I 

109TH CONGRESS 

2D SESSION H. R. 5111 

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. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 5, 2006 

Mr. UDALL of Colorado introduced the following bill; which was referred to 

the Committee on Resources 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Royalty In-Kind for 

5 Energy Assistance Improvement Act of 2006’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—The Congress finds the following: 


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1 (1) As energy costs continue to rise, it is in2 creasingly difficult for our most vulnerable residents 

3 to afford to heat and cool their homes. 

4 (2) The Energy Information Administration re5 cently projected in its Short-term Energy Outlook 

6 that on average, households heating primarily with 

7 natural gas can expect to spend $178 (24 percent) 

8 more for fuel this winter than last winter. 

9 (3) Heating costs as well as costs of cooling in 

10 the summer are a concern. High summer electricity 

11 usage due to hot temperatures can put households in 

12 debt and at risk of disconnection. 

13 (4) More than 13 million households in poverty 

14 will spend an average of 25 percent of their entire 

15 annual income this year on their energy bills just to 

16 maintain their modest levels of usage. 

17 (5) The need for additional low-income energy 

18 assistance has never been greater. At current fund19 ing levels, the Low-Income Home Energy Assistance 

20 Program (LIHEAP) serves less than 15 percent of 

21 the eligible population. 

22 (6) LIHEAP is a critically important program 

23 because it ensures that low-income Americans don’t 

24 have to choose between heating or cooling their 

25 homes and paying their medical bills or going withVerDate Aug 31 2005 23:45 Apr 07, 2006 Jkt 049196 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5111.IH H5111

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1 out food, which is a common practice in one of three 

2 low-income families. 

3 (7) Under authorities granted in the Mineral 

4 Leasing Act (30 U.S.C. 182 et seq.) and the Outer 

5 Continental Shelf Lands Act (43 U.S.C. 1331 et 

6 seq.), the Secretary of the Interior may require Fed7 eral oil and gas lessees to satisfy their royalty pay8 ment obligation through ‘‘royalty in-kind’’ arrange9 ments under which they provide oil instead of mone10 tary value. 

11 (8) Section 342(j) of the Energy Policy Act of 

12 2005 (42 U.S.C. 15902(j)) was intended to provide 

13 the Federal Government with an innovative tool, au14 thorizing the Secretary to grant preference to low15 income consumers when disposing of oil or natural 

16 gas received by the Government under such an ar17 rangement. 

18 (9) However, the Department of the Interior 

19 has concluded that section 342(j) of the Energy Pol20 icy Act of 2005, as enacted, cannot be implemented 

21 because of legal deficiencies in the subsection as en22 acted. 

23 (b) PURPOSE.—The purpose of this Act is to amend 

24 section 342(j) of the Energy Policy Act of 2005 (42 


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1 U.S.C. 15902(j)) to make it possible to assist low-income 

2 consumers of energy to meet their energy needs. 

3 SEC. 3. AUTHORIZATION OF DISCOUNTED SALES OF ROY4 ALTY OIL AND GAS TAKEN IN-KIND FROM 

5 FEDERAL OIL OR GAS LEASE TO PROVIDE AD6 DITIONAL RESOURCES TO LIHEAP. 

7 Section 342(j) of the Energy Policy Act of 2005 (42 

8 U.S.C. 15902(j)) is amended by redesignating paragraph 

9 (2) as paragraph (3), and by inserting after paragraph 

10 (1) the following: 

11 ‘‘(3) DISCOUNTED SALES.— 

12 ‘‘(A) AUTHORIZATION.—In granting a 

13 preference under paragraph (1), the Secretary 

14 may sell at a discounted price royalty oil or gas 

15 taken in-kind, in accordance with an agreement 

16 under this paragraph. 

17 ‘‘(B) DISCOUNTED PRICE.—The dis18 counted price of oil or gas sold under this para19 graph shall be not less than 50 percent of the 

20 fair market value of the oil or gas. 

21 ‘‘(C) AGREEMENT.—The Secretary shall 

22 require, as a condition of any sale to a person 

23 of oil or gas at a discounted price under this 

24 paragraph, that the person enter into an agree25 ment with the Secretary under which the person 


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1 is obligated to provide additional resources for 

2 a Federal low-income energy assistance pro3 gram that have a value that is not less than the 

4 difference between— 

5 ‘‘(i) the sum of the fair market value 

6 of the purchased oil or gas, respectively; 

7 and 

8 ‘‘(ii) the sum of— 

9 ‘‘(I) the amount paid by the per10 son for the oil or gas; and 

11 ‘‘(II) the administrative costs in12 curred by the person in purchasing 

13 the oil and complying with the agree14 ment. 

15 ‘‘(D) COMPLIANCE WITH ANTI-DEFICIENCY

16 ACT.—Any sale of oil at a discounted price in 

17 accordance with this paragraph is deemed to be 

18 in compliance with section 1301(d) of title 31, 

19 United States Code, popularly known as the 

20 Anti-Deficiency Act. 

21 ‘‘(E) REGULATIONS.—In implementing 

22 this paragraph, the Secretary may issue rules, 

23 and may enter into such agreements with any 


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1 Federal or State agency or other person, as the 

2 Secretary considers appropriate.’’. 

Æ 


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