To prohibit the suspension of royalties under certain circumstances, to clarify the authority to impose price thresholds for certain leases, to limit the eligibility of certain lessees for new leases, and to restrict the transfer of certain leases.

SA 4806. Mr. KYL (for himself, Mr. Wyden, Mr. DeWine, Mr. Lieberman,
Mrs. Feinstein, Ms. Cantwell, Mr. Salazar, and Mr. Durbin) submitted an
amendment intended to be proposed by him to the bill H.R. 5631, making
appropriations for the Department of Defense for the fiscal year ending
September 30, 2007, and for other purposes; as follows:

At the appropriate place, insert the following:

SEC. __. ROYALTY RELIEF FOR PRODUCTION OF OIL AND GAS.

(a) Price Thresholds.--Notwithstanding any other provision
of law, the Secretary of the Interior shall place limitations
based on market price on the royalty relief granted under any
lease for the production of oil or natural gas on Federal
land (including submerged land) entered into by the Secretary
of the Interior on or after the date of enactment of this
Act.
(b) Clarification of Authority to Impose Price Thresholds
for Certain Lease Sales.--Congress reaffirms the authority of
the Secretary of the Interior under section 8(a)(1)(H) of the
Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(1)(H))
to vary, based on the price of production from a lease, the
suspension of royalties under any lease subject to section
304 of the Outer Continental Shelf Deep Water Royalty Relief
Act (Public Law 104-58; 43 U.S.C. 1337 note).

SEC. __. ELIGIBILITY FOR NEW LEASES AND THE TRANSFER OF
LEASES.

(a) Definitions.--In this section
(1) Covered lease.--The term ``covered lease'' means a
lease for oil or gas production in the Gulf of Mexico that
is--
(A) in existence on the date of enactment of this Act;
(B) issued by the Department of the Interior under the
Outer Continental Shelf Deep Water Royalty Relief Act (43
U.S.C. 1337 note; Public Law 104-58); and
(C) not subject to limitations on royalty relief based on
market price that are equal to or less than the price
thresholds described in clauses (v) through (vii) of section
8(a)(3)(C) of the Outer Continental Shelf Lands Act (43
U.S.C. 1337(a)(3)(C).
(2) Lessee.--The term ``lessee'' includes any person that
controls, is controlled by, or is in common control with, a
lessee.
(3) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(b) Issuance of New Leases.--
(1) In general.--Beginning on the date that is 1 year after
the date of enactment of this Act, the Secretary shall not
issue any new lease that authorizes the production of

[[Page S8659]]

oil or natural gas in the Gulf of Mexico under the Outer
Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) to--
(A) any lessee that--
(i) holds a covered lease on the date on which the
Secretary considers the issuance of the new lease; or
(ii) was issued a covered lease before the date of
enactment of this Act, but transferred the covered lease to
another person or entity (including a subsidiary or affiliate
of the lessee) after the date of enactment of this Act; or
(B) any other entity or person who has any direct or
indirect interest in, or who derives any benefit from, a
covered lease.
(2) Multiple lessees.--
(A) In general.--For purposes of paragraph (1), if there
are multiple lessees that own a share of a covered lease, the
Secretary may implement separate agreements with any lessee
with a share of the covered lease that modifies the payment
responsibilities with respect to the share of the lessee to
include price thresholds that are equal to or less than the
price thresholds described in clauses (v) through (vii) of
section 8(a)(3)(C) of the Outer Continental Shelf Lands Act
(43 U.S.C. 1337(a)(3)(C)).
(B) Covered lease.--Beginning on the effective date of an
agreement under subparagraph (A), any share subject to the
agreement shall not constitute a covered lease with respect
to any lessees that entered into the agreement.
(c) Transfers.--A lessee or any other person who has any
direct or indirect interest in, or who derives a benefit
from, a lease shall not be eligible to obtain by sale or
other transfer (including through a swap, spinoff, servicing,
or other agreement) any covered lease, the economic benefit
of any covered lease, or any other lease for the production
of oil or natural gas in the Gulf of Mexico under the Outer
Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), unless
the lessee--
(1) renegotiates all covered leases of the lessee; and
(2) enters into an agreement with the Secretary to modify
the terms of all covered leases of the lessee to include
limitations on royalty relief based on market prices that are
equal to or less than the price thresholds described in
clauses (v) through (vii) of section 8(a)(3)(C) of the Outer
Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).

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