Update on the National Energy Security Act of 2001

Update on The National Energy Security Act of 2001 (3-5-01)

Senator Frank Murkowski (R-AK) formally introduced his National Energy Security Act of 2001 (S.388 and S.389) on February 27, 2001, calling it "the starting point for what will be an important debate during this session of the 107th Congress." The bill is the long awaited GOP energy plan that aims to decrease the nation's reliance on foreign oil to 50% by 2011 through varied mechanisms described in the Bill Summary section of this page. A similar bill was introduced in the 106th Congress by Murkowski but the time was not yet ripe to move comprehensive energy legislation through Congress. The California electricity crisis, a spike in the price of natural gas, and ballooning energy bills around the country have brought energy policy to the front burner. More information about actions in Congress and by the Executive branch is available on AGI's Update on Energy Policy.

Most Recent Action
On February 27, 2001, Sen. Murkowski introduced the National Energy Security Act of 2001 (S.388 and S.389). The pair of bills is cosponsored by twelve senators -- Senator John Breaux (D-LA) being the lone Democrat among them. Press attention has focused on the most controversal element of the bill -- the proposed opening the Arctic National Wildlife Refuge (ANWR) for oil exploration. Several Senators have already expressed their opposition to any energy bill that includes the petroleum exploration in ANWR. Other provisions in S. 388 and S. 389 include tax incentives for domestic oil and gas production, measures to expedite construction of gas pipelines, measures to promote energy conservation, incentives for research and development into "clean coal" technology, and many others addressing a range of energy sources. S. 388 contains the entire energy package and was referred to the Energy and Natural Resources Committee. S. 389 contains only the tax provisions and has been referred to the Senate Finance Committee. Because Vice President Cheney's task force is expected to spend several months developing the administration's energy proposal, Senate Majority Leader Trent Lott (R-MS) has indicated that full Senate action on these bills will not take place before the summer. (3/5/01)

Bill Summary
The National Energy Security Act aims to provide energy security through increasing domestic supply, conservation measures, and use of alternative energy sources. The main thrust of the bill is to reduce the nation's reliance on foreign oil and gas to 50% by 2011. The bill covers a range of topics from the opening of ANWR for oil and gas exploration, to royalty relief, to renewable energy, conservation incentives, and clean coal technology. The full text of the bill can be viewed from the Library of Congress Thomas website.

Title I: General Provisions to Protect Energy Supply and Security. Requires the Secretary of Energy to make an annual report on the nation's progress towards energy independence, and generally requires agencies in the government to assess the condition of and ways to improve output from existing energy infrastructure -- hydroelectric dams, nuclear plants, gas pipelines, transmission lines, and domestic refineries.

Title II: Technology Research and Development Program for Advanced Clean Coal Technology for Coal-Based Electricity Generating Facilities. Outlines a program for promoting the development of new technology related to improving efficiency and reducing pollution from coal-fired power plants.

Title III: Oil and Gas. Alters the present policy for royalty relief and federal oil and gas leases, and allows for royalty-in-kind payments. The royalty-in-kind payments would be used to fill the Strategic Petroleum Reserve. Royalty payments on federal leases would be waived when oil or gas market prices are low.

Title IV: Nuclear. Extends the Price-Anderson Act for 10 years to ensure that there are funds available for the public in case of a nuclear incident at a commercial plant. Title IV also allocates funds for the Nuclear Energy Research Initiative, the Nuclear Energy Optimization Program, and the Nuclear Energy Technology Development Program. It also provides industry incentives to improve plant efficiency.

Title V: Arctic Coastal Plain Domestic Energy Security Act of 2001. Outlines a program for development of oil and gas resources thought to be present under area 1002 of the Arctic coastal plain in Alaska.

Title VI: Energy Efficiency, Conservation, and Assistance to Low-income Families. Extends the authorization of the Low Income Home Energy Assistance Program, creates several programs aimed at improving the energy efficiency of public buildings and private homes, and provides economic incentives for conservation in the private sector.

Title VII: Alternative Fuels and Renewable Energy. Provides incentives for using alternative fuels, requires federal agencies to increase the use of vehicles that run on alternative fuels and have improved gas mileage, and alters Federal Energy Regulatory Commission (FERC) hydroelectric dam licensing requirements.

Title VIII: Electricity Supply Reliability; PURPA Repeal; PUHCA Repeal. Contains four subtitles with diverse goals related to electricity deregulation. Subtitle A creates an "industry-run, FERC-overseen, organization that sets enforceable rules for the interstate transmission grid." Subtitle B "repeals the requirement for utilities purchase power at full avoided cost rates." Subtitle C allows electric utilities to diversify by repealing the PUHCA regulations. Subtitle D clarifies the role of state implementation plans in taking emission free control measures.

Title IX: Amendment of 1986 Code. Contains numerous subtitles that provide economic incentives for producers and consumers of many types of energy. Subtitle A gives tax and other economic incentives to oil and gas producers for well production and capital investments. Subtitle B gives incentives to coal producers for application of clean coal technology. Subtitle C provides economic incentives for investment in natural gas. Subtitle D includes general provisions for electric power producers to increase incentives for production. Subtitle E allows companies to treat the costs of temporary storage of spent fuel, and amounts paid into the decommissioning fund as a deductible expenses. Subtitle F provides tax incentives to businesses and households for using energy efficient appliances, vehicles, or structures. Subtitle G allows for tax credits and deductions for use of alternative fuels. Subtitle H gives tax credits for the use of renewable energy sources -- biomass, agricultural waste, solar, wind, and bagasse (sugar-cane waste).

Sources: AGI website, Greenwire, E+E Publishing, Library of Congress Thomas website, Hearing notes and printed testimony

Please send any comments or requests for information to the AGI Government Affairs Program at govt@agiweb.org.

Contributed by Spring 2001 AGI/AAPG Government Affairs intern Mary Patterson, and Margaret A. Baker, Government Affairs Program

Posted March 5, 2001