Plain to oil and gas leasing and to exploration, develop-
ment, and production is that set forth in this title.
(h) CONVEYANCE.—In order to maximize Federal
revenues by removing clouds on title of lands and clari-
fying land ownership patterns within the Coastal Plain,
the Secretary, notwithstanding the provisions of section
1302(h)(2) of the Alaska National Interest Lands Con-
servation Act (16 U.S.C. 3192(h)(2)), is authorized and
directed to convey (1) to the Kaktovik Inupiat Corporation
the surface estate of the lands described in paragraph 2
of the Public Land Order 6959, to the extent necessary
to fulfill the Corporation’s entitlement under section 12
of the Alaska Native Claims Settlement Act (43 U.S.C.
1611), and (2) to the Arctic Slope Regional Corporation
the subsurface estate beneath such surface estate pursu-
ant to the August 9, 1983, agreement between the Arctic
Slope Regional Corporation and the United States of
America.
SEC. 504. RULES AND REGULATIONS.
(a) PROMULGATION.—The Secretary shall prescribe
such rules and regulations as may be necessary to carry
out the purposes and provisions of this title, including
rules and regulations relating to protection of the fish and
wildlife, their habitat, subsistence resources, and the envi-
ronment of the Coastal Plain. Such rules and regulations
shall be promulgated no later than fourteen months after
the date of enactment of this title and shall, as of their
effective date, apply to all operations conducted under a
lease issued or maintained under the provisions of this
title and all operations on the Coastal Plain related to the
leasing, exploration, development, and production of oil
and gas.
(b) REVISION
OF REGULATIONS.—The Secretary
shall periodically review and, if appropriate, revise the
rules and regulations issued under subsection (a) of this
section to reflect any significant biological, environmental,
or engineering data which come to the Secretary’s atten-
tion.
SEC. 505. ADEQUACY OF THE DEPARTMENT OF THE INTE-
RIOR’S LEGISLATIVE ENVIRONMENTAL IM-
PACT STATEMENT.
The ‘‘Final Legislative Environmental Impact State-
ment’’ (April 1987) on the Coastal Plain prepared pursu-
ant to section 1002 of the Alaska National Interest Lands
Conservation Act of 1980 (16 U.S.C. 3142) and section
102(2)(C) of the National Environmental Policy Act of
1969 (42 U.S.C. 4332(2)(C)) is hereby found by the Con-
gress to be adequate to satisfy the legal and procedural
requirements of the National Environmental Policy Act of
1969 with respect to actions authorized to be taken by
the Secretary to develop and promulgate the regulations
for the establishment of the leasing program authorized
by this title, to conduct the first lease sale and any subse-
quent lease sale authorized by this title, and to grant
rights-of-way and easements to carry out the purposes of
this title.
SEC. 506. LEASE SALES.
(a) LEASE SALES.—Lands may be leased pursuant
to the provisions of this title to any person qualified to
obtain a lease for deposits of oil and gas under the Mineral
Leasing Act, as amended (30 U.S.C. 181).
(b) PROCEDURES.—The Secretary shall, by regula-
tion, establish procedures for—
(1) receipt and consideration of sealed nomina-
tions for any area in the Coastal Plain for inclusion
in, or exclusion (as provided in subsection (c)) from,
a lease sale; and
(2) public notice of and comment on designa-
tion of areas to be included in, or excluded from, a
lease sale.
(c) LEASE SALES ON COASTAL PLAIN.—The Sec-
retary shall, by regulation, provide for lease sales of lands
on the Coastal Plain. When lease sales are to be held, they
shall occur after the nomination process provided for in
subsection (b) of this section. For the first lease sale, the
Secretary shall offer for lease those acres receiving the
greatest number of nominations, but no less than two hun-
dred thousand acres and no more than three hundred
thousand acres shall be offered. If the total acreage nomi-
nated is less than two hundred thousand acres, the Sec-
retary shall include in such sale any other acreage which
he believes has the highest resource potential, but in no
event shall more than three hundred thousand acres of
the Coastal Plain be offered in such sale. With respect
to subsequent lease sales, the Secretary shall offer for
lease no less than two hundred thousand acres of the
Coastal Plain. The initial lease sale shall be held within
twenty months of the date of enactment of this title. The
second lease sale shall be held no later than twenty-four
months after the initial sale, with additional sales con-
ducted no later than twelve months thereafter so long as
sufficient interest in development exists to warrant, in the
Secretary’s judgment, the conduct of such sales.
SEC. 507. GRANT OF LEASES BY THE SECRETARY.
(a) IN GENERAL.—The Secretary is authorized to
grant to the highest responsible qualified bidder by sealed
competitive cash bonus bid any lands to be leased on the
Coastal Plain upon payment by the lessee of such bonus
as may be accepted by the Secretary and of such royalty
as may be fixed in the lease, which shall be not less than
121⁄2 per centum in amount or value of the production
removed or sold from the lease.
(b) ANTITRUST REVIEW.—Following each notice of
a proposed lease sale and before the acceptance of bids
and the issuance of leases based on such bids, the Sec-
retary shall allow the Attorney General, in consultation
with the Federal Trade Commission, thirty days to per-
form an antitrust review of the results of such lease sale
on the likely effects the issuance of such leases would have
on competition and the Attorney General shall advise the
Secretary with respect to such review, including any rec-
ommendation for the nonacceptance of any bid or the im-
position of terms or conditions on any lease, as may be
appropriate to prevent any situation inconsistent with the
antitrust laws.
(c) SUBSEQUENT
TRANSFERS.—No lease issued
under this title may be sold, exchanged, assigned, sublet,
or otherwise transferred except with the approval of the
Secretary. Prior to any such approval the Secretary shall
consult with, and give due consideration to the views of,
the Attorney General.
(d) IMMUNITY.—Nothing in this title shall be deemed
to convey to any person, association, corporation, or other
business organization immunity from civil or criminal li-
ability, or to create defenses to actions, under any anti-
trust law.
(e) DEFINITIONS.—As used in this section, the
term—
(1) ‘‘antitrust review’’ shall be deemed an
‘‘antitrust investigation’’ for the purposes of the
Antitrust Civil Process Act (15 U.S.C. 1311); and
(2) ‘‘antitrust laws’’ means those Acts set forth
in section 1 of the Clayton Act (15 U.S.C. 12) as
amended.
SEC. 508. LEASE TERMS AND CONDITIONS.
An oil or gas lease issued pursuant to this title
shall—
(1) be for a tract consisting of a compact area
not to exceed five thousand seven hundred sixty
acres, or nine surveyed or protracted sections which
shall be as compact in form as possible;
(2) be for an initial period of ten years and
shall be extended for so long thereafter as oil or gas
is produced in paying quantities from the lease or
unit area to which the lease is committed or for so
long as drilling or reworking operations, as approved
by the Secretary, are conducted on the lease or unit
area;
in the interest of conservation of the resource or
where there is no available system to transport the
resource. If such a suspension is directed or as-
sented to by the Secretary, any payment of rental
prescribed by such lease shall be suspended during
such period of suspension of operations and produc-
tion, and the term of the lease shall be extended by
adding any such suspension period thereto;
(10) provide that whenever the owner of a non-
producing lease fails to comply with any of the pro-
visions of this Act, or of any applicable provision of
Federal or State environmental law, or of the lease,
or of any regulation issued under this title, such
lease may be canceled by the Secretary if such de-
fault continues for more than thirty days after mail-
ing of notice by registered letter to the lease owner
at the lease owner’s post office address of record;
(11) provide that whenever the owner of any
producing lease fails to comply with any of the pro-
visions of this title, or of any applicable provision of
Federal or State environmental law, or of the lease,
or of any regulation issued under this title, such
lease may be forfeited and canceled by any appro-
priate proceeding brought by the Secretary in any
United States district court having jurisdiction
under the provisions of this title;
(12) provide that cancellation of a lease under
this title shall in no way release the owner of the
lease from the obligation to provide for reclamation
of the lease site;
(13) allow the lessee, at the discretion of the
Secretary, to make written relinquishment of all
rights under any lease issued pursuant to this title.
The Secretary shall accept such relinquishment by
the lessee of any lease issued under this title where
there has not been surface disturbance on the lands
covered by the lease;
(14) provide that for the purpose of conserving
the natural resources of any oil or gas pool, field, or
like area, or any part thereof, and in order to avoid
the unnecessary duplication of facilities, to protect
the environment of the Coastal Plain, and to protect
correlative rights, the Secretary shall require that, to
the greatest extent practicable, lessees unite with
each other in collectively adopting and operating
under a cooperative or unit plan of development for
operation of such pool, field, or like area, or any
part thereof, and the Secretary is also authorized
and directed to enter into such agreements as are
necessary or appropriate for the protection of the
United States against drainage;
(15) require that the holder of a lease or leases
on lands within the Coastal Plain shall be fully re-
sponsible and liable for the reclamation of lands
within the Coastal Plain and any other Federal
lands adversely affected in connection with explo-
ration, development, production or transportation
activities on a lease within the Coastal Plain by the
holder of a lease or as a result of activities con-
ducted on the lease by any of the leaseholder’s sub-
contractors or agents;
(16) provide that the holder of a lease may not
delegate or convey, by contract of otherwise, the rec-
lamation responsibility and liability to another party
without the express written approval of the Sec-
retary;
(17) provide that the standard of reclamation
for lands required to be reclaimed under this title
be, as nearly as practicable, a condition capable of
supporting the uses which the lands were capable of
supporting prior to any exploration, development, or
production activities, or upon application by the les-
see, to a higher or better use as approved by the
Secretary;
(18) contain the terms and conditions relating
to protection of fish and wildlife, their habitat, and
the environment, as required by section 503(a) of
this title;
(19) provide that the holder of a lease, its
agents, and contractors use best efforts to provide a
fair share, as determined by the level of obligation
previously agreed to in the 1974 agreement imple-
menting section 29 of the Federal Agreement and
Grant of Right of Way for the Operation of the
Trans-Alaska Pipeline, of employment and con-
tracting for Alaska Natives and Alaska Native Cor-
porations from throughout the State;
(20) require project agreements to the extent
feasible that will ensure productivity and consistency
recognizing a national interest in both labor stability
and the ability of construction labor and manage-
ment to meet the particular needs and conditions of
projects to be developed under leases issued pursu-
ant to this Act; and
(21) contain such other provisions as the Sec-
retary determines necessary to ensure compliance
with the provisions of this title and the regulations
issued under this title.
SEC. 509. BONDING REQUIREMENTS TO ENSURE FINANCIAL
RESPONSIBILITY OF LESSEE AND AVOID FED-
ERAL LIABILITY.
(a) REQUIREMENT.—The Secretary shall, by rule or
regulation, establish such standards as may be necessary
to ensure that an adequate bond, surety, or other financial
arrangement will be established prior to the commence-
ment of surface disturbing activities on any lease, to en-
sure the complete and timely reclamation of the lease
tract, and the restoration of any lands or surface waters
adversely affected by lease operations after the abandon-
ment or cessation of oil and gas operations on the lease.
Such bond, surety, or financial arrangement is in addition
to, and not in lieu, of any bond, surety, or financial ar-
rangement required by any other regulatory authority or
required by any other provision of law.
(b) AMOUNT.—The bond, surety, or financial ar-
rangement shall be in an amount—
(1) to be determined by the Secretary to pro-
vide for reclamation of the lease site in accordance
with an approved or revised exploration or develop-
ment and production plan; plus
(2) set by the Secretary consistent with the
type of operations proposed, to provide the means
for rapid and effective cleanup, and to minimize
damages resulting from an oil spill, the escape of
gas, refuse, domestic wastewater, hazardous or toxic
substances, or fire caused by oil and gas activities.
(c) ADJUSTMENT.—In the event that an approved ex-
ploration or development and production plan is revised,
the Secretary may adjust the amount of the bond, surety,
or other financial arrangement to conform to such modi-
fied plan.
(d) DURATION.—The responsibility and liability of
the lessee and its surety under the bond, surety, or other
financial arrangement shall continue until such time as
the Secretary determines that there has been compliance
with the terms and conditions of the lease and all applica-
ble law.
(e) TERMINATION.—Within sixty days after deter-
mining that there has been compliance with the terms and
conditions of the lease and all applicable laws, the Sec-
retary, after consultation with affected Federal and State
agencies, shall notify the lessee that the period of liability
under the bond, surety, or other financial arrangement has
been terminated.
SEC. 510. OIL AND GAS INFORMATION.
(a) IN GENERAL.—(1) Any lessee or permittee con-
ducting any exploration for, or development or production
of, oil or gas pursuant to this title shall provide the Sec-
retary access to all data and information from any lease
granted pursuant to this title (including processed and
analyzed) obtained from such activity and shall provide
copies of such data and information as the Secretary may
request. Such data and information shall be provided in
accordance with regulations which the Secretary shall pre-
scribe.
(2) If processed and analyzed information provided
pursuant to paragraph (1) is provided in good faith by
the lessee or permittee, such lessee or permittee shall not
be responsible for any consequence of the use or of reliance
upon such processed and analyzed information.
(3) Whenever any data or information is provided to
the Secretary, pursuant to paragraph (1)—
(A) by a lessee or permittee, in the form and
manner of processing which is utilized by such lessee
or permittee in the normal conduct of business, the
Secretary shall pay the reasonable cost of reproduc-
ing such data and information; or
(B) by a lessee or permittee, in such other form
and manner of processing as the Secretary may re-
quest, the Secretary shall pay the reasonable cost of
processing and reproducing such data and informa-
tion.
(b) REGULATIONS.—The Secretary shall prescribe
regulations to: (1) assure that the confidentiality of privi-
leged or proprietary information received by the Secretary
under this section will be maintained; and (2) set forth
the time periods and conditions which shall be applicable
to the release of such information.
SEC. 511. EXPEDITED JUDICIAL REVIEW.
(a) Any complaint seeking judicial review of any pro-
vision in this title, or any other action of the Secretary
under this title may be filed in any appropriate district
court of the United States, and such complaint must be
filed within ninety days from the date of the action being
challenged, or after such date if such complaint is based
solely on grounds arising after such ninetieth day, in
which case the complaint must be filed within ninety days
after the complainant knew or reasonably should have
known of the grounds for the complaint: Provided, That
any complaint seeking judicial review of an action of the
Secretary in promulgating any regulation under this title
may be filed only in the United States Court of Appeals
for the District of Columbia.
(b) Actions of the Secretary with respect to which re-
view could have been obtained under this section shall not
be subject to judicial review in any civil or criminal pro-
ceeding for enforcement.
SEC. 512. RIGHTS-OF-WAY ACROSS THE COASTAL PLAIN.
Notwithstanding title XI of the Alaska National In-
terest Lands Conservation Act of 1980 (16 U.S.C. 3161
et seq.), the Secretary is authorized and directed to grant,
in accordance with the provisions of section 28 (c) through
(t) and (v) through (y) of the Mineral Leasing Act of 1920
(30 U.S.C. 185), rights-of-way and easements across the
Coastal Plain for the transportation of oil and gas under
such terms and conditions as may be necessary so as not
to result in a significant adverse effect on the fish and
wildlife, subsistence resources, their habitat, and the envi-
ronment of the Coastal Plain. Such terms and conditions
shall include requirements that facilities be sited or modi-
fied so as to avoid unnecessary duplication of roads and
pipelines. The regulations issued as required by section
504 of this title shall include provisions granting rights-
of-way and easements across the Coastal Plain.
SEC. 513. ENFORCEMENT OF SAFETY AND ENVIRON-
MENTAL REGULATIONS TO ENSURE COMPLI-
ANCE WITH TERMS AND CONDITIONS OF
LEASE.
(a) RESPONSIBILITY OF THE SECRETARY.—The Sec-
retary shall diligently enforce all regulations, lease terms,
conditions, restrictions, prohibitions, and stipulations pro-
mulgated pursuant to this title.
(b) RESPONSIBILITY OF HOLDERS OF LEASE.—It
shall be the responsibility of any holder of a lease under
this title to—
(1) maintain all operations within such lease
area in compliance with regulations intended to pro-
tect persons and property on, and fish and wildlife,
their habitat, subsistence resources, and the environ-
ment of, the Coastal Plain; and
(2) allow prompt access at the site of any oper-
ations subject to regulation under this title to any
appropriate Federal or State inspector, and to pro-
vide such documents and records which are pertinent
to occupational or public health, safety, or environ-
mental protection, as may be requested.
(c) ON-SITE INSPECTION.—The Secretary shall pro-
mulgate regulations to provide for—
(1) scheduled onsite inspection by the Sec-
retary, at least twice a year, of facility on the Coast-
al Plain which is subject to any environmental or
safety regulation promulgated pursuant to this title
or conditions contained in any lease issue pursuant
to this title to assure compliance with such environ-
mental or safety regulations or conditions; and
(2) periodic onsite inspection by the Secretary
at least once a year without advance notice to the
operator of such facility to assure compliance with
all environmental or safety regulations.
SEC. 514. NEW REVENUES.
Notwithstanding any other provision of law, all reve-
nues received by the Federal Government from competitive
bids, sales, bonuses, royalties, rents, fees, or interest de-
rived from the leasing of oil and gas within the Coastal
Plain shall be deposited into the Treasury of the United
States, solely as provided in this section. The Secretary
of the Treasury shall pay to the State of Alaska the same
percentage of such revenues as is set forth under the head-
ing ‘‘EXPLORATION OF NATIONAL PETROLEUM
RESERVE IN ALASKA’’ in Public Law 96–514 (94
Stat. 2957, 2964) semiannually to the State of Alaska,
on March 30 and September 30 of each year and shall
deposit the balance of all such revenues as miscellaneous
receipts in the Treasury.
TITLE 
VI—IMPROVEMENTS 
TO
FEDERAL OIL AND GAS LEASE
MANAGEMENT
SEC. 601. TITLE.
This title may be cited as the ‘‘Federal Oil and Gas
Lease Management Improvement Act of 2000’’.
SEC. 602. DEFINITIONS.
In this title—
(a) APPLICATION FOR A PERMIT TO DRILL.—The
term ‘‘application for a permit to drill’’ means a drilling
plan including design, mechanical, and engineering aspects
for drilling a well.
(b) FEDERAL LAND.—
(1) 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 resources or mineral estates
reserved to the United States in the conveyance of
a surface or nonmineral estate.
(2) EXCLUSION.—The term ‘‘Federal land’’
does not include—
(i) Indian land (as defined in section 3 of
the Federal Oil and Gas Royalty Management
Act of 1982 (30 U.S.C. 1702)); or
(ii) submerged land on the Outer Conti-
nental Shelf (as defined in section 2 of the
Outer Continental Shelf Lands Act (43 U.S.C.
1331)).
(c) OIL AND GAS CONSERVATION AUTHORITY.—The
term ‘‘oil and gas conservation authority’’ means the agen-
cy or agencies in each State responsible for regulating for
conservation purposes operations to explore for and
produce oil and natural gas.
(d) 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 re-
sources.
(e) SECRETARY.—The term ‘‘Secretary’’ means—
(1) the Secretary of the Interior, with respect
to land under the administrative jurisdiction of the
Department of the Interior; and
(2) the Secretary of Agriculture, with respect to
land under the administrative jurisdiction of the De-
partment of Agriculture.
(f) SURFACE USE PLAN OF OPERATIONS.—The term
‘‘surface use plan of operations’’ means a plan for surface
use, disturbance, and reclamation.
SEC. 603. NO PROPERTY RIGHT.
Nothing in this title gives a State a property right
or interest in any Federal lease or land.
Subtitle A—State Option To Regu-
late Oil and Gas Lease Oper-
ations on Federal Land
SEC. 610. 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. 611. 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 610, 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 610 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 610 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.
Subtitle B—Use of Cost Savings
From State Regulation
SEC. 621. 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 610.
(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. 622. 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. 623. 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 610 of the Fed-
eral Oil and Gas Lease Management Act of 2000)’’.
Subtitle C—Streamlining and Cost
Reduction
SEC. 631. 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 State 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 OF
ANALYSES, 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. 632. 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 610 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. 633. 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. 634. REPORTS.
(a) IN GENERAL.—Not later than March 31, 2001,
the Secretaries shall jointly submit to the Congress a re-
port 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. 635. SCIENTIFIC INVENTORY OF OIL AND GAS RE-
SERVES.
(a) IN GENERAL.—Not later than March 31, 2001,
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, 2001.
(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,
2002, 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.
Subtitle D—Federal Royalty
Certainty
SEC. 641. DEFINITIONS.
In this subtitle.—
(a) MARKETABLE CONDITION.—The term ‘‘market-
able 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.
(b) REASONABLE COMMERCIAL RATE.—
(1) IN GENERAL.—The term ‘‘reasonable com-
mercial rate’’ means—
(A) in the case of an arm’s-length con-
tract, the actual cost incurred by the lessee; or
(B) 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 economic interests;
or
(ii) if there are no arm’s-length con-
tracts for similar services in the same area,
the just and reasonable rate for the trans-
portation service rendered by the lessee or
lessee’s affiliate.
(2) DISPUTES.—Disputes between the Sec-
retary and a lessee over what constitutes a just and
reasonable rate for such service shall be resolved by
the Federal Energy Regulatory Commission.
SEC. 642. 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 royalty share of production at
the lease; if the payment in value or amount is cal-
culated from a point away from the lease, the pay-
ment shall be adjusted for quality and location dif-
ferentials, and the lessee shall be allowed reimburse-
ments at a reasonable commercial rate for transpor-
tation (including transportation to the point where
the production is put in marketable condition), mar-
keting, processing, and other services beyond the
lease through the point of sale, other disposition, or
delivery;’’.
SEC. 643. 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. 644. INDIAN LAND.
This subtitle shall not apply with respect to Indian
land.
Subtitle E—Royalty Reinvestment
in America
SEC. 651. 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. 652. 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 wells 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. 653. 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.
TITLE VII—FRONTIER OIL AND
GAS EXPLORATION AND DE-
VELOPMENT INCENTIVES
SEC. 701. TITLE.
This title may be cited as the ‘‘Frontier Exploration
and Development Incentives Act of 2000’’.
SEC. 702. AMENDMENTS TO THE OUTER CONTINENTAL
SHELF LANDS ACT.
(a) Section 8(a)(1)(D) of the Outer Continental Shelf
Lands Act (43 U.S.C. 1337(a)(1)(D)) is amended by
striking the word ‘‘area;’’ and inserting in lieu thereof the
word ‘‘area,’’ and the following new text: ‘‘except in the
Arctic areas of Alaska, where the Secretary is authorized
to set the net profit share at 162⁄3 percent. For purposes
of this section, ‘Arctic areas’ means the Beaufort Sea and
Chukchi Sea Planning Areas of Alaska.’’.
(b) Section 8(a) of the Outer Continental Shelf Lands
Act (43 U.S.C. 1337(a)) is amended by adding a new sub-
paragraph (10) at the end thereof:
‘‘(10) After an oil and gas lease is granted pur-
suant to any of the bidding systems of paragraph
(1) of this subsection, the Secretary shall reduce any
future royalty or rental obligation of the lessee on
any lease issued by the Secretary (and proposed by
the lessee for such reduction) by an amount equal
to (a) 10 percent of the qualified costs of explor-
atory wells drilled or geophysical work performed on
any lease issued by the Secretary, whichever is
greater, pursuant to this Act in Arctic areas and (b)
an additional 10 percent of the qualified costs of any
such exploratory wells which are located ten or more
miles from another well drilled for oil and gas. For
purposes of this Act—‘qualified costs’ shall mean
the costs allocated to the exploratory well or geo-
physical work in support of an exploration program
pursuant to 26 U.S.C. as amended; ‘exploratory
well’ shall mean either an exploratory well as defined
by the United States Securities and Exchange Com-
mission in 17 CFR 210.4–10(a)(10), as amended,
or a well three or more miles from any oil or gas
well or a pipeline which transports oil or gas to a
market or terminal; ‘geophysical work’ shall mean
all geophysical data gathering methods used in hy-
drocarbon exploration and includes seismic, gravity,
magnetic, and electromagnetic measurements; and,
all distances shall be measured in horizontal dis-
tance. When a measurement beginning or ending
point is a well, the measurement point shall be the
bottom hole location of that well.’’.
TITLE VIII—TAX MEASURES TO
ENHANCE DOMESTIC OIL AND
GAS PRODUCTION
Subtitle A—Marginal Well
Preservation
SEC. 801. SHORT TITLE; PURPOSE.
(a) This subtitle may be cited as the ‘‘Marginal Well
Preservation Act of 2000’’.
(b) The purpose of section 802 is to prevent the aban-
donment of marginal oil and gas wells responsible for half
of the domestic production of oil and gas in the United
States and of section 803 is to recognize that geological
and geophysical expenditures and delay rentals are ordi-
nary and necessary business expenses that should be de-
ducted in the year the expense is incurred.
SEC. 802. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND
NATURAL GAS WELL PRODUCTION.
(a) Subpart D of part IV of subchapter A of chapter
1 of the Internal Revenue Code of 1986 (relating to busi-
ness credits) is amended by adding at the end the fol-
lowing new section:
‘‘SEC. 45D. CREDIT FOR PRODUCING OIL AND GAS FROM
MARGINAL WELLS.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the marginal well production credit for any taxable year
is an amount equal to the product of—
‘‘(1) the credit amount, and
‘‘(2) the qualified crude oil production and the
qualified natural gas production which is attrib-
utable to the taxpayer.
‘‘(b) CREDIT
AMOUNT.—For purposes of this
section—
‘‘(1) IN GENERAL.—The credit amount is—
‘‘(A) $3 per barrel of qualified crude oil
production, and
‘‘(B) 50 cents per 1,000 cubic feet of
qualified natural gas production.
‘‘(2) REDUCTION AS OIL AND GAS PRICES IN-
CREASE.—
‘‘(A) IN GENERAL.—The $3 and 50 cents
amounts under paragraph (1) shall each be re-
duced (but not below zero) by an amount which
bears the same ratio to such amount (deter-
mined without regard to this paragraph) as—
‘‘(i) the excess (if any) of the applica-
ble reference price over $14 ($1.56 for
qualified natural gas production), bears to
‘‘(ii) $3 ($0.33 for qualified natural
gas production).
The applicable reference price for a taxable
year is the reference price for the calendar year
preceding the calendar year in which the tax-
able year begins.
‘‘(B) INFLATION
ADJUSTMENT.—In the
case of any taxable year beginning in a calendar
year after 2000, each of the dollar amounts
contained in subparagraph (A) shall be in-
creased to an amount equal to such dollar
amount multiplied by the inflation adjustment
factor for such calendar year (determined under
section 43(b)(3)(B) by substituting ‘1999’ for
‘1990’).
‘‘(C) REFERENCE PRICE.—For purposes of
this paragraph, the term ‘reference price’
means, with respect to any calendar year—
‘‘(i) in the case of qualified crude oil
production, the reference price determined
under section 29(d)(2)(C), and
‘‘(ii) in the case of qualified natural
gas production, the Secretary’s estimate of
the annual average wellhead price per
1,000 cubic feet for all domestic natural
gas.
‘‘(c) QUALIFIED CRUDE OIL
AND NATURAL GAS
PRODUCTION.—For purposes of this section—
‘‘(1) IN GENERAL.—The terms ‘qualified crude
oil production’ and ‘qualified natural gas production’
mean domestic crude oil or natural gas which is pro-
duced from a marginal well.
‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION
WHICH MAY QUALIFY.—
‘‘(A) IN GENERAL.—Crude oil or natural
gas produced during any taxable year from any
well shall not be treated as qualified crude oil
production or qualified natural gas production
to the extent production from the well during
the taxable year exceeds 1,095 barrels or barrel
equivalents.
‘‘(B) PROPORTIONATE REDUCTIONS.—
‘‘(i) SHORT TAXABLE YEARS.—In the
case of a short taxable year, the limitations
under this paragraph shall be proportion-
ately reduced to reflect the ratio which the
number of days in such taxable year bears
to 365.
‘‘(ii) WELLS NOT IN PRODUCTION EN-
TIRE YEAR.—In the case of a well which is
not capable of production during each day
of a taxable year, the limitations under
this paragraph applicable to the well shall
be proportionately reduced to reflect the
ratio which the number of days of produc-
tion bears to the total number of days in
the taxable year.
‘‘(3) DEFINITIONS.—
‘‘(A) MARGINAL WELL.—The term ‘mar-
ginal well’ means a domestic well—
‘‘(i) the production from which during
the taxable year is treated as marginal
production under section 613A(c)(6), or
‘‘(ii) which, during the taxable year—
‘‘(I) has average daily production
of not more than 25 barrel equiva-
lents, and
‘‘(II) produces water at a rate
not less than 95 percent of total well
effluent.
‘‘(B) CRUDE OIL, ETC.—The terms ‘crude
oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have
the meanings given such terms by section
613A(e).
‘‘(C) BARREL
EQUIVALENT.—The term
‘barrel equivalent’ means, with respect to nat-
ural gas, a conversion ratio of 6,000 cubic feet
of natural gas to 1 barrel of crude oil.
‘‘(d) OTHER RULES.—
‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX-
PAYER.—In the case of a marginal well in which
there is more than one owner of operating interests
in the well and the crude oil or natural gas produc-
tion exceeds the limitation under subsection (c)(2),
qualifying crude oil production or qualifying natural
gas production attributable to the taxpayer shall be
determined on the basis of the ratio which tax-
payer’s revenue interest in the production bears to
the aggregate to the revenue interests of all oper-
ating interest owners in the production.
‘‘(2) OPERATING
INTEREST
REQUIRED.—Any
credit under this section may be claimed only on
production which is attributable to the holder of an
operating interest.
‘‘(3) PRODUCTION
FROM
NONCONVENTIONAL
SOURCES
EXCLUDED.—In the case of production
from a marginal well which is eligible for the credit
allowed under section 29 for the taxable year, no
credit shall be allowable under this section unless
the taxpayer elects not to claim credit under section
29 with respect to the well.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b) of such Code is amended by striking ‘‘plus’’
at the end of paragraph (11), by striking the period at
the end of paragraph (12) and inserting ‘‘, plus’’, and by
adding at the end of the following new paragraph:
‘‘(13) the marginal oil and gas well production
credit determined under section 45D(a).’’.
(c) CREDIT ALLOWED AGAINST REGULAR AND MIN-
IMUM TAX.—
(1) IN GENERAL.—Subsection (c) of section 38
of such Code (relating to limitation based on amount
of tax) is amended by redesignating paragraph (3)
as paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
‘‘(3) SPECIAL RULES FOR MARGINAL OIL AND
GAS WELL PRODUCTION CREDIT.—
‘‘(A) IN
GENERAL.—In the case of the
marginal oil and gas well production credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to the
credit, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraphs (A) and (B)
thereof shall not apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the marginal
oil and gas well production credit).
‘‘(B) MARGINAL OIL AND GAS WELL PRO-
DUCTION CREDIT.—For purposes of this sub-
section, the term ‘marginal oil and gas well pro-
duction credit’ means the credit allowable under
subsection (a) by reason of section 45D(a).’’.
(2) CONFORMING AMENDMENT.—Subclause (II)
of section 38(c)(2)(A)(ii) of such Code is amended
by inserting ‘‘or the marginal oil and gas well pro-
duction credit’’ after ‘‘employment credit’’.
(d) CARRYBACK.—Subsection (a) of section 39 of
such Code (relating to carryback and carryforward of un-
used credits generally) is amended by adding at the end
the following new paragraph:
‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL
AND GAS WELL PRODUCTION CREDIT.—In the case
of the marginal oil and gas well production credit—
‘‘(A) this section shall be applied sepa-
rately from the business credit (other than the
marginal oil and gas well production credit),
‘‘(B) paragraph (1) shall be applied by
substituting ‘10 taxable year’ for ‘1 taxable
year’ in subparagraph (A) thereof, and
‘‘(C) paragraph (2) shall be applied—
‘‘(i) by substituting ‘31 taxable years’
for ‘21 taxable years’ in subparagraph (A)
thereof, and
‘‘(ii) by substituting ‘30 taxable years’
for ‘20 taxable years’ in subparagraph (B)
thereof.’’.
(e) COORDINATION
WITH
SECTION
29.—Section
29(a) of such Code is amended by striking ‘‘There’’ and
inserting ‘‘At the election of the taxpayer, there.’’
(f) CLERICAL AMENDMENT—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the fol-
lowing item:
‘‘Sec. 45D. Credit for producting oil and gas from marginal
wells.’’
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to production in taxable years be-
ginning after December 31, 1999.
SEC. 803. ELECTION TO EXPENSE GEOLOGICAL AND GEO-
PHYSICAL EXPENDITURES AND DELAY RENT-
AL PAYMENTS.
(a) Section 263 of the Internal Revenue Code of 1986
(relating to capital expenditures) is amended by adding
at the end the following new subsection:
‘‘(j) GEOLOGICAL
AND
GEOPHYSICAL
EXPENDI-
TURES
FOR OIL
AND WELLS.—Notwithstanding sub-
section (a), a taxpayer may elect to treat geological and
geophysical expenses incurred in connection with the ex-
ploration for, or development of, oil or gas as expenses
which are not chargeable to capital account. Any expenses
so treated shall be allowed as a deduction in the taxable
year in which paid or incurred.’’.
(b) Section 263A(c)(3) of such Code is amended by
inserting ‘‘263(j),’’ after ‘‘263(i),’’.
(c)(1) The amendments made by subsections (a) and
(b) shall apply to expenses paid or incurred after the date
of the enactment of this Act.
(2) In the case of any expenses described in section
263(j) of the Internal Revenue Code of 1986, as added
by subsections (a) and (b), which were paid or incurred
on or before the date of the enactment of this Act, the
taxpayer may elect, at such time and in such manner as
the Secretary of the Treasury may prescribe, to amortize
the suspended portion of such expenses over the 36-month
period beginning with the month in which the date of the
enactment of this Act occurs. For purposes of this para-
graph, the suspended portion of any expense is that por-
tion of such expense which, as of the first day of the 36-
month period, has not been included in the cost of a prop-
erty or otherwise deducted.
(d) Section 263 of such Code (relating to capital ex-
penditures), as amended by subsection (b), is amended by
adding at the end the following new subsection:
‘‘(k) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL
AND GAS WELLS.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(a), a taxpayer may elect to treat delay rental pay-
ments incurred in connection with the development
of oil or gas within the United States (as defined in
section 638) as payments which are not chargeable
to capital account. Any payments so treated shall be
allowed as a deduction in the taxable year in which
paid or incurred.
‘‘(2) DELAY RENTAL PAYMENTS.—For purposes
of paragraph (1), the term ‘delay rental payment’