A bill to promote the recovery of oil and gas revenues on the Outer Continental Shelf, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Outer Continental Shelf Royalty 
Reform and Enhancement Act of 2006''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Gulf producing state.--The term ``Gulf producing 
        State'' means each of the States of Alabama, Louisiana, 
        Mississippi, and Texas.
            (2) Qualified outer continental shelf revenues.--
                    (A) In general.--The term ``qualified outer 
                Continental Shelf revenues'' means all rentals, 
                royalties, bonus bids, and other sums due and payable 
                to the United States under section 5.
                    (B) Exclusions.--The term ``qualified outer 
                Continental Shelf revenues'' does not include--
                            (i) revenues from the forfeiture of a bond 
                        or other surety securing obligations other than 
                        royalties, civil penalties, or royalties taken 
                        by the Secretary in-kind and not sold; or
                            (ii) revenues generated from leases subject 
                        to section 8(g) of the Outer Continental Shelf 
                        Lands Act (43 U.S.C. 1337(g)).
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.

SEC. 3. PRICE THRESHOLD REQUIREMENT FOR FUTURE LEASES.

    Notwithstanding any other provision of law, the Secretary shall 
place limitations based on market price on the royalty relief granted 
under any lease for the production of oil or natural gas entered into 
on or after the date of enactment of this Act.

SEC. 4. CLARIFICATION OF AUTHORITY TO IMPOSE PRICE THRESHOLDS FOR 
              CERTAIN LEASE SALES.

    Congress reaffirms the authority of the Secretary 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 (43 U.S.C. 
1337 note; Public Law 104-58).

SEC. 5. RECOVERY OF REVENUE FROM LEASES WITHOUT PRICE THRESHOLDS.

    (a) Offer To Amend Payment Responsibilities.--
            (1) In general.--The Secretary shall offer to enter into 
        written agreements to amend the payment responsibilities under 
        each lease entered into by the Secretary that--
                    (A) authorizes the production of oil or natural gas 
                on the Outer Continental Shelf;
                    (B) provides for relief from the payment of 
                royalties; and
                    (C) does not provide for the suspension of the 
                relief based on an increase in the price of oil or 
                natural gas, respectively, above specified thresholds.
            (2) Offers.--Not later than 30 days after the date of 
        enactment of this Act, the Secretary shall provide each lessee 
        that has entered into a lease described in paragraph (1) with a 
        separate written offer to amend the payment responsibilities of 
        the lessee under the lease.
            (3) Multiple lessees.--In carrying out this subsection, if 
        multiple persons own a share of the lease, the Secretary may 
        enter into a separate agreement with each person that reflects 
        the respective interest of the person in the lease.
            (4) Price thresholds.--The offer shall propose imposing 
        price thresholds beginning in the calendar year in which the 
        offer is accepted at a level that is consistent with the price 
        thresholds contained in outer Continental Shelf leases that 
        contained price thresholds that were entered into for calendar 
        years 1996, 1997, and 2000.
    (b) Increased Royalty Rates.--In addition to the authority provided 
under subsection (a), the Secretary may increase the royalty rate on 
all leases entered into by the Secretary on or after the date of 
enactment of this Act for the production of oil or natural gas on the 
outer Continental Shelf to a rate that is necessary to recover the 
revenues lost from leases described in subsection (a)(1) in an amount 
that (in conjunction with written agreements entered into under 
subsection (a)) is sufficient to recover $12,000,000,000 during the 
period of fiscal years 2007 through 2018.

SEC. 6. DISPOSITION OF RECOVERED QUALIFIED OUTER CONTINENTAL SHELF 
              REVENUES.

    (a) In General.--Notwithstanding section 9 of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1338) and subject to the other provisions of 
this section, for each applicable fiscal year, the Secretary of the 
Treasury shall deposit--
            (1) 50 percent of qualified outer Continental Shelf 
        revenues in a special account in the Treasury, to be disbursed 
        to Gulf producing States by the Secretary in a manner 
        consistent with section 31(b) of the Outer Continental Shelf 
        Lands Act (43 U.S.C. 1356a(b)), as determined by the Secretary;
            (2) 12\1/2\ percent to provide financial assistance to 
        States in accordance with section 6 of the Land and Water 
        Conservation Fund Act of 1965 (16 U.S.C. 460l-8), which shall 
        be considered income to the Land and Water Conservation Fund 
        for purposes of section 2 of that Act (16 U.S.C. 460l-5); and
            (3) 37\1/2\ percent of qualified outer Continental Shelf 
        revenues in the general fund of the Treasury, to be used for 
        deficit reduction.
    (b) Timing.--The amounts required to be deposited under paragraphs 
(1) and (2) of subsection (a) for the applicable fiscal year shall be 
made available in accordance with that paragraph during the fiscal year 
immediately following the applicable fiscal year.
    (c) Administration.--Amounts made available under paragraphs (1) 
and (2) of subsection (a) shall--
            (1) be made available, without further appropriation, in 
        accordance with this section;
            (2) remain available until expended; and
            (3) be in addition to any amounts appropriated under--
                    (A) the Outer Continental Shelf Lands Act (43 
                U.S.C. 1331 et seq.);
                    (B) the Land and Water Conservation Fund Act of 
                1965 (16 U.S.C. 460l-4 et seq.); or
                    (C) any other provision of law.

SEC. 7. FEDERAL GUARANTEE OF STATE BOND.

    The Secretary shall guarantee the repayment of a bond issued by the 
State of Louisiana for constructing and carrying out coastal wetland 
restoration projects and related storm protection infrastructure (to be 
repaid using qualified outer Continental Shelf revenues received by the 
State for fiscal years 2017 through 2027) in an amount equal to 100 
percent of the outstanding principal of the bond, on a determination by 
the Secretary that--
            (1) the amount of the bond does not exceed 80 percent of 
        the estimated amount of qualified outer Continental Shelf 
        revenues the State will receive for fiscal years 2017 through 
        2027;
            (2) the funds will be used in accordance with a plan 
        submitted by the State; and
            (3) the bond is in a registered form and contains 
        appropriate legal guarantees for repayment using qualified 
        Outer Continental shelf revenues for fiscal years 2017 through 
        2027.

Summary: Outer Continental Shelf Royalty Reform and Enhancement Act of 2006 - Directs the Secretary of the Interior (Secretary) to place limitations based on market price on the royalty relief granted under any lease for the production of oil or natural gas entered into on or after enactment of this Act. Declares that Congress reaffirms the authority of the Secretary to vary, based on the price of production from a lease, the suspension of royalties under any lease subject to specified requirements of the Outer Continental Shelf Deep Water Royalty Relief Act. Instructs the Secretary to offer to enter into written agreements to amend the payment responsibilities under each lease that: (1) authorizes the production of oil or natural gas on the Outer Continental Shelf, (2) provides for relief from the payment of royalties. And (3) does not provide for suspension of royalty relief based on an increase in the price of oil or natural gas, respectively, above specified thresholds. Authorizes the Secretary to increase royalty rates on leases for oil or natural gas production on the Outer Continental Shelf. Requires the Secretary of the Treasury to deposit certain percentages of Outer Continental Shelf revenues for: (1) disbursement to Gulf producing states. (2) financial assistance to states for land and water conservation as well as outdoor recreation purposes. And (3) deficit reduction. Requires the Secretary of the Interior to guarantee the repayment of 100 of the outstanding principal of a bond issued by the state of Louisiana for coastal wetland restoration projects and related storm protection infrastructure.