[Congressional Record (Bound Edition), Volume 152 (2006), Part 4]
[Extensions of Remarks]
[Page 5702]
[From the U.S. Government Publishing Office, www.gpo.gov]




 INTRODUCTION OF ROYALTY-IN-KIND FOR ENERGY ASSISTANCE IMPROVEMENT ACT 
                                OF 2006

                                 ______
                                 

                            HON. MARK UDALL

                              of colorado

                    in the house of representatives

                        Wednesday, April 5, 2006

  Mr. UDALL of Colorado. Mr. Speaker, today I am introducing the 
Royalty-in-Kind for Energy Assistance Improvement Act. This bill is 
intended to make it possible for the Department of the 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 the 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.
  Last September, 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.
  Spring may be 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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