Stalemate likely in efforts to clarify Section 526

US House and Senate committees have each approved amendments to Section 526 of the 2007 Energy Independence and Security Act. But the devil, once again, is in the details.

Rep. Henry A. Waxman (D-Calif.) fought to have Section 526, which bars government agencies from signing contracts for fuel from unconventional sources with a bigger carbon impact than conventional sources, inserted in the 2007 energy bill late in its conference.

His primary concern was a US Air Force coal-to-liquids program. But it quickly became apparent early in 2008 that the prohibition could be extended to crude oil produced from Canadian oil sands. That crude represents a growing part of the oil Canada supplies US refineries, particularly in the Upper Midwest.

Waxman exchanged letters with US Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) on the matter, and the House passed a measure which aimed to clear things up. To many people, it did not.

“Last year, the House apparently tried to set a precedent,” an oil industry lobbyist told me on July 10. “The problem is that while the House went on record, its language didn’t really clarify what’s on the books.”

Senate went further

So when Bingaman’s committee passed a broad-based energy bill on June 17, the components included a Section 526 provision proposed by Sam Brownback (R-Kan.) and Bingaman which went further than the House did in 2008.

Two House members, Dan Boren (D-Okla.) and K. Michael Conaway (R-Tex.), submitted language similar to the Brownback-Bingaman amendment to the House Rules Committee which was marking up the federal defense authorization bill, but it was ruled out of order. The committee also rejected a proposal by Rob Bishop (R-Utah) to give the US Defense secretary authority to waive Section 526’s requirements if he considers it appropriate.

Instead, it approved an amendment on June 24 offered by a freshman, Gerald E. Connelly (D-Va.), which essentially reiterated the 2008 measure with language about fuel produced from a predominantly unconventional source. The full House passed the defense authorization bill, with the amendment, a day later in a 416-0 vote.

Arguably conventional

“Section 526 originally had so many ambiguous provisions, and last year’s amendment didn’t help it. We would argue that oil from oil sands has been produced for decades and could reasonably be considered a conventional source, for example,” the lobbyist said.

The goal remains to let US refiners keep using crude from Canadian oil sands, she continued. She said that some people hoped the Senate would insert the Brownback-Bingaman amendment as it considered its own defense authorization bill beginning July 13. That would force a conference to reconcile differences with the Connelly amendment.

Otherwise, the lobbyist said, the only way would be for the House to address the question again in the Energy and Commerce Committee. That doesn’t seem likely, since it is chaired by Section 526’s author, she added.

Contact Nick Snow at nicks@pennwell.com

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