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(c) R
ECOMMENDATIONS
.—The study shall analyze ex-
1
isting Federal and State laws and regulations, and make
2
recommendations as to changes, if any, to Federal law nec-
3
essary to address adverse impacts to surface or water re-
4
sources attributable to coalbed methane development.
5
(d) C
OMPLETION OF
S
TUDY
.—The National Academy
6
of Sciences shall submit the study to the Secretary of the
7
Interior within 18 months after the date of enactment of
8
this Act, and shall make the study available to the public
9
at the same time.
10
(e) R
EPORT TO
C
ONGRESS
.—The Secretary of the Inte-
11
rior shall report to Congress within 6 months of her receipt
12
of the study on—
13
(1) the findings and recommendations of the
14
study;
15
(2) the Secretary’s agreement or disagreement
16
with each of its findings and recommendations; and
17
(3) any recommended changes in funding to ad-
18
dress the effects of coalbed methane production on sur-
19
face and water resources.
20
SEC. 608. FISCAL POLICIES TO MAXIMIZE RECOVERY OF DO-
21
MESTIC OIL AND GAS RESOURCES.
22
(a) E
VALUATION
.—The Secretary of Energy, in coordi-
23
nation with the Secretaries of the Interior, Commerce, and
24
Treasury, Indian tribes and the Interstate Oil and Gas
25
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Compact Commission, shall evaluate the impact of existing
1
Federal and State tax and royalty policies on the develop-
2
ment of domestic oil and gas resources and on revenues to
3
Federal, State, local and tribal governments.
4
(b) S
COPE
.—The evaluation under subsection (a)
5
shall—
6
(1) analyze the impact of fiscal policies on oil
7
and natural gas exploration, development drilling,
8
and production under different price scenarios, in-
9
cluding the impact of the individual and corporate
10
Alternative Minimum Tax, State and local produc-
11
tion taxes and fixed royalty rates during low price
12
periods;
13
(2) assess the effect of existing Federal and State
14
fiscal policies on investment under different geological
15
and developmental circumstances, including but not
16
limited to deepwater environments, subsalt forma-
17
tions, deep and deviated wells, coalbed methane and
18
other unconventional oil and gas formations;
19
(3) assess the extent to which Federal and State
20
fiscal policies negatively impact the ultimate recovery
21
of resources from existing fields and smaller accumu-
22
lations in offshore waters, especially in water depths
23
less than 800 meters, of the Gulf of Mexico;
24
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HR 6 EAS1S/PP
(4) compare existing Federal and State policies
1
with tax and royalty regimes in other countries with
2
particular emphasis on similar geological, develop-
3
mental and infrastructure conditions; and
4
(5) evaluate how alternative tax and royalty
5
policies, including counter-cyclical measures, could
6
increase recovery of domestic oil and natural gas re-
7
sources and revenues to Federal, State, local and trib-
8
al governments.
9
(c) P
OLICY
R
ECOMMENDATIONS
.—Based upon the
10
findings of the evaluation under subsection (a), a report de-
11
scribing the findings and recommendations for policy
12
changes shall be provided to the President, the Congress, the
13
Governors of the member States of the Interstate Oil and
14
Gas Compact Commission, and Indian tribes having an oil
15
and gas lease approved by the Secretary of the Interior. The
16
recommendations should ensure that the public interest in
17
receiving the economic benefits of tax and royalty revenues
18
is balanced with the broader national security and eco-
19
nomic interests in maximizing recovery of domestic re-
20
sources. The report should include recommendations regard-
21
ing actions to—
22
(1) ensure stable development drilling during pe-
23
riods of low oil and/or natural gas prices to maintain
24
reserve replacement and deliverability;
25
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HR 6 EAS1S/PP
(2) minimize the negative impact of a volatile
1
investment climate on the oil and gas service industry
2
and domestic oil and gas exploration and production;
3
(3) ensure a consistent level of domestic activity
4
to encourage the education and retention of a tech-
5
nical workforce; and
6
(4) maintain production capability during peri-
7
ods of low oil and/or natural gas prices.
8
(d) R
OYALTY
G
UIDELINES
.—The recommendations re-
9
quired under (c) should include guidelines for private re-
10
source holders as to the appropriate level of royalties given
11
geology, development cost, and the national interest in
12
maximizing recovery of oil and gas resources.
13
(e) R
EPORT
.—The study under subsection (a) shall be
14
completed not later than 18 months after the date of enact-
15
ment of this section. The report and recommendations re-
16
quired in (c) shall be transmitted to the President, the Con-
17
gress, Indian tribes, and the Governors of the member States
18
of the Interstate Oil and Gas Compact Commission.
19
SEC. 609. STRATEGIC PETROLEUM RESERVE.
20
(a) F
ULL
C
APACITY
.—The President shall—
21
(1) fill the Strategic Petroleum Reserve estab-
22
lished pursuant to part B of title I of the Energy Pol-
23
icy and Conservation Act (42 U.S.C. 6231 et seq.) to
24
full capacity as soon as practicable;
25
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HR 6 EAS1S/PP
(2) acquire petroleum for the Strategic Petro-
1
leum Reserve by the most practicable and cost-effec-
2
tive means, including the acquisition of crude oil the
3
United States is entitled to receive in kind as royal-
4
ties from production on Federal lands; and
5
(3) ensure that the fill rate minimizes impacts
6
on petroleum markets.
7
(b) R
ECOMMENDATIONS
.—Not later than 180 days
8
after the date of enactment of this Act, the Secretary of En-
9
ergy shall submit to Congress a plan to—
10
(1) eliminate any infrastructure impediments
11
that may limit maximum drawdown capability; and
12
(2) determine whether the capacity of the Stra-
13
tegic Petroleum Reserve on the date of enactment of
14
this section is adequate in light of the increasing con-
15
sumption of petroleum and the reliance on imported
16
petroleum.
17
SEC. 610. HYDRAULIC FRACTURING.
18
Section 1421 of the Safe Drinking Water Act (42
19
U.S.C. 300h) is amended by adding at the end the following:
20
‘‘(e) H
YDRAULIC
F
RACTURING FOR
O
IL AND
G
AS
P
RO
-
21
DUCTION
.—
22
‘‘(1) S
TUDY OF THE EFFECTS OF HYDRAULIC
23
FRACTURING
.—
24
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HR 6 EAS1S/PP
‘‘(A) I
N GENERAL
.—As soon as practicable,
1
but in no event later than 24 months after the
2
date of enactment of this subsection, the Admin-
3
istrator shall complete a study of the known and
4
potential effects on underground drinking water
5
sources of hydraulic fracturing, including the ef-
6
fects of hydraulic fracturing on underground
7
drinking water sources on a nationwide basis,
8
and within specific regions, States, or portions of
9
States.
10
‘‘(B) C
ONSULTATION
.—In planning and
11
conducting the study, the Administrator shall
12
consult with the Secretary of the Interior, the
13
Secretary of Energy, the Ground Water Protec-
14
tion Council, affected States, and, as appro-
15
priate, representatives of environmental, indus-
16
try, academic, scientific, public health, and other
17
relevant organizations. Such study may be ac-
18
complished in conjunction with other ongoing
19
studies related to the effects of oil and gas pro-
20
duction on groundwater resources.
21
‘‘(C) S
TUDY
ELEMENTS
.—The study con-
22
ducted under subparagraph (A) shall, at a min-
23
imum, examine and make findings as to
24
whether—
25
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HR 6 EAS1S/PP
‘‘(i) such hydraulic fracturing has en-
1
dangered or will endanger (as defined under
2
subsection (d)(2)) underground drinking
3
water sources, including those sources with-
4
in specific regions, States or portions of
5
States;
6
‘‘(ii) there are specific methods, prac-
7
tices, or hydrogeologic circumstances in
8
which hydraulic fracturing has endangered
9
or will endanger underground drinking
10
water sources; and
11
‘‘(iii) there are any precautionary ac-
12
tions that may reduce or eliminate any
13
such endangerment.
14
‘‘(D) S
TUDY OF HYDRAULIC FRACTURING IN
15
A PARTICULAR TYPE OF GEOLOGIC FORMATION
.—
16
The Administrator may also complete a separate
17
study on the known and potential effects on un-
18
derground drinking water sources of hydraulic
19
fracturing in a particular type of geologic for-
20
mation:
21
‘‘(i) If such a study is undertaken, the
22
Administrator shall follow the procedures
23
for study preparation and independent sci-
24
entific review set forth in subparagraphs (1)
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HR 6 EAS1S/PP
(B) and (C) and (2) of this subsection. The
1
Administrator may complete this separate
2
study prior to the completion of the broader
3
study of hydraulic fracturing required pur-
4
suant to subparagraph (A) of this sub-
5
section.
6
‘‘(ii) At the conclusion of independent
7
scientific review for any separate study, the
8
Administrator shall determine, pursuant to
9
paragraph (3), whether regulation of hy-
10
draulic fracturing in the particular type of
11
geologic formation addressed in the separate
12
study is necessary under this part to ensure
13
that underground sources of drinking water
14
will not be endangered on a nationwide
15
basis, or within a specific region, State or
16
portions of a State. Subparagraph (4) of
17
this subsection shall apply to any such de-
18
termination by the Administrator.
19
‘‘(iii) If the Administrator completes a
20
separate study, the Administrator may use
21
the information gathered in the course of
22
such a study in undertaking her broad
23
study to the extent appropriate. The broader
24
study need not include a reexamination of
25
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HR 6 EAS1S/PP
the conclusions reached by the Adminis-
1
trator in any separate study.
2
‘‘(2) I
NDEPENDENT SCIENTIFIC REVIEW
.—
3
‘‘(A) I
N GENERAL
.—Prior to the time the
4
study under paragraph (1) is completed, the Ad-
5
ministrator shall enter into an appropriate
6
agreement with the National Academy of
7
Sciences to have the Academy review the conclu-
8
sions of the study.
9
‘‘(B) R
EPORT
.—Not later than 11 months
10
after entering into an appropriate agreement
11
with the Administrator, the National Academy of
12
Sciences shall report to the Administrator, the
13
Committee on Energy and Commerce of the
14
House of Representatives, and the Committee on
15
Environment and Public Works of the Senate, on
16
the—
17
‘‘(i) findings related to the study con-
18
ducted by the Administrator under para-
19
graph (1);
20
‘‘(ii) the scientific and technical basis
21
for such findings; and
22
‘‘(iii) recommendations, if any, for
23
modifying the findings of the study.
24
‘‘(3) R
EGULATORY DETERMINATION
.—
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‘‘(A) I
N
GENERAL
.—Not later than 6
1
months after receiving the National Academy of
2
Sciences report under paragraph (2), the Admin-
3
istrator shall determine, after informal public
4
hearings and public notice and opportunity for
5
comment, and based on information developed or
6
accumulated in connection with the study re-
7
quired under paragraph (1) and the National
8
Academy of Sciences report under paragraph
9
(2), either—
10
‘‘(i) that regulation of hydraulic frac-
11
turing under this part is necessary to en-
12
sure that underground sources of drinking
13
water will not be endangered on a nation-
14
wide basis, or within a specific region,
15
State or portions of a State; or
16
‘‘(ii) that regulation described under
17
clause (i) is unnecessary.
18
‘‘(B) P
UBLICATION OF DETERMINATION
.—
19
The Administrator shall publish the determina-
20
tion in the Federal Register, accompanied by an
21
explanation and the reasons for it.
22
‘‘(4) P
ROMULGATION OF REGULATIONS
.—
23
‘‘(A) R
EGULATION NECESSARY
.—If the Ad-
24
ministrator determines under paragraph (3) that
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HR 6 EAS1S/PP
regulation by hydraulic fracturing under this
1
part is necessary to ensure that hydraulic frac-
2
turing does not endanger underground drinking
3
water sources on a nationwide basis, or within
4
a specific region, State or portions of a State,
5
the Administrator shall, within 6 months after
6
the issuance of that determination, and after
7
public notice and opportunity for comment, pro-
8
mulgate regulations under section 1421 (42
9
U.S.C. 300h) to ensure that hydraulic fracturing
10
will not endanger such underground sources of
11
drinking water. However, for purposes of the Ad-
12
ministrator’s approval or disapproval under sec-
13
tion 1422 of any State underground injection
14
control program for regulating hydraulic frac-
15
turing, a State at any time may make the alter-
16
native demonstration provided for in section
17
1425 of this title.
18
‘‘(B) R
EGULATION UNNECESSARY
.—The Ad-
19
ministrator shall not regulate or require States
20
to regulate hydraulic fracturing under this part
21
unless the Administrator determines under para-
22
graph (3) that such regulation is necessary. This
23
provision shall not apply to any State which has
24
a program for the regulation of hydraulic frac-
25
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