Senate Passes Energy Bill

Published August 1, 2005

The U.S. Senate on June 28 approved comprehensive energy legislation by a vote of 85-12. Differences between the Senate legislation and an energy bill previously approved by the U.S. House of Representatives must now be resolved in a conference committee before new energy legislation reaches the desk of President George W. Bush.

Key Differences Unresolved

The most controversial issue still to be resolved is legal liability for manufacturers of MTBE, a gasoline additive that reduces air pollution but has fouled groundwater after leaking from faulty storage tanks and transportation pipes.

The House version of the energy bill provided liability protection for MTBE manufacturers, rationalizing that the additive was developed in response to federal clean air requirements and is not itself defective.

The Senate bill provided no such liability protection. The American Trial Lawyers Association and its political allies strongly oppose a measure that would preclude legal action against MTBE manufacturers.

Another key difference between the Senate and House legislation is the Senate bill’s language authorizing the inventory of oil and gas resources in the outer continental shelf. Representatives of coastal states, whose numbers have stronger representation in the House than in the Senate, have generally deferred to a not-in-my-backyard resource recovery stance, thus holding up the production of offshore energy.

Other Contentious Issues Remain

Senate language requiring utilities to generate at least 10 percent of their electricity from renewable sources is also a contentious issue.

The House opposes the requirement, reasoning that the purpose of an energy bill is to facilitate more affordable, rather than more expensive, energy.

Critics of the Senate provision note that absent a renewable power mandate, citizens who are given a choice by their local power companies have overwhelmingly decided more expensive renewable power is not worth the supposed environmental benefits.

Another disagreement is over authorizing natural resource recovery in a small portion of the Arctic National Wildlife Refuge (ANWR). The House bill includes it, while the Senate bill is silent on it.

Bills Receive Mixed Reaction

Reaction to the Senate bill, and the potential end product after conference with the House, was mixed.

“There are a number of provisions in the bill that will help provide the regulatory conditions necessary so that private industry can rebuild and enlarge America’s aging and inadequate energy infrastructure,” said Myron Ebell, director of global warming and international environmental policy at the Competitive Enterprise Institute.

“The bill might make it possible to build new oil refineries in this country,” Ebell continued. “More than 10 percent of [the nation’s] gasoline is now imported as a finished product because of the lack of refining capacity. That means we are outsourcing high-paying industry jobs. The bill should also make it easier to build pipelines and transmission lines.

“Also, the bill provides some hope that access on federal lands to some of the energy resources that have been roped off by dozens or hundreds of administrative decisions will be restored,” Ebell added.

Others disagree strongly. “There are few provisions in these bills that are even moderately helpful to our national well being,” said Sterling Burnett, senior fellow at the National Center for Policy Analysis. “One is the liquefied natural gas preemption that limits the power of states to restrict the importation of natural gas. That was a necessary and good idea. The other provision that is desirable is the oil and gas inventory provisions regarding offshore energy sources.”

Accused of Playing Favorites

“Everything else is a grab-bag full of pork,” asserted Burnett. “It’s nice if you are a congressionally favored technology, but it is bad for the nation. Especially harmful are renewable portfolio standards that require less-reliable sources, such as wind and solar, and that are more expensive and have their own environmental shortcomings. If these were market competitive, they wouldn’t need mandates and subsidies.

“Such energy dictates will cost the public money and drive up prices at a time when high fuel prices are the stated reason for such an energy bill in the first place,” said Burnett.

James Hoare ([email protected]) is managing attorney at the Syracuse, New York office of McGivney, Kluger & Gannon.