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Compact Commission, shall evaluate the impact of existing
Federal and State tax and royalty policies on the develop-
ment of domestic oil and gas resources and on revenues to
Federal, State, local and tribal governments.
(b) SCOPE.—The evaluation under subsection (a)
shall—
(1) analyze the impact of fiscal policies on oil
and natural gas exploration, development drilling,
and production under different price scenarios, in-
cluding the impact of the individual and corporate
Alternative Minimum Tax, State and local produc-
tion taxes and fixed royalty rates during low price
periods;
(2) assess the effect of existing Federal and State
fiscal policies on investment under different geological
and developmental circumstances, including but not
limited to deepwater environments, subsalt forma-
tions, deep and deviated wells, coalbed methane and
other unconventional oil and gas formations;
(3) assess the extent to which Federal and State
fiscal policies negatively impact the ultimate recovery
of resources from existing fields and smaller accumu-
lations in offshore waters, especially in water depths
less than 800 meters, of the Gulf of Mexico;
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(4) compare existing Federal and State policies
with tax and royalty regimes in other countries with
particular emphasis on similar geological, develop-
mental and infrastructure conditions; and
(5) evaluate how alternative tax and royalty
policies, including counter-cyclical measures, could
increase recovery of domestic oil and natural gas re-
sources and revenues to Federal, State, local and trib-
al governments.
(c) POLICY RECOMMENDATIONS.—Based upon the
findings of the evaluation under subsection (a), a report de-
scribing the findings and recommendations for policy
changes shall be provided to the President, the Congress, the
Governors of the member States of the Interstate Oil and
Gas Compact Commission, and Indian tribes having an oil
and gas lease approved by the Secretary of the Interior. The
recommendations should ensure that the public interest in
receiving the economic benefits of tax and royalty revenues
is balanced with the broader national security and eco-
nomic interests in maximizing recovery of domestic re-
sources. The report should include recommendations regard-
ing actions to—
(1) ensure stable development drilling during pe-
riods of low oil and/or natural gas prices to maintain
reserve replacement and deliverability;
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(2) minimize the negative impact of a volatile
investment climate on the oil and gas service industry
and domestic oil and gas exploration and production;
(3) ensure a consistent level of domestic activity
to encourage the education and retention of a tech-
nical workforce; and
(4) maintain production capability during peri-
ods of low oil and/or natural gas prices.
(d) ROYALTY GUIDELINES.—The recommendations re-
quired under (c) should include guidelines for private re-
source holders as to the appropriate level of royalties given
geology, development cost, and the national interest in
maximizing recovery of oil and gas resources.
(e) REPORT.—The study under subsection (a) shall be
completed not later than 18 months after the date of enact-
ment of this section. The report and recommendations re-
quired in (c) shall be transmitted to the President, the Con-
gress, Indian tribes, and the Governors of the member States
of the Interstate Oil and Gas Compact Commission.
SEC. 609. STRATEGIC PETROLEUM RESERVE.
(a) FULL CAPACITY.—The President shall—
(1) fill the Strategic Petroleum Reserve estab-
lished pursuant to part B of title I of the Energy Pol-
icy and Conservation Act (42 U.S.C. 6231 et seq.) to
full capacity as soon as practicable;
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(2) acquire petroleum for the Strategic Petro-
leum Reserve by the most practicable and cost-effec-
tive means, including the acquisition of crude oil the
United States is entitled to receive in kind as royal-
ties from production on Federal lands; and
(3) ensure that the fill rate minimizes impacts
on petroleum markets.
(b) RECOMMENDATIONS.—Not later than 180 days
after the date of enactment of this Act, the Secretary of En-
ergy shall submit to Congress a plan to—
(1) eliminate any infrastructure impediments
that may limit maximum drawdown capability; and
(2) determine whether the capacity of the Stra-
tegic Petroleum Reserve on the date of enactment of
this section is adequate in light of the increasing con-
sumption of petroleum and the reliance on imported
petroleum.
SEC. 610. HYDRAULIC FRACTURING.
Section 1421 of the Safe Drinking Water Act (42
U.S.C. 300h) is amended by adding at the end the following:
‘‘(e) HYDRAULIC FRACTURING FOR OIL AND GAS PRO-
DUCTION.—
‘‘(1) STUDY OF THE EFFECTS OF HYDRAULIC
FRACTURING.—
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‘‘(A) IN GENERAL.—As soon as practicable,
but in no event later than 24 months after the
date of enactment of this subsection, the Admin-
istrator shall complete a study of the known and
potential effects on underground drinking water
sources of hydraulic fracturing, including the ef-
fects of hydraulic fracturing on underground
drinking water sources on a nationwide basis,
and within specific regions, States, or portions of
States.
‘‘(B) CONSULTATION.—In planning and
conducting the study, the Administrator shall
consult with the Secretary of the Interior, the
Secretary of Energy, the Ground Water Protec-
tion Council, affected States, and, as appro-
priate, representatives of environmental, indus-
try, academic, scientific, public health, and other
relevant organizations. Such study may be ac-
complished in conjunction with other ongoing
studies related to the effects of oil and gas pro-
duction on groundwater resources.
‘‘(C) STUDY
ELEMENTS.—The study con-
ducted under subparagraph (A) shall, at a min-
imum, examine and make findings as to
whether—
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‘‘(i) such hydraulic fracturing has en-
dangered or will endanger (as defined under
subsection (d)(2)) underground drinking
water sources, including those sources with-
in specific regions, States or portions of
States;
‘‘(ii) there are specific methods, prac-
tices, or hydrogeologic circumstances in
which hydraulic fracturing has endangered
or will endanger underground drinking
water sources; and
‘‘(iii) there are any precautionary ac-
tions that may reduce or eliminate any
such endangerment.
‘‘(D) STUDY OF HYDRAULIC FRACTURING IN
A PARTICULAR TYPE OF GEOLOGIC FORMATION.—
The Administrator may also complete a separate
study on the known and potential effects on un-
derground drinking water sources of hydraulic
fracturing in a particular type of geologic for-
mation:
‘‘(i) If such a study is undertaken, the
Administrator shall follow the procedures
for study preparation and independent sci-
entific review set forth in subparagraphs (1)
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(B) and (C) and (2) of this subsection. The
Administrator may complete this separate
study prior to the completion of the broader
study of hydraulic fracturing required pur-
suant to subparagraph (A) of this sub-
section.
‘‘(ii) At the conclusion of independent
scientific review for any separate study, the
Administrator shall determine, pursuant to
paragraph (3), whether regulation of hy-
draulic fracturing in the particular type of
geologic formation addressed in the separate
study is necessary under this part to ensure
that underground sources of drinking water
will not be endangered on a nationwide
basis, or within a specific region, State or
portions of a State. Subparagraph (4) of
this subsection shall apply to any such de-
termination by the Administrator.
‘‘(iii) If the Administrator completes a
separate study, the Administrator may use
the information gathered in the course of
such a study in undertaking her broad
study to the extent appropriate. The broader
study need not include a reexamination of
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the conclusions reached by the Adminis-
trator in any separate study.
‘‘(2) INDEPENDENT SCIENTIFIC REVIEW.—
‘‘(A) IN GENERAL.—Prior to the time the
study under paragraph (1) is completed, the Ad-
ministrator shall enter into an appropriate
agreement with the National Academy of
Sciences to have the Academy review the conclu-
sions of the study.
‘‘(B) REPORT.—Not later than 11 months
after entering into an appropriate agreement
with the Administrator, the National Academy of
Sciences shall report to the Administrator, the
Committee on Energy and Commerce of the
House of Representatives, and the Committee on
Environment and Public Works of the Senate, on
the—
‘‘(i) findings related to the study con-
ducted by the Administrator under para-
graph (1);
‘‘(ii) the scientific and technical basis
for such findings; and
‘‘(iii) recommendations, if any, for
modifying the findings of the study.
‘‘(3) REGULATORY DETERMINATION.—
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‘‘(A) IN
GENERAL.—Not later than 6
months after receiving the National Academy of
Sciences report under paragraph (2), the Admin-
istrator shall determine, after informal public
hearings and public notice and opportunity for
comment, and based on information developed or
accumulated in connection with the study re-
quired under paragraph (1) and the National
Academy of Sciences report under paragraph
(2), either—
‘‘(i) that regulation of hydraulic frac-
turing under this part is necessary to en-
sure that underground sources of drinking
water will not be endangered on a nation-
wide basis, or within a specific region,
State or portions of a State; or
‘‘(ii) that regulation described under
clause (i) is unnecessary.
‘‘(B) PUBLICATION
OF
DETERMINATION.—
The Administrator shall publish the determina-
tion in the Federal Register, accompanied by an
explanation and the reasons for it.
‘‘(4) PROMULGATION OF REGULATIONS.—
‘‘(A) REGULATION NECESSARY.—If the Ad-
ministrator determines under paragraph (3) that
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regulation by hydraulic fracturing under this
part is necessary to ensure that hydraulic frac-
turing does not endanger underground drinking
water sources on a nationwide basis, or within
a specific region, State or portions of a State,
the Administrator shall, within 6 months after
the issuance of that determination, and after
public notice and opportunity for comment, pro-
mulgate regulations under section 1421 (42
U.S.C. 300h) to ensure that hydraulic fracturing
will not endanger such underground sources of
drinking water. However, for purposes of the Ad-
ministrator’s approval or disapproval under sec-
tion 1422 of any State underground injection
control program for regulating hydraulic frac-
turing, a State at any time may make the alter-
native demonstration provided for in section
1425 of this title.
‘‘(B) REGULATION UNNECESSARY.—The Ad-
ministrator shall not regulate or require States
to regulate hydraulic fracturing under this part
unless the Administrator determines under para-
graph (3) that such regulation is necessary. This
provision shall not apply to any State which has
a program for the regulation of hydraulic frac-
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turing that was approved by the Administrator
under this part prior to the effective date of this
subsection.
‘‘(C) EXISTING
REGULATIONS.—A deter-
mination by the Administrator under paragraph
(3) that regulation is unnecessary will relieve all
States (including those with existing approved
programs for the regulation of hydraulic frac-
turing) from any further obligation to regulate
hydraulic fracturing as an underground injec-
tion under this part.
‘‘(5) DEFINITION OF HYDRAULIC FRACTURING.—
For purposes of this subsection, the term ‘hydraulic
fracturing’ means the process of creating a fracture in
a reservoir rock, and injecting fluids and propping
agents, for the purposes of reservoir stimulation re-
lated to oil and gas production activities.
‘‘(6) SAVINGS.—Nothing in this subsection shall
in any way limit the authorities of the Administrator
under section 1431 (42 U.S.C. 300i).’’.
SEC. 611. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Admin-
istrator of the Environmental Protection Agency $100,000
for fiscal year 2003, to remain available until expended,
for a grant to the State of Alabama to assist in the imple-
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mentation of its regulatory program under section 1425 of
the Safe Drinking Water Act.
SEC. 612. PRESERVATION OF OIL AND GAS RESOURCE
DATA.
The Secretary of the Interior, through the United
States Geological Survey, may enter into appropriate ar-
rangements with State agencies that conduct geological sur-
vey activities to collect, archive, and provide public access
to data and study results regarding oil and natural gas
resources. The Secretary may accept private contributions
of property and services for purposes of this section.
SEC 613. RESOLUTION OF FEDERAL RESOURCE DEVELOP-
MENT CONFLICTS IN THE POWDER RIVER
BASIN.
The Secretary of the Interior shall undertake a review
of existing authorities to resolve conflicts between the devel-
opment of Federal coal and the development of Federal and
non-Federal coalbed methane in the Powder River Basin
in Wyoming and Montana. Not later than 90 days from
enactment of this Act, the Secretary shall report to Congress
on her plan to resolve these conflicts.
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TITLE VII—NATURAL GAS
PIPELINES
Subtitle A—Alaska Natural Gas
Pipeline
SEC. 701. SHORT TITLE.
This subtitle may be cited as the ‘‘Alaska Natural Gas
Pipeline Act of 2003’’.
SEC. 702. FINDINGS.
The Congress finds that:
(1) Construction of a natural gas pipeline sys-
tem from the Alaskan North Slope to United States
markets is in the national interest and will enhance
national energy security by providing access to the
significant gas reserves in Alaska needed to meet the
anticipated demand for natural gas.
(2) The Commission issued a conditional certifi-
cate of public convenience and necessity for the Alas-
ka Natural Gas Transportation System, which re-
mains in effect.
SEC. 703. PURPOSES.
The purposes of this subtitle are—
(1) to provide a statutory framework for the ex-
pedited approval, construction, and initial operation
of an Alaska natural gas transportation project, as
an alternative to the framework provided in the Alas-
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ka Natural Gas Transportation Act of 1976 (15
U.S.C. 719–719o), which remains in effect;
(2) to establish a process for providing access to
such transportation project in order to promote com-
petition in the exploration, development and produc-
tion of Alaska natural gas;
(3) to clarify Federal authorities under the Alas-
ka Natural Gas Transportation Act; and
(4) to authorize Federal financial assistance to
an Alaska natural gas transportation project as pro-
vided in this subtitle.
SEC. 704. ISSUANCE OF CERTIFICATE OF PUBLIC CONVEN-
IENCE AND NECESSITY.
(a) AUTHORITY
OF
THE
COMMISSION.—Notwith-
standing the provisions of the Alaska Natural Gas Trans-
portation Act of 1976 (15 U.S.C. 719–719o), the Commis-
sion may, pursuant to section 7(c) of the Natural Gas Act
(15 U.S.C. 717f(c)), consider and act on an application for
the issuance of a certificate of public convenience and neces-
sity authorizing the construction and operation of an Alas-
ka natural gas transportation project other than the Alaska
Natural Gas Transportation System.
(b) ISSUANCE OF CERTIFICATE.—(1) The Commission
shall issue a certificate of public convenience and necessity
authorizing the construction and operation of an Alaska
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natural gas transportation project under this section if the
applicant has satisfied the requirements of section 7(e) of
the Natural Gas Act (15 U.S.C. 717f(e)).
(2) In considering an application under this section,
the Commission shall presume that—
(A) a public need exists to construct and operate
the proposed Alaska natural gas transportation
project; and
(B) sufficient downstream capacity will exist to
transport the Alaska natural gas moving through such
project to markets in the contiguous United States.
(c) EXPEDITED APPROVAL PROCESS.—The Commis-
sion shall issue a final order granting or denying any ap-
plication for a certificate of public convenience and neces-
sity under section 7(c) of the Natural Gas Act (15 U.S.C.
717f(c)) and this section not more than 60 days after the
issuance of the final environmental impact statement for
that project pursuant to section 705.
(d) PROHIBITION ON CERTAIN PIPELINE ROUTE.—No
license, permit, lease, right-of-way, authorization or other
approval required under Federal law for the construction
of any pipeline to transport natural gas from lands within
the Prudhoe Bay oil and gas lease area may be granted
for any pipeline that follows a route that traverses—
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(1) the submerged lands (as defined by the Sub-
merged Lands Act) beneath, or the adjacent shoreline
of, the Beaufort Sea; and
(2) enters Canada at any point north of 68 de-
grees North latitude.
(e) OPEN SEASON.—Except where an expansion is or-
dered pursuant to section 706, initial or expansion capacity
on any Alaska natural gas transportation project shall be
allocated in accordance with procedures to be established
by the Commission in regulations governing the conduct of
open seasons for such project. Such procedures shall include
the criteria for and timing of any open seasons, be con-
sistent with the purposes set forth in section 703(2) and,
for any open season for capacity beyond the initial capac-
ity, provide the opportunity for the transportation of nat-
ural gas other than from the Prudhoe Bay and Point
Thompson units. The Commission shall issue such regula-
tions no later than 120 days after the enactment of this
subtitle.
(f) PROJECTS IN THE CONTIGUOUS UNITED STATES.—
Applications for additional or expanded pipeline facilities
that may be required to transport Alaska natural gas from
Canada to markets in the contiguous United States may
be made pursuant to the Natural Gas Act. To the extent
such pipeline facilities include the expansion of any facility
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constructed pursuant to the Alaska Natural Gas Transpor-
tation Act of 1976, the provisions of that Act shall continue
to apply.
(g) STUDY OF IN-STATE NEEDS.—The holder of the
certificate of public convenience and necessity issued, modi-
fied, or amended by the Commission for an Alaska natural
gas transportation project shall demonstrate that it has con-
ducted a study of Alaska in-State needs, including tie-in
points along the Alaska natural gas transportation project
for in-State access.
(h) ALASKA ROYALTY GAS.—The Commission, upon
the request of the State of Alaska and after a hearing, may
provide for reasonable access to the Alaska natural gas
transportation project for the State of Alaska or its designee
for the transportation of the State’s royalty gas for local
consumption needs within the State: Provided, That the
rates of existing shippers of subscribed capacity on such
project shall not be increased as a result of such access.
(i) REGULATIONS.—The Commission may issue regu-
lations to carry out the provisions of this section.
SEC. 705. ENVIRONMENTAL REVIEWS.
(a) COMPLIANCE WITH NEPA.—The issuance of a cer-
tificate of public convenience and necessity authorizing the
construction and operation of any Alaska natural gas
transportation project under section 704 shall be treated as
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a major Federal action significantly affecting the quality
of the human environment within the meaning of section
102(2)(C) of the National Environmental Policy Act of
1969 (42 U.S.C. 4332(2)(C)).
(b) DESIGNATION OF LEAD AGENCY.—The Commis-
sion shall be the lead agency for purposes of complying with
the National Environmental Policy Act of 1969, and shall
be responsible for preparing the statement required by sec-
tion 102(2)(c) of that Act (42 U.S.C. 4332(2)(c)) with re-
spect to an Alaska natural gas transportation project under
section 704. The Commission shall prepare a single environ-
mental statement under this section, which shall consolidate
the environmental reviews of all Federal agencies consid-
ering any aspect of the project.
(c) OTHER AGENCIES.—All Federal agencies consid-
ering aspects of the construction and operation of an Alaska
natural gas transportation project under section 704 shall
cooperate with the Commission, and shall comply with
deadlines established by the Commission in the preparation
of the statement under this section. The statement prepared
under this section shall be used by all such agencies to sat-
isfy their responsibilities under section 102(2)(C) of the Na-
tional Environmental Policy Act of 1969 (42 U.S.C.
4332(2)(C)) with respect to such project.