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112th Congress                                            Rept. 112-520
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

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



 
                STRATEGIC ENERGY PRODUCTION ACT OF 2012

                                _______


  June 8, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4480]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4480) to provide for the development of a plan 
to increase oil and gas exploration, development, and 
production under oil and gas leases of Federal lands under the 
jurisdiction of the Secretary of Agriculture, the Secretary of 
Energy, the Secretary of the Interior, and the Secretary of 
Defense in response to a drawdown of petroleum reserves from 
the Strategic Petroleum Reserve, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     5
Committee Consideration..........................................     6
Committee Votes..................................................     6
Committee Oversight Findings.....................................    14
Statement of General Performance Goals and Objectives............    14
New Budget Authority, Entitlement Authority and Tax Expenditures.    14
Earmark..........................................................    14
Committee Cost Estimate..........................................    14
Congressional Budget Office Estimate.............................    15
Federal Mandates Statement.......................................    17
Advisory Committee Statement.....................................    17
Applicability to Legislative Branch..............................    17
Section-by-Section Analysis of Legislation.......................    17
Changes in Existing Law Made by the Bill, as Reported............    18
Dissenting Views.................................................    20
    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 ``Strategic Energy Production Act of 
2012''.

SEC. 2. PLAN FOR INCREASING DOMESTIC OIL AND GAS EXPLORATION, 
                    DEVELOPMENT, AND PRODUCTION FROM FEDERAL LANDS IN 
                    RESPONSE TO STRATEGIC PETROLEUM RESERVE DRAWDOWN.

  Section 161 of the Energy Policy and Conservation Act (42 U.S.C. 
6241) is amended by adding at the end the following new subsection:
  ``(k) Plan.--
          ``(1) Contents.--
                  ``(A) In general.--Not later than 180 days after the 
                date on which the Secretary executes, in accordance 
                with the provisions of this section, the first sale 
                after the date of enactment of this subsection of 
                petroleum products in the Reserve the Secretary shall 
                develop a plan to increase the percentage of Federal 
                lands (including submerged lands of the Outer 
                Continental Shelf) under the jurisdiction of the 
                Secretary of Agriculture, the Secretary of Energy, the 
                Secretary of the Interior, and the Secretary of Defense 
                leased for oil and gas exploration, development, and 
                production. The percentage of the total amount of the 
                Federal lands described in the preceding sentence by 
                which the plan developed under this paragraph will 
                increase leasing for oil and gas exploration, 
                development, and production shall be the same as the 
                percentage of petroleum in the Strategic Petroleum 
                Reserve that was drawn down.
                  ``(B) Requirements.--The plan developed under this 
                paragraph shall--
                          ``(i) be consistent with a national energy 
                        policy to meet the present and future energy 
                        needs of the Nation consistent with economic 
                        goals; and
                          ``(ii) promote the interests of consumers 
                        through the provision of an adequate and 
                        reliable supply of domestic transportation 
                        fuels at the lowest reasonable cost.
                  ``(C) Energy information.--The Secretary shall base 
                the determination of the present and future energy 
                needs of the Nation, for purposes of subparagraph 
                (B)(i), on information from the Energy Information 
                Administration.
          ``(2) Limitation.--The plan developed under paragraph (1) 
        shall not provide for oil and gas exploration, development, and 
        production leasing of a total of more than 10 percent of the 
        Federal lands described in paragraph (1)(A).
          ``(3) Consultation.--The Secretary shall develop the plan 
        required by paragraph (1) in consultation with the Secretary of 
        Agriculture, the Secretary of the Interior, and the Secretary 
        of Defense. Additionally, in developing the plan, the Secretary 
        shall consult with the American Association of Petroleum 
        Geologists and other State, environmentalist, and oil and gas 
        industry stakeholders to determine the most geologically 
        promising lands for production of oil and natural gas liquids.
          ``(4) Compliance with requirements.--Each Federal agency 
        described in paragraph (1)(A) shall comply with any 
        requirements established by the Secretary pursuant to the plan, 
        except that no action shall be taken pursuant to the plan if in 
        the view of the Secretary of Defense such action will adversely 
        affect national security or military activities, including 
        preparedness and training.
          ``(5) Exclusions.--The lands referred to in paragraph (1)(A) 
        shall not include lands managed under the National Park System 
        or the National Wilderness Preservation System.
          ``(6) Savings clause.--Nothing in this subsection shall be 
        construed to limit or affect the application of existing 
        restrictions on offshore drilling or requirements for land 
        management under Federal, State, or local law.''.

                          Purpose and Summary

    H.R. 4480, the ``Strategic Energy Production Act of 2012,'' 
was introduced by Representative Cory Gardner (together with 
Representatives Canseco, Olson, Coffman, Blackburn, Johnson of 
Ohio, Landry, McMorris Rodgers, Terry, and Berg) on April 24, 
2012. The legislation would require the Secretary of Energy to 
develop a plan to increase the percentage of Federal lands 
under the jurisdictions of the Secretary of Agriculture, 
Secretary of Energy, Secretary of the Interior, and the 
Secretary of Defense leased for oil and gas exploration, 
development, and production following the first drawdown of the 
Strategic Petroleum Reserve (SPR). The bill requires that the 
plan:
           Increase the total percentage of Federal 
        lands leased for oil and gas exploration, development, 
        and production commensurate with the percentage of 
        petroleum in the SPR that was drawn down;
           Limit the total percentage of Federal lands 
        leased as a result of the plan to 10 percent;
           Exclude lands managed under the National 
        Park System or that are part of the National Wilderness 
        Preservation System;
           Be consistent with a national energy policy 
        to meet present and future energy needs of the U.S.; 
        and
           Promote the interests of consumers through 
        the provision of an adequate and reliable supply of 
        domestic transportation fuels at the lowest reasonable 
        cost.

                  Background and Need for Legislation

    The President is authorized to release oil from the 
Strategic Petroleum Reserve (SPR) upon a finding that there is 
a ``severe supply disruption'' of crude oil supplies. 
Originally established in response to the oil shock caused by 
the 1973-1974 Arab oil embargo, in recent years there has been 
increasing political pressure to authorize SPR drawdowns to 
increase oil supply and thereby reduce market pressures that 
contribute to increases in the price of oil and gasoline. These 
drawdowns provide transitory relief to oil and gasoline price 
increases and do not have a long term effect.
    During this same period of increasing political pressure to 
utilize SPR for short term price manipulation, the production 
of crude oil on Federal lands has declined. Specifically, oil 
production on lands under the jurisdictions of the Secretary of 
Agriculture, Secretary of Energy, Secretary of the Interior, 
and the Secretary of Defense, which collectively total 2.4 
billion acres both onshore and offshore, is experiencing a 
precipitous decline that shows little sign of reversing course 
in the current climate. Like the SPR, these lands are 
ultimately under the management control of the President.
    H.R. 4480 will couple the short term necessity of a 
decision to drawdown from the SPR to a long term solution of 
having a sustainable supply of oil production from Federal 
lands. If a supply disruption is large enough to necessitate 
releasing reserves from the SPR then it is acknowledged that a 
long term plan for increasing oil production on Federal lands 
is required. The bill requires that upon the first drawdown 
from the SPR, the Secretary of Energy must develop a plan to 
increase the percentage of Federal lands leased for oil and gas 
exploration, development, and production.

The history of the SPR

    The SPR was created in 1975 under the Energy Policy and 
Conservation Act (EPCA) to help prevent a repetition of the 
economic harm caused by the 1973-1974 Arab oil embargo. The 
original purpose of the SPR was to help the U.S. manage a 
large, physically discernible disruption from the Persian Gulf 
region. The SPR provides the President with the ability to 
utilize a large pool of emergency oil reserves in the event of 
an oil supply disruption that threatens the economy.
    The EPCA authorized a drawdown from the SPR upon a finding 
by the President that there is a ``severe supply disruption.'' 
This requirement is deemed to exist if three conditions are 
met:
          1. An emergency situation exists and there is a 
        significant reduction in supply which is of significant 
        scope and duration;
          2. A severe increase in the price of petroleum 
        products has resulted from such emergency situation; 
        and
          3. Such price increase is likely to cause major 
        adverse impact on the national economy.
    Congress provided the President with additional authority 
in 1990 (under the Energy Policy and Conservation Act 
Amendments of 1990), to permit use of the SPR for short periods 
to resolve supply interruptions stemming from situations 
internal to the United States. The intention was to provide for 
an SPR drawdown under a less rigorous finding than that 
mandated by original Act. This allows the President to use the 
SPR for a short period without having to declare the existence 
of a ``severe energy supply interruption.''
    The SPR is managed by the Department of Energy, but 
releases from the SPR can only be authorized by the President. 
According to the most recent information provided by the 
Department of Energy, the May 2012 SPR inventory was 696 
million barrels. At that level, the SPR holds the equivalent of 
about 80 days of import protection. The Energy Policy Act of 
2005 authorized SPR expansion to a capacity of 1 billion 
barrels, but the physical expansion of the SPR has not 
surpassed 727 million barrels. The SPR is comprised of five oil 
storage facilities in Louisiana and Texas. There have been 
three releases from the SPR since its creation in order to 
combat supply disruptions that threaten the economy:
          1. January 1991: 17 million barrels were released in 
        response to the beginning of Operation Desert Storm;
          2. September 2005: 11 million barrels were released 
        in response to the aftermath of Hurricane Katrina; and
          3. June 2011: 30 million barrels were released in 
        response to the Libyan civil war.
    The SPR is likely to be most effective as a short-term 
device to help bridge a temporary supply shortfall until other 
sources can become available. Without new supply, any decrease 
in the price of oil from an SPR drawdown likely will be 
fleeting. This is evidenced in the most recent SPR release 
which took place in June of 2011. On the day of the President's 
announcement of his decision to allow for a drawdown from the 
SPR, the price of West Texas Intermediate Crude decreased 4 
percent. A week later the price was above where it had been 
prior to the President's announcement.

Oil production on Federal land

    The total amount of lands under the jurisdictions of the 
Secretary of Agriculture, Secretary of Energy, Secretary of the 
Interior, and the Secretary of Defense collectively total 2.4 
billion acres both onshore and offshore. According to the most 
recent data made available by the Department of the Interior, 
there are 36 million acres of offshore Federal land and 37 
million acres of onshore Federal land that is currently leased 
for oil and gas development. This represents 3% of the total 
Federal lands of the aforementioned agencies. In recent years 
this number has remained stagnant despite an increase in the 
price per barrel of oil over both 5 and 10 year periods.
    In addition to the relatively small percentage of Federal 
lands leased for oil and gas production, there has also been a 
decline in the amount of oil produced on Federal lands. 
According to the Congressional Research Service, oil production 
on Federal land decreased by average of 275,000 barrels per day 
in 2011. This contrasts greatly with the recent increase in 
production that is now occurring on non-Federal lands. For 
example, about 96 percent of the increase of oil production in 
the U.S. took place on non-Federal lands since 2007. According 
to the Energy Information Administration, oil production 
declined 14 percent on Federal lands during fiscal year 2011.
    The most striking example of the declining utilization of 
Federal lands in a long term energy plan for our Nation is an 
examination of the average annual number of leases issued by 
the Bureau of Land Management (BLM) during the previous 5 
Administrations. During the Reagan Administration, an average 
of 8,821 leases were issued annually by BLM. Each subsequent 
Administration saw a decline in the number of leases issued 
annually from the previous Administration. Under the Obama 
Administration, there has been an average of 1,856 leases 
issued annually by BLM. This is a 36 percent decrease from the 
Bush Administration, a 51 percent decrease from the Clinton 
Administration, and a 79 percent decrease from the Reagan 
Administration.
    H.R. 4480 is needed to move towards a long term plan of 
tapping into the Nation's abundant oil supply on Federal lands 
by increasing the amount of Federal land that is leased for oil 
production. Simply relying on a drawdown from the SPR, without 
increasing a domestic supply, will produce only short-lived 
drops in the price of oil and a heavy reliance on sources 
abroad. This legislation will increase a longer term, 
sustainable, domestic supply of oil.

                                Hearings

    On March 28, 2012, the Subcommittee on Energy and Power 
held a legislative hearing on ``The American Energy Initiative: 
A Focus on Legislative Responses to Rising Gasoline Prices'' 
including discussion drafts of the ``Gasoline Regulations Act 
of 2012'' and the ``Strategic Energy Production Act of 2012,'' 
and received testimony from:
           Gina McCarthy, Assistant Administrator for 
        Air and Radiation, U.S. Environmental Protection 
        Agency;
           Robert Abbey, Director, Bureau of Land 
        Management, U.S. Department of the Interior;
           Christopher A. Smith, Deputy Assistant 
        Secretary of Oil and Natural Gas, Office of Fossil 
        Energy, U.S. Department of Energy;
           James Burkhard, Managing Director-Global Oil 
        Group, IHS Cambridge Energy Research Associates;
           Jackson Coleman, Managing Partner and 
        General Counsel, EnergyNorthAmerica, LLC;
           Matthew L. Smorch, Vice President-Strategy, 
        CountryMark Cooperative, LLC;
           George Schink, Managing Director and 
        Principal, Navigant Economics;
           Robert Meyers, Senior Counsel, Crowell & 
        Moring;
           Niger Innis, Co-Chairman, Affordable Power 
        Alliance; and
           Joseph Romm, Senior Fellow, Center for 
        American Progress.

                        Committee Consideration

    On April 17, 2012, the Subcommittee on Energy and Power 
forwarded a committee print entitled the ``Strategic Energy 
Production Act of 2012,'' as amended, to the full Committee by 
a roll call vote of 9 yeas and 7 nays. The committee print was 
subsequently introduced on April 24, 2012, by Representative 
Gardner together with Representatives Canseco, Olson, Coffman, 
Blackburn, Johnson, Landry, McMorris Rodgers, Terry, and Berg.
    On May 16 and 17, 2012, the Committee on Energy and 
Commerce met in open markup session and ordered H.R. 4480 
reported to the House, as amended, by a roll call vote of 31 
yeas and 16 nays.

                            Committee Votes

    Clause 3(b) of rule XII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Upton to order H.R. 4480, reported to the House, 
as amended, was agreed to by a record vote of 31 yeas and 16 
nays. The following reflects the record votes taken during the 
Committee consideration, including the names of those Members 
voting for and against.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

         Statement of General Performance Goals and Objectives

    H.R. 4480 requires that upon the first drawdown from the 
Strategic Petroleum Reserve (SPR), the Secretary of Energy (in 
consultation with the Secretaries of Agriculture, Interior, and 
Defense) must develop a plan to increase the percentage of 
Federal lands leased for oil and gas exploration, development, 
and production. It requires the plan (i) be consistent with a 
national energy policy to meet present and future energy needs 
of the U.S.; (ii) promote the interests of consumers through 
the provision of an adequate and reliable supply of domestic 
transportation fuels at the lowest reasonable cost; and (iii) 
not result in the percentage of Federal lands leased to exceed 
10 percent or include lands managed under the National Park 
System or the National Wilderness Preservation System.

    New Budget Authority, Entitlement Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4480, the ``Energy Production Security Act of 2012,'' would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                                Earmark

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI, 
the Committee finds that H.R. 4480, the ``Energy Production 
Security Act of 2012,'' contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974.
                                                      June 6, 2012.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4480, the 
Strategic Energy Production Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp and Jeff LaFave.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

                  Congressional Budget Office Estimate


H.R. 4480--Strategic Energy Production Act of 2012

    Summary: H.R. 4480 would direct the Department of Energy 
(DOE) to develop a plan to increase the amount of acreage 
leased for oil and gas development on federal lands if the 
department sells oil from the Strategic Petroleum Reserve 
(SPR). DOE would be required to develop that plan within 180 
days after the first sale of oil from the SPR that occurs after 
the bill is enacted, with a goal of increasing the acreage 
under lease by the percentage change in the size of the SPR 
resulting from the sale. This one-time plan would be developed 
in consultation with certain federal and nonfederal entities 
and would be implemented by agencies responsible for managing 
federal lands, including the Departments of the Interior (DOI), 
Agriculture, and Defense. We estimate that implementing the 
bill would have negligible discretionary costs over the 2013-
2017 period.
    Pay-as-you-go procedures apply to this legislation because 
it could affect offsetting receipts from oil and gas leasing, 
which are recorded as a credit against direct spending. CBO 
estimates, however, that the net effect on direct spending 
would be insignificant over the 2013-2022 period. Enacting H.R. 
4480 would not affect revenues.
    H.R. 4480 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: CBO estimates 
that enacting H.R. 4480 would not have a significant impact on 
net direct spending.
    For this estimate, CBO assumes that H.R. 4480 will be 
enacted by the end of 2012 and that the necessary amounts to 
implement it will be appropriated. Since 1985, DOE has sold oil 
from the SPR on eight occasions; three of those sales were 
triggered by international events (in 1990, 1991, and 2011), 
three by Congressional directives (all in 1996), one by a 
hurricane (in 2005), and one sale was implemented to test 
systems and procedures (in 1985). Past sales have involved 
relatively small volumes of oil, ranging from less than 1 
percent to about 4 percent of the oil in the SPR, or an average 
of about 2 percent per sale. Proceeds from those sales--which 
are used to replenish stocks in the reserve--have ranged from 
less than $50 million to $3.2 billion.
    Based on past trends, CBO expects there is a chance that 
another sale will occur over the 2013-2022 period under current 
law. In that case, H.R. 4480 would require DOE to complete a 
plan to increase the amount of federal land leased for oil and 
gas development. The timing of any future sales and when the 
report would be prepared are uncertain, however.

Direct spending

    Under this bill, DOI would be required to implement any 
recommendations in the plan developed by DOE.\1\ CBO estimates 
that enacting H.R. 4480 would have no significant net effect on 
offsetting receipts from federal leasing activity over the 
2013-2022 period.
---------------------------------------------------------------------------
    \1\The Bureau of Land Management acts as the leasing agent for 
mineral rights on all onshore federal lands, including those 
administered by the Department of Agriculture and the Department of 
Defense and would implement any recommendations in the DOE plan that 
affect those lands. The Bureau of Ocean Energy Management is the 
leasing agent for all OCS lands.
---------------------------------------------------------------------------
    Several factors would limit the impact of DOE's plan on 
federal leasing activity. For example, the legislation would 
not repeal the current statutory prohibition on leasing in the 
Arctic National Wildlife Refuge and national parks or the 
temporary ban on leasing in the Outer Continental Shelf (OCS) 
in the Eastern Gulf of Mexico. Similarly, the plan developed 
under H.R. 4480 would not supersede other policies in existing 
law that affect federal leasing activity, such as requirements 
that development be consistent with state coastal zone 
management plans, preserve antiquities, and protect certain 
environmentally sensitive areas. CBO assumes that DOI would 
implement DOE's plan in a manner consistent with the statutory 
and administrative policies in effect at the time the plan is 
developed.
    In addition, there is no single benchmark for measuring 
changes in future leasing activity because of policy 
considerations and fluctuations in market conditions. Under 
current law, within areas open for such activities, private 
firms nominate onshore parcels believed to have economic value, 
and the relevant agencies prepare to offer most of those lands 
for lease. DOI routinely offers leases for virtually all of the 
acreage in the most geologically promising regions of the OCS--
the Central and Western Gulf of Mexico and Chukchi and Beaufort 
Seas. Decisions about leasing in most other areas of the Alaska 
OCS largely depend on the recommendations of potential bidders. 
Administrations have taken different positions on whether to 
offer leases off the California and Atlantic coasts, taking 
into account the resource development policies of the affected 
states. Ultimately, the amount of additional acreage leased 
would depend on decisions made by private firms in light of 
both federal and state policies.
    CBO expects that DOI's primary option for increasing 
leasing under this bill would be to offer acreage that was not 
nominated by industry. That approach would allow DOI to comply 
with the plan without changing other administrative policies 
that prevent leasing off the Pacific or Atlantic coasts and in 
other sensitive areas. Even if a future Administration opens 
areas currently not available for leasing, offering such 
acreage may be the only option to implement a DOE report 
because there would be no other alternatives to increasing the 
acreage offered.
    CBO estimates offering such areas for leasing would have a 
negligible effect on offsetting receipts because, by choosing 
not to nominate or recommend the areas or parcels for leasing, 
firms indicate that they believe those prospects have little 
economic value.

Spending subject to appropriation

    CBO estimates that implementing this bill would have a 
negligible impact on spending subject to appropriation over the 
2013-2017 period. Based on the cost of similar studies, 
developing the plan required by H.R. 4480 would cost about $1 
million. However, those expenditures are uncertain and would 
depend on SPR oil sales that may or may not occur in the next 
five years. CBO also estimates that implementing the bill would 
have no significant impact on DOI's administrative expenses, 
assuming any DOE recommendations are implemented through the 
department's routine planning processes.
    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. CBO estimates that enacting H.R. 4480 would not have 
a significant impact on net direct spending over either the 
2012-2017 period or the 2012-2022 period. Enacting the bill 
would not affect revenues.
    Intergovernmental and private-sector impact: H.R. 4480 
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 and 
Jeff LaFave; Impact on state, local, and tribal governments: 
Melissa Merrell; Impact on the private sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               Section-by-Section Analysis of Legislation


Section 1--Short title

    Section 1 provides the short title of ``Strategic Energy 
Production Act of 2012.''

Section 2--Plan for increasing domestic oil and gas exploration, 
        development, and production from Federal lands in response to 
        Strategic Petroleum Reserve drawdown

    Section 2 amends the Energy Policy and Conservation Act to 
require the Secretary of Energy upon the first drawdown from 
the SPR to develop a plan to increase the percentage of Federal 
lands under the jurisdiction of the Secretary of Agriculture, 
Secretary of Energy, Secretary of the Interior, and Secretary 
of Defense leased for oil and gas exploration, development and 
production.
    Section 2 also requires that the plan developed by the 
Secretary: (1) be consistent with a national energy policy to 
meet present and future energy needs of the U.S. and consistent 
with economic goals, and (2) promote the interests of consumers 
through the provision of an adequate and reliable supply of 
domestic transportation fuels at the lowest reasonable cost.
    Section 2 also provides that the plan shall not result in 
the percentage of Federal lands leased to exceed 10 percent or 
include lands managed under the National Park System or the 
National Wilderness Preservation System.
    Section 2 requires the Secretary of Energy to consult with 
the Secretary of Agriculture, Secretary of Energy, Secretary of 
the Interior, and Secretary of Defense in development of the 
plan and requires these Secretaries to comply with the plan.

         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):

ENERGY POLICY AND CONSERVATION ACT

           *       *       *       *       *       *       *



TITLE I--MATTERS RELATED TO DOMESTIC SUPPLY AVAILABILITY

           *       *       *       *       *       *       *



Part B--Strategic Petroleum Reserve

           *       *       *       *       *       *       *



                DRAWDOWN AND SALE OF PETROLEUM PRODUCTS

  Sec. 161. (a) * * *

           *       *       *       *       *       *       *

  (k) Plan.--
          (1) Contents.--
                  (A) In general.--Not later than 180 days 
                after the date on which the Secretary executes, 
                in accordance with the provisions of this 
                section, the first sale after the date of 
                enactment of this subsection of petroleum 
                products in the Reserve the Secretary shall 
                develop a plan to increase the percentage of 
                Federal lands (including submerged lands of the 
                Outer Continental Shelf) under the jurisdiction 
                of the Secretary of Agriculture, the Secretary 
                of Energy, the Secretary of the Interior, and 
                the Secretary of Defense leased for oil and gas 
                exploration, development, and production. The 
                percentage of the total amount of the Federal 
                lands described in the preceding sentence by 
                which the plan developed under this paragraph 
                will increase leasing for oil and gas 
                exploration, development, and production shall 
                be the same as the percentage of petroleum in 
                the Strategic Petroleum Reserve that was drawn 
                down.
                  (B) Requirements.--The plan developed under 
                this paragraph shall--
                          (i) be consistent with a national 
                        energy policy to meet the present and 
                        future energy needs of the Nation 
                        consistent with economic goals; and
                          (ii) promote the interests of 
                        consumers through the provision of an 
                        adequate and reliable supply of 
                        domestic transportation fuels at the 
                        lowest reasonable cost.
                  (C) Energy information.--The Secretary shall 
                base the determination of the present and 
                future energy needs of the Nation, for purposes 
                of subparagraph (B)(i), on information from the 
                Energy Information Administration.
          (2) Limitation.--The plan developed under paragraph 
        (1) shall not provide for oil and gas exploration, 
        development, and production leasing of a total of more 
        than 10 percent of the Federal lands described in 
        paragraph (1)(A).
          (3) Consultation.--The Secretary shall develop the 
        plan required by paragraph (1) in consultation with the 
        Secretary of Agriculture, the Secretary of the 
        Interior, and the Secretary of Defense. Additionally, 
        in developing the plan, the Secretary shall consult 
        with the American Association of Petroleum Geologists 
        and other State, environmentalist, and oil and gas 
        industry stakeholders to determine the most 
        geologically promising lands for production of oil and 
        natural gas liquids.
          (4) Compliance with requirements.--Each Federal 
        agency described in paragraph (1)(A) shall comply with 
        any requirements established by the Secretary pursuant 
        to the plan, except that no action shall be taken 
        pursuant to the plan if in the view of the Secretary of 
        Defense such action will adversely affect national 
        security or military activities, including preparedness 
        and training.
          (5) Exclusions.--The lands referred to in paragraph 
        (1)(A) shall not include lands managed under the 
        National Park System or the National Wilderness 
        Preservation System.
          (6) Savings clause.--Nothing in this subsection shall 
        be construed to limit or affect the application of 
        existing restrictions on offshore drilling or 
        requirements for land management under Federal, State, 
        or local law.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

                     I. PURPOSE OF THE LEGISLATION

    H.R. 4480 requires the Secretary of Energy to develop a 
plan to increase domestic oil and gas leasing from onshore and 
offshore federal lands that are under the jurisdiction of the 
Departments of Agriculture, Energy, Interior, and Defense 
within 180 days of a release of petroleum from the Strategic 
Petroleum Reserve (SPR).
    A new government bureaucracy at the Department of Energy 
(DOE) would develop this plan which duplicates the oil and gas 
leasing programs at the Departments of Interior and 
Agriculture. The bill requires the Secretary of Energy to 
develop a plan to increase the acreage of federal lands leased 
by a percentage equaling the percentage of SPR petroleum 
released.

       II. H.R. 4480 DOES NOT GUARANTEE ADDITIONAL OIL PRODUCTION

    If petroleum is released from the SPR, H.R. 4480 requires a 
plan to expand the acreage of public lands available for oil 
and gas production. However, this plan will not guarantee any 
specific amount of increased domestic production. That's 
because the amount of oil and gas produced each year from 
federal lands depends on factors that are not addressed in the 
legislation. These factors include whether private parties 
choose to bid for leases, whether, once leased, leaseholders 
develop leased land for oil and gas production, and how much 
oil or gas is economically recoverable on leased land. At the 
Subcommittee hearing on this bill, Robert Abbey, the Director 
of the Bureau of Land Management at the Department of the 
Interior (DOI) testified that the offering of leases will not 
necessarily lead to leasing, and that in the event land is 
leased, there is no guarantee that industry will develop those 
leases. Instead, he testified, production levels fluctuate 
based on ``market conditions and industry decisions.''\1\
---------------------------------------------------------------------------
    \1\Committee on Energy and Commerce, Testimony of Robert Abbey, 
Director, Bureau of Land Management, United States Department of the 
Interior, The American Energy Initiative: A Focus on Legislative 
Responses to Rising Gasoline Prices, 112th Cong. (Mar. 28, 2012).
---------------------------------------------------------------------------
    According to the Department's testimony, of the 37 million 
acres of offshore land offered for lease in 2010, 93.5% of the 
land received no bids from industry.\2\ In 2011, in a lease 
sale of 21 million acres in the Western Gulf of Mexico, 95.2% 
of the offered land received no bids from industry.\3\ Abbey 
testified that in total there are now 38 million acres of 
onshore federal land under lease, but only 32% of those leased 
lands are currently in production.\4\ Offshore there are 38 
million acres of land under lease, but only 26% is currently 
being explored or developed.\5\
---------------------------------------------------------------------------
    \2\Id.
    \3\Id.
    \4\Id.
    \5\Id.
---------------------------------------------------------------------------
    Finally, it is unclear that leasing promoted by this bill 
will open areas of federal land with substantial amounts of 
technically recoverable oil or gas reserves. For instance, 
existing offshore lease sale plans already cover more than 75% 
of technically recoverable oil and gas in the Outer Continental 
Shelf.\6\
---------------------------------------------------------------------------
    \6\Id.
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 III. H.R. 4480 PROPOSES A RADICAL CHANGE IN FEDERAL POLICY REGARDING 
                              PUBLIC LANDS

    The majority has asserted that there are 2.4 billion acres 
of federal land. Therefore, releasing 10 percent of the SPR 
(about 70 million barrels of oil) would appear to require DOE 
to plan for expanded oil and gas production on 240 million 
acres of land. Leasing this many acres of federal land would 
more than quadruple the amount of land currently leased for 
production. The legislation requires the Departments of 
Agriculture, Defense and Interior to follow the Energy 
Department's plan.

              IV. H.R. 4480 WILL NOT LOWER GASOLINE PRICES

    Even if this bill increased domestic production of oil and 
gas, it would not lower gasoline prices. According to the 
Energy Information Administration (EIA), crude oil production 
on offshore and onshore federal lands in 2011 was higher than 
in 2006, 2007, or 2008--the last three years of the Bush 
Administration.\7\ Additionally, crude oil production on all 
lands in the United States is currently at an eight-year 
high.\8\ Despite this increase in production, oil and gasoline 
prices are still on the rise in the United States, because oil 
prices are set on a global market that the United States has 
little power to control.
---------------------------------------------------------------------------
    \7\Energy Information Administration, Sales of Fossil Fuels 
Produced from Federal and Indian Lands, FY 2003 through FY 2011 (Mar. 
2012) at 3.
    \8\Energy Information Administration, Crude Oil Production (online 
at www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm); Energy 
Information Administration, Annual Energy Outlook 2012 Early Release, 
Table 11: Liquid Fuels Supply and Disposition (Jan. 2012).
---------------------------------------------------------------------------
    The Associated Press conducted a statistical analysis of 36 
years of gasoline prices and U.S. domestic oil production data 
and found no statistical correlation between the volume of oil 
produced and the price of gasoline at the pump.\9\ On May 9, 
2012, the Congressional Budget Office (CBO) released a report 
drawing the same conclusion. The CBO report states, ``Even if 
the United States increased production and became a net 
exporter of oil, U.S. consumers would still be exposed to 
gasoline prices that rose and fell in response to disruptions 
around the world.''\10\
---------------------------------------------------------------------------
    \9\More Drilling Won't Lower Gas Prices, Study Shows, Associated 
Press, (Mar. 22, 2012). Available online through various news outlets. 
See, e.g. http://www.cbsnews.com/8301-505145_162-57401456/more-us-
drilling-didnt-drop-gas-price/, (accessed on June 4, 2012).
    \10\U.S. Congressional Budget Office, Energy Security in the United 
States, (May 9, 2012) (online at http://www.cbo.gov/publication/43012).
---------------------------------------------------------------------------
    Canada is largely energy independent when it comes to oil. 
In fact, according to data from Statistics Canada, last year 
Canada exported more than 70% of the oil it produced.\11\ 
Between 2000 and 2011, Canada increased its production of crude 
oil by more than a third and tripled its net exports of crude 
oil.\12\ Even as Canada produced more and more oil over the 
last decade, Canadian consumers have faced the same gasoline 
price spikes as consumers in the United States.
---------------------------------------------------------------------------
    \11\Statistics Canada, Table 126-0001: Supply and disposition of 
crude oil and equivalent (online at www5.statcan.gc.ca/cansim/
a05?lang=eng&id;=1260002&pattern;= 1260002&searchTypeByValue;=1&p2;=35) 
(accessed Mar. 19, 2012).
    \12\Id.
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    In both Subcommittee and full Committee markup of H.R. 
4480, Rep. Rush offered an amendment to ensure that the 
requirements of this bill would not go into effect if it is 
determined that the legislation would not reduce gasoline 
prices within 10 years. At the full Committee markup, the 
amendment was defeated by a roll call vote of 17-31.

   V. H.R. 4480 WILL IMPACT THE OPERATION OF THE STRATEGIC PETROLEUM 
                                RESERVE

    The Strategic Petroleum Reserve serves an essential 
function in protecting American consumers and businesses from 
the effects of global oil supply disruptions. On March 28, 
2012, the Department of Energy, which manages the SPR, 
testified before the Energy and Power Subcommittee that this 
legislation would complicate use of the SPR and would 
potentially reduce its effectiveness in providing strategic and 
economic security for the nation.\13\
---------------------------------------------------------------------------
    \13\Committee on Energy and Commerce, Testimony of Christopher 
Smith, Deputy Assistant Secretary for Oil and Natural Gas, Office of 
Fossil Energy, United States Department of Energy, The American Energy 
Initiative: A Focus on Legislative Responses to Rising Gasoline Prices, 
112th Cong. (Mar. 28, 2012).
---------------------------------------------------------------------------
    The Department of Energy testified before the Energy and 
Power Subcommittee that:

        imposing a requirement to coordinate future increases 
        in leased Federal lands as a consequence of releasing 
        crude oil from the SPR will have a negative impact on 
        the decision-making process to employ the SPR, which 
        should be based solely on protecting the U.S. from the 
        consequences of severe supply interruptions, and could 
        lead to an inability to respond quickly to such 
        threats.\14\
---------------------------------------------------------------------------
    \14\Id., at pages 5-6.

    Consider the aftermath of Hurricane Katrina. In September 
2005, President Bush authorized the release of up to 30 million 
barrels of oil from the SPR to respond to Hurricane 
Katrina.\15\ Had H.R. 4480 been in effect at that time, this 
decision would have triggered a requirement to plan for the 
additional leasing of 100 million acres. Such a monumental task 
would act as a significant deterrent for deployment of the SPR.
---------------------------------------------------------------------------
    \15\U.S. Department of Energy, Releasing Crude Oil from the 
Strategic Petroleum Reserve, (online at http://fossil.energy.gov/
programs/reserves/spr/spr-drawdown.html) (accessed on June 4, 2012).
---------------------------------------------------------------------------

       VI. H.R. 4480 WILL CREATE WASTEFUL GOVERNMENT BUREAUCRACY

    Land management agencies within the Department of the 
Interior, such as the Bureau of Land Management and the Bureau 
of Ocean Energy Management, have many years of experience and a 
great deal of expertise in managing and leasing federal lands 
for energy production. They have extensive processes in place 
which involve public notice and comment and the opportunity for 
local input. The Department of Energy does not have any 
experience in leasing activities.
    The Department of the Interior's land management agencies 
employ multi-year processes to manage leasing on millions of 
acres of land.\16\ For example, under the Outer Continental 
Shelf Lands Act, the Interior Department is required to prepare 
a 5-year oil and gas leasing program including a schedule that 
shows the size, timing, and location of leasing activity as 
precisely as possible.\17\ The in-depth, statutorily mandated 
process for developing that leasing program generally takes 
about 2\1/2\ years and includes 3 separate comment periods, 2 
separate draft proposals, a final proposal, and development of 
an environmental impact statement.\18\ DOI invites and 
considers input from the governors of affected states, and in 
some cases local governments as well.\19\ Finally, after 
approval by the Secretary of the Interior, DOI sends the plan 
to Congress where, absent legislation to modify within 60 days, 
the program becomes final.\20\
---------------------------------------------------------------------------
    \16\See Committee on Energy and Commerce, Testimony of Robert 
Abbey, Director, Bureau of Land Management, United States Department of 
the Interior, The American Energy Initiative: A Focus on Legislative 
Responses to Rising Gasoline Prices, 112th Cong. (Mar. 28, 2012).
    \17\Outer Continental Shelf Lands Act, Section 18, 43 U.S.C. 1344.
    \18\U.S. Department of Interior, 5 Year OCS Oil and Gas Leasing 
Program, (online at www.boem.gov/Oil-and-Gas-Energy-Program/Leasing/
Five-Year-Program.aspx) (accessed on June 4, 2012).
    \19\See, U.S. Department of Interior, Leasing Process, (online at 
www.boemre.gov/ld/PDFs/LeasingProcess.pdf) (accessed on June 4, 2012).
    \20\Id.
---------------------------------------------------------------------------
    Under H.R. 4480, the Department of Energy would have to 
engage in a duplicative planning process, requiring significant 
resources, redundant with those already housed at the 
Department of the Interior. As Christopher Smith, DOE's Deputy 
Assistant Secretary for Oil and Natural Gas, testified before 
the Energy and Power Subcommittee, implementing this bill would 
``require a large investment of resources at DOE.''\21\
---------------------------------------------------------------------------
    \21\Committee on Energy and Commerce, Testimony of Christopher 
Smith, Deputy Assistant Secretary for Oil and Natural Gas, Office of 
Fossil Energy, United States Department of Energy, The American Energy 
Initiative: A Focus on Legislative Responses to Rising Gasoline Prices, 
112th Cong. (Mar. 28, 2012).
---------------------------------------------------------------------------
    An amendment to address this duplication of resources was 
offered by Rep. DeGette during full Committee consideration. 
The amendment would have nullified the requirements of the bill 
if the Secretary of Energy, in consultation with the 
Secretaries of Agriculture, Interior, and Defense, determined 
that the plan would waste government resources by duplicating 
other federal activities. The amendment failed, with no support 
from the Committee's Republican members.

 VII. H.R. 4480 IS NOT NECESSARY TO REPLENISH THE STRATEGIC PETROLEUM 
                                RESERVE

    This bill's sponsor has said that ``the entire purpose of 
the bill is to make sure that we are replenishing the energy 
that we remove from the Strategic Petroleum Reserve.''\22\ 
However, new production is not required to replenish the SPR, 
and the legislation contains no requirement that oil produced 
as a result of the planning requirements of this bill be sold 
to the federal government to replenish the SPR.
---------------------------------------------------------------------------
    \22\Committee on Energy and Commerce, Statement of Rep. Cory 
Gardner, Markup of H.R. 4471, The Gasoline Regulations Act of 2012, and 
H.R. 4480, The Strategic Energy Production Act of 2012, 112th Cong. 
(May 17, 2012).
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VIII. DEMOCRATIC AMENDMENTS TO H.R. 4480 WILL PROTECT NATIONAL SECURITY 
                         AND NATURAL RESOURCES

    Two amendments offered by Democratic members of the 
Committee were accepted during full Committee consideration of 
H.R. 4480. The first, offered by Rep. Dingell, will ensure that 
existing land management requirements and restrictions on 
offshore drilling are preserved. The second, offered by Ranking 
Member Waxman, will prevent lease sales and drilling that might 
adversely impact our national security and military 
preparedness. These amendments passed the Committee by voice 
vote.

                             IX. CONCLUSION

    Because H.R. 4480 will impair the functioning of the 
Strategic Petroleum Reserve and waste public resources with new 
bureaucratic and redundant government programs while providing 
no benefits to the public, we dissent from the decision to 
favorably report the legislation.

                                   Henry A. Waxman.
                                   Bobby L. Rush.