[House Report 113-201]
[From the U.S. Government Printing Office]


113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    113-201

======================================================================



 
                     BLM LIVE INTERNET AUCTIONS ACT

                                _______
                                

 September 10, 2013.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Hastings of Washington, from the Committee on Natural Resources, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 555]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 555) to amend the Mineral Leasing Act to 
authorize the Secretary of the Interior to conduct onshore oil 
and gas lease sales through Internet-based live lease sales, 
and for other purposes, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                          Purpose of the Bill

    The purpose of H.R. 555 is to amend the Mineral Leasing Act 
to authorize the Secretary of the Interior to conduct onshore 
oil and gas lease sales through Internet-based live lease 
sales.

                  Background and Need for Legislation

    In 1920, the Minerals Leasing Act was signed into law. The 
law requires competitive bidding for federal onshore oil and 
gas leases. In 1987, the Leasing Reform Act required this 
competitive bidding to be conducted orally.
    Attempting to prevent fraud in the bidding process and 
embrace advancing technology, Congress appropriated $250,000 in 
the Fiscal Year 2008 budgeted for a pilot internet leasing 
program. In 2009, the Bureau of Land Management (BLM) held a 
pilot auction with extremely positive results.
    Additionally, in 2008, a 27 year old climate activist named 
Tim DeChristopher placed 14 fake bids worth $1.7 million on 
parcels of land BLM was auctioning for energy development. 
DeChristopher was convicted of civil disobedience, fined 
$10,000, and sentenced to two years in federal prison. As a 
result of the DeChristopher scandal, in August 2009, the 
Department of the Interior issued a report listing Internet 
bidding as one option to reduce fraud in the bidding process.
    H.R. 555 would reduce the potential for fraud in the 
bidding process, save taxpayer dollars and ensure that the 
taxpayers get a fair return for activities on federal land.

                            Committee Action

    H.R. 555 was introduced on February 6, 2013, by Congressman 
Bill Johnson (R-OH). The bill was referred to the Committee on 
Natural Resources, and within the Committee to the Subcommittee 
on Energy and Mineral Resources. On May 22, 2013, the 
Subcommittee held a hearing on the bill. On July 24, 2013, the 
Full Natural Resources Committee met to consider the bill. The 
Subcommittee on Energy and Mineral Resources was discharged by 
unanimous consent. No amendments were offered, and the bill was 
adopted and ordered favorably reported to the House of 
Representatives by unanimous consent.

            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(2)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
403 of the Congressional Budget Act of 1974, the Committee has 
received the following cost estimate for this bill from the 
Director of the Congressional Budget Office:

H.R. 555--BLM Live Internet Auctions Act

    H.R. 555 would authorize the Bureau of Land Management 
(BLM) to conduct auctions for federal onshore oil and gas 
leases using Internet-based bidding methods. The bill also 
would require BLM to prepare a report comparing outcomes of 
Internet-based auctions to outcomes of oral auctions conducted 
under current law.
    Using information provided by BLM and individuals familiar 
with Internet auction methods, CBO estimates that, assuming 
availability of appropriated funds, implementing the 
legislation would cost $2 million over the 2014-2018 period. 
That amount includes about $1 million to build an online system 
to facilitate auctions and annual costs to operate and maintain 
the system, which would be partially offset by savings 
associated with reducing the number of oral auctions conducted 
by BLM each year.
    H.R. 555 could affect direct spending by increasing 
receipts from bonus bids; therefore, pay-as-you go procedures 
apply. Total bonus bids from onshore oil and gas leases 
averaged about $250 million annually over the 2008-2012 period. 
CBO expects that any change in receipts resulting from allowing 
the agency to conduct Internet auctions for onshore oil and gas 
leases would not be significant.
    H.R. 555 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Jeff LaFave. The 
estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.
    2. Section 308(a) of Congressional Budget Act. As required 
by clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives and section 308(a) of the Congressional Budget 
Act of 1974, this bill does not contain any new budget 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures. Using information provided by BLM 
and individuals familiar with Internet auction methods, CBO 
estimates that, assuming availability of appropriated funds, 
implementing the legislation would cost $2 million over the 
2014-2018 period. H.R. 555 could affect direct spending by 
increasing receipts from bonus bids for federal onshore oil and 
gas leases, but CBO estimates that these would not be 
significant.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to amend the Mineral Leasing Act to 
authorize the Secretary of the Interior to conduct onshore oil 
and gas lease sales through Internet-based live lease sales.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                       Compliance With H. Res. 5

    Directed Rule Making. The Chairman does not believe that 
this bill directs any executive branch official to conduct any 
specific rule-making proceedings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                Preemption of State, Local or Tribal Law

    This bill is not intended to preempt any State, local or 
tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                          MINERAL LEASING ACT




           *       *       *       *       *       *       *
  Sec. 17. (a) All lands subject to disposition under this Act 
which are known or believed to contain oil or gas deposits may 
be leased by the Secretary.
  (b)(1)(A) All lands to be leased which are not subject to 
leasing under paragraphs (2) and (3) of this subsection shall 
be leased as provided in this paragraph to the highest 
responsible qualified bidder by competitive bidding under 
general regulations in units of not more than 2,560 acres, 
except in Alaska, where units shall be not more than 5,760 
acres. Such units shall be as nearly compact as possible. Lease 
sales shall be conducted by oral bidding, except as provided in 
subparagraph (C). Lease sales shall be held for each State 
where eligible lands are available at least quarterly and more 
frequently if the Secretary of the Interior determines such 
sales are necessary. A lease shall be conditioned upon the 
payment of a royalty at a rate of not less than 12.5 percent in 
amount or value of the production removed or sold from the 
lease. The Secretary shall accept the highest bid from a 
responsible qualified bidder which is equal to or greater than 
the national minimum acceptable bid, without evaluation of the 
value of the lands proposed for lease. Leases shall be issued 
within 60 days following payment by the successful bidder of 
the remainder of the bonus bid, if any, and the annual rental 
for the first lease year. All bids for less than the national 
minimum acceptable bid shall be rejected. Lands for which no 
bids are received or for which the highest bid is less than the 
national minimum acceptable bid shall be offered promptly 
within 30 days for leasing under subsection (c) of this section 
and shall remain available for leasing for a period of 2 years 
after the competitive lease sale.
  (B) The national minimum acceptable bid shall be $2 per acre 
for a period of 2 years from the date of enactment of the 
Federal Onshore Oil and Gas Leasing Reform Act of 1987. 
Thereafter, the Secretary, subject to paragraph (2)(B), may 
establish by regulation a higher national minimum acceptable 
bid for all leases based upon a finding that such action is 
necessary: (i) to enhance financial returns to the United 
States; and (ii) to promote more efficient management of oil 
and gas resources on Federal lands. Ninety days before the 
Secretary makes any change in the national minimum acceptable 
bid, the Secretary shall notify the Committee on Natural 
Resources of the United States House of Representatives and the 
Committee on Energy and Natural Resources of the United States 
Senate. The proposal or promulgation of any regulation to 
establish a national minimum acceptable bid shall not be 
considered a major Federal action subject to the requirements 
of section 102(2)(C) of the National Environmental Policy Act 
of 1969.
  (C) In order to diversify and expand the Nation's onshore 
leasing program to ensure the best return to the Federal 
taxpayer, reduce fraud, and secure the leasing process, the 
Secretary may conduct onshore lease sales through Internet-
based bidding methods. Each individual Internet-based lease 
sale shall conclude within 7 days.
  (2)(A)(i) If the lands to be leased are within a special tar 
sand area, they shall be leased to the highest responsible 
qualified bidder by competitive bidding under general 
regulations in units of not more than 5,760 acres, which shall 
be as nearly compact as possible, upon the payment by the 
lessee of such bonus as may be accepted by the Secretary.
  (ii) Royalty shall be 12\1/2\ per centum in amount of value 
of production removed or sold from the lease subject to section 
17(k)(1)(c).
  (iii) The Secretary may lease such additional lands in 
special tar sand areas as may be required in support of any 
operations necessary for the recovery of tar sands.
  (iv) No lease issued under this paragraph shall be included 
in any chargeability limitation associated with oil and gas 
leases.
  (B) For any area that contains any combination of tar sand 
and oil or gas (or both), the Secretary may issue under this 
Act, separately--
          (i) a lease for exploration for and extraction of tar 
        sand; and
          (ii) a lease for exploration for and development of 
        oil and gas.
  (C) A lease issued for tar sand shall be issued using the 
same bidding process, annual rental, and posting period as a 
lease issued for oil and gas, except that the minimum 
acceptable bid required for a lease issued for tar sand shall 
be $2 per acre.
  (D) The Secretary may waive, suspend, or alter any 
requirement under section 26 that a permittee under a permit 
authorizing prospecting for tar sand must exercise due 
diligence, to promote any resource covered by a combined 
hydrocarbon lease.
  (3)(A) If the United States held a vested future interest in 
a mineral estate that, immediately prior to becoming a vested 
present interest, was subject to a lease under which oil or gas 
was being produced, or had a well capable of producing, in 
paying quantities at an annual average production volume per 
well per day of either not more than 15 barrels per day of oil 
or condensate, or not more than 60,000 cubic feet of gas, the 
holder of the lease may elect to continue the lease as a 
noncompetitive lease under subsection (c)(1).
  (B) An election under this paragraph is effective--
          (i) in the case of an interest which vested after 
        January 1, 1990, and on or before the date of enactment 
        of this paragraph, if the election is made before the 
        date that is 1 year after the date of enactment of this 
        paragraph;
          (ii) in the case of an interest which vests within 1 
        year after the date of enactment of this paragraph, if 
        the election is made before the date that is 2 years 
        after the date of enactment of this paragraph; and
          (iii) in any case other than those described in 
        clause (i) or (ii), if the election is made prior to 
        the interest becoming a vested present interest.
  (C) Notwithstanding the consent requirement referenced in 
section 3 of the Mineral Leasing Act for Acquired Lands (30 
U.S.C. 352), the Secretary shall issue a noncompetitive lease 
under subsection (c)(1) to a holder who makes an election under 
subparagraph (A) and who is qualified to hold a lease under 
this Act. Such lease shall be subject to all terms and 
conditions under this Act that are applicable to leases issued 
under subsection (c)(1).
  (D) A lease issued pursuant to this paragraph shall continue 
so long as oil or gas continues to be produced in paying 
quantities.
  (E) This paragraph shall apply only to those lands under the 
administration of the Secretary of Agriculture where the United 
States acquired an interest in such lands pursuant to the Act 
of March 1, 1911 (36 Stat. 961 and following).
  (c)(1) If the lands to be leased are not leased under 
subsection (b)(1) of this section or are not subject to 
competitive leasing under subsection (b)(2) of this section, 
the person first making application for the lease who is 
qualified to hold a lease under this Act shall be entitled to a 
lease of such lands without competitive bidding, upon payment 
of a non-refundable application fee of at least $75. A lease 
under this subsection shall be conditioned upon the payment of 
a royalty at a rate of 12.5 percent in amount or value of the 
production removed or sold from the lease. Leases shall be 
issued within 60 days of the date on which the Secretary 
identifies the first responsible qualified applicant.
  (2)(A) Lands (i) which were posted for sale under subsection 
(b)(1) of this section but for which no bids were received or 
for which the highest bid was less than the national minimum 
acceptable bid and (ii) for which, at the end of the period 
referred to in subsection (b)(1) of this section no lease has 
been issued and no lease application is pending under paragraph 
(1) of this subsection, shall again be available for leasing 
only in accordance with subsection (b)(1) of this section.
  (B) The land in any lease which is issued under paragraph (1) 
of this subsection or under subsection (b)(1) of this section 
which lease terminates, expires, is cancelled or is 
relinquished shall again be available for leasing only in 
accordance with subsection (b)(1) of this section.
  (d) All leases issued under this section, as amended by the 
Federal Onshore Oil and Gas Leasing Reform Act of 1987, shall 
be conditioned upon payment by the lessee of a rental of not 
less than $1.50 per acre per year for the first through fifth 
years of the lease and not less than $2 per acre per year for 
each year thereafter. A minimum royalty in lieu of rental of 
not less than the rental which otherwise would be required for 
that lease year shall be payable at the expiration of each 
lease year beginning on or after a discovery of oil or gas in 
paying quantities on the lands leased.
  (e) Competitive and noncompetitive leases issued under this 
section shall be for a primary term of 10 years: Provided, 
however, That competitive leases issued in special tar sand 
areas shall also be for a primary term of ten years. Each such 
lease shall continue so long after its primary term as oil or 
gas is produced in paying quantities. Any lease issued under 
this section for land on which, or for which under an approved 
cooperative or unit plan of development or operation, actual 
drilling operations were commenced prior to the end of its 
primary term and are being diligently prosecuted at that time 
shall be extended for two years and so long thereafter as oil 
or gas is produced in paying quantities.
  (f) At least 45 days before offering lands for lease under 
this section, and at least 30 days before approving 
applications for permits to drill under the provisions of a 
lease or substantially modifying the terms of any lease issued 
under this section, the Secretary shall provide notice of the 
proposed action. Such notice shall be posted in the appropriate 
local office of the leasing and land management agencies. Such 
notice shall include the terms or modified lease terms and maps 
or a narrative description of the affected lands. Where the 
inclusion of maps in such notice is not practicable, maps of 
the affected lands shall be made available to the public for 
review. Such maps shall show the location of all tracts to be 
leased, and of all leases already issued in the general area. 
The requirements of this subsection are in addition to any 
public notice required by other law.
  (g) The Secretary of the Interior, or for National Forest 
lands, the Secretary of Agriculture, shall regulate all 
surface-disturbing activities conducted pursuant to any lease 
issued under this Act, and shall determine reclamation and 
other actions as required in the interest of conservation of 
surface resources. No permit to drill on an oil and gas lease 
issued under this Act may be granted without the analysis and 
approval by the Secretary concerned of a plan of operations 
covering proposed surface-disturbing activities within the 
lease area. The Secretary concerned 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 commencement of 
surface-disturbing activities on any lease, to ensure 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 abandonment or cessation of oil 
and gas operations on the lease. The Secretary shall not issue 
a lease or leases or approve the assignment of any lease or 
leases under the terms of this section to any person, 
association, corporation, or any subsidiary, affiliate, or 
person controlled by or under common control with such person, 
association, or corporation, during any period in which, as 
determined by the Secretary of the Interior or Secretary of 
Agriculture, such entity has failed or refused to comply in any 
material respect with the reclamation requirements and other 
standards established under this section for any prior lease to 
which such requirements and standards applied. Prior to making 
such determination with respect to any such entity the 
concerned Secretary shall provide such entity with adequate 
notification and an opportunity to comply with such reclamation 
requirements and other standards and shall consider whether any 
administrative or judicial appeal is pending. Once the entity 
has complied with the reclamation requirement or other standard 
concerned an oil or gas lease may be issued to such entity 
under this Act.
  (h) The Secretary of the Interior may not issue any lease on 
National Forest System Lands reserved from the public domain 
over the objection of the Secretary of Agriculture.
  (i) No lease issued under this section which is subject to 
termination because of cessation of production shall be 
terminated for this cause so long as reworking or drilling 
operations which were commenced on the land prior to or within 
sixty days after cessation of production are conducted thereon 
with reasonable diligence, or so long as oil or gas is produced 
in paying quantities as a result of such operations. No lease 
issued under this section shall expire because operations or 
production is suspended under any order, or with the consent, 
of the Secretary. No lease issued under this section covering 
lands on which there is a well capable of producing oil or gas 
in paying quantities shall expire because the lessee fails to 
produce the same unless the lessee is allowed a reasonable 
time, which shall be not less than sixty days after notice by 
registered or certified mail, within which to place such well 
in producing status or unless, after such status is 
established, production is discontinued on the leased premises 
without permission granted by the Secretary under the 
provisions of this Act.
  (j) Whenever it appears to the Secretary that lands owned by 
the United States are being drained of oil or gas by wells 
drilled on adjacent lands, he may negotiate agreements whereby 
the United States, or the United States and its lessees, shall 
be compensated for such drainage. Such agreements shall be made 
with the consent of the lessees, if any, affected thereby. If 
such agreement is entered into, the primary term of any lease 
for which compensatory royalty is being paid, or any extension 
of such primary term, shall be extended for the period during 
which such compensatory royalty is paid and for a period of one 
year from discontinuance of such payment and so long thereafter 
as oil or gas is produced in paying quantities.
  (k) If, during the primary term or any extended term of any 
lease issued under this section, a verified statement is filed 
by any mining claimant pursuant to subsection (c) of section 7 
of the Multiple Mineral Development Act of August 13, 1954 (68 
Stat. 708), as amended (30 U.S.C. 527), whether such filing 
occur prior to enactment of the Mineral Leasing Act Revision of 
1960 or thereafter, asserting the existence of a conflicting 
unpatented mining claim or claims upon which diligent work is 
being prosecuted as to any lands covered by the lease, the 
running of time under such lease shall be suspended as to the 
lands involved from the first day of the month following the 
filing of such verified statement until a final decision is 
rendered in the matter.
  (l) The Secretary of the Interior shall, upon timely 
application therefor, issue a new lease in exchange for any 
lease issued for a term of twenty years, or any renewal 
thereof, or any lease issued prior to August 8, 1946, in 
exchange for a twenty-year lease, such new lease to be for a 
primary term of five years and so long thereafter as oil or gas 
is produced in paying quantities and at a royalty rate of not 
less than 12\1/2\ per centum in amount of value of the 
production removed or sold from such leases, except that the 
royalty rate shall be 12\1/2\ per centum in amount or value of 
the production removed or sold from said leases as to (1) such 
leases, or such parts of the lands subject thereto and the 
deposits underlying the same, as are not believed to be within 
the productive limits of any producing oil or gas deposit, as 
such productive limits are found by the Secretary to have 
existed on August 8, 1946; and (2) any production on a lease 
from an oil or gas deposit which was discovered after May 27, 
1941, by a well or wells drilled within the boundaries of the 
lease, and which is determined by the Secretary to be a new 
deposit; and (3) any production on or allocated to a lease 
pursuant to an approved cooperative or unit plan of development 
or operation from an oil or gas deposit which was discovered 
after May 27, 1941, on land committed to such plan, and which 
is determined by the Secretary to be a new deposit, where such 
lease, or a lease for which it is exchanged, was included in 
such plan at the time of discovery or was included in a duly 
executed and filed application for the approval of such plan at 
the time of discovery.
  (m) For the purpose of more properly conserving the natural 
resources of any oil or gas pool, field, or like area, or any 
part thereof (whether or not any part of said oil or gas pool, 
field, or like area, is then subject to any cooperative or unit 
plan of development or operation), lessees thereof and their 
representatives may unite with each other, or jointly or 
separately with others, in collective adopting and operating 
under a cooperative or unit plan of development or operation of 
such pool, field, or like area, or any part thereof, whenever 
determined and certified by the Secretary of the Interior to be 
necessary or advisable in the public interest. The Secretary is 
thereunto authorized, in his discretion, with the consent of 
the holders of leases involved, to establish, alter, change, or 
revoke drilling, producing, rental, minimum royalty, and 
royalty requirements of such leases and to make such 
regulations with reference to such leases, with like consent on 
the part of the lessees, in connection with the institution and 
operation of any such cooperative or unit plan as he may deem 
necessary or proper to secure the proper protection of the 
public interest. The Secretary may provide that oil and gas 
leases hereafter issued under this Act shall contain a 
provision requiring the lessee to operate under such a 
reasonable cooperative or unit plan, and he may prescribe such 
a plan under which such lessee shall operate, which shall 
adequately protect the rights of all parties in interest, 
including the United States.
  Any plan authorized by the preceding paragraph which includes 
lands owned by the United States may, in the discretion of the 
Secretary, contain a provision whereby authority is vested in 
the Secretary of the Interior, or any such person, committee, 
or State or Federal officer or agency as may be designated in 
the plan, to alter or modify from time to time the rate of 
prospecting and development and the quantity and rate of 
production under such plan. All leases operated under any such 
plan approved or prescribed by the Secretary shall be excepted 
in determining holdings or control under the provisions of any 
section of this Act.
  When separate tracts cannot be independently developed and 
operated in conformity with an established well-spacing or 
development program, any lease, or a portion thereof, may be 
pooled with other lands, whether or not owned by the United 
States, under a communitization or drilling agreement providing 
for an apportionment of production or royalties among the 
separate tracts of land comprising the drilling or spacing unit 
when determined by the Secretary of the Interior to be in the 
public interest, and operations or production pursuant to such 
an agreement shall be deemed to be operations or production as 
to each such lease committed thereto.
  Any lease issued for a term of twenty years, or any renewal 
thereof, or any portion of such lease that has become the 
subject of a cooperative or unit plan of development or 
operation of a pool, field, or like area, which plan has the 
approval of the Secretary of the Interior, shall continue in 
force until the termination of such plan. Any other lease 
issued under any section of this Act which has heretofore or 
may hereafter be committed to any such plan that contains a 
general provision for allocation of oil or gas shall continue 
in force and effect as to the land committed so long as the 
lease remains subject to the plan: Provided, That production is 
had in paying quantities under the plan prior to the expiration 
date of the term of such lease. Any lease heretofore or 
hereafter committed to any such plan embracing lands that are 
in part within and in part outside of the area covered by any 
such plan shall be segregated into separate leases as to the 
lands committed and the lands not committed as of the effective 
date of unitization: Provided, however, That any such lease as 
to the nonunitized portion shall continue in force and effect 
for the term thereof but for not less than two years from the 
date of such segregation and so long thereafter as oil or gas 
is produced in paying quantities. The minimum royalty or 
discovery rental under any lease that has become subject to any 
cooperative or unit plan of development or operation, or other 
plan that contains a general provision for allocation of oil or 
gas, shall be payable only with respect to the lands subject to 
such lease to which oil or gas shall be allocated under such 
plan. Any lease which shall be eliminated from any such 
approved or prescribed plan, or from any communitization or 
drilling agreement authorized by this section, and any lease 
which shall be in effect at the termination of any such 
approved or prescribed plan, or at the termination of any such 
communitization or drilling agreement, unless relinquished, 
shall continue in effect for the original term thereof, but for 
not less than two years, and so long thereafter as oil or gas 
is produced in paying quantities.
  The Secretary of the Interior is hereby authorized, on such 
conditions as he may prescribe, to approve operating, drilling, 
or development contracts made by one or more lessees of oil or 
gas leases, with one or more persons, associations, or 
corporations whenever, in his discretion, the conservation of 
natural products or the public convenience or necessity may 
require it or the interests of the United States may be best 
subserved thereby. All leases operated under such approved 
operating, drilling, or development contracts, and interests 
thereunder, shall be excepted in determining holdings or 
control under the provisions of this Act.
  The Secretary of the Interior, to avoid waste or to promote 
conservation of natural resources, may authorize the subsurface 
storage of oil or gas, whether or not produced from federally 
owned lands, in lands leased or subject to lease under this 
Act. Such authorization may provide for the payment of a 
storage fee or rental on such stored oil or gas or, in lieu of 
such fee or rental, for a royalty other than that prescribed in 
the lease when such stored oil or gas is produced in 
conjunction with oil or gas not previously produced. Any lease 
on which storage is so authorized shall be extended at least 
for the period of storage and so long thereafter as oil or gas 
not previously produced is produced in paying quantities.
  (n)(1)(A) The owner of (1) an oil and gas lease issued prior 
to the date of enactment of the Combined Hydrocarbon Leasing 
Act of 1981 or (2) a valid claim to any hydrocarbon resources 
leasable under this section based on a mineral location made 
prior to January 21, 1926, and located within a special tar 
sand area shall be entitled to convert such lease or claim to a 
combined hydrocarbon lease for a primary term of ten years upon 
the filing of an application within two years from the date of 
enactment of that Act containing an acceptable plan of 
operations which assures reasonable protection of the 
environment and diligent development of those resources 
requiring enhanced recovery methods of development or mining. 
For purposes of conversion, no claim shall be deemed invalid 
solely because it was located as a placer location rather than 
a lode location or vice versa, notwithstanding any previous 
adjudication on that issue.
  (B) The Secretary shall issue final regulations to implement 
this section within six months of the effective date of this 
Act. If any oil and gas lease eligible for conversion under 
this section would otherwise expire after the date of this Act 
and before six months following the issuance of implementing 
regulations, the lessee may preserve his conversion right under 
such lease for a period ending six months after the issuance of 
implementing regulations by filing with the Secretary, before 
the expiration of the lease, a notice of intent to file an 
application for conversion. Upon submission of a complete plan 
of operations in substantial compliance with the regulations 
promulgated by the Secretary for the filing of such plans, the 
Secretary shall suspend the running of the term of any oil and 
gas lease proposed for conversion until the plan is finally 
approved or disapproved. The Secretary shall act upon a 
proposed plan of operations within fifteen months of its 
submittal.
  (C) When an existing oil and gas lease is converted to a 
combined hydrocarbon lease, the royalty shall be that provided 
for in the original oil and gas lease and for a converted 
mining claim, 12\1/2\ per centum in amount or value of 
production removed or sold from the lease.
  (2) Except as provided in this section, nothing in the 
Combined Hydrocarbon Leasing Act of 1981 shall be construed to 
diminish or increase the rights of any lessee under any oil and 
gas lease issued prior to the enactment of such Act.
  (o) Certain Outstanding Oil and Gas.--(1) Prior to the 
commencement of surface-disturbing activities relating to the 
development of oil and gas deposits on lands described under 
paragraph (5), the Secretary of Agriculture shall require, 
pursuant to regulations promulgated by the Secretary, that such 
activities be subject to terms and conditions as provided under 
paragraph (2).
  (2) The terms and conditions referred to in paragraph (1) 
shall require that reasonable advance notice be furnished to 
the Secretary of Agriculture at least 60 days prior to the 
commencement of surface disturbing activities.
  (3) Advance notice under paragraph (2) shall include each of 
the following items of information:
          (A) A designated field representative.
          (B) A map showing the location and dimensions of all 
        improvements, including but not limited to, well sites 
        and road and pipeline accesses.
          (C) A plan of operations, of an interim character if 
        necessary, setting forth a schedule for construction 
        and drilling.
          (D) A plan of erosion and sedimentation control.
          (E) Proof of ownership of mineral title.
Nothing in this subsection shall be construed to affect any 
authority of the State in which the lands concerned are located 
to impose any requirements with respect to such oil and gas 
operations.
  (4) The person proposing to develop oil and gas deposits on 
lands described under paragraph (5) shall either--
          (A) permit the Secretary to market merchantable 
        timber owned by the United States on lands subject to 
        such activities; or
          (B) arrange to purchase merchantable timber on lands 
        subject to such surface disturbing activities from the 
        Secretary of Agriculture, or otherwise arrange for the 
        disposition of such merchantable timber, upon such 
        terms and upon such advance notice of the items 
        referred to in subparagraphs (A) through (E) of 
        paragraph (3) as the Secretary may accept.
  (5)(A) The lands referred to in this subsection are those 
lands referenced in subparagraph (B) which are under the 
administration of the Secretary of Agriculture where the United 
States acquired an interest in such lands pursuant to the Act 
of March 1, 1911 (36 Stat. 961 and following), but does not 
have an interest in oil and gas deposits that may be present 
under such lands. This subsection does not apply to any such 
lands where, under the provisions of its acquisition of an 
interest in the lands, the United States is to acquire any oil 
and gas deposits that may be present under such lands in the 
future but such interest has not yet vested with the United 
States.
  (B) This subsection shall only apply in the Allegheny 
National Forest.
  (p) Deadlines for Consideration of Applications for 
Permits.--
          (1) In general.--Not later than 10 days after the 
        date on which the Secretary receives an application for 
        any permit to drill, the Secretary shall--
                  (A) notify the applicant that the application 
                is complete; or
                  (B) notify the applicant that information is 
                missing and specify any information that is 
                required to be submitted for the application to 
                be complete.
          (2) Issuance or deferral.--Not later than 30 days 
        after the applicant for a permit has submitted a 
        complete application, the Secretary shall--
                  (A) issue the permit, if the requirements 
                under the National Environmental Policy Act of 
                1969 and other applicable law have been 
                completed within such timeframe; or
                  (B) defer the decision on the permit and 
                provide to the applicant a notice--
                          (i) that specifies any steps that the 
                        applicant could take for the permit to 
                        be issued; and
                          (ii) a list of actions that need to 
                        be taken by the agency to complete 
                        compliance with applicable law together 
                        with timelines and deadlines for 
                        completing such actions.
          (3) Requirements for deferred applications.--
                  (A) In general.--If the Secretary provides 
                notice under paragraph (2)(B), the applicant 
                shall have a period of 2 years from the date of 
                receipt of the notice in which to complete all 
                requirements specified by the Secretary, 
                including providing information needed for 
                compliance with the National Environmental 
                Policy Act of 1969.
                  (B) Issuance of decision on permit.--If the 
                applicant completes the requirements within the 
                period specified in subparagraph (A), the 
                Secretary shall issue a decision on the permit 
                not later than 10 days after the date of 
                completion of the requirements described in 
                subparagraph (A), unless compliance with the 
                National Environmental Policy Act of 1969 and 
                other applicable law has not been completed 
                within such timeframe.
                  (C) Denial of permit.--If the applicant does 
                not complete the requirements within the period 
                specified in subparagraph (A) or if the 
                applicant does not comply with applicable law, 
                the Secretary shall deny the permit.

           *       *       *       *       *       *       *