A bill to suspend royalty relief, to repeal certain provisions of the Energy Policy Act of 2005, and to amend the Internal Revenue Code of 1986 to repeal certain tax incentives for the oil and gas industry.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Oil Subsidy 
Elimination for New Strategies on Energy Act'' or the ``Oil SENSE 
Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I--TERMINATION OF CERTAIN PROVISIONS OF THE ENERGY POLICY ACT OF 
                                  2005

Sec. 101. Termination of certain provisions of the Energy Policy Act of 
                            2005.
                 TITLE II--SUSPENSION OF ROYALTY RELIEF

Sec. 201. Suspension of royalty relief.
Sec. 202. Renegotiation of existing leases.
           TITLE III--REPEAL OF CERTAIN ENERGY TAX INCENTIVES

Sec. 301. Repeal of tax subsidies enacted by the Energy Policy Act of 
                            2005 for oil and gas.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) record highs in oil and natural gas prices have 
        resulted in record profits for oil and natural gas producers 
        and refiners;
            (2) oil prices are projected to remain high for the 
        foreseeable future;
            (3) the Department of the Interior estimates that as much 
        as $66,000,000,000 worth of oil and natural gas taken from the 
        deep waters of the Gulf of Mexico over the next 5 years will be 
        exempt from Government royalty payments, which could amount to 
        the Government losing an estimated $7,000,000,000 to 
        $9,500,000,000 based on anticipated production and current 
        price projections for oil and gas, according to an analysis in 
        the 5-year budget plan of the Department of the Interior;
            (4) the chief executive officers of the top 5 oil companies 
        stated at a November 9, 2005, joint hearing of the Committee on 
        Energy and Natural Resource of the Senate and the Committee on 
        Environment and Public Works of the Senate that their companies 
        did not need the Federal tax incentives provided in the Energy 
        Policy Act of 2005 (42 U.S.C. 15801 et seq.);
            (5) the Statement of Administration Policy of June 14, 
        2005, on the energy bill that would become the Energy Policy 
        Act of 2005 states, ``The President believes that additional 
        taxpayer subsidies for oil-and-gas exploration are unwarranted 
        in today's price environment, and urges the Senate to eliminate 
        the Federal oil-and-gas subsidies and other exploration 
        incentives contained in the bill.''; and
            (6) incentives for the energy industry should be focused on 
        the development of renewable energy resources in the United 
        States that will also promote, jobs, investment, innovation, 
        and economic development in rural, agriculture-dependent areas.

TITLE I--TERMINATION OF CERTAIN PROVISIONS OF THE ENERGY POLICY ACT OF 
                                  2005

SEC. 101. TERMINATION OF CERTAIN PROVISIONS OF THE ENERGY POLICY ACT OF 
              2005.

    (a) In General.--The following provisions of the Energy Policy Act 
of 2005 are repealed as of the date of enactment of this Act:
            (1) Section 343 (42 U.S.C. 15903) (relating to marginal 
        property production incentives).
            (2) Section 344 (42 U.S.C. 15904) (relating to incentives 
        for natural gas production from deep wells in the shallow 
        waters of the Gulf of Mexico).
            (3) Section 345 (42 U.S.C. 15905) (relating to royalty 
        relief for deep water production).
            (4) Section 346 (Public Law 109-58; 119 Stat. 794) 
        (relating to Alaska offshore royalty suspension).
            (5) Section 357 (42 U.S.C. 15912) (relating to 
        comprehensive inventory of OCS oil and natural gas resources).
            (6) Section 362 (42 U.S.C. 15921) (relating to management 
        of Federal oil and gas leasing programs).
            (7) Subtitle J of title IX (42 U.S.C. 16371 et seq.) 
        (relating to ultra-deepwater and unconventional natural gas and 
        other petroleum resources).
    (b) Termination of Alaska Offshore Royalty Suspension.--
            (1) In general.--Section 8(a)(3)(B) of the Outer 
        Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(B)) is 
        amended by striking ``and in the Planning Areas offshore 
        Alaska''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as of the date of enactment of this Act.

                 TITLE II--SUSPENSION OF ROYALTY RELIEF

SEC. 201. SUSPENSION OF ROYALTY RELIEF.

    (a) In General.--Subject to subsection (c), the Secretary of the 
Interior (referred to in this title as the ``Secretary'') shall suspend 
the application of any provision of Federal law under which a person 
would otherwise be provided relief from a requirement to pay a royalty 
for the production of oil or natural gas from Federal land (including 
submerged land) occurring after the date of enactment of this Act 
during any period in which--
            (1) for the production of oil, the average price of crude 
        oil in the United States during the 4-week period immediately 
        preceding the suspension is greater than $34.71 per barrel; and
            (2) for the production of natural gas, the average wellhead 
        price of natural gas in the United States during the 4-week 
        period immediately preceding the suspension is greater than 
        $4.34 per 1,000 cubic feet.
    (b) Determination of Average Prices.--For purposes of subsection 
(a), the Secretary shall determine average prices, taking into 
consideration the most recent data reported by the Energy Information 
Administration.
    (c) Required Adjustment.--For fiscal year 2008 and each subsequent 
fiscal year, each dollar amount specified in subsection (a) shall be 
adjusted to reflect changes for the 1-year period ending the preceding 
November 30 in the Consumer Price Index for All Urban Consumers 
published by the Bureau of Labor Statistics of the Department of Labor.

SEC. 202. RENEGOTIATION OF EXISTING LEASES.

    (a) Requirement.--The Secretary shall renegotiate each lease 
authorizing production of oil or natural gas on Federal land (including 
submerged land) issued by the Secretary before the date of enactment of 
this Act as the Secretary determines to be necessary to modify the 
terms of the lease to ensure that a suspension of a requirement to pay 
royalties under the lease does not apply to production described in 
section 201(a).
    (b) Failure to Renegotiate and Modify.--Beginning on the date that 
is 1 year after the date of enactment of this Act, a lessee under a 
lease described in subsection (a) shall not be eligible--
            (1) to enter into a new lease described in that subsection; 
        or
            (2) to obtain by sale or other transfer any lease issued 
        before that date, unless the lessee--
                    (A) renegotiates the lease; and
                    (B) enters into an agreement with the Secretary to 
                modify the terms of the lease in accordance with 
                subsection (a).

           TITLE III--REPEAL OF CERTAIN ENERGY TAX INCENTIVES

SEC. 301. REPEAL OF CERTAIN PROVISIONS OF THE ENERGY POLICY ACT OF 2005 
              PROVIDING TAX SUBSIDIES FOR THE OIL AND GAS INDUSTRY.

    (a) Repeal of Election to Expense Certain Refineries.--
            (1) In general.--Subparagraph (B) of section 179C(c)(1) of 
        the Internal Revenue Code of 1986 (relating to qualified 
        refinery property) is amended by striking ``January 1, 2012'' 
        and inserting ``the date of the enactment of the Oil Subsidy 
        Elimination for New Strategies on Energy Act''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to property placed in service after the date of the 
        enactment of this Act.
    (b) Repeal of Treatment of Natural Gas Distribution Lines as 15-
Year Property.--
            (1) In general.--Clause (viii) of section 168(e)(3)(E) of 
        such Code (relating to 15-year property) is amended by striking 
        ``January 1, 2011'' and inserting ``the Oil Subsidy Elimination 
        for New Strategies on Energy Act''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to property placed in service after the date of the 
        enactment of this Act.
    (c) Repeal of Treatment of Natural Gas Gathering Lines as 7-Year 
Property.--
            (1) In general.--Clause (iv) of section 168(e)(3)(C) of 
        such Code (relating to 7-year property) is amended by inserting 
        ``and which is placed in service before the date of the 
        enactment of the Oil Subsidy Elimination for New Strategies on 
        Energy Act'' after ``April 11, 2005,''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to property placed in service after the date of the 
        enactment of this Act.
    (d) Repeal of New Rule for Determining Small Refiner Exception to 
Oil Depletion Deduction.--
            (1) In general.--Paragraph (4) of section 613A(d) of such 
        Code (relating to certain refiners excluded) is amended to read 
        as follows:
            ``(4) Certain refiners excluded.--If the taxpayer or a 
        related person engages in the refining of crude oil, subsection 
        (c) shall not apply to such taxpayer if on any day during the 
        taxable year the refinery runs of the taxpayer and such person 
        exceed 50,000 barrels.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (e) Repeal of Amortization of Geological and Geophysical 
Expenditures.--
            (1) In general.--Section 167 of such Code (relating to 
        depreciation) is amended by striking subsection (h) and 
        redesignating subsection (i) as subsection (h).
            (2) Conforming amendment.--Section 263A(c)(3) of such Code 
        is amended by striking ``167(h),''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after the date of the 
        enactment of this Act.

Summary: Oil Subsidy Elimination for New Strategies on Energy Act or the Oil SENSE Act - Repeals provisions of the Energy Policy Act of 2005 relating to: (1) incentives for production from marginal oil wells; (2) incentives for natural gas production in the Gulf of Mexico; (3) royalty relief for deep water production; (4) Alaska offshore royalty suspension; (5) the inventory of Outer Continental Shelf oil and natural gas resources; (6) management of federal oil and gas leasing programs; and (7) ultra-deepwater and unconventional natural gas and other petroleum resources.

Requires the Secretary of the Interior to: (1) suspend royalty relief for producers of oil or natural gas on federal lands during periods in which oil and natural gas production is at certain levels; and (2) renegotiate certain existing leases for oil and natural gas production on federal land.

Repeals provisions of the Internal Revenue Code relating to: (1) the election to expense certain costs associated with liquid fuel refineries; (2) accelerated depreciation of natural gas distribution lines and natural gas gathering lines; and (3) accelerated amortization of geological and geophysical expenditures. Reduces the daily barrel production requirement (from 75,000 to 50,000) applicable to small refiners eligible for the exemption from limitations on the oil and gas depletion allowance.