[House Report 112-371]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-371
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BLM LIVE INTERNET AUCTIONS ACT
_______
January 18, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hastings of Washington, from the Committee on Natural Resources,
submitted the following
R E P O R T
[To accompany H.R. 2752]
[Including cost estimate of the Congressional Budget Office]
The Committee on Natural Resources, to whom was referred the
bill (H.R. 2752) to amend the Mineral Leasing Act to authorize
the Secretary of the Interior to conduct onshore oil and gas
lease sales through Internet-based live lease sales, and for
other purposes, having considered the same, report favorably
thereon 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 ``BLM Live Internet Auctions Act''.
SEC. 2. INTERNET-BASED ONSHORE OIL AND GAS LEASE SALES.
(a) Authorization.--Section 17(b)(1) of the Mineral Leasing Act (30
U.S.C. 226(b)(1)) is amended--
(1) in subparagraph (A), in the third sentence, by inserting
``, except as provided in subparagraph (C)'' after ``by oral
bidding''; and
(2) by adding at the end the following:
``(C) In order to diversify and expand the Nation's onshore leasing
program to ensure the best return to the Federal taxpayer, reduce
fraud, and secure the leasing process, the Secretary may conduct
onshore lease sales through Internet-based bidding methods. Each
individual Internet-based lease sale shall conclude within 7 days.''.
(b) Report.--Not later than 90 days after the tenth Internet-based
lease sale conducted under the amendment made by subsection (a), the
Secretary of the Interior shall analyze the first 10 such lease sales
and report to Congress the findings of the analysis. The report shall
include--
(1) estimates on increases or decreases in such lease sales,
compared to sales conducted by oral bidding, in--
(A) the number of bidders;
(B) the average amount of bid;
(C) the highest amount bid; and
(D) the lowest bid;
(2) an estimate on the total cost or savings to the
Department of the Interior as a result of such sales, compared
to sales conducted by oral bidding; and
(3) an evaluation of the demonstrated or expected
effectiveness of different structures for lease sales which may
provide an opportunity to better maximize bidder participation,
ensure the highest return to the Federal taxpayers, minimize
opportunities for fraud or collusion, and ensure the security
and integrity of the leasing process.
Purpose of the Bill
The purpose of H.R. 2752, as ordered reported, is to amend
the Mineral Leasing Act to authorize the Secretary of the
Interior to conduct onshore oil and gas lease sales through
Internet-based live lease sales.
Background and Need for Legislation
The BLM Live Internet Auctions Act (H.R. 2752) amends the
Mineral Leasing Act to authorize the Secretary of the Interior
to conduct onshore oil and gas lease sales through Internet-
based live lease sales.
Signed into law in 1920, the Minerals Leasing Act requires
competitive bidding for federal onshore oil and gas leases. In
1987, the Leasing Reform Act required this competitive bidding
be conducted orally.
In 2008, a 27-year-old global warming activist named Tim
DeChristopher placed 14 fake bids worth $1.7 million on parcels
of federal land that the Bureau of Land Management (BLM) was
auctioning off for energy development. DeChristopher was
convicted of civil disobedience, fined $10,000, and sentenced
to two years in federal prison.
In August 2009, the Department of the Interior issued a
report listing Internet bidding as one option to reduce fraud
in the bidding process. According to the report:
The Internet leasing auction presents potential
benefits such as increased bidder participation and
accessibility; savings to bidders; electronic
verification of disqualified bidders; additional
identification and financial verification through pre-
registration and pre-certification; the potential for
nationwide bidding instead of individual state
auctions; and the capture of lease auction data for
analysis, planning, and reporting.
Additionally, in an attempt to prevent fraud in the bidding
process and embrace advancing technology, Congress appropriated
$250,000 in the Fiscal Year 2008 BLM budget for a pilot
Internet leasing program. In 2009, BLM held a pilot auction
with extremely positive results.
Internet-based lease sales streamline the leasing process
and reduce auction costs for the Department of the Interior.
Current law stipulates that onshore lease auctions be done in
person, while an Internet-based method would expand the bidder
pool and allow more bidders access to lease auctions. H.R. 2752
would reduce the potential for fraud in the bidding process,
increase transparency, save taxpayer dollars, and ensure that
the taxpayers get a fair return for activities on federal land.
Committee Action
H.R. 2752 was introduced on August 1, 2011, by Congressman
Bill Johnson (R-OH). The bill was referred to the Committee on
Natural Resources, and within the Committee to the Subcommittee
on Energy and Mineral Resources. On September 13, 2011, the
Subcommittee held a hearing on the bill. On October 5, 2011,
the Full Natural Resources Committee met to consider the bill.
The Subcommittee on Energy and Mineral Resources was discharged
by unanimous consent. Congressman Bill Johnson (R-OH) offered
an amendment to the bill; the amendment was adopted by
unanimous consent. The bill was then ordered favorably reported
to the House of Representatives by unanimous consent.
Section-by-Section Analysis
Section 1. Short title
This Act may be cited as the ``BLM Live Internet Auctions
Act.''
Section 2. Internet-based onshore oil and gas lease sales
This section gives the Secretary of the Interior the
authority to conduct Internet-based auctions for onshore leases
to ensure the best return to the Federal taxpayer, reduce
fraud, and secure the leasing process. Each auction should be
no longer than seven days. This section also requires a report
to Congress not more than 90 days after the tenth Internet-
based lease sale.
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. 2752--BLM Live Internet Auctions Act
H.R. 2752 would allow the Bureau of Land Management (BLM)
the option to conduct auctions for onshore oil and gas leases
using Internet-based bidding methods. The bill also would
require BLM to prepare a report comparing outcomes of Internet-
based auctions to outcomes of oral auctions conducted under
current law.
Using information provided by BLM and individuals familiar
with Internet auction methods, CBO estimates that, assuming
availability of appropriated funds, implementing the
legislation would cost $2 million over the 2012-2016 period.
That amount includes about $1 million to build an online system
to facilitate auctions and annual costs to operate and maintain
the system, which would be partially offset by savings
associated with reducing the number of oral auctions conducted
by BLM each year.
H.R. 2752 could affect direct spending by increasing
receipts from bonus bids; therefore, pay-as-you go procedures
apply. Total bonus bids from onshore oil and gas leases
averaged about $250 million annually over the 2007-2011 period.
CBO expects that any change in receipts resulting from allowing
the agency the option to conduct Internet auctions for onshore
oil and gas leases would not be significant.
H.R. 2752 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Jeff LaFave. The
estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
2. Section 308(a) of Congressional Budget Act. As required
by clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives and section 308(a) of the Congressional Budget
Act of 1974, this bill does not contain any new budget
authority, credit authority, or an increase or decrease in
revenues or tax expenditures. Using information provided by
Bureau of Land Management and individuals familiar with
Internet auction methods, CBO estimates that, assuming
availability of appropriated funds, implementing the
legislation would cost $2 million over the 2012-2016 period.
That amount includes about $1 million to build an online system
to facilitate auctions and annual costs to operate and maintain
the system, which would be partially offset by savings
associated with reducing the number of oral auctions conducted
by BLM each year. H.R. 2752 could affect direct spending by
increasing receipts from bonus bids; therefore, pay-as-you go
procedures apply. Total bonus bids from onshore oil and gas
leases averaged about $250 million annually over the 2007-2011
period. CBO expects that any change in receipts resulting from
allowing the agency the option to conduct Internet auctions for
onshore oil and gas leases would not be significant.
3. General Performance Goals and Objectives. As required by
clause 3(c)(4) of rule XIII, the general performance goal or
objective of this bill, as ordered reported, is to amend the
Mineral Leasing Act to authorize the Secretary of the Interior
to conduct onshore oil and gas lease sales through Internet-
based live lease sales.
Earmark Statement
This bill does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of
the House of Representatives.
Compliance With Public Law 104-4
This bill contains no unfunded mandates.
Preemption of State, Local or Tribal Law
This bill is not intended to preempt any State, local or
tribal law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
MINERAL LEASING ACT
* * * * * * *
Sec. 17. (a) * * *
(b)(1)(A) All lands to be leased which are not subject to
leasing under paragraphs (2) and (3) of this subsection shall
be leased as provided in this paragraph to the highest
responsible qualified bidder by competitive bidding under
general regulations in units of not more than 2,560 acres,
except in Alaska, where units shall be not more than 5,760
acres. Such units shall be as nearly compact as possible. Lease
sales shall be conducted by oral bidding, except as provided in
subparagraph (C). Lease sales shall be held for each State
where eligible lands are available at least quarterly and more
frequently if the Secretary of the Interior determines such
sales are necessary. A lease shall be conditioned upon the
payment of a royalty at a rate of not less than 12.5 percent in
amount or value of the production removed or sold from the
lease. The Secretary shall accept the highest bid from a
responsible qualified bidder which is equal to or greater than
the national minimum acceptable bid, without evaluation of the
value of the lands proposed for lease. Leases shall be issued
within 60 days following payment by the successful bidder of
the remainder of the bonus bid, if any, and the annual rental
for the first lease year. All bids for less than the national
minimum acceptable bid shall be rejected. Lands for which no
bids are received or for which the highest bid is less than the
national minimum acceptable bid shall be offered promptly
within 30 days for leasing under subsection (c) of this section
and shall remain available for leasing for a period of 2 years
after the competitive lease sale.
* * * * * * *
(C) In order to diversify and expand the Nation's onshore
leasing program to ensure the best return to the Federal
taxpayer, reduce fraud, and secure the leasing process, the
Secretary may conduct onshore lease sales through Internet-
based bidding methods. Each individual Internet-based lease
sale shall conclude within 7 days.
* * * * * * *