II 

109TH CONGRESS 

2D SESSION S. 3985 

To promote the recovery of oil and gas revenues on the Outer Continental 

Shelf, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 28, 2006 

Ms. LANDRIEU introduced the following bill; which was read twice and 

referred to the Committee on Energy and Natural Resources 

A BILL 

To promote the recovery of oil and gas revenues on the 

Outer Continental Shelf, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Outer Continental 

5 Shelf Royalty Reform and Enhancement Act of 2006’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act: 

8 (1) GULF PRODUCING STATE.—The term ‘‘Gulf 

9 producing State’’ means each of the States of Ala10 bama, Louisiana, Mississippi, and Texas. 


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1 (2) QUALIFIED OUTER CONTINENTAL SHELF

2 REVENUES.— 

3 (A) IN GENERAL.—The term ‘‘qualified 

4 outer Continental Shelf revenues’’ means all 

5 rentals, royalties, bonus bids, and other sums 

6 due and payable to the United States under 

7 section 5. 

8 (B) EXCLUSIONS.—The term ‘‘qualified 

9 outer Continental Shelf revenues’’ does not in10 clude— 

11 (i) revenues from the forfeiture of a 

12 bond or other surety securing obligations 

13 other than royalties, civil penalties, or roy14 alties taken by the Secretary in-kind and 

15 not sold; or 

16 (ii) revenues generated from leases 

17 subject to section 8(g) of the Outer Conti18 nental Shelf Lands Act (43 U.S.C. 

19 1337(g)). 

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

21 the Secretary of the Interior. 

22 SEC. 3. PRICE THRESHOLD REQUIREMENT FOR FUTURE 

23 LEASES. 

24 Notwithstanding any other provision of law, the Sec25 retary shall place limitations based on market price on the 


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1 royalty relief granted under any lease for the production 

2 of oil or natural gas entered into on or after the date of 

3 enactment of this Act. 

4 SEC. 4. CLARIFICATION OF AUTHORITY TO IMPOSE PRICE 

5 THRESHOLDS FOR CERTAIN LEASE SALES. 

6 Congress reaffirms the authority of the Secretary 

7 under section 8(a)(1)(H) of the Outer Continental Shelf 

8 Lands Act (43 U.S.C. 1337(a)(1)(H)) to vary, based on 

9 the price of production from a lease, the suspension of 

10 royalties under any lease subject to section 304 of the 

11 Outer Continental Shelf Deep Water Royalty Relief Act 

12 (43 U.S.C. 1337 note; Public Law 104–58). 

13 SEC. 5. RECOVERY OF REVENUE FROM LEASES WITHOUT 

14 PRICE THRESHOLDS. 

15 (a) OFFER TO AMEND PAYMENT RESPONSIBIL16 ITIES.— 

17 (1) IN GENERAL.—The Secretary shall offer to 

18 enter into written agreements to amend the payment 

19 responsibilities under each lease entered into by the 

20 Secretary that— 

21 (A) authorizes the production of oil or nat22 ural gas on the Outer Continental Shelf; 

23 (B) provides for relief from the payment of 

24 royalties; and 


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1 (C) does not provide for the suspension of 

2 the relief based on an increase in the price of 

3 oil or natural gas, respectively, above specified 

4 thresholds. 

5 (2) OFFERS.—Not later than 30 days after the 

6 date of enactment of this Act, the Secretary shall 

7 provide each lessee that has entered into a lease de8 scribed in paragraph (1) with a separate written 

9 offer to amend the payment responsibilities of the 

10 lessee under the lease. 

11 (3) MULTIPLE LESSEES.—In carrying out this 

12 subsection, if multiple persons own a share of the 

13 lease, the Secretary may enter into a separate agree14 ment with each person that reflects the respective 

15 interest of the person in the lease. 

16 (4) PRICE THRESHOLDS.—The offer shall pro17 pose imposing price thresholds beginning in the cal18 endar year in which the offer is accepted at a level 

19 that is consistent with the price thresholds contained 

20 in outer Continental Shelf leases that contained 

21 price thresholds that were entered into for calendar 

22 years 1996, 1997, and 2000. 

23 (b) INCREASED ROYALTY RATES.—In addition to the 

24 authority provided under subsection (a), the Secretary 

25 may increase the royalty rate on all leases entered into 


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1 by the Secretary on or after the date of enactment of this 

2 Act for the production of oil or natural gas on the outer 

3 Continental Shelf to a rate that is necessary to recover 

4 the revenues lost from leases described in subsection 

5 (a)(1) in an amount that (in conjunction with written 

6 agreements entered into under subsection (a)) is sufficient 

7 to recover $12,000,000,000 during the period of fiscal 

8 years 2007 through 2018. 

9 SEC. 6. DISPOSITION OF RECOVERED QUALIFIED OUTER 

10 CONTINENTAL SHELF REVENUES. 

11 (a) IN GENERAL.—Notwithstanding section 9 of the 

12 Outer Continental Shelf Lands Act (43 U.S.C. 1338) and 

13 subject to the other provisions of this section, for each ap14 plicable fiscal year, the Secretary of the Treasury shall 

15 deposit— 

16 (1) 50 percent of qualified outer Continental 

17 Shelf revenues in a special account in the Treasury, 

18 to be disbursed to Gulf producing States by the Sec19 retary in a manner consistent with section 31(b) of 

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

21 1356a(b)), as determined by the Secretary; 

(2) 121 22 ⁄2 percent to provide financial assistance 

23 to States in accordance with section 6 of the Land 

24 and Water Conservation Fund Act of 1965 (16 

25 U.S.C. 460l–8), which shall be considered income to 


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1 the Land and Water Conservation Fund for pur2 poses of section 2 of that Act (16 U.S.C. 460l–5); 

3 and 

(3) 371 4 ⁄2 percent of qualified outer Continental 

5 Shelf revenues in the general fund of the Treasury, 

6 to be used for deficit reduction. 

7 (b) TIMING.—The amounts required to be deposited 

8 under paragraphs (1) and (2) of subsection (a) for the 

9 applicable fiscal year shall be made available in accordance 

10 with that paragraph during the fiscal year immediately 

11 following the applicable fiscal year. 

12 (c) ADMINISTRATION.—Amounts made available 

13 under paragraphs (1) and (2) of subsection (a) shall— 

14 (1) be made available, without further appro15 priation, in accordance with this section; 

16 (2) remain available until expended; and 

17 (3) be in addition to any amounts appropriated 

18 under— 

19 (A) the Outer Continental Shelf Lands Act 

20 (43 U.S.C. 1331 et seq.); 

21 (B) the Land and Water Conservation 

22 Fund Act of 1965 (16 U.S.C. 460l–4 et seq.); 

23 or 

24 (C) any other provision of law. 


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1 SEC. 7. FEDERAL GUARANTEE OF STATE BOND. 

2 The Secretary shall guarantee the repayment of a 

3 bond issued by the State of Louisiana for constructing and 

4 carrying out coastal wetland restoration projects and re5 lated storm protection infrastructure (to be repaid using 

6 qualified outer Continental Shelf revenues received by the 

7 State for fiscal years 2017 through 2027) in an amount 

8 equal to 100 percent of the outstanding principal of the 

9 bond, on a determination by the Secretary that— 

10 (1) the amount of the bond does not exceed 80 

11 percent of the estimated amount of qualified outer 

12 Continental Shelf revenues the State will receive for 

13 fiscal years 2017 through 2027; 

14 (2) the funds will be used in accordance with a 

15 plan submitted by the State; and 

16 (3) the bond is in a registered form and con17 tains appropriate legal guarantees for repayment 

18 using qualified Outer Continental shelf revenues for 

19 fiscal years 2017 through 2027. 

Æ 


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