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TITLE III—OIL AND GAS
Subtitle A—Petroleum Reserve and
Home Heating Oil
SEC. 301. PERMANENT AUTHORITY TO OPERATE THE STRA-
TEGIC PETROLEUM RESERVE AND OTHER EN-
ERGY PROGRAMS.
(a) AMENDMENT TO TITLE I OF THE ENERGY POLICY
AND CONSERVATION ACT.—Title I of the Energy Policy and
Conservation Act (42 U.S.C. 6212 et seq.) is amended—
(1) by striking section 166 (42 U.S.C. 6246) and
inserting the following:
‘‘AUTHORIZATION OF APPROPRIATIONS
‘‘SEC. 166. There are authorized to be appropriated
to the Secretary such sums as are necessary to carry out
this part and part D, to remain available until expended.’’;
(2) by striking section 186 (42 U.S.C. 6250e);
and
(3) by striking part E (42 U.S.C. 6251).
(b) AMENDMENT TO TITLE II OF THE ENERGY POLICY
AND CONSERVATION ACT.—Title II of the Energy Policy
and Conservation Act (42 U.S.C. 6271 et seq.) is
amended—
(1) by inserting before section 273 (42 U.S.C.
6283) the following:
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‘‘PART C—SUMMER FILL AND FUEL BUDGETING
PROGRAMS’’;
(2) by striking section 273(e) (42 U.S.C.
6283(e)); and
(3) by striking part D (42 U.S.C. 6285).
(c) TECHNICAL AMENDMENTS.—The table of contents
for the Energy Policy and Conservation Act is amended—
(1) by inserting after the items relating to part
C of title I the following:
‘‘PART D—NORTHEAST HOME HEATING OIL RESERVE
‘‘Sec. 181. Establishment.
‘‘Sec. 182. Authority.
‘‘Sec. 183. Conditions for release; plan.
‘‘Sec. 184. Northeast Home Heating Oil Reserve Account.
‘‘Sec. 185. Exemptions.’’;
(2) by amending the items relating to part C of
title II to read as follows:
‘‘PART C—SUMMER FILL AND FUEL BUDGETING PROGRAMS
‘‘Sec. 273. Summer fill and fuel budgeting programs.’’;
and
(3) by striking the items relating to part D of
title II.
(d) AMENDMENT TO THE ENERGY POLICY AND CON-
SERVATION ACT.—Section 183(b)(1) of the Energy Policy
and Conservation Act (42 U.S.C. 6250b(b)(1)) is amended
by striking ‘‘by more’’ and all that follows through ‘‘mid-
October through March’’ and inserting ‘‘by more than 60
percent over its 5-year rolling average for the months of
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mid-October through March (considered as a heating season
average)’’.
(e) FILL STRATEGIC PETROLEUM RESERVE TO CAPAC-
ITY.—(1) IN GENERAL.—The Secretary shall, as expedi-
tiously as practicable, without incurring excessive cost or
appreciably affecting the price of gasoline or heating oil to
consumers, acquire petroleum in quantities sufficient to fill
the Strategic Petroleum Reserve to the 1,000,000,000-barrel
capacity authorized under section 154(a) of the Energy Pol-
icy and Conservation Act (42 U.S.C. 6234(a)), in accord-
ance with the sections 159 and 160 of that Act (42 U.S.C.
6239, 6240).
(2) PROCEDURES.—
(A) IN GENERAL.—The Secretary shall de-
velop, with an opportunity for public comment,
procedures to obtain oil for the Reserve with the
intent of maximizing the overall domestic supply
of crude oil (including quantities stored in pri-
vate sector inventories) and minimizing the costs
to the Department of the Interior and the De-
partment of Energy of acquiring such oil (in-
cluding foregone revenues to the Treasury when
oil for the Reserve is obtained through the roy-
alty-in-kind program), consistent with national
security.
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(B) 
CONSIDERATIONS.—The 
procedures
shall provide that, for purposes of determining
whether to acquire oil for the Reserve or defer de-
liveries of oil, the Secretary shall take into
account—
(i) current and future prices, supplies,
and inventories of oil;
(ii) national security; and
(iii) other factors that the Secretary
determines to be appropriate.
(C) REVIEW OF REQUESTS FOR DEFERRALS
OF
SCHEDULED
DELIVERIES.—The procedures
shall include procedures and criteria for the re-
view of requests for the deferrals of scheduled de-
liveries.
(D) DEADLINES.—The Secretary shall—
(i) propose the procedures required
under this paragraph not later than 120
days after the date of enactment of this Act;
(ii) promulgate the procedures not
later than 180 days after the date of enact-
ment of this Act; and
(iii) comply with the procedures in ac-
quiring oil for Reserve effective beginning
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on the date that is 180 days after the date
of enactment of this Act.
SEC. 302. NATIONAL OILHEAT RESEARCH ALLIANCE.
Section 713 of the Energy Act of 2000 (Public Law
106–469; 42 U.S.C. 6201 note) is amended by striking ‘‘4’’
and inserting ‘‘9’’.
SEC. 303. SMALL BUSINESS AND AGRICULTURAL PRODUCER
ENERGY EMERGENCY DISASTER LOAN PRO-
GRAM.
(a) SMALL BUSINESS PRODUCER ENERGY EMER-
GENCY DISASTER LOAN PROGRAM.—
(1) DISASTER LOAN AUTHORITY.—Section 7(b)
of the Small Business Act (15 U.S.C. 636(b)) is
amended by inserting after paragraph (3) the fol-
lowing:
‘‘(4)(A) In this paragraph—
‘‘(i) the term ‘base price index’ means the
moving average of the closing unit price on the
New York Mercantile Exchange for heating oil,
natural gas, gasoline, or propane for the 10
days, in each of the most recent 2 preceding
years, which correspond to the trading days de-
scribed in clause (ii);
‘‘(ii) the term ‘current price index’ means
the moving average of the closing unit price on
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the New York Mercantile Exchange, for the 10
most recent trading days, for contracts to pur-
chase heating oil, natural gas, gasoline, or pro-
pane during the subsequent calendar month,
commonly known as the ‘front month’; and
‘‘(iii) 
the 
term 
‘significant 
increase’
means—
‘‘(I) with respect to the price of heating
oil, natural gas, gasoline, or propane, any
time the current price index exceeds the base
price index by not less than 40 percent; and
‘‘(II) with respect to the price of ker-
osene, any increase which the Adminis-
trator, in consultation with the Secretary of
Energy, determines to be significant.
‘‘(B) The Administration may make such loans,
either directly or in cooperation with banks or other
lending institutions through agreements to participate
on an immediate or deferred basis, to assist a small
business concern that has suffered or that is likely to
suffer substantial economic injury on or after Janu-
ary 1, 2005, as the result of a significant increase in
the price of heating oil, natural gas, gasoline, pro-
pane, or kerosene occurring on or after January 1,
2005.
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‘‘(C) Any loan or guarantee extended pursuant
to this paragraph shall be made at the same interest
rate as economic injury loans under paragraph (2).
‘‘(D) No loan may be made under this para-
graph, either directly or in cooperation with banks or
other lending institutions through agreements to par-
ticipate on an immediate or deferred basis, if the
total amount outstanding and committed to the bor-
rower under this subsection would exceed $1,500,000,
unless such borrower constitutes a major source of em-
ployment in its surrounding area, as determined by
the Administration, in which case the Administra-
tion, in its discretion, may waive the $1,500,000 lim-
itation.
‘‘(E) For purposes of assistance under this
paragraph—
‘‘(i) a declaration of a disaster area based
on conditions specified in this paragraph shall
be required, and shall be made by the President
or the Administrator; or
‘‘(ii) if no declaration has been made pursu-
ant to clause (i), the Governor of a State in
which a significant increase in the price of heat-
ing oil, natural gas, gasoline, propane, or ker-
osene has occurred may certify to the Adminis-
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tration that small business concerns have suf-
fered economic injury as a result of such increase
and are in need of financial assistance which is
not otherwise available on reasonable terms in
that State, and upon receipt of such certifi-
cation, the Administration may make such loans
as would have been available under this para-
graph if a disaster declaration had been issued.
‘‘(F) Notwithstanding any other provision of
law, loans made under this paragraph may be used
by a small business concern described in subpara-
graph (B) to convert from the use of heating oil, nat-
ural gas, gasoline, propane, or kerosene to a renew-
able or alternative energy source, including agri-
culture and urban waste, geothermal energy, cogen-
eration, solar energy, wind energy, or fuel cells.’’.
(2) CONFORMING AMENDMENTS.—Section 3(k) of
the Small Business Act (15 U.S.C. 632(k)) is
amended—
(A) by inserting ‘‘, significant increase in
the price of heating oil, natural gas, gasoline,
propane, or kerosene’’ after ‘‘civil disorders’’; and
(B) by inserting ‘‘other’’ before ‘‘economic’’.
(b) AGRICULTURAL PRODUCER EMERGENCY LOANS.—
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(1) IN GENERAL.—Section 321(a) of the Consoli-
dated Farm and Rural Development Act (7 U.S.C.
1961(a)) is amended—
(A) in the first sentence—
(i) by striking ‘‘operations have’’ and
inserting ‘‘operations (i) have’’; and
(ii) by inserting before ‘‘: Provided,’’
the following: ‘‘, or (ii)(I) are owned or op-
erated by such an applicant that is also a
small business concern (as defined in sec-
tion 3 of the Small Business Act (15 U.S.C.
632)), and (II) have suffered or are likely to
suffer substantial economic injury on or
after January 1, 2005, as the result of a
significant increase in energy costs or input
costs from energy sources occurring on or
after January 1, 2005, in connection with
an energy emergency declared by the Presi-
dent or the Secretary’’;
(B) in the third sentence, by inserting before
the period at the end the following: ‘‘or by an en-
ergy emergency declared by the President or the
Secretary’’; and
(C) in the fourth sentence—
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(i) by inserting ‘‘or energy emergency’’
after ‘‘natural disaster’’ each place that
term appears; and
(ii) by inserting ‘‘or declaration’’ after
‘‘emergency designation’’.
(2) FUNDING.—Funds available on the date of
enactment of this Act for emergency loans under sub-
title C of the Consolidated Farm and Rural Develop-
ment Act (7 U.S.C. 1961 et seq.) shall be available to
carry out the amendments made by subparagraph (A)
to meet the needs resulting from natural disasters.
(c) GUIDELINES AND RULEMAKING.—
(1) GUIDELINES.—Not later than 30 days after
the date of enactment of this Act, the Administrator
of the Small Business Administration and the Sec-
retary of Agriculture shall each issue guidelines to
carry out this section and the amendments made by
this section, which guidelines shall become effective on
the date of their issuance.
(2) RULEMAKING.—Not later than 30 days after
the date of enactment of this Act, the Administrator
of the Small Business Administration, after consulta-
tion with the Secretary of Energy, shall promulgate
regulations specifying the method for determining a
significant increase in the price of kerosene under sec-
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tion 7(b)(4)(A)(iii)(II) of the Small Business Act (15
U.S.C. 636(b)(4)(A)(iii)(II)), as added by this section.
(d) REPORTS.—
(1) SMALL
BUSINESS
ADMINISTRATION.—Not
later than 12 months after the date on which the Ad-
ministrator of the Small Business Administration
issues guidelines under subsection (c)(1), and annu-
ally thereafter, the Administrator shall submit to the
Committee on Small Business and Entrepreneurship
of the Senate and the Committee on Small Business
of the House of Representatives, a report on the effec-
tiveness of the assistance made available under section
7(b)(4) of the Small Business Act, as added by this
section, including—
(A) the number of small business concerns
that applied for a loan under such section
7(b)(4) and the number of those that received
such loans;
(B) the dollar value of those loans;
(C) the States in which the small business
concerns that received such loans are located;
(D) the type of energy that caused the sig-
nificant increase in the cost for the participating
small business concerns; and
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(E) recommendations for ways to improve
the assistance provided under such section
7(b)(4), if any.
(2) DEPARTMENT OF AGRICULTURE.—Not later
than 12 months after the date on which the Secretary
of Agriculture issues guidelines under subsection
(c)(1), and annually thereafter, the Secretary shall
submit to the Committee on Small Business and En-
trepreneurship and the Committee on Agriculture,
Nutrition, and Forestry of the Senate and to the
Committee on Small Business and the Committee on
Agriculture of the House of Representatives, a report
that—
(A) describes the effectiveness of the assist-
ance made available under section 321(a) of the
Consolidated Farm and Rural Development Act
(7 U.S.C. 1961(a)), as amended by this section;
and
(B) contains recommendations for ways to
improve the assistance provided under such sec-
tion 321(a).
(e) EFFECTIVE DATE.—
(1) SMALL BUSINESS.—The amendments made
by subsection (a) shall apply during the 4-year period
beginning on the earlier of the date on which guide-
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lines are published by the Administrator of the Small
Business Administration under subsection (c)(1) or
30 days after the date of enactment of this Act, with
respect to assistance under section 7(b)(4) of the
Small Business Act, as added by this section.
(2) AGRICULTURE.—The amendments made by
subsection (b) shall apply during the 4-year period
beginning on the earlier of the date on which guide-
lines are published by the Secretary of Agriculture
under subsection (c)(1) or 30 days after the date of
enactment of this Act, with respect to assistance
under section 321(a) of the Consolidated Farm and
Rural Development Act (7 U.S.C. 1961(a)), as
amended by this section.
Subtitle B—Production Incentives
SEC. 311. DEFINITION OF SECRETARY.
In this subtitle, the term ‘‘Secretary’’ means the Sec-
retary of the Interior.
SEC. 312. PROGRAM ON OIL AND GAS ROYALTIES IN-KIND.
(a) APPLICABILITY
OF SECTION.—Notwithstanding
any other provision of law, this section applies to all roy-
alty in-kind accepted by the Secretary on or after the date
of enactment of this Act under any Federal oil or gas lease
or permit under—
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(1) section 36 of the Mineral Leasing Act (30
U.S.C. 192);
(2) section 27 of the Outer Continental Shelf
Lands Act (43 U.S.C. 1353); or
(3) any other Federal law governing leasing of
Federal land for oil and gas development.
(b) TERMS AND CONDITIONS.—All royalty accruing to
the United States shall, on the demand of the Secretary,
be paid in oil or gas. If the Secretary makes such a demand,
the following provisions apply to the payment:
(1) SATISFACTION OF ROYALTY OBLIGATION.—
Delivery by, or on behalf of, the lessee of the royalty
amount and quality due under the lease satisfies roy-
alty obligation of the lessee for the amount delivered,
except that transportation and processing reimburse-
ments paid to, or deductions claimed by, the lessee
shall be subject to review and audit.
(2) MARKETABLE CONDITION.—
(A) DEFINITION
OF
MARKETABLE
CONDI-
TION.—In this paragraph, the term ‘‘in market-
able condition’’ means sufficiently free from im-
purities and otherwise in a condition that the
royalty production will be accepted by a pur-
chaser under a sales contract typical of the field
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or area in which the royalty production was
produced.
(B) REQUIREMENT.—Royalty production
shall be placed in marketable condition by the
lessee at no cost to the United States.
(3) DISPOSITION BY THE SECRETARY.—The Sec-
retary may—
(A) sell or otherwise dispose of any royalty
production taken in-kind (other than oil or gas
transferred under section 27(a)(3) of the Outer
Continental 
Shelf 
Lands 
Act 
(43 
U.S.C.
1353(a)(3)) for not less than the market price;
and
(B) transport or process (or both) any roy-
alty production taken in-kind.
(4) RETENTION BY THE SECRETARY.—The Sec-
retary may, notwithstanding section 3302 of title 31,
United States Code, retain and use a portion of the
revenues from the sale of oil and gas taken in-kind
that otherwise would be deposited to miscellaneous re-
ceipts, without regard to fiscal year limitation, or
may use oil or gas received as royalty taken in-kind
(referred to in this paragraph as ‘‘royalty produc-
tion’’) to pay the cost of—
(A) transporting the royalty production;
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(B) processing the royalty production;
(C) disposing of the royalty production; or
(D) any combination of transporting, proc-
essing, and disposing of the royalty production.
(5) LIMITATION.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the Secretary may not use
revenues from the sale of oil and gas taken in-
kind to pay for personnel, travel, or other ad-
ministrative costs of the Federal Government.
(B) 
EXCEPTION.—Notwithstanding 
sub-
paragraph (A), the Secretary may use a portion
of the revenues from royalty in-kind sales, with-
out fiscal year limitation, to pay salaries and
other administrative costs directly related to the
royalty in-kind program.
(c) REIMBURSEMENT OF COST.—If a lessee, pursuant
to an agreement with the United States or as provided in
the lease, processes the royalty gas or delivers the royalty
oil or gas at a point not on or adjacent to the lease area,
the Secretary shall—
(1) reimburse the lessee for the reasonable costs
of transportation (not including gathering) from the
lease to the point of delivery or for processing costs;
or