Lawmakers hail 'most comprehensive energy bill'

Mary O'Driscoll, Greenwire senior reporter
Tuesday, July 26, 2005

Working through the night and into the early morning, House and Senate negotiators completed the energy bill today, paving the way for possible final House passage tomorrow and Senate approval Friday.

The conference leaders -- House Energy and Commerce Committee Chairman Joe Barton (R-Texas) and Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.) -- called the legislation "the most comprehensive energy bill in the last 30 to 40 years."

The two lawmakers touted the bill, saying it touches nearly every aspect of energy production, consumption and savings. The measure would expand oil and gas production, initiate the first inventory of offshore oil and gas resources, provide incentives and tax breaks for advanced nuclear power and coal production, extend tax incentives for renewable energy, require utilities to follow nationwide electric reliability rules, and offer incentives for energy efficiency and conservation measures.

But environmentalists decried the bill's emphasis on fossil fuels and the incentives and benefits it provides oil producers.

"It's the Tour de Big Oil," said Anna Aurilio of U.S. PIRG. "Exxon is wearing the yellow jersey."

Clearing the oil and gas, ethanol and nuclear power issues during the marathon session, the conferees defeated Barton's bid to allow metropolitan areas that are out of attainment with the U.S. EPA's ozone standards to time extensions for compliance with the Clean Air Act rules.

Lawmakers will be asked to sign the conference report today, along with approving an expected $11 billion tax incentives package for oil and gas, renewable energy, energy efficiency, coal and nuclear power programs.

The tax package, which House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said last night was "95 percent complete," was to be finalized this morning. Thomas, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Finance Committee ranking member Max Baucus (D-Mont.) negotiated the tax provisions of the bill.

Leaders say effort was bipartisan

Barton and Domenici attributed their success in wrapping up the bill to the bipartisan nature of their approach to the legislation. "Everyone agreed to try to find a way to make the bill possible in a very short amount of time," Barton said.

Domenici said he did not expect significant Senate opposition to the conference report, which means this marks the best chance in four years for Congress to complete the energy bill. Problems in conference, and a Senate filibuster in 2003, kept Congress from taking any action on the energy bill.

Domenici said the primary opposition to the energy bill is likely to come from Florida's senators, Democrat Bill Nelson and Republican Mel Martinez, who are opposed to the bill's offshore oil and gas inventory language. But Domenici does not think they are likely to find enough opposition among other senators to prevent final passage.

The issue that kept the energy bill from Senate passage two years ago, liability protection for producers of the controversial fuel oxygenate MTBE, is not in the bill this year. A proposal to tie liability protection to an $11 billion public-private cleanup trust fund fell apart over the weekend.

Indeed, fears earlier in the day that the energy bill would contain language requiring all MTBE lawsuits to be moved to federal courts were misplaced, as the bill only allows defendants, the MTBE companies, to request the federal court venues for their cases. The distinction appears arcane, but it is important to communities and water utilities that are suing the MTBE companies for spills that have polluted groundwater supplies around the country.

Barton's bid to amend Clean Air Act

The two House Clean Air Act provisions -- Barton's ozone nonattainment amendment and a proposal to expedite the review and approval process for mothballed petroleum refineries -- did not make it into the bill. The ozone proposal, approved by House conferees, was rejected by the Senate, while the refinery language was never offered as an amendment.

Barton has been working for years to try to allow areas that do not meet EPA's current eight-hour ozone standard, as well as its old one-hour requirement, to receive an extension of their compliance deadlines if they can show their primary emissions problems come from upwind industrial sources. Nonattainment areas would receive an extended, flexible timeframe to comply with the EPA standards without facing a slate of existing, more costly requirements on their local industries.

The Senate voted against the plan because, as it deals with the Clean Air Act, it would require approval by the Environment and Public Works Committee, and Domenici stated repeatedly that jurisdiction over all environmental issues must go before that panel.

The vote stunned environmentalists in the audience. "This is a good outcome," PIRG's Aurilio said. "We didn't expect it."

Domenici suggested approval of the amendment could jeopardize the Senate's chances of approving the entire energy bill.

"You ought to recognize this is a big, big problem" for the Senate, Domenici said. "I don't think we can do it, and I regret to say that."

The refinery provision would have smoothed the way for the start-up of idled petroleum refineries by expediting the review and approval process for mothballed facilities. It also would have sped up the permitting process for a new plant provided a site was in an area that had an idled refinery or experienced "mass layoffs at manufacturing facilities" as defined by the Labor Department and had an unemployment rate exceeding the national average by at least 10 percent.

The expectation was that Barton either would have offered the amendment during last night's session, or that it would be attached to the bill in the manager's amendment package approved at the very end of the markup. Neither happened.

Other major amendments

Elsewhere, lawmakers approved an amendment providing $2 billion in risk insurance for the nuclear power industry to guard against regulatory and other problems they may encounter in trying to build new-generation reactors.

The proposal, first outlined by President Bush this past spring, provides full coverage for delays for the first two reactors that receive combined licenses and on which construction has begun, capped at $500 million per contract. For the next four reactors, payments would be 50 percent of covered costs capped at $250 million per contract.

House Democrats panned the proposal. "What has happened to the Republicans' faith in the free market?" asked Rep. Ed Markey (D-Mass.), who charged that the nuclear power industry "is pretending to be in its infancy even 50 years after we began the process of making it the single most subsidized industry in America."

Domenici defended the amendment, noting it was "one of the few things" the White House directly asked to be included in the energy bill. It is necessary, he added, because "we haven't built any new reactors in almost four decades."

Markey and environmentalists also protested an amendment by Rep. Ralph Hall (R-Texas) that effectively takes all state Clean Air Act lawsuits for everything from pipeline projects to import terminals for liquefied natural gas (LNG) out of state courts and into federal courts.

Renewable portfolio standards

The conference rejected Sen. Jeff Bingaman's (D-N.M.) proposal to implement a 10 percent renewable portfolio standard by 2030, even after he added provisions allowing utilities to get credit for demand-side management programs.

Barton's proposal to turn the standard into a "clean energy" standard that would include clean coal, advanced nuclear and existing and new hydropower projects also was turned down, with Markey charging it "makes a mockery" of the Bingaman proposal. Bingaman's plan had been part of the Senate bill but was removed during initial conference talks.

"It guts the renewable portfolio standard and what the Senate has been trying to achieve," Markey said. "We're better off doing nothing."

But Barton would not be dissuaded. "The issue is not going away," he said, promising there would be hearings on the matter and another bill. "The House is going to do it in a comprehensive way, not just the politically correct way."

Tax package

The roughly $11 billion, 10-year tax package has not yet been finalized or made fully public, but lobbyists said last night they expected offsets to total about $3 billion.

Ways and Means Committee Chairman Thomas outlined some broad points for energy conferees in a pre-conference meeting yesterday afternoon. According to one source who was in on the briefing, initial tax incentives totaled $11.68 billion and were distributed as follows:

  • Oil and gas production, $1.561 billion.
  • Gas distribution, $1.072 billion.
  • Electricity reliability, $3.139 billion.
  • Electricity/renewable energy, $3.158 billion.
  • Coal, $2.982 billion.
  • Alternative vehicles and fuels, $1.259 billion.
  • Efficiency and conservation, $1.369 billion.

Thomas told the conferees, and later repeated to reporters, that he wanted to keep the bill at $11 billion and go no higher. According to the source who attended the conference briefing, Thomas suggested it could be done through cuts such as the advanced nuclear power tax credit, which would garner $276 million, and pre-funding for Coal Act liability at $80 million.

Other amendments

Among other amendments added to the final version of the energy bill:

  • An amendment by Rep. Chip Pickering (R-Miss.) to amend the $1.8 billion Clean Coal Power Program to allow advanced combustion technologies to get part of the 70 percent funding that goes to advanced gasification programs. These advanced combustion technologies have the same air and water quality standards as the advanced gasification technologies.
  • Another Pickering amendment that allows all producers of motor vehicles with plants based in the United States to be eligible for federal grants for production of hybrid vehicles.
  • A Dorgan amendment that eliminates from the bill a study on rural electric cooperatives' reliability and consumer protection measures.
  • An amendment by Sen. Larry Craig (R-Idaho) that allows the Nuclear Regulatory Commission to mediate conflicts of interest or disputes at the national laboratories.
  • An amendment by Rep. Ralph Hall (R-Texas) directing DOE to study the application of radiation to petroleum at standard temperature and pressure to refine petroleum products as a way to increase oil production.

Last modified: 26 July 2005

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