Leasing Market Efficiency Act

II 116TH CONGRESS 2D SESSION S. 4223 To amend the Mineral Leasing Act to ensure market competition in onshore oil and gas leasing, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 20, 2020 Mr. TESTER introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To amend the Mineral Leasing Act to ensure market com- petition in onshore oil and gas leasing, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Leasing Market Effi- 4 ciency Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds that— 7 (1) pursuant to the Federal Land Policy and 8 Management Act of 1976 (43 U.S.C. 1701 et seq.) 9 and the Forest and Rangeland Renewable Resources 10 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 2 •S 4223 IS Planning Act of 1974 (16 U.S.C. 1600 et seq.), pub- 1 lic land and National Forest System land are to be 2 managed for multiple uses, including recreation, 3 range, timber, minerals, watershed, wildlife and fish, 4 and natural scenic, scientific, and historical values; 5 (2) existing oil and gas leases, even if undevel- 6 oped, can and do prevent the Bureau of Land Man- 7 agement from managing tracts of land for other 8 multiple uses; 9 (3) oil and gas lease parcels that do not receive 10 bids at competitive auction have been tested by the 11 competitive market and found to have minimal or no 12 present value for oil and gas development; 13 (4) noncompetitive leasing does not provide a 14 fair return to taxpayers since noncompetitive leasing 15 allows companies and individuals to pay less than 16 the minimum $2 bid for the use of public land; 17 (5) noncompetitively issued leases are usually 18 not developed and account for only a small fraction 19 of royalty-generating production; 20 (6) companies and individuals frequently pur- 21 chase oil and gas leases noncompetitively, despite 22 lacking the intent or capability to develop them, as 23 a form of speculation; 24 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 3 •S 4223 IS (7) relative to leases issued competitively, leases 1 issued noncompetitively are significantly more likely 2 to be terminated for failure to pay rent; 3 (8) the noncompetitive leasing program drains 4 administrative resources from the Bureau of Land 5 Management, in the form of personnel time and ef- 6 fort to issue, monitor, and frequently terminate and 7 reinstate noncompetitive leases; 8 (9) noncompetitive leasing has increased in re- 9 cent years, with the number of leases issued non- 10 competitively in calendar year 2018 marking a 10- 11 year high; 12 (10) several States, including Colorado and por- 13 tions of New Mexico, do not regularly issue leases 14 noncompetitively, and yet maintain a robust and 15 profitable oil and gas program; and 16 (11) the Federal onshore oil and gas leasing 17 program is best served by— 18 (A) issuing oil and gas leases only through 19 a competitive process; and 20 (B) leaving land that does not receive bids 21 at competitive auction to be managed for other 22 uses. 23 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 4 •S 4223 IS SEC. 3. POLICY OF THE UNITED STATES; SENSE OF CON- 1 GRESS. 2 (a) POLICY OF THE UNITED STATES.—It is the pol- 3 icy of the United States that the Secretary of the Interior 4 shall not issue onshore oil and gas leases except through 5 a competitive bidding process. 6 (b) SENSE OF CONGRESS.—It is the sense of Con- 7 gress that the policy of the United States described in sub- 8 section (a)— 9 (1) will discourage speculation in the Federal 10 onshore oil and gas leasing program; 11 (2) will conserve limited Federal resources that 12 can be better applied elsewhere; 13 (3) will avoid opportunity costs that impact the 14 management of other resources, such as wildlife 15 habitat management; 16 (4) will benefit taxpayers from the receipt by 17 the Secretary of the Interior of at least the min- 18 imum bid value for onshore oil and gas leases issued 19 by the Secretary of the Interior; 20 (5) is in keeping with the goals of multiple use 21 land management; and 22 (6) is not to the detriment of the fiscal interests 23 or energy security of the United States. 24 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 5 •S 4223 IS SEC. 4. ELIMINATION OF NONCOMPETITIVE LEASING. 1 (a) OIL AND GAS LEASING.—Section 17 of the Min- 2 eral Leasing Act (30 U.S.C. 226) is amended— 3 (1) by striking subsection (a) and inserting the 4 following: 5 ‘‘(a) LEASING AUTHORITY.— 6 ‘‘(1) IN GENERAL.—All land subject to disposi- 7 tion under this Act that is known or believed to con- 8 tain oil or gas deposits may be leased by the Sec- 9 retary. 10 ‘‘(2) RECEIPT OF FAIR MARKET VALUE.—In 11 conducting leasing activities under this Act, the Sec- 12 retary shall ensure the receipt by the United States 13 of fair market value for— 14 ‘‘(A) any land or resources leased by the 15 United States; and 16 ‘‘(B) any rights conveyed by the United 17 States.’’; 18 (2) in subsection (b)— 19 (A) in paragraph (1)(A)— 20 (i) in the first sentence, by striking 21 ‘‘paragraphs (2) and (3) of this sub- 22 section’’ and inserting ‘‘paragraph (2)’’; 23 and 24 (ii) by striking the last sentence; and 25 (B) by striking paragraph (3); 26 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 6 •S 4223 IS (3) by striking subsection (c) and inserting the 1 following: 2 ‘‘(c) ADDITIONAL ROUNDS OF COMPETITIVE BID- 3 DING.—Land made available for leasing under subsection 4 (b)(1) for which no bid is accepted or received may be 5 made available by the Secretary for a new round of com- 6 petitive bidding under that subsection.’’; and 7 (4) in subsection (e)— 8 (A) in the third sentence, by striking ‘‘Any 9 lease’’ and inserting the following: 10 ‘‘(3) ADDITIONAL EXTENSIONS.—Any lease’’; 11 (B) in the second sentence, by striking 12 ‘‘Each such lease’’ and inserting the following: 13 ‘‘(2) EXTENSION OF LEASE AFTER PRIMARY 14 TERM.—A lease described in paragraph (1)’’; and 15 (C) by striking the subsection designation 16 and all that follows through the period at the 17 end of the first sentence and inserting the fol- 18 lowing: 19 ‘‘(e) TERM OF LEASE.— 20 ‘‘(1) IN GENERAL.—Any lease issued under this 21 section, including a lease for tar sand areas, shall be 22 for a primary term of 10 years.’’. 23 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 7 •S 4223 IS (b) FAILURE TO COMPLY WITH PROVISIONS OF 1 LEASE.—Section 31 of the Mineral Leasing Act (30 2 U.S.C. 188) is amended— 3 (1) in subsection (d)(1), in the first sentence, 4 by striking ‘‘or section 17(c) of this Act’’; 5 (2) in subsection (e)— 6 (A) in paragraph (2)— 7 (i) by striking ‘‘either’’; and 8 (ii) by striking ‘‘or the inclusion’’ and 9 all that follows through ‘‘, all’’; and 10 (B) in paragraph (3)— 11 (i) in subparagraph (A), by adding 12 ‘‘and’’ after the semicolon; 13 (ii) by striking subparagraph (B); and 14 (iii) by striking ‘‘(3)(A) payment’’ and 15 inserting the following: 16 ‘‘(3) payment’’; 17 (3) in subsection (g)— 18 (A) in paragraph (1), by striking ‘‘as a 19 competitive’’ and all that follows through ‘‘of 20 this Act’’ and inserting ‘‘in the same manner as 21 the original lease issued pursuant to section 22 17’’; 23 (B) by striking paragraph (2); 24 VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS 8 •S 4223 IS (C) by redesignating paragraphs (3) and 1 (4) as paragraphs (2) and (3), respectively; and 2 (D) in paragraph (2) (as so redesignated), 3 by striking ‘‘applicable to leases issued under 4 subsection 17(c) of this Act (30 U.S.C. 226(c)) 5 except,’’ and inserting ‘‘except’’; 6 (4) in subsection (h), by striking ‘‘subsections 7 (d) and (f) of this section’’ and inserting ‘‘subsection 8 (d)’’; 9 (5) in subsection (i), by striking ‘‘(i)(1) In act- 10 ing’’ and all that follows through ‘‘of this section’’ 11 in paragraph (2) and inserting the following: 12 ‘‘(i) ROYALTY REDUCTION IN REINSTATED 13 LEASES.—In acting on a petition for reinstatement pursu- 14 ant to subsection (d)’’; 15 (6) by striking subsection (f); and 16 (7) by redesignating subsections (g) through (j) 17 as subsections (f) through (i), respectively. 18 Æ VerDate Sep 11 2014 03:07 Jul 25, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\S4223.IS S4223 kjohnson on DSK79L0C42PROD with BILLS