§ 1337. — Grant of leases by Secretary.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 43USC1337]
TITLE 43--PUBLIC LANDS
CHAPTER 29--SUBMERGED LANDS
SUBCHAPTER III--OUTER CONTINENTAL SHELF LANDS
Sec. 1337. Grant of leases by Secretary
(a) Oil and gas leases; award to highest responsible qualified bidder;
method of bidding; royalty relief; Congressional consideration
of bidding system; notice
(1) The Secretary is authorized to grant to the highest responsible
qualified bidder or bidders by competitive bidding, under regulations
promulgated in advance, any oil and gas lease on submerged lands of the
outer Continental Shelf which are not covered by leases meeting the
requirements of subsection (a) of section 1335 of this title. Such
regulations may provide for the deposit of cash bids in an interest-
bearing account until the Secretary announces his decision on whether to
accept the bids, with the interest earned thereon to be paid to the
Treasury as to bids that are accepted and to the unsuccessful bidders as
to bids that are rejected. The bidding shall be by sealed bid and, at
the discretion of the Secretary, on the basis of--
(A) cash bonus bid with a royalty at not less than 12\1/2\ per
centum fixed by the Secretary in amount or value of the production
saved, removed, or sold;
(B) variable royalty bid based on a per centum in amount or
value of the production saved, removed, or sold, with either a fixed
work commitment based on dollar amount for exploration or a fixed
cash bonus as determined by the Secretary, or both;
(C) cash bonus bid, or work commitment bid based on a dollar
amount for exploration with a fixed cash bonus, and a diminishing or
sliding royalty based on such formulae as the Secretary shall
determine as equitable to encourage continued production from the
lease area as resources diminish, but not less than 12\1/2\ per
centum at the beginning of the lease period in amount or value of
the production saved, removed, or sold;
(D) cash bonus bid with a fixed share of the net profits of no
less than 30 per centum to be derived from the production of oil and
gas from the lease area;
(E) fixed cash bonus with the net profit share reserved as the
bid variable;
(F) cash bonus bid with a royalty at no less than 12\1/2\ per
centum fixed by the Secretary in amount or value of the production
saved, removed, or sold and a fixed per centum share of net profits
of no less than 30 per centum to be derived from the production of
oil and gas from the lease area;
(G) work commitment bid based on a dollar amount for exploration
with a fixed cash bonus and a fixed royalty in amount or value of
the production saved, removed, or sold;
(H) cash bonus bid with royalty at no less than 12 and \1/2\ per
centum fixed by the Secretary in amount or value of production
saved, removed, or sold, and with suspension of royalties for a
period, volume, or value of production determined by the Secretary,
which suspensions may vary based on the price of production from the
lease; or
(I) subject to the requirements of paragraph (4) of this
subsection, any modification of bidding systems authorized in
subparagraphs (A) through (G), or any other systems of bid
variables, terms, and conditions which the Secretary determines to
be useful to accomplish the purposes and policies of this
subchapter, except that no such bidding system or modification shall
have more than one bid variable.
(2) The Secretary may, in his discretion, defer any part of the
payment of the cash bonus, as authorized in paragraph (1) of this
subsection, according to a schedule announced at the time of the
announcement of the lease sale, but such payment shall be made in total
no later than five years after the date of the lease sale.
(3)(A) The Secretary may, in order to promote increased production
on the lease area, through direct, secondary, or tertiary recovery
means, reduce or eliminate any royalty or net profit share set forth in
the lease for such area.
(B) In the Western and Central Planning Areas of the Gulf of Mexico
and the portion of the Eastern Planning Area of the Gulf of Mexico
encompassing whole lease blocks lying west of 87 degrees, 30 minutes
West longitude, the Secretary may, in order to--
(i) promote development or increased production on producing or
non-producing leases; or
(ii) encourage production of marginal resources on producing or
non-producing leases;
through primary, secondary, or tertiary recovery means, reduce or
eliminate any royalty or net profit share set forth in the lease(s).
With the lessee's consent, the Secretary may make other modifications to
the royalty or net profit share terms of the lease in order to achieve
these purposes.
(C)(i) Notwithstanding the provisions of this subchapter other than
this subparagraph, with respect to any lease or unit in existence on
November 28, 1995, meeting the requirements of this subparagraph, no
royalty payments shall be due on new production, as defined in clause
(iv) of this subparagraph, from any lease or unit located in water
depths of 200 meters or greater in the Western and Central Planning
Areas of the Gulf of Mexico, including that portion of the Eastern
Planning Area of the Gulf of Mexico encompassing whole lease blocks
lying west of 87 degrees, 30 minutes West longitude, until such volume
of production as determined pursuant to clause (ii) has been produced by
the lessee.
(ii) Upon submission of a complete application by the lessee, the
Secretary shall determine within 180 days of such application whether
new production from such lease or unit would be economic in the absence
of the relief from the requirement to pay royalties provided for by
clause (i) of this subparagraph. In making such determination, the
Secretary shall consider the increased technological and financial risk
of deep water development and all costs associated with exploring,
developing, and producing from the lease. The lessee shall provide
information required for a complete application to the Secretary prior
to such determination. The Secretary shall clearly define the
information required for a complete application under this section. Such
application may be made on the basis of an individual lease or unit. If
the Secretary determines that such new production would be economic in
the absence of the relief from the requirement to pay royalties provided
for by clause (i) of this subparagraph, the provisions of clause (i)
shall not apply to such production. If the Secretary determines that
such new production would not be economic in the absence of the relief
from the requirement to pay royalties provided for by clause (i), the
Secretary must determine the volume of production from the lease or unit
on which no royalties would be due in order to make such new production
economically viable; except that for new production as defined in clause
(iv)(I), in no case will that volume be less than 17.5 million barrels
of oil equivalent in water depths of 200 to 400 meters, 52.5 million
barrels of oil equivalent in 400-800 meters of water, and 87.5 million
barrels of oil equivalent in water depths greater than 800 meters.
Redetermination of the applicability of clause (i) shall be undertaken
by the Secretary when requested by the lessee prior to the commencement
of the new production and upon significant change in the factors upon
which the original determination was made. The Secretary shall make such
redetermination within 120 days of submission of a complete application.
The Secretary may extend the time period for making any determination or
redetermination under this clause for 30 days, or longer if agreed to by
the applicant, if circumstances so warrant. The lessee shall be notified
in writing of any determination or redetermination and the reasons for
and assumptions used for such determination. Any determination or
redetermination under this clause shall be a final agency action. The
Secretary's determination or redetermination shall be judicially
reviewable under section 702 of title 5, only for actions filed within
30 days of the Secretary's determination or redetermination.
(iii) In the event that the Secretary fails to make the
determination or redetermination called for in clause (ii) upon
application by the lessee within the time period, together with any
extension thereof, provided for by clause (ii), no royalty payments
shall be due on new production as follows:
(I) For new production, as defined in clause (iv)(I) of this
subparagraph, no royalty shall be due on such production according
to the schedule of minimum volumes specified in clause (ii) of this
subparagraph.
(II) For new production, as defined in clause (iv)(II) of this
subparagraph, no royalty shall be due on such production for one
year following the start of such production.
(iv) For purposes of this subparagraph, the term ``new production''
is--
(I) any production from a lease from which no royalties are due
on production, other than test production, prior to November 28,
1995; or
(II) any production resulting from lease development activities
pursuant to a Development Operations Coordination Document, or
supplement thereto that would expand production significantly beyond
the level anticipated in the Development Operations Coordination
Document, approved by the Secretary after November 28, 1995.
(v) During the production of volumes determined pursuant to clauses
\1\ (ii) or (iii) of this subparagraph, in any year during which the
arithmetic average of the closing prices on the New York Mercantile
Exchange for light sweet crude oil exceeds $28.00 per barrel, any
production of oil will be subject to royalties at the lease stipulated
royalty rate. Any production subject to this clause shall be counted
toward the production volume determined pursuant to clause (ii) or
(iii). Estimated royalty payments will be made if such average of the
closing prices for the previous year exceeds $28.00. After the end of
the calendar year, when the new average price can be calculated, lessees
will pay any royalties due, with interest but without penalty, or can
apply for a refund, with interest, of any overpayment.
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\1\ So in original. Probably should be ``clause''.
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(vi) During the production of volumes determined pursuant to clause
(ii) or (iii) of this subparagraph, in any year during which the
arithmetic average of the closing prices on the New York Mercantile
Exchange for natural gas exceeds $3.50 per million British thermal
units, any production of natural gas will be subject to royalties at the
lease stipulated royalty rate. Any production subject to this clause
shall be counted toward the production volume determined pursuant to
clauses \1\ (ii) or (iii). Estimated royalty payments will be made if
such average of the closing prices for the previous year exceeds $3.50.
After the end of the calendar year, when the new average price can be
calculated, lessees will pay any royalties due, with interest but
without penalty, or can apply for a refund, with interest, of any
overpayment.
(vii) The prices referred to in clauses (v) and (vi) of this
subparagraph shall be changed during any calendar year after 1994 by the
percentage, if any, by which the implicit price deflator for the gross
domestic product changed during the preceding calendar year.
(4)(A) The Secretary of Energy shall submit any bidding system
authorized in subparagraph (H) of paragraph (1) to the Senate and House
of Representatives. The Secretary may institute such bidding system
unless either the Senate or the House of Representatives passes a
resolution of disapproval within thirty days after receipt of the
bidding system.
(B) Subparagraphs (C) through (J) of this paragraph are enacted by
Congress--
(i) as an exercise of the rulemaking power of the Senate and the
House of Representatives, respectively, and as such they are deemed
a part of the rules of each House, respectively, but they are
applicable only with respect to the procedures to be followed in
that House in the case of resolutions described by this paragraph,
and they supersede other rules only to the extent that they are
inconsistent therewith; and
(ii) with full recognition of the constitutional right of either
House to change the rules (so far as relating to the procedure of
that House) at any time, in the same manner, and to the same extent
as in the case of any other rule of that House.
(C) A resolution disapproving a bidding system submitted pursuant to
this paragraph shall immediately be referred to a committee (and all
resolutions with respect to the same request shall be referred to the
same committee) by the President of the Senate or the Speaker of the
House of Representatives, as the case may be.
(D) If the committee to which has been referred any resolution
disapproving the bidding system of the Secretary has not reported the
resolution at the end of ten calendar days after its referral, it shall
be in order to move either to discharge the committee from further
consideration of the resolution or to discharge the committee from
further consideration of any other resolution with respect to the same
bidding system which has been referred to the committee.
(E) A motion to discharge may be made only by an individual favoring
the resolution, shall be highly privileged (except that it may not be
made after the committee has reported a resolution with respect to the
same recommendation), and debate thereon shall be limited to not more
than one hour, to be divided equally between those favoring and those
opposing the resolution. An amendment to the motion shall not be in
order, and it shall not be in order to move to reconsider the vote by
which the motion is agreed to or disagreed to.
(F) If the motion to discharge is agreed to or disagreed to, the
motion may not be renewed, nor may another motion to discharge the
committee be made with respect to any other resolution with respect to
the same bidding system.
(G) When the committee has reported, or has been discharged from
further consideration of, a resolution as provided in this paragraph, it
shall be at any time thereafter in order (even though a previous motion
to the same effect has been disagreed to) to move to proceed to the
consideration of the resolution. The motion shall be highly privileged
and shall not be debatable. An amendment to the motion shall not be in
order, and it shall not be in order to move to reconsider the vote by
which the motion is agreed to or disagreed to.
(H) Debate on the resolution is limited to not more than two hours,
to be divided equally between those favoring and those opposing the
resolution. A motion further to limit debate is not debatable. An
amendment to, or motion to recommit, the resolution is not in order, and
it is not in order to move to reconsider the vote by which the
resolution is agreed to or disagreed to.
(I) Motions to postpone, made with respect to the discharge from the
committee, or the consideration of a resolution with respect to a
bidding system, and motions to proceed to the consideration of other
business, shall be decided without debate.
(J) Appeals from the decisions of the Chair relating to the
application of the rules of the Senate or the House of Representatives,
as the case may be, to the procedure relating to a resolution with
respect to a bidding system shall be decided without debate.
(5)(A) During the five-year period commencing on September 18, 1978,
the Secretary may, in order to obtain statistical information to
determine which bidding alternatives will best accomplish the purposes
and policies of this subchapter, require, as to no more than 10 per
centum of the tracts offered each year, each bidder to submit bids for
any area of the outer Continental Shelf in accordance with more than one
of the bidding systems set forth in paragraph (1) of this subsection.
For such statistical purposes, leases may be awarded using a bidding
alternative selected at random for the acquisition of valid statistical
data if such bidding alternative is otherwise consistent with the
provisions of this subchapter.
(B) The bidding systems authorized by paragraph (1) of this
subsection, other than the system authorized by subparagraph (A), shall
be applied to not less than 20 per centum and not more than 60 per
centum of the total area offered for leasing each year during the five-
year period beginning on September 18, 1978, unless the Secretary
determines that the requirements set forth in this subparagraph are
inconsistent with the purposes and policies of this subchapter.
(6) At least ninety days prior to notice of any lease sale under
subparagraph (D), (E), (F), or, if appropriate, (H) of paragraph (1),
the Secretary shall by regulation establish rules to govern the
calculation of net profits. In the event of any dispute between the
United States and a lessee concerning the calculation of the net profits
under the regulation issued pursuant to this paragraph, the burden of
proof shall be on the lessee.
(7) After an oil and gas lease is granted pursuant to any of the
work commitment options of paragraph (1) of this subsection--
(A) the lessee, at its option, shall deliver to the Secretary
upon issuance of the lease either (i) a cash deposit for the full
amount of the exploration work commitment, or (ii) a performance
bond in form and substance and with a surety satisfactory to the
Secretary, in the principal amount of such exploration work
commitment assuring the Secretary that such commitment shall be
faithfully discharged in accordance with this section, regulations,
and the lease; and for purposes of this subparagraph, the principal
amount of such cash deposit or bond may, in accordance with
regulations, be periodically reduced upon proof, satisfactory to the
Secretary, that a portion of the exploration work commitment has
been satisfied;
(B) 50 per centum of all exploration expenditures on, or
directly related to, the lease, including, but not limited to (i)
geological investigations and related activities, (ii) geophysical
investigations including seismic, geomagnetic, and gravity surveys,
data processing and interpretation, and (iii) exploratory drilling,
core drilling, redrilling, and well completion or abandonment,
including the drilling of wells sufficient to determine the size and
a real extent of any newly discovered field, and including the cost
of mobilization and demobilization of drilling equipment, shall be
included in satisfaction of the commitment, except that the lessee's
general overhead cost shall not be so included against the work
commitment, but its cost (including employee benefits) of employees
directly assigned to such exploration work shall be so included; and
(C) if at the end of the primary term of the lease, including
any extension thereof, the full dollar amount of the exploration
work commitment has not been satisfied, the balance shall then be
paid in cash to the Secretary.
(8) Not later than thirty days before any lease sale, the Secretary
shall submit to the Congress and publish in the Federal Register a
notice--
(A) identifying any bidding system which will be utilized for
such lease sale and the reasons for the utilization of such bidding
system; and
(B) designating the lease tracts selected which are to be
offered in such sale under the bidding system authorized by
subparagraph (A) of paragraph (1) and the lease tracts selected
which are to be offered under any one or more of the bidding systems
authorized by subparagraphs (B) through (H) of paragraph (1), and
the reasons such lease tracts are to be offered under a particular
bidding system.
(b) Terms and provisions of oil and gas leases
An oil and gas lease issued pursuant to this section shall--
(1) be for a tract consisting of a compact area not exceeding
five thousand seven hundred and sixty acres, as the Secretary may
determine, unless the Secretary finds that a larger area is
necessary to comprise a reasonable economic production unit;
(2) be for an initial period of--
(A) five years; or
(B) not to exceed ten years where the Secretary finds that
such longer period is necessary to encourage exploration and
development in areas because of unusually deep water or other
unusually adverse conditions,
and as long after such initial period as oil or gas is produced from
the area in paying quantities, or drilling or well reworking
operations as approved by the Secretary are conducted thereon;
(3) require the payment of amount or value as determined by one
of the bidding systems set forth in subsection (a) of this section;
(4) entitle the lessee to explore, develop, and produce the oil
and gas contained within the lease area, conditioned upon due
diligence requirements and the approval of the development and
production plan required by this subchapter;
(5) provide for suspension or cancellation of the lease during
the initial lease term or thereafter pursuant to section 1334 of
this title;
(6) contain such rental and other provisions as the Secretary
may prescribe at the time of offering the area for lease; and
(7) provide a requirement that the lessee offer 20 per centum of
the crude oil, condensate, and natural gas liquids produced on such
lease, at the market value and point of delivery applicable to
Federal royalty oil, to small or independent refiners as defined in
the Emergency Petroleum Allocation Act of 1973 \2\ [15 U.S.C. 751 et
seq.].
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\2\ See References in Text note below.
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(c) Antitrust review of lease sales
(1) Following each notice of a proposed lease sale and before the
acceptance of bids and the issuance of leases based on such bids, the
Secretary shall allow the Attorney General, in consultation with the
Federal Trade Commission, thirty days to review the results of such
lease sale, except that the Attorney General, after consultation with
the Federal Trade Commission, may agree to a shorter review period.
(2) The Attorney General may, in consultation with the Federal Trade
Commission, conduct such antitrust review on the likely effects the
issuance of such leases would have on competition as the Attorney
General, after consultation with the Federal Trade Commission, deems
appropriate and shall advise the Secretary with respect to such review.
The Secretary shall provide such information as the Attorney General,
after consultation with the Federal Trade Commission, may require in
order to conduct any antitrust review pursuant to this paragraph and to
make recommendations pursuant to paragraph (3) of this subsection.
(3) The Attorney General, after consultation with the Federal Trade
Commission, may make such recommendations to the Secretary, including
the nonacceptance of any bid, as may be appropriate to prevent any
situation inconsistent with the antitrust laws. If the Secretary
determines, or if the Attorney General advises the Secretary, after
consultation with the Federal Trade Commission and prior to the issuance
of any lease, that such lease may create or maintain a situation
inconsistent with the antitrust laws, the Secretary may--
(A) refuse (i) to accept an otherwise qualified bid for such
lease, or (ii) to issue such lease, notwithstanding subsection (a)
of this section; or
(B) issue such lease, and notify the lessee and the Attorney
General of the reason for such decision.
(4)(A) Nothing in this subsection shall restrict the power under any
other Act or the common law of the Attorney General, the Federal Trade
Commission, or any other Federal department or agency to secure
information, conduct reviews, make recommendations, or seek appropriate
relief.
(B) Neither the issuance of a lease nor anything in this subsection
shall modify or abridge any private right of action under the antitrust
laws.
(d) Due diligence
No bid for a lease may be submitted if the Secretary finds, after
notice and hearing, that the bidder is not meeting due diligence
requirements on other leases.
(e) Secretary's approval for sale, exchange, assignment, or other
transfer of leases
No lease issued under this subchapter may be sold, exchanged,
assigned, 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.
(f) Antitrust immunity or defenses
Nothing in this subchapter shall be deemed to convey to any person,
association, corporation, or other business organization immunity from
civil or criminal liability, or to create defenses to actions, under any
antitrust law.
(g) Leasing of lands within three miles of seaward boundaries of coastal
States; deposit of revenues; distribution of revenues
(1) At the time of soliciting nominations for the leasing of lands
containing tracts wholly or partially within three nautical miles of the
seaward boundary of any coastal State, and subsequently as new
information is obtained or developed by the Secretary, the Secretary
shall, in addition to the information required by section 1352 of this
title, provide the Governor of such State--
(A) an identification and schedule of the areas and regions
proposed to be offered for leasing;
(B) at the request of the Governor of such State, all
information from all sources concerning the geographical,
geological, and ecological characteristics of such tracts;
(C) an estimate of the oil and gas reserves in the areas
proposed for leasing; and
(D) at the request of the Governor of such State, an
identification of any field, geological structure, or trap located
wholly or partially within three nautical miles of the seaward
boundary of such coastal State, including all information relating
to the entire field, geological structure, or trap.
The provisions of the first sentence of subsection (c) and the
provisions of subsections (e)-(h) of section 1352 of this title shall be
applicable to the release by the Secretary of any information to any
coastal State under this paragraph. In addition, the provisions of
subsections (c) and (e)-(h) of section 1352 of this title shall apply in
their entirety to the release by the Secretary to any coastal State of
any information relating to Federal lands beyond three nautical miles of
the seaward boundary of such coastal State.
(2) Notwithstanding any other provision of this subchapter, the
Secretary shall deposit into a separate account in the Treasury of the
United States all bonuses, rents, and royalties, and other revenues
(derived from any bidding system authorized under subsection (a)(1) of
this section), excluding Federal income and windfall profits taxes, and
derived from any lease issued after September 18, 1978 of any Federal
tract which lies wholly (or, in the case of Alaska, partially until
seven years from the date of settlement of any boundary dispute that is
the subject of an agreement under section 1336 of this title entered
into prior to January 1, 1986 or until April 15, 1993 with respect to
any other tract) within three nautical miles of the seaward boundary of
any coastal State, or, (except as provided above for Alaska) in the case
where a Federal tract lies partially within three nautical miles of the
seaward boundary, a percentage of bonuses, rents, royalties, and other
revenues (derived from any bidding system authorized under subsection
(a)(1) of this section), excluding Federal income and windfall profits
taxes, and derived from any lease issued after September 18, 1978 of
such tract equal to the percentage of surface acreage of the tract that
lies within such three nautical miles. Except as provided in paragraph
(5) of this subsection, not later than the last business day of the
month following the month in which those revenues are deposited in the
Treasury, the Secretary shall transmit to such coastal State 27 percent
of those revenues, together with all accrued interest thereon. The
remaining balance of such revenues shall be transmitted simultaneously
to the miscellaneous receipts account of the Treasury of the United
States.
(3) Whenever the Secretary or the Governor of a coastal State
determines that a common potentially hydrocarbon-bearing area may
underlie the Federal and State boundary, the Secretary or the Governor
shall notify the other party in writing of his determination and the
Secretary shall provide to the Governor notice of the current and
projected status of the tract or tracts containing the common
potentially hydrocarbon-bearing area. If the Secretary has leased or
intends to lease such tract or tracts, the Secretary and the Governor of
the coastal State may enter into an agreement to divide the revenues
from production of any common potentially hydrocarbon-bearing area, by
unitization or other royalty sharing agreement, pursuant to existing
law. If the Secretary and the Governor do not enter into an agreement,
the Secretary may nevertheless proceed with the leasing of the tract or
tracts. Any revenues received by the United States under such an
agreement shall be subject to the requirements of paragraph (2).
(4) The deposits in the Treasury account described in this section
shall be invested by the Secretary of the Treasury in securities backed
by the full faith and credit of the United States having maturities
suitable to the needs of the account and yielding the highest reasonably
available interest rates as determined by the Secretary of the Treasury.
(5)(A) When there is a boundary dispute between the United States
and a State which is subject to an agreement under section 1336 of this
title, the Secretary shall credit to the account established pursuant to
such agreement all bonuses, rents, and royalties, and other revenues
(derived from any bidding system authorized under subsection (a)(1) of
this section), excluding Federal income and windfall profits taxes, and
derived from any lease issued after September 18, 1978 of any Federal
tract which lies wholly or partially within three nautical miles of the
seaward boundary asserted by the State, if that money has not otherwise
been deposited in such account. Proceeds of an escrow account
established pursuant to an agreement under section 1336 of this title
shall be distributed as follows:
(i) Twenty-seven percent of all bonuses, rents, and royalties,
and other revenues (derived from any bidding system authorized under
subsection (a)(1) of this section), excluding Federal income and
windfall profits taxes, and derived from any lease issued after
September 18, 1978, of any tract which lies wholly within three
nautical miles of the seaward boundary asserted by the Federal
Government in the boundary dispute, together with all accrued
interest thereon, shall be paid to the State either--
(I) within thirty days of December 1, 1987, or
(II) by the last business day of the month following the
month in which those revenues are deposited in the Treasury,
whichever date is later.
(ii) Upon the settlement of a boundary dispute which is subject
to a section 1336 of this title agreement between the United States
and a State, the Secretary shall pay to such State any additional
moneys due such State from amounts deposited in or credited to the
escrow account. If there is insufficient money deposited in the
escrow account, the Secretary shall transmit, from any revenues
derived from any lease of Federal lands under this subchapter, the
remaining balance due such State in accordance with the formula set
forth in section 8004(b)(1)(B) of the Outer Continental Shelf Lands
Act Amendments of 1985.
(B) This paragraph applies to all Federal oil and gas lease sales,
under this subchapter, including joint lease sales, occurring after
September 18, 1978.
(6) This section shall be deemed to take effect on October 1, 1985,
for purposes of determining the amounts to be deposited in the separate
account and the States' shares described in paragraph (2).
(7) When the Secretary leases any tract which lies wholly or
partially within three miles of the seaward boundary of two or more
States, the revenues from such tract shall be distributed as otherwise
provided by this section, except that the State's share of such revenues
that would otherwise result under this section shall be divided equally
among such States.
(h) State claims to jurisdiction over submerged lands
Nothing contained in this section shall be construed to alter,
limit, or modify any claim of any State to any jurisdiction over, or any
right, title, or interest in, any submerged lands.
(i) Sulphur leases; award to highest bidder; method of bidding
In order to meet the urgent need for further exploration and
development of the sulphur deposits in the submerged lands of the outer
Continental Shelf, the Secretary is authorized to grant to the qualified
persons offering the highest cash bonuses on a basis of competitive
bidding sulphur leases on submerged lands of the outer Continental
Shelf, which are not covered by leases which include sulphur and meet
the requirements of section 1335(a) of this title, and which sulphur
leases shall be offered for bid by sealed bids and granted on separate
leases from oil and gas leases, and for a separate consideration, and
without priority or preference accorded to oil and gas lessees on the
same area.
(j) Terms and provisions of sulphur leases
A sulphur lease issued by the Secretary pursuant to this section
shall (1) cover an area of such size and dimensions as the Secretary may
determine, (2) be for a period of not more than ten years and so long
thereafter as sulphur may be produced from the area in paying quantities
or drilling, well reworking, plant construction, or other operations for
the production of sulphur, as approved by the Secretary, are conducted
thereon, (3) require the payment to the United States of such royalty as
may be specified in the lease but not less than 5 per centum of the
gross production or value of the sulphur at the wellhead, and (4)
contain such rental provisions and such other terms and provisions as
the Secretary may by regulation prescribe at the time of offering the
area for lease.
(k) Other mineral leases; award to highest bidder; terms and conditions;
agreements for use of resources for shore protection, beach or
coastal wetlands restoration, or other projects
(1) The Secretary is authorized to grant to the qualified persons
offering the highest cash bonuses on a basis of competitive bidding
leases of any mineral other than oil, gas, and sulphur in any area of
the outer Continental Shelf not then under lease for such mineral upon
such royalty, rental, and other terms and conditions as the Secretary
may prescribe at the time of offering the area for lease.
(2)(A) Notwithstanding paragraph (1), the Secretary may negotiate
with any person an agreement for the use of Outer Continental Shelf
sand, gravel and shell resources--
(i) for use in a program of, or project for, shore protection,
beach restoration, or coastal wetlands restoration undertaken by a
Federal, State, or local government agency; or
(ii) for use in a construction project, other than a project
described in clause (i), that is funded in whole or in part by or
authorized by the Federal Government.
(B) In carrying out a negotiation under this paragraph, the
Secretary may assess a fee based on an assessment of the value of the
resources and the public interest served by promoting development of the
resources. No fee shall be assessed directly or indirectly under this
subparagraph against a Federal, State, or local government agency.
(C) The Secretary may, through this paragraph and in consultation
with the Secretary of Commerce, seek to facilitate projects in the
coastal zone, as such term is defined in section 1453 of title 16, that
promote the policy set forth in section 1452 of title 16.
(D) Any Federal agency which proposes to make use of sand, gravel
and shell resources subject to the provisions of this subchapter shall
enter into a Memorandum of Agreement with the Secretary concerning the
potential use of those resources. The Secretary shall notify the
Committee on Merchant Marine and Fisheries and the Committee on Natural
Resources of the House of Representatives and the Committee on Energy
and Natural Resources of the Senate on any proposed project for the use
of those resources prior to the use of those resources.
(l) Publication of notices of sale and terms of bidding
Notice of sale of leases, and the terms of bidding, authorized by
this section shall be published at least thirty days before the date of
sale in accordance with rules and regulations promulgated by the
Secretary.
(m) Disposition of revenues
All moneys paid to the Secretary for or under leases granted
pursuant to this section shall be deposited in the Treasury in
accordance with section 1338 of this title.
(n) Issuance of lease as nonprejudicial to ultimate settlement or
adjudication of controversies
The issuance of any lease by the Secretary pursuant to this
subchapter, or the making of any interim arrangements by the Secretary
pursuant to section 1336 of this title shall not prejudice the ultimate
settlement or adjudication of the question as to whether or not the area
involved is in the outer Continental Shelf.
(o) Cancellation of leases for fraud
The Secretary may cancel any lease obtained by fraud or
misrepresentation.
(Aug. 7, 1953, ch. 345, Sec. 8, 67 Stat. 468; Pub. L. 95-372, title II,
Sec. 205(a), (b), Sept. 18, 1978, 92 Stat. 640, 644; Pub. L. 99-272,
title VIII, Sec. 8003, Apr. 7, 1986, 100 Stat. 148; Pub. L. 100-202,
Sec. 101(g) [title I, Sec. 100], Dec. 22, 1987, 101 Stat. 1329-213,
1329-225; Pub. L. 103-426, Sec. 1(a), Oct. 31, 1994, 108 Stat. 4371;
Pub. L. 104-58, title III, Secs. 302, 303, Nov. 28, 1995, 109 Stat. 563,
565; Pub. L. 105-362, title IX, Sec. 901(k), Nov. 10, 1998, 112 Stat.
3290; Pub. L. 106-53, title II, Sec. 215(b)(1), Aug. 17, 1999, 113 Stat.
292.)
References in Text
The Emergency Petroleum Allocation Act of 1973, referred to in
subsec. (b)(7), is Pub. L. 93-159, Nov. 27, 1973, 87 Stat. 628, as
amended, which was classified generally to chapter 16A (Sec. 751 et
seq.) of Title 15, Commerce and Trade, and was omitted from the Code
pursuant to section 760g of Title 15, which provided for the expiration
of the President's authority under that chapter on Sept. 30, 1981.
The antitrust laws, referred to in subsecs. (c)(3), (4)(B) and (f),
are defined in section 1331 of this title.
Section 8004(b)(1)(B) of the Outer Continental Shelf Lands Act
Amendments of 1985, referred to in subsec. (g)(5)(A), is section
8004(b)(1)(B) of Pub. L. 99-272, which is set out as a note below.
Codification
In subsec. (a)(3)(C)(ii), ``section 702 of title 5'' substituted for
``section 10(a) of the Administrative Procedures Act (5 U.S.C. 702)'' on
authority of Pub. L. 89-554, Sec. 7(b), Sept. 6, 1966, 80 Stat. 631, the
first section of which enacted Title 5, Government Organization and
Employees.
Amendments
1999--Subsec. (k)(2)(B). Pub. L. 106-53 substituted ``a Federal,
State, or local government agency'' for ``an agency of the Federal
Government''.
1998--Subsec. (a)(9). Pub. L. 105-362 struck out par. (9) which
related to report to Congress by Secretary of Energy on bidding options
for oil and gas leases on outer Continental Shelf land.
1995--Subsec. (a)(1)(H), (I). Pub. L. 104-58, Sec. 303, added
subpar. (H) and redesignated former subpar. (H) as (I).
Subsec. (a)(3). Pub. L. 104-58, Sec. 302, designated existing
provisions as subpar. (A) and added subpars. (B) and (C).
1994--Subsec. (k). Pub. L. 103-426 designated existing provisions as
par. (1) and added par. (2).
1987--Subsec. (g)(5)(A). Pub. L. 100-202 substituted ``an escrow
account established pursuant to an agreement under section 1336 of this
title'' for ``such account'' in second sentence, added cl. (i),
designated existing indented par. as cl. (ii), substituted ``a
boundary'' for ``any boundary'', ``any additional moneys'' for ``all
moneys'', and inserted ``or credited to'' before ``the escrow account''.
1986--Subsec. (g)(1). Pub. L. 99-272 amended par. (1) generally.
Prior to amendment, par. (1) read as follows: ``At the time of
soliciting nominations for the leasing of lands within three miles of
the seaward boundary of any coastal State, the Secretary shall provide
the Governor of such State--
``(A) an identification and schedule of the areas and regions
proposed to be offered for leasing;
``(B) all information concerning the geographical, geological,
and ecological characteristics of such regions;
``(C) an estimate of the oil and gas reserves in the areas
proposed for leasing; and
``(D) an identification of any field, geological structure, or
trap located within three miles of the seaward boundary of such
coastal State.''
Subsec. (g)(2). Pub. L. 99-272 amended par. (2) generally. Prior to
amendment, par. (2) read as follows: ``After receipt of nominations for
any area of the outer Continental Shelf within three miles of the
seaward boundary of any coastal State, the Secretary shall inform the
Governor of such coastal State of any such area which the Secretary
believes should be given further consideration for leasing. The
Secretary, in consultation with the Governor of the coastal State, shall
then, determine whether any such area may contain one or more oil or gas
pools or fields underlying both the outer Continental Shelf and lands
subject to the jurisdiction of such State. If, with respect to such
area, the Secretary selects a tract or tracts which may contain one or
more oil or gas pools or fields underlying both the outer Continental
Shelf and lands subject to the jurisdiction of such State, the Secretary
shall offer the Governor of such coastal State the opportunity to enter
into an agreement concerning the disposition of revenues which may be
generated by a Federal lease within such area in order to permit their
fair and equitable division between the State and Federal Government.''
Subsec. (g)(3). Pub. L. 99-272 amended par. (3) generally. Prior to
amendment, par. (3) read as follows: ``Within ninety days after the
offer by the Secretary pursuant to paragraph (2) of this subsection, the
Governor shall elect whether to enter into such agreement and shall
notify the Secretary of his decision. If the Governor accepts the offer,
the terms of any lease issued shall be consistent with the provisions of
this subchapter, with applicable regulations, and, to the maximum extent
practicable, with the applicable laws of the coastal State. If the
Governor declines the offer, or if the parties cannot agree to terms
concerning the disposition of revenues from such lease (by the time the
Secretary determines to offer the area for lease), the Secretary may
nevertheless proceed with the leasing of the area.''
Subsec. (g)(4). Pub. L. 99-272 amended par. (4) generally. Prior to
amendment, par. (4) read as follows: ``Notwithstanding any other
provision of this subchapter, the Secretary shall deposit in a separate
account in the Treasury of the United States all bonuses, royalties, and
other revenues attributable to oil and gas pools underlying both the
outer Continental Shelf and submerged lands subject to the jurisdiction
of any coastal State until such time as the Secretary and the Governor
of such coastal State agree on, or if the Secretary and the Governor of
such coastal State cannot agree, as a district court of the United
States determines, the fair and equitable disposition of such revenues
and any interest which has accrued and the proper rate of payments to be
deposited in the treasuries of the Federal Government and such coastal
State.''
Subsec. (g)(5) to (7). Pub. L. 99-272 added pars. (5) to (7).
1978--Subsec. (a). Pub. L. 95-372, Sec. 205(a), designated existing
provisions as par. (1)(A) and (B), and in par. (1)(A) as so
redesignated, struck out provisions which restricted authority of
Secretary to grant oil and gas leases to situations involving the urgent
need for further exploration and development of oil and gas deposits of
the submerged lands of the outer Continental Shelf and inserted
provisions permitting the promulgation of regulations for the deposit of
cash bids in interest-bearing accounts until the Secretary announces his
decision on whether to accept the bids with the earned interest paid
either to the Treasury or to unsuccessful bidders, in par. (1)(B) as so
redesignated, substituted provisions relating to variable royalty bids
based on a per centum in amount or value of the production saved,
removed, or sold, with either a fixed work commitment based on dollar
amount covering exploration or a fixed cash bonus as determined by the
Secretary or both for provisions relating to straight royalty bids at
not less than 12\1/2\ per centum with a cash bonus fixed by the
Secretary, and added pars. (1)(C) to (H) and pars. (2) to (9).
Subsec. (b). Pub. L. 95-372, Sec. 205(a), redesignated cls. (1) to
(4) as pars. (1), (2), (3), and (6) respectively, added pars. (4), (5),
and (7), and in par. (1) as so redesignated, inserted provisions
authorizing the Secretary to lease tracts larger than 5760 acres if a
larger area is necessary to comprise a reasonable economic production
unit and in par. (2) as so redesignated, inserted provision to allow up
to a 10 year initial period if the longer period is necessary to
encourage exploration and development in areas because of unusually deep
water or other unusually adverse conditions, and in par. (3) as so
redesignated, substituted ``payment of amount or value as determined by
one of the bidding systems set forth in subsection (a) of this section''
for ``payment of a royalty of not less than 12\1/2\ per centum, in the
amount or value of the production saved, removed, or sold from the
lease''.
Subsecs. (c) to (h). Pub. L. 95-372, Sec. 205(b), added subsecs. (c)
to (h). Former subsecs. (c) to (h) redesignated (i) to (n).
Subsec. (i). Pub. L. 95-372, Sec. 205(b), redesignated former
subsec. (c) as (i). Former subsec. (i) redesignated (o).
Subsec. (j). Pub. L. 95-372, Sec. 205(b), redesignated former
subsec. (d) as (j). Former subsec. (j), which provided that any person
complaining of the cancellation of a lease by the Secretary could have
the Secretary's action reviewed in the United States District Court for
the District of Columbia by filing a petition for review, was struck
out. See section 1349 of this title.
Subsecs. (k) to (o). Pub. L. 95-372, Sec. 205(b), redesignated
former subsecs. (e) to (i) as (k) to (o), respectively.
Change of Name
Committee on Natural Resources of House of Representatives treated
as referring to Committee on Resources of House of Representatives by
section 1(a) of Pub. L. 104-14, set out as a note preceding section 21
of Title 2, The Congress.
Regulations
Section 305 of title III of Pub. L. 104-58 provided that: ``The
Secretary shall promulgate such rules and regulations as are necessary
to implement the provisions of this title [amending this section and
enacting provisions set out as notes under this section] within 180 days
after the enactment of this Act [Nov. 28, 1995].''
Savings Provision
Section 306 of title III of Pub. L. 104-58 provided that: ``Nothing
in this title [amending this section and enacting provisions set out as
notes under this section] shall be construed to affect any offshore pre-
leasing, leasing, or development moratorium, including any moratorium
applicable to the Eastern Planning Area of the Gulf of Mexico located
off the Gulf Coast of Florida.''
Abolition of House Committee on Merchant Marine and Fisheries
Committee on Merchant Marine and Fisheries of House of
Representatives abolished and its jurisdiction transferred by House
Resolution No. 6, One Hundred Fourth Congress, Jan. 4, 1995. For
treatment of references to Committee on Merchant Marine and Fisheries,
see section 1(b)(3) of Pub. L. 104-14, set out as a note preceding
section 21 of Title 2, The Congress.
Transfer of Functions
Functions vested in, or delegated to, Secretary of Energy and
Department of Energy under or with respect to subsec. (a)(4) 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.
Reimbursement of Local Interests
Pub. L. 106-53, title II, Sec. 215(b)(2), Aug. 17, 1999, 113 Stat.
293, provided that: ``Any amounts paid by non-Federal interests for
beach erosion control, hurricane protection, shore protection, or storm
damage reduction projects as a result of an assessment under section
8(k) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(k)) shall
be fully reimbursed.''
Fees for Royalty Rate Relief Applications
Pub. L. 104-134, title I, Sec. 101(c) [title I], Apr. 26, 1996, 110
Stat. 1321-156, 1321-166; renumbered title I, Pub. L. 104-140,
Sec. 1(a), May 2, 1996, 110 Stat. 1327, provided in part: ``That
beginning in fiscal year 1996 and thereafter, fees for royalty rate
relief applications shall be established (and revised as needed) in
Notices to Lessees, and shall be credited to this account in the program
areas performing the function, and remain available until expended for
the costs of administering the royalty rate relief authorized by 43
U.S.C. 1337(a)(3)''.
Lease Sales
Section 304 of title III of Pub. L. 104-58 provided that: ``For all
tracts located in water depths of 200 meters or greater in the Western
and Central Planning Area of the Gulf of Mexico, including that portion
of the Eastern Planning Area of the Gulf of Mexico encompassing whole
lease blocks lying west of 87 degrees, 30 minutes West longitude, any
lease sale within five years of the date of enactment of this title
[Nov. 28, 1995], shall use the bidding system authorized in section
8(a)(1)(H) of the Outer Continental Shelf Lands Act, as amended by this
title [43 U.S.C. 1337(a)(1)(H)], except that the suspension of royalties
shall be set at a volume of not less than the following:
``(1) 17.5 million barrels of oil equivalent for leases in water
depths of 200 to 400 meters;
``(2) 52.5 million barrels of oil equivalent for leases in 400
to 800 meters of water; and
``(3) 87.5 million barrels of oil equivalent for leases in water
depths greater than 800 meters.''
Distribution of Section 1337(g) Account
Section 8004 of title VIII of Pub. L. 99-272 provided that:
``(a) Prior to April 15, 1986, the Secretary shall distribute to the
designated coastal States the sum of--
``(1) the amounts due and payable to each such State under
paragraph (2) of section 8(g) of the Outer Continental Shelf Lands
Act, as amended by this title [43 U.S.C. 1337(g)(2)], for the period
between October 1, 1985, and the date of such distribution, and
``(2) the amounts due each such State under subsection (b)(1)(A)
of this section for the period prior to October 1, 1985.
``(b)(1) As a fair and equitable disposition of all revenues
(including interest thereon) derived from any lease of Federal lands
wholly or partially within 3 miles of the seaward boundary of a coastal
State prior to October 1, 1985, the Secretary shall distribute:
``(A) from the funds which were deposited in the separate
account in the Treasury of the United States under section 8(g)(4)
of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(g)(4))
which was in effect prior to the date of enactment of section 8003
of this title [Apr. 7, 1986] the following sums:
($ million)
Louisiana.................................................. 572
Texas...................................................... 382
California................................................. 338
Alabama.................................................... 66
Alaska..................................................... 51
Mississippi................................................ 14
Florida.....................................................
0.03
as well as 27 percent of the royalties, derived from any lease of
Federal lands, which have been deposited through September 30, 1985,
in the separate account described in this paragraph and interest
thereon accrued through September 30, 1985, and shall transmit any
remaining amounts to the miscellaneous receipts account of the
Treasury of the United States; and
``(B) from revenues derived from any lease of Federal lands
under the Outer Continental Shelf Lands Act, as amended [43 U.S.C.
1331 et seq.], prior to April 15 of each of the fifteen fiscal years
following the fiscal year in which this title is enacted, 3 percent
of the following sums in each of the five fiscal years following the
date of enactment of this Act [Apr. 7, 1986], 7 percent of such sums
in each of the next five fiscal years, and 10 percent of such sums
in each of the following five fiscal years:
($ million)
Louisiana...................................................
84
Texas.......................................................
134
California..................................................
289
Alabama......................................................
7
Alaska......................................................
134
Mississippi...................................................
2.
``(2) The acceptance of any payment by a State under this section
shall satisfy and release any and all claims of such State against the
United States arising under, or related to, section 8(g) of the Outer
Continental Shelf Lands Act [43 U.S.C. 1337(g)], as it was in effect
prior to the date of enactment of this Act [Apr. 7, 1986] and shall vest
in such State the right to receive payments as set forth in this
section.
``(c) Notwithstanding any other provision of this Act, the amounts
due and payable to the State of Louisiana prior to October 1, 1986,
under subtitle A of title VIII (Outer Continental Shelf and Related
Programs) of this Act [title VIII does not contain a subtitle A, see
Short Title of 1986 Amendment note set out under section 1301 of this
title] shall remain in their separate accounts in the Treasury of the
United States and continue to accrue interest until October 1, 1986,
except that the $572,000,000 set forth in subsection 8004(b)(1)(A) of
this section shall only accrue interest from April 15, 1986 to October
1, 1986, at which time the Secretary shall immediately distribute such
sums with accrued interest to the State of Louisiana.''
Section Referred to in Other Sections
This section is referred to in sections 1331, 1332, 1346, 1356a of
this title; title 30 sections 196, 1731a; title 42 section 6508.
