To amend the Energy Policy Act of 2005 to authorize discounted sales of royalty oil and gas taken in-kind from a Federal oil or gas lease to provide additional resources to Federal low-income energy assistance programs.

Summary: Royalty In-Kind for Energy Assistance Improvement Act of 2006 - Amends the Energy Policy Act of 2005, with respect to federal low-income energy assistance programs, to authorize the Secretary of Energy to sell at a discounted price any royalty oil or gas taken in-kind.

Requires the discounted price to be at least 50% of the fair market value of the oil or gas.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Royalty In-Kind for Energy 
Assistance Improvement Act of 2006''.

SEC. 2. 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.

SEC. 3. 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.''.