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
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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.
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(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.
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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.
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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.
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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.
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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
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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
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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
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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.
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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.
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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).
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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
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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.
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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
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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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