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Settlement Act (43 U.S.C. 1602)) with respect to the 
creation or expansion of units that include acreage in 
which the State of Alaska or the Regional Corpora-
tion has an interest in the mineral estate. 
‘‘(3) 
PRODUCTION
ALLOCATION
METHOD-
OLOGY.—(A) The Secretary may use a production al-
location methodology for each participating area 
within a unit that includes solely Federal land in the 
Reserve. 
‘‘(B) The Secretary shall use a production allo-
cation methodology for each participating area with-
in a unit that includes Federal land in the Reserve 
and non-Federal land based on the characteristics of 
each specific oil or gas pool, field, reservoir, or like 
area to take into account reservoir heterogeneity and 
area variation in reservoir producibility across di-
verse leasehold interests. The implementation of the 
foregoing production allocation methodology shall be 
controlled by agreement among the affected lessors 
and lessees. 
‘‘(4) BENEFIT OF OPERATIONS.—Drilling, pro-
duction,’’; 
(10) by striking ‘‘When separate’’ and inserting 
the following: 
‘‘(5) POOLING.—If separate’’;
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(11) by inserting ‘‘(in consultation with the own-
ers of the other land)’’ after ‘‘determined by the Sec-
retary of the Interior’’; 
(12) by striking ‘‘thereto; (10) to’’ and all that 
follows through ‘‘the terms provided therein’’ and in-
serting ‘‘to the agreement. 
‘‘(k) EXPLORATION INCENTIVES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) WAIVER, SUSPENSION, OR
REDUC-
TION.—To encourage the greatest ultimate recov-
ery of oil or gas or in the interest of conserva-
tion, the Secretary may waive, suspend, or re-
duce the rental fees or minimum royalty, or re-
duce the royalty on an entire leasehold (includ-
ing on any lease operated pursuant to a unit 
agreement), whenever (after consultation with the 
State of Alaska and the North Slope Borough of 
Alaska and the concurrence of any Regional Cor-
poration for leases that include land that was 
made available for acquisition by the Regional 
Corporation under the provisions of section 
1431(o) of the Alaska National Interest Lands 
Conservation Act (16 U.S.C. 3101 et seq.)) in the 
judgment of the Secretary it is necessary to do 
so to promote development, or whenever in the
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judgment of the Secretary the leases cannot be 
successfully operated under the terms provided 
therein. 
‘‘(B) APPLICABILITY.—This paragraph ap-
plies to a lease that is in effect on or after the 
date of enactment of the Energy Policy Act of 
2005.’’; 
(13) by striking ‘‘The Secretary is authorized to’’ 
and inserting the following: 
‘‘(2) SUSPENSION OF OPERATIONS AND PRODUC-
TION.—The Secretary may’’; 
(14) by striking ‘‘In the event’’ and inserting the 
following: 
‘‘(3) SUSPENSION OF PAYMENTS.—If’’; 
(15) by striking ‘‘thereto; and (11) all’’ and in-
serting ‘‘to the lease. 
‘‘(l) RECEIPTS.—All’’; 
(16) by redesignating subparagraphs (A), (B), 
and (C) as paragraphs (1), (2), and (3), respectively; 
(17) by striking ‘‘Any agency’’ and inserting the 
following: 
‘‘(m) EXPLORATIONS.—Any agency’’; 
(18) by striking ‘‘Any action’’ and inserting the 
following: 
‘‘(n) ENVIRONMENTAL IMPACT STATEMENTS.—
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‘‘(1) JUDICIAL REVIEW.—Any action’’; 
(19) by striking ‘‘The detailed’’ and inserting the 
following: 
‘‘(2) INITIAL LEASE SALES.—The detailed’’; 
(20) by striking ‘‘section 104(b) of the Naval Pe-
troleum Reserves Production Act of 1976 (90 Stat. 
304; 42 U.S.C. 6504)’’ and inserting ‘‘section 
104(a)’’; and 
(21) by adding at the end the following: 
‘‘(o) REGULATIONS.—As soon as practicable after the 
date of enactment of the Energy Policy Act of 2005, the 
Secretary shall issue regulations to implement this section. 
‘‘(p) WAIVER
OF ADMINISTRATION
FOR CONVEYED 
LANDS.— 
‘‘(1) IN
GENERAL.—Notwithstanding section 
14(g) of the Alaska Native Claims Settlement Act (43 
U.S.C. 1613(g)), the Secretary of the Interior shall 
waive administration of any oil and gas lease to the 
extent that the lease covers any land in the Reserve 
in which all of the subsurface estate is conveyed to the 
Arctic Slope Regional Corporation (referred to in this 
subsection as the ‘Corporation’). 
‘‘(2) PARTIAL CONVEYANCE.— 
‘‘(A) IN GENERAL.—In a case in which a 
conveyance of a subsurface estate described in
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paragraph (1) does not include all of the land 
covered by the oil and gas lease, the person that 
owns the subsurface estate in any particular por-
tion of the land covered by the lease shall be enti-
tled to all of the revenues reserved under the lease 
as to that portion, including, without limitation, 
all the royalty payable with respect to oil or gas 
produced from or allocated to that portion. 
‘‘(B) SEGREGATION OF LEASE.—In a case 
described in subparagraph (A), the Secretary of 
the Interior shall— 
‘‘(i) segregate the lease into 2 leases, 1 
of which shall cover only the subsurface es-
tate conveyed to the Corporation; and 
‘‘(ii) waive administration of the lease 
that covers the subsurface estate conveyed to 
the Corporation. 
‘‘(C) NO CHANGE IN LEASE OBLIGATIONS.— 
The segregation of the lease described in subpara-
graph (B)(i) has no effect on the obligations of 
the lessee under either of the resulting leases, in-
cluding obligations relating to operations, pro-
duction, or other circumstances (other than pay-
ment of rentals or royalties).