Congressional leaders say they want to have key portions of the White House's energy blueprint ready for President George W. Bush to sign into law before the US Labor Day holiday Sept. 3.
Many of the White House's recommendations from its May report can be implemented administratively. The document emphasizes interagency cooperation on energy policy and calls on regulators to streamline environmental and drilling permits whenever possible.
About one third of the president's recommendations, however, require legislative action, including some controversial issues. Some of the larger legislative items originally sought from Congress include: expanding tax credits for alternate energy sources; opening up to drilling a portion of the Arctic National Wildlife Refuge coastal plain; and creating a "multipollutant" market-based emission program for power plants.
The Republican-led House of representatives and Democratic-controlled Senate each are moving forward with energy bills that seek to codify portions of the White House energy plan. Consensus remains elusive for now, but party leaders on both sides of the aisle are optimistic legislation that has bipartisan support can be passed this summer. Already Congress appears willing to streamline reformulated gasoline (RFG) rules and improve vehicle efficiency standards.
Bush administration officials also seem amenable to RFG changes and new vehicle standards, although they have not spelled out specifics.
Other parts of the White House plan may be tougher to legislate, lobbyists contend.
ANWR, royalty relief debated
ANWR development and expanded tax credits are unlikely, given the present political pulse on Capitol Hill, according to industry officials.
Due to environmental reasons, the opening of ANWR is opposed solidly by a bipartisan group in both houses of Congress. And new alternate energy tax credits-which the White House aggressively supported earlier in the congressional session-are now on the back burner because of White House budget concerns. Those same budget worries may make expanding tax credits for traditional fossil fuels an even harder sell to the Bush administration, industry lobbyists concede.
Nevertheless, congressional support for expanded energy tax incentives remains strong, despite the White House's reservations. Pending energy proposals by Republican and Democratic leaders give new incentives, such as royalty relief to marginal producers.
In the House, a July 5 draft bill under consideration by the House Committee on Resources seeks to address key upstream issues discussed by the White House's National Energy Policy Development Group. At presstime, a hearing on the expected bill was tentatively scheduled for July 11, with Interior Sec. Gale Norton to testify.
Like the June 20 version, the draft bill would reduce royalties on marginal wells when crude prices fall below $15/bbl, a provision similar to pending Senate legislation offered by Chairman Jeff Bingaman (D-NM) (OGJ Online, June 20, 2001). The Resources committee draft also would open a portion of the coastal plain of ANWR and offer deepwater royalty relief for western and central Gulf of Mexico leases.
Congressional staff have made revisions as well. The draft does not include a proposal to amend the Coastal Zone Management Act to expedite the appeals process for offshore drilling. That provision was opposed by many coastal states. Another provision that sought to expand state oversight of federal royalty collections was also stripped from the bill because of objections from the Department of the Interior. A royalty-in-kind program is included in the draft as a voluntary, not mandatory, program.
However, public land advocates are still expected to be upset over a new provision that they say would strip the US Forest Service's authority over drilling debates regarding the "roadless" rule. A provision in the bill directs the Secretary of the Interior to "consult" with the Secretary of Agriculture "in determining stipulations on surface use under the lease."
Downstream matters
Under draft legislation, the federal RFG program would be streamlined and vehicle fuel efficiency standards raised (see related article, p. 32). The House bill, however, does not detail how much the fuel efficiency standard should be increased. The current standard calls for national averages of 27.5 mpg for cars and 20.5 mpg for light trucks.
With regard to RFG, refiners would have more flexibility meeting oxygenate standards. Instead of a "minimum" 2 wt %/gal basis, fuels sold in a given area could contain an "average" of 2%, allowing for credit trading.
Similar initiatives are being considered in the Senate. Given that there is White House support for both measures, chances are good that changes to RFG and fuel efficiency standards for cars will be considered this summer, lobbyists said.
The House Commerce on Energy and Commerce draft would also direct the US Environmental Protection Agency and Department of Energy to review current federal, state, and local fuel requirements in an effort to reduce specialized "boutique" clean fuel requirements. That language is almost identical to the White House energy report and could be done without Congressional approval.
In the Senate, the Committee on Energy and Natural Resources has outlined an ambitious schedule throughout the month that will address key portions of pending energy legislation previously released by the current Committee Chairman Jeff Bingaman (D-NM) and the prior chairman, Frank Murkowski (R-Alas.).
