text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Outer Continental Shelf Enhanced 
  Exploration and Deep Water Incentives Act''.
  
  SEC. 2. AMENDMENTS TO THE OUTER CONTINENTAL SHELF LANDS ACT.
  
      (a) Incentives.--Section 8(a)(3) of the Outer Continental Shelf 
  Lands Act (43 U.S.C. 1337(a)(3)) is amended to read as follows:
      ``(3)(A) The Secretary, at his own discretion or on petition of a 
  lessee, in order--
              ``(i) to promote development and new production on 
          producing or nonproducing leases, through primary, secondary, 
          or tertiary recovery means; or
              ``(ii) to encourage production of marginal or uneconomic 
          resources on producing or nonproducing leases, which may 
          include the use of primary, secondary, or tertiary recovery 
          means,
  may reduce, suspend, or eliminate any royalty or net profit share set 
  forth in the leases. In the case of a petition of a lessee, the 
  Secretary shall make a final determination under this subparagraph 
  within 6 months after the submittal of such petition.
      ``(B)(i) Notwithstanding any other provision of this Act, except as 
  provided in clauses (ii) and (iii) of this subparagraph, no royalty 
  payment shall be due on new production from any lease located in water 
  depths of 200 meters or greater until the capital costs directly 
  related to such new production have been recovered by the lessee out of 
  the proceeds from such new production.
      ``(ii) Notwithstanding clause (i), in any month during which the 
  arithmetic average of the closing prices for the earliest delivery 
  month on the New York Mercantile Exchange for Light Sweet crude oil 
  exceeds $28.00 per barrel, any production of oil described in clause 
  (i) shall be subject to royalties at the lease stipulated rate.
      ``(iii) Notwithstanding clause (i), in any month during which the 
  arithmetic average of the closing prices for the earliest delivery 
  month on the New York Mercantile Exchange for natural gas exceeds $3.50 
  per million British thermal units, any production of natural gas 
  described in clause (i) shall be subject to royalties at the lease 
  stipulated rate.
      ``(iv) The prices referred to in clauses (ii) and (iii) of this 
  subparagraph shall be changed during any calendar year after 1993 by 
  the percentage if any by which the consumer price index changed during 
  the preceding calendar year, as defined in section 111(f)(4) of the 
  Internal Revenue Code of 1986.
      ``(v) Nothing in this subparagraph shall be construed to affect any 
  requirement under this section to pay bonus bids.
      ``(vi) For purposes of this subparagraph--
              ``(I) the term `capital costs' shall be defined by the 
          Secretary, shall include exploration costs incurred after the 
          acquisition of the lease and development and capital production 
          costs directly related to new production, shall not include any 
          amounts paid as bonus bids or paid as royalties pursuant to 
          clause (ii) or (iii), and shall be adjusted to reflect changes 
          in the consumer price index, as defined in section 111(f)(4) of 
          the Internal Revenue Code of 1986; and
              ``(II) the term `new production' means any production from 
          a lease from which no royalties have been due on production, 
          other than test production, prior to the date of the enactment 
          of the Outer Continental Shelf Enhanced Exploration and Deep 
          Water Incentives Act, or any production resulting from lease 
          development activities under a development and production plan 
          approved by the Secretary under section 25 after the date of 
          the enactment of the Outer Continental Shelf Enhanced 
          Exploration and Deep Water Incentives Act.''.
      (b) Frontier Areas.--Section 18 of the Outer Continental Shelf 
  Lands Act (43 U.S.C. 1344) is amended by adding at the end the 
  following new subsection:
      ``(i) The Secretary shall, in each leasing program prepared under 
  this section, designate as frontier areas portions of the outer 
  Continental Shelf, if any, with respect to which the Secretary will 
  exercise authority under section 8(a)(3)(A) to reduce, suspend, or 
  eliminate the requirement to pay royalties. Any such designation shall 
  include a full description of the terms of such reduction, suspension, 
  or elimination. In designating frontier areas under this subsection, 
  the Secretary shall take into consideration the increased capital costs 
  associated with exploration and development in coastal or marine 
  environments, including arctic environments, with special environmental 
  protection requirements.''.
  
  SEC. 3. REGULATIONS.
  
      (a) Incentives.--The Secretary shall, within 180 days after the 
  date of the enactment of this Act, issue such rules and regulations as 
  are necessary to implement the amendment made by section 2(a).
      (b) Frontier Areas.--The Secretary shall, within 1 year after the 
  date of the enactment of this Act, issue regulations defining the term 
  ``frontier area'' for purposes of carrying out section 18(i) of the 
  Outer Continental Shelf Lands Act.
target: Outer Continental Shelf Enhanced Exloration and Deep Water Incentives Act - Amends the Outer Continental Shelf Lands Act to authorize the Secretary of the Interior to suspend any royalty or net profit share set forth in Outer Continental Shelf (OCS) oil or gas leases. 
  Declares that no royalty payment shall be due on new production from leases located in depths of 200 meters or more until the capital costs directly related to such production have been recovered out of the resulting proceeds. 
  Requires the Secretary to designate as frontier areas those portions of the OCS with respect to which the Secretary will exercise authority to modify royalty payment requirements.
feat_title: Outer Continental Shelf Enhanced Exploration and Deep Water Incentives Act