Senate Energy Bill Update #8 (Floor Update)

May 16, 2003
12:00 AM
Thanks, everyone, for your patience and good humor so far re: the Senate GOP energy bill (S. 14). Floor action on this legislation is likely get more challenging as we mush ahead. The Senate is not expected to resume consideration of the energy bill until after Memorial Day recess. The Majority Leader has announced a schedule for next week, and on deck are the Defense authorization bill and legislation to raise the debt limit. Our assumption, then, is that we will not be doing energy next week. To review: the Senate has debated the energy bill for four days … two amendments have been offered … there have been no votes. By the time we return to S. 14, expect Senate Democrats to propound a number of substantive and interesting amendments. Chairman Domenici has cited seven areas where floor amendments are expected -- ethanol, renewable portfolio standard, CAFE, Indian Energy, merger review language, electricity and climate change. We agree with that. To this list we would add two more issues of major concern: the unprecedented government subsidies to industry included in the nuclear title, and the one-sided provision concerning hydroelectric relicensing. For those of you who have to report on energy legislation over the next two weeks, we offer these Minority Views, from the committee report on The Energy Policy Act of 2003. If there is anything else we can do to help in your coverage during this quiet time, please call or e-mail. MINORITY VIEWS OF SENATOR BINGAMAN Our nation has been blessed with an abundance of natural resources. This fact has long shaped our national energy policy, and our energy policy has shaped both our economy and our society. Cheap, abundant energy has made us the world’s dominant economic power and it has enabled us to attain a standard of living that is the envy of the world. Our demand for energy has long since outpaced our own resources. We consume far more than we can produce at home. We are increasingly dependent on low-cost oil from abroad. And the environmental consequences of our dependence on fossil fuels are growing increasingly apparent and alarming. Plainly, then, a new energy policy– an energy policy for the 21st century– is needed. Such a policy must, as the President has said, “help the private sector ... promote dependable, affordable, and environmentally sound production and distribution of energy for the future.” But it must do more than promote production. It must promote conservation and efficiency, technological innovation, and the formation of new, competitive energy markets. At the same time, it must protect consumers from exploitation and the environment from degradation. The bill ordered reported by the Committee on Energy and Natural Resources, largely along party lines, fails the test. While it contains a host of good provisions, overall, it lacks the balance needed to provide an effective energy policy for the 21st century. Automobile fuel efficiency The bill does nothing to address our growing demand for imported oil to fuel our cars and trucks. To the contrary, the bill’s fuel “economy” provisions, which extend provisions of existing law that give extra fuel economy credits to so-called “dual-fuel alternative fuel vehicles,” will actually increase gasoline consumption by an estimated 11.5 billion barrels. During the Committee’s consideration of the bill, Senator Feinstein offered an amendment that would have required sport utility vehicles (SUVs) and light-duty trucks to meet, by 2011, the same fuel economy standards that passenger vehicles have met since 1985. Closing this “SUV loophole” would save one million barrels of oil per day. It would reduce oil imports by ten percent. And it would prevent about 240 million tons of carbon dioxide– the top greenhouse gas and biggest single cause of global warming– from entering the atmosphere. Regrettably, the Committee rejected Senator Feinstein’s amendment on a largely party-line vote. Renewable energy The bill does not do enough to increase the use of renewable energy. Last year, the Senate approved an energy bill containing both a renewable fuel standard for transportation fuels and a renewable portfolio standard for electricity. The renewable fuel standard would have added 5 billion gallons of homegrown ethanol to the nation’s gasoline supply by 2012. The renewable portfolio standard would have ensured that 10 percent of the nation’s electricity would be generated from renewable energy sources by 2019. The Committee abandoned both initiatives. During the Committee’s consideration of the bill, I offered an amendment to add a renewable portfolio standard, similar to the one approved by the Senate last year. The Committee rejected it on a straight party-line vote. Nuclear subsidies The bill contains huge subsidies for the nuclear power industry. It authorizes the Secretary of Energy to guarantee up to half the cost of building as many as six new nuclear power plants. It places no ceiling on these loan guarantees, which would make the federal taxpayers potentially liable for billions of dollars in construction and delay costs. During the Committee’s consideration of the bill, I offered an amendment to strike these subsidies. The Committee rejected it largely on a party-line vote. In addition, the bill authorizes the Secretary of Energy to build and operate a new advanced nuclear reactor to generate both hydrogen and electricity. It authorizes $1.135 billion for this project through fiscal year 2008, and such sums as may be needed beyond 2008. It exempts the project from the management controls the Department of Energy normally applies to its projects, and does not require the reactor to be licensed by the Nuclear Regulatory Commission. Repeal of the Public Utility Holding Company Act The bill repeals the Public Utility Holding Company Act without providing any offsetting protection for electricity consumers. The Holding Company Act is a Depression-era law designed to protect investors and consumers from abuses they suffered at the hands of public utility holding companies. While the Act may be outdated and more restrictive than it needs to be, it should not be repealed without putting in place the new regulatory authorities needed to prevent future abuses. Proponents of the Act’s repeal say that federal antitrust law and state utility regulation will be sufficient to prevent abuses. But both federal antitrust regulators and state utility regulators say they lack the tools to do the job. The energy bill approved by the Senate last year repealed the Holding Company Act, but gave the Federal Energy Regulatory Commission new authority to review electric utility mergers. Under last year’s bill, mergers and acquisitions that the Holding Company Act now bans would have been permitted, if the Federal Energy Regulatory Commission found they did not harm electric consumers or the public interest. The Committee abandoned this sensible check on the increasing concentration in the electric utility industry. Manipulation of electricity markets The bill does little to protect electricity consumers from market manipulation. The Federal Energy Regulatory Commission’s recent investigation of price manipulation in the western electricity markets disclosed a host of practices used by energy traders to manipulate prices. The Committee prohibits only one of these practices– round-trip trading– and leaves all the others unregulated. During the Committee’s consideration of the bill, I offered an amendment that contained a broad-based prohibition on market manipulation. My proposal was based on similar language in the Securities Exchange Act of 1934, which has served the public well for nearly 70 years. This amendment was also rejected on a straight party-line vote. Energy development on Indian land The bill contains a beneficial title that offers Indian tribes financial and technical assistance to develop energy resources on their lands. Unfortunately, the bill goes too far. Under current law, the Secretary of the Interior, as the trustee for the Indian tribes, must approve of any energy project on Indian land. The Secretary’s approval is a major federal action subject to environmental review under the National Environmental Policy Act. The bill would permit the tribes to open their lands to oil and gas drilling, coal mining, pipeline and transmission line rights-of-way, and all manner of energy projects without the Secretary’s approval of individual projects. Since the tribes are not federal agencies and the Secretary would no longer be required to approve energy projects on Indian land, they would no longer require an environmental review under the National Environmental Policy Act. In addition, the provision waives federal liability for any harm to a tribe resulting from a project approved under this authority. Thus, in a stroke, the provision eliminates comprehensive environmental reviews, meaningful public participation, and the Secretary’s trust responsibility with respect to energy projects on Indian land. I offered an amendment to strike this provision during the Committee’s consideration of the bill. This amendment was also rejected by a straight party-line vote. Hydroelectric licensing More than 80 years ago, the Federal Water Power Act struck a balance between the power industry and the champions of government control over water power development. The power industry won the right to appropriate water resources from the public domain for periods of up to 50 years. The champions of government control won the right to license hydroelectric projects and to hold them to a public interest test. The Federal Energy Regulatory Commission cannot consider the hydroelectric benefits of a proposed project alone, but must give equal consideration to the project’s effect on fish and wildlife, recreation, and other environmental concerns. In addition, where the project is to be built on an Indian reservation, a national forest, or other federal reservation, the Commission is required to include in the license whatever conditions the Secretary responsible for the reservation deems necessary for the adequate protection and use of the reservation. The bill reported by the Committee would tip this long-standing balance in the power industry’s favor by giving the license applicant the power to propose “alternative” conditions that the Secretary must accept if they provide “adequate” protection to the reservation, even though “adequate” protection may mean less protection than the Secretary’s conditions. There are similar provisions for fishway prescriptions. In addition, the bill gives the license applicant special procedural rights on alternative conditions and the right to trial-type hearings on the Secretary’s conditions that will not be available to other people whose interests may be affected. These trial-type hearings are likely to delay the issuance of both new licenses and renewals by three years or more. During the last Congress, both the House and the Senate passed provisions giving license applicants the ability to propose alternative conditions. The House required them to be at least as protective of the reservation as the Secretary’s, while the Senate did not. Neither the House nor the Senate gave license applicants special procedural rights. During the Committee’s consideration of the bill, I offered an amendment to replace these provisions with the ones approved by the House last year. Adoption of my amendment would have eliminated the special procedural rights to trial-type hearings, placed all parties on an equal procedural footing, and required alternative conditions and fishway prescriptions to be at least as protective as the Secretary’s. The Committee rejected the amendment on a largely party-line vote. Climate change The bill does little or nothing to address the serious problem of global climate change. The energy bill passed by the Senate last year, by contrast, contained several useful, if modest, climate change initiatives. They would not have solved the serious health, environmental, and economic problems posed by climate change, but they at least acknowledged the existence of the problems and would have put us on a track to begin solving those problems by creating new offices, providing for data collection, and authorizing research and development programs. The bill reported by the Committee should do no less, but it does. I was prepared to offer a climate change amendment based on the provisions approved by the Senate last year. Regrettably, the Committee elected to defer any consideration of this central issue, despite the fact that many aspects of the matter are within the jurisdiction of the Committee. The Committee’s unwillingness to address climate change in its energy bill stands in sharp and unfavorable contrast with the United Kingdom’s energy policy adopted earlier this year. Britain sees climate change as the primary challenge to be addressed by its energy policy and has committed itself to reducing its carbon dioxide emissions by 60 percent of current levels by 2050. The bill on balance The bill is not without its good points. It contains many useful provisions on oil and gas development, construction of the Alaska Natural Gas Pipeline, clean coal development, Indian energy, renewal of the Price-Anderson Act, renewable energy, energy efficiency, hydrogen, energy research and development, workforce training, and electricity. But a vote to report the bill is a vote on the overall balance and scope of the bill. As it now stands, the bill does not do enough, or goes in the wrong direction, on too many key issues for me to vote for it. # # #