US Senate Democrats introduce energy reform bill

US Senate Democrats Wednesday introduced an energy reform plan they said is more balanced than a pending Republican proposal that passed the House last August.

By the OGJ Online Staff

WASHINGTON, DC, Dec. 5 -- US Senate Democrats Wednesday introduced an energy reform plan they said is more balanced than a pending Republican proposal that passed the House last August.

"Our energy plan represents a new approach. It invests in new ways of thinking. It balances production and conservation and creates hundreds of jobs in the process," said Senate Majority Leader Tom Daschle (D-SD).

Daschle and other Democratic leaders, including the chairman of the Senate Committee on Energy and Natural Resources Jeff Bingaman (D-NM) and Sen. Byron Dorgan (D-ND), chairman of the Democratic Policy Committee, criticized the House bill as a "dig and drill" policy that represents the status quo.

"That's yesterday's policy. We believe in increasing domestic production of oil and gas, but we need to find ways to also limit demand," Dorgan said.

Daschle said he is committed to debating a comprehensive energy bill early next year, but said the legislative calendar is too crowded to consider it before Congress leaves for the year in mid-December.

Pro-industry Republicans have sharply criticized Daschle's decision to postpone an energy debate until next year. They argue Democrats are not taking the issue seriously.

"Sen. Daschle has not said when the Senate will vote on any energy bill. He may want to start debate in January, but when will it conclude?" said Sen. Frank Murkowski (R-Alas.). "A week? A month?"

Murkowski said the Democrats' new energy plan is nearly identical to an earlier proposal introduced by Bingaman last spring.

Democrats maintain their latest bill represents a more bipartisan, and therefore more realistic, approach than what Republicans have put on the table so far. The Senate bill addresses 9 out of the 10 key areas cited by the White House when it released its own energy blueprint in May, Democrats said. By comparison, the House bill only includes 5 priorities of the president.

And if Republicans insist on including controversial provisions, such as leasing in the Arctic National Wildlife Refuge, it may stall the process indefinitely, Daschle warned.

The most dramatic difference between the House and Senate bills is the contentious Alaska drilling issue. The House Republican plan would allow leasing of a portion of the coastal plain of ANWR. The Senate bill does not.

Bill provisions
The House bill also includes $34 billion in new energy tax incentives over 10 years, including $8 billion earmarked to expand tax breaks for marginal well production. The White House has joined with Democrats in expressing reservations over the cost of that measure. Other provisions of the House bill have been heartily endorsed by the administration, however. The bill seeks to expedite permitting, streamline regulations, and encourage domestic production.

The 400-page Senate bill does not yet include tax provisions; a separate committee is still drafting provisions that will be included early next year. But Democrats said they expect there to be a much greater emphasis on renewable energy. Similarly, the Democrats' latest energy proposal does not spell out how automakers should boost fuel efficiency, but they expect the provision to include higher standards for all vehicles including sport-utility vehicles. A House bill calls on automakers to find a way to reduce SUV fuel use by 5 billion gal/year over a 6-year period. Environmental groups say that does not go far enough. An earlier Democratic proposal that did not make it into the final bill would have boosted fuel efficiency standard from the current 27.5 miles/gal standard to 35 mpg over 10 years.

The Senate bill, unlike its House counterpart, seeks to give federal regulators a better roadmap to follow when regulating wholesale electric markets. It does not grant the Federal Energy Regulatory Commission permission to site interstate power lines. However, it does offer FERC more authority in other regulatory areas. It would strengthen the agency's jurisdiction over mergers to include mergers of holding companies that own utilities, mergers of generation-only utilities, and acquisitions of natural gas companies by electric companies. It would also repeal the Public Utility Holding Company Act, update the Public Utility Regulatory Policy Act, and expand federal authority to oversee consumer protections and reliability.

The Democratic bill does however include several provisions Republicans leaders support.

The bill would permanently authorize the operation of the Strategic Petroleum Reserve and the ability of the US to cooperate -- through the International Energy Agency -- with other oil-consuming nations to plan for and respond to any potential oil supply disruption. The bill also directs the SPR be filled to its current 700 million bbl capacity and requires a report on infrastructure bottlenecks that might impede drawdowns. It also requires recommendations for increasing the capacity of the stockpile.

It also would boost administrative funding for federal onshore oil and gas leasing programs to ensure adequate personnel at the Department of Interior, so that required environmental reviews related to oil and gas production on public lands can be completed more quickly.

Other language addresses oil and gas lease acreage limitations. The bill responds to consolidation in the domestic oil and gas industry by altering the acreage cap for oil and gas leases on federal lands so that producing leases are not included in existing statewide acreage limitations.

"This provides an incentive for producers to keep domestic acreage in production or to turn the leases over to another operator who will," the bill says.

The bill also would establish an Outer Continental Shelf Energy Infrastructure Security Program administered by the Department of Interior. Under the program, states close to leased federal offshore tracts (Alaska, Alabama, California, Florida, Louisiana, Mississippi, and Texas) and political subdivisions will receive funding based on production to fund security projects needed to protect infrastructure.

Controversial provisions
A portion of the Democrats' bill that is nearly as controversial as ANWR is language that requires the Environmental Protection Agency to mandate renewable fuel in the gasoline pool, starting with 2 billion gal/year in 2003 and increasing to 5 billion gal/year in 2012. It would also ban the use of the oxygenate methyl tertiary butyl ether within 4 years and authorize funds to clean up groundwater contamination.

States would also be allowed to waive the oxygen content from clean fuel programs. The bill would also offer grants to MTBE producers who convert production to other fuel additives.

The bill also seeks to integrate climate change with energy policy. The bill would establish a White House office to address the issue and create an interagency task force to promulgate policy. Additionally, the Department of Energy would have to create a new division to oversee a $4.75 billion research and development budget over a 9-year period.

The Department of Commerce, meanwhile, would be required to establish a database that included an inventory of emissions from "significant" sources and a registry of voluntary reductions.

The bill would also provide federal loan guarantees of up to $10 billion for an Alaska gas pipline, provided the applications for certificates to move forward were filed 6 months after the bill was passed. Democrats do not endorse a specific route but call for expedited federal review if a pipeline application is filed.

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