Prohibition on using last-in, first-out accounting for major integrated oil companies

(a)

In general

Section 472 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(h)

Major integrated oil companies

Notwithstanding any other provision of this section, a major integrated oil company (as defined in section 167(h)) may not use the method provided in subsection (b) in inventorying of any goods.

(b)

Effective date and special rule

(1)

In general

The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2014. (2)

Change in method of accounting

In the case of any taxpayer required by the amendment made by this section to change its method of accounting for its first taxable year beginning after the date of the enactment of this Act— (A)such change shall be treated as initiated by the taxpayer, (B)such change shall be treated as made with the consent of the Secretary of the Treasury, and (C)the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account ratably over a period (not greater than 8 taxable years) beginning with such first taxable year.

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 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. (b)

Issuance of new leases

(1)

In general

The Secretary shall not issue any new lease that authorizes the production of oil or natural gas under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) to a person described in paragraph (2) unless 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 require the payment of royalties if the price of oil and natural gas is greater than or equal to 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)

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 that has any direct or indirect interest in, or that 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. (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 or other person has— (1)renegotiated each covered lease with respect to which the lessee or person is a lessee, to modify the payment responsibilities of the lessee or 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 (2)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)). (d)

Price thresholds for royalty suspension provisions

(1)

In general

The Secretary shall agree to a request by any lessee to amend any lease issued for any Central and Western Gulf of Mexico tract during the period of January 1, 1996, through November 28, 2000, to incorporate price thresholds applicable to royalty suspension provisions, 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)

Requirement

(A)

In general

A lease amended under paragraph (1) shall impose the new or revised price thresholds effective January 1, 2015. (B)

Existing lease provisions

Existing lease provisions for a lease amended under paragraph (1) shall prevail through December 31, 2014.