To amend the Outer Continental Shelf Lands Act.

Amends the Outer Continental Shelf Lands Act to change from discretionary to mandatory the Secretary of the Interior's authority to cancel a lease or permit within such lands in specified circumstances. Revises the condition that the Secretary must determine that continued activity would probably cause serious harm or damage. States that lease or permit cancellation shall occur if the activity has resulted in or poses a threat of serious harm or damage to life, property, and other specified things, and that the environmental or other resources harmed or placed at risk are of substantial value.

Prohibits the cancellation of a lease or permit unless its operation has been suspended or temporarily prohibited by the Secretary or pursuant to an Act of the Congress. (Present law provides for suspension by the Secretary alone.) Decreases the due extension of such suspended lease term from five years to one.

Allows the compensation for a cancelled lease to be made in the form of currency, forgiveness of the lessee's obligation to pay rents or royalties on another issued lease, or against bonus payments for future lease purchases.

Changes the administrative procedure of the Secretary for processing comments received from a Governor modifying a proposed Outer Continental Shelf leasing program that affects his or her State.

Requires the national interest of lands within the Outer Continental Shelf to be determined by application of a balancing process that gives equal weight to obtaining oil and gas supplies and protection of the environment, while permitting the consideration of other factors.

Directs the Secretary to accept a Governor's recommendation providing a reasonable balance between the national interest and the well-being of the citizens of such affected State, unless found to be based on a material error of fact or arbitrary or capricious.

Requires completion (subject to peer review) and publication within 180 days before an oil and gas lease sale of any environmental impact study of any area or region included in the lease sale.