§ 1334. — Administration of leasing.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 43USC1334]
TITLE 43--PUBLIC LANDS
CHAPTER 29--SUBMERGED LANDS
SUBCHAPTER III--OUTER CONTINENTAL SHELF LANDS
Sec. 1334. Administration of leasing
(a) Rules and regulations; amendment; cooperation with State agencies;
subject matter and scope of regulations
The Secretary shall administer the provisions of this subchapter
relating to the leasing of the outer Continental Shelf, and shall
prescribe such rules and regulations as may be necessary to carry out
such provisions. The Secretary may at any time prescribe and amend such
rules and regulations as he determines to be necessary and proper in
order to provide for the prevention of waste and conservation of the
natural resources of the outer Continental Shelf, and the protection of
correlative rights therein, and, notwithstanding any other provisions
herein, such rules and regulations shall, as of their effective date,
apply to all operations conducted under a lease issued or maintained
under the provisions of this subchapter. In the enforcement of safety,
environmental, and conservation laws and regulations, the Secretary
shall cooperate with the relevant departments and agencies of the
Federal Government and of the affected States. In the formulation and
promulgation of regulations, the Secretary shall request and give due
consideration to the views of the Attorney General with respect to
matters which may affect competition. In considering any regulations and
in preparing any such views, the Attorney General shall consult with the
Federal Trade Commission. The regulations prescribed by the Secretary
under this subsection shall include, but not be limited to, provisions--
(1) for the suspension or temporary prohibition of any operation
or activity, including production, pursuant to any lease or permit
(A) at the request of a lessee, in the national interest, to
facilitate proper development of a lease or to allow for the
construction or negotiation for use of transportation facilities, or
(B) if there is a threat of serious, irreparable, or immediate harm
or damage to life (including fish and other aquatic life), to
property, to any mineral deposits (in areas leased or not leased),
or to the marine, coastal, or human environment, and for the
extension of any permit or lease affected by suspension or
prohibition under clause (A) or (B) by a period equivalent to the
period of such suspension or prohibition, except that no permit or
lease shall be so extended when such suspension or prohibition is
the result of gross negligence or willful violation of such lease or
permit, or of regulations issued with respect to such lease or
permit;
(2) with respect to cancellation of any lease or permit--
(A) that such cancellation may occur at any time, if the
Secretary determines, after a hearing, that--
(i) continued activity pursuant to such lease or permit
would probably cause serious harm or damage to life
(including fish and other aquatic life), to property, to any
mineral (in areas leased or not leased), to the national
security or defense, or to the marine, coastal, or human
environment;
(ii) the threat of harm or damage will not disappear or
decrease to an acceptable extent within a reasonable period
of time; and
(iii) the advantages of cancellation outweigh the
advantages of continuing such lease or permit force;
(B) that such cancellation shall not occur unless and until
operations under such lease or permit shall have been under
suspension, or temporary prohibition, by the Secretary, with due
extension of any lease or permit term continuously for a period
of five years, or for a lesser period upon request of the
lessee;
(C) that such cancellation shall entitle the lessee to
receive such compensation as he shows to the Secretary as being
equal to the lesser of (i) the fair value of the canceled rights
as of the date of cancellation, taking account of both
anticipated revenues from the lease and anticipated costs,
including costs of compliance with all applicable regulations
and operating orders, liability for cleanup costs or damages, or
both, in the case of an oilspill, and all other costs reasonably
anticipated on the lease, or (ii) the excess, if any, over the
lessee's revenues, from the lease (plus interest thereon from
the date of receipt to date of reimbursement) of all
consideration paid for the lease and all direct expenditures
made by the lessee after the date of issuance of such lease and
in connection with exploration or development, or both, pursuant
to the lease (plus interest on such consideration and such
expenditures from date of payment to date of reimbursement),
except that (I) with respect to leases issued before September
18, 1978, such compensation shall be equal to the amount
specified in clause (i) of this subparagraph; and (II) in the
case of joint leases which are canceled due to the failure of
one or more partners to exercise due diligence, the innocent
parties shall have the right to seek damages for such loss from
the responsible party or parties and the right to acquire the
interests of the negligent party or parties and be issued the
lease in question;
(3) for the assignment or relinquishment of a lease;
(4) for unitization, pooling, and drilling agreements;
(5) for the subsurface storage of oil and gas other than by the
Federal Government;
(6) for drilling or easements necessary for exploration,
development, and production;
(7) for the prompt and efficient exploration and development of
a lease area; and
(8) for compliance with the national ambient air quality
standards pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.), to
the extent that activities authorized under this subchapter
significantly affect the air quality of any State.
(b) Compliance with regulations as condition for issuance, continuation,
assignment, or other transfer of leases
The issuance and continuance in effect of any lease, or of any
assignment or other transfer of any lease, under the provisions of this
subchapter shall be conditioned upon compliance with regulations issued
under this subchapter.
(c) Cancellation of nonproducing lease
Whenever the owner of a nonproducing lease fails to comply with any
of the provisions of this subchapter, or of the lease, or of the
regulations issued under this subchapter, such lease may be canceled by
the Secretary, subject to the right of judicial review as provided in
this subchapter, if such default continues for the period of thirty days
after mailing of notice by registered letter to the lease owner at his
record post office address.
(d) Cancellation of producing lease
Whenever the owner of any producing lease fails to comply with any
of the provisions of this subchapter, of the lease, or of the
regulations issued under this subchapter, such lease may be forfeited
and canceled by an appropriate proceeding in any United States district
court having jurisdiction under the provisions of this subchapter.
(e) Pipeline rights-of-way; forfeiture of grant
Rights-of-way through the submerged lands of the outer Continental
Shelf, whether or not such lands are included in a lease maintained or
issued pursuant to this subchapter, may be granted by the Secretary for
pipeline purposes for the transportation of oil, natural gas, sulphur,
or other minerals, or under such regulations and upon such conditions as
may be prescribed by the Secretary, or where appropriate the Secretary
of Transportation, including (as provided in section 1347(b) of this
title) assuring maximum environmental protection by utilization of the
best available and safest technologies, including the safest practices
for pipeline burial and upon the express condition that oil or gas
pipelines shall transport or purchase without discrimination, oil or
natural gas produced from submerged lands or outer Continental Shelf
lands in the vicinity of the pipelines in such proportionate amounts as
the Federal Energy Regulatory Commission, in consultation with the
Secretary of Energy, may, after a full hearing with due notice thereof
to the interested parties, determine to be reasonable, taking into
account, among other things, conservation and the prevention of waste.
Failure to comply with the provisions of this section or the regulations
and conditions prescribed under this section shall be grounds for
forfeiture of the grant in an appropriate judicial proceeding instituted
by the United States in any United States district court having
jurisdiction under the provisions of this subchapter.
(f) Competitive principles governing pipeline operation
(1) Except as provided in paragraph (2), every permit, license,
easement, right-of-way, or other grant of authority for the
transportation by pipeline on or across the outer Continental Shelf of
oil or gas shall require that the pipeline be operated in accordance
with the following competitive principles:
(A) The pipeline must provide open and nondiscriminatory access
to both owner and nonowner shippers.
(B) Upon the specific request of one or more owner or nonowner
shippers able to provide a guaranteed level of throughput, and on
the condition that the shipper or shippers requesting such expansion
shall be responsible for bearing their proportionate share of the
costs and risks related thereto, the Federal Energy Regulatory
Commission may, upon finding, after a full hearing with due notice
thereof to the interested parties, that such expansion is within
technological limits and economic feasibility, order a subsequent
expansion of throughput capacity of any pipeline for which the
permit, license, easement, right-of-way, or other grant of authority
is approved or issued after September 18, 1978. This subparapraph
\1\ shall not apply to any such grant of authority approved or
issued for the Gulf of Mexico or the Santa Barbara Channel.
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\1\ So in original. Probably should be ``subparagraph''.
(2) The Federal Energy Regulatory Commission may, by order or
regulation, exempt from any or all of the requirements of paragraph (1)
of this subsection any pipeline or class of pipelines which feeds into a
facility where oil and gas are first collected or a facility where oil
and gas are first separated, dehydrated, or otherwise processed.
(3) The Secretary of Energy and the Federal Energy Regulatory
Commission shall consult with and give due consideration to the views of
the Attorney General on specific conditions to be included in any
permit, license, easement, right-of-way, or grant of authority in order
to ensure that pipelines are operated in accordance with the competitive
principles set forth in paragraph (1) of this subsection. In preparing
any such views, the Attorney General shall consult with the Federal
Trade Commission.
(4) Nothing in this subsection shall be deemed to limit, abridge, or
modify any authority of the United States under any other provision of
law with respect to pipelines on or across the outer Continental Shelf.
(g) Rates of production
(1) The leasee \2\ shall produce any oil or gas, or both, obtained
pursuant to an approved development and production plan, at rates
consistent with any rule or order issued by the President in accordance
with any provision of law.
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\2\ So in original. Probably should be ``lessee''.
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(2) If no rule or order referred to in paragraph (1) has been
issued, the lessee shall produce such oil or gas, or both, at rates
consistent with any regulation promulgated by the Secretary of Energy
which is to assure the maximum rate of production which may be sustained
without loss of ultimate recovery of oil or gas, or both, under sound
engineering and economic principles, and which is safe for the duration
of the activity covered by the approved plan. The Secretary may permit
the lessee to vary such rates if he finds that such variance is
necessary.
(h) Federal action affecting outer Continental Shelf; notification;
recommended changes
The head of any Federal department or agency who takes any action
which has a direct and significant effect on the outer Continental Shelf
or its development shall promptly notify the Secretary of such action
and the Secretary shall thereafter notify the Governor of any affected
State and the Secretary may thereafter recommend such changes in such
action as are considered appropriate.
(i) Flaring of natural gas
After September 18, 1978, no holder of any oil and gas lease issued
or maintained pursuant to this subchapter shall be permitted to flare
natural gas from any well unless the Secretary finds that there is no
practicable way to complete production of such gas, or that such flaring
is necessary to alleviate a temporary emergency situation or to conduct
testing or work-over operations.
(j) Cooperative development of common hydrocarbon-bearing areas
(1) Findings
(A) \3\ The Congress of the United States finds that the
unrestrained competitive production of hydrocarbons from a common
hydrocarbon-bearing geological area underlying the Federal and State
boundary may result in a number of harmful national effects,
including--
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\3\ So in original. No subpar. (B) has been enacted.
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(i) the drilling of unnecessary wells, the installation of
unnecessary facilities and other imprudent operating practices
that result in economic waste, environmental damage, and damage
to life and property;
(ii) the physical waste of hydrocarbons and an unnecessary
reduction in the amounts of hydrocarbons that can be produced
from certain hydrocarbon-bearing areas; and
(iii) the loss of correlative rights which can result in the
reduced value of national hydrocarbon resources and disorders in
the leasing of Federal and State resources.
(2) Prevention of harmful effects
The Secretary shall prevent, through the cooperative development
of an area, the harmful effects of unrestrained competitive
production of hydrocarbons from a common hydrocarbon-bearing area
underlying the Federal and State boundary.
(Aug. 7, 1953, ch. 345, Sec. 5, 67 Stat. 464; Pub. L. 95-372, title II,
Sec. 204, Sept. 18, 1978, 92 Stat. 636; Pub. L. 101-380, title VI,
Sec. 6004(a), Aug. 18, 1990, 104 Stat. 558.)
References in Text
The Clean Air Act, referred to in subsec. (a)(8), is act July 14,
1955, ch. 360, 69 Stat. 322, as amended, which is classified generally
to chapter 85 (Sec. 7401 et seq.) of Title 42, The Public Health and
Welfare. For complete classification of this Act to the Code, see Short
Title note set out under section 7401 of Title 42 and Tables.
Amendments
1990--Subsec. (j). Pub. L. 101-380 added subsec. (j).
1978--Subsec. (a). Pub. L. 95-372 expanded provisions formerly
contained in subsec. (a)(1) so as to include the enforcement of safety
and environmental laws and regulations, consultation with the Attorney
General and the Federal Trade Commission, and regulations for the
suspension or temporary prohibition of any operation or activity
including production, the cancellation of leases or permits, the prompt
and efficient exploration and development of a lease area, and
compliance with the national ambient air quality standards to the extent
that activities authorized significantly affect the air quality of any
State.
Subsec. (b). Pub. L. 95-372 redesignated as subsec. (b) provisions
formerly contained in subsec. (a)(2) conditioning the issuance and
continuation of leases or of assignments or other transfers of leases
upon compliance with regulations, and struck out provisions that had set
a penalty of a fine of not more than $2,000 or imprisonment for not more
than six months or both for the knowing and willful violation of rules
or regulations promulgated by the Secretary. See section 1350 of this
title.
Subsec. (c). Pub. L. 95-372 redesignated as subsec. (c) provisions
formerly contained in subsec. (b)(1) covering the cancellation of
nonproducing leases for failure of the owner to comply with any of the
provisions of this subchapter, or of the lease, or of the regulations
issued under this subchapter.
Subsec. (d). Pub. L. 95-372 redesignated as subsec. (d) provisions
formerly contained in subsec. (b)(2) covering the cancellation and
forfeiture of producing leases for failure of the owner to comply with
any of the provisions of this subchapter, the lease, or regulations
promulgated under this subchapter.
Subsec. (e). Pub. L. 95-372 redesignated as subsec. (e) provisions
formerly contained in subsec. (c) relating to pipeline rights-of-way and
inserted provisions relating to regulations prescribed by the Secretary
of Transportation and assurances of maximum environmental protection
through the use of the best available and safest technologies including
the safest practices for pipeline burial, and substituted references to
the Federal Energy Regulatory Commission and the Secretary of Energy for
existing references to the Federal Power Commission and the Interstate
Commerce Commission.
Subsecs. (f) to (i). Pub. L. 95-372 added subsecs. (f) to (i).
Effective Date of 1990 Amendment
Amendment by Pub. L. 101-380 applicable to incidents occurring after
Aug. 18, 1990, see section 1020 of Pub. L. 101-380, set out as an
Effective Date note under section 2701 of Title 33, Navigation and
Navigable Waters.
Transfer of Functions
Functions vested in, or delegated to, Secretary of Energy and
Department of Energy under or with respect to subsec. (g)(2) of this
section, transferred to, and vested in, Secretary of the Interior, by
section 100 of Pub. L. 97-257, 96 Stat. 841, set out as a note under
section 7152 of Title 42, The Public Health and Welfare.
Functions of Secretary of the Interior to promulgate regulations
under this subchapter which relate to fostering of competition for
Federal leases, implementation of alternative bidding systems authorized
for award of Federal leases, establishment of diligence requirements for
operations conducted on Federal leases, setting of rates for production
of Federal leases, and specifying of procedures, terms, and conditions
for acquisition and disposition of Federal royalty interests taken in
kind, transferred to Secretary of Energy by section 7152(b) of Title 42.
Section 7152(b) of Title 42 was repealed by Pub. L. 97-100, title II,
Sec. 201, Dec. 23, 1981, 95 Stat. 1407, and functions of Secretary of
Energy returned to Secretary of the Interior. See House Report No. 97-
315, pp. 25, 26, Nov. 5, 1981.
West Delta Field
Section 6004(b) of Pub. L. 101-380 provided that: ``Section 5(j) of
the Outer Continental Shelf Lands Act [43 U.S.C. 1334(j)], as added by
this section, shall not be applicable with respect to Blocks 17 and 18
of the West Delta Field offshore Louisiana.''
Key Largo Coral Reef Preserve
Secretary of the Interior to prescribe rules and regulations
governing the protection and conservation of the coral and other mineral
resources in the area designated Key Largo Coral Reef Preserve, see
Proc. No. 3339, Mar. 15, 1960, 25 F.R. 2352, set out as a note under
section 461 of Title 16, Conservation.
Section Referred to in Other Sections
This section is referred to in sections 1335, 1337, 1340, 1351 of
this title; title 42 section 7627.
