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Energy Policy (10-10-06)

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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, wind, nuclear, hydrogen fuel cells and hydroelectric power.  The inability of the 107th and 108th Congresses to pass comprehensive energy legislation has created a strong impetus for the 109th Congress to act swiftly. With Republican gains in the House and Senate as well as the defeat of Senate Minority Leader Tom Daschle (D-SD), many lawmakers in the White House and Congress believe they may be able to finally pass an energy bill in the 109th Congress. 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.

For a topic-by-topic run-down of the comprehensive energy bill signed into law on August 8, 2005, view this comparison chart that highlights the bills' major provisions and the differences between the House, Senate and Final versions.

Recent Action

On September 29, 2006, hours before Congress adjourned, the House approved the Alternative Energy Research and Development Act (H.R. 5656) which brings together a series of smaller bills considered by the Science Committee. The bill authorizes $402 million for alternative energy research, particularly biofuels, hydrogen, plug-in hybrid vehicles and green building technology. The bill also requests a National Academy of Sciences study of the Advanced Research Projects for Energy (ARPA-E) initiative. The initiative was suggested in the National Academy report, "Rising Above the Gathering Storm" and has been proposed in several competitiveness bills introduced in 2006. There is no comparable bill being considered in the Senate and this bill is not likely to advance. (10/10/06)

Both chambers of Congress introduced legislation for a pipeline safety overhaul stimulated by significant corrosion problems in BP's Prudhoe Bay pipelines along the North Slope of Alaska. The House Transportation and Infrastructure Committee Chairman Don Young (R-AK) introduced the Pipeline Safety Improvement Act of 2006 (H.R. 5782) on July 13. The bill, cosponsored by twenty members, would regulate low-stress pipelines in "unusually sensitive areas."

H.R. 5782 was referred to the Committee on Energy and Commerce where it remained with little activity until BP pipeline problems prompted shutdown in August. On September 27, after several hearings on the BP pipeline problems in the House, Energy and Commerce Committee Chairman Joe Barton (R-TX) and Ranking Member John D. Dingell (D-MI) introduced bipartisan amendments to H.R. 5782 which would enhance operator inspection and cleaning rules on most rural low-stress pipelines with a few exceptions, regulating more pipelines than the original bill.

On the same day in the Senate, Senator Ted Stevens (R-AK) introduced the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006 (S. 3961), cosponsored by Senators Daniel Inouye (D-HA), Trent Lott (R-MS), Frank Lautenberg (D-NJ), Barbara Boxer (D-CA) and Lisa Murkowski (R-AK). The bill would regulate the same low-stress pipelines as the Barton-Dingell amendment. It would also support the authorization of grants for pipeline damage prevention programs, public summaries of enforcement actions against pipeline operators and minimum standards for integrity management programs for gas distribution in areas close to residences. Both bills await further action.

For summaries of recent pipeline hearings, click here. (10/10/06)

The House and Senate were unable to settle their differences on offshore drilling legislation before the October recess. The Gulf of Mexico Energy Security Act of 2006 (S.3711), introduced by Senator Pete V. Domenici on July 10, 2006, would open 8.3 million acres in the eastern Gulf of Mexico to new oil and gas drilling. The bill was cosponsored by fourteen members and passed by a 75 to 21 vote on August 2. It would permit oil and gas leasing in the 181 and 181 South areas within one year but places a moratorium on leasing in other specified areas until at least June 30, 2022. According to S. 3711, any party with a prior lease in areas subject to the moratorium may "exchange the lease for a bonus or royalty credit that may only be used in the Gulf of Mexico" (Sec 4(c)(1)).

The Senate bill now needs to be reconciled with the much broader House bill, the Deep Ocean Energy Resources Act (DOER, H.R. 4761). The House bill would not only affect the Gulf of Mexico, but would lift the 25-year moratorium on drilling for oil and natural gas off most of the U.S. coastline. States would have the option to maintain the offshore drilling ban within 100 miles of their coastlines and a percent of federal revenue generated from offshore drilling royalties would go directly to states. The extent of the drilling and the sharing of the royalty revenues remain the most contentious issues to resolve between the two bills. (10/10/06)

Previous Action

On August 2, the Senate voted 75 to 21 to pass the Gulf of Mexico Energy Security Act of 2006 (S.3711 ) that would open 8.3 million acres in the eastern Gulf of Mexico to new oil and gas drilling. The bill now needs to be reconciled with the much broader House bill, the Deep Ocean Energy Resources Act (DOER, H.R. 4761). The House bill would lift the 25-year moratorium on drilling for oil and natural gas off most of the U.S. coastline. States have the option to maintain the offshore drilling ban within 100 miles of their coastlines.

Within the House bill, part of the federal revenue generated from offshore drilling royalties would fund the Energy and Mineral Schools Reinvestment Fund Act (EMSRA). Funds would be distributed to petroleum, mining, applied geology and geophysics schools to support education and research and to encourage the growth of professionals in the energy workforce. Additional funds would be available for K-12 science education. H.R. 4761 would also establish the National Geo Fund to fund geologic mapping, geophysical and other seismic studies, earthquake monitoring programs, and preservation and use of geologic and geophysical data. (8/7/06)

On June 27 the House Science Committee unanimously passed H.R. 5656, a bill appropriating funds to several energy initiatives. "Having reliable affordable, clean sources of domestic fuel is a must… [We] need to develop and use [domestic] sources more wisely," said Chairman Sherwood Boehlert (R-NY) in his opening statements. Ranking member Bart Gordon (D-TN) concurred with Boehlert's statement, saying "We must begin to rethink and reenergize research and development."

H.R. 5656, the Energy Research, Development, Demonstration, and Commercial Application Act of 2006, authorizes the President's Advanced Energy Initiative. The energy research programs funded by H.R. 5656 are broad in nature, and include carbon sequestration, nuclear fuel reprocessing, solar and wind energy, and hydrogen fuel cells. The bill also puts emission requirements on the clean coal project called FutureGen, tightly limiting the amount of sulfur, nitrous oxide, mercury and carbon dioxide emissions.

The bill funds nearly $2 billion in energy programs. This includes $1.25 billion in plug-in hybrid research and an additional $250 million to fund state projects for plug-in hybrid research. Biofuel programs are appropriated $485 million over three years. Solar technology research receives $648 million and an additional $800 million in grant programs. Wind power is allotted $204 million. There is also an energy efficient building program funded at $50 million.

One controversial measure was the future of the proposed Advanced Research Projects Agency for Energy (ARPA-E). H.R. 5656 requests the National Academy of Sciences (NAS) to clarify their recommendations for ARPA-E's mission and role in the federal government in fostering new energy technology. Boehlert urged the committee to wait on approving ARPA-E until NAS could reply with further recommendations. "We don't know yet if ARPA-E would contribute enough new energy technologies [to the private sector]…the issue remains unresolved," he said. Gordon offered an amendment which would have approved ARPA-E as proposed and appropriated $3.4 billion to the program. Gordon also stressed the potential for collaboration between the federal government and the private sector. "This will bring together our national labs, universities and the private sector," he said. However, the majority agreed with Boehlert. "I don't see how creating a new agency creates transformational research. It's not clear what problems we are trying to solve. Is it a failure of DOE to transfer technology to the market?" asked Rep. Judy Biggert (R-IL). The amendment failed by a voice vote on party lines.

Six amendments were grouped together and passed by a voice vote. One of them is a measure by Rep. Sheila Jackson-Lee (D-TX) to ensure historically black colleges are eligible to receive grants funded by H.R. 5656. Rep. Doris Matsui (D-CA) sponsored an amendment to continue the geothermal, hydropower, cogeneration, and distributed energy research and development program enacted by the Energy Policy Act of 2005. Other amendments include research and development for methods to test sulfur in fuels, creating higher standards for the definition of an energy efficient building, a requirement for energy efficient buildings to operate HVAC systems that meet Energy Star requirements, and a statuary change to the Energy Policy Act of 2005 to include biomass in the Bioenergy demonstration program. (7/06/06)

Oil and gas leasing in the Arctic National Wildlife Refuge was included in a budget reconciliation bill that passed the Senate 52-47 on November 3, 2005. In the House however, the Republican leadership faced steadfast opposition to their $50 billion in spending cuts from Democrats, and dissension from moderate Republicans who said they would oppose any measure that would open ANWR to drilling. Ultimately all references to ANWR were stripped from the bill and it narrowly passed by a vote of 217-215 on November 18. Energy and Commerce Committee Chairman Joe Barton (R-TX), who had previously said he would not vote for the bill unless it included drilling in ANWR, reluctantly cast the final vote in favor.

Drilling in ANWR will remain a hotly contested issue as the conference committee works to hammer out differences between the two bills. Two dozen Republican moderates in the House, whose votes are essential to the bill's passage, have written letters saying they will not support a conference report that includes drilling. On the other hand many senators, especially the Alaska delegation and Energy Committee Chairman Pete Domenici (R-NM), as well as Joe Barton and House Resources Committee Chair Richard Pombo (R-CA), say they will not vote for the reconciliation bill unless it includes drilling in ANWR.

As with ANWR drilling, House Resources Committee Chairman Richard Pombo's (R-CA) legislation that would have allowed states to opt out of a moratorium on offshore oil and gas drilling was excised from the House bill in order to ensure passage. This measure is even less likely to be reinserted during a conference report, because there is no similar language in the Senate bill. Pombo's bill also included funding for mining and petroleum schools and for geologic mapping from royalties generated by new offshore exploration. Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) is working on offshore drilling legislation that he will introduce next year, but he has made no indication that he will attempt to include similar language in the budget reconciliation conference report.

Meanwhile, the efforts at passing new refinery legislation that had gained momentum earlier this fall have stalled. Senator James Inhofe's (R-OK) "Gas Petroleum Refiner Improvement and Community Empowerment Act" (S. 1772) failed to pass out of the Environment and Public Works Committee on October 26 after all of the committee's Democratic members, as well as Senator Lincoln Chafee (R-RI) voted against it. This vote effectively ended the bills chances of reaching the Senate floor. Inhofe's bill was a less controversial version of the "Gasoline for America's Future Act" (H.R. 3893), which was narrowly passed by the House in October. Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) said that his committee would take up the issue, but not until the beginning of next year. (12/12/05)

On October 7, 2005 the House narrowly passed Representative Joe Barton's (R-TX) "Gasoline for America's Future Act" (H.R. 3893) by a vote of 212-210. The five-minute vote was held open for an additional forty minutes in order to rally the necessary votes to pass it, a move that infuriated Democrats. The bill is primarily concerned with increasing refining capacity, and would streamline the permitting process for new refineries as well as allow the President to designate new refinery sites on federal lands, including closed military bases and wildlife refuges. The most controversial provision of the bill, which would have relaxed New Source Review rules that require expanding refineries to upgrade their emissions equipment, was removed the night before the vote because Republican leaders feared it would prevent the bill's passage. The bill that passed the House does include, however, several provisions that would weaken clean air regulations for refineries. Other important measures the bill takes include a drastic reduction in the number of fuel blends and an expansion of the Strategic Petroleum Reserve. The House rejected, 199-222, a Democratic substitute bill that would have imposed criminal penalties on energy companies involved in price-gouging and would have created a "strategic refinery reserve" operated by the federal government which would increase refined fuel during emergencies.

Meanwhile, Senate Environment and Public Works Committee Chairman James Inhofe (R-OK) has introduced a companion bill in the Senate to address Post-Katrina and Rita energy shortages. Like Barton's bill, Inhofe's "Gas Petroleum Refiner Improvement and Community Empowerment Act" (S. 1772) is focused on facilitating the construction of new refineries, but it does not include the controversial air pollution measures found in the House legislation. The Senate bill also takes a more gradual approach towards reducing the number of boutique fuel blends supplied by refiners. Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) is also drafting separate energy legislation, which will likely focus on opening offshore areas for gas and oil development. (10/17/05)

Hurricanes Katrina and Rita, which damaged Gulf Coast oil drilling rigs and refineries, offered lawmakers a rare opportunity to revisit national energy policy. Just two months after the enactment of the Energy Policy Act of 2005, House Republicans successfully drafted and reported out of committee two new energy bills that would relax refinery regulations and open up public lands and offshore areas for energy development.

The full House is scheduled to vote October 7, 2005 on the "Gasoline for America's Security Act of 2005" (H.R. 3893), which was introduced by Energy and Commerce Committee Chairman Joe Barton (R-TX). The legislation would allow new refinery construction incentives and it would relax Clean Air Act New Source Review and ozone attainment requirements that discourage certain localities from building refineries. This legislation is likely to be contested in the House and rejected by the Senate. Senator Jim Jeffords (I-VT) has already threatened to filibuster the bill if it retains these provisions for the refineries.

The second bill, sponsored by House Resources Committee Chairman Richard Pombo (R-CA), was approved in committee on September 28 and takes bold steps to increase domestic energy supply, including a provision to allow states to opt out of offshore leasing bans and to allow drilling in the Arctic National Wildlife Refuge (ANWR). In order to expedite energy production, the bill would also trim environmental review laws and repeal a section of the Energy Act of 2005 to establish a fixed royalty structure for oil shale development. Two smaller pieces of legislation that were tacked onto Pombo's bill would also provide funding for engineering and mining schools and establish a geologic mapping and data preservation fund from a small percentage of mining and offshore royalties. See AGI's action alert for details about the mining schools provision.

While the House is going forward with Barton's bill, Republican leadership decided not to call a House vote on Pombo's bill; instead, the bill will be incorporated into the House budget reconciliation package, which cannot be filibustered in the Senate. Meanwhile, Senate Energy and Natural Resources Chairman Pete Domenici is expected to roll out Katrina-related energy legislation of his own later in October that will contain offshore oil and gas options and incentives to encourage energy conservation. (10/3/05)

On August 8, 2005, President Bush signed the Energy Policy Act of 2005 into law during a visit to New Mexico's Sandia National Laboratory. On July 29, 2005, the Senate passed the Energy Policy Act of 2005 by a 99-1 vote, thereby overcoming the final hurdle in a four-year push to pass comprehensive energy legislation. A day earlier, the House also approved the massive, 1,725 page legislation by a reasonably bipartisan vote of 275 to 156. After a House-Senate Conference Committee succeeded in agreeing on a final bill earlier in the week, the Senate vote came just in time to meet the August deadline set by the President.

After almost two weeks of frenzied negotiation, House and Senate conferees were able to work out major differences by dropping the most contentious parts of the bill. There will be no provisions for drilling in the Arctic National Wildlife Refuge (ANWR), no liability protection for producers of methyl tertiary butyl ether (MTBE) and no renewable portfolio standard (RPS). Because drilling in ANWR will likely be acheived through the budget reconciliation process, it was not a major concession to drop it from the energy bill. Conference Committee Co-Chairman Joe Barton (R-TX), pushed hard for a compromise on the MTBE liability protection by offering to set-up an MTBE cleanup trust fund of $1 billion in which industry, state and the federal government would each contribute one-third. Likewise, Senator Jeff Bingaman's attempt to amend the RPS language was not successful.

On many provisions, the final bill simply splits the difference between various numbers that appear in the House and Senate versions (see AGI's table comparing the differences). For example, 70% of the authorized funding for the $1.8 billion Clean Coal Power Initiative will go to advanced combustion technologies, including coal gasification; the Senate bill had called for 80%, while the House bill had called for 60%.

The National Geological and Geophysical Data Preservation Program Act of 2005 was left as is in the final bill. The section authorizes $30 million each year for the next five years, with federal funds not to exceed 50% of the total cost of any state data preservation program or facility. The federal part of the program will be administered by the U.S. Geological Survey.

Other major provisions include:

  • Permanent authorization for the Strategic Petroleum Reserve, and a mandate for the Energy Secretary to fill the reserve to 1 billion barrels.
  • $3.6 billion in authorized funding for new oil and gas programs that range from three to ten years, including $165 billion to conduct a methane hydrates research program and $1.5 billion for an ultra-deepwater oil drilling research and development program
  • An inventory of outer continental shelf oil and gas resources using existing data; no funds were authorized to conduct new seismic studies.
  • Exemption of hydraulic fracturing from Safe Drinking Water Act requirements.
  • An authorized $4 billion to spur new nuclear power generation, including $1.25 billion through 2015 for the Next Generation Nuclear Plant project.and $2 billion in risk insurance for new nuclear reactors.
  • A requirement of 7.5 billion gallons of ethanol and other biofuels to be included in the nation's gasoline supply by 2012, down from 8 billion in the Senate bill and up from 5 billion in the House bill.
  • An extension of existing energy efficiency production and consumer incentives, plus an authorized $4.6 billion over three years for renewable energy and energy efficiency R&D programs. For FY 2005, Renewable Energy R&D was funded at $247 million while Energy Conservation R&D was funded at $367 million.
  • A $14.6 billion energy tax package over the next 10 years, with $3.1 billion in revenue-generating offsets, up from $8 billion in the House bill and down from $18 billion in the Senate bill. Tax package includes $2.9 billion for clean coal, $2.9 billion for renewable energy, $2.6 billion for domestic fossil fuel production, $1.7 billion for conservation and energy efficiency, and $1.3 billion for advanced nuclear capacity.
  • An extension of daylight savings time by one month

For more information, resources also available through the Senate Energy and Natural Resources Committee website. (8/8/05)

On July 25, 2005, the American Meteorological Society held a forum to discuss on "The Future of Oil: Will Supply Meet Demand?" The seminar featured four presentations focusing on peak oil, each speaker offering his predictions about when the peak will occur and recommendations for future energy use in the United States and worldwide. Representative Roscoe Bartlett (R-MD) opened the discussion by pointing out the inevitably finite nature of fossil fuels. Mr. Bartlett expressed concern at the lack of urgency among policy-makers to address this issue, and suggested that the nation needs a program like the Manhattan Project to speed up the development of renewable resources.

One central issue was the reliability and accessability of data on oil reserves, production and use. Jack Zagar, Director of the Association for the Study of Peak Oil (ASPO), discussed the lack of reliable data on oil capacity in Saudi Arabia. Inaccurate data and uncertain estimates, he said, could drastically affect peak oil predictions and create a false sense of security about oil supplies. Matthew Simmons, Chairman and Chief Executive Officer of Simmons & Company International, gave an animated presentation criticizing optimists for keeping the peak oil problem mute. He also underlined the urgent need for accurate data about oil supplies and audits of this data. According to Simmons, the International Energy Associates (IEA), the Group of 8 countries, the United Nations, and the International Monetary Fund are all working together to devise a plan to collect such data so there will be a more accurate estimate of global oil supplies and the rate at which they are being depleted.

As an international representative, IEA President Dr. Herman Franssen reminded the audience not to blame the growing Chinese population for desiring the same 26 barrels of oil per day per person lifestyle that Americans enjoy. Currently China uses 1.5 barrels of oil per day per person, though this is likely to increase over time. Dr. Franssen emphasized increased efficiencies and better use of limited resources to balance an increase in global oil demand.

Robert Hirsch, Senior Energy Program Advisor at SAIC and a leading researcher on the peak oil issue, identified the transportation sector as the biggest problem for peak oil, noting that an estimated 40-million light trucks or about half of the total fleet will need to be replaced in the next 9-14 years at a cost of $1 trillion. Hirsch recommended the nation take action in implementing plan to transition from petroleum-dependency at least 20 years before peaking to ensure that the U.S. can recover from a severe upset in oil supply.

The speakers were resistant to answering any questions dealing with politics and legislation. Simmons admitted that he had not been closely following the progress of the Energy Policy Act of 2005, but he did suggest that the provision to inventory outer continental shelf resources was the most important part of the bill, because it would give us a better estimate of our oil supplies. In general, Hirsch said that the bill fails to address peak oil, calling it "business as usual." (7/24/05)

After an exhausting two-week mark-up, the full Senate overwhelmingly passed their version of the energy bill, H.R.6, on June 28, 2005 by a vote of 85-12. The final legislation included several unprecedented attempts within Congress to reduce greenhouse gas emissions and foreign oil dependency. However, according to media coverage, White House and Senate officials have acknowledged that the legislation will not bring consumers any short-term relief from high gas prices. The bill also differs in several major ways with the House energy bill, which was passed on April 21, 2005 by a vote of 249 to 183. The Senate bill includes a higher, 8 billion gallon mandate on ethanol production, an inventory of off-shore continental shelf (OCS) energy resources, and a first-ever national renewable portfolio standard (RPS). The RPS requires utilities to generate electricity using at least 10% renewable energy by 2020. In total, 170 amendments were offered for discussion. Provisions of the bill that were not debated are listed in the previous energy policy update below. A comparison chart highlights the differences between the two energy bills.

The $12.6 billion five-year tax package attached to the Senate bill also provides more incentives for efficient and renewable energy technologies than its $8 billion counterpart in the House. Only slightly more than $2 billion would be available as incentives for oil and gas producers. Revenue from fuel taxes will total $1.99 billion to bring the Senate package cost within the $11 billion ceiling approved by the Budget Committee.

In their opening statements on June 14th, Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) and Ranking Member Jeff Bingaman (D-NM) praised the bill for its bi-partisanship. Conflicts that arose during the debate were primarily regional issues. In the end, dissenting votes were also bipartisan with 7 Democrats and 5 Republicans voting against the bill.

Senate Minority Leader Harry Reid (D-NV) issued a statement on the eve of the floor debate declaring that the goal of the Democratic Party is to pass energy legislation that will “reduce imports of foreign oil by 40 percent over the next 20 years so that our country will never be held hostage to our dependence on foreign oil.” Democrats hoped that their goal would be achieved through an amendment offered by Senator Maria Cantwell (D-WA) to change the bill's oil reduction demands from 1 million barrels per day by 2015 to 1.5 million barrels per day by 2025. The amendment failed by a vote of 47-53.

Debates also got off to a rocky start when Senator Bill Nelson (D-FL) stubbornly threatened to filibuster the whole bill due to a proposed amendment by Senator Mary Landrieu (D-LA). Landrieu ultimately withdrew the amendment, which would have given states the option to exploit potential oil and gas resources in the offshore waters along their respective state coastal boundaries, essentially undermining the oil and gas moratoria along most of the U.S. coastal regions. Calling the proposal a “coastal killer amendment,” Nelson argued that such language could harm Florida’s valuable coastal tourism industry. However Nelson and Mel Martinez (R-FL) were unsuccessful in removing another provision to allow the Department of the Interior to inventory outer continental shelf resources. Later in the mark-up, the Senate approved a $1 billion coastal protection spending package for states that currently allow offshore drilling. Out of the six eligible states, 54% of this package would go to Louisiana for coastal restoration.

Climate change dominated the debate for much of the mark-up's second week. Adopted by the Senate was an amendment offered by Chuck Hagel (R-NE) to provide financial incentives for the development of new emission-reducing technology, and another “sense of the Senate” resolution, which will put on record for the first time that the Senate ackowledges greenhouse gas emissions are contributing to global warming. For more about the climate change debates, read our update on Climate Change Policy. (6/28/05)

On May 26, 2005, the Senate Energy and Natural Resources Committee passed bipartisan energy legislation (S.10) by a 21-1 vote, with Sen. Ron Wyden (D-Ore.) casting the single dissenting vote. Even with a near-unanimous vote in committee, the bill's future is uncertain as it proceeds to the floor, where debates on climate change, national renewable portfolio standards, fuel efficiency, ethanol, offshore oil and gas drilling, and liquefied natural gas (LNG) siting are anticipated.

Unlike the energy bill passed in the House last month, the Senate bill does not include a provision opening Alaska's Arctic National Wildlife Refuge (ANWR), provides fewer financial incentives for oil and gas production, and does not provide liability protection for producers of the gasoline additive methyl tertiary-butyl ether (MTBE). Two provisions in the Senate bill that are absent from the House bill, included (1) an amendment on the final day of the mark-up that requires an inventory of offshore oil and gas reserves, making areas under moratoria potentially vulnerable to drilling and (2) a repeal the Public Utility Holding Company Act of 1935 (PUHCA) while expanding the authority of the Federal Energy Regulatory Commission (FERC) to oversee electric utility mergers and acquisitions. The amendment to repeal PUHCA, which represents a compromise among majority and minority members, will likely spark another heated debate on the floor of the Senate and may present an obstacle when the Senate bill goes to conference with the House bill.

Under the Oil and Gas title, the Senate Energy and Natural Resources Committee approved several important provisions. In addition to provisions intended to improve Federal oil and gas leasing activities, the bill includes incentives for natural gas production from deep wells in the Gulf of Mexico, instructs the Secretary of the Interior to provide land for oil shale research and development activities by 2007, and includes a provision that would amend the Mineral Leasing Act to authorize combined hydrocarbon leasing for tar sand and oil and gas. The bill also provides a five-year, $20,000,000 annual authorization to the Secretary of the Interior to develop a program to remediate, reclaim, and close, orphaned, abandoned, or idled wells on Federal land. Finally, the bill would grant the Department of the Interior management and oversight of alternate energy-related projects on the Outer Continental Shelf.

The Senate bill also includes a provision that secures the preservation of geological and geophysical data. The Secretary of the Interior will work with individual states to develop a data preservation program for archiving geological, geophysical, and engineering data and samples related to oil and gas development.

On May 25th, the Senate Energy and Natural Resources Committee considered the nuclear and renewable energy titles of the bill, approving an amendment that establishes an 8 billion gallon renewable fuels standard by 2012, which is 3 billion gallons more than the standard in the House bill. Because 90% of the nation's ethanol is produced in five midwestern states, the committee also agreed to a secondary amendment that would incentivize the use of crops other than corn in ethanol production. Senator Diane Feinstein (D-CA), who expressed strong opposition to the provision, successfully moved another amendment that exempts California from summertime ethanol use by a narrow 12-10 vote.

The Committee also approved a hydropower relicensing provision that grants states, tribes and environmental groups the right to appeal decisions and propose alternative mandatory conditions for dam relicensing projects under an accelerated, trial-like process. The language in this provision resembles recommendations of the FERC, which proposes that 14,000 megawatts of electricity could be generated by constructing 92 dams in Washington, California, Idaho and Montana over the next 12 years.

Before the final committee vote on May 26th, a lively debate erupted over offshore oil and gas drilling and exploration. Before offering the amendment to establish an oil and gas inventory, an impassioned Mary Landrieu (D-La) offered and withdrew an amendment that would have given states the right to lift congressional moratorium off of their coasts and allow them to claim 50% of any offshore energy royalties. Landrieu has been the leading advocate for greater royalty sharing in oil and gas producing states, calling it "the fair thing to do," particularly in states whose coastal ecosystems are threatened by energy production activities. Ranking Member Jeff Bingaman (D-NM) has long been a supporter of offshore oil and gas drilling, but voiced strong opposition to any amendment that replaces the current royalty policy, which grants states 50% for projects up to 3 miles offshore and 27% for projects between 3 and 6 miles out. Energy resources that are produced beyond 6 miles from the coastline are considered federal property only. (5/31/05)

The Senate Energy and Natural Resources Committee has begun their mark-up of comprehensive energy legislation, beginning the week of May 16, 2005 with some of the less disputed titles of the energy bill. Among these titles were Department of Energy Management, Research and Development, Hydrogen, Coal, Vehicles and Fuels, and Energy Efficiency. At the beginning of the mark-up, Committee Chairman Pete Domenici (R-NM) pledged this year's legislation will be "a balanced bill." In their opening remarks, minority members offered Domenici their respect and admiration for his "exceptional thoughtfulness" and inclusiveness.

The Committee approved the Research and Development (R&D) title with little debate on May 17th. Members from both sides of the isle praised the title for a balanced endorsement of conventional resources, fuel efficiency, and renewable energy. Among some of the key R&D programs, the bill would authorize $20 million through FY 2008 and $50 million through 2010 for Department of Energy's (DOE) methane hydrate research program. The bill would authorize roughly $800 million total for R&D for energy efficiency systems, including a $30 million grant program operated by DOE's Office of Science and Energy Efficiency offices.

Under the Coal title, the Senate's energy bill resembles the version passed in the House, which authorizes $200 million annually for the Administration's "Clean Coal Power Initiative." At the mark-up, debate flared over what percentage of this authorization should be committed to coal gasification technologies compared to other coal combustion methods. Some Republican senators on the committee argued that the 80% share proposed for gasification research and development would restrict DOE's ability to invest in future clean coal technologies. In comparison, the energy bill passed by the House devotes 60% of a similar authorized level to coal gasification. Senator Lamar Alexander (R-TN) said he will later offer an alternate amendment that would equally fund coal gasification and carbon sequestration R&D at $3 billion each over five years. His proposal resembles the coal policy recently put forth by the National Commission on Energy Policy (NCEP).

At the center of debate over vehicles and fuels was an amendment proposed by Senator Diane Feinstein (D-CA) to close the "SUV loophole" that exempts light trucks and sport utility vehicles from complying with Corporate Average Fuel Economy (CAFÉ) standards. The amendment was defeated 15 to 7, but the issue will be revisited on the Senate floor, where CAFE supporters like Senator Byron Dorgan (D-ND) may push for raising fuel efficiency requirements to 70 miles per gallon over the coming decades. Domenici said improved CAFÉ standards stand little chance in the Senate; to address fuel efficiency, his bill includes language authorizing the president do take whatever actions necessary to reduce oil demand by 1 million barrels per day.

In the coming weeks, the Senate will consider some of the more contentious issues, such as oil and gas production, nuclear power, and renewable energy. According to Environment and Energy (E&E) Daily, the Senate committee is likely to include provisions that would give states the authority to lift restrictions on offshore oil and gas exploration off their own shores. Senators Alexander and Mary Landrieu (D-LA) have each offered amendments that would expand state control over offshore energy production including oil and gas, wind, solar, and wave energy. (5/20/05)

On April 21, the U.S. House of Representatives passed national, comprehensive energy legislation by a vote of 249-183. The Energy Policy Act of 2005, or H.R. 6, strays little from the conference report passed by the House in the last congress, including several controversial provisions that contributed to the bill's defeat in the Senate last year. An attempt to strike liability protections for producers of the fuel oxygenate methyl tertiary butyl ether (MTBE) failed on a close vote of 213 to 219. Rep. Lois Capps (D-CA), who offered the amendment unexpectedly, challenged the provision on new grounds, arguing that the provision represents an unfunded mandate that imposes MTBE clean-up costs on states and localities. Majority votes also defeated an amendment to strike a heavily debated provision giving the Federal Energy Regulatory Commission (FERC) primary regulatory authority over new liquefied natural gas (LNG) facilities, and an amendment by Rep. Luis Grijalva (D-AZ) challenging royalty relief for oil and gas producers in the Outer Continental Shelf region of the Gulf of Mexico.

These and other provisions in the House energy bill, including a $8 billion tax package and permission to open the Arctic National Wildlife Refuge to oil and gas production (read below), promise to cause problems in conference with the Senate's version of the energy bill. The Senate is expected to draft and mark-up its version of the energy bill within the next few months. (4/22/05)

In marathon mark-up sessions on April 12 and 13, 2005, the House Energy and Commerce Committee by a vote of 39 to 16 approved the Energy Policy Act of 2005, again named H.R. 6. On April 13th, the House Resources and Ways and Means Committees also approved the "Domestic Energy Security Act of 2005" and an $8 billion tax package, which will be incorporated into H.R. 6, along with a research and development section previously passed by the Science Committee. The final bill heads to the House floor for a vote on April 20 and 21, 2005.

In the Energy and Commerce mark-up, Committee Chairman Joe Barton (R-TX) facilitated what was primarily a partisan debate on 82 amendments to the energy bill. Democrats failed to pass amendments on key sticking points such as raising corporate average fuel economy (CAFE) standards for automobiles and eliminating liability protections for producers of the fuel additive methyl tertiary butyl ether (MTBE). The majority also voted against adding a "sense of Congress" resolution regarding Climate Change, and raising the national renewable portfolio standard (RPS). Several amendments intended to regulate hydraulic fracturing were also defeated, including one that would have prohibited the use of diesel in fracturing, and another that would have allowed the Environmental Protection Agency (EPA) to regulate the practice based on additional National Academy of Sciences studies.

The most controversial amendment to be approved by the committee was to strike a provision that would have forced those who request upgrades to the electricity grid to pay for them, a provision supported by southern utilities who said upgrade requests came from power suppliers who sell their power outside the region. The committee also approved amendments to authorize $1.3 billion for a nuclear hydrogen plant, and $4.05 billion through 2010 to develop hydrogen fuel cells. Section 2011, to archive, catalog and manage Geological and Geophysical Data, has remained in the bill, unchanged since last year's H.R. 6. For details on all of the amendments offered and their approval status, visit the Energy and Commerce Committee webpage.

At the House Resources Committee's mark-up of their portion of the bill, known as the Domestic Energy Security Act of 2005, members debated over several major provisions affecting the development of domestic oil and gas reserves, including the Arctic National Wildlife Reserve (ANWR), and the development of alternative energy supplies. Representative Ed Markey (D-MA) offered an amendment to prevent drilling in ANWR, which was defeated 30 to 13.

The bill includes several incentives for oil and gas companies to explore shallow and deep-water outer-continental shelf resources in the Gulf of Mexico, onshore natural gas reserves, marginal wells and gas hydrate production. The bill establishes a permanent Royalty-in-Kind program at the Department of the Interior, and reimburses companies for compliance with National Environmental Policy Act (NEPA) reviews. Another amendment offered by Rep. Chris Cannon (R-Utah) and approved by the committee, would allow federal officials to repurchase oil, gas, coal and other leases where development of the lease is not allowed, compensating companies for the lease and drilling costs. The Committee's Ranking Member Nick Rahall (D-WV) unsuccessfully challenged these royalty and tax breaks, calling the energy bill in a press release "a game of crudeopoly" that shifts the financial burden to consumers and taxpayers while boosting industry's profits.

Democrats failed to strip controversial language in Section 102 (Now Section 1702 of the H.R. 6) that would reduce the ability of federal agencies, under the National Environmental Policy Act (NEPA), to consider project alternatives and public comments during the NEPA review process for renewable energy projects. Democrats said the provision would shut the public out of major decisions and cause innovative projects to be abandoned rather than expedited. Other amendments are listed on the House Resources Committee webpage.

Meanwhile, the Ways and Means Committee approved an $8 billion tax package, including provisions to improve electricity, nuclear, and oil and gas infrastructure. Other miscellaneous incentives (costing $1.85 billion ) include a 15% tax credits for residential solar hot water and photovoltaics, a 15% credit for business and individual investments in fuel cells, a 20% credit for residential efficiency improvements, and credits for lean-burn motor vehicle technology. The bill would also write off, over two years, any geological and geophysical expenditures related to oil and gas exploration and development. (4/19/05)

The House Science Committee approved the research and development section of the energy bill on February 10, 2005. In doing so, they became the first panel to advance their portion of the energy bill through the legislative process. The Energy Research, Development, Demonstration, and Commercial Application Act of 2005, H.R. 610, is based on the conference report for H.R. 6 (last year's energy bill). At the beginning of the markup, Chairman Boehlert (R-NY) explained that the bill is "improved" since the H.R. 6 version because the language is better and the authors added "some innovative new programs, particularly programs to demonstrate energy efficiency and renewable energy technologies."

According to E&E Daily, the bill authorizes $44 billion for research into renewable energy, energy efficiency and nuclear power, among others. That breaks down to $4 billion for energy efficiency accounts between fiscal year 2006 and FY '10. On renewables, the bill would authorize $3.91 billion in research spending between FY '06 and FY '10, with $990 million for solar energy, $1.5 billion for bioenergy, $310 million for wind, $150 million for geothermal and $800 million for a photovoltaic demonstration effort. Nuclear energy programs get a sizeable research commitment in H.R. 610, with a total of $2.25 billion in authorizations. A total of $1.25 billion of that sum would go towards building a next-generation nuclear power plant.

E&E Daily reported that for fossil energy research, the bill would authorize $3.1 billion for research accounts, including efforts on coal, natural gas and fuel cells. The measure would create the "Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Fund," paid for by $750 million in federal oil and gas royalties, with a total authorization of $250 million. Language on hydrogen and fuel cell research is the same as was contained in H.R. 6 last year, with $2.15 billion tabbed for research over five years with the aim of commercializing hydrogen cars by 2015. The bill also requires an external group like the National Academy of Sciences to review the program's progress every two years.

For clean coal, the measure authorizes $1.4 billion for research at DOE through 2012, and would require the Energy secretary to submit a 10-year research plan to Congress. For demonstration projects, the federal funding share would be limited to 50 percent of costs. The measure also would allow Congress to spend as much as $150 million over five years to retrofit existing coal-fired power plants with carbon capture technology.

In his opening remarks Chairman Boehlert called H.R. 610 "bipartisan and balanced." His colleagues agreed. After approving a manager's amendment offered by Rep. Biggert (R-IL), the bill was approved by voice vote. (2/11/05)


Three years after the White House released the president's National Energy Policy (NEP), crafted by a task force comprised of representatives from the energy industry, several members of the president's Cabinet, and headed by Vice President Dick Cheney; the Congress has yet to pass comprehensive energy legislation.

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. On April 30th 2003, Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM) finally achieved committee 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 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 House-Senate conference committee completed work on a 1,200-page compromise on November 17, 2003. Democrats were excluded from the committee from the outset. The final bill quickly passed the House the following day. However, on 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 required to obtain cloture and thus end the filibuster.

Although Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.) worked furiously to get the votes needed to pass the energy bill, he 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 2004. The bill once again languished in the Senate in fierce partisan gridlock.

In June 2004, Energy and Commerce Committee Chairman Joe Barton (R-TX) once again 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.

The energy bill continued to flounder in the lead up to the 2004 elections with each side unable to compromise on key issues such as ANWR drilling, greenhouse gas mitigation, and MTBE litigation limits. However, with Republican gains in the election and the defeat of Senate Minority Leader Tom Daschle (D-SD) many Republicans in the White House and Congress are encouraged that they may be able to finally pass the energy bill in the 109th Congress.

Despite the gridlock on the maligned Energy Bill, Congress did manage to pass significant energy legislation in the 108th congress. 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." While tax credits would also be in store for biodiesel technologies, energy efficiency credits were omitted in the final bill. 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 which passed just before 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 effectively provides all the necessary prerequisites for the $20 billion project to get underway.

Addition information on energy legislation in the 108th Congress is available at

Sources: Environment and Energy Daily, Greenwire, House of Representatives, Library of Congress, Senate, Washington Post, Independent Petroleum Association of America webapge, and hearing testimony.

Contributed by Katie Ackerly, AGI Government Affairs Program, Amanda Schneck, AGI/AIPG 2005 Summer Intern, Anne Smart, AGI/AIPG 2005 Summer Intern, Peter Douglas, AGI/AAPG 2005 Fall Intern, Tim Donahue, AGI/AIPG 2006 Summer Intern and Rachel Bleshman, AGI/AAPG 2006 Fall Intern.

Background section includes material from AGI's Energy Policy Overview for 108th Congress.

Please send any comments or requests for information to AGI Government Affairs Program.

Last updated on October 10, 2006.

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