Congress wants to send White House energy legislation this summer

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 Labor Day. Already Congress appears willing to streamline reformulated gasoline rules and improve vehicle efficiency standards.


Maureen Lorenzetti
OGJ Online

WASHINGTON, DC, July 9 -- 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 Labor Day.

Many of the White House's recommendations from its May report can be done administratively. The document emphasizes interagency cooperation on energy policy and calls on regulators to streamline environmental and drilling permits whenever possible.

But about one-third of the president's recommendations do require legislative action, including some controversial issues. Some of the larger legislative items originally sought from Congress include: expanding tax credits for alternative energy sources; opening up a portion of the coastal plain of the Arctic National Wildlife Refuge to drilling; and creating a "multi-pollutant" market-based emission program for power plants.

The Republican-led House 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 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 say.

ANWR unlikely
Both ANWR development and expanded tax credits are unlikely, given the present political pulse on Capitol Hill, industry officials say.

Opening ANWR is solidly opposed by a bipartisan group in both houses of Congress because of environmental reasons. And new alternative 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 64-page 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. A hearing on the expected bill is tentatively scheduled for July 11 with Interior Sec. Gale Norton testifying.

Like the June 20 version, the draft bill would reduce royalties on marginal wells when crude prices fell below $15/bbl, a provision similar to pending Senate legislation offered by Chairman Jeff Bingaman (D-NM) (OGJ Online, June 20, 2001). The Resources draft also would open a northeastern 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 appeal process for offshore drilling. That provision was opposed by many coastal states. Another provision that sought to dramatically expand state oversight of federal royalty collections was also stripped from the bill because of objections from the Interior Department. Royalty-in-kind 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."

Gulf of Mexico study
The draft also includes a new provision (Sec. 204 of the bill) that directs the National Academy of Sciences to study whether the government should further expand production incentives for the Gulf of Mexico.

NAS would conduct an analysis and review of existing Gulf of Mexico oil and natural gas resource assessments made by industry and government. The nonpartisan group would compare the financial incentives offered currently in the US and "recommend what level of incentives for all water depths are appropriate in order to ensure that the United States optimizes the domestic supply of oil and natural gas from the offshore areas of the Gulf of Mexico that are not subject to current leasing moratoria."

Technology centers
Another new provision (Sec. 233) would direct the Secretary of the Interior to create regional oil and gas technology transfer centers operated under a partnership with the US Geological Survey and the state in which the center was located.

Centers would conduct oil and gas exploration research in their region. They would also archive and provide public access to data regarding oil and gas reserves and production.

No more than 50% of the center's research budget would be federally funded.

The draft legislation still seeks to address energy infrastructure bottlenecks detailed in the White House plan. The bill reiterates an existing White House plan to initiate an interagency study of existing rights of way on federal lands to see where new pipelines or transmission facilities could be built. The bill, however, does not go so far as to direct the Federal Energy Regulatory Commission to take over siting authority for electric transmission from the states. That issue is expected to be addressed in a separate bill under the jurisdiction of the House Committee on Energy and Commerce. Currently FERC only can approve interstate gas pipeline routes, but does not have oversight over the siting of interstate electrical transmission.

The energy committee's electricity legislation is still being discussed, but other proposals that seek to codify the White House's downstream initiatives may be considered in the committee as early as this week. Under draft legislation, the federal reformulated gasoline program would be streamlined and vehicle fuel efficiency standards raised.

The House bill does not detail how much the fuel efficiency standard should be increased, however. The current standard is 27.5 miles per gallon 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 there is White House support for both measures, chances are good that changes to RFG and fuel efficiency standards for cars will be seriously considered this summer, lobbyists said.

The House Commerce draft would also direct the US Environmental Protection Agency and the Energy Department to review current federal, state, 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.

Over 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.).

Contact Maureen Lorenzetti at Maureenl@ogjonline.com.

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