DROP Act

I 118TH CONGRESS 1ST SESSION H. R. 3637 To direct the Federal Trade Commission to promulgate regulations to prohibit an entity from selling, leasing, or offering for sale or lease water rights at an excessive price during certain droughts, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 24, 2023 Mr. GALLEGO introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To direct the Federal Trade Commission to promulgate regu- lations to prohibit an entity from selling, leasing, or offering for sale or lease water rights at an excessive price during certain droughts, 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 ‘‘Drought-Related Over- 4 pricing Prevention Act’’ or the ‘‘DROP Act’’. 5 SEC. 2. PROHIBITION ON WATER RIGHTS PRICE GOUGING. 6 (a) PROHIBITION.—Not later than 1 year after the 7 date of the enactment of this Act, the Commission shall 8 VerDate Sep 11 2014 23:06 Jun 15, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3637.IH H3637 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 3637 IH promulgate, under section 553 of title 5, United States 1 Code, regulations to prohibit an entity from selling, leas- 2 ing, or offering for sale or lease, at an excessive price, 3 water rights relating to an area subject to a covered 4 drought. 5 (b) EXEMPTIONS.— 6 (1) IN GENERAL.—In promulgating regulations 7 under subsection (a), the Commission shall exempt 8 from such regulations the following: 9 (A) An entity with less than $100,000,000 10 in gross revenues in the United States (includ- 11 ing the revenues of any parent entity of such 12 entity) during the 1-year period preceding the 13 date of the relevant sale, lease, or offer. 14 (B) A State government. 15 (C) A local government. 16 (D) A Tribal government. 17 (2) ADJUSTMENTS FOR INFLATION.—On an an- 18 nual basis, the Commission shall adjust the amount 19 specified in paragraph (1)(A) to reflect changes in 20 the Consumer Price Index for All Urban Consumers 21 published by the Bureau of Labor Statistics. 22 (c) EXCESSIVE PRICE DETERMINATIONS.— 23 (1) STANDARDS REQUIRED.—In promulgating 24 regulations under subsection (a), the Commission 25 VerDate Sep 11 2014 23:06 Jun 15, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3637.IH H3637 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 3637 IH shall establish standards for determining if a price 1 is excessive. 2 (2) DETERMINATIONS OF EXCESSIVE PRICE.— 3 The standards established under paragraph (1) shall 4 provide for a price to be determined excessive if the 5 Commission finds that the relevant entity is selling, 6 leasing, or offering for sale or lease water rights— 7 (A) using a covered drought as a pretext 8 to increase prices; and 9 (B) at an inappropriately excessive price 10 compared to the average price at which similar 11 water rights were sold, leased, or offered for 12 sale or lease (as the case may be), during the 13 120-day period preceding such covered drought, 14 by— 15 (i) such relevant entity; or 16 (ii) by all sellers in the relevant mar- 17 ket. 18 (3) COSTS NOT WITHIN CONTROL OF ENTITY.— 19 The standards established under paragraph (1) may 20 ensure that an entity is not determined to be selling, 21 leasing, or offering for sale or lease water rights at 22 an excessive price if the entity demonstrates, by 23 clear and convincing evidence, that a relevant in- 24 VerDate Sep 11 2014 23:06 Jun 15, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3637.IH H3637 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 3637 IH crease in price is directly attributable to costs that 1 are not within the control of the entity. 2 (d) ENFORCEMENT BY COMMISSION.— 3 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC- 4 TICES.—A violation of the regulations promulgated 5 under subsection (a) shall be treated as a violation 6 of a regulation under section 18(a)(1)(B) of the 7 Federal Trade Commission Act (15 U.S.C. 8 57a(a)(1)(B)) regarding unfair or deceptive acts or 9 practices. 10 (2) POWERS OF COMMISSION.—The Commis- 11 sion shall enforce the regulations promulgated under 12 subsection (a) in the same manner, by the same 13 means, and with the same jurisdiction, powers, and 14 duties as though all applicable terms and provisions 15 of the Federal Trade Commission Act (15 U.S.C. 41 16 et seq.) were incorporated into and made a part of 17 this Act. Any person who violates such regulations 18 shall be subject to the penalties and entitled to the 19 privileges and immunities provided in the Federal 20 Trade Commission Act. 21 (e) DEFINITIONS.—In this section: 22 (1) COMMISSION.—The term ‘‘Commission’’ 23 means the Federal Trade Commission. 24 VerDate Sep 11 2014 23:06 Jun 15, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3637.IH H3637 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 3637 IH (2) COVERED DROUGHT.—The term ‘‘covered 1 drought’’ means any of the following: 2 (A) As determined by the Commission in 3 coordination with the United States Geological 4 Survey, a weather pattern and precipitation def- 5 icit that has continued for a period in excess of 6 6 months. 7 (B) As determined by the Commission in 8 coordination with the Bureau of Reclamation, a 9 Tier 1 or more severe shortage designation with 10 respect to the Colorado River. 11 Æ VerDate Sep 11 2014 23:06 Jun 15, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H3637.IH H3637 pbinns on DSKJLVW7X2PROD with $$_JOB