CS/CS/CS/HB 1219

1
A bill to be entitled
2An act relating to the regulation of state lands and oil
3and gas resources; amending s. 253.52, F.S.; providing for
4the Board of Trustees of the Internal Improvement Trust
5Fund to accept and award bids for oil and gas leases on
6submerged lands underlying the territorial waters of the
7state; providing requirements and procedures for
8submitting, reviewing, and awarding such bids; providing
9for a nonrefundable bid submittal fee; providing for
10easements over sovereign submerged lands for the
11construction, installation, and maintenance of structures
12relating to the production of oil, gas, or other petroleum
13products; providing a fee for such easements; requiring
14certain notice; amending s. 253.571, F.S.; providing
15requirements for proof of financial responsibility by a
16lessee prior to the commencement of drilling on submerged
17lands underlying the territorial waters of the state;
18providing a limitation; creating s. 253.585, F.S.;
19providing for the distribution of royalties, cash
20considerations, annual rentals, or payments in lieu of
21royalties collected for oil and gas leases on submerged
22lands within the territorial waters of the state;
23providing for rulemaking; amending s. 253.61, F.S.;
24providing an exemption from land-leasing restrictions for
25leases on submerged lands within the territorial waters of
26the state; deleting a provision prohibiting leasing of
27specified lands; amending s. 377.24, F.S.; providing an
28exemption from permit restrictions relating to drilling
29gas or oil wells for leases on submerged lands within the
30territorial waters of the state; deleting a provision
31prohibiting drilling in specified waters; amending s.
32377.242, F.S.; deleting a provision prohibiting the
33construction of specified structures; providing exemptions
34from restrictions relating to the permitting or
35construction of structures intended for the drilling for
36or production of oil, gas, or other petroleum products;
37amending s. 377.2425, F.S.; revising applicability
38provisions relating to surety for geophysical exploration,
39drilling, and production; exempting applicants for
40drilling or operating permits for operations planned in
41coastal waters; providing an effective date.
42
43Be It Enacted by the Legislature of the State of Florida:
44
45     Section 1.  Section 253.52, Florida Statutes, is amended to
46read:
47     253.52  Placing oil and gas leases on market by board.--
48     (1)  Whenever in the opinion of the Board of Trustees of
49the Internal Improvement Trust Fund there shall be a demand for
50the purchase of oil and gas leases on any area, tract, or parcel
51of the land so owned, controlled, or managed, by any state
52board, department, or agency, then the board shall place such
53oil and gas lease or leases on the market in such blocks,
54tracts, or parcels as it may designate. The lease or leases
55shall only be made after notice by publication thereof has been
56made not less than once a week for 4 consecutive weeks in a
57newspaper of general circulation published in Leon County, and
58in a similar newspaper for a similar period of time published in
59the vicinity of the lands offered to be leased, the last
60publication in both newspapers to be not less than 5 days in
61advance of the sale date. Such notice shall be to the effect
62that a lease or leases will be offered for sale at such date and
63time as may be named in said notice and shall describe the land
64upon which such lease, or leases, will be offered. This notice
65may be combined with the notice required pursuant to s. 253.115.
66Before any lease of any block, tract, or parcel of land,
67submerged, or unsubmerged, within a radius of 3 miles of the
68boundaries of any incorporated city, or town, or within such
69radius of any bathing beach, or beaches, outside thereof, such
70board, department, or agency, shall through one or more of its
71members hold a public hearing, after notice thereof by
72publication once in a newspaper of general circulation published
73at least 1 week prior to said hearing in the vicinity of the
74land, or lands, offered to be leased, of the offer to lease the
75same, calling upon all interested persons to attend said hearing
76where they would be given the opportunity to be heard, all of
77which shall be considered by the board prior to the execution of
78any lease or leases to said land, and the board may withdraw
79said land, or any part thereof, from the market, and refuse to
80execute such lease or leases if after such hearing, or
81otherwise, it considers such execution contrary to the public
82welfare. Before advertising any land for lease the form of the
83lease or leases to be offered for sale, not inconsistent with
84law, or the provisions of this section, shall be prescribed by
85the board and a copy, or copies, thereof, shall be available to
86the general public at the office of the Board of Trustees of the
87Internal Improvement Trust Fund and the advertisements of such
88sale shall so state.
89     (2)(a)  Notwithstanding subsection (1), the Board of
90Trustees of the Internal Improvement Trust Fund shall accept a
91nomination on or before September 1 of each year from a bidder
92or bidders for the purchase, in such blocks, tracts, or parcels
93as the bidder may designate, of oil and gas leases on any area,
94tract, or parcel of submerged land underlying the territorial
95waters of the state, as defined in the Submerged Lands Act, 43
96U.S.C. ss. 1301-1315, so owned, controlled, or managed by any
97state board, department, or agency.
98     (b)  Within 14 days after receipt of a bid, the board shall
99give notice of same by publication in the Florida Administrative
100Weekly and in a newspaper of general circulation published in
101the vicinity of the proposed lease or leases. The publication
102may not include any reference to proprietary trade secrets or
103confidential or economic business information provided by the
104original bidder.
105     (c)  The notice requirements under paragraph (b) shall
106apply in lieu of the requirements under subsection (1) and s.
107253.115 for a nomination for the purchase of an oil and gas
108lease pursuant to this subsection.
109     (d)  Other interested parties shall have 90 days after the
110date of publication of the notice to submit a competing bid for
111the same blocks, tracts, or parcels as were designated in the
112original bid and published in the notice. The bid period shall
113close on the 90th day.
114     (e)  The board shall have no more than 30 days from the
115date the bid period closes to review all bids and determine
116whether or not each bid contains all of the information required
117under subsection (4). Any bid determined to not contain all of
118the information required under subsection (4) shall be returned
119to the bidder and may not be further considered.
120     (f)  Following a determination that a bid or bids contain
121all of the information required under subsection (4), the board
122shall select the highest and best of such bids within 30 days,
123provided that if, in the reasonable judgment of the board, the
124bids submitted do not represent the reasonable fair value of
125such lease or leases, the execution of same is reasonably
126determined to be contrary to the public welfare, or, if the
127responsibility of the bidder offering the highest amount has not
128reasonably been established to the board's satisfaction, the
129board may in its discretion reject the bids. All information
130included in all bids not selected by the board shall be returned
131to the bidder, including all checks or other financial
132assurances, except for the $1 million nonrefundable bid
133submittal fee.
134     (g)  The board shall have no more than 90 days to negotiate
135any outstanding matters, including, but not limited to, definite
136rental payments or payments that may be made in lieu of royalty,
137with the winning bidder and award the lease or leases.
138Affirmative action by the board to approve any such lease shall
139require the approval of the Governor and at least two other
140members of the board.
141     (3)  To the extent that any provision of the sealed bid
142requirements pursuant to s. 253.53 and the competitive bidding
143process pursuant to s. 253.54 may be in conflict with the
144nomination process provided under subsection (2), subsection (2)
145shall control the nomination for and the award of the purchase,
146in such blocks, tracts, or parcels as may be designated, of an
147oil and gas lease or leases on any area, tract, or parcel of
148submerged land underlying the territorial waters of the state.
149     (4)  All bids submitted to the board for lands identified
150under subsection (2) shall include the following:
151     (a)  A nonrefundable bid submittal fee of $1 million in
152addition to and separate from any cash consideration that may be
153provided as part of the bid;
154     (b)  Documentation stating that all equipment or structures
155above the surface of the water and related to the development
156and production of oil and gas within the territorial waters of
157the state shall be situated no closer than 3 miles from the
158coast as calculated from the line of mean high tide;
159     (c)  A statement and map identifying the blocks, tracts, or
160parcels, as designated for the oil and gas lease or leases, on
161submerged land underlying the territorial waters of the state;
162     (d)  A statement of a cash consideration; and
163     (e)  A statement of a royalty, never less than one-eighth
164in kind or in value; provided, however, that up-front payments
165in lieu of royalties may be proposed and, if proposed, may
166reduce the minimum one-eighth royalty.
167     (5)  All bids shall be accompanied by a separate cashier's
168check or certified check for the amount of the cash
169consideration and application fee and shall be payable to the
170state board, department, or agency which holds title to or
171controls the land sought to be leased.
172     (6)  For a bidder who obtains an oil and gas lease from a
173bid pursuant to subsection (2) and fails to be issued a permit,
174after a good faith effort to attain such a permit, for
175geophysical operations, drilling, or exploring and extracting
176through well holes or by other means pursuant to ss. 377.2408
177and 377.242 within 24 months after receiving the lease, the
178board shall refund the entire cash consideration with interest
179paid pursuant to s. 55.03(1), using the per annum rate for the
180year in which the bidder obtained the lease. The bidder may
181extend this time period upon receiving a written request showing
182good cause by the Department of Environmental Protection.
183     (7)  If the board awards an oil and gas lease or leases
184issued pursuant to subsection (2), the lessee shall be entitled
185to obtain an easement or easements over sovereign submerged
186lands for the construction, installation, and maintenance of any
187pipeline or associated infrastructure that is an appurtenance to
188the transportation of oil and gas from the leased submerged
189lands to shore-based facilities. The fee for this easement shall
190be based on a cost per linear foot basis and may not exceed $5
191per linear foot. Notwithstanding s. 253.115, within 14 days
192after receipt of an application for an easement or easements
193pursuant to this subsection, the board shall require the
194applicant for such easement or easements to give notice of the
195filing of such application or applications by publication, one
196time only, in a newspaper of general circulation published in
197the vicinity of the proposed lease or leases.
198     Section 2.  Section 253.571, Florida Statutes, is amended
199to read:
200     253.571  Proof of financial responsibility required of
201lessee prior to commencement of drilling.--
202     (1)  The Board of Trustees of the Internal Improvement
203Trust Fund may require a surety or property bond, an irrevocable
204letter of credit, or other proof of financial responsibility
205from each lessee of public land or mineral interest prior to the
206time such lessee mines, drills, or extracts in any manner,
207petroleum, petroleum products, gas, sulphur, or any other
208mineral from such land. The surety bond or irrevocable letter of
209credit shall be from a surety company or bank authorized to do
210business in the state. The surety bond, irrevocable letter of
211credit, or other proof of financial responsibility shall serve
212as security and is to be forfeited to the board to pay for any
213damages caused by mining or drilling operations performed by the
214lessee. In the case of operations planned in the waters of the
215state or under other particular circumstances which, by their
216nature warrant greater security in view of possible damages, the
217board shall give special consideration to the extent of such
218possible damages and shall set the amount of an adequate and
219sufficient surety bond, irrevocable letter of credit, or other
220proof of financial responsibility accordingly. For the purposes
221of this section, damages shall include, but not be limited to,
222air, water, and ground pollution, destruction of wildlife or
223marine productivity and any other damage which impairs the
224health and general welfare of the citizens of the state. The
225board shall require a lessee to provide proof of financial
226responsibility only once, irrespective of the number of
227different leases the lessee may have.
228     (2)  A surety or property bond, an irrevocable letter of
229credit, or other proof of financial responsibility from each
230lessee of public land or mineral interest in submerged lands
231underlying the territorial waters of the state, as defined in
232the Submerged Lands Act, 43 U.S.C. ss. 1301-1315, shall not
233exceed the lesser amount of either:
234     (a)  Five hundred million dollars; or
235     (b)  A calculated cost estimate for potential damages
236related to, but not limited to, air, water, and ground
237pollution, destruction of wildlife or marine productivity, and
238any other damage that impairs the health and general welfare of
239the citizens of the state, as based on reasonably foreseeable
240accidents or occurrences associated with the particular oil and
241gas development or production activity within the immediate area
242of the oil and gas lease.
243     (3)  A surety or property bond, an irrevocable letter of
244credit, or other proof of financial responsibility issued under
245subsection (2) shall be the only proof of financial
246responsibility a lessee must provide in lieu of any other proof
247of financial responsibility that may be required by any agency
248for any permit or authorization that must be obtained in
249connection with the development and production of oil and gas,
250including, but not limited to, oil and gas transportation
251infrastructure, such as pipelines, appurtenant to the leased
252submerged lands.
253     Section 3.  Section 253.585, Florida Statues, is created to
254read:
255     253.585  Distribution of royalties, cash considerations,
256annual rentals, or payments in lieu of royalties collected for
257oil and gas leases on submerged lands within the territorial
258waters of the state.--
259     (1)  Royalties, cash considerations, annual rentals, or
260payments in lieu of royalties collected for oil and gas leases
261on submerged lands within the territorial waters of the state
262shall be appropriated for the following purposes:
263     (a)  To fund a bond initiative to provide up to $300
264million per year for the Florida Forever land acquisition
265program, including up to an additional $15 million for
266reasonable management costs for the administration of such
267lands, to the extent the Board of Trustees of the Internal
268Improvement Trust Fund determines such management costs are
269necessary.
270     (b)  To provide up to $20 million per year for local
271governments to support beach restoration and nourishment
272projects.
273     (c)  To provide up to $20 million per year to be
274distributed to coastal local governments within the county or
275counties within which the lease or leases are issued.
276     (2)  The Division of State Lands in the Department of
277Environmental Protection, as staff to the Board of Trustees of
278the Internal Improvement Trust Fund, shall adopt rules as
279necessary to administer this section.
280     Section 4.  Paragraphs (b), (c), and (d) of subsection (1)
281of section 253.61, Florida Statutes, are amended to read:
282     253.61  Lands not subject to lease.--
283     (1)  Regardless of anything to the contrary contained in
284this law in any previous section or part thereof, no board or
285agency mentioned therein or the state shall have the power or
286authority to sell, execute, or enter into any lease of the type
287covered by this law relating to any of the following lands,
288submerged or unsubmerged, except under the circumstances and
289conditions as hereinafter set out in this section, to wit:
290     (b)  No lease of the type covered by this law shall be
291granted, sold or executed covering any such lands in the tidal
292waters of the state, abutting on or immediately adjacent to the
293corporate limits of a municipality or within 3 miles of such
294corporate limits extending from the line of mean high tide into
295such waters, unless the governing authority of the municipality
296shall have first duly consented to the granting or sale of such
297lease by resolution. This paragraph does not apply to leases on
298submerged lands underlying the territorial waters of the state,
299as defined in the Submerged Lands Act, 43 U.S.C. ss. 1301-1315,
300where any structure or equipment above the surface of the water
301is more than 3 miles from such corporate limits.
302     (c)  No lease of the type covered by this law shall be
303granted, sold or executed covering such lands on any improved
304beach, located outside of an incorporated town or municipality,
305or covering such lands in the tidal waters of the state abutting
306on or immediately adjacent to any improved beach, or within 3
307miles of an improved beach extending from the line of mean high
308tide into such tidal waters, unless the county commissioners of
309the county in which such beach is located shall have first duly
310consented to the granting or sale of such lease by resolution.
311This paragraph does not apply to leases on submerged lands
312underlying the territorial waters of the state, as defined in
313the Submerged Lands Act, 43 U.S.C. ss. 1301-1315, where any
314structure or equipment above the surface of the water is more
315than 3 miles from such improved beach.
316     (d)  Without exception, after July 1, 1989, no lease of the
317type covered by this law shall be granted, sold, or executed
318south of 26° north latitude off Florida's west coast and south
319of 27° north latitude off Florida's east coast, within the
320boundaries of Florida's territorial seas as defined in 43 U.S.C.
3211301. After July 31, 1990, no oil or natural gas lease shall be
322granted, sold, or executed covering lands located north of
32326°00'00" north latitude off Florida's west coast to the western
324boundary of the state bordering Alabama as set forth in s. 1,
325Art. II of the State Constitution, or located north of 27°00'00"
326north latitude off Florida's east coast to the northern boundary
327of the state bordering Georgia as set forth in s. 1, Art. II of
328the State Constitution, within the boundaries of Florida's
329territorial seas as defined in 43 U.S.C. 1301.
330     Section 5.  Subsections (6), (7), and (9) of section
331377.24, Florida Statutes, are amended to read:
332     377.24  Notice of intention to drill well; permits;
333abandoned wells and dry holes.--
334     (6)  No permit to drill a gas or oil well shall be granted
335at a location in the tidal waters of the state, abutting or
336immediately adjacent to the corporate limits of a municipality
337or within 3 miles of such corporate limits extending from the
338line of mean high tide into such waters, unless the governing
339authority of the municipality shall have first duly approved the
340application for such permit by resolution. This subsection does
341not apply to leases on submerged lands underlying the
342territorial waters of the state, as defined in the Submerged
343Lands Act, 43 U.S.C. ss. 1301-1315, where any structure or
344equipment above the surface of the water is more than 3 miles
345from such corporate limits.
346     (7)  No permit to drill a gas or oil well shall be granted
347on any improved beach, located outside of an incorporated town
348or municipality, or at a location in the tidal waters of the
349state abutting or immediately adjacent to an improved beach, or
350within 3 miles of an improved beach extending from the line of
351mean high tide into such tidal waters, unless the county
352commissioners of the county in which such beach is located shall
353have first duly approved the application for such permit by
354resolution. This subsection does not apply to leases on
355submerged lands underlying the territorial waters of the state,
356as defined in the Submerged Lands Act, 43 U.S.C. ss. 1301-1315,
357where any structure or equipment above the surface of the water
358is more than 3 miles from such improved beach.
359     (9)  Without exception, after July 1, 1989, no permit to
360drill a well in search of oil or gas shall be granted south of
36126°00'00" north latitude off Florida's west coast and south of
36227°00'00" north latitude off Florida's east coast, within the
363boundaries of Florida's territorial seas as defined in 43 U.S.C.
3641301. After July 31, 1990, no permit to drill a well in search
365of oil or gas shall be granted north of 26°00'00" north latitude
366off Florida's west coast to the western boundary of the state
367bordering Alabama as set forth in s. 1, Art. II of the State
368Constitution, or located north of 27°00'00" north latitude off
369Florida's east coast to the northern boundary of the state
370bordering Georgia as set forth in s. 1, Art. II of the State
371Constitution, within the boundaries of Florida's territorial
372seas as defined in 43 U.S.C. 1301.
373     Section 6.  Section 377.242, Florida Statutes, is amended
374to read:
375     377.242  Permits for drilling or exploring and extracting
376through well holes or by other means.--The department is vested
377with the power and authority:
378     (1)(a)  To issue permits for the drilling for, exploring
379for, or production of oil, gas, or other petroleum products
380which are to be extracted from below the surface of the land,
381including submerged land, only through the well hole drilled for
382oil, gas, and other petroleum products.
383     1.  No structure intended for the drilling for, or
384production of, oil, gas, or other petroleum products may be
385permitted or constructed on any submerged land within any bay or
386estuary.
387     2.  No structure intended for the drilling for, or
388production of, oil, gas, or other petroleum products may be
389permitted or constructed within 1 mile seaward of the coastline
390of the state.
391     3.  No structure intended for the drilling for, or
392production of, oil, gas, or other petroleum products may be
393permitted or constructed within 1 mile of the seaward boundary
394of any state, local, or federal park or aquatic or wildlife
395preserve or on the surface of a freshwater lake, river, or
396stream.
397     4.  No structure intended for the drilling for, or
398production of, oil, gas, or other petroleum products may be
399permitted or constructed within 1 mile inland from the shoreline
400of the Gulf of Mexico, the Atlantic Ocean, or any bay or estuary
401or within 1 mile of any freshwater lake, river, or stream unless
402the department is satisfied that the natural resources of such
403bodies of water and shore areas of the state will be adequately
404protected in the event of accident or blowout.
405     5.  Without exception, after July 1, 1989, no structure
406intended for the drilling for, or production of, oil, gas, or
407other petroleum products may be permitted or constructed south
408of 26°00'00" north latitude off Florida's west coast and south
409of 27°00'00" north latitude off Florida's east coast, within the
410boundaries of Florida's territorial seas as defined in 43 U.S.C.
411s. 1301. After July 31, 1990, no structure intended for the
412drilling for, or production of, oil, gas, or other petroleum
413products may be permitted or constructed north of 26°00'00"
414north latitude off Florida's west coast to the western boundary
415of the state bordering Alabama as set forth in s. 1, Art. II of
416the State Constitution, or located north of 27°00'00" north
417latitude off Florida's east coast to the northern boundary of
418the state bordering Georgia as set forth in s. 1, Art. II of the
419State Constitution, within the boundaries of Florida's
420territorial seas as defined in 43 U.S.C. s. 1301.
421     (b)  Subparagraphs (a)1. and 4. do not apply to permitting
422or construction of structures intended for the drilling for, or
423production of, oil, gas, or other petroleum products pursuant to
424an oil, gas, or mineral lease of such lands by the state under
425which lease any valid drilling permits are in effect on the
426effective date of this act. In the event that such permits
427contain conditions or stipulations, such conditions and
428stipulations shall govern and supersede subparagraphs (a)1. and
4294.
430     (c)  The prohibitions of subparagraphs (a)1.-4. in this
431subsection do not include "infield gathering lines," or other
432pipelines for the purpose of transporting offshore production on
433shore, provided no other placement is reasonably available and
434all other required permits have been obtained.
435     (d)  Subparagraphs (a)1.-3. do not apply to the permitting
436or construction of offshore structures intended for the
437exploration or production of oil, gas, or other petroleum
438products where any structure or equipment above the surface of
439the water is more than 3 miles seaward from the line of mean
440high tide.
441     (2)  To issue permits to explore for and extract minerals
442which are subject to extraction from the land by means other
443than through a well hole.
444     (3)  To issue permits to construct wells for the injection
445and recovery of any natural gas for temporary storage in
446subsurface reservoirs.
447
448Each permit shall contain an agreement by the permitholder that
449the permitholder will not prevent inspection by division
450personnel at any time. The provisions of this section
451prohibiting permits for drilling or exploring for oil in coastal
452waters do not apply to any leases entered into before June 7,
4531991.
454     Section 7.  Subsection (1) of section 377.2425, Florida
455Statutes, is amended to read:
456     377.2425  Manner of providing security for geophysical
457exploration, drilling, and production.--
458     (1)  Prior to granting a permit to conduct geophysical
459operations; drilling of exploratory, injection, or production
460wells; producing oil and gas from a wellhead; or transporting
461oil and gas through a field-gathering system, the department
462shall require the applicant or operator to provide surety that
463these operations will be conducted in a safe and environmentally
464compatible manner.
465     (a)  The applicant for a drilling, production, or injection
466well permit or a geophysical permit may provide the following
467types of surety to the department for this purpose:
468     1.  A deposit of cash or other securities made payable to
469the Minerals Trust Fund. Such cash or securities so deposited
470shall be held at interest by the Chief Financial Officer to
471satisfy safety and environmental performance provisions of this
472chapter. The interest shall be credited to the Minerals Trust
473Fund. Such cash or other securities shall be released by the
474Chief Financial Officer upon request of the applicant and
475certification by the department that all safety and
476environmental performance provisions established by the
477department for permitted activities have been fulfilled.
478     2.  A bond of a surety company authorized to do business in
479the state in an amount as provided by rule.
480     3.  A surety in the form of an irrevocable letter of credit
481in an amount as provided by rule guaranteed by an acceptable
482financial institution.
483     (b)  An applicant for a drilling, production, or injection
484well permit, or a permittee who intends to continue
485participating in long-term production activities of such wells,
486has the option to provide surety to the department by paying an
487annual fee to the Minerals Trust Fund. For an applicant or
488permittee choosing this option the following shall apply:
489     1.  For the first year, or part of a year, of a drilling,
490production, or injection well permit, or change of operator, the
491fee is $4,000 per permitted well.
492     2.  For each subsequent year, or part of a year, the fee is
493$1,500 per permitted well.
494     3.  The maximum fee that an applicant or permittee may be
495required to pay into the trust fund is $30,000 per calendar
496year, regardless of the number of permits applied for or in
497effect.
498     4.  The fees set forth in subparagraphs 1., 2., and 3.
499shall be reviewed by the department on a biennial basis and
500adjusted for the cost of inflation. The department shall
501establish by rule a suitable index for implementing such fee
502revisions.
503     (c)  This subsection does not apply to an applicant for a
504drilling or operating permit for operations planned in coastal
505waters that by their nature warrant greater surety shall provide
506surety only in accordance with paragraph (a), or similar proof
507of financial responsibility other than as provided in paragraph
508(b). For all such applications, including applications pending
509at the effective date of this act and notwithstanding the
510provisions of paragraph (b), the Governor and Cabinet in their
511capacity as the Administration Commission, at the recommendation
512of the Department of Environmental Protection, shall set a
513reasonable amount of surety required under this subsection. The
514surety amount shall be based on the projected cleanup costs and
515natural resources damages resulting from a maximum oil spill and
516adverse hydrographic and atmospheric conditions that would tend
517to transport the oil into environmentally sensitive areas, as
518determined by the Department of Environmental Protection.
519     Section 8.  This act shall take effect July 1, 2009.


CODING: Words stricken are deletions; words underlined are additions.