Senate adjourns without passing energy bill

The Senate has adjourned for the year without passing the 1,000-page-plus Energy Policy Act of 2003. This article provides the latest available update plus links to the current drafts of the legislation.

By Sylvie Dale, Online Editor

Nov. 25, 2003 -- With only hours to go before the U.S. Senate will adjourn for the year, Senate Republicans backing a massive energy bill gave up on trying to end the filibuster and proceed to the vote.

Senate Majority Leader Bill Frist has said that the Senate did not have enough votes to end the filibuster and the bill would have to be delayed until early 2004.

The primary point of contention was the provision for producers of the gasoline additive MTBE and corn-based ethanol to receive some legal immunity from product-defect liability suits. Opponents of the MTBE provision have said that this leaves a legal loophole that may force drinking water utility customers to pay for cleaning polluted groundwater. The American Water Works Association, which represents U.S. drinking water utilities, praised the filibuster effort.

The White House tried to salvage the bill by encouraging the House to drop the liability limitations for producers of MTBE and ethanol, according to ABCNews.com.

But House leaders reportedly would not budge in their stance on that provision, effectively killing any chance at compromise, Dow Jones reported.

The Senate has been debating the 1,000-page-plus Energy Policy Act since Nov. 18, when the House passed its version by a wide margin.

The latest version of the energy conference report, with draft language of the bill, is available in PDF format at the link below:

http://energy.senate.gov/legislation/energybill2003/energybill2003.cfm

Among the provisions the Democrats failed to get added at the last minute were a measure to require large electric utilities to use or buy a steadily increasing amount of renewable power, and an amendment to restore some provisions of the Public Utility Holding Company Act (PUHCA), which would have been repealed by the current energy legislation.

Republicans were also able to stop Democrats' efforts to add protections for rural electric cooperatives and to prevent manipulation of wholesale power markets.

In all, the legislation would have provided $23 billion in tax breaks, with two-thirds for the coal, oil and natural gas industries. The bill's authors say it would also have created new investment in the electric grid and provide loan guarantees for a pipeline which would transport natural gas from Alaska to Chicago.

Not present in the compromise version was the Bush Administration's plan to encourage oil drilling in an Alaskan wildlife refuge.

Senate Energy & Natural Resources Chairman Pete V. Domenici called the Energy Policy Act of 2003 a "jobs bill" that will create nearly 1 million new jobs, further stimulating a booming economy.

Senator Jeff Bingaman, ranking Democrat member of the Senate Energy & Natural Resources Committee, called the compromise legislation a 'parade of horribles', saying that it would favor energy companies over consumers, weaken air pollution laws and do little to ease the country's dependence on oil imports.

"... after 71 days of closed-door negotiations, Republicans have produced an energy conference report replete with serious deficiencies and larded with billions of dollars in special-interest giveaways," Bingaman wrote in his update.

Perhaps the most divisive issue in the bill is the portion which exempts producers of the gasoline additive methyl tertiary butyl ether, or MTBE, from some liability if a leak or spill contaminates the area water supply. The conference report stated that no renewable fuel intended for use in an automobile can be targeted by a defective product liability suit if it doesn't violate any Environmental Protection Agency (EPA) rules.

This part of the bill would also have authorized $380 million per year, through fiscal year 2008, for general administration, operator training and enforcement activities, cleanups of gasoline or chemical contaminated sites, cleanups of ether fuel additives in gasoline, like MTBE, inspection programs and requirements, and for release prevention, compliance, and enforcement activities. It also prohibits the use of MTBE in gasoline formulations in states where the governor has not approved its use.

Water utilities and cities nationwide have expressed great concern that they won't have legal recourse against MTBE polluters and that drinking water customers could end up footing the bill for cleanup costs.

MTBE is a suspected carcinogen and a persistent pollutant in groundwater supplies. More than 1,500 communities reportedly have experienced some MTBE contamination in their water supplies.

The liability limitations would be effective retroactively to Sept. 5, 2003, which, thereby negating dozens of defective product lawsuits filed since then on behalf of roughly 100 water utilities as well as a suit brought by New Hampshire to recover statewide MTBE cleanup costs.

AWWA Executive Director Jack Hoffbuhr blasted the safe harbor provision as a "brazen political giveaway [that is] beyond the limits of reasonable compromise."

Another major issue has been the provision on ethanol. The renewable fuels requirement would add five billion gallons per year of ethanol and other renewable-based fuel to the nation's gasoline by 2012, effectively doubling the current level.

HIGHLIGHTS OF ENERGY POLICY ACT OF 2003

The bill's authors describe it as a comprehensive national energy policy to promote conservation, reduce our growing dependence on unstable Middle Eastern oil, improve our economy and create new jobs.

Following are the highlights of the Energy Policy Act of 2003:

Energy Efficiency

• Would require a 20 percent reduction in federal building energy use by 2013, provides funding for energy efficiency programs for public buildings, including schools and hospitals, and increases fuel efficiency requirements for federal vehicles.

• Would authorize $3.4 billion for each fiscal year 2004 through 2006 for the Low Income Housing Assistance Program (LIHEAP). Increases funding for low-income weatherization programs, and state energy programs to improve energy efficiency.

• Would expand the Energy Star program, a government industry partnership for promoting energy efficient products.

• Would establish new energy efficiency standards for many new commercial and consumer products that use large amounts of energy - providing significant savings on monthly energy costs.

• According to the American Council for an Energy Efficient Economy, the energy efficiency and conservation provisions would "eliminate the need for at least 130 new power plants (300 MW each) by 2020."

Renewable Energy

• Would reauthorize the Renewable Energy Production Incentive program to provide renewable energy production incentives for solar, wind, geothermal, biomass and other renewables.

• Would authorize $300 million for solar programs, starting with a goal of installing 20,000 solar roof-top systems in federal buildings by 2010, as well as a separate $210 million program for concentrating solar power for hydrogen production.

• Would authorize $550 million in grants for biomass programs.

• Would authorize $100 million for increased hydropower production through increased efficiency at existing dams and modernizes the nation's hydropower laws to allow increased production, without compromising existing environmental protections.

Hydroelectric power is our nation's single largest renewable energy source and accounts for roughly 10 percent of our electricity supply. According to the Energy Information Administration (EIA), of the approximately 75,000 dams in the United States, only about 2,400 or 3 percent are used to produce electricity.

• Would direct the federal government to use more renewable energy, with a goal of using 7.5 percent or more by 2011.

• Would provide for royalty relief for geothermal uses, including on-site electricity generation.

• Would provide substantial tax credits for a variety of renewables.

• Would reauthorize the Renewable Energy Production Incentive program, and expands it to include landfill gas. It would also provide for comprehensive assessment of renewable energy resources.

• Contains a renewable fuels requirement to add five billion gallons per year of ethanol and other renewable-based fuel to the nation's gasoline.

Clean Coal Technologies

• Would provide authorizations for an average of about $600 million per year for the Department of Energy's fossil program for existing and new coal-based research and development. It requires the establishment of a national center or consortium for clean power and energy research as well as coal mining research efforts to minimize contaminants in mined coal.

Research is focused on innovations at existing plants, new advanced gasification and combined cycle plants, advanced combustion systems and turbines as well as fuel-related research.

• Would provide a $1.8 billion authorization for the Secretary of Energy to carry out the Clean Coal Power Initiative, which will provide funding to those projects that can demonstrate advanced coal-based power generating technologies that achieve significant reductions in emissions.

• Would mandate that at least 60 percent of the $1.8 billion will be used for projects on coal-based gasification technology and that these projects meet stringent environmental performance standards and vastly increased efficiency standards.

Hydrogen

• Would launch a state-of-the-art program to get hydrogen-powered automobiles on the road by 2020 along with the necessary infrastructure to provide for the safe delivery of hydrogen fuels. Would establish an interagency task force on hydrogen as well as an outside advisory committee. Authorized at $2.15 billion over five fiscal years.

• Would require the Department of Energy to develop a plan outlining technical milestones as well as technical and non-technical hurdles to hydrogen vehicles and their associated infrastructure. The hydrogen program, to be conducted as a public/private partnership, is to address the production of hydrogen from diverse sources, including fossil fuels, hydrogen carrier fuels and renewable energy resources including biomass and nuclear energy. The program also addresses pipeline hydrogen transmission, convenient refueling, advanced vehicle technologies, hydrogen storage and the development of necessary codes and standards.

Oil and Gas

• Would allow for more oil and natural gas exploration and development by providing royalty relief for deep and ultra-deep gas wells in the shallow waters of the Gulf of Mexico. Improves access to North America's abundant natural gas resources.

• Would allow for the construction of a natural gas pipeline from the Alaskan North Slope to the lower 48 states. Natural gas is responsible for 20 percent of our nation's energy production and is expected to play an increasingly important role in addressing our nation's future energy needs. The Alaska natural gas pipeline will promote competition in the exploration, development and production of natural gas.

• Would authorize the expansion of the Strategic Petroleum Reserve's (SPR) capacity from 700 million to one billion barrels and filling the SPR to that capacity during periods of stability.

Nuclear

• Would renew Price-Anderson nuclear liability protections for 20 years, including provisions to encourage the development of advanced modular reactors. Strengthens security of nuclear facilities, including imp roved federal oversight of plant security and the expansion of federal statutes for sabotage of nuclear facilities.

• Would strengthen operations of the Nuclear Regulatory Commission. Protects decommissioning funds from misuse, improves the ability to attract and retain trained personnel and clarifies license periods for new plants.

Electricity

• Would promote investment in critical electric transmission capacity and efficiency measures by directing the Federal Energy Regulatory Commission (FERC) to do an incentive rate rulemaking and provide for participant funding; provides for expedited siting processes on both federal and private lands; and provides for the use of advanced transmission technologies.

• Would improve the operation and reliability of electric transmission networks by providing for open access to transmission lines not previously subject to the same open access requirements; authorizing federal utilities to participate in Regional Transmission
Organizations (RTOs), provides for continued reservation of transmission capacity needed to serve "native load" customers; and establishes an electric reliability organization to develop and enforce reliability standards for the bulk transmission system.

• Would promote investment in the electric sector by repealing existing Public Utility Holding Company Act (PUHCA) requirements and replacing it with authority for federal and state regulators to examine relevant books and records. Provides for state consideration of model standards for real-time pricing, time-of-use metering, and smart metering. Provides for State consideration of model standards for net metering.

• Would provide for an electronic system to improve transparency of electricity markets. Would prohibit filings of false information and round trip or "wash" trading and dramatically increase criminal and civil penalties limits and expands penalty provisions to cover all violations of the Federal Power Act.

• Would move the refund effective date up to the date of complaint to ensure refunds of unjust and unreasonable amounts. Would extend FERC refund authority to cover sales by otherwise nonjurisdictional utilities in certain markets. Would promote market stability by requiring FERC to meet a public interest standard before abrogating contracts, and would authorize the Federal Trade Commission (FTC) to establish rules to protect consumer privacy and prohibit "slamming" and "cramming."

• Would expand FERC's merger authority and requires review of elimination of duplication and onerous conditions imposed under FERC's merger review authority.

Research and Development

• Would provide extensive authorization for the Department of Energy to increase the efficiency of all energy intensive sectors, promotes diversity in energy supply, improves energy security and decreases the environmental impact of energy-related activities.

• Specific authorizations are provided for energy efficiency efforts, a next generation lighting initiative, national building performance initiative, advanced energy technology transfer centers, research and development efforts regarding distributed energy systems and electric energy technologies, renewable energy efforts, bioenergy programs, solar power research and nuclear energy.

• Would authorize oil and gas research programs including ultra-deepwater and unconventional natural gas research and development. Would also authorize new scientific endeavors in such areas as catalysis research, nanotechnology and fusion energy.

• Would authorize over $2.9 billion in funding over the next five years for renewable energy research and development, including $800 million to develop biopower energy systems, biofuels and bio-based products.

• Would establish a program to develop hydrogen energy from many sources, including renewable energy resources like solar energy.

Leaking Underground Storage Tanks

• Would require at least 80 percent of all dollars appropriated from the Leaking Underground Storage Tank (LUST) Trust Fund to be sent to the States for operating leaking underground tank programs.

• Would provide increases in State funding from the LUST Trust Fund for States containing a larger number of tanks or whose leaking tanks present a greater threat to groundwater.

• Would require onsite inspections of underground storage tanks every three (3) years after a brief period for the state to update its backlog.

• Would establish operator-training programs, where they do not already exist. Many releases from underground storage tanks are caused by improper operation of those tanks.

• Would institute a specific new funding category to cleanup tank-related releases of oxygenated fuel additives in gasoline, like MTBE.

• Would prohibit federal facilities from exempting themselves from complying with all federal, state, and local underground tank laws.

• Would have asked States to submit an annual inventory to the U.S. EPA detailing the number of regulated tanks in its state and which of those tanks are leaking.

• Would provide States the authority to prohibit deliveries of fuel to non-compliant regulated tanks in order to achieve legal enforcement.

• Would authorize $380 million per year, through fiscal year 2008, for general administration, operator training and enforcement activities, cleanups of gasoline or chemical contaminated sites, cleanups of ether fuel additives in gasoline, like MTBE, inspection programs and requirements, and for release prevention, compliance, and enforcement activities. The LUST trust fund currently contains a $2 billion balance.

Personnel and Training

• Would establish a National Power Plant Operations Technology Education Center.

• Would improve access to energy scientific and technical careers, especially for minorities.

• Would instruct the Secretaries of Labor and Energy to develop training guidelines for electric energy industry personnel to support electric system reliability and safety.

The latest version of the energy conference report, with draft language of the bill, is available in PDF format at the link below:

http://energy.senate.gov/legislation/energybill2003/energybill2003.cfm

More information is available at

http://energy.senate.gov/legislation/energybill2003/energybill2003.cfm

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