[House Report 113-101]
[From the U.S. Government Publishing Office]
113th Congress Rept. 113-101
HOUSE OF REPRESENTATIVES
1st Session Part 1
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OUTER CONTINENTAL SHELF TRANSBOUNDARY HYDROCARBON AGREEMENTS
AUTHORIZATION ACT
_______
June 6, 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
together with
DISSENTING VIEWS
[To accompany H.R. 1613]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred
the bill (H.R. 1613) to amend the Outer Continental Shelf Lands
Act to provide for the proper Federal management and oversight
of transboundary hydrocarbon reservoirs, and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Outer Continental Shelf Transboundary
Hydrocarbon Agreements Authorization Act''.
TITLE I--AMENDMENT TO THE OUTER CONTINENTAL SHELF LANDS ACT
SEC. 101. AMENDMENT TO THE OUTER CONTINENTAL SHELF LANDS ACT.
The Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) is
amended by adding at the end the following:
``SEC. 32. TRANSBOUNDARY HYDROCARBON AGREEMENTS.
``(a) Authorization.--After the date of enactment of the Outer
Continental Shelf Transboundary Hydrocarbon Agreements Authorization
Act, the Secretary may implement the terms of any transboundary
hydrocarbon agreement for the management of transboundary hydrocarbon
reservoirs entered into by the President and approved by Congress. In
implementing such an agreement, the Secretary shall protect the
interests of the United States to promote domestic job creation and
ensure the expeditious and orderly development and conservation of
domestic mineral resources in accordance with all applicable United
States laws governing the exploration, development, and production of
hydrocarbon resources on the outer Continental Shelf.
``(b) Submission to Congress.--
``(1) In general.--No later than 180 days after all parties
to a transboundary hydrocarbon agreement have agreed to its
terms, a transboundary hydrocarbon agreement that does not
constitute a treaty in the judgment of the President shall be
submitted by the Secretary to--
``(A) the Speaker of the House of Representatives;
``(B) the Majority Leader of the Senate;
``(C) the Chair of the Committee on Natural Resources
of the House of Representatives; and
``(D) the Chair of the Committee on Energy and
Natural Resources of the Senate.
``(2) Contents of submission.--The submission shall include--
``(A) any amendments to this Act or other Federal law
necessary to implement the agreement;
``(B) an analysis of the economic impacts such an
agreement and any amendments necessitated by the
agreement will have on domestic exploration,
development, and production of hydrocarbon resources on
the outer Continental Shelf; and
``(C) a detailed description of any regulations
expected to be issued by the Secretary to implement the
agreement.
``(c) Implementation of Specific Transboundary Agreement With
Mexico.--The Secretary may take actions as necessary to implement the
terms of the Agreement between the United States of America and the
United Mexican States Concerning Transboundary Hydrocarbon Reservoirs
in the Gulf of Mexico, signed at Los Cabos, February 20, 2012,
including--
``(1) approving unitization agreements and related
arrangements for the exploration, development, or production of
oil and natural gas from transboundary reservoirs or geological
structures;
``(2) making available, in the limited manner necessary under
the agreement and subject to the protections of confidentiality
provided by the agreement, information relating to the
exploration, development, and production of oil and natural gas
from a transboundary reservoir or geological structure that may
be considered confidential, privileged, or proprietary
information under law;
``(3) taking actions consistent with an expert determination
under the agreement; and
``(4) ensuring only appropriate inspection staff at the
Bureau of Safety and Environmental Enforcement or other Federal
agency personnel designated by the Bureau, the operator, or the
lessee have authority to stop work on any installation or other
device or vessel permanently or temporarily attached to the
seabed of the United States, which may be erected thereon for
the purpose of resource exploration, development or production
activities as approved by the Secretary.
``(d) Exemption From Resources Extraction Reporting Requirement.--
Actions taken by a public company in accordance with any transboundary
hydrocarbon agreement shall not constitute the commercial development
of oil, natural gas, or minerals for purposes of section 13(q) of the
Securities Exchange Act of 1934 (157 U.S.C. 78m(q)).
``(e) Savings Provisions.--Nothing in this section shall be
construed--
``(1) to authorize the Secretary to participate in any
negotiations, conferences, or consultations with Cuba regarding
exploration, development, or production of hydrocarbon
resources in the Gulf of Mexico along the United States
maritime border with Cuba or the area known by the Department
of the Interior as the `Eastern Gap'; or
``(2) as affecting the sovereign rights and the jurisdiction
that the United States has under international law over the
outer Continental Shelf which appertains to it.''.
TITLE II--APPROVAL OF TRANSBOUNDARY HYDROCARBON AGREEMENT
SEC. 201. APPROVAL OF AGREEMENT WITH MEXICO.
The Agreement between the United States of America and the United
Mexican States Concerning Transboundary Hydrocarbon Reservoirs in the
Gulf of Mexico, signed at Los Cabos, February 20, 2012, is hereby
approved.
Purpose of the Bill
The purpose of H.R. 1613, as ordered reported, is to amend
the Outer Continental Shelf Lands Act to provide for the proper
Federal management and oversight of transboundary hydrocarbon
reservoirs.
Background and Need for Legislation
The Outer Continental Shelf Transboundary Hydrocarbon
Agreements Authorization Act (H.R. 1613) will provide the
Secretary of the Interior the legislative authority to
implement a February 2012 Agreement signed by then-U.S.
Secretary of State Hillary Clinton and Mexican Foreign
Secretary Patricia Espinosa on how to explore, develop and
share revenue from hydrocarbon reservoirs that overlie our
maritime boundary with Mexico in the Gulf of Mexico. The bill
also establishes a clear and transparent process on how to
implement future transboundary hydrocarbon agreements, ensures
U.S. sovereignty on our Outer Continental Shelf (OCS), and
includes a discreet waiver of Securities and Exchange
Commission reporting requirements that may be in conflict with
language in the Agreement and Mexican law to provide certainty
to future exploration and development in these areas.
In 1978, the United States established maritime boundaries
with Mexico extending out to the 200-nautical-mile limit of our
nation's exclusive economic zone. However, this mapping left
two enclosed areas, known as the Western Gap and Eastern Gap,
both of which extended beyond the 200-nautical-mile
jurisdiction of each country. As a result, on June 9, 2000, the
United States and Mexico signed the U.S.-Mexico Maritime
Boundary Treaty which established a continental shelf boundary
between the U.S. and Mexico in the Western Gap area. This
treaty was ratified by the Senate on October 18, 2000, and
established a 1.4-nautical-mile moratorium from hydrocarbon
development on each side of the boundary in the Western Gap
area in recognizing the possibility of transboundary
hydrocarbon oil and gas reservoirs. While the moratorium was
due to expire in 2010, it has been extended, during which time
the U.S. and Mexico have arrived at the aforementioned
Agreement, which sets up a legal framework to guide commercial
energy development in these areas.
While there has only been an official moratorium in the
Western Gap areas described above, lease blocks along other
areas of the U.S./Mexico maritime border in the Gulf have not
been explored and developed for oil and gas resources due to
uncertainty and disputes over the legal treatment of potential
transboundary reservoirs. The February 2012 Agreement only
covers the U.S./Mexican maritime boundary and the Western Gap.
The situation has been further complicated by the control
of the Mexican oil market by Mexico's national oil company,
Petroleos Mexicanos (PEMEX), and Mexico's pre-2008 prohibition
on foreign oil and gas companies operating within Mexican
territory. However, while investment is now permitted, there
remains a possibility that Mexico will pass laws which are
inconsistent with U.S. interests, and U.S. companies must be
protected from this. According to Duncan Wood, Director of the
Mexico Institute at the Woodrow Wilson International Center for
Scholars, Mexico ratified the Agreement as a treaty in April
2012, despite some opposition, who, prior to reviewing the
final details of the Agreement, portrayed it as ``selling out
to the U.S.''
That said, the Calderon Administration largely supported
the finalization of the Agreement given PEMEX's longstanding
troubles in its deep water endeavors. Additionally, current
Mexican President Enrique Pena Nieto, whose six-year term began
in December 2012, has indicated his intention to promote
legislative changes to allow private companies to partner with
PEMEX. Some have viewed this push for collaboration as a clear
signal that Mexico wishes to enhance its deep water production
given the United States' vast success in the Gulf of Mexico
OCS.
The Obama Administration has decided to enact this
Agreement as a Congressional-Executive Agreement, rather than a
treaty, which requires a simple majority in both houses of
Congress rather than a 2/3 majority in the Senate. Despite the
difference in approval methods, the Agreement has the same
status under international law as Mexico's ratification.
Currently, there are 67 active lease blocks held by nine
companies on the U.S. portion of the Western Gap, meaning
roughly 20% of the available acreage in the Gap area is under
lease and awaiting certainty to move forward with exploration
and development. There are 11 active lease blocks within three
miles of the U.S./Mexico maritime boundary in the Western
Planning Area of the Gulf (outside of the Gap) also waiting
development. While comprehensive seismic scans have not been
taken, these areas in the Western Gap as well as the lease
blocks along the maritime border are considered likely to
contain significant hydrocarbon resources. The Bureau of Ocean
Energy Management and the U.S. State Department estimate that
these areas contain as much as much as 172 million barrels of
oil and 304 billion cubic feet of natural gas.
On November 2, 2011, the Subcommittee on Energy and Mineral
Resources held an oversight hearing entitled ``North American
Offshore Energy: Mexico and Canada Boundary Treaties and New
Drilling by Cuba and Bahamas.'' This hearing briefly touched on
the need to finalize the Transboundary Hydrocarbon Agreement
with Mexico to move forward with energy development in the Gulf
of Mexico along our two nation's maritime boundaries. Four
months later, the Agreement was signed in February 2012.
Despite indicating it was a priority of the Obama
Administration, the Department of the Interior did not respond
to the repeated requests by the House Natural Resource
Committee Majority staff for draft enacting legislation
throughout 2012. In a Full Committee oversight hearing held on
May 9, 2012, regarding the President's 5-year offshore leasing
plan, Chairman Doc Hastings specifically asked Director Tommy
Beaudreau of the Bureau of Ocean Energy Management when the
Department of the Interior would be providing the Committee
with draft legislation to implement the Agreement, to which
Director Beaudreau replied ``very soon.''
Unfortunately, this was not the case and instead, the
Administration attempted to insert a single paragraph in a
last-minute non-germane Senate bill in December 2012. Consent
to adoption of that language would have denied Congress its
important oversight function, and the language would not have
sufficiently protected U.S. companies in the implementation
process.
The Administration first provided the House Natural
Resources Committee with proposed implementation language on
March 19, 2013, over one year after the signing of the
Agreement. Work began immediately, with Congressman Jeff Duncan
(R-SC) drafting implementing legislation and introducing a
final bill on April 18, 2013. One week later, on April 25,
2013, the Subcommittee on Energy and Mineral Resources
conducted a hearing on the bill.
The extreme difficulty in obtaining specific implementation
guidance and language from the Department of the Interior and
the U.S. Department of State in a timely manner was a
motivation to include paragraphs (a) and (b) in H.R. 1613,
rather than providing a more simple approval of the Agreement.
Given our nation's vast energy resources in other areas where
the United States shares a maritime border with other nations,
the need for future transboundary hydrocarbons agreements will
likely be necessary. The approval of this Agreement is setting
a significant precedent for such future agreements. Therefore,
there was a clear need for a transparent process through which
the Department of the Interior and the U.S. Department of State
should operate to avoid future delays.
Finally, paragraph (d) of H.R. 1613 was included to provide
a discreet exemption from the reporting requirements of Section
13q-1 of the Securities Exchange Act (as implemented by Public
Law 111-517, the Dodd-Frank Wall Street Reform and Consumer
Protection Act). This provision is only applicable to the
exploration and development of transboundary hydrocarbon
reservoirs between the U.S. and Mexico, as defined in the
Agreement. The Obama Administration signed the Agreement with
Mexico to develop energy resources bridging our international
maritime boundary and that Agreement makes provision for the
sharing of royalties on transboundary reservoirs, and also has
very specific requirements on maintaining data confidentiality.
Without the Dodd-Frank clarification in H.R. 1613, American
workers could be blocked from producing American energy in
American waters if Mexico blocks disclosure of royalty payments
due to it under the terms of the Agreement signed by the Obama
Administration. This potential outcome was confirmed by
witnesses during the April 25, 2013, hearing on H.R. 1613. As a
result of this conflict between the Agreement language and
Securities and Exchange Commission (SEC) requirements, American
companies could be barred from developing a discovered
transboundary energy resource, thereby leaving it to foreign-
controlled energy companies such as China or Russia, who fall
outside the jurisdiction of these SEC reporting requirements,
to develop this American resource. The Committee determined
that rather than face the prospect of putting American jobs and
American-made energy at risk, this legislation should include a
clarification that provides certainty to prevent such an
outcome.
Committee Action
H.R. 1613 was introduced on April 18, 2013, by Congressman
Jeff Duncan (R-SC). The bill was referred to the Committee on
Natural Resources, and within the Committee to the Subcommittee
on Energy and Mineral Resources. In addition, the bill was
referred to the Committees on Foreign Affairs and Financial
Services. On April 25, 2013, the Subcommittee on Energy and
Mineral Resources held a hearing on the bill. On May 15, 2013,
the Full Natural Resources Committee met to consider the bill.
The Subcommittee on Energy and Mineral Resources was discharged
by unanimous consent. Congressman Doug Lamborn (R-CO) offered
an amendment designated #1 to the bill; the amendment was
adopted by voice vote. Congressman Raul Grijalva (D-AZ) offered
an amendment designated .001 to the bill; the amendment was not
adopted by a roll call vote of 18 to 23, as follows:
Congressman Raul Grijalva (D-AZ) offered an amendment
designated Holt.003 to the bill; the amendment was not adopted
by a roll call vote of 18 to 23, as follows:
No further amendments were offered and the bill, as
amended, was then adopted and ordered favorably reported to the
House of Representatives by a bipartisan roll call vote of 25
to 16, as follows:
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. 1613--Outer Continental Shelf Transboundary Hydrocarbon Agreements
Authorization Act
Summary: H.R. 1613 would approve a February 20, 2012,
agreement between the United States and Mexico regarding the
development of oil and gas resources in what is known as the
``transboundary'' area in the Gulf of Mexico. It would
establish guidelines and procedures for implementing that
agreement and for Congressional review of any future agreements
governing that area.
Pay-as-you-go procedures apply to this bill because
enacting the legislation would affect offsetting receipts,
which are recorded as a credit against direct spending. CBO
estimates that enacting H.R. 1613 would increase offsetting
receipts from lease sales in the Outer Continental Shelf (OCS)
by $25 million over the 2014-2023 period, thus reducing direct
spending by a corresponding amount. Enacting H.R. 1613 would
not affect revenues.
H.R. 1613 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1613 is shown in the following table.
The costs of this legislation fall within budget function 950
(undistributed offsetting receipts).
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By fiscal year, in millions of dollars--
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018 2014-2023
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CHANGES IN DIRECT SPENDING
Estimated Budget Authority........................ -7 -2 -2 -2 -2 -2 -2 -2 -2 -2 -15 -25
Estimated Outlays................................. -7 -2 -2 -2 -2 -2 -2 -2 -2 -2 -15 -25
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Basis of estimate: H.R. 1613 would affect the development
of any jointly owned oil and gas resources along the border
between the territorial waters of the United States and Mexico
in the Gulf of Mexico. That area is known as the
``transboundary area'' and extends 1.4 miles on either side of
that border. Most of the area on the United States side is far
from the coast and has resources located in very deep water.
Although the Department of the Interior (DOT) routinely offers
leases for most of that acreage, little has been leased for
development. Neither country currently allows firms to develop
resources in one portion of the transboundary area (known as
the Western Gap).
CBO expects that enacting H.R. 1613 would affect OCS
leasing activity in two ways. First, approving the 2012
agreement would allow DOT to offer leases for the 158,584 acres
in the Western Gap that currently are unavailable for
development. Second, it may increase the value of other leases
by clarifying procedures for developing oil and gas fields that
straddle the boundary of the two nations.
CBO estimates that implementing this bill would increase
offsetting receipts by about $25 million over the 2014-2023
period, primarily from bonus and rental payments from new
leasing activity. That estimated change in offsetting receipts
is roughly proportionate to the increase in the amount of
acreage made available for leasing relative to current law.\1\
For this estimate, CBO expects that firms would acquire
additional leases in the affected area beginning in fiscal year
2014. Receipts also are projected to rise in subsequent years
as a result of higher prices for new leases as well as rental
and royalty payments.
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\1\Based on recent trends, CBO estimates in its May 2013 baseline
that DOI will offer leases for about 60 million acres in the Gulf of
Mexico under current law and that bonus and rental payments for new
leases will total about $20 billion over the 2014-2023 period. Allowing
additional leasing in the transboundary portion of the Western Gap
would increase the acreage available for leasing by less than one-half
of one percent.
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Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1613 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON MAY 15, 2013
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By fiscal year, in millions of dollars--
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2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013-2018 2013-2023
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NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact............ 0 -7 -2 -2 -2 -2 -2 -2 -2 -2 -2 -15 -25
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Intergovernmental and private-sector impact: H.R. 1613
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal Costs: Kathleen Gramp; Impact
on State, Local, and Tribal governments: Melissa Merrill;
Impact on the Private Sector: Amy Petz.
Estimate 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. CBO estimates that enacting H.R.
1613 would increase offsetting receipts from lease sales in the
Outer Continental Shelf (OCS) by $25 million over the 2014-2023
period, thus reducing direct spending by a corresponding
amount.
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, as ordered reported, is to amend the
Outer Continental Shelf Lands Act to provide for the proper
Federal management and oversight of transboundary hydrocarbon
reservoirs.
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):
OUTER CONTINENTAL SHELF LANDS ACT
* * * * * * *
SEC. 32. TRANSBOUNDARY HYDROCARBON AGREEMENTS.
(a) Authorization.--After the date of enactment of the Outer
Continental Shelf Transboundary Hydrocarbon Agreements
Authorization Act, the Secretary may implement the terms of any
transboundary hydrocarbon agreement for the management of
transboundary hydrocarbon reservoirs entered into by the
President and approved by Congress. In implementing such an
agreement, the Secretary shall protect the interests of the
United States to promote domestic job creation and ensure the
expeditious and orderly development and conservation of
domestic mineral resources in accordance with all applicable
United States laws governing the exploration, development, and
production of hydrocarbon resources on the outer Continental
Shelf.
(b) Submission to Congress.--
(1) In general.--No later than 180 days after all
parties to a transboundary hydrocarbon agreement have
agreed to its terms, a transboundary hydrocarbon
agreement that does not constitute a treaty in the
judgment of the President shall be submitted by the
Secretary to--
(A) the Speaker of the House of
Representatives;
(B) the Majority Leader of the Senate;
(C) the Chair of the Committee on Natural
Resources of the House of Representatives; and
(D) the Chair of the Committee on Energy and
Natural Resources of the Senate.
(2) Contents of submission.--The submission shall
include--
(A) any amendments to this Act or other
Federal law necessary to implement the
agreement;
(B) an analysis of the economic impacts such
an agreement and any amendments necessitated by
the agreement will have on domestic
exploration, development, and production of
hydrocarbon resources on the outer Continental
Shelf; and
(C) a detailed description of any regulations
expected to be issued by the Secretary to
implement the agreement.
(c) Implementation of Specific Transboundary Agreement With
Mexico.--The Secretary may take actions as necessary to
implement the terms of the Agreement between the United States
of America and the United Mexican States Concerning
Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico,
signed at Los Cabos, February 20, 2012, including--
(1) approving unitization agreements and related
arrangements for the exploration, development, or
production of oil and natural gas from transboundary
reservoirs or geological structures;
(2) making available, in the limited manner necessary
under the agreement and subject to the protections of
confidentiality provided by the agreement, information
relating to the exploration, development, and
production of oil and natural gas from a transboundary
reservoir or geological structure that may be
considered confidential, privileged, or proprietary
information under law;
(3) taking actions consistent with an expert
determination under the agreement; and
(4) ensuring only appropriate inspection staff at the
Bureau of Safety and Environmental Enforcement or other
Federal agency personnel designated by the Bureau, the
operator, or the lessee have authority to stop work on
any installation or other device or vessel permanently
or temporarily attached to the seabed of the United
States, which may be erected thereon for the purpose of
resource exploration, development or production
activities as approved by the Secretary.
(d) Exemption From Resources Extraction Reporting
Requirement.--Actions taken by a public company in accordance
with any transboundary hydrocarbon agreement shall not
constitute the commercial development of oil, natural gas, or
minerals for purposes of section 13(q) of the Securities
Exchange Act of 1934 (157 U.S.C. 78m(q)).
(e) Savings Provisions.--Nothing in this section shall be
construed--
(1) to authorize the Secretary to participate in any
negotiations, conferences, or consultations with Cuba
regarding exploration, development, or production of
hydrocarbon resources in the Gulf of Mexico along the
United States maritime border with Cuba or the area
known by the Department of the Interior as the
``Eastern Gap''; or
(2) as affecting the sovereign rights and the
jurisdiction that the United States has under
international law over the outer Continental Shelf
which appertains to it.
DISSENTING VIEWS
We oppose H.R. 1613 because the Majority wrote this
legislation without the input of the minority and included in
it a poison pill provision that will ensure it will never
become law in its current form. Legislation could have been
drafted on a bipartisan basis and swiftly passed to allow the
Administration to implement an agreement between the United
States and Mexico to allow for the safe development of
resources in the Gulf of Mexico along the maritime border
between the two countries. Instead, the Majority tucked a
provision into H.R. 1613 that would waive a section of the
Dodd-Frank financial reform bill that requires disclosure of
company payments to foreign nations and apply that waiver to
any other country that shares a border with America, including
nations that have questionable ethical practices. The
legislation passed by Republicans on the House Natural
Resources Committee would leave the door open for secret
payments by oil companies to foreign nations or officials,
which could include unethical actions by a company to gain an
advantage or even bribes.
The Dodd-Frank requirement, otherwise known as the SEC
Natural Resource Extraction disclosure rule, is intended to
protect investors by allowing them to know if a company is
making questionable payments to a government that could expose
the company to civil liability or even criminal sanctions. It
also aims to increase transparency regarding resource
extraction projects in the developing world, thereby
eliminating the so-called ``resource curse'' that has plagued
many developing countries for decades by creating a cycle of
corruption in their governments.
Allowing such secret payments is not only unwise, it is
also unwarranted. The SEC already has the authority to provide
waivers from the Dodd-Frank disclosure requirement should it be
warranted. The SEC has general exemption authority under
Sections 12(h) and 36 of the Securities Exchange Act of 1934.
The SEC can ``exempt any person, security, or transaction, or
any class or classes of persons, securities, or transactions''
using this authority ``to the extent that such exemption is
necessary or appropriate in the public interest, and is
consistent with the protection of investors.'' If a situation
arises where such a waiver is needed, the SEC already has the
authority it needs to exempt companies from the disclosure
requirement. We should not provide a blanket exemption as is
included in the underlying bill.
This legislation is intended to expand and facilitate
offshore drilling but the Majority continues to do nothing to
implement the recommended safety reforms following the BP
spill. The entity formed out of the BP Spill Commission
recently released another report card to assess the response to
the spill. It gave Congress a ``D+''. That is something we
should be ashamed of.
A recent report from the Democratic staff of the Committee
underscores the continued need for Congress to act. The report
found that oil companies that were engaged in risky drilling
practices before the BP spill continue to do so. In part, that
is because Congress has not taken action to enact reforms that
cannot be accomplished without an act of Congress to ensure
there is a sufficient financial deterrent for these companies
engaged in risky drilling behaviors.
Representative Raul Grijalva (D-AZ), offered an amendment
to the bill to strike the Republican disclosure waiver, which
was rejected by the Majority. The Majority also voted down an
amendment offered on behalf of Energy and Mineral Resources
Subcommittee Ranking Member Rush Holt (D-NJ) that would have
implemented key oil drilling safety reforms recommended
following the BP spill, such as raising the liability cap for
offshore oil spills and increasing the fines that the Interior
Department can levy against oil companies who violate the law.
We should be working together to address these issues. Yet
the Majority continues to pass partisan legislation that
benefits the oil industry and does nothing to ensure that we
protect our environment, economy and workers from another
disaster like the BP Deepwater Horizon.
Edward J. Markey.
Raul M. Grijalva.
Rush Holt.