Deficit Reduction Through Fair Oil Royalties Act

To prohibit the Secretary of the Interior from issuing new oil or natural gas production leases in the Gulf of Mexico under the Outer Continental Shelf Lands Act to a person that does not renegotiate its existing leases in order to require royalty payments if oil and natural gas prices are greater than or equal to specified price thresholds, and for other purposes. 1. Short title This Act may be cited as the Deficit Reduction Through Fair Oil Royalties Act 2. Eligibility for new leases and the transfer of leases (a) Definitions In this section: (1) Covered lease The term covered lease (A) in existence on the date of enactment of this Act; (B) issued by the Secretary under section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act ( 43 U.S.C. 1337 Public Law 104–58 (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 (3) Secretary The term Secretary (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. 43 U.S.C. 1337(a)(3)(C) (2) Persons described A person referred to in paragraph (1) is— (A) 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. (1) has 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) (2) has 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) Use of amounts for deficit reduction Notwithstanding any other provision of law, any amounts received by the United States as rentals or royalties under covered leases shall be deposited in the Treasury and used for— (1) Federal budget deficit reduction; or (2) if there is no Federal budget deficit, reducing the Federal debt in such manner as the Secretary of the Treasury considers appropriate. 3. Price thresholds for royalty suspension provisions (a) In general The Secretary of the Interior 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) (b) New or revised price thresholds An amended lease under subsection (a) shall impose the new or revised price thresholds effective on October 1, 2015. (c) Existing lease provisions Lease provisions in effect on the date of enactment of this Act shall prevail through September 30, 2015.

Summary: Deficit Reduction Through Fair Oil Royalties Act This bill prohibits the Department of the Interior from issuing new oil or natural gas production leases in the Gulf of Mexico under the Outer Continental Shelf Lands Act unless they have been renegotiated to require royalty payments if the price of oil and natural gas is greater than or equal to specified price thresholds. Rentals or royalties received by the United States under covered leases must be deposited in the Treasury and used for federal budget deficit reduction or, if there is no federal budget deficit, federal debt reduction. Interior must agree to a lessee's request to amend a lease to incorporate price thresholds applicable to royalty suspension requirements that are equal to or less than certain statutory price thresholds if the lease was issued for any Central and Western Gulf of Mexico tract on or after January 1, 1996, through November 28, 2000.