Energy Policy Overview (11-10-04)
Energy policy involves many issues of interest to the geoscience
community, including resource development on public lands, environmental
regulations, climate change, nuclear waste disposal, and research
related to coal, oil, gas, geothermal, and hydroelectric power.
The inability of the previous 107th Congress to pass comprehensive
energy legislation has created a stong impetus for the 108th Congress
to act swiftly. The House is expected to vote this spring, and Senate
action could occur this summer. General background information on
the issues surrounding the development of a national energy policy
is available from several Congressional Research Service (CRS) reports
available from the National
Library for the Environment. Because a great deal of recent activity
has centered around natural gas policy, a separate
review of gas-related issues is also available on this site.
NEW: For a quick run-down of the Senate and House energy bills,
view this comparison
chart that highlights the bills' major provisions and the differences
between the two.
The International Energy Agency (IEA) reported in October that world
energy demand is projected to rise 60% by 2030. In their "World
Energy Outlook 2004" report, the IEA urged worldwide government
action to reduce unsustainable energy demand. In a Greenwire article,
IEA Executive Director Claude Mandil said that he believed in market
forces. However, he elaborated, "the challenge is so huge that
we need governments to guide and provide the right market frameworks"
to make more energy-efficient products available to consumers and
to encourage further investment in energy production." Mandil
said the rate of oil discoveries has fallen in recent years due to
a lack of investment and the tumultuous political climates of some
oil producing regions. "The problem is not a problem of resources,
but of incentives to invest in places where the resources are,"
he said. (11/10/04)
Environmental Protection Agency (EPA)
officials announced last week that vapor from the gasoline additive MTBE also
poses a threat to groundwater supplies. Recent efforts have focused on monitoring
and preventing liquid leaks in underground tanks but have largely neglected the
threat of vapor leaks, possibly underscoring recent efforts to improve liquid
leak detection and prevention. The warning came during a groundwater contamination
conference in Maryland, which has experienced significant MTBE contamination in
the last month. Maryland Governor Bob Ehrlich (R) has proposed new rules to prevent
leaks in roughly 13,000 underground fuel storage tanks across the state, where
over 200 wells have been found containing MTBE. Eight of these wells had MTBE
concentrations 1,300 times higher than acceptable levels, causing widespread concern
of water contamination throughout Maryland. (8/25/04) On January 8, 2003,
Secretary of the Interior Gale Norton renewed the federal right of way agreement
for the Trans-Alaskan Pipeline System (TAPS).
In a press release, Norton noted
that "The 30-year renewal follows completion of a comprehensive Environmental
Impact Statement (EIS) analyzing renewal options. This action provides a high
degree of certainty that the TAPS will continue to operate safely for many years
to come." Alaska renewed
the state right-of-way agreement in November 2002. These right-of-way agreements
will allow TAPS and the supporting infrastructure to continue to pump more than
a million barrels of oil per day from the North Slope. Construction of TAPS began
is 1975, was completed two years later, and recently survived a 7.9 magnitude
On January 16th, the Department of the
Interior (DOI) released a study
of the oil and natural gas resources in several key western basins: Paradox-San
Juan, Unita-Piceance, Greater Green River, Powder River, and Montana Thrust. The
report, entitled Scientific Inventory of Onshore Federal Lands' Oil and Gas
Resources and Reverses and the Extent and Nature of Restrictions or Impediments
to Their Development, was prepared by DOI's Bureau of Land Management (BLM)
and U.S. Geological Survey (USGS), Department
of Agriculture's U.S. Forest Service (USFS),
and the Department of Energy's Office of Fossil Energy (FE) and Energy Information
Administration (EIA). In the press
release, Assistant Secretary for Land and Minerals Management Rebecca Watson
noted that the study "is a planning tool for the Congress that identifies
areas of high and low oil and gas potential and the nature of constraints to the
development of those resources in the basins in the interior West." The study,
which was requested as a part of the 2000 Energy Policy and Conservation Act,
also looked at resources and reserves that are federally owned under privately
owned land. It does not make any policy recommendations, instead, as Watson noted,
it is a "planning tool" for Congress as it debates a national energy
In February, the Senate Energy and Natural Resources
Committee held a series of hearings addressing oil and natural gas prices, supply,
and potential on federal lands to prepare for creating comprehensive energy legislation.
The testimony from industry and the administration focused on new sources and
how they affect prices and supply in the present and the future. Witnesses emphasized
that because the bulk of the world's oil reserves are not located within the U.S.,
it is essential to create a globally diverse oil supply in order to protect our
energy security. On the other hand, large sources of natural gas do occur domestically,
providing more control over supply and prices than with oil. Witnesses testified
that the recently elevated natural gas prices are due to an increase in demand
without an increase in supply. While short-term volatility will likely persist,
they suggested increasing the natural gas supply by providing greater accessibility
to federal lands, such as Alaska's Arctic National Wildlife Refuse and parts of
the Rocky Mountains, and providing support for new pipelines to aid long-term
stability. Energy production on federal lands, however, continues to arouse debate
with conflicting viewpoints on the quantity of oil and gas they contain, and the
amount of land that is actually off-limits to exploration. Additional information
from the hearings can be found at AGI's Energy
Hearings site. (3/11/03)
On February 28th, the House Energy and Commerce
Committee unveiled a draft of comprehensive energy legislation, including provisions
for clean coal technology, automobile efficiency, and an increase to the Strategic
Petroleum Reserve. Described by E&E Daily as "bare bones," the draft
does not include more controversial provisions such as drilling in Alaska's Arctic
National Wildlife Refuge (ANWR), ethanol mandates, and renewable portfolio standards.
It is expected, however, that those and many other provisions would be added later
as the bill makes its way to the floor combined with legislation produced by other
committees -- particularly the House Resources, Science, and Ways and Means Committees.
The draft's oil and gas related provisions include permanent authorization of
the Strategic Petroleum Reserve, enabling legislation for a natural gas pipeline
from Alaska's North Slope to the state's southern coast, and one calling for an
EPA study of its regulation of hydraulic fracturing associated with coalbed methane
extraction. Energy legislation is on a fast track and could make it to the House
floor for a vote later this spring. (3/14/02)
On March 19, 2003,
the House Energy and Air Quality Subcommittee marked-up and passed Subcommittee
Chairman Joe Barton's (R-TX) draft energy bill. Democrats attempted to insert
a number of amendments, including an amendment by Rep. Henry Waxman (D-CA) to
reduce the country's demand for oil by 2.5% over the next seven years, and an
amendment by Rep. John Dingell (D-MI) to revert the hydropower title to language
agreed upon in conference last year that would respect local environmental conditions.
Both of the amendments, along with a number of others that sought to increase
environmental protection, failed. Barton argued against most of the amendments,
often stating that they mischaracterized the situation, did not include enough
details, or were not comprehensive in their scope. The draft bill will soon be
considered by the full committee. (3/21/03)
On April 11, 2003, the
omnibus energy bill, H.R.
6, passed the House 247-175.
The bill is a combination of four separate bills from the House Energy and Commerce,
Ways and Means, Resources, and Science Committees containing provisions on drilling
in the Arctic National Wildlife Refuge, electricity restructuring, oil and natural
gas royalty relief, and research and development for President Bush's Hydrogen
Initiative, FreedomCar program, energy efficiency, clean-coal technology, and
nuclear programs. Rep. Lois Capps's (D-CA) amendment to remove the provision calling
for a complete inventory of oil and natural gas resources in areas offshore of
Alaska, California, Florida, Oregon, Washington, and the East Coast passed by
voice vote. Reps. Sherwood Boehlert's (R-NY) and Edward Markey's (D-MA) amendment
to increase the Corporate Average Fuel Economy standards to 30 miles per gallon
was defeated 162-268.
The bill now waits for the Senate to finish its version of the bill before heading
to a conference committee. Sen. Pete Domenici's (R-NM) draft bill spent the past
week in mark-up in the Senate Energy and Natural Resources Committee. Titles on
hydrogen, renewable energy, nuclear power, and oil and gas were approved, but
the climate change provision was removed until the floor debate, which is expected
to occur in May. (4/11/03)
On April 30th, Senate Energy and Natural
Resources Committee Chairman Pete Domenici (R-NM) finally achieved passage of
his draft energy bill. Sen. Mary Landrieu (D-LA) joined all of the committee's
Republicans in a 13-10 vote that cleared the way for consideration by the full
Senate. Although major changes occurred in the electricity deregulation portion
of the bill, the most controversial issues were omitted from consideration in
order to move the legislation out of committee. The omitted issues -- including
drilling in the Arctic National Wildlife Refuge, reformulated gasoline reform,
and climate change -- are likely to reappear on the Senate floor. Sen. Ron Wyden
(D-OR) attempted to address the climate change issue during the committee mark-up
by introducing an amendment on carbon sequestration, but withdrew it on the urging
of Domenici. According to E&EDaily, Wyden criticized the committee
for "ducking" climate change in favor of quick committee passage and
vowed to re-propose the amendment on the Senate floor. Like its House counterpart,
the Senate bill calls for a substantial increase in funding for Department of
Energy's (DOE) Office of Science, up to $5.4 billion in FY 2008 from the current
$3.3 billion. The bill would also authorize significant changes in the organizational
management of DOE's science programs. For additional commentary on the current
congressional efforts to pass energy legislation, please see the Political
Scene column in the May 2003 issue of Geotimes. (5/5/03)
reported in an AGI
special update, the Senate spent the final week of July debating energy legislation.
After much bickering over the 400 proposed amendments and seven major issues,
it looked like the Senate might leave town for the August recess without finishing
the energy debate. But Majority Leader Bill Frist (R-TN) and Minority Leader Tom
Daschle (D-SD) brokered a deal under which this year's bill, S. 14, was traded
for the bill that passed the Senate last year during the previous Congress (S.
517) when Democrats controlled the chamber. This compromise passed 84-14, setting
the stage for a conference committee of House and Senate members to iron out the
differences between this bill and the bill that the House passed, H.R. 6, on April
11th. The Bush administration, which made energy policy a priority from the outset,
is eager to see the conference committee complete its work this fall. With a number
of key issues affecting geoscientists, the energy debate continues to offer an
opportunity to provide input at a crucial time. For more on the outcome of the
Senate debate, see an AGI special web update at http://www.agiweb.org/gap/legis108/energy_senatefinal.html.
AGI's web site also provides information about how last year's Senate bill stacks
up to this year's House bill at http://www.agiweb.org/gap/legis108/energy_bill_comparison.html.
In response to the current natural gas issues, House Speaker
Dennis Hastert (R-IL) created the Task Force for Affordable Natural Gas, which
is composed of 18 Republicans from the Energy and Commerce Committee and Resources
Committee. The intended purpose of the Task Force is to report to the Speaker
on the causes of the gas supply shortage and possible short-term solutions. On
July 21, 2003, the Task Force held it first public meeting. Task Force Co-Chair
Billy Tauzin (R-LA) said the Task Force will not dictate solutions, define balances,
or make policy. Their only concern is to recommend possible solutions. He asked
the members to assign one member of their staff to work with the committee staff
on the problem. By August 1st, Tauzin said, the staffs should have defined background
information, the current state of the gas market, gas trends, and policy. Over
the August recess, the Task Force will hold meetings to discuss the issues. By
mid-September, the Task Force should finalize their recommendations, which are
due to the Speaker by September 30. Tauzin said he did not agree with analysts,
such as Alan Greenspan, who say there are no short-term solutions to the natural
gas shortage. Co-Chair Richard Pombo (R-CA) said that we cannot afford to say
there are no short-term solutions. (7/28/03)
Appointment of House conferees
for a joint House-Senate energy conference was delayed even as selection of their
senatorial counterparts went ahead as planned on September 4, 2003. The House
hold-up resulted after House Energy and Commerce Committee ranking member John
Dingell (D-MI) introduced a "motion to instruct" conferees to address
electric energy reliability in a stand-alone bill independent of the larger energy
package that has been an administration priority. The motion, which later failed,
highlighted a partisan dispute over the Democrats' wish to separate power grid
stability from the energy bill, and the Republicans' goal of combining the two.
After the August 14th blackout affecting 50 million people, the issue of grid
stability would likely have enough prominence for Republicans to push their whole
energy bill through Congress. Dingell opposes this, explaining that the popular
electricity measure could be passed quickly, enabling Congress to "kill the
snake closest to us," rather than bogging it down in the bulky energy bill.
On the Senate side, Minority Leader Tom Daschle (D-SD), has said that he will
also consider separating the issues, especially because Republicans in the Senate
wish to include Arctic oil drilling in the larger energy bill. Along a similar
vein, the White House signaled on September 5, 2003 that it would like to insert
its controversial Clear Skies Initiative into the same bill. Many Democrats have
balked at this, favoring instead more stringent anti-pollution legislation. Some
Republicans also oppose this addendum, concerned that Democratic resistance to
one item will kill the entire energy bill. More information on the Clear Skies
Initiative is available at http://www.agiweb.org/gap/legis108/cleanair.html.
House-Senate Conference Committee includes: Senators Pete Domenici (R-NM), Don
Nickles (R-OK), Larry Craig (R-ID), Ben Nighthorse Campbell (R-CO), Craig Thomas
(R-WY), Charles Grassley (R-IO), Trent Lott (R-MS), Jeff Bingaman (D-NM), Byron
Dorgan (D-ND), Bob Graham (D-FL), Ron Wyden (D-OR), Tim Johnson (D-SD), Max Baucus
(D-MT), Representatives Billy Tauzin (R-LA), Michael Bilirakis (R-FL), Joe Barton
(R-TX), Fred Upton (R-MI), Cliff Stearns (R-FL), Paul Gillmor (R-PA), John Shimkus
(R-IL), John Dingell (D-MI), Henry Waxman (D-CA), Ed Markey (D-MA), Rick Boucher
(D-VA), Bobby Rush (D-IL), Bob Goodlatte (R-VA), Frank Lucas (R-OK), Charles Stenholm
(D-TX), Duncan Hunter (R-CA), Curt Weldon (R-PA), Ike Skelton (D-MO), Buck McKeon
(R-CA), Sam Johnson (R-TX), George Miller (D-CA), Michael Oxley (R-OH), Bob Ney
(R-OH), Maxine Waters (D-CA), Susan Davis (D-CA), Timothy Murphy (R-PA), John
Tierney (D-MA), James Sensenbrenner (R-WI), Lamar Smith (R-TX), John Conyers (D-MI),
Richard Pombo (R-CA), Barbara Cubin (R-WY), Nick Rahall (D-WV), Ron Kind (D-WI),
Sherwood Boehlert (R-NY), Judy Biggert (R-IL), Ralph Hall (D-TX), Jerry Costello
(D-IL), Nick Lampson (D-TX), Don Young (R-AK), Thomas Petri (R-WI), James Oberstar
(D-MN), William Thomas (R-CA), Jim McCrery (R-LA), and Charles Rangel (D-NY).
and Senate conferees were scheduled to meet with the President on the afternoon
of September 10th, but those plans were scuttled due to the scheduling of votes
on the Senate floor. Plans for a staff briefing were also cancelled. It appears
that serious negotiations will not begin taking place until next week at the earliest.(9/11/03)
Secretary Spencer Abraham sent a Statement
of Administration Policy (SAP) to the House and Senate conferees on September
10th. A SAP is issued by the White House or a member of the Cabinet to advise
Congress about the administration's position on a piece of legislation -- usually
a contentious one. The seven-page SAP issued by Secretary Abraham details strong
support for provisions in both the House and Senate bills. Specifically, the administration
supports voluntary Regional Transmission Organizations (RTOs), the establishment
of mandatory, enforceable reliability rules, a repeal of the Public Utility Holding
Company Act of 1935 and reforming the Public Utility Regulatory Policies Act of
1978. The SAP also called for development and deployment of new technology to
modernize the transmission grid.
E & E News reported that more
controversially, the SAP said the administration supports the House bill's "last-resort"
federal siting authority for high-priority transmission lines and the coordination
and streamlining of transmission permitting activities across federal lands. The
administration also supports House provisions requiring FERC to establish incentive-based
rates to promote investment in new and upgraded transmission facilities.
Abraham's letter to the conferees detailed administration opposition to national
renewable portfolio standards on power generation, saying these are best left
to the states. It supports the Senate's renewable fuels provisions, and is pleased
that both houses authorize funding for the Hydrogen Fuel Initiative and FreedomCAR
programs, though the SAP detailed opposition to provisions in both bills that
set "unrealistic targets and timetables" for hydrogen vehicle sales
or use of hydrogen fuel. Also opposed are the Senate's fuel cell purchase requirements.
In other areas of the SAP, the Bush Administration:
both houses' efforts to increase production of alternative and traditional energy
resources in the Outer Continental Shelf, federal onshore lands and tribal lands;
- supports the House bill's authorization to open the Arctic National Wildlife
Refuge to oil and gas exploration;
- wants to work with the conference
to establish nuclear energy authorization levels that are consistent with its
own budget proposals;
- supports both houses' Corporate Average Fuel Economy
standards policies, though it opposes the amendments requiring multi-year National
Highway Traffic Safety Administration (NHTSA) rulemakings for both passenger cars
and light trucks without also providing statutory authority for NHTSA to consider
the full range of of CAFE reform options;
- supports the Alaska natural
gas pipeline, though it opposes the Senate's price floor tax credit plan and in
its place would back an "appropriately structured" 80 percent loan guarantee,
accelerated depreciation and enhanced oil recovery tax credit to support pipeline
opposes any climate change provisions, such as those in the
- opposes new authorizations for research and development
authorizations for appropriations "that far exceed any contemplated levels
of spending in future years," and is concerned about the "excessive"
number of and total authorizations for loan programs, which are "inconsistent
with administration policy for risk-sharing, loan terms and program administration;"
- is concerned that tax incentives in both bills contain total revenue
loss that exceed administration policy. (9/11/03)
scored an apparent victory in August when the Senate Republican leaders, eager
to recess, replaced their version of comprehensive energy legislation with a version
passed last year when Democrats held the majority. But that victory was short-lived.
Since the first and only meeting of the House-Senate conference committee that
is hammering out a final bill, Democrats have largely been excluded from the process.
As drafts have been vetted by staff on both sides of the aisle, Republicans have
taken control of the conference and negotiated each provision that will ultimately
be presented to the full House and Senate. Since senators will spend October 6
- 10 in their districts followed by House members spending Columbus Day week with
their constituents back home, the conference committee is not expected to resume
work on the energy bill until October 20th at the earliest. Here is how things
are beginning to shape up.
- The difficult ethanol debate centers on
how the energy bill will address methyl tertiary butyl ether (MTBE). The issues
are a federal MTBE ban and liability protection for MTBE producers, both of which
are important to petroleum-state representatives led by House Majority Leader
Tom DeLay (R-TX). These issues have tied the conference in knots, even splitting
the GOP caucus along regional lines. Adding to the turmoil is the rumor that some
Republicans want an October 1, 2003, start date for the MTBE liability waiver,
rather than simply using the energy bill's date of enactment, according to a source
familiar with negotiations. The language would mean that September 30th was the
last day any lawsuit could have been filed against an MTBE producer using a defective
- Senate Finance Committee Chairman Charles Grassley
(R-IA) and House Ways and Means Committee Chairman Bill Thomas (R-CA) must work
out differences between the House energy bill's $18.1 billion in tax breaks and
the Senate energy bill's $14.5 billion in tax breaks. The latest reports suggest
that these negotiations have not yet begun.
The electricity provisions of
the bill are being honed to do two things: delay the Federal Energy Regulatory
Commission's contentious proposal on standard wholesale power market design and
mandatory regional transmission organizations, while preserving the commission's
ability to continue crafting voluntary market structures and policies that would
help promote reliability, particularly in the wake of the August 14th blackout.
- Language authorizing an Outer Continental Shelf oil and gas inventory
and opening the Arctic National Wildlife Refuge to oil drilling will most likely
survive into the final conference report. At the same time, renewable portfolio
standards and climate change provisions favored by some Democrats and environmentalists
will not be included, according to E & E Daily and Greenwire. All of these
topics are virtually guaranteed to provoke filibusters in the Senate.
a victory for oil companies, draft energy conference report language prohibits
the U.S. EPA from regulating a controversial oil and gas extraction method under
the Safe Drinking Water Act. The language, which House and Senate conferees have
already released as part of the oil and gas title to the energy bill, refines
"underground injection" under the Safe Drinking Water Act to exclude
hydraulic fracturing from the definition of the term. EPA would not be permitted
to bar the drilling technique for "operations related to oil and gas production
activities," the draft states. The provision, which was in the House bill,
also excludes natural gas storage from the definition of underground injection.
According to E & E Daily, this underground injection language overturns a
2001 decision by the 11th Circuit Court of Appeals requiring EPA to regulate hydraulic
fracturing -- the process of injecting high-pressure water
and other fluids into oil reservoirs to enhance permeability and flow in order
to extract more oil and natural gas -- as a drinking water contaminant.
See the AGI Natural Gas
Policy update for information on three newly released reports. The National
Research Council (NRC) has released a workshop
summary entitled "U.S. Natural Gas Demand, Supply, and Technology: Looking
Toward the Future." On September 30th, the House Republican Task
Force for Affordable Natural Gas released its final report on the causes of
and short-term solutions to the natural gas shortage. On September 25th, Secretary
of Energy Spencer Abraham was on hand when the National Petroleum Council released
its report, "Balancing Natural Gas Policy -- Fueling the Demands of a Growing
Economy." For links and additional information, visit www.agiweb.org/gap/legis108/naturalgas.html.
House and Senate leaders earlier sought to intervene
in the conference to iron out differences between the two chambers' versions of
energy legislation. Vice President Cheney has also been involved with the negotiations.
On October 30th, President Bush made one of his strongest statements to date while
on a political fundraising swing through Ohio. Energy and Environment Daily reported
that his message to Congress was "resolve your differences. Understand that
if you're interested in people finding a job, we need an energy policy. Get the
bill done." Unfortunately, that's easier said than done. In negotiations
like these, it helps when the principal negotiators have a good relationship with
each other. But Senate Finance Committee Chairman Charles Grassley (R-IA) and
House Ways and Means Committee Chairman Bill Thomas (R-CA), who oversee negotiations
on tax-related provisions, have a "prickly" relationship at best. As
negotiations have progressed, relations between their respective staffs have become
strained as well, further delaying action on this legislation. Adding to the tension,
Thomas and Grassley are also negotiating the high-stakes Medicare prescription
drug reform bill.
Both of these bills need to be approved before Congress
goes home for the holidays. Doing so would secure two legislative wins for President
Bush, and these are politically hot-button issues that nobody wants to address
in an election year. Energy conferee and former Majority Leader of the Senate,
Trent Lott, was quoted earlier this week as saying that House and Senate leaders
should get aggressive about getting the two sides to cooperate. According to Lott,
that is best done when the leaders "open the bazaar and say 'What do you
need?'" While not substantively linked, rumors have been circulating throughout
Washington that some last-minute horse-trading may be done between these two bills
and the remaining appropriations bills to wrap up Congress's work for the year.
As reported in an AGI
special update, the House-Senate conference committee completed work on a
1,200-page compromise on November 17th. The final bill quickly passed the House
the following day and awaits Senate action. President Bush has already indicated
that he will sign the measure if presented to him. Details of the compromise were
released on November 14th after 71 days of closed-door negotiations that excluded
Democrats but exposed internal rifts among House and Senate Republicans. The final
bill does not reflect a comprehensive national energy policy -- indeed it is in
some sense more notable for what it does not include than what it does -- but
its many provisions address a wide variety of energy-related issues important
to the many constituencies that senators and representatives must serve. And a
number of the provisions will affect geoscientists. (11/20/03)
November 21st, an uneasy alliance of northeastern Republicans and non-Midwest
Democrats mustered enough votes to prevent Senate Majority Leader Bill Frist (R-TN)
from cutting off debate on the final energy bill. The 57-40 vote fell three shy
of the 60-vote supermajority equired to obtain cloture and thus end a threatened
filibuster. (To be precise, Frist changed his vote to oppose cloture so that --
under Senate rules -- he could bring it up again, so bill proponents only need
two more votes.) As reported by E&E Daily, the bill "fell under
the weight of a $31.1 billion price tag and controversial provisions giving producers
of the fuel additive methyl tertiary butyl ether (MTBE) protection from defective
product liability lawsuits." Frist has called for another vote on Tuesday.
In the interim, bill sponsors may seek to provide concessions in a separate omnibus
appropriations bill to get the remaining votes before senators head home for Thanksgiving.
Following President Bush's State of the Union address
on January 20th wherein he only briefly mentioned energy policy, there was rampant
speculation about the fate of the energy bill. On January 21st Energy Undersecretary
Robert Card tried to calm fears by publicly stating that the Bush Administration
remains committed to its energy agenda. Card also said not to expect any new Statements
of Administrative Policy regarding energy from the White House.
Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.) is working
to get the votes needed to pass the energy bill in the Senate. According to Greenwire,
Domenici said "The one option I absolutely will not consider is breaking
this bill up. It's the start of the year, and we're only two votes down."
However, on January 22nd, Senators Hillary Rodham Clinton (D-N.Y.), Maria Cantwell
(D-Wash.), Russ Feingold (D-Wis.) and Jim Jeffords (I-Vt.) introduced an electric
reliability bill that takes the reliability provisions out of the energy bill
and sets them up in a separate, stand-alone bill. Domenici still insists that
it is too early to break up the bill and will fight all efforts to do so. (1/23/04)
At the weekly Republican caucus meeting on February 10th, Senate Energy and
Natural Resources Committee Chairman Pete Domenici (R-N.M.) failed to get agreement
on how to take a slimmed-down energy bill to the Senate floor. The energy bill
was stripped of the controversial fuel oxygenate liability protection language
and about $17 billion in tax incentives. Dominici introduced the slimmer, trimmer
bill as an Energy Omnibus Bill, S.
2095, on February 12th.
Domenici wanted to attach the bill as an amendment
to the highway funding reauthorization bill, which is currently on the Senate
floor. Many Republicans had strong feelings about the energy bill and the highway
bill being kept separate, mostly for the sake of the highway bill. E&E Daily
quoted Senator Kit Bond (R-Mo) as saying, "I know the White House wants an
energy bill, [but] we don't want to leave a land mine in the road for the highway
bill." After a conversation with Senate Environment and Public Works Committee
Chairman James Inhofe (R-Okla.), Domenici said that he would not offer his energy
bill as an amendment to Inhofe's highway bill.
Not only is the energy bill
having trouble making it to the Senate floor, but the Bush Administration still
does not agree with its reduced price tag. The Bush Administration would like
to spend $8 billion on the bill, not the $14 billion that is now being proposed.
In addition, the National Commission on Energy Policy is working on a bipartisan
national energy strategy that will analyze key energy sectors and identify ways
to overcome analytical obstacles that have slowed the progress the current energy
bill. The 18-member commission was formed in 2002 and includes authors of President
Bush's energy plan and President Clinton's climate change policy. The commission
will bypass election year politics and issue a final report and policy recommendations
next January. (2/13/04)
On Tuesday, May 11th, the Senate approved
the corporate tax bill, S.
1637, by a vote of 92-5. The bill was originally proposed to repeal the Foreign
Services Corporation/Extraterritorial Income Exclusion Act, which incited large
tariffs from Europe due to its illegality under World Trade Organization policy.
It provides $170 billion in corporate tax cuts over the next decade to compensate
exporters for the loss FSC/ETI subsidies. A $14 billion energy tax incentive package
was also included in the bill in an attempt to pass at least some portion of the
comprehensive energy bill that has been stalled in the Senate. Within two days
of Senate passage, cost estimates for the energy tax package rose to $18 billion
largely due to a renewable energy tax credit. Proponents say that the cost of
the bill is completely offset by plans for fraud reduction, ethanol excise tax
provisions, and repeal of export subsidies. The official Joint Tax Committee score
of the bill should be available soon.
Last-minute amendments to the bill
are also expected to raise the total cost of the energy package. One amendment
proposed by Sen. Don Nickles (R-OK) will accelerate depreciation of electricity
transmission property to 15 years for property placed within the next two years.
Senate Finance Committee Chairman Chuck Grassy (R-IA) added two amendments: one
offering credits to larger ethanol-producing facilities who implement certain
emissions control technology, and one relating to renewable energy use by the
Tennessee Valley Authority.
Sen. John McCain (R-AZ) has been a vocal opponent
of S. 1637, arguing that it "has grown into a $170 billion Christmas tree
of goodies for every conceivable special interest." McCain proposed an amendment
to strike out the energy tax portion of the bill, but it was rejected 13-85. Other
efforts by Senators McCain and Kyl (R-AZ) to strip down the energy tax package
were withdrawn before the Senate reached its final vote.
While many of
the tax incentives and cuts benefit conventional energy suppliers, the 1.8-cent-per-kilowatt-hour
renewable energy credit may help the United States become a larger force in the
renewable technology market. However, some advocates of renewable energy claim
that a tax incentive may not be enough to spur the industry's development, and
that a renewable portfolio standard (RPS) should be implemented in the United
States as it has been in some European countries. The 15 states that have independently
adopted RPS policies account for 75 percent of renewable industry growth over
the last decade, illustrating the potential effect of RPS. President Bush continues
to advocate a voluntary approach to renewable development. (5/13/04)
House Science Committee unanimously approved H.R.
3890, a bill to reauthorize $20 million a year for the Metals Program at the
Department of Energy through 2009. The Metals Program provides funding and guidance
for the development of energy efficiency technologies in the metals industry.
It aims to reduce energy consumption and environmental impact such as greenhouse
gas emissions of metals companies, while improving international competitiveness.
The version of the bill that was introduced in subcommittee authorized only $10
million a year to the program, but its sponsor Rep. Melissa Hart (R-PA) succeeded
in passing an amendment to double the funds before the full committee. The bill
requires industry partners in the program to match 30 percent of the funding they
receive and provide progress reports to Congress each year. The $20 million authorization
may provide clout for increased Fiscal Year 2006 funding, although an amendment
has been added to the bill to flatline funding for Fiscal Year 2005. The Bush
administration requested $6.5 million for metals industry efficiency programs
in next year's budget. The House Science Committee Republicans blocked an amendment
to the bill funding energy efficiency projects in other sectors. They pointed
out that such amendments could slow down the bill and that similar measures are
included in other legislation. To see a summary of a May 2004 hearing on the Metals
Program, click here.
House Republicans introduced comprehensive energy legislation
and other energy-related bills during "Energy Week" debates June 15th
and 16th. Environment and Energy Daily reported that high gasoline prices
and Democratic opposition to many energy-related bills were likely to serve as
important contexts for the debates. The Republican sponsored Energy Week; however,
was delayed due to the death of former President Reagan, postponing the debates
one week. During this time, gas prices began to fall and the Bush Administration
reported that prices were expected to fall throughout the summer. The bills were
debated on the House floor under rules that prohibited amendments.
Commerce Committee Chairman Joe Barton (R-TX) introduced H.R.
4503, the House comprehensive energy bill, which passed with a 244-178 vote.
This bill was a reintroduction of last year's energy conference report and included
energy conservation, research and development, and energy supply diversification.
Many Democrats were agitated that the bill was debated in the House once again,
while Republicans focused on the increased domestic production and jobs the bill
would provide. Additionally, Barton introduced H.R.
4517, which also passed. This bill will speed up the permitting process for
the construction of new petroleum refinery facilities in areas of high unemployment,
allowing the Department of Energy (DOE) to establish "refinery revitalization
zones" in communities with an unemployment rate 20% above the national average
and either a closed refinery or history of major industrial layoffs. Some opponents
of the bill argued it would undermine parts of the Clean Air Act and would do
little to solve the nation's short-term energy problems. Republican supporters
and a spokesperson for the National Petrochemical and Refiners Association insisted
that permits will only be granted to refineries who meet existing and future environmental
regulations. They also pointed out that without refineries, the U.S. will be unable
to move toward more demestic production.
House Resources Committee Chairman
Richard Pombo (R-CA) also introduced several bills during Energy Week. One bill,
4513, passed 229-186. This bill will streamline the process of environmental
impact assessments required under the National Environmental Policy Act (NEPA)
for new renewable energy projects. It allows federal agencies to propose renewable
energy projects without identifying more than one possible location for the project.
Opponents argued that without alternative sites, the purpose of NEPA is ignored.
also passed, which will provide energy companies incentives to produce natural
gas from methane
hydrate resources, which have been found to contain significantly more gas
than all other conventional natural gas resources combined. Although the technology
to exploit hydrate resources is not yet available, the bill provides incentives
for companies to develop that technology and begin extraction by the year 2018.
Two bills did not make it out of the House. The hotly debated H.R.
4529 was removed from Floor consideration due to a lack of support. This bill
called for some of the revenues from the Arctic National Wildlife Refuge (ANWR)
oil and natural gas drilling to be used for the cleanup of abandoned coal mines
and health benefits for coal miners. These two issues were linked in an effort
to gain support from those who oppose ANWR energy exploration. However, the United
Mine Workers of America, one of the groups expected to benefit from the bill,
issued a letter to Congress June 15th opposing the bill. Another bill, H.R.
4545, failed to obtain the necessary two-thirds vote from the House. This
bill, sponsored by House Majority Whip Roy Blunt (R-Mo.) and Paul Ryan (R-Wis.),
would have lowered the price of gasoline blends, commonly known as "boutique
fuels", and would allow the Environmental Protection Agency (EPA) to waive
Clean Air Act fuel requirements for up to five days is there is a significant
disruption in the fuel supply. (6/18/04)
The House of Representatives
4520, the corporate tax bill, on June 17th. The bill has been pushed forward
with the purpose of repealing the Foreign Services Corporation/Extraterritorial
Income Act (FSC/ETI), which has been declared illegal by the World Trade Organization
and has incited tariffs from Europe. The Senate passed S.1637
in May for the same purpose, although its bill included a $19.4 billion energy
tax package. For a discussion of S.1637, see the May 13th entry below. The House
version of the FSC/ETI repeal does not include a major tax package, although it
does include some specific provisions suspending duties on nuclear steam generators
and nuclear reactor vessel heads. The House and the Senate will meet in conference
to reconcile differences between the bills, with discussions likely focusing on
energy tax incentives. (6/18/04)
A study released July 9th by the
Cambridge Energy Research Associates concluded that natural gas prices will continue
to rise in North America unless the oil and gas industry can resolve its shortage.
The study predicted natural gas prices would rise to $6.62 per million BTU by
2007. New liquefied natural gas (LNG) terminals could help alleviate this problem
by 2008 or 2009, but would require permits for LNG expansion to be streamlined
and some regulations relaxed. Many LNG terminals are currently being planned and
built, but the report emphasized that it would be necessary for Congress to take
quick action to balance natural gas supply and demand. (7/12/04)
In late June the Environmental Protection Agency (EPA) released a
stating that there is little threat of pollution to underground drinking
water sources due to the injection of hydraulic fracturing fluids
in coalbed methane (CBM) wells. The report was issued partly in response
to a court decision that declared the EPA was responsible for CBM
issues under the Safe Drinking Water Act. As CBM production has increased
in recent years, rising in 12 states from 1,252 billion cubic feet
in 1996 to 1,353 trillion cubic feet in 2000, concern has grown over
the possible consequences this practice could have on underground
water supplies. The report examined roughly 200 studies and reviews
done on 11 major coal basins, including the three largest: the Powder
River Basin in Wyoming and Montana, the San Juan Basin in Colorado
and New Mexico, and the Black Warrior Basin in Alabama. The process
includes injecting a mixture of water and other fluids at high pressure
into a well to crack the rocks, which increases the flow of oil and
gas, making it possible to extract hydrocarbons that were previously
inaccessible. Often diesel fuel is used as a fracturing fluid, which
introduces benzene, toluene, ethylbenzene and xylenes into the ground
and potentially into underground drinking water supplies. The largest
CBM producers have agreed to voluntarily stop using diesel as a fracturing
fluid, but asserted that most of the fluids injected biodegrade or
remain stationary. Although the EPA was criticized for not conducting
its own investigation, they upheld their finding that there is no
strong link between hydraulic fracturing and groundwater contamination.
They also agreed to conduct additional studies on the effects of hydraulic
fracturing if necessary. (7/19/04)
Late on October 7th, Congress passed the corporate
tax bill with a number of tax breaks for the energy industry.
Although the bill's primary purpose was to eliminate the now 12% tariff
on American goods in Europe from a WTO injunction against American
trade policies, it carried along hundreds of coattail tax breaks and
subsidies for a myriad of industries. E & E Daily reported, "The
energy industry tax breaks range from extension of the wind and renewable
energy production tax credit to tax incentives for the Alaska natural
gas pipeline, as well as elimination of import duties for imported
nuclear power plant parts, a tax credit for marginal oil and gas wells
during times of low prices that otherwise would force them out of
business, and a tax break for utilities that join transmission companies."
Twenty-six oil companies would receive over $60 billion under the
tax break, $22 billion and $10.5 billion of which would go to Exxon
Mobil and Chevron Texaco respectively. No incentives were included
to improve energy efficiency. According to Kara Rinaldi, director
of policy for the Alliance to Save Energy, "Tax incentives for
energy-efficient new homes and home improvements and for high-mileage
hybrid vehicles would ease the pressure on tight energy supplies and
on energy costs. Energy efficiency is the quickest, cleanest, cheapest
way to help meet America's growing energy needs."
Renewable fuels incentives emerged as a winner in H.R.
4520, the corporate tax legislation passed on October 7th. Under
the proposed "Volumetric Ethanol Excise Tax Credit" (VEETC)
system, refiners who blend gasoline with ethanol would pay the 18.4
cents per gallon in gasoline excise taxes into the Highway Trust Fund
(HTF), up from the current 13.2 cents per gallon they currently pay.
However, they would then receive a 5.2 cents tax break, paid out of
general revenues, resulting in more funding for the HTF.
Tax credits would also be in store for biodiesel technologies. Although
biodiesel is not as popular as ethanol, its usage has skyrocketed
in recent years; from 500,000 gallons per year in 1999 to 25 million
gallons per year in 2003. Biodiesel has the advantage of being more
environmentally friendly and easier to transport long distances compared
with ethanol. Joe Jobe, Executive Director of the National Biodiesel
Board, told Environment and Energy Daily that "tax credits for
biodiesel are especially timely as refiners look to meet new low-sulfur
fuel regulations beginning in 2006." Also in the bill, the biodiesel
income tax credit would provide a 50 cent per gallon income tax credit
for each gallon of biodiesel used or sold as fuel.
Missing from the final bill were tax credits for energy efficiency.
Incentives for consumers who retrofit their homes with better insulation
or more efficient windows and for developers who build energy efficient
homes were removed in conference. Also missing from the bill were
tax credits for consumers who purchase fuel-efficient cars and trucks,
specifically a provision that would have raised the current $2,000
tax deduction for the purchase of a hybrid vehicle to $4,000. Environmental
groups did applaud the closing of a tax loophole that encouraged small
business owners to buy large sport utility vehicles. The allowable
deduction for these vehicles was reduced from $100,000 to $25,000.
The authorizing language for the Alaska natural gas pipeline was
attached to the FY05 Military Construction Appropriations bill just
prior to the vote and Congress' adjournment for the election on October
11th. According to Environment and Energy Daily, the language includes
"a ban on a northern route for the line that would bypass Alaska
markets, provisions that allow Alaska to control in-state use of the
gas to promote its use for heating or enhancement of a gas industry
in Alaska, and a streamlined permitting and expedited court review
process to speed construction and limit judicial or regulatory delays...The
bill also includes $20 million for a worker job training program in
Alaska, including $3 million for construction of a Fairbanks training
facility." This language, which effectively provides all the
necessary prerequisites for the $20 billion project to get underway,
was welcomed by the Alaska congressional delegation and may help Senator
Lisa Murkowski who is currently in the midst of a tough reelection
The president's National Energy Policy (NEP),
which was released in May 2001, colored most of the energy debate on Capitol Hill
last Congress. The NEP, which was assembled by a task force that included several
members of the president's Cabinet and was headed by Vice President Dick Cheney,
makes 105 recommendations of which 12 can be accomplished by executive order,
another 73 can be accomplished by agency action, and the remaining 20 recommendations
require congressional action. According to an AGI special update a majority
of the recommendations relate to infrastructure and international relationships.
Shortly after the release of NEP, Congress began to hold hearings on the report's
recommendations. The House acted quickly to craft legislation (H.R. 4), sponsored
by Energy and Commerce Chairman Billy Tauzin (R-LA), that incorporated many of
the NEP provisions. H.R. 4 included language to allow exploration in the Arctic
National Wildlife Reserve (ANWR). Despite the fact that opening ANWR was
central to the president's plan, the H.R. 4 differs from what the NEP had envisioned
due to an amendment introduced by Reps. John Sununu (R-NH; now senator) and Heather
Wilson (R-NM). Their amendment, which passed by a 228-201 vote, limits exploration
activity to 2,000 of the 1.5 million acres of the coastal plain in the refuge. The
House passed H.R. 4 on August 1, 2001, in a floor vote of 240-189.
Early in 2001, several bills were introduced as being national energy policies
but few of them received much bipartisan attention. On February 27, 2001, Sen.
Murkowski introduced his National Energy Security Act of 2001, (S.388 and S.389)
with the stated aims to decrease the nation's reliance on foreign oil to 50% by
2011 through a suite of policy changes. These bills contained a provision
to open ANWR and several tax incentives for domestic oil and gas production. On
March 22nd, then-Senate Minority Leader Tom Daschle (R-SD) and Sen. Jeff Bingaman
(D-NM) introduced the Comprehensive and Balanced Energy Policy Act of 2001 (S.596
and S.597) as
a counter-measure to the energy legislation introduced by Murkowski. In
the legislation, energy efficiency and emissions reductions are encouraged through
tax incentives and regulations that reduce the input of greenhouse gases to the
atmosphere. Neither of these bills moved very far in the Senate.
response to the NEP was delayed first by the switch of Senator James Jeffords
from Republican to independent that led to the Democrats taking control of the
majority. At the end of 2001, the Democrats introduced another energy policy bill
entitled the Energy Policy Act (S. 1766) that
again emphasized efficiency, conservation, and the development of alternative
and renewable energy resources. In hopes to restart the energy debate and to skip
over the sticky committee revision, including the possibility of a pro-ANWR vote
given the committee's make-up, the leadership added S. 1766 as an amendment to
a small bill that was already pending on the floor: S. 517. S. 517
started life as a $30 million authorization of a national laboratory partnership
program but became the vehicle for the massive, 530-page energy bill. After more
than a month of consideration and hundreds of amendments, the Senate passed its
energy legislation in an 88-11
vote. -- just to keep it interesting, the chamber inserted its energy policy
legislation portion of S. 517 back into H.R. 4 as an amendment in the form of
a substitute. This action paved the way for a House-Senate conference committee
to work out a final bill.
Conference committee work began in Fall 2002 but
failed to produce a final version before the 107th Congress ended in December
2002. Before breaking for the elections, the conference committee had worked out
compromise language on hundreds of pages of bill text but had yet to find consensus
on some of the largest issues -- such as the House provision to open the Arctic
National Wildlife Refuge (ANWR) for oil and gas exploration and Senate provisions
regarding climate change.
Most of the energy debate in the last Congress
focused on crafting national energy policy legislation, but a few other energy-related
bills also received some attention. The House Science Committee looked into several
research and development bills, including H.R. 3929,
the Energy Pipeline Research, Development, and Demonstration Act. H.R. 3929,
co-sponsored by Reps. Ralph M. Hall (D-TX) and Lamar Smith (R-TX), aimed to advance
pipeline infrastructure research and development (R&D) and streamline the
repair and recovery process after a potential pipeline failure. The committee
also drafted an energy bill (H.R.
2460) that was folded into the final House bill. The bill
would authorize the appropriation of close to $18.5 billion over the next 8 year
period to the Department of Energy (DOE), the Environmental Protection Agency
(EPA), and the Office of Science and Technology Policy (OSTP) in the Executive
Office of the President. It would increase funding for conservation and
renewable energy programs, fund the administration's 10-year $2 billion clean
coal initiative, and fund a new research program on oil and gas drilling in ultra-deep
Addition information on energy legislation in the 107th Congress
is available at http://www.agiweb.org/gap/legis107/energy.html.
Sources: E&E Publishing, Greenwire, House of Representatives, Library
of Congress, Senate, Washington Post, and hearing testimony.
by Emily Lehr Wallace, AGI Government Affairs Program; Margaret A. Baker, AGI
Government Affairs Program; Charna Meth, 2003 AGI/AAPG Spring Semester Intern;
Deric R. Learman, 2003 AGI/AIPG Summer Intern; Ashley M. Smith, 2003 AGI/AAPG
Fall Semester Intern; Gayle Levy, 2004 AGI/AAPG Spring Semester Intern; Bridget
Martin, 2004 AGI/AIPG Summer Intern; Ashlee Dere, 2004 AGI/AIPG Summer Intern
and Dave Millar, 2004 AGI/AAPG Fall Semester Intern.
Background section includes
material from AGI's Energy Policy Overview
for 107th Congress.
Please send any comments or requests for information to
AGI Government Affairs Program.
Last updated on November 10, 2004