I 

111TH CONGRESS 

2D SESSION H. R. 6051 

To prohibit the Secretary of the Interior from issuing any new lease that 

authorizes the production of oil or natural gas under the Outer Continental Shelf Lands Act to a person that does not renegotiate existing 

leases held by the person to incorporate limitations on royalty relief 

based on market price that are equal to or less than price thresholds 

that apply to other leases under that Act, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2010 

Mr. MARKEY of Massachusetts (for himself, Mr. HINCHEY, Mrs. CAPPS, Mr. 

INSLEE, and Mr. WELCH) introduced the following bill; which was referred to the Committee on Natural Resources 

A BILL 

To prohibit the Secretary of the Interior from issuing any 

new lease that authorizes the production of oil or natural 

gas under the Outer Continental Shelf Lands Act to 

a person that does not renegotiate existing leases held 

by the person to incorporate limitations on royalty relief 

based on market price that are equal to or less than 

price thresholds that apply to other leases under that 

Act, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Deficit Reduction 

3 Through Fair Oil Royalties Act’’. 

4 SEC. 2. ELIGIBILITY FOR NEW LEASES AND THE TRANSFER 

5 OF LEASES. 

6 (a) ISSUANCE OF NEW LEASES.— 

7 (1) IN GENERAL.—The Secretary shall not 

8 issue any new lease that authorizes the production 

9 of oil or natural gas under the Outer Continental 

10 Shelf Lands Act (43 U.S.C. 1331 et seq.) to a per11 son described in paragraph (2) unless the person has 

12 renegotiated each covered lease with respect to which 

13 the person is a lessee, to modify the payment re14 sponsibilities of the person to require the payment of 

15 royalties if the price of oil and natural gas is greater 

16 than or equal to the price thresholds described in 

17 clauses (v) through (vii) of section 8(a)(3)(C) of the 

18 Outer Continental Shelf Lands Act (43 U.S.C. 

19 1337(a)(3)(C)). 

20 (2) PERSONS DESCRIBED.—A person referred 

21 to in paragraph (1) is a person that— 

22 (A) is a lessee that— 

23 (i) holds a covered lease on the date 

24 on which the Secretary considers the 

25 issuance of the new lease; or 


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1 (ii) was issued a covered lease before 

2 the date of enactment of this Act, but 

3 transferred the covered lease to another 

4 person or entity (including a subsidiary or 

5 affiliate of the lessee) after the date of en6 actment of this Act; or 

7 (B) any other person that has any direct 

8 or indirect interest in, or that derives any ben9 efit from, a covered lease. 

10 (3) MULTIPLE LESSEES.— 

11 (A) IN GENERAL.—For purposes of para12 graph (1), if there are multiple lessees that own 

13 a share of a covered lease, the Secretary may 

14 implement separate agreements with any lessee 

15 with a share of the covered lease that modifies 

16 the payment responsibilities with respect to the 

17 share of the lessee to include price thresholds 

18 that are equal to or less than the price thresh19 olds described in clauses (v) through (vii) of 

20 section 8(a)(3)(C) of the Outer Continental 

21 Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)). 

22 (B) TREATMENT OF SHARE AS COVERED

23 LEASE.—Beginning on the effective date of an 

24 agreement under subparagraph (A), any share 

25 subject to the agreement shall not constitute a 


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1 covered lease with respect to any lessees that 

2 entered into the agreement. 

3 (b) TRANSFERS.—A lessee or any other person who 

4 has any direct or indirect interest in, or who derives a 

5 benefit from, a lease shall not be eligible to obtain by sale 

6 or other transfer (including through a swap, spinoff, serv7 icing, or other agreement) any covered lease, the economic 

8 benefit of any covered lease, or any other lease for the 

9 production of oil or natural gas in the Gulf of Mexico 

10 under the Outer Continental Shelf Lands Act (43 U.S.C. 

11 1331 et seq.), unless the lessee or other person has— 

12 (1) renegotiated each covered lease with respect 

13 to which the lessee or person is a lessee, to modify 

14 the payment responsibilities of the lessee or person 

15 to include price thresholds that are equal to or less 

16 than the price thresholds described in clauses (v) 

17 through (vii) of section 8(a)(3)(C) of the Outer Con18 tinental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); 

19 or 

20 (2) entered into an agreement with the Sec21 retary to modify the terms of all covered leases of 

22 the lessee or other person to include limitations on 

23 royalty relief based on market prices that are equal 

24 to or less than the price thresholds described in 

25 clauses (v) through (vii) of section 8(a)(3)(C) of the 


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1 Outer Continental Shelf Lands Act (43 U.S.C. 

2 1337(a)(3)(C)). 

3 (c) USE OF AMOUNTS FOR DEFICIT REDUCTION.— 

4 Notwithstanding any other provision of law, any amounts 

5 received by the United States as rentals or royalties under 

6 covered leases shall be deposited in the Treasury and used 

7 for Federal budget deficit reduction or, if there is no Fed8 eral budget deficit, for reducing the Federal debt in such 

9 manner as the Secretary of the Treasury considers appro10 priate. 

11 (d) DEFINITIONS.—In this section— 

12 (1) COVERED LEASE.—The term ‘‘covered 

13 lease’’ means a lease for oil or gas production in the 

14 Gulf of Mexico that is— 

15 (A) in existence on the date of enactment 

16 of this Act; 

17 (B) issued by the Department of the Inte18 rior under section 304 of the Outer Continental 

19 Shelf Deep Water Royalty Relief Act (43 

20 U.S.C. 1337 note; Public Law 104–58); and 

21 (C) not subject to limitations on royalty re22 lief based on market price that are equal to or 

23 less than the price thresholds described in 

24 clauses (v) through (vii) of section 8(a)(3)(C) of 


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1 the Outer Continental Shelf Lands Act (43 

2 U.S.C. 1337(a)(3)(C)). 

3 (2) LESSEE.—The term ‘‘lessee’’ includes any 

4 person or other entity that controls, is controlled by, 

5 or is in or under common control with, a lessee. 

6 (3) SECRETARY.—The term ‘‘Secretary’’ means 

7 the Secretary of the Interior. 

8 SEC. 3. PRICE THRESHOLDS FOR ROYALTY SUSPENSION 

9 PROVISIONS. 

10 The Secretary of the Interior shall agree to a request 

11 by any lessee to amend any lease issued for any Central 

12 and Western Gulf of Mexico tract in the period of January 

13 1, 1996, through November 28, 2000, to incorporate price 

14 thresholds applicable to royalty suspension provisions, that 

15 are equal to or less than the price thresholds described 

16 in clauses (v) through (vii) of section 8(a)(3)(C) of the 

17 Outer Continental Shelf Lands Act (43 U.S.C. 

18 1337(a)(3)(C)). Any amended lease shall impose the new 

19 or revised price thresholds effective October 1, 2010. Ex20 isting lease provisions shall prevail through September 30, 

21 2010. 

Æ 


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