and commercial leases, issued under the authority of 
this section: 
‘‘(A) ROYALTY
RATES
FOR
COMMERCIAL 
LEASES.— 
‘‘(i) ROYALTY
RATES.—The royalty 
rate for commercial leases shall be 10 per 
centum of the value of production at the 
first sale. 
‘‘(ii) REDUCTION.—The royalty rate 
fixed in the lease shall be reduced up to 5 
per centum as follows: 
‘‘(I) 100 per centum of this 
amount if the lease is brought to first 
sustained production within 3 years 
after issuance of the lease. 
‘‘(II) 80 per centum of this 
amount if the lease is brought to first 
sustained production between 3 and 4 
years after issuance of the lease. 
‘‘(III) 60 per centum of this 
amount if the lease is brought to first 
sustained production between 4 and 5 
years after issuance of the lease. 
‘‘(IV) 40 per centum of this 
amount if the lease is brought to first 
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sustained production between 5 and 6 
years after issuance of the lease. 
‘‘(V) 20 per centum of this 
amount if the lease is brought to first 
sustained production between 6 and 7 
years after issuance of the lease. 
‘‘(B) ROYALTY RATES FOR RESEARCH, DE-
VELOPMENT, AND DEMONSTRATION LEASES.— 
‘‘(i) ROYALTY
RATES.—The royalty 
rate for research, development, and dem-
onstration leases that have been converted 
to full-sized leases shall be 8 percent of the 
value of production at the first sale. 
‘‘(ii) REDUCTION.—The royalty rate 
fixed in the lease shall be reduced up to 3 
per centum as follows: 
‘‘(I) 100 per centum of this 
amount if the lease is brought to first 
sustained production within 3 years 
after conversion to a full-sized lease. 
‘‘(II) 80 per centum of this 
amount if the lease is brought to first 
sustained production between 3 and 4 
years after conversion to a full-sized 
lease. 
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‘‘(III) 60 per centum of this 
amount if the lease is brought to first 
sustained production between 4 and 5 
years after conversion to a full-sized 
lease. 
‘‘(IV) 40 per centum of this 
amount if the lease is brought to first 
sustained production between 5 and 6 
years after conversion to a full-sized 
lease. 
‘‘(V) 20 per centum of this 
amount if the lease is brought to first 
sustained production between 6 and 7 
years after conversion to a full-sized 
lease. 
‘‘(C) 
OTHER
PROVISIONS.—Commercial 
tracts shall be leased to the highest bidder 
based on sealed bids. The provisions for depos-
its, rentals, fees, and other matters shall be the 
same for commercial oil shale and tar sands 
leases as for oil and gas leases under the Min-
eral Leasing Act.’’. 
(b) TREATMENT OF RECEIPTS.—Section 21 of the 
Mineral Leasing Act (30 U.S.C. 241) is amended by add-
ing at the end the following: 
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‘‘(e) RECEIPTS.— 
‘‘(1) IN GENERAL.—Notwithstanding the provi-
sions of section 35, all funds received from and 
under an oil shale or tar sands lease shall be dis-
posed of as provided in this subsection. 
‘‘(2) DISPOSITION OF RECEIPTS.— 
‘‘(A) DEPOSIT.—The Secretary shall de-
posit into a separate account in the Treasury 
all receipts derived from any oil shale or tar 
sands lease. 
‘‘(B) ALLOCATIONS TO STATES AND LOCAL 
POLITICAL SUBDIVISIONS.—The Secretary shall 
allocate 50 percent of the receipts deposited 
into the account established under subpara-
graph (A) to the State within the boundaries of 
which the leased lands are located, with a por-
tion of that to be paid directly by the Secretary 
to the State’s local political subdivisions as pro-
vided in this paragraph. 
‘‘(C) TRANSMISSION OF ALLOCATIONS.— 
‘‘(i) IN GENERAL.—Not later than the 
last business day of the month after the 
month in which the revenues were received, 
the Secretary shall transmit— 
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