House and Senate Set to Reconcile

1112 I Street #350

Sacramento, CA 95814

(916) 447-1177

Sept. 2003

House and Senate Set to Reconcile

Competing Versions of Energy Bill

(Source: Congressional Research Service, Joint Committee on Taxation)

The House and Senate will organize a conference committee this month to reconcile two omnibus energy bills brimming with controversial issues, with the goal of sending legislation to President Bush before Congress adjourns for the year.
The House on April 11 passed, by a vote of 247-175, the 778-page Energy Policy Act (HR 6).
Action on energy legislation in the Senate (S 14) stalled in July, endangering plans by Senate GOP leaders to complete work on the bill before the August recess. Senators reached a novel compromise just two days before the break, in which they adopted the text of energy legislation from the 107th Congress (S 517) that had passed the Senate in April 2002, when Democrats were in the majority.
The action means the final bill, including the all-important tax package, will be written largely in conference.
Lawmakers have struggled for the past three years to pass comprehensive energy legislation. Energy legislation died last year in conference during the final days of the 107th Congress (HR 4).
Republicans, controlling the House and Senate, will manage the conference. They plan to write the final bill along the lines of the Bush administration's 2001 national energy plan, which promotes increased domestic energy production.
Following are comparisons on key issues going into conference:
AUTHORIZATIONS
Senate: The bill authorizes a total of $54.5 billion for new and expanded energy programs through fiscal 2011.
House: The bill authorizes $48.7 billion through fiscal 2013.
ARCTIC REFUGE LEASING
Senate: No provision. Efforts to open the 1.5-million-acre coastal plain of the Arctic National Wildlife Refuge in northeastern Alaska to oil and gas drilling have been defeated repeatedly in the Senate. Democrats threaten to filibuster the final bill if the conference report includes ANWR drilling.
House: Opens the ANWR coastal plain to oil and gas leasing, which the Bush administration cites as a major goal in its 2001 national energy strategy. Leasing would be limited to 2,000 surface acres, which would not have to be contiguous, and would include production and support facilities, airstrips, and gravel berms and piers supporting pipelines. A 1987 environmental impact statement would be deemed to satisfy the environmental review requirement for the leasing program.
Royalties would be split 50-50 between the state of Alaska and the federal government. Federal royalties would be used to create a "coastal plain local government impact aid assistance fund" to help North Slope communities deal with the impact of oil development. Bonus payments for leases would go to the Low-Income Home Energy Assistance Program. Exports of oil from ANWR leases would be prohibited.
CLIMATE CHANGE
Senate: Establishes a White House office of climate change and a DOE office of climate change technology to develop a greenhouse gas reduction strategy. Creates an interagency task force, headed by the White House office, to submit to Congress a greenhouse gas reduction strategy within one year. Authorizes DOE to spend $4.8 billion on climate change technology through fiscal 2011.
Continues voluntary reporting of greenhouse gas emissions, but includes a trigger for mandatory reporting if the database falls below 60 percent of total emissions after five years. Requires the Energy, Agriculture and Commerce departments and the Environmental Protection Agency to design a greenhouse gas emissions database, including an inventory of emissions from significant sources and a registry of voluntary reductions within two years. Requires annual reports on greenhouse gas emissions produced by federal activities. Directs DOE's office of science and technology policy to focus on global climate change and establishes an associate director.
Establishes 30 new programs and mandates new consortia, working groups and committees. Directs Commerce to submit a plan for a national climate service within one year to include: a national center for operational climate monitoring and prediction, a national climate observing system, a nationally coordinated modeling strategy, modeling and assessment capabilities to predict regional and local climate changes and impacts, coordination with the private sector, long-term development and maintenance of climate products and access to relevant climate data, and mechanisms to coordinate with federal agencies, state and local entities and academics.
House: No provision. The House bill from the 107th Congress (HR 4) called for consultations on a national climate change strategy by the administration, Congress and federal agencies that would have included cost-benefit analysis, research and development, and market-based policies.
CONSERVATION
Energy efficiency
Senate: Sets energy efficiency goals to reduce energy demand for federal buildings and fleet vehicles; requires federal purchase of electricity from renewable energy sources; creates federal energy bank for loans to federal agencies; authorizes rebate program to states to promote sales of energy-efficient appliances through Energy Star program; gives statutory authority to Energy Star program; extends authorization and increases funding for state energy conservation programs. Authorizes approximately $1 billion over the next decade.
House: Similar provisions, with a $1.6 billion authorization over the next decade.
Low-income assistance
Senate: Authorizes a 50 percent increase, to $3.4 billion per year, for the Low Income Home Energy Assistance Program. Doubles emergency funding to $1 billion. Increases weatherization assistance to $325 million for fiscal 2003, $400 million in fiscal 2004, and $500 million for fiscal 2005.
House: Authorizes $3.4 billion per year for LIHEAP in fiscal 2004, 2005 and 2006. Increases weatherization to $325 million in fiscal 2004, $400 million in 2005 and $500 million in 2006. Directs the Health and Human Services Department to report on more effective use of LIHEAP program.
ELECTRICITY
General provisions
Senate: Directs the Federal Energy Regulatory Commission to create an electric reliability organization, managed by the utility industry and subject to commission approval, to issue mandatory reliability standards to ensure the reliable operation of the interstate transmission system. The industry currently relies on voluntary compliance with reliability standards set by a self-regulating industry organization, the North American Electric Reliability Council.
Directs DOE to provide federal support to states to improve regional coordination for planning and siting new energy infrastructure, including interstate transmission. Provides new, but limited, FERC authority over interstate transmission operations of federal power marketing agencies, state entities, municipalities and rural cooperatives to ensure comparable rates.
Does not include a ban on FERC's "standard market design" draft rule to create a national electricity grid. (Southern and Western senators are seeking to have FERC's controversial proposal remanded or banned.)
House: Unlike last year's bill (HR 4), the House included an electricity title in HR 6. Creates an electric reliability organization to enforce mandatory reliability standards on the transmission grid. Participation in regional transmission organizations remains voluntary. Utilities that do not belong to a regional transmission organization can give preferential service to native load customers, regardless of any new FERC rule -- a provision crucial to Southern and Western lawmakers.
Provides new FERC authority over interstate transmission rates to include public power, rural co-ops and federal systems. Directs FERC to adopt a rule creating incentive-based transmission rates, through higher returns on equity, to promote capital investment in new transmission facilities. Provides for "participant funding" of new transmission facilities so native load customers won't bear the brunt of construction costs.
Gives transmission owners the right of eminent domain in federal court to site new transmission lines. Appoints DOE as lead agency for coordinating environmental reviews and permitting requirements on federal lands; sets one-year deadline for reviews. Requires interagency study on "federal corridors" used for transmission on federal lands within 90 days.
Market transparency rules
Senate: Requires more disclosure of trading in the wholesale energy market by directing FERC to establish an electronic system to post prices for generation and transmission service and available transmission capacity that can be seen "on a timely basis" by buyers and sellers and federal and state regulators. Does not address numerous trading schemes revealed last year that were used by trading companies such as Enron Corp. to manipulate prices in the West Coast electricity crisis of 2000-2001. Increases civil penalties for violations of the Federal Power Act and repeals the criminal penalty section.
House: Also directs FERC to establish an electronic information system to improve market transparency. Specifically prohibits "round-trip trading," a simultaneous buy and sell with another party for the same amount of power so that there is no financial gain or loss, for the purpose of manipulating prices. Increases criminal penalties under the Federal Power Act.
Public Utility Holding Company Act
Senate: Repeals the Public Utility Holding Company Act of 1935, which restricts utility mergers and ownership, within 18 months. Provides federal and state access to holding company records. Establishes an interagency task force to report on consumer protection and competition within electric markets. Requires a General Accounting Office study on competition.
House: Repeals PUHCA and gives FERC and state regulators access to books and records.
Public Utility Regulatory Policies Act
Senate: Repeals mandatory purchase requirements on electric utilities under the Public Utility Regulatory Policies Act of 1978 for power produced by cogeneration and small power producers. Requires states to set standards providing competitive access to the distribution grid, competitive pricing of service, and simplified standard contracts for interconnection for distributed energy facilities, and combined heat and power facilities.
House: Repeals the mandatory purchase requirement under PURPA for electric utilities, if the cogeneration facility has access to a competitive, wholesale market in which to sell surplus power.
Renewable portfolio standard
Senate: Establishes a national standard requiring electric utilities to increase the use of renewable energy for electric generation from 1 percent in fiscal 2005 to 10 percent in fiscal 2020. States can increase that requirement above 10 percent by 2030. Establishes trading credit program and requires retail suppliers to use renewable energy technologies.
House: No provision.
Renewable energy on federal lands
Senate: Extends the renewable energy production incentive to 2013. Calls for an interagency cost-share demonstration program to promote wind and solar energy facilities on federal lands, and a National Academy of Sciences study on wind and solar energy potential. Directs the Interior Department to make periodic assessments of renewable energy potential on public lands and to begin a pilot program for development. Requires 3 percent of total electricity purchased by the federal government in fiscal 2002 to be generated by renewable energy sources, increasing to 7.5 percent in fiscal 2010.
House: Extends the renewable energy production incentive to 2013. Directs Interior and Agriculture to complete a study within two years on ways to develop renewable energy resources on federal lands. Calls for an NAS study on renewable energy potential on the Outer Continental Shelf, and an annual inventory of renewable energy potential on federal lands. Provides grants to improve commercial production of forest biomass for electric generation. Promotes development of geothermal production on federal lands. Calls for study on increasing hydropower production.
The bill would jumpstart a biomass industry with financial incentives to use waste wood from national forests, promote hydropower generation at federal dams, provide financial incentives for the geothermal industry, amend coal leasing laws to encourage more coal development on federal land, and expedite rights of way on federal lands.
ENERGY RESEARCH
Goals
Senate: Establishes first-ever goals for DOE research and development programs to reduce U.S. energy intensity, total energy use and carbon dioxide emissions by specific percentages. Authorizes $28 billion over the next decade for total energy R and D programs, including energy efficiency, distributed generation, renewables, nuclear, fossil and basic science programs.
House: Also sets specific goals for research and development programs. Authorizes approximately $23 billion through fiscal 2013.
Renewable energy
Senate: Authorizes $2.9 billion through fiscal 2007 to develop wind energy, hotovoltaics, solar thermal, biomass and biofuel, geothermal, hydrogen, hydropower, electric energy systems and storage. Establishes eight new organizational entities and mandates more than 40 new research and development programs.
Extends the renewable energy production incentive for power produced from wind and biomass and expands it to include landfill gas, incremental hydro and ocean energy.
Directs Interior to create pilot program to develop wind and solar energy on federal lands, and DOE to report annually on renewable energy resource potential.
House: Authorizes $1.8 billion for renewable energy R and D programs through fiscal 2008.
Extends the renewable energy production incentive to 2023 for power produced from wind and biomass and expands it to include landfill gas.
Calls for an interagency study on the potential for renewable energy development on federal lands and an NAS study on potential for renewables on the outer continental shelf.
Hydrogen
Senate: Authorizes $290 million through fiscal 2006 for ongoing hydrogen research and $130 million for fuel cells under the Hydrogen Future Act.
House: Reauthorizes hydrogen research programs at $1.8 billion through fiscal 2008 and fully funds President Bush's initiative to develop hydrogen fuel cells and emissions-free hydrogen-fueled vehicles.
FUELS AND VEHICLES
Corporate Average Fuel Economy
Senate: Requires the National Highway Traffic Safety Administration to issue a new rule increasing corporate average fuel economy (CAFE) standard, but leaves the amount up to the agency. Rules for non-passenger vehicles would be issued within 15 months. Proposed rules for passenger vehicles would be issued within 180 days and final rules within two years. Requires Congress to act on a bill increasing CAFE standards if DOT fails to act within the time limits. DOT's new standard would be phased in over no more than 15 years. DOT would have to take into account 13 specific criteria, including the impact on jobs and an environmental assessment. The bill "freezes" the current light pickup truck standard at 20.7 miles per gallon.
House: Requires no increase, but directs NHTSA to conduct a study within one year on the feasibility of reducing fuel consumption by model year 2012 "by a significant percentage." Last year's House bill (HR 4) required NHTSA to set CAFE standards for non-passenger vehicles (light trucks, SUVs and minivans) in model years 2004 through 2010 that would ensure a reduction in fuel consumption of at least 5 billion gallons of gasoline, and required an NAS study to be completed in one year on making further reductions after 2010.
Alternative fuels
Senate: Requires federal fleets with alternative fuel capability to use alternative fuels 100 percent of the time by Jan. 1, 2009. Waivers may be granted until 2012.
Authorizes $225 million to expand advanced technologies such as fuel cells, hydrogen storage, engine and emissions control systems.
House: Authorizes $200 million in grants for the Clean Cities Program to promote the purchase of alternative fuel and advanced vehicles. Establishes $50 million demonstration project for hydrogen-fueled fuel cell buses. Requires DOE report on effectiveness of alternative fuel programs.
Ethanol mandate
Senate: Directs EPA to issue a rule requiring refiners to increase the volume of renewable fuel (ethanol and biodiesel) that is blended into gasoline from 2.3 billion gallons per year in 2004 to 5 billion gallons per year in 2012 -- more than double current ethanol production. Tradable credits could be earned and sold. Seasonal variations in renewable fuel use would be studied and rules issued if excessive variations occurred. State waivers could be requested. Small refiners would be exempted until Jan. 1, 2008. Raises limits on conventional gasoline's Reid vapor pressure, a measure of volatility, when blended with ethanol.
House: Establishes a renewable fuels standard starting at 2.7 billion gallons in 2005 and rising to 5 billion gallons by 2015. Establishes a credit trading program and permits seasonal variations. Delays compliance for small refiners and provides waivers for hardships. Provides "safe harbor" from product liability lawsuits for producers of ethanol and methyl tertiary butyl ether (MTBE), the predominant fuel additive that is being phased out.
MTBE ban
Senate: Amends the Clean Air Act to ban use of MTBE as fuel oxygenate in four years, but permits states to use it if desired. Allows governors to waive the 2 percent oxygen content requirement for reformulated gasoline in their states.
Authorizes $200 million for remediation of groundwater contamination from MTBE, and $30 million yearly through 2008. Requires regional toxic standards for reformulated gasoline. Authorizes $250 million in grants to merchant producers of MTBE to convert production facilities to other fuel additives.
House: Does not ban MTBE. Eliminates Clean Air Act requirement that reformulated gasoline must contain 2 percent oxygen by weight, as requested by several states. Authorizes $750 million in grants to merchant producers of MTBE to assist in plant conversions to other products. Authorizes EPA to apply $850 million from the Leaking Underground Storage Tank Trust Fund toward cleanup of drinking water resulting from MTBE contamination.
HYDROELECTRIC RELICENSING
Senate: The Senate bill would require federal agencies to adopt alternative mandatory conditions proposed by an applicant for a hydroelectric relicensing project or fishway if the agency head determined that the proposed alternative condition would provide no less protection to the environment than the agency-proposed condition, and would either cost less or result in improved operations. The Senate bill would direct federal agencies to establish expedited hydroelectric relicensing procedures and deadlines, to conduct a study to identify problems in the relicensing process, and to collect data on the time and cost of relicensing to applicants.