Eligibility for new leases and the transfer of leases; conservation of resources fees

(a)

Issuance of New Leases

(1)

In general

The Secretary shall not issue any new lease that authorizes 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.) to a person described in paragraph (2) unless— (A)the person has renegotiated each covered lease with respect to which the person is a lessee, to modify the payment responsibilities of the person 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)); or (B)the person has— (i)paid all fees established by the Secretary under subsection (b) that are due with respect to each covered lease for which the person is a lessee; or (ii)entered into an agreement with the Secretary under which the person is obligated to pay such fees. (2)

Persons described

A person referred to in paragraph (1) is a person that— (A)is a 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 person or entity who has any direct or indirect interest in, or who derives any benefit from, a covered lease. (3)

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)

Treatment of share as 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. (b)

Conservation of Resources Fees

(1)

In general

Not later than 60 days after the date of enactment of this Act, the Secretary of the Interior by regulation shall establish— (A)a conservation of resources fee for producing Federal oil and gas leases in the Gulf of Mexico; and (B)a conservation of resources fee for nonproducing Federal oil and gas leases in the Gulf of Mexico. (2)

Producing lease fee terms

The fee under paragraph (1)(A)— (A)subject to subparagraph (C), shall apply to covered leases that are producing leases; (B)shall be set at $9 per barrel for oil and $1.25 per million Btu for gas, respectively, in 2005 dollars; and (C)shall apply only to production of oil or gas occurring— (i)in any calendar year in which the arithmetic average of the daily closing prices for light sweet crude oil on the New York Mercantile Exchange (NYMEX) exceeds $34.73 per barrel for oil and $4.34 per million Btu for gas in 2005 dollars; and (ii)on or after October 1, 2010. (3)

Nonproducing lease fee terms

The fee under paragraph (1)(B)— (A)subject to subparagraph (C), shall apply to leases that are nonproducing leases; (B)shall be set at $3.75 per acre per year in 2005 dollars; and (C)shall apply on and after October 1, 2010. (4)

Treatment of receipts

Amounts received by the United States as fees under this subsection shall be treated as offsetting receipts. (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— (1)the lessee or other person has— (A)renegotiated all covered leases of the lessee or other person; and (B)entered into an agreement with the Secretary to modify the terms of all covered leases of the lessee or other person 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)); or (2)the lessee or other person has— (A)paid all fees established by the Secretary under subsection (b) that are due with respect to each covered lease for which the person is a lessee; or (B)entered into an agreement with the Secretary under which the person is obligated to pay such fees. (d)

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 section 304 of 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 or other entity that controls, is controlled by, or is in or under common control with, a lessee. (3)

Secretary

The term Secretary means the Secretary of the Interior.