Short title

This Act may be cited as the

Royalty In-Kind for Energy Assistance Improvement Act of 2006

Findings and purpose

(a)

Findings

The Congress finds the following: (1)As energy costs continue to rise, it is increasingly difficult for our most vulnerable residents to afford to heat and cool their homes. (2)The Energy Information Administration recently projected in its Short-term Energy Outlook that on average, households heating primarily with natural gas can expect to spend $178 (24 percent) more for fuel this winter than last winter. (3)Heating costs as well as costs of cooling in the summer are a concern. High summer electricity usage due to hot temperatures can put households in debt and at risk of disconnection. (4)More than 13 million households in poverty will spend an average of 25 percent of their entire annual income this year on their energy bills just to maintain their modest levels of usage. (5)The need for additional low-income energy assistance has never been greater. At current funding levels, the Low-Income Home Energy Assistance Program (LIHEAP) serves less than 15 percent of the eligible population. (6)LIHEAP is a critically important program because it ensures that low-income Americans don’t have to choose between heating or cooling their homes and paying their medical bills or going without food, which is a common practice in one of three low-income families. (7)Under authorities granted in the Mineral Leasing Act (30 U.S.C. 182 et seq.) and the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), the Secretary of the Interior may require Federal oil and gas lessees to satisfy their royalty payment obligation through “royalty in-kind” arrangements under which they provide oil instead of monetary value. (8)Section 342(j) of the Energy Policy Act of 2005 (42 U.S.C. 15902(j)) was intended to provide the Federal Government with an innovative tool, authorizing the Secretary to grant preference to low-income consumers when disposing of oil or natural gas received by the Government under such an arrangement. (9)However, the Department of the Interior has concluded that section 342(j) of the Energy Policy Act of 2005, as enacted, cannot be implemented because of legal deficiencies in the subsection as enacted. (b)

Purpose

The purpose of this Act is to amend section 342(j) of the Energy Policy Act of 2005 (42 U.S.C. 15902(j)) to make it possible to assist low-income consumers of energy to meet their energy needs.

Authorization of discounted sales of royalty oil and gas taken in-kind from Federal oil or gas lease to provide additional resources to LIHEAP

Section 342(j) of the Energy Policy Act of 2005 (42 U.S.C. 15902(j)) is amended by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following:

(3)

Discounted sales

(A)

Authorization

In granting a preference under paragraph (1), the Secretary may sell at a discounted price royalty oil or gas taken in-kind, in accordance with an agreement under this paragraph. (B)

Discounted price

The discounted price of oil or gas sold under this paragraph shall be not less than 50 percent of the fair market value of the oil or gas. (C)

Agreement

The Secretary shall require, as a condition of any sale to a person of oil or gas at a discounted price under this paragraph, that the person enter into an agreement with the Secretary under which the person is obligated to provide additional resources for a Federal low-income energy assistance program that have a value that is not less than the difference between— (i)the sum of the fair market value of the purchased oil or gas, respectively; and (ii)the sum of— (I)the amount paid by the person for the oil or gas; and (II)the administrative costs incurred by the person in purchasing the oil and complying with the agreement. (D)

Compliance with Anti-Deficiency Act

Any sale of oil at a discounted price in accordance with this paragraph is deemed to be in compliance with section 1301(d) of title 31, United States Code, popularly known as the Anti-Deficiency Act. (E)

Regulations

In implementing this paragraph, the Secretary may issue rules, and may enter into such agreements with any Federal or State agency or other person, as the Secretary considers appropriate.