[Congressional Record Volume 142, Number 92 (Thursday, June 20, 1996)]
[Senate]
[Pages S6624-S6625]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

                                 ______


         CONGRESSIONAL BUDGET OFFICE ESTIMATE OF COSTS--S. 1605

 Mr. MURKOWSKI. Mr. President: in compliance with paragraph 
11(a) of rule XXVI of the Standing Rules of the Senate, the Committee 
on Energy and Natural Resources has obtained a letter from the 
Congressional Budget Office containing an estimate of the costs of S. 
1605, the Energy Policy and Conservation Amendment Act, as reported 
from the committee. In addition, pursuant to Public Law 104-4, the 
letter contains the opinion of the Congressional Budget Office 
regarding whether S. 1605 contains intergovernmental mandates as 
defined in that act. I respectfully request that the opinion of the 
Congressional Budget Office be printed in the Congressional Record in 
its entirety.
  The opinion follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                     Washington, DC., May 9, 1996.
     Hon. Frank H. Murkowski,
     Chairman, Committee on Energy and Natural Resources, U.S. 
         Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 1605, the Energy 
     Policy and Conservation Act Amendment Act.
       Enactment of S. 1605 would affect direct spending. 
     Therefore, pay-as-you-go procedures would apply to the bill.
       If you wish further details on this estimate, we will be 
     pleased to provide them.
           Sincerely,
                                                  June E. O'Neill,
                                                         Director.
       Enclosure.


               Congressional Budget Office Cost Estimate

       1. Bill number: S. 1605.
       2. Bill title: Energy Policy and Conservation Act Amendment 
     Act.
       3. Bill status: As ordered reported by the Senate Committee 
     on Energy and Natural Resources on April 24, 1996.
       4. Bill purpose: S. 1605 would reauthorize certain 
     activities and programs at the Department of Energy (DOE) 
     through 2001. It would revise and extend the statutory 
     guidelines and requirements of the Energy Policy and 
     Conservation Act (EPCA), which outlines federal policies 
     regarding energy emergencies, energy exports, and certain 
     energy conservation initiatives. These amendments would 
     authorize DOE to lease underutilized capacity of the 
     Strategic Petroleum Reserve (SPR) to foreign governments to 
     the extent provided in appropriation acts. Other provisions 
     would remove certain restrictions on joint bidding by major 
     oil companies for leases on the Outer Continental Shelf 
     (OCS), modify various reporting and planning requirements, 
     and enable the state of Hawaii to purchase oil from the SPR 
     under certain conditions.
       S. 1605 would authorize the appropriation of such sums as 
     may be necessary for the SPR for 1996 through 2001. It would 
     authorize specific amounts for 1996 for the State Energy 
     Conservation Program (SECP), the Institutional Conservation 
     Program (ICP), the Alternative Fuels Truck Commercial 
     Application Program, and programs under Part C of EPCA 
     (including activities supporting the International Energy 
     Agency, the Committee on Renewable Energy Commerce and Trade, 
     and the Committee on Energy Efficiency Commerce and Trade). 
     The bill also would authorize the appropriation of such sums 
     as may be necessary to implement the conservation grant and 
     alternative fuels programs for 1997 through 2001 and the Part 
     C programs for 1997 through 1999.
       5. Estimated cost to the Federal Government: The following 
     table summarizes the estimated budgetary effects of S. 1605. 
     Assuming appropriation of the authorized amounts for 1997 
     through 2001, we estimate that enacting this bill would 
     result in additional discretionary spending totaling between 
     $1.4 billion and $1.5 billion over that period. CBO 
     anticipates that enacting this bill would affect direct 
     spending by reducing offsetting receipts from bonus bids for 
     OCS leases, but the impact is likely to be small for each 
     fiscal year. On average, we estimate that bonus bids would 
     fall by about $2 million a year over the 1997-2002 period.

----------------------------------------------------------------------------------------------------------------
                                                                  1996   1997   1998   1999   2000   2001   2002
----------------------------------------------------------------------------------------------------------------
                                       SPENDING SUBJECT TO APPROPRIATIONS                                       
                                                                                                                
Spending under current law:                                                                                     
  Budget authority \1\.........................................    325  .....  .....  .....  .....  .....  .....
  Estimated outlays............................................    279    173     57      9  .....  .....  .....
                                                                                                                
                                        WITHOUT ADJUSTMENT FOR INFLATION                                        
                                                                                                                
Proposed Changes:                                                                                               
  Estimated authorization level................................     31    291    291    291    286    286  .....
  Estimated outlays............................................  .....    139    255    287    289    287    148
Spending Under S. 1605:                                                                                         
  Estimated authorization level................................    356    291    291    291    286    286  .....
  Estimated outlays............................................    279    313    311    296    289    287    148
                                                                                                                
                                          WITH ADJUSTMENT FOR INFLATION                                         
                                                                                                                
Proposed Changes:                                                                                               
  Estimated authorization level................................     31    291    300    309    313    324  .....
  Estimated outlays............................................  .....    139    259    300    310    318    167
Spending Under S. 1605:                                                                                         
  Estimated authorization level................................    356    291    300    309    313    324  .....
  Estimated outlays............................................    279    313    316    308    310    318    167
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
  Estimated budget authority...................................  .....      3      2      2      2      1      1
  Estimated outlays............................................  .....      3      2      2      2      1      1
----------------------------------------------------------------------------------------------------------------
\1\ The 1996 level is the amount actually appropriated.                                                         

       The costs of this bill fall within budget functions 270 and 
     950.
       6. Basis of estimate: Spending Subject to Appropriations. 
     The estimate of outlays for 1996 is based on amounts actually 
     appropriated for the fiscal year. In the case of the SPR 
     program, we assume that recently enacted appropriations 
     provide the necessary amounts for that program for 1996. The 
     authorizations specified in the bill for conservation grants 
     and the Part C activities exceed the enacted levels for those 
     programs by a total of $31 million. We estimate that the 
     additional authorization would not result in outlays, 
     because we assume that a supplemental appropriation would 
     not be enacted before the end of this fiscal year.
       For future years for which authorization levels are not 
     specified, we generally projected spending based on the 
     amounts authorized by S. 1605 for 1996. For the SPR 
     facilities and operations account, we have based our 1997-
     2001 projections on DOE's current estimate of the program's 
     requirements for 1997 because the 1996 level is inflated by 
     the one-time cost of decommissioning one of the SPR sites. 
     Starting in 1997, we project spending for the SPR at about 
     $220 million a year.
       The table shows two alternative sets of authorization 
     levels for fiscal years 1997 through 2001: one without 
     adjustment for anticipated inflation, and a second that 
     includes an adjustment for inflation. For the purposes of 
     this estimate, we assume that future appropriations will be 
     provided before the start of each fiscal year and that 
     outlays will follow historical trends for the respective 
     programs.
       For comparability to estimates for 1997 and beyond, the 
     table includes the $287 million gross appropriation for the 
     SPR facilities account for 1996. This SPR account received no 
     new budget authority for 1996 because the entire 
     appropriation was offset by collections of $100 million from 
     a sale of oil from one of the SPR site and by the transfer of 
     $187 million in unobligated balances from the SPR petroleum 
     acquisition account.
       Under this bill, DOE could generate income by leasing 
     excess SPR capacity to foreign governments if such leasing is 
     approved in subsequent appropriation acts. If, for example, 
     appropriations actions were to trigger this authorization by 
     the beginning of fiscal year 1998, we estimate that the 
     annual income from such leases would total $1 million in 
     fiscal year 1999 and rise gradually to $11 million by 2002. 
     This provision of S. 1605, however, would have no direct 
     effect on offsetting receipts, because the leasing activity 
     would be contingent upon future appropriations action.
       Direct Spending. Under current law, certain major oil 
     companies are restricted from bidding jointly for new leases 
     on the Outer Continental Shelf. CBO expects that allowing 
     such companies to begin bidding jointly on OCS leases would 
     likely reduce the number of bids submitted for OCS lease 
     sales. On average, we expect that this would lower offsetting 
     receipts from bonuses by about $2 million per year over the 
     1997-2002 period. This estimate is based on information from 
     the Minerals Management Service regarding the most recent OCS 
     lease sale. The effect of the bill's provision on industry 
     competition in future sales could vary, but we expect that 
     the likely impact on bonus bids would be small in any year 
     because relatively few winning bids in each sale are the 
     result of direct competition between companies that are 
     currently barred from submitting joint bids.
       7. Pay-as-you-go considerations: Section 252 of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 
     sets up pay-as-you-go procedures for legislation affecting 
     direct spending or receipts through 1998. CBO estimates that 
     the OCS provisions in S. 1605 would result in a reduction in 
     offsetting receipts from bonus bids, as shown in the 
     following table.

------------------------------------------------------------------------
                                            1996       1997       1998  
------------------------------------------------------------------------
Change in outlays......................          0          3          2
Change in receipts.....................      (\1\)      (\1\)      (\1\)
------------------------------------------------------------------------
\1\ Not applicable.                                                     

       8. Estimated impact on State, local, and tribal 
     governments: S. 1605 contains no intergovernmental mandates 
     as defined in Public Law 104-4 and would impose no direct 
     costs on state, local, or tribal governments. The bill would 
     extend the authorization for grants to states and localities 
     for energy conservation programs. It would also benefit the 
     state of Hawaii by guaranteeing that it would be allowed to 
     purchase oil from the SPR during a drawdown of the reserve.
       S. 1605 would authorize appropriations totaling $56 million 
     for fiscal year 1996 and such sums as may be necessary for 
     fiscal years 1997-2001 for the SECP and ICP programs. In 
     contrast, $26 million was appropriated for 1996 for a program 
     that would consolidate these two programs and provide grants 
     to states. For the purposes of this estimate, we assume that 
     the states would not receive the additional $30 million 
     authorized by the bill, because it is unlikely that a 
     supplemental appropriation would be enacted before the end of 
     the fiscal year.
       Under current law, states must match these grant funds at 
     different rates. Based on

[[Page S6625]]

     information provided by DOE, CBO estimates that states would 
     be required to provide matching funds of approximately $5 
     million in fiscal year 1996. CBO has no basis for 
     estimating the matching requirement in future years.
       9. Estimated impact on the private sector: This bill would 
     impose a new private sector mandate as defined in Public Law 
     104-4. It would eliminate an existing limit on the Secretary 
     of Energy's authority to require an importer or refiner of 
     petroleum products to maintain readily available inventories 
     of petroleum products in the Industrial Petroleum Reserve. 
     The existing authority has not been used and CBO estimates 
     that the Secretary would not use the expanded authority 
     granted by S. 1605. Thus, we estimate that the mandate would 
     impose no additional costs on the private sector.
       10. Previous CBO estimate: On April 22, 1996, CBO 
     transmitted a cost estimate for H.R. 2596, a bill to 
     reauthorize the Energy Policy Conservation Act through 1999, 
     and for other purposes, as ordered reported by the House 
     Committee on Commerce on March 13, 1996. Differences between 
     that estimate and the estimate for S. 1605 result from 
     differences in the two bills. In particular, the two bills 
     authorize spending for different years, and, in some cases, 
     for different programs and amounts.
       11. Estimate prepared by: Federal Cost Estimate: Kathleen 
     Gramp--SPR and Energy Conservation Victoria Heid--OCS. State 
     and Local Government Impact: Marjorie Miller. Private Sector 
     Impact: Patrice Gordon.
       12. Estimate approved by: Robert A. Sunshine for Paul N. 
     Van de Water, Assistant Director for Budget Analysis.

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