H.R. 5577, Innovation in Offshore Leasing Act

H.R. 5577

Innovation in Offshore Leasing Act

Date
September 6, 2016 (114th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Tuesday, September 6, 2016, the House will consider H.R. 5577, the Innovation in Offshore Leasing Act, under suspension of the rules. The bill was introduced on June 24, 2016, by Rep. Garret Graves (R-LA) and was referred to the Committee on Natural Resources, which ordered the bill reported, as amended, on July 13, 2016 by unanimous consent.

Bill Summary

H.R. 5577 amends the Outer Continental Shelf Lands Act to provide the Secretary of the Interior with the authority and direction to conduct internet-based, sealed-bid offshore oil and natural gas lease sales. The Secretary is required to meet specific requirements in conducting internet-based sales, including: having an independent observer present; providing a “bid-map” to all bidders so that they may verify their bids prior to the bid-reading; ensuring data security for all bidder data; and feedback from bidders in order to continually improve the leasing process.

In addition, the legislation includes increased data transparency measures to ensure that the Secretary not only discloses all available data related to sale-day statistics, but also ensures such data is made publicly available and easily accessible on a web-based format. Finally, H.R. 5577 requires the Secretary to conduct not less than one workshop with viable bidders to the first internet-based lease sale in order to ensure feedback and an ability for bidders to familiarize themselves with the new platform.

Background

Currently, the Secretary of the Interior has the authority to conduct sealed-bid lease sales for oil and natural gas leasing on 1.7 billion acres of U.S. outer Continental Shelf (OCS) lands. Lease sales are currently conducted in a sealed-bid format, with bids opened and read aloud in the Superdome in New Orleans, Louisiana. Of the 1.7 billion offshore acres available, only 1.3%, or 22 million acres, is currently under lease for a total of 4,119 active leases.[1]

In order to qualify for an OCS lease, the individual must be a U.S. citizens, an alien lawfully admitted for permanent residence, a private, public, or municipal corporation, or an association and submit qualifying documents and be certified by the Bureau of Ocean Energy Management (BOEM). Prior to a sale, the BOEM issues a Proposed Notice of Sale four months prior, and a Final Notice of Sale no less than 30 days prior. Lease sale notices are included in the Secretary’s Five-Year Plan and announced in the Federal Register. Notices include necessary details and instructions of the lease sale.[2]

A bidder completes a bidder form with the required information and makes an electronic deposit (usually 20%) of the bid which is held in an account. A sealed bid is opened and read aloud and BOEM deems the highest bidder in compliance with Department of Justice and Federal Trade Commission requirements.  A successful leasee must go through the permitting process and pay rental fees for the duration of the lease.  If exploration or development activities do not take place, a lease could face cancellation. All sales statistics are then published by BOEM.[3]

According to the bill’s sponsor, “Dealing with the government is like going back in time, and workflows the private sector retired decades ago are still alive and well. In the real world, work gets done online – that’s why I introduced this bill. Internet-based oil and gas leasing will open investment opportunities and competition for additional businesses, and improve the transparency and efficiency of the process.”[4]

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[1] See Committee on Natural Resources Markup Memo, “H.R. 5577 (Rep. Garret Graves), To amend the Outer Continental Shelf Lands Act to allow for internet-based oil and natural gas leasing” July 11, 2016 at 1.
[2] Id. at 2.
[3] Id.
[4] See. Rep. Graves Press Release, “Rep. Graves’ Offshore Bill Modernizes Federal Oil and Gas Leasing Process” July 6, 2016.

Cost

A Congressional Budget Office (CBO) estimate is currently unavailable.

Additional Information

For questions or further information please contact Jake Vreeburg with the House Republican Policy Committee by email or at 5-0190.