[Congressional Record Volume 153, Number 35 (Thursday, March 1, 2007)]
[Extensions of Remarks]
[Pages E433-E434]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF ROYALTY-IN-KIND FOR ENERGY ASSISTANCE LEGISLATION

                                 ______
                                 

                            HON. MARK UDALL

                              of colorado

                    in the house of representatives

                        Thursday, March 1, 2007

  Mr. UDALL of Colorado. Madam Speaker, today I am again introducing 
the Royalty-in-Kind for Energy Assistance Improvement Act. This bill is 
intended to make it possible for the Department of Interior to 
implement a provision in the Energy Policy Act of 2005 that was 
intended to provide a new way to assist low-income people to heat or 
cool their homes.
  For several years before 2005, the Department of Interior had 
authority to develop ``royalty-in-kind'' arrangements under which 
companies developing federal oil could meet their required royalty 
payments by providing oil instead of cash. The Energy Policy Act 
expanded this provision to apply to natural-gas developers as well, and 
also added new authority for Interior to grant a preference to low-
income consumers when disposing of natural gas it obtained under such 
an arrangement.
  While this Energy Policy Act provision does not specifically 
reference the federal Low-Income Home Energy Assistance Program 
(LIHEAP), its implementation could benefit that program.
  LIHEAP is intended to help low-income Americans pay for their heating 
and cooling costs. However, at current funding levels this critically 
important program serves less than 15 percent of those who qualify for 
it. Implementing the Energy Policy Act provision to grant a preference 
to low-income consumers would supplement LIHEAP funding and expand the 
amount of energy assistance available to the poor.
  After enactment of the 2005 legislation, I joined my colleagues from 
Colorado in writing a letter to Interior Secretary Gail Norton asking 
her to consider beginning implementation of the new provision through a 
pilot program in Colorado. In the letter we emphasized the importance 
of helping this country's most vulnerable citizens, who are 
increasingly hard hit by rising energy costs.
  In a reply to my office, the Interior Department responded that the 
Interior Department's lawyers had reviewed the Energy Policy Act 
provision and had concluded that as it now stands it could not be 
implemented because the current law ``does not provide the Department 
with the authority or discretion to receive less than fair market value 
for the royalty gas or oil.''
  My bill is intended to correct the legal deficiencies in the 
provision as enacted to make it possible for the Interior Department to 
implement the program. In developing the legislation, my staff has 
reviewed the Interior Department's legal opinion and has consulted with 
the Interior Department's lawyers and with other legal experts. Based 
on that review, I think enactment of my bill will resolve the legal 
problems cited by the Interior Department and will enable the program 
to go forward.

[[Page E434]]

  Spring may be nearly upon us, but hot summer temperatures and another 
winter are just months away. I believe the Energy Policy Act provision 
to help low-income consumers is an innovative tool that must be allowed 
to work. The Royalty-in-Kind for Energy Assistance Improvement Act 
would make this possible. I urge my colleagues to support this 
legislation and to support energy assistance for this nation's most 
vulnerable residents.
  Here is a brief outline of the bill:
  Section One--provides a short title (``Royalty-in-Kind for Energy 
Assistance Improvement Act of 2006'').
  Section Two--sets forth findings regarding the importance of LIHEAP 
and the intent of the relevant provisions of law regarding payment of 
royalties-in-kind and the conclusion of the Interior Department that 
the provision of the 2005 Energy Policy Act intended to allow use of 
royalties-in-kind to benefit low-income consumers cannot be 
implemented. This section also states the bill's purpose, which is to 
amend that part of the Energy Policy Act in order to make it possible 
for it to be implemented in order to assist low-income people to meet 
their energy needs.
  Section Three--amends the relevant provision (Section 342(j)) of the 
Energy Policy Act by--
  (1) adding explicit authority for the Interior Department to sell 
royalty-in-kind oil or gas for as little as half its fair market value 
in implementing that part of the Energy Policy Act under an agreement 
that the purchaser will be required to provide an appropriate amount of 
resources to a Federal low-income energy assistance program;
  (2) clarifying that such a sale at a discounted price will be deemed 
to comply with the Anti-deficiency Act; and
  (3) authorizing the Interior Department to issue rules and enter into 
agreements that are considered appropriate in order to implement that 
part of the Energy Policy Act.
  These changes are specifically designed to correct the legal 
deficiencies that the Interior Department has determined currently make 
it impossible for it to implement this part of the Energy Policy Act.

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