deemed to
have been granted.
SEC. 303. ELIMINATION OF UNWARRANTED DENIALS AND
STAYS.
(a) IN GENERAL.—The Secretary shall ensure that
unwarranted denials and stays of lease issuance and un-
warranted restrictions on lease operations are eliminated
from the administration of oil and gas leasing on Federal
land.
(b) LAND DESIGNATED FOR MULTIPLE USE.—
(1) IN GENERAL.—Land designated as available
for multiple use under Bureau of Land Management
resource management plans and Forest Service leas-
ing analyses shall be available for oil and gas leasing
without lease stipulations more stringent than re-
strictions on surface use and operations imposed
under the laws (including regulations) of the State
oil and gas conservation authority unless the Sec-
retary includes in the decision approving the man-
agement plan or leasing analysis a written expla-
nation why more stringent stipulations are war-
ranted.
(2) APPEAL.—Any decision to require a more
stringent stipulation shall be administratively ap-
pealable and, following a final agency decision, shall
be subject to judicial review.
(c) REJECTION OF OFFER TO LEASE.—
(1) IN GENERAL.—If the Secretary rejects an
offer to lease on the ground that the land is unavail-
able for leasing, the Secretary shall provide a writ-
ten, detailed explanation of the reasons the land is
unavailable for leasing.
(2) PREVIOUS RESOURCE MANAGEMENT DECI-
SION.—If the determination of unavailability is
based on a previous resource management decision,
the explanation shall include a careful assessment of
whether the reasons underlying the previous decision
are still persuasive.
(3) SEGREGATION OF AVAILABLE LAND FROM
UNAVAILABLE LAND.—The Secretary may not reject
an offer to lease land available for leasing on the
ground that the offer includes land unavailable for
leasing, and the Secretary shall segregate available
land from unavailable land, on the offeror’s request
following notice by the Secretary, before acting on
the offer to lease.
(d) DISAPPROVAL OR REQUIRED MODIFICATION OF
SURFACE USE PLANS OF OPERATIONS AND APPLICATION
FOR PERMIT TO DRILL.—The Secretary shall provide a
written, detailed explanation of the reasons for dis-
approving or requiring modifications of any surface use
plan of operations or application for permit to drill.
(e) EFFECTIVENESS OF DECISION.—A decision of the
Secretary respecting an oil and gas lease shall be effective
pending administrative appeal to the appropriate office
within the Department of the Interior or the Department
of Agriculture unless that office grants a stay in response
to a petition satisfying the criteria for a stay established
by section 4.21(b) of title 43, Code of Federal Regulations
(or any successor regulation).
SEC. 304. REPORTS.
(a) IN GENERAL.—Not later than March 31, 2000,
the Secretaries shall jointly submit to the President of the
Senate and the Speaker of the House of Representatives
a report explaining the most efficient means of eliminating
overlapping jurisdiction, duplication of effort, and incon-
sistent policymaking and policy implementation as be-
tween the Bureau of Land Management and the Forest
Service.
(b) RECOMMENDATIONS.—The report shall include
recommendations on statutory changes needed to imple-
ment the report’s conclusions.
SEC. 305. SCIENTIFIC INVENTORY OF OIL AND GAS RE-
SERVES.
(a) IN GENERAL.—Not later than March 31, 2000,
the Secretary of the Interior, in consultation with the Di-
rector of the United States Geological Survey, shall pub-
lish, through notice in the Federal Register, a science-
based national inventory of the oil and gas reserves and
potential resources underlying Federal land and the outer
Continental Shelf.
(b) CONTENTS.—The inventory shall—
(1) indicate what percentage of the oil and gas
reserves and resources is currently available for leas-
ing and development; and
(2) specify the percentages of the reserves and
resources that are on—
(A) land that is open for leasing as of the
date of enactment of this Act that has never
been leased;
(B) land that is open for leasing or devel-
opment subject to no surface occupancy stipula-
tions; and
(C) land that is open for leasing or devel-
opment subject to other lease stipulations that
have significantly impeded or prevented, or are
likely to significantly impede or prevent, devel-
opment; and
(3) indicate the percentage of oil and gas re-
sources that are not available for leasing or are
withdrawn from leasing.
(c) PUBLIC COMMENT.—
(1) IN GENERAL.—The Secretary of the Inte-
rior shall invite public comment on the inventory to
be filed not later than September 30, 2000.
(2) RESOURCE MANAGEMENT DECISIONS.—Spe-
cifically, the Secretary of the Interior shall invite
public comment on the effect of Federal resource
management decisions on past and future oil and
gas development.
(d) REPORT.—
(1) IN GENERAL.—Not later than March 31,
2001, the Secretary of the Interior shall submit to
the President of the Senate and the Speaker of the
House of Representatives a report comprised of the
revised inventory and responses to the public com-
ments.
(2) CONTENTS.—The report shall specifically
indicate what steps the Secretaries believe are nec-
essary to increase the percentage of land open for
development of oil and gas resources.
TITLE IV—FEDERAL ROYALTY
CERTAINTY
SEC. 401. DEFINITIONS.
In this title:
(1) 
MARKETABLE
CONDITION.—The 
term
‘‘marketable condition’’ means lease production that
is sufficiently free from impurities and otherwise in
a condition that the production will be accepted by
a purchaser under a sales contract typical for the
field or area.
(2) REASONABLE COMMERCIAL RATE.—
(A) IN GENERAL.—The term ‘‘reasonable
commercial rate’’ means—
(i) in the case of an arm’s-length con-
tract, the actual cost incurred by the les-
see; or
(ii) in the case of a non-arm’s-length
contract—
(I) the rate charged in a contract
for similar services in the same area
between parties with opposing eco-
nomic interests; or
(II) if there are no arm’s-length
contracts for similar services in the
same area, the just and reasonable
rate for the transportation service
rendered by the lessee or lessee’s affil-
iate.
(B) DISPUTES.—Disputes between the
Secretary and a lessee over what constitutes a
just and reasonable rate for such service shall
be resolved by the Federal Energy Regulatory
Commission.
SEC. 402. AMENDMENT OF OUTER CONTINENTAL SHELF
LANDS ACT.
Section 8(b)(3) of the Outer Continental Shelf Lands
Act (43 U.S.C. 1337(b)(3)) is amended by striking the
semicolon at the end and adding the following:
‘‘Provided: That if the payment is in value or amount,
the royalty due in value shall be based on the value of
oil or gas production at the lease in marketable condition,
and the royalty due in amount shall be based on the roy-
alty share of production at the lease; if the payment in
value or amount is calculated from a point away from the
lease, the payment shall be adjusted for quality and loca-
tion differentials, and the lessee shall be allowed reim-
bursements at a reasonable commercial rate for transpor-
tation (including transportation to the point where the
production is put in marketable condition), marketing,
processing, and other services beyond the lease through
the point of sale, other disposition, or delivery;’’.
SEC. 403. AMENDMENT OF MINERAL LEASING ACT.
Section 17(c) of the Act of February 25, 1920 (30
U.S.C. 226(c)) (commonly known as the ‘‘Mineral Leasing
Act’’), is amended by adding at the end the following:
‘‘(3) ROYALTY DUE IN VALUE.—
‘‘(A) IN GENERAL.—Royalty due in value
shall be based on the value of oil or gas produc-
tion at the lease in marketable condition, and
the royalty due in amount shall be based on the
royalty share of production at the lease.
‘‘(B) CALCULATION OF VALUE OR AMOUNT
FROM A POINT AWAY FROM A LEASE.—If the
payment in value or amount is calculated from
a point away from the lease—
‘‘(i) the payment shall be adjusted for
quality and location differentials; and
‘‘(ii) the lessee shall be allowed reim-
bursements at a reasonable commercial
rate for transportation (including transpor-
tation to the point where the production is
put in marketable condition), marketing,
processing, and other services beyond the
lease through the point of sale, other dis-
position, or delivery;’’.
SEC. 404. INDIAN LAND.
This title shall not apply with respect to Indian land.
TITLE V—ROYALTY
REINVESTMENT IN AMERICA
SEC. 501. ROYALTY INCENTIVE PROGRAM.
(a) IN GENERAL.—To encourage exploration and de-
velopment expenditures on Federal land and the Outer
Continental Shelf for the development of oil and gas re-
sources when the cash price of West Texas Intermediate
crude oil, as posted on the Dow Jones Commodities Index
chart is less than $18 per barrel for 90 consecutive pricing
days or when natural gas prices as delivered at Henry
Hub, Louisiana, are less than $2.30 per million British
thermal units for 90 consecutive days, the Secretary shall
allow a credit against the payment of royalties on Federal
oil production and gas production, respectively, in an
amount equal to 20 percent of the capital expenditures
made on exploration and development activities on Federal
oil and gas leases.
(b) NO CREDITING AGAINST ONSHORE FEDERAL
ROYALTY OBLIGATIONS.—In no case shall such capital ex-
penditures made on Outer Continental Shelf leases be
credited against onshore Federal royalty obligations.
SEC. 502. MARGINAL WELL PRODUCTION INCENTIVES.
To enhance the economics of marginal oil and gas
production by increasing the ultimate recovery from mar-
ginal wells when the cash price of West Texas Inter-
mediate crude oil, as posted on the Dow Jones Commod-
ities Index chart is less than $18 per barrel for 90 con-
secutive pricing days or when natural gas prices are deliv-
ered at Henry Hub, Louisiana, are less than $2.30 per
million British thermal units for 90 consecutive days, the
Secretary shall reduce the royalty rate as production de-
clines for—
(1) onshore oil wells producing less than 30
barrels per day;
(2) onshore gas wells producing less than 120
million British thermal units per day;
(3) offshore oil well producing less than 300
barrels of oil per day; and
(4) offshore gas wells producing less than 1,200
million British thermal units per day.
SEC. 503. SUSPENSION OF PRODUCTION ON OIL AND GAS
OPERATIONS.
(a) IN GENERAL.—Any person operating an oil well
under a lease issued under the Act of February 25, 1920
(commonly known as the ‘‘Mineral Leasing Act’’) (30
U.S.C. 181 et seq.) or the Mineral Leasing Act for Ac-
quired Lands (30 U.S.C. 351 et seq.) may submit a notice
to the Secretary of the Interior of suspension of operation
and production at the well.
(b) PRODUCTION QUANTITIES NOT A FACTOR.—A
notice under subsection (a) may be submitted without re-
gard to per day production quantities at the well and with-
out regard to the requirements of subsection (a) of section
3103.4–4 of title 43 of the Code of Federal Regulations
(or any successor regulation) respecting the granting of
such relief, except that the notice shall be submitted to
an office in the Department of the Interior designated by
the Secretary of the Interior.
(c) PERIOD OF RELIEF.—On submission of a notice
under subsection (a) for an oil well, the operator of the
well may suspend operation and production at the well for
a period beginning on the date of submission of the notice
and ending on the later of—
(1) the date that is 2 years after the date on
which the suspension of operation and production
commences; or
(2) the date on which the cash price of West
Texas Intermediate crude oil, as posted on the Dow
Jones Commodities Index chart is greater than $15
per barrel for 90 consecutive pricing days.
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