Energy Policy (10-10-06)
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.
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
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
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
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.
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)
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,
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.
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
[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
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]
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
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
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
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
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
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
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
- $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
- Exemption of hydraulic fracturing from Safe Drinking Water Act
- 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
- 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
- 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
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 Floridas 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
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"
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
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
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.
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
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
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 http://www.agiweb.org/gap/legis108/energy.html.
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.