Federal Energy Bill [RE-wrenches]

Allan Sindelar allan at positiveenergysolar.com
Mon Nov 17 20:58:07 PST 2003


Below is a summary of the Energy Bill's major provisions prepared by
the Majority (R) staff of the Energy Committee. Below that is a critique of
the bill done by the Minority (D) staff.

Here are a few things the bill does not contain:
1) ANWR drilling authorization;
2) A mandatory increase in CAFÉ standards;
3) Abandoned Mine Land Program reauthorization;
4) Authorization for an inventory of offshore oil and gas reserves;
5) Language delaying the issuance of the Mercury MACT rule;
6) Natural gas price floor guarantees for the AK pipeline; and
7) A renewable portfolio standard for electricity generation.

Highlights of Energy Policy Act of 2003
Nearly three years and hundreds of hours of hard work and debate have
produced a bipartisan, comprehensive national energy policy that will
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
· Requires 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.
· Authorizes $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.
· Expands the Energy Star program, a government industry partnership for
promoting energy efficient products.
· 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 will "eliminate the need for
at least 130 new power plants (300 MW each) by 2020."
Renewable Energy
· Reauthorizes the Renewable Energy Production Incentive program to provide
renewable energy production incentives for solar, wind, geothermal, biomass
and other renewables.
· Authorizes $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.
· Authorizes $550 million in grants for biomass programs.
· Authorizes $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.
· Directs the federal government to use more renewable energy, with a goal
of using 7.5 percent or more by 2011.
· Provides for royalty relief for geothermal uses, including on-site
electricity generation.
· Provides substantial tax credits for a variety of renewables.
· Reauthorizes the Renewable Energy Production Incentive program, and
expands it to include landfill gas. Provides 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
· Provides 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.
· Provides 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.
· Mandates 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.
Vehicles and Fuels
· Requires "dual-fueled" vehicles acquired under the EPAct programs to be
operated on alternative fuels and provides credits for medium and heavy duty
vehicles, hybrid vehicles and investment in alternative fuel infrastructure.

· Authorizes $200 million for an advanced vehicle program. This program,
operating under the current Department of Energy "Clean Cities" program,
would provide grants to state and local governments to acquire alternative
fueled and fuel cell vehicles, hybrids and other vehicles, including ultra
low-sulfur diesel vehicles.
· Authorizes two new "Clean School Bus" programs. The first program would
provide $100 million to retrofit existing diesel buses with new pollution
control technology. The second program authorizes $200 million in grants for
replacement of older school buses with clean alternative fueled and
ultra-low sulfur fueled buses.
· Launches programs for hydrogen fuel-cell transit buses and for hydrogen
fuel-cell school buses to demonstrate the use of this technology. Also
includes funding for a railroad efficiency center, a provision to review
mobile emission reduction trading, a study of aviation fuel conservation,
diesel fuel emission technologies, a "conserve by bicycling" program and a
program for advanced idle reduction systems.
Automobile Efficiency/CAFE
· Increases funding to $6 million over four years (2004-2008) for the
Department of Transportation to continue its work on improving Corporate
Average Fuel Economy (CAFE) standards.
· When setting CAFE standards, requires the National Highway Traffic Safety
Administration (NHTSA) to consider the impact on vehicle safety and
automobile industry jobs.
· Includes a study, to be done by NHTSA, to look into alternatives to the
CAFE program and examine the amount of fuel consumed by automobiles.
Hydrogen
· Launches 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. Establishes an interagency task force on
hydrogen as well as an outside advisory committee. Authorized at $2.15
billion over five fiscal years.
· Requires 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
· Allows 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.
· Allows 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.
· Authorizes 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
· Renews Price-Anderson nuclear liability protections for 20 years,
including provisions to encourage the development of advanced modular
reactors. Strengthens security of nuclear facilities, including improved
federal oversight of plant security and the expansion of federal statutes
for sabotage of nuclear facilities.
· Strengthens 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
· Promotes 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.
· Improves 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.
· Promotes 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.
· Provides for an electronic system to improve transparency of electricity
markets. Prohibits filings of false information and round trip or "wash"
trading. Dramatically increases criminal and civil penalties limits and
expands penalty provisions to cover all violations of the Federal Power Act.
· Moves the refund effective date up to the date of complaint to ensure
refunds of unjust and unreasonable amounts. Extends FERC refund authority to
cover sales by otherwise nonjurisdictional utilities in certain markets.
Promotes market stability by requiring FERC to meet a public interest
standard before abrogating contracts. Authorizes the Federal Trade
Commission (FTC) to establish rules to protect consumer privacy and prohibit
"slamming" and "cramming."
· Expands FERC's merger authority and requires review of elimination of
duplication and onerous conditions imposed under FERC's merger review
authority.
Research and Development
· Provides 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. · Authorizes oil and gas research
programs including ultra-deepwater and unconventional natural gas research
and development. Authorizes new scientific endeavors in such areas as
catalysis research, nanotechnology and fusion energy. · Authorizes 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.
· Establishes a program to develop hydrogen energy from many sources,
including renewable energy resources like solar energy.
Leaking Underground Storage Tanks · Requires 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.
· Provides 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.
· Requires onsite inspections of underground storage tanks every three (3)
years after a brief period for the state to update its backlog.
· Establishes operator-training programs, where they do not already exist.
Many releases from underground storage tanks are caused by improper
operation of those tanks.
· Institutes a specific new funding category to cleanup tank-related
releases of oxygenated fuel additives in gasoline, like MTBE.
· Prohibits federal facilities from exempting themselves from complying with
all federal, state, and local underground tank laws.
· Asks 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.

· Provides States the authority to prohibit deliveries of fuel to
non-compliant regulated tanks in order to achieve legal enforcement.
· Authorizes $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
· Establishes a National Power Plant Operations Technology Education Center.
· Improves access to energy scientific and technical careers, especially for
minorities.
· Instructs the Secretaries of Labor and Energy to develop training
guidelines for electric energy industry personnel to support electric system
reliability and safety.


TOP PROBLEMS IN THE REPUBLICAN ENERGY CONFERENCE REPORT
1. Damaging Future Electric Grid Reliability and Discouraging New Electric
Transmission through "Participant Funding," a Cost-Shifting Gimmick - The
basic lessons of the August 2003 blackout are that strong Regional
Transmission Organizations are needed to ensure that any reliability rules
are carried out, and that additional transmission upgrades are needed to
maintain reliability. The "participant funding" provision shifts the costs
of building new electric transmission such that transmission construction
will be discouraged and utilities will be encouraged not to participate in
Regional Transmission Organizations. This provision, which mostly benefits
big utilities in the Southeast, thus works against the two needs highlighted
by the blackout, and makes future blackouts more likely. In one of many
special-interest fixes in the bill, it overturns a FERC decision in a
dispute involving Louisiana-based Entergy Corporation that had gone against
Entergy.
2. Ushering in an Era of Merger Mania for Electric Utilities - Repeals the
public-interest restrictions on mergers now in law, with little protection
for ratepayers when electric utilities acquire generating assets, or gas
companies, even if it gives them the ability to dominate markets and gouge
ratepayers. Mergers can be approved even if they result in corporate
structures that prevent oversight by State regulatory commissions to protect
their consumers. If merger proposals aren't acted upon by the Federal Energy
Regulatory Commission within 180 days (with a possible extension of another
180 days), they would be automatically approved. Many electric utilities are
struggling with the financial consequences of past forays into businesses
outside their competence - this provision will ensure that many more
utilities can be acquired by companies with no track record in providing
reliable and affordable electric service to consumers.
3. No Prohibition for Most of the Price-Gouging Schemes Used by Enron -
Broad and effective prohibition against electricity market manipulation,
supported 57-40 in the Senate this month, is excluded from the bill.
4. Legal Limbo for Federal Regulators of the Electric Utility Industry -
Between now and 2007, any rule promulgated by the Federal Energy Regulatory
Commission that would generally apply to electricity markets in a region or
across the country will be subject to legal challenge under a provision that
both says that such rules are prohibited and that the authorities and
obligations of FERC haven't been modified or diminished. The result is that
all such rules will be trapped in endless litigation, and FERC will be
powerless to respond to market crises like the California electricity crisis
of 2000.
5. Dirtying the Air We Breathe - In a major rewrite of existing clean air
law, postpones ozone attainment standards across the country. This is a
matter never considered in either House or Senate bill that has been
inserted into the conference report.
6. Liability Protection for MTBE Producers. - Provides immunity to MTBE
producers (large petrochemical companies) from "defective product" liability
arising from the contamination of groundwater supplies by MTBE across the
country. In another particularly blatant special interest provision,
terminates a lawsuit filed by the State of New Hampshire against the
industry for groundwater pollution by reaching back to provide immunity as
of September 5, 2003. The MTBE industry also benefits from a $2 billion
"transition assistance" program (again made retroactive to benefit Texas
producers that have already ceased production), while a "ban" in the bill of
MTBE in 2014 can be overturned by Governors for their States and the
President for the nation.
7. Failing to Secure Domestic Natural Gas Supplies - Fails to provide the
necessary fiscal certainty to enable construction of the Alaska Natural Gas
Pipeline, to prevent the U.S. from becoming dependent on imports of natural
gas. The primary company interested in the Alaska pipeline has stated that
it will not pursue it.
8. Endangering the Highway Trust Fund through a Flawed Ethanol Provision -
Rewrites the bipartisan Senate ethanol provision in a way that provides no
certainty to farmers that its goals will be reached, while threatening deep
revenue losses to the Highway Trust Fund and the construction jobs it
supports.
9. Threatening Water Supplies by Exemptions of Water Pollution Laws -
Exempts all construction activities at oil and gas drilling sites from
coverage under the runoff requirements of the Clean Water Act. Removes
hydraulic fracturing (an underground oil and gas recovery technique) from
coverage under the Safe Drinking Water Act.
10. Gutting the National Environmental Policy Act with Respect to Energy
Production on Public Lands - Waives NEPA environmental review process for
all types of energy development projects and energy processing facilities
(e.g., refineries) on Indian lands, and NEPA compliance for drilling on
public lands is subject to unrealistic time limits.
11. Raiding the Treasury for Billions for Regional and Special Interests -
$1.1 billion in new direct spending from the U.S. Treasury to Gulf Coast
States and Alaska; $1.5 billion in spending for "ultradeepwater oil and gas
R&D" principally benefitting a consortium led by Texas A&M, the University
of Houston, and Louisiana State University; $500 million for the Denali
Commission in Alaska; tens of millions in special royalty payments to the
State of Louisiana and 3 Texas- and Louisiana-based oil companies.
12. Preventing Taxpayers from Getting Fair Return for Use of Public Lands -
Reduces royalties paid by energy developers for use of Federal lands. Limits
the ability of federal land managers to review applications for access to
Federal lands and to ensure a fair return to the taxpayers for the use of
public lands.
13. Burning Old-Growth Forest for Energy - Authorizes $50 million for
companies to remove trees, including large fire-resistant trees important
for forest health, and burn them for energy.
14. Imperiling Coastal Resources - Grants the Secretary of the Interior new
authority for oil and gas support facilities, even in areas on the Outer
Continental Shelf under leasing moratoria; undermines protection of Padre
Island National Seashore from impacts of oil and gas development.
15. Changing the Basic Relationship Between Indian Tribes and the Government
- Undermines the federal trust responsibility to Indian tribes with respect
to energy development on Indian lands.
16. Discriminating Against Tribes, States and the Public - Discriminates
against tribes, States and the public in new appeals procedures for
hydroelectric relicensing proceedings by letting only industry to initiate
appeals. New "trial-type" procedures lets industry hold proceedings hostage
for years.
17. Undermining the Senate's Commitment to Hydrogen - Abandons the
bipartisan Senate hydrogen title, reducing funding for hydrogen research,
development and demonstration by $1 billion per year and deleting
broadly-supported goals for introduction of hydrogen fuel cell vehicles.
18. Undermining Clean Coal - Reduces the percentage of authorized funds
required to be spent on the cleanest coal gasification technologies by 20
percent, in favor of more polluting coal-based technologies. Adds
pork-barrel loan guarantees for the first time in the 17-year history of
program - without environmental safeguards. Creates a new, competing program
of up to $1.8 billion Federal grants to utilities and other firms to
purchase and install conventional coal-burning technology (reducing any
future demand for cleaner coal technology).
19. Subsidies, Subsidies, Subsidies - Provides millions of dollars in direct
incentive payments to mature energy industries (e.g., hydroelectric plants,
new turbines at existing plants) to undertake equipment upgrades they would
normally do otherwise. Authorizes a $1.1 billion nuclear reactor in Idaho,
with exempt from normal Federal project management rules, to demonstrate
uneconomic hydrogen production technologies.
20. Abandoning Broadly Supported Elements of a Balanced Energy Policy in the
Senate Bill - Key issues commanding majority support in the Senate, such as
a Renewable Portfolio Standard for electricity, requirements for measures to
reduce dependence on foreign oil, and climate change policy and technology
have been dropped from the conference report.

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