Omnibus Energy Legislation, 108th Congress: Comparison of Non-Tax Provisions in the H.R. 6 Conference Report and S. 2095

Congressional research reportFeb 23, 2004

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Omnibus Energy Legislation, 108th Congress:

Comparison of Non-Tax Provisions in the

H.R. 6 Conference Report and S. 2095

Updated February 23, 2004

-name redacted- and -name redacted-, Coordinat

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Omnibus Energy Legislation, 108th Congress:

Comparison of Non-Tax Provisions in the H.R. 6

Conference Report and S. 2095

Summary

House and Senate conferees approved an omnibus energy bill (H.R. 6, H.Rept.

108-375) on November 17, 2003, and the House approved the measure the following

day (246-180). However, on November 21, 2003, a cloture motion to limit Senate

debate on the conference report failed (57-40). On February 12, 2004, Senator

Domenici introduced a revised version of the bill (S. 2095) with a lower estimated

cost and without a controversial provision on the fuel additive MTBE. Major non-tax

provisions in the conference measure and S. 2095 include:

Ethanol. An increase in ethanol production to 3.1 billion gallons annually by

2005 and 5 billion gallons by 2012 would be mandated. However, states could

petition for a waiver if the mandate would have severe economic or environmental

repercussions, other than loss of revenue to the highway trust fund.

MTBE. Methyl tertiary butyl ether (MTBE), a gasoline additive widely used to

meet Clean Air Act requirements, has caused water contamination. The conference

bill would ban the use of MTBE by 2015 with some possible exceptions, provide

funds for MTBE cleanup, and provide protection for fuel producers and blenders of

renewable fuels and MTBE from defective product lawsuits. The liability protection

was not included in S. 2095.

Electricity. In part, the electricity section would repeal the Public Utility

Holding Company Act (PUHCA) and establish mandatory standards for interstate

transmission. Standard market design (SMD) would be remanded to the Federal

Energy Regulatory Commission (FERC); no rule would be allowed before the end

of FY2006.

Alaska Gas Pipeline. The bill would provide $18 billion in loan guarantees for

construction of a natural gas pipeline from Alaska to Alberta, where it would connect

to the existing midwestern pipeline system.

Energy Efficiency Standards. New statutory efficiency standards would be

established for several consumer and commercial products and appliances. For

certain other products and appliances, DOE would be empowered to set new

standards. For motor vehicles, funding would be authorized for the National Highway

Traffic Safety Administration (NHTSA) to set Corporate Average Fuel Economy

(CAFE) levels as provided in current law.

Energy Production on Federal Lands. Royalty reductions would be provided

for marginal oil and gas wells on federal lands and the outer continental shelf.

Provisions are also included to increase access by energy projects to federal lands.

For a discussion of the tax provisions in the bills, see CRS Issue Brief IB10054,

Energy Tax Policy. This report will not be updated.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Major Non-Tax Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Electricity Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Renewable Fuel Standard and MTBE . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Motor Vehicle Fuel Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Nuclear Accident Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Renewable Energy and Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Arctic National Wildlife Refuge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Domestic Energy Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Alaska Gas Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Hydrogen Fuel Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Selected New Provisions in H.R. 6 Conference Bill . . . . . . . . . . . . . . . . . . . 6

Hydropower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Energy on Federal Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Nuclear Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Energy Efficiency and Renewables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Offshore Energy Revenue Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Tennessee Valley Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Environmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Alternative and Reformulated Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Organization of Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Title I — Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Subtitle A — Federal Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 101: Energy and Water Saving Measures in Congressional

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 102: Energy Management Requirements . . . . . . . . . . . . . . . . 10

Section 103: Energy Use Measurement and Accountability . . . . . . . . 10

Section 104: Procurement of Energy-Efficient Products . . . . . . . . . . . 10

Section 105: Energy Saving Performance Contracts . . . . . . . . . . . . . 10

Section 106: Energy Savings Performance Contracts Pilot Program for

Non-Building Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 105 (107): Voluntary Commitments to Reduce Industrial Energy

Intensity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 106 (108): Advanced Building Efficiency Testbed . . . . . . . . . 10

Section 107 (109): Federal Building Performance Standards . . . . . . . 10

Section 108 (110): Increased Use of Recovered Mineral Component in

Federally Funded Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Subtitle B — Energy Assistance and State Programs . . . . . . . . . . . . . . . . . 11

Section 121: Low Income Home Energy Assistance Program (LIHEAP)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 122: Weatherization Assistance . . . . . . . . . . . . . . . . . . . . . . . 11

Section 123: State Energy Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 124: Energy-Efficient Appliance Rebate Programs . . . . . . . . 11

Section 125: Energy-Efficient Public Buildings . . . . . . . . . . . . . . . . . 11

Section 126: Low Income Community Energy Efficiency Pilot Program

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Subtitle C — Energy-Efficient Products . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 131: Energy Star Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 132: HVAC Maintenance Consumer Education Program . . . 11

Section 133: Energy Conservation Standards for Additional Products

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 134: Energy Labeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Subtitle D — Public Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 141: Capacity Building for Energy-Efficient, Affordable Housing

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 142: Increase of CDBG Public Services Cap for Energy

Conservation and Efficiency Activities . . . . . . . . . . . . . . . . . . . . 12

Section 143: FHA Mortgage Insurance Incentives for Energy-Efficient

Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 144: Public Housing Capital Fund . . . . . . . . . . . . . . . . . . . . . 12

Section 145: Grants for Energy-Conserving Improvements for Assisted

Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 146: North American Development Bank . . . . . . . . . . . . . . . 13

Section 147: Energy-Efficient Appliances . . . . . . . . . . . . . . . . . . . . . . 13

Section 148: Energy-Efficient Standards . . . . . . . . . . . . . . . . . . . . . . . 13

Section 149: Energy Strategy for HUD . . . . . . . . . . . . . . . . . . . . . . . . 13

Title II — Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Subtitle A — General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 201: Assessment of Renewable Energy Resources . . . . . . . . . 13

Section 202: Renewable Energy Production Incentive . . . . . . . . . . . . 13

Section 203: Federal Purchase Requirement . . . . . . . . . . . . . . . . . . . . 14

Section 204: Insular Areas Energy Security . . . . . . . . . . . . . . . . . . . . . 14

Section 205: Use of Photovoltaic Energy in Public Buildings . . . . . . 14

Section 206: Grants to Improve the Commercial Value of Forest Biomass

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 207: Federal Procurement of Biobased Products . . . . . . . . . . 15

Subtitle B — Geothermal Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Sections 211-227: Geothermal Energy Leasing Amendments . . . . . . 15

Subtitle C — Hydroelectric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 231: Alternative Conditions and Fishways . . . . . . . . . . . . . . . 16

Section 241: Hydroelectric Production Incentives . . . . . . . . . . . . . . . . 17

Section 242: Hydroelectric Efficiency Improvement . . . . . . . . . . . . . . 17

Section 243: Small Hydroelectric Power Projects . . . . . . . . . . . . . . . . 17

Section 244: Increased Hydroelectric Generation at Existing Federal

Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 245: Shift of Project Loads to Off-Peak Periods . . . . . . . . . . . 17

Section 246: Corps of Engineers Hydropower Operation and Maintenance

Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Section 246 (247): Limitation on Certain Charges Assessed to the Flint

Creek Project, Montana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 247 (248): Reinstatement and Transfer of Hydroelectric License

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Title III — Oil and Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Subtitle A — Petroleum Reserve and Home Heating Oil . . . . . . . . . . . . . . 18

Section 301: Permanent Authority to Operate the Strategic Petroleum

Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Section 302: National Oilheat Research Alliance . . . . . . . . . . . . . . . . 18

Subtitle B — Production Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 311: Definition of Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 312: Program on Oil and Gas Royalties-In-Kind . . . . . . . . . . 19

Section 313: Marginal Property Production Incentives . . . . . . . . . . . . 19

Section 314: Incentives for Natural Gas Production From Deep Wells in

the Shallow Waters of the Gulf of Mexico . . . . . . . . . . . . . . . . . 19

Section 315: Royalty Reductions for Deep Water Production . . . . . . . 19

Section 316: Alaska Offshore Royalty Suspension . . . . . . . . . . . . . . . 19

Section 317: Oil and Gas Leasing in the National Petroleum Reserve in

Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Section 318: Orphaned, Abandoned, or Idled Wells on Federal Land

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 319: Combined Hydrocarbon Leasing . . . . . . . . . . . . . . . . . . 20

Section 320: Liquefied Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 321: Alternate Related Uses on the Outer Continental Shelf

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Section 322: Preservation of Geological and Geophysical Data . . . . . 20

Section 323: Oil and Gas Lease Acreage Limitations . . . . . . . . . . . . . 21

Section 324: Assessment of Dependence of State of Hawaii on Oil . . 21

Section 325: Deadline for Decision on Appeals under the Coastal Zone

Management Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Section 326: Reimbursement for Costs of NEPA Analysis,

Documentation, and Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Section 327: Hydraulic Fracturing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Section 328: Oil and Gas Exploration and Production Defined . . . . . 24

Section 329: Outer Continental Shelf Provisions . . . . . . . . . . . . . . . . 25

Section 330: Appeals Relating to Pipeline Construction or Offshore

Mineral Development Projects . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Section 331: Bilateral International Oil Supply Agreements . . . . . . . . 25

Sections 332 and 333: Natural Gas Market Reform . . . . . . . . . . . . . . 25

Subtitle C — Access to Federal Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Sections 341-348: Leasing and Permitting Processes . . . . . . . . . . . . . 26

Section 349: Fair Market Rental Value Determinations for Public Land

and Forest Service Rights-of-Way . . . . . . . . . . . . . . . . . . . . . . . . 27

Section 350: Energy Facility Rights-of-Way and Corridors on Federal

Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Section 351: Consultation Regarding Energy Rights-of-Way on Public

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Section 352: Renewable Energy on Federal Lands . . . . . . . . . . . . . . . 27

Section 353: Electricity Transmission Line Right-of-Way in Cleveland

National Forest and Adjacent Public Land . . . . . . . . . . . . . . . . . 27

Section 354: Sense of Congress Regarding Development of Minerals

Under Padre Island National Seashore . . . . . . . . . . . . . . . . . . . . . 28

Section 355: Encouraging Prohibition of Offshore Drilling in the Great

Lakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Section 356: Finger Lakes National Forest Withdrawal . . . . . . . . . . . 28

Section 357: Study on Lease Exchanges in the Rocky Mountain Front

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Section 358: Federal Coalbed Methane Regulation . . . . . . . . . . . . . . . 28

Section 359: Livingston Parish Mineral Rights Transfer . . . . . . . . . . . 28

Subtitle D — Alaska Natural Gas Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . 28

Section 371: Short Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 372: Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 373: Issuance of Certificate of Public Convenience and Necessity

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 374: Environmental Reviews . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 375: Pipeline Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 376: Federal Coordinator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Section 377: Judicial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Section 378: State Jurisdiction Over In-State Delivery of Natural Gas

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Section 379: Study of Alternative Means of Construction . . . . . . . . . 30

Section 380: Clarification of ANGTA Status and Authorities . . . . . . 30

Section 381: Sense of Congress Concerning Use of Steel Manufactured in

North America and Negotiation of a Project Labor Agreement

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Section 382: Sense of Congress and Study Concerning Participation by

Small Business Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Section 383: Alaska Pipeline Construction Training Program . . . . . . 31

Section 384: Sense of Congress Concerning Natural Gas Demand . . . 31

Section 385: Sense of Congress Concerning Alaskan Ownership . . . . 31

Section 386: Loan Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Title IV — Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Subtitle A — Clean Coal Power Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Sections 401-404: Clean Coal Power Initiative . . . . . . . . . . . . . . . . . . 32

Subtitle B — Clean Power Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Sections 411-416: Clean Power Projects . . . . . . . . . . . . . . . . . . . . . . . 33

Subtitle C — Federal Coal Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Sections 421-427: Federal Coal Leases . . . . . . . . . . . . . . . . . . . . . . . . 33

Subtitle D — Coal and Related Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Section 441: Clean Air Coal Program . . . . . . . . . . . . . . . . . . . . . . . . . 34

Title V — Indian Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Section 501: Short Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Section 502: Office of Indian Energy Policy and Programs . . . . . . . . 34

Section 503: Indian Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Section 504: Four Corners Transmission Line Project . . . . . . . . . . . . 35

Section 505: Energy Efficiency in Federally Assisted Housing . . . . . 35

Section 506: Consultation with Indian Tribes . . . . . . . . . . . . . . . . . . . 35

Title VI — Nuclear Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Subtitle A — Price-Anderson Act Amendments . . . . . . . . . . . . . . . . . . . . . 35

Sections 601-611: Price-Anderson Nuclear Liability Coverage . . . . . 35

Subtitle B — General Nuclear Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Section 621: Commercial Reactor License Period . . . . . . . . . . . . . . . 38

Section 622: NRC Training and Fellowship Program . . . . . . . . . . . . . 38

Section 623: Cost Recovery From Government Agencies . . . . . . . . . 38

Section 624: Elimination of Pension Offset for Key NRC Personnel

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Section 625: Antitrust Review Suspension . . . . . . . . . . . . . . . . . . . . . 38

Section 626: Decommissioning Fund Protection . . . . . . . . . . . . . . . . . 38

Section 627: Limitation on DOE Legal Fee Reimbursement . . . . . . . 38

Section 628: Reactor Decommissioning Pilot Program . . . . . . . . . . . . 38

Section 629: Feasibility Study for Commercial Reactors at DOE Sites

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Section 630: Government Uranium Sales . . . . . . . . . . . . . . . . . . . . . . 39

Section 631: Uranium Mining Research and Development . . . . . . . . . 39

Section 632: Whistleblower Protection . . . . . . . . . . . . . . . . . . . . . . . . 39

Section 633: Uranium Exports for Medical Isotope Production . . . . . 39

Section 634: Fernald Byproduct Material . . . . . . . . . . . . . . . . . . . . . . 39

Section 635: Safe Disposal of Greater-than-Class-C Radioactive Waste

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Section 636: Prohibition on Nuclear Exports to Terrorism Sponsors

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Section 637: Uranium Enrichment Facilities . . . . . . . . . . . . . . . . . . . . 40

Section 638: National Uranium Stockpile . . . . . . . . . . . . . . . . . . . . . . 40

Subtitle C — Advanced Reactor Hydrogen Cogeneration Project . . . . . . . 40

Sections 651-655: Idaho Hydrogen Production Reactor . . . . . . . . . . . 40

Subtitle D — Nuclear Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Section 661: Nuclear Facility Threats . . . . . . . . . . . . . . . . . . . . . . . . . 41

Section 662: Fingerprinting for Criminal Background Checks . . . . . . 41

Section 663: Use of Firearms by Nuclear Licensees . . . . . . . . . . . . . . 41

Section 664: Unauthorized Introduction of Dangerous Weapons . . . . 41

Section 665: Sabotage of Nuclear Facilities or Fuel . . . . . . . . . . . . . . 41

Section 666: Secure Transfer of Nuclear Materials . . . . . . . . . . . . . . . 41

Section 667: Department of Homeland Security Consultation . . . . . . 42

Title VII — Vehicles and Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Subtitle A — Existing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Section 701: Use of Alternative Fuels by Dual-Fueled Vehicles . . . . 42

Section 702: Neighborhood Electric Vehicles . . . . . . . . . . . . . . . . . . . 42

Section 703: Credits for Medium and Heavy-Duty Dedicated Vehicles

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Section 704: Incremental Cost Allocation . . . . . . . . . . . . . . . . . . . . . . 43

Section 705: Alternative Compliance and Flexibility . . . . . . . . . . . . . 43

Section 706: Review of Energy Policy Act of 1992 Programs . . . . . . 43

Section 707: Report Concerning Compliance with Alternative Fuel

Vehicle Purchasing Requirements . . . . . . . . . . . . . . . . . . . . . . . . 43

Subtitle B — Hybrid Vehicles, Advanced Vehicles, and Fuel Cell Buses

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Section 711: Hybrid Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Sections 721-724: Advanced Vehicles . . . . . . . . . . . . . . . . . . . . . . . . 44

Section 731: Fuel Cell Transit Bus Demonstration . . . . . . . . . . . . . . . 44

Subtitle C — Clean School Buses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Sections 741-744: Clean School Buses . . . . . . . . . . . . . . . . . . . . . . . . 44

Subtitle D — Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Section 751: Railroad Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Section 752: Mobile Emission Reductions Trading . . . . . . . . . . . . . . 45

Section 753: Aviation Fuel Conservation and Emissions . . . . . . . . . . 45

Section 754: Diesel Fueled Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Section 755: Conserve by Bicycling Program . . . . . . . . . . . . . . . . . . . 45

Section 756: Reduction of Engine Idling of Heavy-Duty Vehicles . . . 45

Section 757: Biodiesel Engine Testing Program . . . . . . . . . . . . . . . . . 46

Section 758: High Occupancy Vehicle Exception . . . . . . . . . . . . . . . . 46

Subtitle E — Automobile Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Sections 771-774: Fuel Economy Standards . . . . . . . . . . . . . . . . . . . . 46

Title VIII — Hydrogen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Sections 801-809: Hydrogen Research and Development . . . . . . . . . . 46

Title IX — Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Section 901: Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Section 902: Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Subtitle A — Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Section 904: Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Section 905: Next Generation Lighting Initiative . . . . . . . . . . . . . . . . 48

Section 906: National Building Performance Initiative . . . . . . . . . . . . 48

Section 907: Secondary Electric Vehicle Battery Use Program . . . . . 48

Section 908: Energy Efficiency Science Initiative . . . . . . . . . . . . . . . . 48

Section 909: Electric Motor Control Technology . . . . . . . . . . . . . . . . 48

Subtitle B — Distributed Energy and Electric Energy Systems . . . . . . . . . 48

Section 911: Distributed Energy and Electric Energy Systems . . . . . . 48

Section 912: Hybrid Distributed Power Systems . . . . . . . . . . . . . . . . . 48

Section 913: High Power Density Industry Program . . . . . . . . . . . . . . 48

Section 914: Micro-Cogeneration Energy Technology . . . . . . . . . . . . 49

Section 915: Distributed Energy Technology Demonstration Program

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Section 916: Reciprocating Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Subtitle C — Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Section 918: Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Section 919: Bioenergy Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Section 920: Concentrating Solar Power Research and Development

Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Section 921: Miscellaneous Projects . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Section 922: Renewable Energy in Public Buildings . . . . . . . . . . . . . 49

Section 923: Study of Marine Renewable Energy Options . . . . . . . . . 50

Subtitle D — Nuclear Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Section 924: Nuclear Energy Authorizations . . . . . . . . . . . . . . . . . . . . 50

Section 925: Nuclear Energy Research and Development Programs

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Section 926: Advanced Fuel Cycle Initiative . . . . . . . . . . . . . . . . . . . . 50

Section 927: University Nuclear Science and Engineering Support . . 50

Section 928: Security of Reactor Designs . . . . . . . . . . . . . . . . . . . . . . 50

Section 929: Alternatives to Industrial Radioactive Sources . . . . . . . . 51

Section 930: Deep Borehole Disposal of Spent Nuclear Fuel . . . . . . . 51

Subtitle E — Fossil Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Section 931: Fossil Energy Authorizations . . . . . . . . . . . . . . . . . . . . . 51

Section 932: Oil and Gas Research Programs . . . . . . . . . . . . . . . . . . 51

Section 933: Technology Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Section 934: Coal Mining Technology . . . . . . . . . . . . . . . . . . . . . . . . 51

Section 935: Coal and Related Technologies Programs . . . . . . . . . . . 51

Section 936: Complex Well Technology Facility . . . . . . . . . . . . . . . . 52

Section 937: Fischer-Tropsch Diesel Fuel Loan Guarantee Program

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Sections 941-949: Ultra-Deepwater and Unconventional Natural Gas and

Other Petroleum Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Subtitle F — Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Section 951: Science Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Section 952: United States Participation in ITER . . . . . . . . . . . . . . . . 53

Section 953: Plan for the Fusion Energy Science Program . . . . . . . . . 53

Section 954: Spallation Neutron Source . . . . . . . . . . . . . . . . . . . . . . . 53

Section 955: Support for Science and Energy Facilities and Infrastructure

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Section 956: Catalysis Research and Development Program . . . . . . . 54

Section 957: Nanoscale Science and Engineering Research, Development,

Demonstration, and Commercial Application . . . . . . . . . . . . . . . 54

Section 958: Advanced Scientific Computing for Energy Missions . . 54

Section 959: Genomes to Life Program . . . . . . . . . . . . . . . . . . . . . . . . 54

Section 960: Fission and Fusion Energy Materials Research Program

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Section 961: Energy-Water Supply Program . . . . . . . . . . . . . . . . . . . . 54

Section 962: Nitrogen Fixation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Subtitle G — Energy and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Section 964: U.S.-Mexico Energy Technology Cooperation . . . . . . . 55

Section 965: Western Hemisphere Energy Cooperation . . . . . . . . . . . 55

Section 966: Waste Reduction and Use of Alternatives . . . . . . . . . . . 55

Section 967: Report on Fuel Cell Test Center . . . . . . . . . . . . . . . . . . . 55

Section 968: Arctic Engineering Research Center . . . . . . . . . . . . . . . . 56

Section 969: Barrow Geophysical Research Facility . . . . . . . . . . . . . . 56

Section 970: Western Michigan Demonstration Project . . . . . . . . . . . 56

Subtitle H — Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Section 971: Availability of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Section 972: Cost Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Section 973: Merit Review of Proposals . . . . . . . . . . . . . . . . . . . . . . . 56

Section 974: External Technical Review of Departmental Programs

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Section 975: Improved Coordination of Technology Transfer Activities

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Section 976: Federal Laboratory Educational Partners . . . . . . . . . . . . 57

Section 977: Interagency Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 57

Section 978: Technology Infrastructure Program . . . . . . . . . . . . . . . . 57

Section 979: Reprogramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Section 980: Construction with Other Laws . . . . . . . . . . . . . . . . . . . . 57

Section 981: Report on Research and Development Evaluation

Methodologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Section 982: Department of Energy Science and Technology Scholarship

Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Section 983: Report on Equal Employment Opportunity Practices . . 58

Section 984: Small Business Advocacy and Assistance . . . . . . . . . . . 58

Section 985: Report on Mobility of Scientific and Technical Personnel

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Section 986: Report on Obstacles to Commercial Application . . . . . . 58

Section 987: Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Section 988: Competitive Award of Management Contracts . . . . . . . 58

Section 989: Educational Programs in Science and Mathematics . . . . 59

Title X — Department of Energy Management . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Section 1001: Additional Assistant Secretary Position . . . . . . . . . . . . 59

Section 1002: Other Transactions Authority . . . . . . . . . . . . . . . . . . . . 59

Title XI — Personnel and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Section 1101: Training Guidelines for Electric Energy Industry Personnel

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Section 1102: Improved Access to Energy-Related Scientific and

Technical Careers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Section 1103: National Power Plant Operations Technology and Education

Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Section 1104: International Energy Training . . . . . . . . . . . . . . . . . . . . 60

Title XII — Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Section 1201: Short Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Subtitle A — Reliability Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Section 1211: Electric Reliability Standards . . . . . . . . . . . . . . . . . . . . 61

Subtitle B — Transmission Infrastructure Modernization . . . . . . . . . . . . . . 61

Section 1221: Siting of Interstate Electric Transmission Facilities . . . 61

Section 1222: Third-Party Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Section 1223: Transmission System Monitoring . . . . . . . . . . . . . . . . . 62

Section 1224: Advanced Transmission Technologies . . . . . . . . . . . . . 62

Section 1225: Electric Transmission and Distribution Programs . . . . 62

Section 1226: Advanced Power System Technology Incentive Program

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Section 1227: Office of Electric Transmission and Distribution . . . . . 63

Subtitle C — Transmission Operation Improvements . . . . . . . . . . . . . . . . . 63

Section 1231: Open Nondiscriminatory Access . . . . . . . . . . . . . . . . . 63

Section 1232: Sense of Congress on Regional Transmission Organizations

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Section 1233: Regional Transmission Organization Applications Progress

Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Section 1234: Federal Utility Participation in Regional Transmission

Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Section 1235: Standard Market Design . . . . . . . . . . . . . . . . . . . . . . . . 64

Section 1236: Native Load Service Obligation . . . . . . . . . . . . . . . . . . 64

Section 1237: Study on the Benefits of Economic Dispatch . . . . . . . . 64

Subtitle D — Transmission Rate Reform . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Section 1241: Transmission Infrastructure Investment . . . . . . . . . . . . 64

Section 1242: Voluntary Transmission Pricing Plans . . . . . . . . . . . . . 65

Subtitle E — Amendments to PURPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Section 1251: Net Metering and Additional Standards . . . . . . . . . . . . 65

Section 1252: Smart Metering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Section 1253: Cogeneration and Small Power Production Purchase and

Sale Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Subtitle F — Repeal of PUHCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Section 1261: Short Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Section 1262: Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Section 1263: Repeal of the Public Utility Holding Company Act of 1935

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Section 1264: Federal Access to Books and Records . . . . . . . . . . . . . 66

Section 1265: State Access to Books and Records . . . . . . . . . . . . . . . 66

Section 1266: Exemption Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1267: Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1268: Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1269: Effect on Other Regulations . . . . . . . . . . . . . . . . . . . . . 67

Section 1270: Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1271: Savings Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1272: Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1273: Transfer Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1274: Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1275: Service Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Section 1276: Authorization of Appropriations . . . . . . . . . . . . . . . . . . 68

Section 1277: Conforming Amendments to the Federal Power Act . . 68

Subtitle G — Market Transparency, Enforcement, and Consumer Protection

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Section 1281: Market Transparency Rules . . . . . . . . . . . . . . . . . . . . . 68

Section 1282: Market Manipulation . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Section 1283: Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Section 1284: Refund Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 69

Section 1285: Refund Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Section 1286: Sanctity of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Section 1287: Consumer Privacy and Unfair Trade Practices . . . . . . . 69

Subtitle H — Merger Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Section 1291: Merger Review Reform and Accountability . . . . . . . . . 69

Section 1292: Electric Utility Mergers . . . . . . . . . . . . . . . . . . . . . . . . 70

Subtitles I and J — Definitions and Conforming Amendments . . . . . . . . . 70

Section 1295: Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Section 1297: Conforming Amendments . . . . . . . . . . . . . . . . . . . . . . . 70

Title XIII — Energy Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Sections 1300-1366 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Title XIV — Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Subtitle A — Rural and Remote Electricity Construction . . . . . . . . . . . . . . 70

Section 1401: Denali Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Section 1402: Rural and Remote Community Assistance . . . . . . . . . . 71

Subtitle B — Coastal Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Section 1411: Royalty Payments Under Certain Leases . . . . . . . . . . . 71

Section 1412: Domestic Offshore Energy Reinvestment . . . . . . . . . . . 71

Subtitle C — Reforms to the Board of Directors of TVA . . . . . . . . . . . . . . 73

Sections 1431-1434: Changes to Board of Directors and Staff

Appointments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Subtitle D — Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Section 1441: Continuation of Transmission Security Order . . . . . . . 73

Section 1442: Review of Agency Determinations on Gas Projects . . . 73

Section 1443: Attainment Dates for Downwind Ozone Nonattainment

Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Section 1444: Energy Production Incentives . . . . . . . . . . . . . . . . . . . . 74

Section 1445: Use of Granular Mine Tailings . . . . . . . . . . . . . . . . . . . 74

Title XV — Ethanol and Motor Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Subtitle A — General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Section 1501: Renewable Content of Motor Vehicle Fuel . . . . . . . . . 75

Section 1502: Fuels Safe Harbor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Section 1502 (1503): MTBE Transition Assistance . . . . . . . . . . . . . . 76

Sections 1503-1504 (1504-1505): Ban on the Use of MTBE . . . . . . . 76

Section 1505 (1506): Elimination of Oxygen Requirement and

Maintenance of Toxic Emission Reductions . . . . . . . . . . . . . . . . 76

Sections 1506-1507 (1507-1508): Analyses and Data Collection . . . . 77

Section 1508 (1509): Reducing the Proliferation of State Fuel Controls

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Section 1509 (1510): Fuel System Requirements Harmonization Study

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Section 1510 (1511): Commercial Byproducts from Municipal Solid

Waste and Cellulosic Biomass Loan Guarantee Program . . . . . . 77

Section 1511 (1512): Bioconversion Resource Center . . . . . . . . . . . . 78

Section 1512 (1513): Cellulosic Biomass and Waste-Derived Ethanol

Conversion Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Section 1513 (1514): Blending of Compliant Reformulated Gasolines

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Subtitle B — Underground Storage Tank Compliance . . . . . . . . . . . . . . . . 78

Sections 1521-1533: Underground Storage Tank Provisions . . . . . . . 78

Title XVI — Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Section 1601: Study on Inventory of Petroleum and Natural Gas Storage

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Section 1602: Natural Gas Supply Shortage Report . . . . . . . . . . . . . . 79

Section 1603: Split-Estate Federal Oil and Gas Leasing and Development

Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Section 1604: Resolution of Federal Resource Development Conflicts in

the Powder River Basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Section 1605: Study of Energy Efficiency Standards . . . . . . . . . . . . . 80

Section 1606: Telecommuting Study . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Section 1607: LIHEAP Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Section 1608: Oil Bypass Filtration Technology . . . . . . . . . . . . . . . . . 80

Section 1609: Total Integrated Thermal Systems . . . . . . . . . . . . . . . . 80

Section 1610: University Collaboration . . . . . . . . . . . . . . . . . . . . . . . . 80

Section 1611: Reliability and Consumer Protection Assessment . . . . 80

List of Tables

Table 1. Authorizations in H.R. 6 Conference Report and S. 2095 . . . . . . . . . . . 82

Omnibus Energy Legislation,

108th Congress: Comparison of Non-Tax

Provisions in the H.R. 6 Conference Report

and S. 2095

Introduction

Continuing a legislative effort that began in the 107th Congress, House and

Senate conferees on November 17, 2003, reached agreement on an omnibus energy

bill (H.R. 6, H.Rept. 108-375), which would be the first comprehensive energy

legislation in more than 10 years. On November 18, the House approved the

conference report by a vote of 246-180, but on November 21, a cloture motion to

limit debate in the Senate failed, 57-40. On February 12, 2004, Senator Domenici

introduced a revised version of the bill (S. 2095) with a lower estimated cost and

without a controversial provision on the fuel additive MTBE. Including tax

provisions, S. 2095 is estimated by its supporters to cost less than $14 billion, in

contrast to the $31 billion estimated for the H.R. 6 conference report.

The two bills contain identical provisions to change the regulatory requirements

for the wholesale electric market, including repeal of the Public Utility Holding

Company Act (PUHCA). They would also mandate increasing levels of ethanol

production through 2012 but allow regions to opt out under certain conditions. Use

of methyl tertiary butyl ether (MTBE) as a domestic gasoline additive would be

banned by the end of 2014, but the President could void the ban and a state could

authorize continued use. Under the H.R. 6 conference report, producers of MTBE

and renewable fuels would be granted protection (a “safe harbor”) from product

liability lawsuits, but that provision was dropped in S. 2095.

Both bills would provide $18 billion in loan guarantees for construction of a

natural gas pipeline from Alaska to Alberta, where it would connect to the existing

Midwestern pipeline system. Royalty reductions would be provided for marginal oil

and gas wells on federal lands and the outer continental shelf. Provisions are also

included to increase access by energy projects to federal lands.

Several new statutory efficiency standards would be established for consumer

and commercial products and appliances, and other standards could be set by the

Department of Energy (DOE). For motor vehicles, funding would be authorized for

the National Highway Traffic Safety Administration (NHTSA) to set Corporate

Average Fuel Economy (CAFE) levels as provided in current law.

The House version of H.R. 6, which passed April 11, 2003, included a key

component of the Bush Administration’s energy strategy: opening the Arctic National

Wildlife Refuge (ANWR) to oil and gas exploration and development. But the

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Senate version, passed July 31, 2003, did not include the ANWR language, and the

conference report and S. 2095 would leave ANWR off-limits to drilling.

This report summarizes the major non-tax provisions of the H.R. 6 conference

agreement and notes the changes included in S. 2095. Table 1 lists annual funding

authorizations in the bills, which total about $71 billion over 10 years. (The likely

cost of the funding authorizations has not yet been estimated by the Congressional

Budget Office.) For a discussion of the tax provisions in the bills, see CRS Issue

Brief IB10054, Energy Tax Policy.

For a comparison of the House and Senate versions of H.R. 6, see CRS Report

RL32033, Omnibus Energy Legislation (H.R. 6): Side-by-side Comparison of

Non-tax Provisions. Many provisions in the H.R. 6 conference report are similar to

those of an omnibus energy bill that the Senate debated but did not pass, S. 14. For

a comparison of major provisions of S. 14 and the House and Senate versions of H.R.

6, see CRS Report RL32078, Omnibus Energy Legislation: Comparison of Major

Provisions in House- and Senate-Passed Versions of H.R. 6, Plus S. 14.

Major Non-Tax Provisions

Electricity Regulation. Historically, electric utilities have been regarded as

natural monopolies requiring regulation at the state and federal levels. The Energy

Policy Act of 1992 (EPACT, P.L. 102-486) removed a number of regulatory barriers

to electricity generation in an effort to increase supply and introduce competition, but

further legislation has been introduced and debated to resolve remaining issues

affecting transmission, reliability, and other restructuring concerns.

In part, the electricity section of the conference report and S. 2095 would repeal

the Public Utility Holding Company Act (PUHCA) and establish mandatory

reliability standards. Standard market design (SMD), a proposed system to provide

uniform market procedures for wholesale electric power transactions, would be

remanded to the Federal Energy Regulatory Commission (FERC); no rule would be

allowed before the end of FY2006. The Department of Energy (DOE) would identify

“transmission corridors” that require new construction or upgrading. The bills would

grant eminent domain authority to the federal government for construction of

interstate power lines on these transmission corridors if the states did not act in time.

(For a discussion of the policy context and current law, see CRS Report

RL32178, Summary of Electricity Provision in the Conference Report on H.R. 6.

For additional discussion on these issues, see CRS Report RL32728, Electric Utility

Regulatory Reform: Issues for the 109th Congress; and CRS Report RL32133,

Federal Merger Review Authority.)

Renewable Fuel Standard and MTBE. The H.R. 6 conference report and

S. 2095 would amend the Clean Air Act to eliminate the requirement that

reformulated gasoline (RFG) contain 2% oxygen to reduce automotive emissions, a

requirement which prompted the widespread use of MTBE (methyl tertiary butyl

ether) and, to a lesser degree, ethanol. Instead, the bills would establish a new

requirement that an increasing amount of gasoline contain renewable fuels such as

ethanol. The bills would require that 3.1 billion gallons of renewable fuel be used in

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2005, increasing to 5.0 billion gallons by 2012 (as compared to 2.1 billion gallons

used in 2002). However, concerns have been raised that this requirement could

significantly raise the pump price for gasoline in some areas.

Because of concerns over drinking water contamination by MTBE (a major

competitor with ethanol), the bills would ban the use of MTBE in motor vehicle fuel,

except in states that specifically authorize its use, not later than December 31, 2014.

The ban has two possible exceptions. First, EPA may allow MTBE in motor fuel up

to 0.5 percent by volume, in cases that the Administrator determines to be

appropriate; and second, the President may make a determination, not later than June

30, 2014, that the restrictions on the use of MTBE shall not take place. The bills

would also authorize $2.0 billion to assist the conversion of merchant MTBE

production facilities to the production of other fuel additives. Further, the bills would

preserve the reductions in emissions of toxic substances achieved by the RFG

program.

One of the most controversial provisions in the H.R. 6 conference report is the

establishment of a “safe harbor” from product liability lawsuits for producers of

MTBE and renewable fuels. The safe harbor provision — which was excluded from

S. 2095 — would protect anyone in the product chain, from manufacturers down to

retailers, from liability for cleanup of MTBE and renewable fuels or for personal

injury or property damage based on the nature of the product. (That legal approach

has been used in California to require refiners to shoulder liability for MTBE

cleanup.) The safe harbor would be retroactive to September 5, 2003. Prior to that

date, five lawsuits had been filed. After that date, at least 150 suits were filed, on

behalf of 210 communities in 15 different states.

(For additional information, see CRS Report RL32865, Renewable Fuels and

MTBE: A Comparison of Selected Legislative Initiatives; CRS Report RL30369, Fuel

Ethanol: Background and Public Policy Issues; and CRS Report RL32787, MTBE

in Gasoline: Clean Air and Drinking Water Issues.)

Motor Vehicle Fuel Economy. One of the first initiatives designed to have

a significant effect on oil demand was passage of corporate average fuel economy

standards (CAFE) in the Energy Policy and Conservation Act of 1975 (EPCA, P.L.

94-163). In the years since, there have been periodic calls for toughening or

broadening the CAFE standards — especially as consumer demand has turned more

to light-duty trucks and sport utility vehicles (SUVs).

A final rule mandating higher CAFE standards for light-duty trucks was issued

April 1, 2003, by the National Highway Traffic Safety Administration (NHTSA), but

congressional interest in the issue continues. The bill reported from conference and

S. 2095 would require a CAFE study, would prescribe several considerations that

must be weighed in determining maximum feasible fuel economy, would authorize

$2 million annually during FY2004-FY2008 for NHTSA rulemakings and CAFE

analysis, and would extend the existing fuel economy credit for the manufacture of

alternative-fueled vehicles.

(For additional information, see CRS Issue Brief IB90122, Automobile and

Light Truck Fuel Economy: The CAFE Standards.)

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Nuclear Accident Liability. Reauthorization of the Price-Anderson Act

nuclear liability system is one of the top nuclear items on the energy agenda. Under

Price-Anderson, commercial reactor accident damages are paid through a

combination of private-sector insurance and a nuclear industry self-insurance system.

Liability is capped at the maximum coverage available under the system, currently

about $10.9 billion. Price-Anderson also authorizes the Department of Energy to

indemnify its nuclear contractors. The limit on DOE contractor liability is the same

as for commercial reactors, except when the limit for commercial reactors drops

because of a decline in the number of covered reactors.

The H.R. 6 conference agreement and S. 2095 would provide a 20-year

extension of Price-Anderson to the end of 2023. The nuclear industry contends that

the system has worked well and should be continued, but opponents charge that

Price-Anderson’s liability limits provide an unwarranted subsidy to nuclear power.

The conference report would also authorize the Nuclear Regulatory Commission

(NRC) to issue new regulations on nuclear power plant security and would require

force-on-force security exercises.

Another nuclear provision in the bills is a $1.1 billion authorization for a

nuclear-hydrogen cogeneration project at the Idaho National Engineering and

Environmental Laboratory. In the tax title, the conference agreement — but not S.

2095 — would provide a tax credit of 1.8 cents per kilowatt-hour for electricity

generated by new nuclear power plants, if the plants were placed in service by 2020

and did not exceed a total capacity of 6,000 megawatts.

(For more information, see CRS Issue Brief IB88090, Nuclear Energy Policy.)

Renewable Energy and Efficiency. The H.R. 6 conference report and S.

2095 would legislate new energy efficiency standards for several consumer and

commercial products and appliances. For certain other products and appliances, DOE

would be empowered to set new standards. Also, the bills would provide increased

funding authorizations for the DOE weatherization program and establish a voluntary

program to promote energy efficiency in industry.

However, neither bill includes one of the top priorities of environmental groups:

a renewable portfolio standard (RPS), which would have required retail electricity

suppliers to obtain a minimum percentage of their power from a portfolio of new

renewable energy resources. The Senate version of H.R. 6 would have established

an RPS starting at 1% in 2005, rising at a rate of about 1.2% every two years, and

leveling off at 10% in 2019.

(For additional information, see CRS Issue Brief IB10020, Energy Efficiency:

Budget, Oil Conservation and Electricity Conservation Issues, and CRS Issue Brief

IB10041, Renewable Energy: Tax Credit, Budget, and Electricity Production Issues.)

Arctic National Wildlife Refuge. The congressional debate over whether

to open the Arctic National Wildlife Refuge (ANWR) to oil and gas leasing has

continued for more than 30 years. H.R. 6 as passed by the House would have

authorized oil and gas exploration, development, and production in ANWR, with a

2,000-acre limit on production and support facilities. The Senate-passed bill did not

CRS-5

include ANWR provisions. The Administration strongly urged that the House

ANWR language be included in the conference bill. However, once it became

apparent that there were insufficient votes in the Senate to pass an energy bill with

ANWR provisions, the managers decided to leave ANWR out of the final conference

bill and S. 2095.

Proponents of exploring ANWR point to advances in exploration and drilling

technology and methods that have significantly reduced the extent of surface

disturbance caused by oil and gas activities. While opponents concede this may be

so, they argue that the bill does not impose adequate requirements in this regard, that

surface disturbance represents only one of many environmental impacts, and that

considerable risk to the environment remains during all phases of development.

Some opponents, citing ANWR’s pristine character, argue that its ecology and habitat

should not be disturbed under any circumstances.

(For additional information, see CRS Issue Brief IB10136, Arctic National

Wildlife Refuge (ANWR), and CRS Report RL31115, Legal Issues Related to

Proposed Drilling for Oil and Gas in the Arctic National Wildlife Refuge.)

Domestic Energy Production. The Department of the Interior (DOI) has

estimated that roughly a quarter of oil resources and less than one-fifth of gas

resources on Indian lands have been developed. The H.R. 6 conference report and S.

2095 would allow Indian tribes to enter into business agreements with energy

developers without obtaining prior approval from the Department of the Interior, but

only if DOI has already approved the tribe’s regulations governing such energy

agreements.

To encourage production on federal lands, royalty reductions would be provided

for marginal oil and gas wells on public lands and the outer continental shelf.

Provisions are also included to increase access to federal lands by energy projects —

such as drilling activities, electric transmission lines, and gas pipelines.

Alaska Gas Pipeline. Alaska’s North Slope currently holds 30 trillion cubic

feet of undeveloped proven natural gas reserves, about 18% of total U.S. reserves.

The Alaska gas reserves have not been developed due to the high cost of building and

operating the transportation infrastructure to reach distant markets. The H.R. 6

conference bill and S. 2095 would provide $18 billion in loan guarantees for

constructing an Alaska gas pipeline. The tax section of S. 2095 would also provide

a tax credit for Alaska gas producers if prices fell below a certain level.

Hydrogen Fuel Initiative. The H.R. 6 conference bill and S. 2095 would

authorize $2.1 billion for FY2004-2008 for President Bush’s hydrogen initiative and

establish a goal of producing hydrogen vehicles by 2020. Critics of the

Administration suggest that the hydrogen program is intended to forestall any

attempts to significantly raise vehicle CAFE standards, and that it relieves the

automotive industry of assuming more initiative in pursuing technological

innovations. On the other hand, some contend that it is appropriate for government

to become involved in the development of technologies that could address national

environmental and energy goals but are too risky to draw private-sector investment.

CRS-6

(For additional information, see CRS Report RS21442, Hydrogen and Fuel Cell

R&D: FreedomCAR and the President’s Hydrogen Fuel Initiative; and CRS Report

RL32196, A Hydrogen Economy and Fuel Cells: An Overview.)

Selected New Provisions in H.R. 6 Conference Bill

Several significant non-tax provisions in the H.R. 6 conference report are not

found in the House and Senate versions of the bill. The following is a partial list and

brief description of such new provisions.

Hydropower. Section 246: Corps of Engineers Hydropower Operation and

Maintenance Funding. The administrators of power marketing administrations could

transfer receipts to the Army Corps of Engineers for operations and maintenance

activities at facilities assigned to them. This provision was not included in S. 2095.

Energy on Federal Lands. Section 316: Alaska Offshore Royalty

Suspension. The Secretary of the Interior could reduce or eliminate oil and gas

royalty or net profit shares in planning areas of offshore Alaska.

Section 317: Oil and Gas Leasing in the National Petroleum Reserve in Alaska.

The competitive leasing system for oil and gas in the National Petroleum Reserve in

Alaska would be modified, allowing the Secretary of the Interior to grant royalty

reductions if they were found to be in the public interest.

Section 329: Outer Continental Shelf Provisions. For applications to build

deepwater ports, the Secretary of Transportation could use environmental impact

statements or other studies prepared by other federal agencies instead of conducting

separate studies.

Section 352: Renewable Energy on Federal Lands. A five-year plan would be

prepared to encourage renewable energy development.

Section 356: Finger Lakes National Forest Withdrawal. All federal land within

the boundary of Finger Lakes National Forest in the state of New York would be

withdrawn from entry, appropriation, or disposal under public land laws and

disposition under all laws relating to oil and gas leasing.

Section 358: Federal Coalbed Methane Regulation. States would be

encouraged to reduce impediments to coalbed methane development.

Nuclear Energy. Section 634: Fernald Byproduct Material. DOE-managed

material in the concrete silos at the Fernald uranium processing facility would be

considered byproduct material, which DOE would dispose of in an NRC- or

state-regulated facility.

Section 635: Safe Disposal of Greater-than-Class-C Radioactive Waste. DOE

would designate an office with the responsibility for developing a comprehensive

plan for permanent disposal of the most concentrated category of low-level

radioactive waste.

CRS-7

Section 637: Uranium Enrichment Facilities. The Nuclear Regulatory

Commission (NRC) would be required to issue a final decision on a license to build

and operate a uranium enrichment facility within two years after an application is

submitted, and procedures for handling the facility’s waste would be established.

Section 638: National Uranium Stockpile. The Secretary of Energy would be

authorized to create a national low-enriched uranium stockpile.

Section 662: Fingerprinting for Criminal Background Checks. The existing

requirement that individuals be fingerprinted for criminal background checks before

receiving unescorted access to nuclear power plants would be extended to individuals

with unescorted access to any radioactive material or property that could pose a

health or security threat.

Section 668: NRC Homeland Security Costs. Except for the costs of

background checks and security inspections, NRC homeland security costs would not

be recovered through fees on nuclear power plants and other licensees.

Section 928: Security of Reactor Designs. DOE’s Office of Nuclear Energy,

Science, and Technology would be required to carry out a research and development

(R&D) program on technology for increasing the safety and security of reactor

designs.

Section 929: Alternatives to Industrial Radioactive Sources. After studying the

current management of industrial radioactive sources and developing a program plan,

DOE would be required to establish an R&D program on alternatives to large

industrial radioactive sources.

Energy Efficiency and Renewables. Section 703: Credits for Medium and

Heavy-Duty Dedicated Vehicles. Vehicle fleets operated by states and alternative

fuel providers could claim extra credits for purchasing medium- and heavy-duty

vehicles dedicated to running on alternative fuels.

Section 915: Distributed Energy Technology Demonstration Program. DOE

would be authorized to provide financial assistance to consortia for demonstrations

to accelerate the use of distributed energy technologies in highly energy-intensive

commercial applications.

Section 916: Reciprocating Power. DOE would be required to create a program

for fuel system optimization and emissions reduction after-treatment technologies for

industrial reciprocating engines, including retrofits for natural gas or diesel engines.

Section 920: Concentrating Solar Power Research and Development Program.

DOE would be required to conduct an R&D program on using concentrating solar

power to produce hydrogen.

Section 965: Western Hemisphere Energy Cooperation. DOE would be directed

to conduct a cooperative effort with other nations of the Western Hemisphere to

assist in formulating economic and other policies that increase energy supply and

energy efficiency.

CRS-8

Electricity. Section 1222: Third-Party Finance. The Western Area Power

Administration (WAPA) and the Southwestern Power Administration (SWPA)

would be able to either continue to design, develop, construct, operate, maintain, or

own transmission facilities within their region or participate with other entities for

the same purposes if specified criteria were met.

Section 1227: Office of Electric Transmission and Distribution. Statutory

authority would be provided for the DOE Office of Electric Transmission and

Distribution.

Section 1275: Service Allocation. FERC would be required to review and

authorize cost allocations for non-power goods or administrative or management

services provided by an associate company that was organized specifically for the

purpose of providing such goods or services.

Offshore Energy Revenue Sharing. Section 1412: Domestic Offshore

Energy Reinvestment. A portion of the federal revenues from offshore energy

activities would be given to affected coastal states to fund specified activities.

Tennessee Valley Authority. Sections 1431-1434: Changes to Board of

Directors and Staff Appointments. The presidentially appointed TVA Board of

Directors would be expanded from three to nine, and the Board would hire a chief

operating officer to take over day-to-day management.

Environmental Regulation. Section 1443: Attainment Dates for Downwind

Ozone Nonattainment Areas. Clean Air Act deadlines would be extended for areas

that have not attained ozone air quality standards if upwind areas “significantly

contribute” to their nonattainment.

Section 1445: Use of Granular Mine Tailings. The EPA Administrator would

be directed to establish criteria for the safe and environmentally protective use of

lead and zinc mine tailings in northeastern Oklahoma for cement or concrete projects,

and for federally funded highway construction projects.

Alternative and Reformulated Fuels. Section 1513: Cellulosic Biomass

and Waste-Derived Ethanol Conversion Assistance. The conference report would

allow the Secretary of Energy to provide grants for the construction of ethanol plants.

To qualify, the ethanol must be produced from cellulosic biomass, municipal solid

waste, agricultural waste, or agricultural byproducts. A total of $750 million would

be authorized for FY2004 through FY2006. Neither the House nor the Senate

version contained any similar provision.

Section 1514: Blending of Compliant Reformulated Gasolines. This provision

would allow reformulated gasoline (RFG) retailers to blend batches with and without

ethanol as long as both batches were compliant with the Clean Air Act. In a given

year, retailers would be permitted to blend batches over any two 10-day periods in

the summer months. Currently, retailers must drain their tanks before switching from

ethanol-blended RFG to non-ethanol RFG (or vice versa). The House and Senate

versions contained no similar provision.

CRS-9

Organization of Report

The remainder of this report provides a section-by-section summary of the nontax provisions of the conference version of H.R. 6. Sections that were excluded from

S. 2095 are shown in italics, and new language is shown in boldface.

The sections are listed in numerical order, with section numbers that have been

changed in S. 2095 shown in parentheses. Some of the most controversial sections

are discussed in greater detail, while multiple sections that deal with a single program

have been combined. Funding authorizations, including changes made by S. 2095,

are shown in Table 1 at the end of the report.

The following analysts in the CRS Resources, Science, and Industry Division

contributed to this report:

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(name redacted), electric utilities;

(name redacted), DOE management;

(name redacted), energy security;

Carl Behrens, hydropower;

(name redacted), Federal Wa ter Pollution Control Act;

(name redacted), ANWR;

(name redacted), Native Americanergy,

en general authorizations;

(name redacted), nuclear energy;

(name redacted), federal energy leasing, coal;

Larry Kumins, oil and gas;

Erika Lunder, state energy incentive authority;

Jim McCarthy, Clean Air Act, MTBE;

Dan Morgan, science programs;

(name redacted), Clean Air Act;

(name redacted), hydropower;

(name redacted), ozone, mine tailings;

(name redacted), conservati

on and renewable energy;

(name redacted), underground storage tanks, drinking water;

Brent Yacobucci, motor fuels;

Jeff Zinn, Coastal Zone Management Act.

Title I — Energy Efficiency

Subtitle A — Federal Programs

Section 101: Energy and Water Saving Measures in Congressional

Buildings. The Architect of the Capitol would be required to plan and implement

an energy and water conservation strategy for congressional buildings that would be

consistent with that required of other federal buildings. An annual report would be

required. Up to $2 million would be authorized. Section 310 of the Legislative

Branch Appropriations Act of 1999 called for the Architect of the Capitol (AOC) to

develop an energy efficiency plan for congressional buildings.

CRS-10

Section 102: Energy Management Requirements. The baseline for

federal energy savings would be updated from FY1985 to FY2001 and a new goal

of 20% reduction would be set for FY2013. At that time, DOE would be directed to

assess progress and set a new goal for FY2023. Section 202 of Executive Order

13123 uses FY1985 as the baseline for measuring federal building energy efficiency

improvements and calls for a 35% reduction in energy use per gross square foot by

FY2010.

Section 103: Energy Use Measurement and Accountability. Federal

buildings would be required to be metered or sub-metered by late 2010, to help

reduce energy costs and promote energy savings.

Section 104: Procurement of Energy-Efficient Products. Statutory

authority would be created to require federal agencies to purchase products certified

as energy-efficient under the Energy Star program or energy-efficient products

designated by the Federal Energy Management Program (FEMP). Currently, Section

403 of Executive Order 13123 directs federal agencies to purchase life-cycle costeffective Energy Star products.

Section 105: Energy Saving Performance Contracts. Federal agencies

would be empowered to continue using energy savings performance contracts

(ESPCs) indefinitely. Section 801(c) of the National Energy Conservation Policy Act

(NECPA, P.L. 95-619) provides for federal use of ESPCs through the end of FY2002.

Section 106: Energy Savings Performance Contracts Pilot Program

for Non-Building Applications. The Department of Defense and other federal

agencies would be authorized to enter into up to 10 energy savings performance

contracts for non-building applications. The payments to be made by the federal

government could not exceed $200 million for all such contracts combined.

Section 105 (107): Voluntary Commitments to Reduce Industrial

Energy Intensity. DOE would be authorized to form voluntary agreements with

industry sectors or companies to reduce energy use per unit of production by 2.5%

per year. While there is no current statutory authority, industry energy efficiency

programs have been in place, such as the former Climate Wise program at the

Environmental Protection Agency (EPA).

Section 106 (108): Advanced Building Efficiency Testbed. DOE

would be required to create a program to develop, test, and demonstrate advanced

federal and private building efficiency technologies.

Section 107 (109): Federal Building Performance Standards. DOE

would be directed to set revised energy efficiency standards for new federal buildings

at a level 30% stricter than industry or international standards. Mandatory energy

efficiency performance standards for federal buildings are currently set in Section

305(a) of P.L. 94-385 and implemented through 10 CFR Part 435.

Section 108 (110): Increased Use of Recovered Mineral Component

in Federally Funded Projects. Federally funded construction projects would be

CRS-11

required to increase the procurement of cement and concrete that used recovered

material.

Subtitle B — Energy Assistance and State Programs

Section 121: Low Income Home Energy Assistance Program

(LIHEAP). Increased funding would be authorized for the LIHEAP grant program

for FY2004 through FY2006. Department of Health and Human Services funding

for LIHEAP is currently authorized through FY2003 in the Human Services

Authorization Act of 1998.

Section 122: Weatherization Assistance. Increased funding would be

authorized for the DOE weatherization grant program for FY2004 through FY2006.

Funding for the program is currently authorized through FY2003 under 42 U.S.C.

6872.

Section 123: State Energy Programs. New requirements would be set for

state energy conservation goals and plans. Also, increased funding would be

authorized for FY2004 through FY2006 for DOE state energy grant programs.

Section 124: Energy-Efficient Appliance Rebate Programs. DOE

would be authorized to fund rebate programs in eligible states to support residential

end-user purchases of Energy Star products.

Section 125: Energy-Efficient Public Buildings. A grant program would

be created for energy-efficient renovation and construction of local government

buildings.

Section 126: Low Income Community Energy Efficiency Pilot

Program. A pilot energy-efficiency grant program would be created for local

governments, private companies, community development corporations, and Native

American economic development entities.

Subtitle C — Energy-Efficient Products

Section 131: Energy Star Program. DOE and EPA would be given

statutory authority to carry out the Energy Star program, which identifies and

promotes energy-efficient products and buildings.

Section 132: HVAC Maintenance Consumer Education Program.

DOE would be required to implement a public education program for homeowners

and small businesses that explained the energy-saving benefits of improved

maintenance of heating, ventilating, and air conditioning equipment. Also, the Small

Business Administration would be directed to assist small businesses in becoming

more energy-efficient.

Section 133: Energy Conservation Standards for Additional

Products. DOE would be directed to issue a rule that determined whether

efficiency standards should be set for standby mode in battery chargers and external

CRS-12

power supplies. Also, energy efficiency standards would be set by statute for exit

signs, traffic signals, torchieres (floor lamps), and distribution transformers (electric

utility equipment). Further, DOE would be directed to issue a rule that prescribed

efficiency standards for ceiling fans, vending machines, commercial refrigerators and

freezers, unit heaters (fan-type heaters, usually portable), and compact fluorescent

lamps.

Section 134: Energy Labeling. The Federal Trade Commission (FTC)

would be required to consider improvements in the effectiveness of energy labels for

consumer products. Also, DOE or FTC would be directed to prescribe labeling

requirements for products added by this section of the bill. The FTC is currently

required by Section 324(a) of the Energy Policy and Conservation Act (P.L. 94-163)

to issue rules for energy efficiency labels on consumer products (42 U.S.C. 6294).

Subtitle D — Public Housing

Section 141: Capacity Building for Energy-Efficient, Affordable

Housing. Activities would be required that would provide energy-efficient,

affordable housing and other residential measures under the HUD Demonstration

Act.

Section 142: Increase of CDBG Public Services Cap for Energy

Conservation and Efficiency Activities. The amount of community

development block grant (CDBG) public services funding that could be used for

energy efficiency would be increased to 25%. The current limit is 15% under Section

105(a)(8) of the Housing and Community Development Act of 1974.

Section 143: FHA Mortgage Insurance Incentives for EnergyEfficient Housing. Solar energy equipment can be eligible for up to 30% of the

total amount of property value that can be covered by Federal Housing

Administration mortgage insurance. The current limit is 20% under Section

203(b)(2) of the National Housing Act.

Section 144: Public Housing Capital Fund. The Public Housing Capital

Fund would be modified to include certain energy and water use efficiency

improvements. Under Section 9 of the United States Housing Act, the Capital Fund

is available to public housing agencies to develop, finance, and modernize public

housing developments and to make management improvements to these housing

facilities. There is currently no provision for energy conservation projects that

involve water-conserving plumbing fixtures and fittings.

Section 145: Grants for Energy-Conserving Improvements for

Assisted Housing. HUD would be directed to provide grants for certain energy

and water efficiency improvements to multifamily housing projects. Section 2(a)(2)

of the National Housing Act, as amended by Section 251(b)(1) of the National

Energy Conservation Policy Act, empowers HUD to make grants for energy

conservation projects in public housing, but it has no provision for energy- and

water-conserving plumbing fixtures and fittings.

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Section 146: North American Development Bank. The North American

Development Bank would be encouraged to finance energy efficiency projects.

Section 147: Energy-Efficient Appliances. Public housing agencies

would be required to purchase cost-effective Energy Star appliances.

Section 148: Energy-Efficient Standards. The energy efficiency standards

and codes that the federal government encourages states to use would be changed

from the codes set by the Council of American Building Officials to the 2000

International Energy Conservation Code.

Section 149: Energy Strategy for HUD. The Secretary of Housing and

Urban Development would be required to implement an energy conservation strategy

to reduce utility expenses through cost-effective energy-efficient design and

construction of public and assisted housing.

Title II — Renewable Energy

Subtitle A — General Provisions

Section 201: Assessment of Renewable Energy Resources. DOE

would be required to report annually on resource potential, including solar, wind,

biomass, ocean (tidal, wave, current, and thermal), geothermal, and hydroelectric

energy resources. DOE would be required to review available assessments and

undertake new assessments as necessary, accounting for changes in market

conditions, available technologies, and other relevant factors. The resource potential

for renewables has not been assessed as thoroughly as that for conventional energy

resources and the potential may be altered somewhat by climate change.

Section 202: Renewable Energy Production Incentive. Eligibility for

the existing incentive would be extended through 2023 and expanded to include

electric cooperatives and tribal governments. Qualifying resources would be

expanded to include landfill gas. Federal law currently provides a 1.5 cent/kwh

incentive for power produced from wind and biomass by state and local governments

and non-profit electrical cooperatives.1 The incentive is funded by appropriations to

DOE and was created to encourage public agencies, which are not eligible for tax

incentives, in a fashion parallel to the renewable energy production tax credit for

private sector businesses (Section 1302). This incentive has played a major role in

wind energy development and is viewed by the wind industry as the single-most

important provision in the bill. The Senate version would have added incremental

hydro and ocean energy to the list of eligible resources.

Section 203: Federal Purchase Requirement. Federal agencies would

be required, to the extent “economically feasible and technically practicable,” to

purchase power produced from renewables. The collective total percentage of

1

Energy Policy Act, Sec. 1212 (42 U.S.C. 13317)

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renewables use, as a share of total federal electric energy use, would start at 3% in

FY2005, rise to 5% in FY2008, and then reach 7.5% in 2011 and all subsequent

years. Renewable energy produced at a federal site, on federal lands, or on Indian

lands would be eligible for double credit toward the purchase requirement. This

provision aims to help develop the market for renewables. A report to Congress

would be required every two years.

Section 204: Insular Areas Energy Security. This section includes

congressional findings that electric power transmission and distribution lines in

insular areas are not adequate to withstand hurricane and typhoon damage, and that

an assessment is needed of energy production, consumption, infrastructure, reliance

on imported energy, and indigenous sources of energy in insular areas. Federal law

currently requires comprehensive energy plans for insular areas that describe the

potential for renewable energy resources.2 This section would require the Secretary

of the Interior, in consultation with the Secretary of Energy and the head of

government of each insular area, to update insular area plans to reflect these findings,

and to seek to reduce energy imports by increasing energy conservation and energy

efficiency and by attempting to maximize the use of indigenous resources. Annual

appropriations would be authorized that would, in part, be used for matching grants

for projects designed to protect electric power transmission distribution lines in one

or more of the territories of the United States from damage caused by hurricanes and

typhoons.

Section 205: Use of Photovoltaic Energy in Public Buildings. The

General Services Administration (GSA) would be authorized to encourage use of

solar photovoltaic energy systems in new and existing buildings. This provision aims

to help reduce costs and, thereby, stimulate the market for photovoltaic equipment.

Section 206: Grants to Improve the Commercial Value of Forest

Biomass. The Secretaries of Agriculture and the Interior would be authorized to

make grants of up to $20 per green ton (a ton of freshly sawed or undried wood or

other biomass) to individuals, businesses, communities, and Indian tribes for the

commercial use of biomass for fuel, heat, or electric power. Also, the Secretaries of

Agriculture and the Interior may make grants as an incentive to projects that develop

ways to improve the use of, or add value to, biomass. Preference is given to small

towns, rural areas, and areas at risk of damage to the biomass resource. This

provision attempts to address the increasing risk of wildfires and the growing threat

to forests of insect infestation and disease.

Section 207: Federal Procurement of Biobased Products. This

provision amends the existing requirement3 that federal agencies give procurement

2

3

42 U.S.C. 1492 .

7 U.S.C. 8201(c)(1) gives preference to procurement of items made with highest

percentage of biobased products.

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preference to items composed of the highest percentage of biobased products

practicable by adding a specific reference to degradable six-pack rings.4

Subtitle B — Geothermal Energy

Sections 211-227: Geothermal Energy Leasing Amendments. Much

of the nation’s geothermal energy potential is located on federal lands. Reducing

delays in the federal geothermal leasing process and reducing royalties could increase

geothermal energy production, although the environmental impact of greater

geothermal development is also an issue.

Current Law. Competitive geothermal lease sales are based on whether lands

are within a known geothermal resource area (Geothermal Steam Act of 1970, U.S.C.

1003). Geothermal production on federal lands is charged a royalty of 10%-15%

under Section 5 of the Geothermal Steam Act. The royalty is imposed on the amount

or value of steam or other form of heat derived from production under a geothermal

lease.

The Secretary of the Interior can withdraw public lands from leasing or other

public use and modify, extend, or revoke withdrawals under provisions in the Federal

Land Policy and Management Act of 1976 (FLPMA, 43 U.S.C. 1714). At certain

intervals the Secretary may readjust terms and conditions of a geothermal lease,

including rental and royalty rates. Annual rental fees of not less than $1 per acre on

geothermal leases are paid in advance. The primary lease term is 10 years and shall

continue as long as geothermal steam is produced or used in commercial quantities.

Rents are $1 per acre or fraction thereof for each year of a geothermal lease.

Conference Agreement. Amendments to the Geothermal Steam Act would

change lease procedures for competitive and non-competitive lease sales.

Competitive lease sales would be held every two years. If there were no competitive

bid, then lands would be made available for two years under a non-competitive

process (Sec. 212). A fee schedule in lieu of any royalty or rental payments would be

established for low-temperature geothermal resources. Existing geothermal leases

may be converted to leases for direct utilization of low-temperature geothermal

resources (Sec. 213). Royalties from geothermal leases would be 3.5% of the gross

proceeds from geothermal electricity sales and 0.75% of the gross proceeds from the

sale of items produced from direct use of geothermal energy. This section takes

effect on October 1, 2004. (Sec. 214). A memorandum of understanding between

the Secretaries of the Interior and Agriculture should include provisions that would

identify known geothermal areas on public lands within the National Forest system

and establish an administrative procedure that would include time frames for

processing lease applications (Sec 215).

The Secretary the Interior would review all areas under moratoria or

withdrawals and report to Congress on whether the reasons for withdrawal still

4

42 U.S.C. 6914b-1 provides for use of naturally degradable material in plastic ring carriers

to help reduce litter and to protect fish and wildlife.

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applied (Sec. 216). The Secretary could reimburse lessees for the costs of

environmental analyses required by the National Environmental Policy Act of 1969

(NEPA, 30 U.S.C. 1001 et seq.) through royalty credits under certain circumstances.

This section’s effective date is changed from the date of enactment to October

1, 2004. (Sec. 217). The U.S. Geological Survey (USGS) would provide Congress

with an assessment of current geothermal resources (Sec. 218). Cooperative or unit

plans for geothermal development would be promoted (Sec. 219). Leasable minerals

produced as a byproduct of a geothermal lease would pay royalties under the Mineral

Leasing Act (30 U.S.C. 181) (Sec. 220).

Sections 8(a) and (b) of the Geothermal Steam Act would be repealed, which

would eliminate the Secretary’s authority to readjust geothermal rental and royalty

rates at “not less than 20 year intervals beginning 35 years after the date geothermal

steam is produced” (Sec. 221). Annual rentals would be credited towards the royalty

of the same lease (Sec. 222), and the primary lease term could be extended for two

additional five-year terms if work commitments were met (Sec. 223). If production

from a geothermal lease were suspended during a period in which a royalty was

required, royalties would be paid in advance until production resumed (Sec. 224).

The conference agreement would establish rental rates for competitive and noncompetitive lease sales (Sec. 225). A joint report within two years would be

submitted to detail the differences between the military geothermal program and the

civilian geothermal program, including recommendations for legislation or

administrative actions to improve the effectiveness of the program (Sec. 226). About

two dozen technical amendments are included in Section 227.

Subtitle C — Hydroelectric

Section 231: Alternative Conditions and Fishways. Under the Federal

Power Act (FPA, 16 U.S.C. 797 et. seq.) the Federal Energy Regulatory Commission

(FERC) has primary responsibility for balancing multiple water uses and evaluating

hydropower relicensing applications. However, the FPA also creates a role in the

licensing process for federal agencies that are responsible for managing fisheries or

federal reservations (e.g. national forests, etc.). Specifically, sections 4(e) and 18 of

the FPA give certain federal agencies the authority to attach conditions to FERC

licenses. For example, federal agencies may require applicants to build passageways

through which fish can travel around the dam, schedule periodic water releases for

recreation, ensure minimum flows of water for fish migration, control water release

rates to reduce erosion, or limit reservoir fluctuations to protect the reservoir’s

shoreline habitat. Once an agency issues such conditions, FERC must include them

in its license. While these conditions often generate environmental or recreational

benefits, they may also require construction expenditures and may increase costs by

reducing operational flexibility.

Reflecting recommendations by FERC and the hydropower industry, both the

House and Senate versions of H.R. 6 included provisions to alter federal agencies’

license-conditioning authority. The conference bill includes the House language. It

would establish new requirements for federal agencies that set conditions or fishway

requirements for hydroelectric licenses under sections 4(e) and 18 of the Federal

Power Act. License applicants could initiate a trial-type hearing on factual issues

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related to an agency’s conditions. Federal agencies would have to consider

alternative conditions proposed by the license applicant and accept a proposed

alternative if it would provide for the adequate protection and utilization of a federal

reservation, and would either cost less or improve a project’s operational efficiency.

An agency would have to justify its decision to accept or to reject the alternative after

giving equal consideration to both conditions’ effects on a broad range of factors.

The bill would also establish a system for reviewing an agency’s decision if it

rejected the applicant’s alternative.

Section 241: Hydroelectric Production Incentives. The Secretary of

Energy would make incentive payments to non-federal owners or operators of

hydroelectric facilities for power that is first produced within 10 years of the date of

enactment by generating equipment added to existing facilities. Payments of 1.8

cents per kilowatt-hour (kWh), up to a total of $750,000/year, may be made for up

to 10 years from the first year after the facility begins operating.

Section 242: Hydroelectric Efficiency Improvement. The Secretary of

Energy would make incentive payments to the owners or operators of hydroelectric

facilities who make capital improvements on existing facilities that improve

efficiency by at least 3%. Payments would not exceed 10% of the improvement cost

and would not exceed $750,000 at any single facility.

Section 243: Small Hydroelectric Power Projects. This provision

would amend the Public Utility Regulatory Policy Act of 1978 (16 U.S.C. 2078), to

change the date on or before which a dam must be constructed to qualify as an

existing dam, from April 20, 1977, to March 4, 2003.

Section 244: Increased Hydroelectric Generation at Existing

Federal Facilities. Within 18 months of enactment, the Secretaries of the Interior

and Energy, in consultation with the Secretary of the Army, would submit a study of

the potential for increasing electric power production capability at federally owned

or operated water regulation, storage, and conveyance facilities.

Section 245: Shift of Project Loads to Off-Peak Periods. The

Secretary of the Interior would review electric power consumption by the Bureau of

Reclamation facilities for water pumping, and, with the consent of affected irrigation

customers, adjust water pumping schedules to reduce power consumption during

periods of peak electric power demand. This section would not affect Interior’s

existing obligations to provide electric power, water, or other benefits.

Section 246: Corps of Engineers Hydropower Operation and

Maintenance Funding. This section would authorize the administrators of

federal power marketing administrations (PMAs) to transfer receipts to the Corps

for operations and maintenance activities at facilities assigned to them. This

provision was not in either the House or Senate version of H.R. 6.

Section 246 (247): Limitation on Certain Charges Assessed to the

Flint Creek Project, Montana. Charges for using federal land for the Flint Creek

hydroelectric facility would be limited to $25,000 per year. This provision was not

in either the House or Senate version of H.R. 6.

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Section 247 (248): Reinstatement and Transfer of Hydroelectric

License. The license for FERC project 2696, the Stuyvesant Falls Hydroelectric

Project, would be reinstated and transferred to the Town of Stuyvesant, NY. This

provision was not in either the House or Senate version of H.R. 6.

Title III — Oil and Gas

Subtitle A — Petroleum Reserve and Home Heating Oil

Section 301: Permanent Authority to Operate the Strategic

Petroleum Reserve. Congress authorized the Strategic Petroleum Reserve (SPR)

in the Energy Policy and Conservation Act (EPCA, P.L. 94-163) to help prevent a

repetition of the economic dislocation caused by the 1973-74 Arab oil embargo.

Physically, the SPR comprises five underground storage facilities, hollowed out from

naturally occurring salt domes, located in Texas and Louisiana. In 2000, Congress

also authorized establishment of a Northeast Heating Oil Reserve (NHOR) where

two million barrels of home heating oil is kept in leased, above-ground storage, to be

released if the price of heating oil exceeds a calculated historic average. The

authorities governing the SPR and NHOR are included in the Energy Policy and

Conservation Act (EPCA, P.L. 94-163) and are currently authorized through FY2008

by P.L. 108-7. These authorities also provide for U.S. participation in emergency

activities of the International Energy Agency (IEA) without risking violation of

antitrust law and regulation.

The conference bill would permanently reauthorize both programs, avoiding

awkward periods such as occurred in 2000 when differences between the House and

Senate over certain issues resulted in a period of several months when the authorities

were not in force.

Section 302: National Oilheat Research Alliance. The National Oilheat

Research Alliance (NORA) was established by the Energy Policy Act of 2000 (P.L.

106-460), and assesses a fee of $.002 per gallon on home heating oil sold by retail

distributors. The proceeds, among other purposes, are dedicated to research on

improving the efficiency of furnaces and boilers, and providing education and

training resources to professionals in the industry. The conference bill would extend

the authorization for NORA until nine years (2010) after the date on which the

Alliance was established.

Subtitle B — Production Incentives

Section 311: Definition of Secretary. In this subtitle, “Secretary” means

Secretary of the Interior.

Section 312: Program on Oil and Gas Royalties-In-Kind. The federal

government would be allowed to continue to receive physical quantities of oil and

gas as royalty-in-kind payments if it can receive market value for the product and

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revenues greater than or equal to the revenues it would have received under a

comparable cash-payment royalty. The royalty product would have to be placed in

marketable condition (as defined in H.R. 6) at no cost to the United States. Small

refineries would receive preferential treatment if supplies on the market were

insufficient. A report to Congress in each year from FY2004-FY2013 would explain

among, other things, how the Secretary determined whether the amount received was

at least the amount that would have been taken in cash and how a lease was evaluated

as to whether royalty in kind were taken. This section would have taken effect

upon enactment of the act. In S. 2095, this section would take effect on October

1, 2004.

Section 313: Marginal Property Production Incentives. The Secretary

of the Interior would have the authority to reduce or terminate royalties for

independent producers under certain conditions. The Secretary would be authorized

to prescribe different standards for marginal properties in lieu of those in this section.

This section would take effect on October 1, 2004.

Section 314: Incentives for Natural Gas Production From Deep

Wells in the Shallow Waters of the Gulf of Mexico. Royalty reductions

would be provided for shallow water deep gas production at certain depths not later

than180 days after enactment. An “ultra-deep” well would also be defined in this

section. This section would take effect on October 1, 2004.

Section 315: Royalty Reductions for Deep Water Production.

Royalty reductions would be provided for deepwater areas at fixed production levels

at certain depths.

Section 316: Alaska Offshore Royalty Suspension. Planning areas in

offshore Alaska would be included under section 8(a)(3)(B) of the Outer Continental

Shelf Lands Act (OCSLA, 43 U.S.C. 1337(a)(3)(B)). This section of OCSLA

currently provides a mechanism for the Secretary of the Interior to reduce or

eliminate royalty or net profit share established in leases for oil and gas production

in Gulf of Mexico planning areas. This provision was not in the House or Senate

bills.

Section 317: Oil and Gas Leasing in the National Petroleum

Reserve in Alaska. The competitive leasing system for oil and gas in the National

Petroleum Reserve in Alaska would be modified. Leases would be issued for

successive 10-year terms if leases met specific criteria. Active participation would

be sought by the state of Alaska and Regional Corporations as defined under the

Alaska Native Claims Settlement Act (43 U.S.C. 1602). The Secretary of the Interior

could grant royalty reductions if they were found to be in the public interest. This

section was not in the House or Senate bills.

Section 318: Orphaned, Abandoned, or Idled Wells on Federal

Land. Within a year after enactment, the Secretary would establish a technical

assistance program to help states remediate and close abandoned or idled wells.

Technical and financial assistance would be made available over a 10-year period to

quantify and mitigate environmental dangers. A program would be established for

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reimbursing the private sector with credits against federal royalties for reclaiming,

remediating, and closing orphaned wells.

Section 319: Combined Hydrocarbon Leasing. The Mineral Leasing

Act would be amended to allow separate leases for tar sands and for oil and gas in the

same area. Tar sands would be leased under the same system as for oil and gas and

would require a minimum accepted bid of $2 per acre.

Section 320: Liquefied Natural Gas. This section would amend the

Natural Gas Act to limit the criteria upon which FERC could reject a proposed

liquefied natural gas (LNG) project. Under the conference bill, FERC could not deny

a “certificate of convenience and necessity” solely because a facility would be at least

partly dedicated to importing the project sponsor’s own natural gas.

Current Law. Under the Natural Gas Act, FERC reviews jurisdictional project

proposals (including those for natural gas importation) to determine if a public need

would be met. A wide variety of criteria are applied in making such a determination.

The Commission can reject a project for a range of reasons, including impact on the

competitive nature of U.S. natural gas markets.

Policy Context. Growth in U.S. natural gas demand has created a need for

additional gas supplies, and imports from plentiful reserves abroad — in the form of

LNG — have attracted recent interest. An increasing number of projects are under

consideration, and FERC may have to pick and choose which to certificate.

Section 321: Alternate Related Uses on the Outer Continental Shelf.

The Secretary would be authorized to grant rights-of-way or easements on the OCS

for energy-related activity on a competitive or noncompetitive basis and would

charge fees for such access. A surety bond or other financial guarantee would be

required.

Section 322: Preservation of Geological and Geophysical Data.

Under the proposed “National Geological and Geophysical Data Preservation

Program Act of 2003,” the Interior Department through the U.S. Geological Survey

would establish a program to archive geologic, geophysical, and engineering data,

maps, well logs, and samples; provide a national catalog of archival material; and

provide technical and financial assistance related to the archival material. State

agencies that elect to be part of the data archive system that stores and preserves

geologic samples would receive 50% financial assistance, subject to the availability

of appropriations. Private contributions would be applied to the non-federal share.

Appropriations of $30 million per year from FY2004 through FY2008 would be

authorized.

Section 323: Oil and Gas Lease Acreage Limitations. Lease acreage

limits would be altered so that additional federal lands would not fall under the

Mineral Leasing Act’s single-state ownership limitations.

Section 324: Assessment of Dependence of State of Hawaii on Oil.

Concern surfaces periodically about the vulnerability of U.S. territories and Hawaii

in the event of an oil supply disruption. The conference bill would require a broad

CRS-21

study that would assess the “economic implication” of Hawaii’s reliance upon oil in

both the electricity and transportation sectors. The report would explore the technical

and economic feasibility of displacing the use of residual fuel oil for the generation

of electricity with renewables and liquefied natural gas. Delivery of a report would

be required roughly 10 months after enactment.

Section 325: Deadline for Decision on Appeals under the Coastal

Zone Management Act. This section would replace language in Section 319 of

the Coastal Zone Management Act of 1972 (CZMA),as amended (16 U.S.C. 1465).

Section 319 had been added as an amendment in 1996. It established a time line for

appeals to the Secretary of Commerce on consistency determinations when a state

and federal agency are unable to reach agreement. The consistency provisions, set

forth in Section 307 of the CZMA, require federal activities in or affecting the coastal

zone to be consistent with the policies of a federally approved and state-administered

coastal zone management plan. (Federal activities include activities and development

projects performed by a federal agency or by a contractor on behalf of a federal

agency, and federal financial assistance.) A proposal to modify the appeals time line

with deadlines very similar to this legislation was included in a proposed rule on

federal consistency, published in the June 11, 2003, Federal Register. A final rule

has not been issued.

The consistency provision creates an unusual relationship where states can halt

most federal actions that are incompatible with state interests. When enacted, the

consistency requirement was viewed as a main reason why states would pursue

development and implementation of coastal plans since the other incentive to

participate, federal financial grants, always has been modest. This view appears to

have some validity as 34 or the 35 eligible states and territories are now

administering federally approved coastal management programs.

Current Law. The consistency provisions in Section 307 of the CZMA guides

state consideration of whether a proposed federal activity will be compatible with a

federally approved and state-administered coastal zone management plan. Since the

first state plan was approved in the mid-1970s, there has been considerable friction

between states and federal agencies over the reach of the consistency provisions.

States have sought broader application to have a strong role in decisions about the

largest possible array of proposed federal activities, while the federal government has

sought narrower interpretations, especially relating to offshore energy development.

Determining an exact boundary separating actions on which the state is to have a

primary role in halting a proposal from actions on which the state does not have such

powers has been a subject of federal appeals and litigation, including decisions by the

U.S. Supreme Court (notably Secretary of the Interior v. California, 464 U.S. 312

(1984), in which the court determined that the sale of oil and gas leases on the outer

continental shelf was not an act affecting the coastal zone).

When a state and a federal agency cannot reach an agreement on a consistency

determination, the law and regulations lay out an elaborate process for resolving that

disagreement. Most disagreements are resolved through this process, but if no

agreement can be reached, the final step is an appeal to the Secretary of Commerce

to make a decision. Appeals to the Secretary have not been common. According to

citations of appeals posted on the website of the Office of Ocean and Coastal

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Resource Management in the National Oceanic and Atmospheric Administration

(NOAA), as of December 30, 2003, 38 consistency determinations were appealed to

the Secretary between 1984 and 1999, and 19 of them involved proposed activities

by oil companies. The appeals process, like all other aspects of consistency, is

currently covered under a final rule issued by NOAA in the December 8, 2000,

Federal Register.

Section 319 in current law has less detail than the proposed amendment. It

states that the Secretary will either issue a final decision on the appeal or publish a

notice in the Federal Register stating why a decision cannot be reached within 90

days after the record has closed. If the Secretary publishes a notice that a decision

has not been made, that decision must be issued within 45 days of the date of

publication of that notice.

Conference Agreement. The conference agreement would replace the

current Section 319 of the CZMA with a new set of provisions that would stipulate

three sequential deadlines, and thereby limit the overall length of this appeals process

to a total of 270 days from the date when an appeal is filed. The first deadline would

be for the Secretary of Commerce to publish an initial notice of an appeal in the

Federal Register within 30 days of the appeal’s filing. The second deadline would

be that the administrative record would be open for no more than 120 days. During

that time period, the Secretary could receive filings related to the appeal. The final

deadline would give the Secretary up to 120 days to issue a decision after the

administrative record had been closed. The second and third deadlines would also

apply to all pending appeals not resolved prior to the date of enactment. Also, any

appeals in which the record is open on the date of enactment would have to be closed

within 120 days of that date.

Policy Context. Consistency appeals have been contentious and, in some

instances, the appeals process has dragged on for long time periods. The 1996

amendments in Section 319 were meant to address those delays by establishing some

time limits. This has proved unsatisfactory to some, who seek additional statutory

language that would remove decisions about deadlines from the unpredictable rulemaking process by defining the length of component steps in law, and therefore the

overall process, after an appeal to the Secretary has been filed.

Section 326: Reimbursement for Costs of NEPA Analysis,

Documentation, and Studies. The Minerals Leasing Act would be amended to

provide reimbursement for costs of NEPA-related studies under certain

circumstances. This provision would not take effect until October 1, 2008.

Section 327: Hydraulic Fracturing. This section would amend the Safe

Drinking Water Act (SDWA, 42 U.S.C. 300h(d)) to specify that the definition of

“underground injection” excludes the injection of fluids or propping agents used in

hydraulic fracturing operations for oil and gas production.

In response to a 1997 court ruling directing EPA to regulate hydraulic fracturing

as underground injection, Section 327 would expressly preclude EPA from regulating

the underground injection of fluids used in hydraulic fracturing for oil and gas

production. The provision adopts language from the House bill that exempts

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hydraulic fracturing from the definition of underground injection. The Senate bill

directed EPA to study the effects of hydraulic fracturing of hydrocarbon-bearing

formations on underground sources of drinking water, and to determine whether

regulation was necessary. The Senate bill also directed the National Academy of

Sciences to study the effects of coalbed methane production on surface and ground

water resources.

Current Law. The SDWA required EPA to promulgate regulations for state

underground injection control (UIC) programs that included minimum requirements

for programs to prevent underground injection that endangers sources of drinking

water. The Act specifies that UIC program regulations may not prescribe

requirements that interfere with “any underground injection for the secondary or

tertiary recovery of oil or natural gas, unless such requirements are essential to assure

that underground sources of drinking water will not be endangered by such injection”

(SDWA §1421(b)(2)).

Policy Context. EPA reports that before 1997 it had not considered regulating

hydraulic fracturing for oil and gas development, because the Agency did not view

this well-production process as an activity subject to regulation under SDWA’s UIC

program. In 1997, the 11th Circuit Court of Appeals ruled that the injection of fluids

for the purpose of hydraulic fracturing constituted underground injection as defined

under the SDWA, that all underground injection must be regulated, and that

hydraulic fracturing of coalbed methane wells in Alabama should be regulated under

the state’s UIC program (LEAF v. EPA, 118 F. 3d 1467). In 1999, EPA approved

a revision to Alabama’s UIC program to include regulations for hydraulic fracturing

of coalbed methane wells.

Following the court’s decision, EPA decided it needed more information before

making further decisions regarding the regulation of hydraulic fracturing, and

undertook a study to evaluate impacts on drinking water sources from hydraulic

fracturing practices used in coalbed methane production. In 2002, EPA issued a draft

report that identified water quality and quantity problems attributed to hydraulic

fracturing in several states in the West and Southeast, but tentatively concluded that

the overall impact was small.5 EPA is expected to issued a final report in early 2004.

In 2003, EPA’s National Drinking Water Advisory Council recommended that

EPA (1) work, either through voluntary means or regulation, to eliminate the use of

diesel fuel and related additives in fracturing fluids that are injected into formations

containing drinking water sources; (2) continue to study the health and environmental

problems that could occur from hydraulic fracturing for coalbed methane production;

and (3) defend its authority and discretion to implement the UIC program in a way

that advances protection of groundwater resources from contamination.

Section 328: Oil and Gas Exploration and Production Defined. This

section would provide a permanent exemption from Clean Water Act (CWA)

stormwater runoff rules for the construction of exploration and production facilities

5

U.S. EPA, Draft Evaluation of Impacts to Underground Sources of Drinking Water by

Hydraulic Fracturing of Coalbed Methane Reservoirs, August 2002, pp. 6-20 - 6-21.

CRS-24

by oil and gas companies or the roads that service those sites. Currently under that

Act, the operation of facilities involved in oil and gas exploration, production,

processing, transmission, or treatment is generally exempt from compliance with

stormwater runoff regulations, but the construction of associated facilities is not. The

amendment would modify the CWA to specifically include construction activities in

the types of oil and gas facilities that are covered by the law’s statutory exemption

from stormwater rules.

The issue arises from stormwater-permitting rules for small construction sites

and municipal separate storm sewer systems that were issued by the Environmental

Protection Agency (EPA) in 1999 and which became effective March 10, 2003.

Those rules, known as Phase II of the Clean Water Act stormwater program, require

most small construction sites disturbing one to five acres and municipal separate

storm sewer systems serving populations of up to 100,000 people to have a CWA

discharge permit. The permits require pollution-prevention plans describing

practices for curbing sediment and other pollutants from being washed by stormwater

runoff into local water bodies. Phase I of the stormwater program required

construction sites larger than five acres (including oil and gas facilities) and larger

municipal separate storm sewer systems to obtain discharge permits beginning in

1991.6

As the March 2003 compliance deadline approached, EPA proposed a two-year

extension of the Phase II rules for small oil and gas construction sites to allow the

agency to assess the economic impact of the rule on that industry. EPA said the delay

was needed to comply with President Bush’s Executive Order 13211, which directed

agencies to consider the effects of their actions on energy-related production

activities. EPA had initially assumed that most oil and gas facilities would be

smaller than one acre and thus excluded from the Phase II rules, but recent

Department of Energy data indicate that several thousand new sites per year would

be of sizes subject to the rule. The postponement did not affect other industries or

small cities covered by the 1999 rule.

Conference Agreement. The provision in the conference bill is similar to

one in House-passed H.R. 6: It makes EPA’s two-year delay permanent and makes

it applicable to construction activities at all oil and gas development and production

sites, regardless of size, including those covered by Phase I of the stormwater

program. The Senate version included no similar provision. Industry officials

contended that the EPA stormwater rule created costly permitting requirements, even

though the short construction period for drilling sites carried little potential for

stormwater runoff pollution. Supporters said the provision was intended to clarify

existing CWA language. Opponents argued that the provision did not belong in the

energy legislation and that there was no evidence that construction at oil and gas sites

caused less pollution than other construction activities. However, they were

unsuccessful in efforts to remove the provision during House consideration of H.R.

6 in April 2003 and also during conference deliberations. On November 7, by a 188210 vote, the House defeated a motion offered by Representative Filner that would

6

For background, see CRS Report 97-290, Stormwater Permits: Status of EPA’s Regulatory

Program.

CRS-25

have instructed conferees to strike the oil and gas exemption provision from the bill.

Section 329: Outer Continental Shelf Provisions. For applications to

build deepwater ports, the Secretary of Transportation could use environmental

impact statements or other studies prepared by other federal agencies instead of

conducting separate studies. Information from state and local governments and

private-sector sources could also be used. This provision was not included in the

House and Senate bills.

Section 330: Appeals Relating to Pipeline Construction or Offshore

Mineral Development Projects. Appeals of decisions under the Coastal Zone

Management Act on natural gas pipelines and offshore energy projects would be

based exclusively on the record compiled by FERC or the relevant permitting agency.

It would be the sense of Congress that appeals relating to natural gas pipeline

construction would be coordinated within FERC’s established timeframes under

sections 3 and 7 of the Natural Gas Act (15 U.S.C. 717 b 717 (f).

Section 331: Bilateral International Oil Supply Agreements. Prior to

the Camp David accords, the United States entered into treaties and agreements with

Israel to provide oil to that nation if Israel could not purchase all the oil it needed in

the markets. This commitment was renewed in 1995 and requires reauthorization in

early FY2005. This provision would have the effect of making these agreements

permanent and with the force of law.

Sections 332 and 333: Natural Gas Market Reform. These sections

would address natural gas price reporting issues in the wake of the Enron scandal.

During extremely volatile market episodes in 2000-2001 — when gas prices briefly

soared to unprecedented levels — it was alleged that market participants reported

false trading information to price-reporting services. Beyond creating higher prices

for the market participants involved, these price-reporting schemes arguably resulted

in higher transactions prices for unrelated gas deals whose prices were derived from

published price indices artificially escalated by the allegedly false reports.

Section 332, entitled “Natural Gas Market Reform,” would modify the

Commodity Exchange Act (CEA, 7 U.S.C. 13), banning “knowingly false or

knowingly misleading or knowingly inaccurate reports.” It also increases the

penalties for false reporting.

Section 333, entitled “Natural Gas Market Transparency,” would direct FERC

to issue rules calling for the timely reporting of natural gas prices and availability and

to evaluate the data for accuracy. The language specifies that FERC not impinge on

the role of commercial publishers of natural gas prices.

Current Law. The Commodity Futures Trading Commission regulates public

trading in gas under a variety of securities laws, including the CEA FERC also has

existing authority to prevent market manipulation and issued Order 644 on

November 13, 2003. Order 644 is designed to prevent market abuse, set “rules of the

road,” and provide a more stable marketplace for both electricity and natural gas. It

establishes rules relating to market manipulation, data reporting, and record retention.

It also makes sellers subject to disgorgement of unjust profits and revocation of

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FERC authorities to operate under market-based rules (i.e. without direct regulatory

supervision) and/or to do business.

The New York Mercantile Exchange (NYMEX) — where much of the trading

in natural gas futures takes place — also has some authority to prevent trading abuses

on its platform. In November 2003, it formulated a proposal regarding strict record

keeping, price disclosure, and use of a common computer-based data format, such

that trading information could be electronically scanned to find trading anomalies.

Subtitle C — Access to Federal Land

Sections 341-348: Leasing and Permitting Processes. These sections

would address concerns over delays in the permitting process for oil and gas

development after leases are granted. Some lease stipulations are considered by the

Administration to be impediments to domestic oil and gas development. However,

concerns have also been raised that faster permitting could bypass important

environmental protections.

Current Law. The federal oil and gas leasing program is governed under the

Mineral Leasing Act of 1920, as amended (30 U.S.C. 181 et. seq.). Bureau of Land

Management (BLM) procedures for an application for a permit to drill (APD) are

contained in 43 CFR 3162.3-1. The APD is posted for 30 days. Within 5 working

days after the 30-day period, the BLM consults with surface-managing agencies

whose consent is also required, then notifies the applicant of the results. The BLM

is also required to process the application within the 35-day period. The Bush

Administration has taken some action on this issue, including processing and

conducting environmental analyses on multiple permit applications with similar

characteristics, implementing geographic area development planning for oil and gas

fields or areas within a field, and allowing for block surveys of cultural resources.

Conference Agreement. An Office of Federal Energy Project Coordination

(FEPC) would be established to review and report on accomplishments that are

considered more efficient and effective for federal permitting (Sec. 341). The

Secretary of the Interior would perform an internal review of the federal onshore oil

and gas leasing and permitting process with particular focus on lease stipulations

affecting the environment and conflicts over resource use (Sec. 342). The Secretary

would be required to ensure expeditious completion of environmental and other

reviews and implement “best management practices” that would lead to timely action

on oil and gas leases and drilling permits (Sec. 343). The Secretaries of the Interior

and Agriculture would be required to sign an MOU on the “timely processing” of oil

and gas lease applications, surface use plans and drilling applications, the elimination

of duplication, and ensuring consistency in applying lease stipulations (Sec. 344).

The U.S. Geological Survey would be required to estimate onshore oil and gas

resources and identify impediments and restrictions that might delay permits. The

Department of Energy would be required to make regular assessments of economic

reserves (Sec. 345). Compliance with Executive Order No. 13211 (42 U.S.C. 12301

note), requiring energy impact studies, would be required before taking action on

regulations having an effect on domestic energy supply (Sec. 346).

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A pilot program would be established to demonstrate energy development on

federal land in accordance with the multiple-use mandate; Wyoming, Montana,

Colorado, Utah, and New Mexico would be asked to participate (Sec. 347). The

Secretary of the Interior would have 10 days after receiving an application for a

permit to drill (APD) to notify the applicant whether the APD was complete. The

Secretary would have 30 days after a complete APD was submitted to issue or defer

a permit with correcting measures. If deferred, the applicant would have a two-year

window to complete the application, as specified by the Secretary. If the applicant

met the requirements, then the Secretary would issue a permit within 10 days. The

Secretary would deny the permit if the criteria were not met within the two-year

period (Sec. 348).

Section 349: Fair Market Rental Value Determinations for Public

Land and Forest Service Rights-of-Way. The Secretaries of the Interior and

Agriculture would annually revise and update rental fees for land encumbered by

linear rights-of-way to reflect fair market value.

Section 350: Energy Facility Rights-of-Way and Corridors on

Federal Lands. Not later than one year after enactment, the Secretaries of the

Interior and Agriculture, in consultation with Secretaries of Defense, Commerce, and

Energy and FERC, would submit to Congress a report addressing the location of

existing rights-of-way on federal land for oil and gas pipelines and electric

transmission and distribution facilities.

Section 351: Consultation Regarding Energy Rights-of-Way on

Public Land. Within six months after enactment, the Secretaries of the Interior and

Agriculture would be required to enter into an MOU to coordinate environmental

compliance and processing of rights-of-way applications.

Section 352: Renewable Energy on Federal Lands. The Secretaries of

Agriculture and the Interior, in consultation with others, would prepare a five-year

plan for encouraging renewable energy development, including an analysis of rights

of way and projected net benefits of government incentives. A National Academy of

Sciences study would be required within two years to assess renewable energy on the

outer continental shelf. This provision is new to the conference report.

Section 353: Electricity Transmission Line Right-of-Way in

Cleveland National Forest and Adjacent Public Land. The Bureau of Land

Management would become the lead federal agency for environmental and other

necessary reviews for a high-voltage electricity transmission line right-of-way

through the Trabuco Ranger District of the Cleveland National Forest in California.

Section 354: Sense of Congress Regarding Development of

Minerals Under Padre Island National Seashore. In recognition of the split

estate on Padre Island National Seashore, it would be the sense of Congress that the

federal government owns the surface rights while the mineral rights are held privately

and also by the state of Texas. The implications of this section are uncertain.

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Section 355: Encouraging Prohibition of Offshore Drilling in the

Great Lakes. States adjacent to the Great Lakes would be encouraged to prohibit

off-shore drilling in the Great Lakes.

Section 356: Finger Lakes National Forest Withdrawal. This provision

would withdraw all federal land within the boundary of Finger Lakes National Forest

in the state of New York from entry, appropriation, or disposal under public land

laws and disposition under all laws relating to oil and gas leasing. This section was

not included in the House and Senate bills.

Section 357: Study on Lease Exchanges in the Rocky Mountain

Front. The Secretary of the Interior would, among other things, consider

opportunities for domestic oil and gas production through the exchange of nonproducing leases in defined areas of the Rocky Mountain Front for other comparable

tracts, consider compensation for the exchange or cancellation of a non-producing

lease, and assess the economic impact on the lessees and the state under a lease

exchange or cancellation. Statutory guidelines would be provided for valuation of

non-producing leases. This section was not included in the House and Senate bills.

Section 358: Federal Coalbed Methane Regulation. States on the list

of “affected states” under section 1339(b) of the Energy Policy Act of 1992 (42

U.S.C. 13368(b)) would be removed if they took specified actions within three years

after enactment of H.R. 6 or had previously taken action under section 1339(b). The

list of “affected states” established under the Energy Policy Act of 1992 (42 U.S.C.

13368 (b)) includes West Virginia, Pennsylvania, Kentucky, Ohio, Tennessee,

Indiana, and Illinois. These states are on the list as a result of coalbed methane

(CBM) ownership disputes, impediments to development, lack of a regulatory

framework to encourage CBM development in the state, and no current extensive

development of CBM. A state may be removed from the list through a petitioning

process initiated by the governor of that state. This provision was not included in the

House and Senate bills.

Section 359: Livingston Parish Mineral Rights Transfer. Section 102

of P.L. 102-562 is amended by striking the “Conveyance of Lands” provision, which

maintains the reservation of mineral rights held by the United States in specific areas

of Livingston Parish, Louisiana. This provision was not included in the House and

Senate bills.

Subtitle D — Alaska Natural Gas Pipeline

This Subtitle would facilitate the construction of a pipeline to transport natural

gas from the Alaskan North Slope (ANS) to the lower 48 states.

Section 371: Short Title. Subtitle D would be cited as the Alaska Natural

Gas Pipeline Act.

Section 372: Definitions. ANS natural gas would be defined as lying north

of 64 degrees north latitude; the Transportation Project would be defined as

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delivering this gas to the Alaska-Canada border by a route heading south from

Prudhoe Bay.

Section 373: Issuance of Certificate of Public Convenience and

Necessity. FERC would be directed to issue a certificate of convenience and

necessity for an applicant seeking to build this pipeline under the terms the Natural

Gas Act alone, presuming both a public need and that sufficient transport capacity

existed at the Canadian end of the pipe to deliver the gas to U.S. markets. An

expedited hearing process would be provided for, directing FERC to issue a

certificate within 60 days after the issuance of a final environmental impact

statement.

Section 373 (d) would prohibit construction of a pipeline via a northerly route

to Canada transiting under the Beaufort Sea. This would preclude a proposal that was

floated a few years ago but garnered little support.

In order to elicit interest in the pipeline project, an “open season” for potential

customers would be held 120 days after the energy bill was enacted. An open season

is a formalized proceeding in which the public demand for a project is gauged, giving

an indication of the capacity that might be called for in an Alaska Gas Transport

project.

An assessment of Alaska in-state gas needs would also be made under this

section, and access to the state’s royalty gas for consumption within Alaska would

be facilitated.

Section 374: Environmental Reviews. This section would fast-track

NEPA compliance by the proposed Alaska gas pipeline. FERC would be designated

as the lead agency under NEPA, setting the schedule and coordinating environmental

reviews, rather than having each federal agency with jurisdiction over an aspect of

the project proceed separately with the review process. The Commission would be

responsible for consolidating the environmental reviews of all other federal agencies

into one environmental impact statement (EIS), which would satisfy all NEPA

requirements for the project. The section would require FERC to issue a draft EIS

within one year after a project application date, and a final EIS within 180 days after

issuing the draft, unless there were delays “for good cause.”

Section 375: Pipeline Expansion. This section would provide FERC with

authority to order the capacity of the project to be expanded — after holding a

hearing — on the basis of one or more requests for additional capacity. The applicant

would have to make a firm commitment for transport services. The hearing would

determine that tariffs were non-discriminatory, the expansion would not adversely

impact other shippers, and that adequate downstream facilities existed that would

deal with additional throughput.

Section 376: Federal Coordinator. An independent executive branch

Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects

would be established, headed by a presidential appointee who would be confirmed

by the Senate. The Secretary of Energy would hold these authorities for up to 18

months while a coordinator was being put in place. The coordinator would be

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responsible for expeditious discharge of other agencies’ responsibilities and ensuring

that the provisions of the Alaska gas subtitle of this bill were complied with.

The coordinator would not have authority to override or amend FERC decisions.

He or she would enter into an agreement with the state to jointly monitor

Transportation System construction, with the state and federal governments having

primary responsibility for sections of the project crossing their respective lands.

Section 377: Judicial Review. The U.S. Court of Appeals for the District

of Columbia would be designated as having original and exclusive jurisdiction over

disputes arising from this proposed legislation. Claims arising under this subtitle

would have to be brought not later than 60 days after the action giving rise to the

claim, and the court would be directed to give them expedited consideration.

Section 378: State Jurisdiction Over In-State Delivery of Natural

Gas. Were the Alaska pipeline project to be constructed, the state could benefit by

using it as a backbone system for distributing gas. This section would provide that

the state hold jurisdiction over intrastate distribution pipelines that might be supplied

by the Transportation Project, ensuring that state pipelines and natural gas would not

fall under FERC jurisdiction. Sec. 338 notes that FERC would have tariff jurisdiction

of the Transportation Project, and that the state should coordinate regarding rates for

in-state consumers.

Section 379: Study of Alternative Means of Construction. Were no

application for Transportation Project construction to be filed within 18 months of

the enactment of this act, the Secretary of Energy would be required to conduct a

study of alternative construction approaches. The bill calls for consideration of such

factors as establishing a federal corporation, joint federal and private-sector

ownership, and securing alternative means of financing. The Secretary would report

to Congress on the study’s findings and make recommendations on how the project

might be accomplished.

Section 380: Clarification of ANGTA Status and Authorities. The bill

would not change anything previously done under the Alaska Natural Gas

Transportation Act of 1976 (ANGTA, 15 U.S.C. 719g), but would provide authority

for responsible agencies to update decisions made in prior years to meet current

project requirements. The project sponsor could be required to update environmental

impact studies and analyses and compliance plans.

Section 381: Sense of Congress Concerning Use of Steel

Manufactured in North America and Negotiation of a Project Labor

Agreement. The project sponsors should make “every effort” to use steel

manufactured in North America and to negotiate a project labor agreement.

Section 382: Sense of Congress and Study Concerning

Participation by Small Business Concerns. Were the project to go forward,

it would be the sense of Congress that small businesses — as defined in the Small

Business Act (15 U.S.C. 632(a)) — should participate to the maximum. The

Comptroller General would be directed to study the extent of possible participation

CRS-31

and report to Congress not later than one year after enactment. An update every five

years would also be called for.

Section 383: Alaska Pipeline Construction Training Program. This

section would authorize grants to recruit and train adult workers in Alaska to work

on the gas transport project. It would call for the Governor of Alaska to request funds

after certifying that the constructions work was reasonably expected to begin within

two years.

Section 384: Sense of Congress Concerning Natural Gas Demand.

This section would express congressional concern that the demand for natural gas

will outstrip supplies from North American producing areas that already have

pipeline connections. It would express the belief that both Alaskan and Canadian

resources are needed to meet future demand, and that such demand would be strong

enough that historic Canadian and lower 48 U.S. producers would not be displaced

in the marketplace.

Section 385: Sense of Congress Concerning Alaskan Ownership.

This section would convey the sense of Congress that it is in the economic interest

of Alaska to have local ownership of a share of the pipeline, and that project sponsors

would be encouraged to work with interested local parties seeking to participate.

Section 386: Loan Guarantees. The bill would grant authority to the

Secretary of Energy to issue “Federal guarantee instruments,” providing loan

guaranties to pipeline certificate holders. The instruments would expire two years

after the certificate had been issued, meaning that the project sponsor would have to

be in the project financing stage by that time. The loan or debt obligation would have

to be issued by a qualified lender, the loan could not be for more than 30 years, and

the total amount of the guaranteed debt obligations would be limited to $18 billion,

adjusted for inflation from the date of enactment. The guaranteed loan could cover

all legitimate components of the transport system.

The bill also would authorize the Secretary to extend these loan guarantees to

the Canadian segment of the Alaska gas transportation project.

Current Law. The basic law addressing the certification of pipelines is the

Natural Gas Act, which gives FERC broad-based authority to certificate pipelines,

facilitating their construction and ensuring that their rates and tariffs are “just and

reasonable.” In addition to the NGA, the Alaska Natural Gas Transportation Act of

1976 was enacted specifically to pave the way for the project visualized in H.R. 6.

Under ANGTA, a presidential finding specified the pipeline route that is the focal

point of Subtitle D.

Policy Context. Significant amounts of proven ANS gas reserves lie in and

around the Prudhoe Bay field and remain there because a transportation system has

not been developed, despite enactment of ANGTA in 1976. Demand for natural gas

in the lower 48 states has grown in the recent past, and supply has become tight,

resulting in steadily increasing average prices and disruptive price volatility during

high-demand winter months. While an Alaskan gas pipeline is many years off —

CRS-32

even if construction began today — the current supply-demand situation has become

a source of longer-term concern among policymakers.

Proponents of the loan guarantees contend that the inherent risk is so high in

building an Alaska pipeline, at an estimated cost of $20 billion, that it could not be

financed by conventional means. The conference bill’s loan guarantees would offer

those providing the project’s capital some assurance that a certain amount of their

investment would be repaid, although exposing the federal government to potential

losses. Other proposals have utilized commodity price guarantees or a combination

of loan and price guarantees.

Title IV — Coal

Subtitle A — Clean Coal Power Initiative

Sections 401-404: Clean Coal Power Initiative. The Clean Coal Power

Initiative (CCPI) is in its third year of funding under a 10-year, $2 billion program

outlined by the Bush Administration. According to DOE, the program supports costshared projects with the private sector to demonstrate new technologies that could

boost the efficiency and reduce emissions from coal-fired power plants.

Current Law. CCPI does not currently have a specific authorization, although

it has been funded through the annual Interior and Related Agencies Appropriations

bill. The program supersedes the Clean Coal Technology Program, which has

completed most of its projects and has been subject to rescissions and deferrals since

the mid-1990s.

Conference Agreement. Funding for CCPI would be authorized for $200

million for each year from FY2004-FY2012 (Sec. 401). The technical criteria would

be established for coal-based gasification and other projects. The federal share of

financing for each clean coal project would not exceed 50% (Sec. 402). A report on

the projects’ status and technical milestones would be submitted after the first year

and every two years by the Secretary of Energy to various congressional committees

(Sec. 403). The program would include grants to universities to establish Centers of

Excellence for energy systems of the future (Sec. 404).

Policy Context. A key ingredient of President Bush’s May 2001 National

Energy Policy is to bolster U.S. energy supply. One of its goals is to use coal more

efficiently, as coal is an abundant national resource. The Administration contends

that new technologies could cost-effectively reduce emissions from coal-fired power

plants and overcome barriers to expanded coal use.

Subtitle B — Clean Power Projects

Sections 411-416: Clean Power Projects. The Secretary of Energy would

be authorized to provide a $125 million loan to an experimental clean coal power

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plant in Healy, Alaska (Sec. 411). Loan guarantees would be authorized for a power

plant using integrated combined-cycle (IGCC) technology in a deregulated market

and receiving no ratepayer subsidy (Sec. 412). A power plant using IGCC

technology in a taconite-producing region of the United States could receive loan

guarantees (Sec. 413). Loan guarantees would be available for at least one

petro-coke gasification polygeneration project, involving co-production of electricity

and fuels (Sec. 414). Loan guarantees would be authorized for an IGCC project

using low-Btu coal that would be combined with renewable energy sources, offer the

potential to sequester carbon dioxide emissions, and provide hydrogen for fuel-cell

demonstrations. The facility would be located in the Upper Great Plains, and its goal

would be to provide at least 200 megawatts of power at competitive rates (Sec. 415).

The Secretary of Energy would be directed to use $5 million of appropriated funds

to begin a project managed by the DOE Chicago Operations Office to demonstrate

high-energy electron scrubbing technology for high-sulfur coal emissions (Sec. 416).

Subtitle C — Federal Coal Leases

Sections 421-427: Federal Coal Leases. This subtitle would modify

federal coal leasing procedures to encourage greater coal production on federal lands.

Issues raised by these provisions include their impact on regional competition and

returns to the U.S. Treasury.

Current Law. Under the Mineral Leasing Act of 1920 (30 U.S.C. 203),

modifications to an existing coal lease shall not exceed 160 acres or add acreage

larger than that in the original lease. Coal leases are subject to diligent development

requirements, but the Secretary of the Interior may suspend the condition upon

payment of advance royalties. Advance royalties are computed on a fixed production

reserve ratio, and the aggregate number of years advance royalties may be accepted

in lieu of production is 10. An operation and reclamation plan must be submitted

within three years after a lease is issued under the Leasing Act (30 U.S.C. 207).

Financial assurance is required to guarantee payment of bonus bid installments (30

U.S.C. 201 (a)).

Conference Agreement. The conference agreement would repeal the 160

acre limitation on coal lease modifications. The total area added to an existing coal

lease through a modification could not exceed 1,280 acres or add acreage larger than

the original lease (Sec. 421). Criteria would be established for extending the mine-out

period of a coal lease beyond 40 years (Sec. 422). The Secretary may upon payment

of an advance royalty, suspend a coal lessee’s requirement for continuous operation.

Advance royalties would be based on the average price of coal sold on the spot

market from the same region, and the aggregate number of years advance royalties

could be accepted in lieu of production would be 20 (Sec. 423). The current

three-year deadline for submission of a coal lease operation and reclamation plan

would be repealed (Sec. 424). The financial surety bond or other financial guarantee

for a bonus bid would no longer be required (Sec. 425). The Secretary of the Interior,

in consultation with the Secretaries of Agriculture and Energy, would be required to

assess coal on public lands, including low-sulfur coal and various impediments to

developing such resources (Sec. 426). Amendments made under this provision would

apply to any coal lease issued before, on, or after the date of enactment (Sec. 427).

CRS-34

Subtitle D — Coal and Related Programs

Section 441: Clean Air Coal Program. This section would amend the

Energy Policy Act of 1992 with the addition of a clean air coal program to promote

increased use of coal, acceptance of new clean coal technologies, and advance

deployment of pollution control equipment to meet the Clean Air Act (42 U.S.C.

7402 et seq.).

A total of $500 million over FY2005-FY2009 would be authorized for pollution

control projects to control mercury, nitrogen dioxide, sulfur dioxide emissions,

particulate matter, or more than one pollutant; and allow use of the waste byproducts.

Additional authorizations totaling $1.5 billion over FY2006-FY2012 would be

provided for projects using coal-based electrical generation equipment and processes,

and associated environmental control equipment.

Project selection criteria would be based on significantly improving air quality,

replacing less efficient units, and improving thermal efficiency. Up to 25% of

projects would be cogeneration or other gasification projects. At least 25% of the

projects would be solely for electrical generation, with priority for those generating

less than 600 MW. Federal loans or loan guarantees would not exceed 30% of the

total funds obligated during any fiscal year. The federal share of projects funded

would not exceed 50%.

No technology funded by the program, or level of emissions reduction achieved

by funded projects, would be considered adequately demonstrated for purposes of

Sections 111, 169, or 171 of the Clean Air Act.

Title V — Indian Energy

Section 501: Short Title. The “Indian Tribal Energy Development and SelfDetermination Act of 2003.”

Section 502: Office of Indian Energy Policy and Programs. Title II

of the Department of Energy Organization Act (42 U.S.C. 7131 et. seq.) would be

amended to create the Office of Indian Energy Policy and Programs at the

Department of Energy.

Section 503: Indian Energy. Title 26 the Energy Policy Act of 1992 (25

U.S.C. 3501) would be replaced by this section, which outlines procedures whereby

Indian tribes would be able to develop and manage the energy resources located on,

and rights-of-way through, tribal land. Within a year of enactment of the bill, the

Department of the Interior (DOI) would issue regulations on the requirements for

approval of tribal energy resource agreements. Under their own tribal energy

resource agreements as approved by DOI, Indian tribes would be able to enter into

leases or business agreements for energy development and grant rights-of-way over

tribal land for pipelines or electric lines.

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Assistance for tribal energy development would be provided through DOI by

grants and low-interest loans and through DOE by grants and loan guarantees.

Federal agencies could give preference to Indian energy when purchasing energy

products and byproducts.

DOI would be required to undertake a review and make recommendations

regarding tribal opportunities under the Indian Mineral Development Act of 1982 (25

U.S.C. 2101 et. seq.). The Bonneville Power Administration and Western Area

Power Administration would be authorized to assist in developing distribution

systems that provide power to Indian tribes using the federal transmission system.

DOE, in coordination with the Army and DOI, would conduct a study of the

feasibility of obtaining a marketable, steady electricity source from wind energy

generated on tribal lands connected with hydropower generated by the U.S. Army

Corp of Engineers at Missouri River powerplants.

The language of the conference agreement combines and expands on both the

House- and Senate-passed bills with regard to Indian Energy.

Section 504: Four Corners Transmission Line Project. The Dine

Power Authority, an enterprise of the Navajo nation, would be eligible to receive

grants and other assistance to develop a transmission line from the Four Corners Area

to southern Nevada, including related generation facilities.

Section 505: Energy Efficiency in Federally Assisted Housing. The

Department of Housing and Urban Development (HUD) would be required to

promote energy efficiency and energy conservation in federally assisted housing

located on Indian land. This provision would expand current law regarding

affordable housing development for Native Americans to include use of energyefficient technologies and innovations.7

Section 506: Consultation with Indian Tribes. The Secretaries of Energy

and of the Interior would be required to consult with Indian tribes in carrying out this

title.

Title VI — Nuclear Matters

Subtitle A — Price-Anderson Act Amendments

Sections 601-611: Price-Anderson Nuclear Liability Coverage. The

Price-Anderson Act,8 which addresses liability for damages to the general public

from nuclear incidents, would be extended through 2023. The Price-Anderson

liability system was up for reauthorization on August 1, 2002, and it was extended

for commercial nuclear reactors through December 31, 2003, by the FY2003

omnibus continuing resolution (P.L. 108-7). Even without an extension, existing

reactors will continue to operate under the current Price-Anderson liability system,

7

25 U.S.C. 4132(2).

8

Primarily Sec. 170 of the Atomic Energy Act of 1954, 42 U.S.C. 2210.

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but any new reactors would not be covered. Price-Anderson coverage for DOE

nuclear contractors was extended through December 31, 2004, by the National

Defense Authorization Act for FY2003 (P.L. 107-314).

Current Law. Under Price-Anderson, the owners of commercial reactors must

assume all liability for nuclear damages awarded to the public by the court system,

and they must waive most of their legal defenses following a severe radioactive

release (“extraordinary nuclear occurrence”). To pay any such damages, each

licensed reactor must carry financial protection in the amount of the maximum

liability insurance available, which was increased by the insurance industry from

$200 million to $300 million on January 1, 2003. Any damages exceeding that

amount are to be assessed equally against all covered commercial reactors, up to

$95.8 million per reactor (most recently adjusted for inflation on August 20, 2003).

Those assessments — called “retrospective premiums” — would be paid at an annual

rate of no more than $10 million per reactor, to limit the potential financial burden

on reactor owners following a major accident. Including two that are not operating,

105 commercial reactors are currently covered by the Price-Anderson retrospective

premium requirement.

Funding for public compensation following a major nuclear incident, therefore,

would include the $300 million in insurance coverage carried by the reactor that

suffered the incident, plus the $95.8 million in retrospective premiums from each of

the 105 currently covered reactors, totaling $10.4 billion. On top of those payments,

a 5% surcharge may also be imposed, raising the total per-reactor retrospective

premium to $100.6 million and the total potential compensation for each incident to

about $10.9 billion. Under Price-Anderson, the nuclear industry’s liability for an

incident is capped at that amount, which varies depending on the number of covered

reactors, the amount of available insurance, and an inflation adjustment that is made

every five years. Payment of any damages above that liability limit would require

congressional approval under special procedures in the act.

The Price-Anderson Act also covers contractors who operate hazardous DOE

nuclear facilities. The liability limit for DOE contractors is the same as for

commercial reactors, excluding the 5% surcharge, except when the limit for

commercial reactors drops because of a decline in the number of covered reactors.

Because the most recent adjustments have raised the commercial reactor liability

limit to a record high, the liability limit for DOE contractors is currently the same as

the commercial limit, minus the surcharge, or $10.4 billion. Price-Anderson

authorizes DOE to indemnify its contractors for the entire amount, so that damage

payments for nuclear incidents at DOE facilities would ultimately come from the

U.S. Treasury. However, the law also allows DOE to fine its contractors for safety

violations, and contractor employees and directors can face criminal penalties for

“knowingly and willfully” violating nuclear safety rules. However, Section 234A of

the Atomic Energy Act specifically exempts seven non-profit DOE contractors and

their subcontractors. Under the same section, DOE automatically remits any civil

penalties imposed on non-profit educational institutions serving as DOE contractors.

Conference Agreement. Price-Anderson liability coverage for commercial

reactors and for DOE contractors would be extended through December 31, 2023

(Sec. 602). The total retrospective premium for each reactor would be set at the

CRS-37

current level of $95.8 million and the limit on per-reactor annual payments raised to

$15 million (Sec. 603), with both to be adjusted for inflation every five years (Sec.

607). For the purposes of those payment limits, a nuclear plant consisting of multiple

small reactors (100-300 megawatts, up to a total of 1,300 megawatts) would be

considered a single reactor (Sec. 608). Therefore, a power plant with six 120megawatt modular reactors would be liable for retrospective premiums of up to $95.8

million, rather than $574.8 million. The liability limit on DOE contractors would be

set at $10 billion per accident, also to be adjusted for inflation, under the conference

agreement (Sec. 604).

The liability limit and maximum indemnification for DOE contractors for

nuclear incidents outside the United States would be raised from $100 million to

$500 million (Sec. 605). However, Price-Anderson indemnification would be

prohibited for contracts related to nuclear facilities in countries found to sponsor

terrorism (Sec. 610). None of the increased liability limits would apply to nuclear

incidents taking place before the amendments are enacted (Sec. 609). The Nuclear

Regulatory Commission (NRC) and DOE would have to report to Congress by the

end of 2019 on the need for further Price-Anderson extensions and modifications

(Sec. 606).

For future contracts, the conference agreement would eliminate the civil penalty

exemption for nuclear safety violations by the seven non-profit contractors listed in

current law. DOE’s authority to automatically remit penalties imposed on all nonprofit educational institutions serving as contractors would also be repealed.

However, the bill would limit the civil penalties against a non-profit contractor to the

amount of management fees received under that contract (Sec. 611).

The House-passed version of H.R. 6 would have authorized the federal

government to sue DOE contractors to recover at least some of the compensation that

the government had paid for any accident caused by intentional DOE contractor

management misconduct. Such cost recovery would have been limited to the amount

of the contractor’s profit under the contract involved, and no recovery would have

been allowed from nonprofit contractors. However, the conference agreement does

not include that provision. Most of the major provisions in the conference agreement

are similar to provisions in both the House and Senate versions.

Policy Context. The Price-Anderson Act’s limits on liability were crucial in

establishing the commercial nuclear power industry in the 1950s. Supporters of the

Price-Anderson system contend that it has worked well since that time in ensuring

that nuclear accident victims would have a secure source of compensation, at little

cost to the taxpayer. However, opponents contend that Price-Anderson subsidizes

the nuclear power industry by protecting it from some of the financial consequences

of the most severe conceivable accidents.

Because no new U.S. reactors are currently planned, missing the deadline for

extension would have little short-term effect on the nuclear power industry.

However, any new DOE contracts signed during Price-Anderson expiration would

have to use alternate indemnification authority.

CRS-38

Subtitle B — General Nuclear Matters

Section 621: Commercial Reactor License Period. The initial 40-year

period for a commercial nuclear reactor license would begin when NRC authorized

the reactor to commence operation. Under current law (Atomic Energy Act sections

103 and 185), the 40-year period may start before construction of a reactor begins,

when a combined construction permit and operating license is issued. The

conference provision was taken from the House bill, but the Senate version included

similar language.

Section 622: NRC Training and Fellowship Program. Funding would

be authorized for NRC to conduct a training and fellowship program to develop

critical nuclear safety regulatory skills. This is nearly identical to a House provision.

Section 623: Cost Recovery From Government Agencies. NRC would

be authorized to charge cost-based fees for all services rendered to other federal

agencies. Such authority is limited under current law (Atomic Energy Act, Section

161 w.) This provision is identical to language in the House bill.

Section 624: Elimination of Pension Offset for Key NRC Personnel.

When NRC has a critical need for the skills of a retired employee, NRC could hire

the retiree as a contractor and exempt him or her from the annuity reductions that

would otherwise apply. This is identical to language in the House bill.

Section 625: Antitrust Review Suspension. NRC would no longer have

to submit nuclear reactor license applications to the Attorney General for antitrust

reviews, as currently required by Atomic Energy Act, Section 105 c. The Senate bill

would have replaced the existing antitrust review requirement with modified

procedures for new reactor applications; the House version had no provision.

Section 626: Decommissioning Fund Protection. NRC would be

explicitly authorized to issue regulations ensuring that funds collected to

decommission nuclear power plants would not be used for other purposes. This

provision is particularly aimed at cases in which an original nuclear power plant

owner has sold the plant but retained control over decommissioning funds collected

before the ownership transfer. A similar but more detailed provision was included

in the Senate bill.

Section 627: Limitation on DOE Legal Fee Reimbursement. Except

as required by existing contracts, DOE would be prohibited from reimbursing its

contractors for legal expenses incurred in defending against “whistleblower”

complaints that are ultimately upheld. This provision was taken from the House bill.

Section 628: Reactor Decommissioning Pilot Program. A DOE

program would be established to decommission the sodium-cooled test reactor in

northwest Arkansas. This provision was taken from the Senate bill.

Section 629: Feasibility Study for Commercial Reactors at DOE

Sites. The Secretary of Energy would be required to submit a study to Congress on

CRS-39

the feasibility of developing commercial nuclear power plants at existing DOE sites.

This provision was taken from the House bill.

Section 630: Government Uranium Sales. With certain exceptions,

DOE uranium sales would be restricted to 3 million pounds per year from FY2004FY2009, 5 million pounds per year in FY2010-FY2011, 7 million pounds per year

in FY2012, and 10 million pounds per year thereafter. Up to 21 million pounds could

be transferred to the uranium enric

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Omnibus Energy Legislation, 108th Congress: Comparison of Non-Tax Provisions in the H.R. 6 Conference Report and S. 2095 · RL32204 | Frix