[Congressional Record Volume 148, Number 48 (Thursday, April 25, 2002)]
[Senate]
[Pages S3342-S3390]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATIONAL LABORATORIES PARTNERSHIP IMPROVEMENT ACT OF 2001--Resumed
The PRESIDING OFFICER. The clerk will report the bill.
The assistant legislative clerk read as follows:
A bill (S. 517) to authorize funding the Department of
Energy to enhance its mission areas through technology
transfer and partnerships for fiscal years 2002 through 2006,
and for other purposes.
Pending:
Daschle/Bingaman further modified amendment No. 2917 in the
nature of a substitute.
Murkowski/Breaux/Stevens amendment No. 3132 (to amendment
No. 2917) to create jobs for Americans, to reduce dependence
on foreign sources of crude oil and energy, to strengthen the
economic self-determination of the Inupiat Eskimos, and to
promote national security.
Feinstein amendment No. 3225 (to amendment No. 2917) to
modify the provision relating to the renewable content of
motor vehicle fuel to eliminate the required volume of
renewable fuel for calendar year 2004.
Feinstein amendment No. 3170 (to amendment No. 2917) to
reduce the period of time in which the Administrator may act
on a petition by one or more States to waive the renewable
fuel content requirement.
Durbin amendment No. 3342 (to amendment No. 2917) to strike
the nonbusiness use limitation with respect to the credit for
the installation of certain small wind energy systems.
Harkin amendment No. 3195 (to amendment No. 2917) to direct
the Secretary of Energy to revise the seasonal energy
efficiency ratio standard for central air-conditioners and
central air-conditioning heat pumps within 60 days.
Carper amendment No. 3198 (to amendment No. 2917) to
decrease the U.S. dependence on imported oil by the year
2015.
Reid (for Bingaman) amendment No. 3359 (to amendment No.
2917) to modify the credit for new energy-efficient homes by
treating a manufactured home which meets the energy star
standard as a 30-percent home.
Reid (for Boxer) amendment No. 3139 (to amendment No. 2917)
to provide for equal liability treatment of vehicle fuels and
fuel additives.
Reid (for Boxer) amendment No. 3311 (to amendment No. 3139)
to provide for equal liability treatment of vehicle fuels and
fuel additives.
The PRESIDING OFFICER. The Senator from California.
amendment no. 3311
Mrs. BOXER. Mr. President, I understand that under the unanimous
consent agreement, I am to call up my amendment No. 3311 at this time.
The PRESIDING OFFICER. That amendment is already pending.
Mrs. BOXER. Mr. President, I would like the clerk to read the
amendment, and after that I am going to yield briefly, without the time
coming off my time, to several colleagues who want to lay down some
amendments; also, that I would not lose my right to the floor, as they
will make clear when they speak.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will report the amendment.
The senior assistant bill clerk read as follows:
In lieu of the matter proposed to be inserted, insert the
following:
``(1) In general.--Notwithstanding any other provision of
federal or state law, a renewable fuel, as defined by this
Act, used or intended to be used as a motor vehicle fuel, or
any motor vehicle fuel containing such renewable fuel, shall
be subject to liability standards no less protective of human
health, welfare and the environment than any other motor
vehicle fuel or fuel additive.
``(2) Effective date.--This subsection shall be effective
one day after the enactment of this Act.''
Mrs. BOXER. Mr. President, I ask for the yeas and nays on my
amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.
Mrs. BOXER. Mr. President, now I will be happy to yield, with the
understanding I will not lose my right to the floor, to several of my
colleagues.
The PRESIDING OFFICER. The Senator from Washington.
Mrs. MURRAY. Mr. President, will the Senator from California yield
for a unanimous consent request?
Mrs. BOXER. I will be happy to yield.
amendment no. 3326 to amendment No. 2917
Mrs. MURRAY. Mr. President, I ask unanimous consent that the pending
amendment be set aside and amendment No. 3326 be called up, and that
immediately after it is reported, it be laid aside and the Senate
resume consideration of Senator Boxer's amendment No. 3311.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will report.
The assistant legislative clerk read as follows:
The Senator from Washington [Mrs. Murray], for herself and
Ms. Cantwell, proposes an amendment numbered 3326 to
amendment No. 2917.
Mrs. MURRAY. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To modify the specifications for a fuel cell power plant
eligible for the extension of the energy tax credit)
In Division H. beginning on page 103, line 19, strike all
through page 104, line 7, and insert the following:
``(i) generates at least 0.5 kilowatt of electricity using
an electrochemical process, and
``(ii) has an electricity-only generation efficiency
greater than 30 percent.
``(B) Limitation.--In the case of qualified fuel cell
property placed in service during the taxable year, the
credit determined under paragraph (1) for such year with
respect to such property shall not exceed an amount equal to
the lesser of--
``(i) 30 percent of the basis of such property, or
``(ii) $500 for each 0.5 kilowatt of capacity of such
property.''
The PRESIDING OFFICER. The Senator from Florida.
Mr. GRAHAM. Mr. President, I ask unanimous consent that the pending
amendment be set aside and amendments Nos. 3370 and 3372 be brought up,
and that immediately after they are reported, they be laid aside and
the Senate resume consideration of Senator Boxer's amendment No. 3311.
The PRESIDING OFFICER. Is there objection?
The Senator from Alaska.
Mr. MURKOWSKI. Mr. President, we have a problem. We are not going to
be able to finish this bill. We have a number of Senators in the queue
waiting to call up their amendments. I am concerned, and I would like
to discuss this matter a little further. I suggest the absence of a
quorum.
The PRESIDING OFFICER. The Senator does not have the floor. Does the
Senator object?
Mr. MURKOWSKI. The Senator does object.
The PRESIDING OFFICER. Objection is heard.
The Senator from California.
[[Page S3343]]
Mrs. BOXER. Mr. President, I tell my friend, under the UC agreement,
I have agreed to yield--and, of course, Senators have the right to
object, but I agreed to yield next to Senator Corzine and then Senator
Dorgan, and then I go back to my amendment and we get this done. I
wanted to be congenial to my colleagues because they have done that for
me in the past.
Mr. KYL. Will the Senator from California yield?
Mr. MURKOWSKI. Reserving the right to object. I have already
objected. I had understood Senator Boxer was going to be next, although
previous conversation indicated Senator Murray was going to be next. We
have been going back and forth, and we want to continue going back and
forth. Senator Kyl is prepared to go.
My concern is we are going to run out of time, and we want to
accommodate Senators, but as we put new Senators into the queue, we are
going to run into a situation with the finance aspect of this
legislation, on which I am sure Senator Baucus wants a reasonable
amount of time. We are going to have to come up with some solution.
I want to accommodate my friend from Florida. I wonder if he will
give us a few moments to try to work this out. If I may propose a
unanimous consent request that the Senator from California may speak on
her amendment now while we try to work this out.
Mrs. BOXER. Mr. President, we already have a unanimous consent
agreement. I think it would be wise of my colleagues just simply not to
interrupt and to have a conversation with the Senator from Alaska while
I begin.
Mr. MURKOWSKI. I am concerned about the time element involved with
each Senator. I understand the Senator from California wants to speak
for about an hour.
Mrs. BOXER. No, I do not want to speak for about an hour. I want to
argue this, and I have 50 minutes remaining on my time. Other Senators
want to speak, if they come. I am not interested in stalling.
The PRESIDING OFFICER. Does the Senator from California yield to the
Senator from Florida?
Mrs. BOXER. I am delighted to yield to my friend, assuming we go
right back to this amendment as we originally intended in our UC
agreement; is that correct, that is what will happen under the UC
agreement?
The PRESIDING OFFICER. Under the unanimous consent agreement, the
Senator from California was to yield to several Senators without losing
her right to the floor.
Mrs. BOXER. Mr. President, I yield to my friend from Florida or my
friend from Nevada, whomever.
Mr. REID. Will the Senator yield to me without losing her right to
the floor?
Mrs. BOXER. I will be happy to yield without losing my right to the
floor.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. It seems what we should do is what the Senator from Alaska
suggested. The Senator from California should speak on her amendment,
and in the meantime, while she is doing that, we will try to work out
some process for these amendments to go forward. We are using a lot of
time on the bill that this afternoon will be vitally needed. There are
important tax measures, as the Senator from Alaska indicated, that
should take a bit of discussion. There are other matters that may not
take much time. But the tax matters, in my brief review of them, are
fairly complicated.
That is my suggestion: The Senator from California should go ahead
and complete her statement and, in the meantime, we will try to work
out the way the other amendments can come forward.
Mr. SCHUMER. Will the Senator from California yield?
Mrs. BOXER. I will be happy to yield for a question.
Mr. SCHUMER. I wish to speak on the amendment of the Senator from
California. I do not want anything to get in the way of others who wish
to speak to that amendment right after her.
Mr. REID. I respond through the Chair to the Senator from New York,
that is my suggestion: We get debate done on the Boxer amendment. In
the meantime, we have a number of people--Senator Corzine and Senator
Kyl are here--there are a number of people, including Senators Dorgan
and Graham, who have amendments to offer, and we will try to work our
way through those. That is my suggestion.
The PRESIDING OFFICER. The Senator from California has the floor.
Mr. MURKOWSKI. I wonder if the Senator will yield for a point.
Mrs. BOXER. Yes.
Mr. MURKOWSKI. What we are really trying to do is proceed without
basically having the exposure of Senators yielding to other Senators to
offer amendments as opposed to other Senators wanting to speak on
behalf of an amendment offered. I think Senator Bingaman will agree
that is all we are trying to do.
The PRESIDING OFFICER. The Senator from California.
Mrs. BOXER. Mr. President, this has been an interesting beginning to
my amendment. I am looking forward to getting to it, which I am going
to do right now. I want to clarify that the time that was used did not
come off my 51 minutes, which is what I said in my UC request when I
began: That none of the time would come off the time I have.
The PRESIDING OFFICER. That was not the Chair's understanding. But
without objection, it is so ordered.
Mrs. BOXER. I thank the Chair. I did say it, but it may have been
lost in the shuffle.
Amendment No. 3311
Mrs. BOXER. Mr. President, there is an extraordinary thing about the
bill we are debating. For the first time in history, makers of a
product are being given a waiver of all liability essentially, if
something in that product goes wrong in the future. For anyone who
cares about consumers and communities, this is a terrible situation
because we do not know what is going to happen with ethanol.
Now, I am not in the least bit hostile to ethanol. I think it is an
exciting possibility that we can help our farmers and we can have a
good additive that cleans the air. I know it opens up an opportunity,
for example, for my rice growers that they can make ethanol from rice.
So I am not at all hostile. In fact, most of my friends know, in the
pro-ethanol caucus, as I call them, that I am the one who led the fight
to ban MTBE because it is so damaging to the water supply.
What concerns me is giving the makers of this product carte blanche
to walk away if in the future we find out there is a problem.
When I brought this issue up to the ethanol folks in the Senate, they
said: Well, Senator, we are mandating ethanol in this bill and,
therefore, if the Government is mandating ethanol, then we should give
them a waiver from being held accountable if something goes wrong.
That reasoning is faulty and it is not borne out by the way we do
business in this country. For example, we mandate that there be
seatbelts in all cars, but we do not exempt car companies from being
held accountable if they make a defective seatbelt. They are held
accountable. We mandated seatbelts, but they are held accountable for
the safety of the product.
We mandated that there be airbags in all cars, but we do not exempt
car companies from being held accountable if there is a defective
airbag.
We mandated that all mammographer machines meet certain safety
standards. Even though we had a mandate that they meet certain
standards in terms of the radiation that can leak from them, we did not
say they cannot be held accountable.
In the 1990 Clean Air Act, we mandated that either MTBE or ethanol be
used in gasoline, but neither was let off the hook for any damage they
caused.
So the first argument that the Government is mandating this so there
should be no liability for the people who make ethanol does not hold
up.
The second time I came back and made the argument, I was told: In the
bill, the Government will pick up all costs if there is a problem.
So I said, that is interesting. So my wonderful staff went back and
read every page of the bill. They could not find anyplace in the bill
where the Government picks up the tab. So they spoke to everyone they
could and said, well, did we miss something? There is nothing in the
bill that says the liability will be shifted from the people who make
the product to the Federal Government.
[[Page S3344]]
I have scratched my head and said, is there any precedent at all? I
thought, maybe the Price-Anderson Act, which by the way I have never
supported--the bottom line is it says if there is an accident in a
nuclear powerplant, the taxpayers will pick up the tab. But even there
the nuclear powerplants have to pay an insurance premium over to the
Federal Government so at least they are paying part of the tab if, God
forbid, there should be an accident at a nuclear powerplant.
There is no premium being paid by the people who make ethanol. So
that is the second place where this myth is exploded. There is nothing
in the bill that says the Government will pick up the tab.
There is a third myth. They say we are only providing a safe harbor
from one type of lawsuit: defective products. So I went to my lawyerly
staff, and I said: They are saying no problem, they are only exempting
these companies from a very narrow provision of law.
Well, the defective product argument is the only one that will hold
up in court. It is the one that people are using as they seek to get
damages for MTBE. So very cleverly, the way this bill is crafted, I
assure everyone, by the attorneys for the oil companies--I can assure
everyone that--it is crafted in a way so the liability is waived in a
way so people can never be held accountable.
Why is this so important? Because if one looks back at what happened
with MTBE, they see the argument that did carry weight was the
defective product argument.
Why is it important to everyone? Because in the beginning everyone
thought MTBE was safe, and now even though the people who want to
support this mandate are saying the product is safe, there are studies
in the bill to find out if it is really safe. We do not know.
Senator Feinstein, who I see in the Chamber, has gone into this
matter in great detail. We do not know what can happen. What we do know
is it cleans the air but it makes smog worse. We know that but we
really do not know what is going to occur when the components break
down.
The city of Santa Monica had to sue because they paid over $200
million to try to clean up the damage from MTBE. We hope they will be
able to recover because they sued under this defective product
provision.
Myth four: Ethanol is safe; no need to worry about liability. I was
not born yesterday, as everyone can tell, and if there is no need to
worry about liability then why have the waiver for liability? It does
not make sense. Obviously, somebody is worried about it. The oil
companies are worried about it, I can say that. One does not give a
special exemption from liability--and one does not work to get it in
the bill and, by the way, fight for it, because I have tried to get
some agreement on it and the oil companies do not want to give an inch
on it--if you are 100-percent convinced that it is safe.
As the Washington Post points out in its April 16 editorial, the safe
harbor liability protection is ``hardly a sign of confidence in
ethanol's environmental merits.'' We cannot have it both ways. One
cannot stand up and say this is safe and then fight to protect their
product. Consumers should be outraged, and that is why we have every
consumer group that I know of supporting this amendment. That is why we
have every environmental group that I know of supporting this
amendment.
Mr. DURBIN. Will the Senator yield for a question?
Mrs. BOXER. If it comes off the time of the Senator. I have very
little time.
Mr. DURBIN. I did not know I had time.
Mrs. BOXER. Yes, the Senator has an hour under cloture. Every Senator
does. If the Senator takes it on his time, that is fine.
Mr. DURBIN. I ask unanimous consent that time for the colloquy in
which I am about to engage be taken from the appropriate time.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. May I say to the Senator from California--and she knows
this very well--I come from the heart of ethanol country. I have been
supportive of the ethanol program throughout my congressional career.
At times I have been chairman of the alcohol fuels caucus in both the
House and the Senate. I believe ethanol has been proven over and over
again to be a safe fuel. It is simply alcohol. It does not have the
carcinogenic and dangerous qualities of MTBE and other chemicals. We
have used it successfully in the State of Illinois for years. About a
third of our gasoline supply is blended with ethanol and is used
safely.
So I say to the Senator from California, speaking only for myself, I
accept her challenge. I believe we can establish across the Nation that
ethanol is a safe fuel, not only safe for those who would handle it and
those who would use it in their cars but safe for our environment.
I see no reason for us to put language in this bill creating any kind
of exemption from liability for ethanol or renewables fuels.
The Senator from California has suggested our fuels be held to the
same standards as every other fuel in America in terms of public health
and safety. I completely endorse that approach. I would like to be
shown as a cosponsor to the Senator's amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. I yield the floor.
Mrs. BOXER. I thank my friend. Senator Dayton was here yesterday,
from ethanol country, supporting this amendment. I think it takes guts
to do it, but the Senator is right.
The people we have been meeting with from the Corn Belt--the
producers, the farmers--do not like this. Frankly, they do not like the
liability waiver. I believe it is the oil companies that came to the
table that were fighting for this.
I am pleased the Senator is a cosponsor. I ask unanimous consent that
John Kerry be added as a cosponsor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. BOXER. We have been hit with several myths. Another myth is ETBE
is not included in the safe harbor. We are glad it isn't. ETBE is only
one form of ethanol and not the most prominent form. Most ethanol will
be exempted and will have this safe harbor.
I state for the record who supports this Boxer-Feinstein-Durbin-
Kerry-Schumer amendment: the National Resources Defense Council, the
Sierra Club, the U.S. Public Interest Research Group, the League of
Conservation Voters, Consumer Federation of America, Consumers Union,
the American Lung Association, Earthjustice, Friends of the Earth,
Physicians for Social Responsibility, the American Water Works
Association, the Association of Metropolitan Water Agencies, the
Association of California Water Agencies, and the South Tahoe Public
Utility District.
It is true that even the groups that support the ethanol mandate
agree with our amendment on liability--for example, the American Lung
Association and the Blue Water Network. Even among the supporters of
ethanol--such as Senator Durbin and Senator Dayton--supporters have no
qualms about going forward with this amendment. They realize the double
standard is wrong.
When Senator Feinstein began the debate on why California is leery of
this mandate, she made several points. One dealt with the issue of
price. Again, we were told over and over again, the Department of
Energy says, yes, there will be a 9-cent increase per gallon in certain
places and 7 elsewhere. That was wrong; it would only be a penny.
Senator Feinstein made the point we have had some bad experiences
with collusion in the area of our electricity. If there are only four
or five people who make the product, we could have problems.
Yesterday there was a San Francisco Chronicle article: ``Memos show
possible ethanol price-fixing.'' I ask unanimous consent this article
be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the San Francisco Chronicle, Apr. 24, 2002]
Memos Show Possible Ethanol Price-Fixing
(By Zachary Coile, Chronicle Washington Bureau)
Washington, Apr. 24.--The Senate backed a plan yesterday to
triple the amount of ethanol in gasoline, which opponents
argued will lead to more expensive prices at the pumps for
Californians.
[[Page S3345]]
As lawmakers on both sides of the Capitol debated the
ethanol requirement, a Sacramento congressman who opposes the
plan revealed possible price manipulation among ethanol
producers.
Rep. Doug Ose, the Republican chairman of the energy
subcommittee of the House Government Reform Committee,
released internal memorandums from ethanol suppliers at a
hearing about a proposal to ban MTBE as a gasoline additive
and require three times as much ethanol, a corn-based
additive. The proposal is part of the energy bill scheduled
for a Senate vote tomorrow.
``These memos show a disturbing trend of potential market
manipulation by ethanol producers,'' Ose said.
William Kovacic, the general counsel for the Federal Trade
Commission and a witness at Ose's hearing, said the full
commission could initiate an investigation of the ethanol
suppliers.
Kovacic said that he could not tell whether the documents
were evidence of possible industry collusion but that the
memos were ``not simply provocative, but perhaps alarming as
well.''
``Direct communications between rivals that suggest such
behavior are a matter of keen concern to the enforcement
community,'' Kovacic said, adding that he would alert
antitrust investigators at the Justice Department.
A spokesman for the Renewable Fuels Association, the
ethanol industry's trade association, said his group had not
seen any of the document and could not comment on Ose's
allegations.
``I am very suspect of the timing and motivation of this
charge,'' Bob Dinneen, the group's president, said in a
statement. ``Congressman Ose called today's hearing at the
request of the MTBE industry, and no one from the ethanol
industry was called to testify. It strikes me as more than a
coincidence that Mr. Ose raised this issue at the eleventh-
hour on the day the Senate is debating the renewable fuels
standard.''
The release of the documents came on a day of often bitter
debate that split the Senate along regional lines, pitting
Midwestern lawmakers who support the ethanol requirement
against senators from California and New York, who strongly
oppose it.
The Senate last night defeated, by a 68-to-31 vote, an
amendment by Sen. Charles Schumer, D-N.Y., that would have
stripped the ethanol requirement from the energy bill.
Earlier in the day, California Sen. Dianne Feinstein
temporarily delayed the bill until senators could debate
proposals to alter the ethanol requirement.
Feinstein, a Democrat, said the requirement could sharply
raise gas prices for California consumers because much of the
ethanol will have to be transported by rail from the Midwest,
where 98 percent of ethanol plants are located.
In releasing the memos, Ose said the documents appear to
show a pattern by ethanol suppliers to discuss what prices
they intended to bid for supplies before ethanol auctions
took place--with the goal of assuring that suppliers got the
prices they wanted.
In one of the memos, an executive at an Orange County
ethanol supplier, Western Ethanol Co., wrote to a competitor
in Costa Rica on Sept. 29, 2000: ``I expect that the winning
bid for the 25 percent volume will be somewhere in the upper
$1.30's to low $1.40's. We are prepared to stop bidding
should the price drop below $1.38 per gallon.''
In another memo, an executive at another Orange County
company, Regent International, wrote to an official at Archer
Daniels Midland, the nation's largest ethanol producer, on
Nov. 20, 1995, to discuss a proposed deal with a London-based
ethanol producer, ED & F Man Alcohols, to jointly bid on fuel
from France.
``Therefore (ED & F) Man will be bidding on the 75,000 hl
out of France at a price of 5.02,'' the memo read. ``I would
suggest that ADM underbid at a price of 4.85. This will serve
as a safety net in the event Man's bid is rejected for any
reason.''
ADM officials could not be reached for comment. Messages
left at the offices of the Orange County companies yesterday
afternoon were not returned.
The release of the memos was part of a last-ditch attempt
by ethanol opponents to derail the plan to phase out MTBE as
a gasoline additive and triple the use of ethanol by 2012.
California and a dozen other states have moved to ban MTBE,
which has been implicated in groundwater contamination. Gov.
Gray Davis last month delayed the state's MTBE ban by a year,
to Jan. 1, 2004; after a report by the California Energy
Commission said replacing MTBE with ethanol could cut the
state's gas supply by 5 to 10 percent and drive up prices to
$2 to $3 a gallon.
Mrs. BOXER. Essentially, it shows Congressman Ose from California got
ahold of memos that show, if you are doubtful, they are already talking
about how they will get the highest price possible for this product.
I add that because it is important that when we voted on some of the
other ethanol issues, everyone said: Don't listen to the people from
California.
Now it is time to listen to us. We have been through some troubles in
our State because there wasn't transparency; there was manipulation of
supply and electricity. We don't want to see that happen to any other
State. We don't want to see it happen to gasoline.
When the people who objected to points made by Senator Feinstein and
Senator Schumer, saying they were wrong, there would be no problem,
this article shows possible ethanol price fixing.
This is just the beginning. I don't want to see, in 2 years,
communities in trouble because it turned out ethanol was not as safe as
they said and we had problems in our communities and there is no way to
recuperate from the manufacturers of ethanol.
I diverted into the issue of possible price fixing; I hope people
listen. I am not here because I am hostile to ethanol. I would like to
see it move a little slower. I want to see the health studies. I am not
hostile to using ethanol. We are going to use it in a lot of our
gasoline. It may turn out to be the panacea. We don't know. I am
saying: Be cautious and do not give anyone a blanket waiver of
liability from the one area of the law--defective product--that people
may have at their disposal.
I ask my colleague, does she want me to yield for questions?
Mrs. FEINSTEIN. I very much appreciate the Senator from California
making that offer. I would like to add to what the Senator has said. I
am firmly in support of the Senator's amendment. I ask this question.
She made the case about the health and environmental unknowns of
ethanol. That was somewhat contested. She is absolutely right.
I ask the Senator if she knew about the EPA blue-ribbon panel on
oxygenates which found ``ethanol may retard biodegradation and increase
movement of benzene and other hydrocarbons around leaking tanks''?
Mrs. BOXER. I say to my colleague and friend and partner in this
effort, we are aware of it. I am glad the issue has been raised. This
has been an education for everyone as we looked into the study. The
underlying bill does a study on the safety of ethanol, which is an
admission that they don't know. Therefore, to have a study in the bill,
and yet at the same time, before we have the facts from the study,
waive this liability is terrible for consumers and States.
I am happy the Senator asked the question and I continue to yield.
Mrs. FEINSTEIN. I wonder if the Senator from California heard that a
report by the State of California entitled ``Health and Environmental
Assessment of the Use of Ethanol as a Fuel Oxygenate'' points out there
are valid questions about the impact of ethanol on ground and surface
water. The report points that there will be a 20-percent increase in
public drinking water wells contaminated with benzene if a significant
amount of ethanol is used. Of course, benzene is a known carcinogen.
What is interesting in the study, it points out that ethanol causes
the components of gasoline to break apart and therefore more easily
seep into ground water from leaking tanks. We all know gasoline leaks.
It is saying it aids in the release of benzene, a component of
gasoline.
I wonder if the junior Senator from California heard of that
California report.
Mrs. BOXER. I say to my senior Senator, I have. In addition to the
benzene, I make the point there are other dangerous areas--not only
benzene but ethyl benzene, toluene, xylene. We believe ethanol may
inhibit the breakdown of these toxic materials.
Yes, we have a blue-ribbon panel, the State. That is why I think we
are disturbed at the liability waiver.
I say to my friend, it is incredible because everyone said MTBE was
wonderful, too.
Now we have more warning about ethanol than we had about MTBE, and
they put in a liability waiver.
I am encouraged that Senator Durbin, for example, and Senator
Dayton--from ethanol country--are with us on this issue. It means a
great deal.
Mr. SCHUMER. Will the Senator yield for a question?
Mrs. BOXER. I am happy to yield for a question.
Mr. SCHUMER. I am sorry I could not be here at the beginning of the
debate, but I have a couple of questions. Just let me get this
straight.
We are banning MTBEs because we know they are harmful--in this bill.
[[Page S3346]]
Some of our States have done it already. And we are forcing States that
may not use ethanol to buy ethanol, which will raise gas prices and cut
the amount that goes into the trust fund. At the same time, we are
saying: But, if your soil is polluted--and we have a big problem in New
York because on Long Island we have one aquifer, one place where all
the drinking water occurs and the MTBEs are sinking in--if your soil is
polluted and even if it was done knowingly, that you cannot sue the
polluter? Is that what we are saying here?
Mrs. BOXER. Yes, this is exactly what the liability safeguard
provision does. I repeat, the corn people to whom we have spoken really
do not like this particularly. They are unhappy with it. But the oil
companies are pushing for it.
It seems to me, when you hear that Senator Durbin and Senator Dayton,
from corn-growing places, support us, that is hopeful. But my friend is
right. We are banning MTBE because it is harmful. We do not really know
the end result of ethanol. And before we even know the end result, we
are waiving liability. He is correct.
Mr. SCHUMER. I know the Senator has been a leader and expert in these
issues of suits and liability, far more than I have. How often have we
done this? How often have we taken some substances that we know are
dangerous already, some substances that might be dangerous, and put in
a whole safe harbor so you cannot sue no matter what happens? Have we
done this for other substances?
Mrs. BOXER. I say to my friend, this is a precedent-setting waiver.
Even in the case of the Price-Anderson Act where we waived liability
for the nuclear power industry, they must pay a premium into a fund, so
they are on the hook for billions of dollars. This has never been done.
I say further to my friend, when we talk to some of my ethanol-
supporting friends, they say: But the Government is mandating this, so
therefore they should waive liability. We mandate seatbelts, but if
there is a defective seatbelt, a person can sue; airbags, mammograms--
you could go through the list. This is precedent setting, and it is
terrible law.
Mr. SCHUMER. If I might ask a question or two more?
So we are saying the Government is mandating it, but we are not
putting in any Government backstop?
Mrs. BOXER. We are not.
Mr. SCHUMER. If you are a small community and you have a couple of
schools in your community and your ground water is polluted, costing
you millions of dollars--and that means the property taxes have to go
way up--and you know some oil company or refiner, or whatever, polluted
that soil knowingly, and the MTBEs leaked in, you have no recourse
against the company and there is no Government backstop as in Price-
Anderson, so the local taxpayers would be stuck; is that correct?
Mrs. BOXER. That is correct. As a matter of fact, the first time I
raised it, some of my friends from the ethanol areas said there was a
Government backstop in the bill. So I went back. We searched the bill,
page after page, and could not find it.
We called the people who put together the compromise. As you know,
the Senators from California and New York were not in that group when
there was a compromise. No one has come up with anything that shows us
there is anything in the bill.
The bottom line is that a city such as Santa Monica--and you could
pick out your cities--that had a horrible problem with MTBE is
currently suing to recover $200 million from the oil companies. If that
was not allowed, the consumers, our taxpayers, have to pick up the tab.
This is the classic case of, in my view, turning away from ``polluter
pays'' and going to ``taxpayer pays.''
If ethanol is so safe, then I would say: Why do they have a study on
safety in the bill? Why are they seeking this waiver? And why are they
ignoring the two studies my friend from California, Senator Feinstein,
is going to have printed in the Record, the blue-ribbon committee from
EPA, and the State study, that show there is really a problem?
Mr. SCHUMER. Just another question: So when the Senator is saying
``taxpayers pay,'' in this case it is not even the Federal taxpayer--
which we do in other areas--it would be the local property taxpayer who
would be left holding the bag?
Mrs. BOXER. It will be the biggest unfunded mandate. Not only are
they mandating ethanol, and at a very fast pace--and it is very hard
for us to be able to accept that much--but they are also saying: Local
communities, you are on your own.
Mr. SCHUMER. It seems to me--and I wonder about the Senator's
comments as to this--this is like piling on. First you mandate ethanol
and raise the gasoline prices in New York, California, and so many
other parts of the country. We can dispute how much. We think a modest
estimate is 4 cents to 10 cents, depending on the State. Then we cut
money from the trust fund, so you are getting a gas tax but not the
money to build the roads. And now we are saying pollution--where it is
caused by ethanol, we don't know it; but things we know are poisonous
and polluting are exempt from any lawsuit at all. It seems to me that
is just piling on. I have never seen anything like it.
I ask my friend from California, has she? She has more experience in
these areas than do I. Have you seen anything that has such an amalgam?
It is almost like an evil brew. They put in all these bad ingredients
and sneak them in the bill.
I appreciate very much the leadership of the Senator from California,
standing up to this provision. We tried to knock out the whole thing. I
was surprised we got as many as 31 votes, given the power of the
ethanol lobby. But now we are looking at one piece of it, perhaps one
of the most egregious pieces of it, and asking people just to knock out
that part.
Mrs. BOXER. I agree.
Mr. SCHUMER. Have you seen anything of such an amalgam this way, that
hits you right, hits you left, hits you center?
Mrs. BOXER. It is an amazing situation for those of us on the east
coast or the west coast. We know we are outnumbered here. But as my
colleague from California has told me many times, we must make the case
and the record on this, because I can tell you right now, after living
through the crisis we lived through in electricity, where we saw what
happens when a supply is manipulated--the story in today's San
Francisco Chronicle says:
These memos show a disturbing trend of potential market
manipulation by ethanol producers. . . .
And the ink hasn't dried on this bill as it becomes law.
Did you say a witch's brew? Is that what you said?
Mr. SCHUMER. I can't remember. I think I said an evil brew.
Mrs. BOXER. If you look at the components of ethanol--and we all hope
and pray the health studies in the bill come out that it is terrific
and there is no problem--just look at what ethanol does to another
witch's brew. It may spread blooms of benzene, toluene, ethyl benzene,
and xylene because ethanol may inhibit the breakdown of these toxic
materials.
Mr. SCHUMER. Just to clarify, what is in the bill doesn't just apply
to ethanol and its potential dangers but to some things that we know
are dangerous such as MTBEs, such as benzene, and other things. Is that
fair to say?
Mrs. BOXER. The safe harbor does not apply to MTBE.
Mr. SCHUMER. It does not? Just to the ethanol?
Mrs. BOXER. It is just ethanol minus ETBE, which as I understand it
is about 2 percent--a very small percentage of the ethanol. Those are
the only two.
There is another point I want to make to my friend.
I ask unanimous consent to have printed in the Record this letter
from the Association of California Water Agencies, American Water Works
Association, and the Association of Metropolitan Water Agencies.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
[[Page S3347]]
Association of California Water Agencies, American Water
Works Association, Association of Metropolitan Water
Agencies,
April 16, 2002.
Re: Energy Policy Act of 2002: MTBE and Ethanol provisions
Hon. Tom Daschle,
U.S. Senate, Senate Hart Office Building, Washington, DC.
Dear Senator Daschle: The Association of California Water
Agencies (ACWA), American Water Works Association (AWWA) and
the Association of Metropolitan Water Agencies (AMWA)
strongly support language in the current Energy Policy Act of
2002 to end the use of methyl tertiary butyl ether (MTBE) and
expedite states' requests for waivers from the Clean Air
Act's oxygenate requirement. The phase-out will protect
increasingly scarce water supplies from additional
contamination by MTBE, which was blended into gas without
regulators' consideration of its impact on groundwater.
Unfortunately, however, the energy bill would also require
that states use a new fuel additive, ethanol, in even greater
quantities than were required for MTBE. Replacing MTBE with
ethanol runs the serious risk of repeating costly
environmental mistakes, once again without evidence of the
benefits for clean air or the risks to human health. A 1999
study by the University of California concluded that the
state could meet its clean air, goals without oxygenated
fuel, a point corroborated by the U.S. EPA's Blue Ribbon
Panel in July 1999. Putting ethanol in gasoline, at any
levels would almost certainly result in higher prices at the
pump and new instances of possible water contamination.
The problems don't end there. The ethanol provision
features language creating a ``renewable fuels safe harbor''
that gives product liability protection to ethanol marketers.
This is especially troubling in view of the real possibility
that it will have its own environmental problems.
Members of the above organizations supply safe drinking
water to more than 200 million people in North America. We
recognize the need for the U.S. to invest in renewable fuel
sources, and are cognizant of the benefits they offer. But
ethanol doesn't need a federal mandate to help meet U.S.
energy needs. Your fellow Senators have spoken at length on
this provision creating market volatility and price spikes
for the benefit of a few ethanol producing states, and our
organizations support efforts by Senators Feinstein and Boxer
to amend the bill.
Senator Daschle, water agencies sincerely appreciate the
language phasing-out MTBE in S. 517. But the bill's call for
renewable fuels must not be pitted against the safety of
drinking water. We oppose the ethanol mandate and safe harbor
language in the bill, and we urge instead your support for
waivers from the Clean Air's outdated oxygenate requirement.
Thank you for your consideration, and please contact our
offices if we may provide further information.
Mrs. BOXER. Here is what it says. It is a letter addressed to Senator
Daschle.
Senator Daschle, water agencies sincerely appreciate the
language phasing-out MTBE that is in the bill. But the bill's
call for renewable fuels must not be pitted against the
safety of drinking water. We oppose the ethanol mandate and
safe harbor language in the bill, and we urge instead your
support for waivers from the Clean Air Act's outdated
oxygenate requirement.
That is of course the larger picture.
But the point is these water agencies have had to deal with the real
problems of MTBE. Mr. President, 120 million people are served by these
water agencies.
Mrs. FEINSTEIN. Will my colleague yield?
Mrs. BOXER. I am happy to yield.
Mrs. FEINSTEIN. I thank Senator Boxer for her support and leadership
on this issue, as Senator Schumer said. One of the things that has
struck me is the belief that there is no harm from ethanol when in fact
studies on this issue have not been done to a great extent.
I would ask the Senator if she has comments about yesterday's hearing
on the House side. Yesterday, Professor Gordon Rauser of the University
of California commented on the potential harm of ethanol on ground
water. This was before a House committee.
He said that research now strongly suggests that the presence of
ethanol in gasoline not only delays its degradation of benzene but also
lengthens the benzene plumes which run out by between 25 and 100
percent.
I think it is very important that the Record shows there is
scientific evidence that benzene plumes can go up as much as 100
percent and travel 100 percent more in distance because of ethanol.
That suggests ethanol may not be as safe as its proponents would have
you believe.
Mrs. BOXER. Yes. That is exactly the point of the blue-ribbon panel
of the EPA. That is exactly what MTBE does as well.
We are dealing with the potential that we could really have problems.
No one hopes more than I do that in the end it is all going to be safe;
that would be a winner. But we cannot stand here and say that.
If we don't learn from history, we are doomed to repeat it. We went
through the electricity crisis. We know what happens when supply is
manipulated.
Unfortunately, what my friend said on the floor may become true.
Manipulation is already being discussed on what to charge for ethanol.
We lived through the MTBE tragedy. I was one of the leaders; I had
the first bill to ban MTBE. In fact, a long time ago we got over 56
votes to ban MTBE.
No one can say I have been reluctant to do that. As I said, I am not
hostile to ethanol; I am very open to it, but at the same time we need
to know what we are doing here. We need to be careful about the amount
we are mandating so it isn't overwhelming but also difficult for people
to charge exorbitant rates. We have to be careful that there are not a
few suppliers and there is price manipulation. We have to be careful
with that. We have to be careful that we have the infrastructure we
need to bring in the ethanol. We must be careful so we are not giving a
waiver of liability to the oil companies and give them safe harbor so
they will not be held responsible, if, in fact, it turns out that this
blue-ribbon panel and the scientist who Senator Feinstein quoted proves
to be correct.
We already know that ethanol makes the air cleaner, but it makes smog
worse. We know these things. What we don't know is the long-range
impact of what happens when we use it in the types of quantities in
which we want to use it.
Mr. President, how much time do we have on our side?
The PRESIDING OFFICER (Mr. Carper). Seventeen minutes.
Mr. MURKOWSKI. Mr. President, will the Senator yield for a very short
question?
Mrs. BOXER. On your time. I want to reserve my time.
Mr. MURKOWSKI. My question has to do with the terminology ``Big Oil''
and the responsibility for ethanol. The Senator from Alaska understands
that Big Oil does not make ethanol.
Mrs. BOXER. We understand that the oil companies are at the table
with the ethanol people. They manufacture products. So everyone is at
the table with the oil companies.
Mr. MURKOWSKI. I will leave the question out there. It is not my
understanding that Big Oil makes ethanol.
Mrs. BOXER. They blend it into the oil. We understand that.
Mr. MURKOWSKI. They blend it because it is mandated.
Mrs. BOXER. Right now it is not mandated. We will wait and see what
happens.
But my argument is, if this bill becomes law, I don't want to see the
oil companies--the makers of ethanol--get off the hook if there is a
problem. It would be unprecedented. It would be the first time in
American history that it would happen. And it would be coming at a time
when we know that all the environmental and health questions have not
been answered.
Before some of my colleagues arrived, I went through all of the myths
that I have been told relating to my case. To try to say we are just
mandating it, and we must, therefore, waive liability--we don't do that
to automobile manufacturers with seatbelts, airbags, or anything else.
That is why I am very proud to have Senator Durbin's support and
Senator Dayton's support because these Senators come from ethanol
States. They understand that if they have this waiver in this bill, it
clouds this whole issue. If anyone says to you they have the safest
product in the world and they want a liability waiver, what does that
mean? It means in their hearts that they are not so sure. Again, anyone
who wasn't born yesterday knows that is not a good thing to do.
I reserve the remainder of my time--probably 15 minutes.
The PRESIDING OFFICER. The assistant majority leader.
Mr. REID. Thank you, Mr. President. We would like to schedule a vote
in the next hour or so on the amendments of the Senators from
California. It is my
[[Page S3348]]
understanding that on the Boxer amendment, Senator Grassley wishes to
speak for 5 minutes and Senator Hagel for 10 minutes. I will use a
couple of minutes.
We have to move this along. How much longer does the Senator from
California wish to speak?
Mrs. BOXER. If I could just close in 5 minutes.
Mr. REID. Mr. President, on this amendment, the Boxer amendment, I
ask unanimous consent that I be recognized for 5 minutes to speak in
opposition to the amendment, that Senator Boxer close with 5 minutes,
that Senator Grassley be recognized for 5 minutes in opposition to the
amendment, and that Senator Hagel be recognized to speak for 10 minutes
in opposition to this.
I also ask unanimous consent that, upon completion of debate on the
Boxer amendment, sometime prior to 12:30 today, I be recognized to
offer a motion to table on behalf of the majority leader.
Mrs. BOXER. Mr. President, reserving the right to object for one
moment, I didn't realize the Senator from Nevada was speaking against
my amendment. Therefore, because of his eloquence, I ask that I be able
to speak for 8 minutes instead of 5 minutes.
The PRESIDING OFFICER. Does the Senator modify his request?
Mr. REID. That would be fine.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Mr. REID. Mr. President, how much time does the Senator from
California need on her very important amendment?
Mrs. FEINSTEIN. One-half hour.
Mr. REID. We will arrange a vote, and I assume a few Members will
wish to speak in opposition to the amendment. I don't have the amount
of time figured out.
If the Senator from California would agree to 25 minutes, and 15
minutes in opposition----
Mrs. FEINSTEIN. I agree to that.
Mr. REID. Mr. President, I ask unanimous consent that on the
Feinstein amendment No. 3225----
Mrs. FEINSTEIN. The 1 year.
Mr. REID. Yes. We would have a vote first on the Boxer amendment and
second on the Feinstein amendment at 12:30, with the times I have
mentioned. I ask unanimous consent that be the order, and that both
votes be on or in relation to the amendments.
The PRESIDING OFFICER. Will the Senator please restate the request
with respect to the Feinstein amendment.
Mr. REID. I am sorry, I cannot hear the Chair.
The PRESIDING OFFICER. Will the Senator please restate the debate
time with respect to the Feinstein amendment.
Mr. REID. Yes. Senator Feinstein would have 25 minutes to speak on
her amendment, and the opposition would have 15 minutes.
The PRESIDING OFFICER. Is there objection to the unanimous consent
request?
Without objection, it is so ordered.
Mr. REID. And the vote would occur at 12:30, with no second-degree
amendments prior to that time being in order.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The deputy majority leader.
Mr. REID. Mr. President, the majority leader is in the most important
agricultural conference, which supposedly--I have heard this before--is
in its waning minutes, and he can't be in the Chamber. He is one of
four Democratic conferees. So he has asked me to speak on his behalf
relating to the Boxer amendment.
First, Mr. President, the chart I have shows the amount of cases that
the Senator from California is talking about. Of all the cases we have
in our court system, the defective product liability cases amount to
.002 percent. On behalf of the majority leader, I indicate that this is
a very small number of cases, and it relates to this bill. It is my
understanding that the language in this bill certainly gives the proper
opportunity for people to go forward in litigation.
What the amendment of the Senator from California could be construed
to be is, in effect, giving strict liability, meaning that you do not
have to prove any negligence. The majority leader has indicated that
this simply is not fair, that there is no reason to have strict
liability in this instance when there are so few cases in our judicial
system where strict liability is allowed. So the majority leader has
asked me to indicate that this amendment should be opposed by all
Senators.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I had the good fortune of listening to
the exchange between the junior Senator from California and the senior
Senator from New York. The senior Senator from New York is not in the
Chamber now. But I would like to point out that there is a lack of
understanding of this legislation, particularly as it relates to that
exchange they had over whether or not you can sue with regard to MTBE.
For all the pollution we have had from that product, there is nothing
in this legislation that is going to restrict any lawsuits in regard to
MTBE. So when there was an implication that if we did not adopt the
amendment before us, that people who have been harmed would not be able
to seek legal redress, that is totally false. It is misleading if
anybody says that for MTBE, and damage done from it, there cannot be
legal redress.
It is very important we make that clear because the water of
California, the water of New York, and other States--there is even a
little bit in my State--has been damaged because of this product, MTBE.
If you drink MTBE, it will kill you. If you drink ethanol, it will not.
For the future--and this legislation is prospective--if there is any
violation of the Clean Water Act, the Clean Air Act, if there is any
violation by any product, the Environmental Protection Agency has the
power to make that determination. If that determination is made, then
there is not a safe harbor under this legislation. So I think, as the
distinguished Democratic whip has stated, there is ample opportunity
for redress in this legislation.
I also point out another misstatement from the other side: that
somehow you are not going to be able to hold big oil companies
responsible involving anything to do with ethanol. You do not have to
worry about holding them responsible anyway. The big oil companies are
not producing ethanol.
Then, I remind the junior Senator from California, as I have said, I
think on two other occasions during this debate over the last week,
that we were proud of her and willing to work with her on a resolution
in 1999 that she authored, to declare MTBE as something that should be
outlawed, and that the reason it should be outlawed is the Clean Air
Act requirements could be met because the oxygenate requirements of
that act could be fulfilled because of the availability of ethanol.
Well, it is the same ethanol in the year 2002 as we were mixing with
gasoline in 1999, or for the last 20 years, as far as that is
concerned. The Senator from California, at that particular time, was
giving accolades to ethanol as a substitute for MTBE.
Then, lastly, since I am a Republican, I might be suspect from the
other side of the aisle, but about 6, 7 years ago, Senator Harkin, my
colleague from Iowa, had a hearing on ethanol versus MTBE in relation
to its safety, its use, et cetera, and Senator Harkin gave a
demonstration for all of the Senate that was involved in that
committee.
He had a small glass of ethanol, and he drank it. You can talk all
you want about the dangers of ethanol, but Senator Harkin is very much
alive and well, years after he took that small amount of ethanol. He
also had some MTBE there with the skull and crossbones on the can that
said how poisonous it was. So I think we need to get the facts straight
before this Senate.
Again, the exchange that went on a few minutes ago from the senior
Senator from New York to the junior Senator from California was
misleading in relation to people not having legal redress in this law
against damage from MTBE.
I yield the floor.
The PRESIDING OFFICER. The Senator has used his 5 minutes.
The Senator from Nebraska.
Mr. HAGEL. Mr. President, I rise today to speak in opposition to the
[[Page S3349]]
amendment offered by my colleague from California. As the Senators from
Iowa and Nevada, who have just preceded me, have stated very clearly,
this latest attempt to undermine the energy bill's renewable fuel
standard--one of the few provisions of the bill that is truly
bipartisan--is not in the best interest of this country's energy needs.
And it deserves, as the senior Senator from Iowa has just said, some
explanation as to what it does and does not do--this renewable fuel
standard amendment, reached by a bipartisan group of Senators, that is
in the present energy bill.
It is claimed that it will provide a sweeping liability exemption for
damage to public health or the environment resulting from the use of
renewable fuels. This is a clear misrepresentation of this section of
the energy bill.
A few months ago, Majority Leader Daschle reached out to a number of
Senators from both sides of the aisle to help craft the renewable fuel
provision in the current energy bill that we debate today. The result
is a historic agreement which has been endorsed by a majority of
Governors, the Bush administration, agricultural organizations, the oil
industry, and, yes--and yes--environmental and public health groups.
The talks that produced this bipartisan compromise included
representatives from the EPA, the American Lung Association, and the
Northeast States for Coordinated Air Use Management, among many others.
I know--and I am sure my colleagues from California and other
Senators in this body know--that the majority leader of the Senate has
a strong commitment to the environment and to the health of all
Americans. I suspect he would not agree to a provision he thought might
ultimately harm the public's health or environment. None of us would.
The safe harbor provision in this bill is there for one reason: to
protect the public and the environment while at the same time not
exposing manufacturers and distributors to frivolous lawsuits for
simply complying with a Federal requirement, a Federal requirement that
we imposed aimed at improving our air and water quality.
This language in this bill is fair. It is reasonable. It is right.
Yesterday, the Renewable Energy Action Project, REAP, a California-
based coalition of environmental groups, public agencies, and renewable
energy producers, placed a full-page ad in the Washington Post. The
headline in the ad read: ``Renewable fuels mean cleaner air, cleaner
water, and less dependence on foreign oil.'' And the ad went on to talk
about the health benefits.
The ad strongly supports the renewable fuels standard provision and
calls the provision an important environmental victory that will
protect America's drinking water and improve our air quality. This
coalition also warned readers to remember the facts and not be
surprised when they hear inflammatory and misleading information
attacking the renewable fuel standard.
We have heard the misleading information. We have heard it clearly.
Let's review the facts.
The facts are, this bill has solid safeguards. It requires, the
Environmental Protection Agency to conduct studies of the long-term
health and environmental effects of renewable fuels. Under this bill,
the EPA Administrator has the authority, the jurisdiction, the control
to either prohibit or allow the sale of renewable fuels that could
adversely affect air or water quality or the public health. There is no
safe harbor if the Administrator rules that the law has been broken or
laws are violated.
The safe harbor provision is very limited. It applies only to claims
that a renewable fuel is ``defective in design or manufacture''--I know
some in the legal business find that difficult to accept--and that
meets the requirements of the Clean Air Act. This is very important.
The Clean Air Act is still the law of the land. All must comply with
the law of the land. These requirements include compliance with
requests for information about a fuel's public health and environmental
effects as well as compliance with any regulations adopted by the EPA.
If these requirements are not met, the safe harbor protection does not
apply.
This provision does not affect claims based on the wrongful release
of a renewable fuel into the environment. Anyone harmed by a release of
that kind would retain all the rights to sue, all the rights they now
have under current law. If we change or strike the safe harbor
provision in this bill, we will unravel the entire bipartisan
agreement. We will, in fact, be taking several steps backward because
the result will be the continued use of MTBE, which we know has health
and environmental consequences. I do not think that is what my
colleagues from California or any other colleague wants or intends.
Just let me recap for a moment what the senior Senator from Iowa said
about compliance and who is protected, which is very important. There
is no safe harbor protection under this amendment, if the EPA
Administrator rules that a manufacturer or any entity is not in
compliance with the Clean Air Act. The language is very clear. I shall
read briefly from that language in the bill:
If it does not violate a control or prohibition imposed by
the administrator under section 211 of the Clean Air Act, as
amended by this act, and the manufacturer is in compliance
with all requests for information under section 211(b) of the
Clean Air Act, as amended by this act, in the event that the
safe harbor under this section does not apply, the existence
of a design defect or manufacturing defect shall be
determined under otherwise applicable law.
This is very clear.
As I summarize, let me point out an article that appeared today in
the Washington Post. This article is headlined ``Link Seen Between
Cooking, Cancer . . . Frying, Baking Starches Creates A Carcinogen.''
It goes on to say:
The process of frying and baking starchy foods such as
potatoes and bread causes the formation of potentially
harmful amounts of a chemical listed as a probable
carcinogen. . . .
It goes on.
What much of this is also about is downstream, future technologies.
No one can predict what is ahead. We now have a story questioning
starchy foods and how we prepare them. I think there is some historical
evidence that people have actually been baking bread for centuries and
eating potatoes cooked many ways and have done quite well actually.
Let's bring some common sense back to this debate. Let's bring some
common sense to what we are trying to do here and apply the law based
on common sense.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. MURKOWSKI. Mr. President, how much time remains on the side of
the opponents?
The PRESIDING OFFICER. Fifteen minutes in opposition on the Feinstein
amendment.
Mrs. BOXER. Mr. President, I have 8 minutes to respond.
The PRESIDING OFFICER. The question was on the time in opposition.
The Senator from Alaska.
Mr. MURKOWSKI. Mr. President, it is fair to reflect on this safe
harbor Boxer amendment which will be stricken if the amendment
prevails.
The bill, we all know, contains this safe harbor provision regarding
the liability of manufacturers and distributors in renewable fuels that
are subject to the bill's mandate. The principle is relatively simple:
No one should be subjected to tort liability simply for manufacturing
or selling a product that was mandated by this Congress. That is what
we are talking about, a product mandated by Congress. Maybe Congress
should bear the liability.
In any event, it is fair to say the provision is very limited. It
applies only to claims that a renewable fuel mandated by the act is
defective in design or manufacture, and it applies only so long as the
applicable requirements of section 211 of the Clean Air Act have been
met. These requirements include both compliance with requests for
information about a fuel's public health and environmental effects and
compliance with any regulations adopted by the Administrator.
If these requirements are not met, then the safe harbor protection
will not be available, and liability will be determined under otherwise
applicable law.
This provision does not affect claims based on wrongful release of a
renewable fuel in the environment. Anyone harmed by a release of that
kind would
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retain all rights he or she has under current law.
It also applies only prospectively. So it does not affect any claims
that have already been filed as of the effective date.
There is some uncertainty regarding the long-term health and
environmental risks associated with renewable fuels. Questions have
been asked about ETBE, an ether derivative from ethanol, even ethanol
itself. The major strength of the bill is its provisions requiring EPA
to conduct studies of those effects.
Those studies show that if additional regulations are necessary, then
the Administrator simply has authority under the rulemaking provision.
Liability protection under the bill would depend on full compliance
with any rules the Administrator may adopt. The balanced approach,
which I think it is, will protect the public from any adverse health
and environmental impacts from renewable fuels while not exposing
manufacturers and distributors to tort lawsuits for complying with the
renewable fuels mandated in the bill.
Some have contended that this provision could give polluters sweeping
liability for damage to public health or the environment resulting from
renewable fuels or their use, in the sense of conventional gasoline.
Nothing could be further from the truth.
In the first place, the safe harbor provision doesn't affect claims
based on the wrongful release of the renewable fuel into the
environment. Those responsible for releases to the environment receive
no protection whatsoever, nor should they. Moreover, the safe harbor
only applies if the maker or seller of a renewable fuel complies with
EPA regulations to protect the public health and environment.
Under this bill, the Administrator has the authority to control, or
even prohibit, the sale of renewable fuels that may adversely affect
air or water quality or the public health. There is no safe harbor if
the Administrator's rules are violated.
In my opinion, the amendment would simply promote litigation and
increase our dependence on imported oil, which we have already talked
about a great deal in this debate on the energy bill.
Mr. President, I reserve the remainder of my time.
The PRESIDING OFFICER. Who seeks time?
Mrs. BOXER. Mr. President, understanding is that all time in
opposition to my amendment has been used; is that correct?
The PRESIDING OFFICER. Yes. The time in opposition to the Senator's
amendment has expired.
The Senator from California has 8 minutes.
Mrs. BOXER. I would like to be told when I have used up 7 minutes of
my 8.
Mr. President, it is such a simple point. People try to complicate
simple matters around here. If ethanol is so safe, why have the
companies involved in its production pressed for the liability
exemption in the bill? I have to say, with respect to my friends from
ethanol country, if this chart that my friend from Nevada talked about
were submitted as an answer to a question in a bar exam, the person
would fail the bar exam because they have mixed up the causes from the
remedies. You cannot show all of this and say each one of these is a
cause. Compensatory damages is a remedy. Punitive damages is a remedy.
The cause of action they are going after here happens to be a very
small one, it is true. It is only used in a small number of all civil
cases, it is true. But defective product liability is the only cause of
action that will hold up in a court of law when you seek to get damages
from an additive to gasoline.
How do I know this? Because we have done this with MTBE, and every
other cause of action that was recommended was thrown out by the court.
The only one left standing was defective product.
So then my friends say: But we are only eliminating defective
product, and it is just a little narrow sliver. Again, they don't pay
these oil company attorneys $500 an hour to come up with some
overarching thing that people will notice. They pay them to come up
with a very narrow exemption that they hope will slip through. Thank
goodness, people who have read this bill understand the ramifications
of this liability waiver, because this could have slipped through.
The fact of the matter is that they have exempted themselves in this
so-called ethanol compromise--the compromise where Senator Feinstein
wasn't at the table, nor was I, nor were the New York Senators. They
compromised it themselves. The oil companies and the ethanol producers
came up with this liability waiver.
So it is a simple point. If it is meaningless, why won't they take it
out? If it only applies to .002 percent of civil cases, then it is
meaningless, so why won't they take it out?
The other question is, I believe, this is precedent setting. We
mandate many things. The Senator from Alaska says we are mandating
this. We cannot expect these companies to pick up the tab if it is
defective. We mandate seatbelts. If there is a defective seatbelt, auto
companies are held responsible. We mandate regulations on a lot of
products, such as airbags. We mandate that products be safe and that
certain rules and regulations be followed in mammography and many other
products. Yet if there is a defective product, there is no waiver of
liability.
One of my friends who is with the ethanol caucus said: Well, we did
it in Y2K, Mr. President; we waived the liability for the computer
industry in Y2K. That is a laughable comparison. We gave a waiver of
liability for 1 year on the Y2K problem because we knew it would be
complicated. That set a precedent for every thousand years--every
thousand years. We won't be around for the next one.
But that is not what this is about. You have heard the expression
``solidarity forever.'' This is liability forever--liability from a
product on which there are some problems already proven and there are
perhaps more problems yet to be known. That is why there is a study in
the bill.
I think anyone in this body who cares about consumers, and about
health, and about the children, and who cares about the environment,
cares about our States and localities that will have to pick up the tab
if there is a problem, will vote with us.
I will be happy to yield to my friend for a question.
Mrs. FEINSTEIN. Mr. President, I think what the Senator has said is
very important. I hope Members of the Senate will listen because what
she pointed out was the central flaw in this safe harbor provision.
As I understand it, what the Senator is pointing out is that the safe
harbor provision eliminates the one cause of action anyone has that is
able to be successful, and that relates to a defective product. So this
bill eliminates any cause of action which is brought around the product
being defective.
Let me give an example, if I understand this. If it is shown--as I
believe it can be shown--that ethanol breaks down gasoline to allow its
component parts to plume into the air, spread into the ground, and then
it enables benzene to move faster and longer and harder, no one can sue
under a defective product liability cause of action; is that right?
Mrs. BOXER. My colleague is absolutely correct. If I might tell her
that, in the Lake Tahoe case against MTBE, the only cause of action the
court allowed was the very one they are trying to do away with, as she
pointed out, the defective product liability. It was $45 million to
clean up the mess at Lake Tahoe, an area of our Nation that my
colleague and I, Senators Reid, and others have worked so hard to
protect. The fact is, they had a horrible problem because of the boats
using the gasoline with MTBE, which is now banned on Lake Tahoe. They
went to court to try to get the $45 million. We still don't know. The
jury did come back, and they found for the good guys, the plaintiffs.
The PRESIDING OFFICER. The Senator has 1 minute.
Mrs. BOXER. The jury ruled in favor of the plaintiffs. It was made
under the defective product cause of action. Had they not had that
available to them--which is exactly what this bill would do, eliminate
that--they would not have had a case; the people of Lake Tahoe would be
stuck paying $45 million. This is a small area.
So, in closing, let me say this: I say to my friends here, please,
rise above all of this special interest politics and think about what
is good for your people. We know what is good for your
[[Page S3351]]
people is to make sure they are protected--protected from a product
that may cause them and their community harm. If we don't vote for this
amendment, I worry and fear for the future.
I yield the floor.
The PRESIDING OFFICER. The Senator's time has expired.
Who yields time? If no one yields time, time will be charged equally.
The Senator from New Mexico.
Mr. BINGAMAN. Mr. President, would you repeat that statement? What is
the status with regard to time?
The PRESIDING OFFICER. If no one uses time, time will be charged
equally to both sides. Senator Feinstein has 25 minutes remaining in
support of her amendment, and there are 10 minutes in opposition to the
Feinstein amendment.
Mr. BINGAMAN. Under the unanimous consent agreement, Senator
Feinstein's 25 minutes begins to run at this point?
The PRESIDING OFFICER. That is correct.
Mr. BINGAMAN. I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. MURKOWSKI. Mr. President, how much time do we have?
The PRESIDING OFFICER. Ten minutes in opposition. Senator Feinstein
has 25 minutes, and the time is equally divided in both the support and
opposition.
Amendment No. 3132 Withdrawn
Mr. MURKOWSKI. Mr. President, I ask unanimous consent to withdraw
amendment No. 3132.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3225
Mrs. FEINSTEIN. Mr. President, I call up amendment No. 3225, and I
ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mrs. FEINSTEIN. Mr. President, the amendment I call up is a very
modest amendment to the renewable fuels provision in the Senate energy
bill. It will simply delay the implementation of the ethanol mandate
for 1 year. That would move it from 2004 to 2005.
The purpose of the amendment is to give States more time to make
essential infrastructure refinery and storage improvements. This
amendment will provide the Senate with the opportunity to make an
essential modification to the current bill since virtually every State
outside of the Midwest will have to grapple with how to bring in more
ethanol over the next several years.
Although the ethanol industry says they can meet future demand,
virtually every expert has told me that delivery interruptions and
shortfalls are likely, if not inevitable, and yet we are tied to bring
in a specific amount. In 2004, the Nation will be forced to use 2.3
billion gallons of ethanol. There is insufficient transportation
infrastructure to ship large amounts of ethanol to the east and west
coasts, and a temporary reprieve is essential to develop the
infrastructure, especially when the infrastructure demands for ethanol
are far more complex for ethanol than for MTBE.
Here is why infrastructure is so important. Moisture causes ethanol
to separate from gasoline. So the fuel additive cannot be shipped
through traditional gasoline pipelines. Ethanol needs to be transported
separately by truck, boat, barge, rail, and then blended into the
gasoline at the refinery site after it has arrived.
Yet it will not be so easy to transport ethanol by truck, boat, or
rail from the Midwest and blend it once it is transported, unless
adequate facilities can be built.
According to the California Energy Commission, the adequacy of
logistics to deliver large volumes of ethanol is not consistent. A
recent report sponsored by the California Energy Commission predicts
there will be future logistical problems since the gasoline supply
system is currently constrained with demand exceeding the existing
infrastructure capacity.
In fact, inadequate infrastructure recently led the Governor of
California to push back the start date of the State's ban on MTBE to
2004 from 2003. California does not have the ethanol infrastructure in
place to meet the oxygenate requirement under current law once MTBE is
banned. The Governor had little choice because California's predicted
gas prices at the pump would double if the MTBE ban went into effect as
planned in 2003.
This is due in part to the lack of infrastructure. It is also because
once MTBE is removed, California needs 5 to 10 percent more gasoline
with ethanol. Here is why.
MTBE helps reduce the amount of gasoline needed to make a gallon.
Ethanol, however, does not go as far as MTBE, so it increases the
amount of gasoline needed to make a gallon. Once we have phased out
MTBE, the difference is estimated by experts to require 5 to 10 percent
more gasoline in every gallon of gasoline that is produced with
ethanol--5 to 10 percent more.
California's refining capacity is at capacity. It is 98 percent,
which is capacity. Therefore, we cannot refine 5 to 10 percent more
gasoline under the present refining conditions. Therefore, not only are
there going to have to be massive improvements in the ability to bring
ethanol into the State, but there have to be massive changes made in
the refineries themselves, and this is going to take time. Somehow we
are going to have to bring online additional refining capacity to
handle the tripling of ethanol that is required over the next 10 years
by this bill.
This is one of the reasons, from a California perspective, the
ethanol mandate is worse for California than for any other State, and
for California it is going to spike the cost of gasoline.
Let there be no doubt, we have troubles even the way things are with
gasoline supply. As a matter of fact, gas in California is going up.
One of the reasons is refinery outages, the shortage of gasoline. That
is a very real problem.
This additional year, from 2004 to 2005, will give all States, and
especially the east coast and west coast States, an additional year to
solve some of these problems.
Before forcing three times the amount of ethanol we currently produce
in our fuel supply, I sincerely urge the Senate to adopt this amendment
to allow those States that have problems, of which ours is prime, to be
able to develop the terminals, the trucks, and the barges to bring in
ethanol and the refinery changes that are going to be necessary to
produce more gasoline, as well as to absorb ethanol into the situation.
Let me summarize. In the past days, we have made the following
points: That the Senate bill requires 5 billion gallons of ethanol by
2012. The mandate will force California to use 2.68 billion gallons
more of ethanol than we need to meet clean air standards.
We have proven, I think, that this is a hidden gas tax of anywhere
from 4 to 10 percent, and the infrastructure shortfalls in California
will most likely put the gas tax hike above that. We have shown there
are transportation and infrastructure problems. We have shown there is
a dangerously high market concentration.
We point out Archer Daniels Midland has a 41 percent market share.
The Wall Street Journal this morning contains a very interesting
article on this very subject entitled ``ADM Used European Wine For
Ethanol.'' It shows how recent evidence has been uncovered to suggest
that ADM engaged in bid rigging, which is a form of price fixing, with
respect to European ethanol brought into the United States.
So giving any company a large concentration of market share can also
produce exactly what we went through with Enron. We have shown that
ethanol has mixed environmental and health benefits. It does decrease
carbon monoxide. However, it increases nitrogen oxide emissions, or
NOx, which will increase smog in my State and in other
States.
We have demonstrated there will be less revenue to the highway trust
fund because gasoline is taxed at 18.4 cents to provide funds for our
roads and bridges, but fuel blended with ethanol is only taxed at 13.1
cents. Therefore, this mandate will create an unbelievable $7 billion
shortfall in the highway trust fund, and it will provide every State in
the Union less dollars to build roads, bridges, and transportation
infrastructure.
We have shown, and Senator Boxer did this eloquently, that the safe
harbor provision of the bill prevents legal redress if ethanol and
other fuel additives harm the environment, because it
[[Page S3352]]
removes the unsafe product liability cause of action. That is the one
cause of action that sustained the cases in California brought on MTBE,
and this bill removes it for ethanol.
Why is this in there? Because the oil companies wanted liability
protection or they would not go along with the deal that was cut. So
they were given liability protection and no one can bring an unsafe
product cause of action against ethanol.
We have shown that ethanol is not a renewable fuel because some
scientists believe it takes 70 percent more energy to make ethanol than
it saves using it, and we have shown that the ethanol mandate will
largely benefit producers, not farmers.
Producers will get 70 percent of the benefit; farmers, 30 percent
according to one report. We have shown what this amounts to is a
massive transfer of wealth.
The bottom line is the ethanol provisions of this bill are a very bad
deal and that mandating 5 billion gallons of it, a tripling of it, by
2012, which never had a hearing in the Energy Committee, never saw the
light of day before the deal was put together in secret and apparently
a majority of the Senate is going to support it, we ask one thing, and
that is that California and other States that need it, on the east
coast and on the west coast especially, be given one more year to
increase the refining capacity, to improve the infrastructure, to see
that the terminals are in place and that we can, in fact, triple
ethanol and have enough gasoline to supply our need.
It is my understanding the junior Senator from California would like
to ask a question.
Mrs. BOXER. I do want to ask a question, but first I want to thank my
colleague for this very modest amendment. I am stunned that our friends
in the ethanol caucus have so far not acceded to it. This is my
feeling, and I ask my friend if she agrees with me. As she has so
eloquently pointed out, we need to build an infrastructure to receive
this ethanol. We have to make sure we know what we are doing and we do
not rush this. If we rush this and the Senator's amendment is not
adopted, I think it is possible there could be huge hostility toward
the use of ethanol, and when the people of our country get upset about
taxation without representation--and that is how they are going to feel
because, as my friend has pointed out, this is like a tax on gasoline
for us--there is no telling what is going to happen in this country in
places where they are hit.
If we put that together with this terrible article that ran
yesterday, ``Memos Show Possible Ethanol Price-fixing,'' with the
legitimate issues of building an infrastructure, together with the fact
we do not know the health impacts, if they rush this there could be an
explosion of resentment in the country.
There is a 2-year study on the health effects in the bill. Until that
is done, until that is analyzed, this could take us into 2005. If we
find out, for example, there is a way to mitigate some of the problems,
we would have time to fix the infrastructure in a way to contain the
problem.
My question to my friend, in addition to thanking her for her
leadership on this, is, does she not believe if we are all really on
the level and we are being sincere, that this is a friendly amendment
to both sides because it would, in fact, give us more time to
accommodate for the use of the ethanol, would give us more information
on the impacts of the ethanol, and it would allow us to do this in an
orderly way without great disruption to the marketplace and at the
pumps.
Mrs. FEINSTEIN. I respond to the junior Senator by saying she is
absolutely right. She has phrased it in a very kind and gentle way. I
am afraid I feel more adamantly about it, because I am 100 percent
certain this is a big gas tax increase for our people.
We have the longest commutes in the Nation now with people commuting
as much as 2\1/2\ hours to get to work from Stockton to the Bay Area.
This is going to be a real hardship. Our State is complicated because
we do not have the refining capacity to refine the additional gasoline
that ethanol is going to require. We talked about this yesterday. I
went back and checked the figures, and our state will require 5 to 10
percent additional gasoline once we ban MTBE, but to force ethanol down
our throats at the same time is a recipe for disaster.
Therefore, we will not have the refining ability to refine that
because our refineries are at capacity.
So the infrastructure need of our State is much greater because it is
going to mean additional refining capacity. That is not cheap or easy
to produce, because you have to go through zoning, you have to go
through local governments, you have to conduct environmental reports,
to increase the refining capacity of our refineries.
Additionally, our refineries are old and they break down. We have had
two breakdowns of major refineries, as the junior Senator knows, and
that spikes the price of gasoline. The Senator is right. All this
amendment says is, give us another year. Instead of 2004, make it 2005.
Give us and other states a chance to produce our additional refining
capacity and to meet the additional infrastructure needs.
The Senator from New York is in the chair. She knows the hardship
that New York is going to occasion because of this. It gives New York
an additional year to be able to make substantial infrastructure
changes.
Neither California nor New York have much by the way of ethanol
plants. Everything has to come in from the Midwest. Weather is going to
impact it. It has to come in by truck or rail or boat. Then it has to
be transported to a refinery and injected into the gasoline.
We are saying: Please, you have the votes out there. You know it will
present considerable hardship to some. At least be generous enough to
give an extra year to be able to get ready for it.
I thank the Senator for her question, and I yield the floor.
The PRESIDING OFFICER (Mrs. Clinton). The Senator from Iowa.
Mr. GRASSLEY. Madam President, obviously, I am against this
amendment. The rest of the country is trying to help California get
through their oxygenate standards and to get over the business of
polluting water with MTBE which their oil companies wanted to use and
got a mandate for in the last Clean Air Act.
Somehow, notwithstanding all this help, the Senators from California
do not realize how good the agricultural States and even other States
are trying to be to California to get through this problem. For
example, a lot of farmer cooperatives have helped invest $1.4 billion
in small ethanol plants and ethanol expansion in order to provide the
product needed to help California to meet the requirements of the Clean
Air Act.
We already have the Governor of California sticking it to the
farmers--particularly the farmers who have created the small co-ops to
produce ethanol--by delaying one year, the MTBE ban that he said 3
years ago would take effect at the end of this year. So now farmers
have to wait through 2003 before they get the market created by the
MTBE ban. It is putting the investment of these small co-ops in danger.
The Senators from California can talk all they want about helping
ADM. ADM will survive. The financial investments of the small co-ops
will be harmed.
So now, in addition to the damage the Governor of California has been
done by delaying the MTBE ban by 1 year, now the Senators want to delay
another year.
The Senators will help ADM and hurt the farmers who have been trying
to build the smaller plants so there is more competition in ethanol and
also more value-added benefits of ethanol go to the individual family
farmer, instead of ADM.
So I make it clear, this 1 more year delay, in addition to the year
delay caused by the Governor of California, is doing damage to the
people that Senators say they want to help. Senators say they do not
want dependence upon ADM, but they will make themselves more dependent
on ADM.
And now to clear up something about the mixture of ethanol with
gasoline. The senior Senator from California said you bring ethanol to
the refinery and it is injected. Let me tell how simple it is to mix
ethanol and gasoline together. In the tanker, you put the 10-percent
mix of ethanol in the tanker and add the other 90 percent of gasoline.
This can be done at the terminal, not at the refinery. You go down the
[[Page S3353]]
road and it is splash blended. It is not a technologically complicated
process of mixing ethanol with gasoline to create what we call gasohol.
The other thing I think the Senate should be reminded of regarding
not having refinery capacity, how long has it been since you built a
refinery in California? It has been decades. That is not our problem;
that is your problem that you don't have this refinery capacity because
of the attitude ``not in my backyard.''
Now, key points regarding this amendment: The bill before the Senate
provides for a gradual phase-in of the use of renewable fuels beginning
with 2.3 billion gallons in the year 2004 and growing to 5 billion
gallons over an additional 8-year-period of time. So there is plenty of
time to meet the needs under this legislation.
The gradual phase-in of the renewable fuels standard provides a very
orderly transition allowing ethanol capacity and infrastructure
modifications to expand to meet market demand.
Nevertheless, we have this delaying tactic before the Senate. It is
being presented out of fear of disruptions of supply and price. The
facts show there is no need to delay our fuel standard and there is no
fear of disruptions. The original agreement implemented the renewable
fuels provisions beginning 2003 in an effort to assure all parties that
ethanol capacity expansion and infrastructure modifications needed to
meet demand would be completed, and we made the renewable portfolio
standards delayed by 1 year, until the year 2004.
The U.S. ethanol industry has the capacity to produce 2.3 billion
gallons of ethanol per year. Right now we produce 1.8 billion gallons
per year. Plants currently under construction will increase capacity to
2.7 billion gallons by the end of this year. Clearly, there is more
than enough ethanol capacity to meet the needs of the first year of the
program, beginning 2 years from now.
Ethanol producers have expanded capacity to meet demands. In response
to State calls for the removal of MTBE from gasoline, America's farmers
responded, investing in ethanol plants and adding 1 billion gallons of
new capacity in just these 2 years. Delaying the renewable fuels
provision will result in significant oversupply in the ethanol market,
harming new entrants in the ethanol market. Predominantly, these are
farmer-owns facilities, likely resulting in some plant shutdown.
A delay will wreak havoc on the fuel supply markets as ethanol plants
shut down as a result of delay. The petroleum industry will lose
potential sources of supply necessary to meet renewable fuel
requirements the following year when the program begins, disrupting
markets and actually raising the potential for price increases to
consumers.
By the way, I want to respond to the so-called tax on consumers.
There is not any place I have been in my State that you have to pay one
penny more for gasoline with ethanol in it. Most times you get it for 2
cents cheaper, sometimes 3 cents cheaper. Most of the time it is priced
exactly the same. Don't talk to me about a tax on consumers because
ethanol is in gasoline.
Today, oil refineries are operating at near full capacity, leaving no
room in the system for unexpected shutdowns, fires, or pipeline
disruptions.
Delaying the renewable fuels provision by a year will further
constrain domestic supply, leaving consumers vulnerable to price hikes.
Last, I think we also have to remember there is a certain amount of
camaraderie around this body that has to be respected. That is that we
do have some very basic agreements put together in regard to getting a
bipartisan energy bill through this body.
The historic bipartisan compromise on fuels issues in this bill
represents a carefully crafted agreement among oil industry, ethanol
producers, agricultural groups, environmental and public health
interest groups, including the American Lung Association, the Union of
Concerned Scientists, and Northeast States for Coordinated Air Use
Management, among others.
So let's keep this carefully crafted agreement together so we can get
a bill passed and maintain a bipartisan approach to the energy problems
of this country.
I yield the floor.
The PRESIDING OFFICER. The Senator from California.
Mrs. FEINSTEIN. Madam President, how much time do I have?
The PRESIDING OFFICER. Six minutes.
Mrs. FEINSTEIN. Madam President, I would like to respond to the
Senator. I found his comments really quite amazing. On the one hand, he
was saying how generous he was being to California; on the other hand,
he was saying: Tough, if it spikes your cost of gasoline; tough, if you
don't have enough refinery capability, that is your fault. I am for the
farmers in the Midwest, and all the rest of you be damned.
I don't appreciate that very much. I will tell you something: When
the price of gasoline does spike and people are calling, I will refer
them to your office, Senator, and be happy to do so. We are being
forced to use something we do not need. It would be one thing if we
needed it to meet clean air standards. We are being forced to use 2.68
billion gallons of ethanol we do not need in California to meet clean
air standards. I resent that.
I resent that the policy of the United States Senate mandates that we
have to use something we do not need that is going to cost us more,
that is going to prevent us from getting highway money and
transportation money because it is going to cut the highway trust fund
by $7 billion.
I resent the fact that I am on the Energy Committee and this bill was
not even run by the committee; that there has been no public hearing
held on any part of it. I resent that fact.
I resent the fact that you don't care whether my State has the
refining capacity or not to meet this in time. We have tried to be nice
all during this debate, but I resent the fact that this is a deal cut
in secret, when nobody who is affected adversely has a chance to weigh
in.
I resent the fact that we have no chance to get experts before a
committee, to say what we do and do not know about ethanol.
I resent the fact that everybody says it is just great, when
scientists have said it may have real problems attributed to it and we
cannot even have a hearing to listen to those problems. I resent that.
I do not think it is good public policy. It might be good in a
political campaign.
I resent the fact that I had the refiners, the ethanol people and the
corn farmers, in my office for 8 months trying to negotiate something
that California could live with, and then both Presidential candidates
announced their support of ethanol and the corn growers reversed and
said: Forget you, we are not going to negotiate with you; now we can
get much more. And the ``much more'' has resulted in a tripling of an
additive we do not need.
Senator Boxer and I are standing here like two lone sheep trying to
make an argument when the deal has already been cut, when we have never
been consulted. The Senator from New York, what is she going to do when
her gasoline price spikes--because it is going to--because we did not
have that opportunity?
I resent that as public policy. I have every right to. I represent
34.5 million people, the fifth-largest economic engine on Earth, and we
are being told: It is good for corn farmers, so, you guys, lay down and
take it. I am being told: Oh, we have a credit trading system. But the
fact of the matter is, if you really read the fine print: Use it or pay
for it.
I have a problem with that public policy. And I have every right to
stand on this Senate floor and say I have a problem with it, and say I
think this is unfair, and say I think it is done in the dark of night,
and say I do not think anybody who is really affected by it has been
let into that secret, dark room.
Yes, you have all cut your deal, and both coasts are going to suffer
because of it.
I talk to Senators who I was surprised were in on the deal. What they
told me was: We had to, or they would not let us stop using MTBE. We
had to, or they would not let us stop using MTBE. That is the way
public policy is made.
It is wrong. I am sorry, it is wrong. We lose today, but guess what,
we will watch this thing. We will watch this with the eyes of a hawk.
You can be sure we will have more to say about it
[[Page S3354]]
because it is bad public policy. To mandate States to use something
they don't need, when they can meet clean air standards with
reformulated fuel except for a small part of the year, in a certain
market--it is wrong. It is bad public policy.
Mrs. BOXER. Will my colleague yield for a question?
Mrs. FEINSTEIN. I will be happy to yield because my adrenaline will
then drop and my blood pressure will as well.
Mrs. BOXER. I say to my colleague, she had every right to exhibit the
feelings she did, when we are told on the floor: Don't come and tell us
about price increases.
Our State has gone through the proverbial nightmare with electricity
prices because they were manipulated, because the supply was
manipulated, because there was no transparency, because a few companies
got together and did it to us. Now we are walking into this situation
because of our colleagues who have a special interest in this. I
understand it, but don't stand on the floor and say: Don't tell me
about price increases.
Your administration, the administration in charge, the Bush
administration, has put out a chart. What I want to ask my colleague is
this: Didn't Spencer Abraham put out a chart that showed us that this
administration believes the price of gasoline in California will go up
9 cents? This is not something we are making up. Is that not a fact?
The PRESIDING OFFICER. The time of the Senator has expired.
Mrs. BOXER. I ask for 30 more seconds so she can respond.
Mr. REID. There is no time.
Mrs. BOXER. May she have 30 seconds to respond to my question,
please?
Mr. REID. I object.
The PRESIDING OFFICER. Is there objection?
Mr. REID. Yes. The Senator from Nevada has 2\1/2\ minutes. I yield 2
minutes of that to the Senator from Nebraska, Mr. Nelson.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. NELSON of Nebraska. Madam President, one of the questions raised
continuously throughout this debate, and it continues to be a question,
is: Will there be enough volume, will there be enough production
capacity to handle these requirements? Let me refer to the chart we
have here that shows there are 61 plants today, plants that are in
operation; 14 are under construction--and they claim 82 percent of
capacity is in production. We can do better. Biodiesel is estimated to
provide another 100 million gallons of ethanol equivalent.
As you begin to see the capacity and production, you see that we have
the additional capacity in excess of the production we have at the
present time. So the whole question about whether or not we will have
enough production, will there be enough ethanol, I think should be put
to bed.
The other point that needs to be made is, will this raise the price
of gasoline because of the cost of ethanol? Frankly, by reducing the
amount of gasoline used, because of the additive, it will drive down
the supply of gasoline, which I think will also, if you will--and the
use of ethanol as a part of that--not increase the cost of gasoline but
will in fact decrease the cost of gasoline. The evidence really exists
that this is what the marketplace has been doing over the last 10 to 20
years in many States across the country.
I can understand the concern that has been raised. But I think we
have to deal with the facts. If we are going to deal with concerns, the
best way to deal with them is with facts. I think the facts have shown
capacity, have shown prices, and haven't gone up. I think we can
conclude that there will be enough capacity and that the prices will
not go up as has been suggested.
I yield the floor.
Mr. REID. Madam President, I yield the final 30 seconds to the
Senator from California.
The PRESIDING OFFICER. The Senator from California is yielded the
final 30 seconds.
Mrs. FEINSTEIN. Madam President, once again, this is just a very
modest amendment. It delays the implementation of this mandate by 1
year, until 2005. It gives both coasts of the United States the
opportunity to do what they need to do to increase refining capacity,
to develop the terminals, to develop the truck fleet, and to get ready
for what is going to be a massive infusion of a product that can't be
shipped by pipe. It has to be shipped by truck or by rail or by barge.
I hope the Senate will allow us this additional year to get ready for
this unfortunate mandate.
Amendments Nos. 3332, 3333, 3370, 3372, 3239, As Modified, 3146, As
Modified and Further Modified, 3082, 3355, and 3335
Mr. REID. Madam President, prior to the vote taking place, there are
some housekeeping matters.
I ask unanimous consent the pending amendments be temporarily set
aside in order for the following filed amendments to be offered in the
order in which they are listed below. I further ask unanimous consent
that following the reporting of these amendments they be set aside in
the order offered:
Kyl No. 3332; Kyl No. 3333; Graham No. 3370; Graham No. 3372;
Brownback No. 3239, as modified; Hagel No. 3146, as modified, with a
further modification now at the desk; Baucus No. 3082; Conrad-Smith No.
3355; and Sessions No. 3335.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 3332, 3333, 3370, 3372, 3239, as modified, 3146,
as further modified, 3082, 3355, and 3335) are as follows:
amendment no. 3332
(Purpose: To strike the extension of the credit for producing
electricity from wind)
In Division H, on page 4, line 8, strike ``Subparagraphs
(A) and'' and insert ``Subparagraph''.
____
amendment no. 3333
(Purpose: To strike the provisions relating to alternative vehicles and
fuels incentives)
In Division H, beginning on page 17, line 9, strike all
through page 55, line 6.
____
amendment no. 3370
(Purpose: To strike section 2308 of Division H (relating to energy tax
incentives))
In Division H, (relating to energy tax incentives), strike
section 2308.
____
amendment no. 3372
(Purpose: To limit the effective dates of the provisions of Division H
(relating to energy tax incentives))
In Division H, on page 216, after line 21, add the
following:
SEC. . LIMITATION ON EFFECTIVE DATES.
Notwithstanding any other provision of this division, no
provision of nor any amendment made by this division shall
take effect until the date of the enactment of legislation
which raises Federal revenues or reduces Federal spending
sufficient to offset the Federal budgetary cost of such
provisions and amendments for the 10-fiscal year period
beginning on October 1, 2002.
____
AMENDMENT NO. 3239, As Modified
Strike all after the title heading and insert the
following:
SEC. 1101. PURPOSE.
The purpose of this title is to establish a greenhouse gas
inventory, reductions registry, and information system that--
(1) are complete, consistent, transparent, and accurate;
(2) will create reliable and accurate data that can be used
by public and private entities to design efficient and
effective greenhouse gas emission reduction strategies; and
(3) will acknowledge and encourage greenhouse gas emission
reductions.
SEC. 1102. DEFINITIONS.
In this title:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Environmental Protection Agency.
(2) Baseline.--The term ``baseline'' means the historic
greenhouse gas emission levels of an entity, as adjusted
upward by the designated agency to reflect actual reductions
that are verified in accordance with--
(A) regulations promulgated under section 1104(c)(1); and
(B) relevant standards and methods developed under this
title.
(3) Database.--The term ``database'' means the National
Greenhouse Gas Database established under section 1104.
(4) Designated agency.--The term ``designated agency''
means a department or agency to which responsibility for a
function or program is assigned under the memorandum of
agreement entered into under section 1103(a).
(5) Direct emissions.--The term ``direct emissions'' means
greenhouse gas emissions by an entity from a facility that is
owned or controlled by that entity.
(6) Entity.--The term ``entity'' means--
(A) a person located in the United States; or
(B) a public or private entity, to the extent that the
entity operates in the United States.
(7) Facility.--The term ``facility'' means--
(A) all buildings, structures, or installations located on
any 1 or more contiguous or adjacent properties of an entity
in the United States; and
(B) a fleet of 20 or more motor vehicles under the common
control of an entity.
(8) Greenhouse gas.--The term ``greenhouse gas'' means--
[[Page S3355]]
(A) carbon dioxide;
(B) methane;
(C) nitrous oxide;
(D) hydrofluorocarbons;
(E) perfluorocarbons;
(F) sulfur hexafluoride; and
(G) any other anthropogenic climate-forcing emissions with
significant ascertainable global warming potential, as--
(i) recommended by the National Academy of Sciences under
section 1107(b)(3); and
(ii) determined in regulations promulgated under section
1104(c)(1) (or revisions to the regulations) to be
appropriate and practicable for coverage under this title.
(9) Indirect emissions.--The term ``indirect emissions''
means greenhouse gas emissions that--
(A) are a result of the activities of an entity; but
(B)(i) are emitted from a facility owned or controlled by
another entity; and
(ii) are not reported as direct emissions by the entity the
activities of which resulted in the emissions.
(10) Registry.--The term ``registry'' means the registry of
greenhouse gas emission reductions established as a component
of the database under section 1104(b)(2).
(11) Sequestration.--
(A) In general.--The term ``sequestration'' means the
capture, long-term separation, isolation, or removal of
greenhouse gases from the atmosphere.
(B) Inclusions.--The term ``sequestration'' includes--
(i) soil carbon sequestration;
(ii) agricultural and conservation practices;
(iii) reforestation;
(iv) forest preservation;
(v) maintenance of an underground reservoir; and
(vi) any other appropriate biological or geological method
of capture, isolation, or removal of greenhouse gases from
the atmosphere, as determined by the Administrator.
SEC. 1103. ESTABLISHMENT OF MEMORANDUM OF AGREEMENT.
(a) In General.--Not later than 1 year after the date of
enactment of this Act, the President, acting through the
Director of the Office of National Climate Change Policy,
shall direct the Secretary of Energy, the Secretary of
Commerce, the Secretary of Agriculture, the Secretary of
Transportation, and the Administrator to enter into a
memorandum of agreement under which those heads of Federal
agencies will--
(1) recognize and maintain statutory and regulatory
authorities, functions, and programs that--
(A) are established as of the date of enactment of this Act
under other law;
(B) provide for the collection of data relating to
greenhouse gas emissions and effects; and
(C) are necessary for the operation of the database;
(2)(A) distribute additional responsibilities and
activities identified under this title to Federal departments
or agencies in accordance with the missions and expertise of
those departments and agencies; and
(B) maximize the use of available resources of those
departments and agencies; and
(3) provide for the comprehensive collection and analysis
of data on greenhouse gas emissions relating to product use
(including the use of fossil fuels and energy-consuming
appliances and vehicles).
(b) Minimum Requirements.--The memorandum of agreement
entered into under subsection (a) shall, at a minimum, retain
the following functions for the designated agencies:
(1) Department of energy.--The Secretary of Energy shall be
primarily responsible for developing, maintaining, and
verifying the registry and the emission reductions reported
under section 1605(b) of the Energy Policy Act of 1992 (42
U.S.C. 13385(b)).
(2) Department of commerce.--The Secretary of Commerce
shall be primarily responsible for the development of--
(A) measurement standards for the monitoring of emissions;
and
(B) verification technologies and methods to ensure the
maintenance of a consistent and technically accurate record
of emissions, emission reductions, and atmospheric
concentrations of greenhouse gases for the database.
(3) Environmental protection agency.--The Administrator
shall be primarily responsible for--
(A) emissions monitoring, measurement, verification, and
data collection under this title and title IV (relating to
acid deposition control) and title VIII of the Clean Air Act
(42 U.S.C. 7651 et seq.), including mobile source emissions
information from implementation of the corporate average fuel
economy program under chapter 329 of title 49, United States
Code; and
(B) responsibilities of the Environmental Protection Agency
relating to completion of the national inventory for
compliance with the United Nations Framework Convention on
Climate Change, done at New York on May 9, 1992.
(4) Department of agriculture.--The Secretary of
Agriculture shall be primarily responsible for--
(A) developing measurement techniques for--
(i) soil carbon sequestration; and
(ii) forest preservation and reforestation activities; and
(B) providing technical advice relating to biological
carbon sequestration measurement and verification standards
for measuring greenhouse gas emission reductions or offsets.
(c) Draft Memorandum of Agreement.--Not later than 15
months after the date of enactment of this Act, the
President, acting through the Director of the Office of
National Climate Change Policy, shall publish in the Federal
Register, and solicit comments on, a draft version of the
memorandum of agreement described in subsection (a).
(d) No Judicial Review.--The final version of the
memorandum of agreement shall not be subject to judicial
review.
SEC. 1104. NATIONAL GREENHOUSE GAS DATABASE.
(a) Establishment.--As soon as practicable after the date
of enactment of this Act, the designated agencies, in
consultation with the private sector and nongovernmental
organizations, shall jointly establish, operate, and maintain
a database, to be known as the ``National Greenhouse Gas
Database'', to collect, verify, and analyze information on
greenhouse gas emissions by entities.
(b) National Greenhouse Gas Database Components.--The
database shall consist of--
(1) an inventory of greenhouse gas emissions; and
(2) a registry of greenhouse gas emission reductions.
(c) Comprehensive System.--
(1) In general.--Not later than 2 years after the date of
enactment of this Act, the designated agencies shall jointly
promulgate regulations to implement a comprehensive system
for greenhouse gas emissions reporting, inventorying, and
reductions registration.
(2) Requirements.--The designated agencies shall ensure, to
the maximum extent practicable, that--
(A) the comprehensive system described in paragraph (1) is
designed to--
(i) maximize completeness, transparency, and accuracy of
information reported; and
(ii) minimize costs incurred by entities in measuring and
reporting greenhouse gas emissions; and
(B) the regulations promulgated under paragraph (1)
establish procedures and protocols necessary--
(i) to prevent the reporting of some or all of the same
greenhouse gas emissions or emission reductions by more than
1 reporting entity;
(ii) to provide for corrections to errors in data submitted
to the database;
(iii) to provide for adjustment to data by reporting
entities that have had a significant organizational change
(including mergers, acquisitions, and divestiture), in order
to maintain comparability among data in the database over
time;
(iv) to provide for adjustments to reflect new technologies
or methods for measuring or calculating greenhouse gas
emissions; and
(v) to account for changes in registration of ownership of
emission reductions resulting from a voluntary private
transaction between reporting entities.
(3) Baseline identification and protection.--Through
regulations promulgated under paragraph (1), the designated
agencies shall develop and implement a system that provides--
(A) for the provision of unique serial numbers to identify
the verified emission reductions made by an entity relative
to the baseline of the entity;
(B) for the tracking of the reductions associated with the
serial numbers; and
(C) that the reductions may be applied, as [determined to
be appropriate by any Act of] Congress enacted after the date
of enactment of this Act, toward a Federal requirement under
such an Act that is imposed on the entity for the purpose of
reducing greenhouse gas emissions.
SEC. 1105. GREENHOUSE GAS REDUCTION REPORTING.
(a) In General.--An entity that participates in the
registry shall meet the requirements described in subsection
(b).
(b) Requirements.--
(1) In general.--The requirements referred to in subsection
(a) are that an entity (other than an entity described in
paragraph (2)) shall--
(A) establish a baseline (including all of the entity's
greenhouse gas emissions on an entity-wide basis); and
(B) submit the report described in subsection (c)(1).
(2) Requirements applicable to entities entering into
certain agreements.--An entity that enters into an agreement
with a participant in the registry for the purpose of a
carbon sequestration project shall not be required to comply
with the requirements specified in paragraph (1) unless that
entity is required to comply with the requirements by reason
of an activity other than the agreement.
(c) Reports.--
(1) Required report.--Not later than April 1 of the third
calendar year that begins after the date of enactment of this
Act, and not later than April 1 of each calendar year
thereafter, subject to paragraph (3), an entity described in
subsection (a) shall submit to each appropriate designated
agency a report that describes, for the preceding calendar
year, the entity-wide greenhouse gas emissions (as reported
at the facility level), including--
(A) the total quantity of each greenhouse gas emitted,
expressed in terms of mass and in terms of the quantity of
carbon dioxide equivalent;
(B) an estimate of the greenhouse gas emissions from fossil
fuel combusted by
[[Page S3356]]
products manufactured and sold by the entity in the previous
calendar year, determined over the average lifetime of those
products; and
(C) such other categories of emissions as the designated
agency determines in the regulations promulgated under
section 1104(c)(1) may be practicable and useful for the
purposes of this title, such as--
(i) direct emissions from stationary sources;
(ii) indirect emissions from imported electricity, heat,
and steam;
(iii) process and fugitive emissions; and
(iv) production or importation of greenhouse gases.
(2) Voluntary reporting.--An entity described in subsection
(a) may (along with establishing a baseline and reporting
reductions under this section)--
(A) submit a report described in paragraph (1) before the
date specified in that paragraph for the purposes of
achieving and commoditizing greenhouse gas reductions through
use of the registry; and
(B) submit to any designated agency, for inclusion in the
registry, information that has been verified in accordance
with regulations promulgated under section 1104(c)(1) and
that relates to--
(i) with respect to the calendar year preceding the
calendar year in which the information is submitted, and with
respect to any greenhouse gas emitted by the entity--
(I) project reductions from facilities owned or controlled
by the reporting entity in the United States;
(II) transfers of project reductions to and from any other
entity;
(III) project reductions and transfers of project
reductions outside the United States;
(IV) other indirect emissions that are not required to be
reported under paragraph (1); and
(V) product use phase emissions;
(ii) with respect to greenhouse gas emission reductions
activities of the entity that have been carried out during or
after 1990, verified in accordance with regulations
promulgated under section 1104(c)(1), and submitted to 1 or
more designated agencies before the date that is 4 years
after the date of enactment of this Act, any greenhouse gas
emission reductions that have been reported or submitted by
an entity under--
(I) section 1605(b) of the Energy Policy Act of 1992 (42
U.S.C. 13385(b)); or
(II) any other Federal or State voluntary greenhouse gas
reduction program; and
(iii) any project or activity for the reduction of
greenhouse gas emissions or sequestration of a greenhouse gas
that is carried out by the entity, including a project or
activity relating to--
(I) fuel switching;
(II) energy efficiency improvements;
(III) use of renewable energy;
(IV) use of combined heat and power systems;
(V) management of cropland, grassland, or grazing land;
(VI) a forestry activity that increases forest carbon
stocks or reduces forest carbon emissions;
(VII) carbon capture and storage;
(VIII) methane recovery;
(IX) greenhouse gas offset investment; and
(X) any other practice for achieving greenhouse gas
reductions as recognized by 1 or more designated agencies.
(3) Exemptions from reporting.--
(A) In general.--If the Director of the Office of National
Climate Change Policy determines under section 1108(b) that
the reporting requirements under paragraph (1) shall apply to
all entities (other than entities exempted by this
paragraph), regardless of participation or nonparticipation
in the registry, an entity shall be required to submit
reports under paragraph (1) only if, in any calendar year
after the date of enactment of this Act--
(i) the total greenhouse gas emissions of at least 1
facility owned by the entity exceeds 10,000 metric tons of
carbon dioxide equivalent (or such greater quantity as may be
established by a designated agency by regulation); or
(ii)(I) the total quantity of greenhouse gases produced,
distributed, or imported by the entity exceeds 10,000 metric
tons of carbon dioxide equivalent (or such greater quantity
as may be established by a designated agency by regulation);
and
(II) the entity is not a feedlot or other farming operation
(as defined in section 101 of title 11, United States Code).
(B) Entities already reporting.--
(i) In general.--An entity that, as of the date of
enactment of this Act, is required to report carbon dioxide
emissions data to a Federal agency shall not be required to
re-report that data for the purposes of this title.
(ii) Review of participation.--For the purpose of section
1108, emissions reported under clause (i) shall be considered
to be reported by the entity to the registry.
(4) Provision of verification information by reporting
entities.--Each entity that submits a report under this
subsection shall provide information sufficient for each
designated agency to which the report is submitted to verify,
in accordance with measurement and verification methods and
standards developed under section 1106, that the greenhouse
gas report of the reporting entity--
(A) has been accurately reported; and
(B) in the case of each voluntary report under paragraph
(2), represents--
(i) actual reductions in direct greenhouse gas emissions--
(I) relative to historic emission levels of the entity; and
(II) net of any increases in--
(aa) direct emissions; and
(bb) indirect emissions described in paragraph (1)(C)(ii);
or
(ii) actual increases in net sequestration.
(5) Failure to submit report.--An entity that participates
or has participated in the registry and that fails to submit
a report required under this subsection shall be prohibited
from including emission reductions reported to the registry
in the calculation of the baseline of the entity in future
years.
(6) Independent third-party verification.--To meet the
requirements of this section and section 1106, a entity that
is required to submit a report under this section may--
(A) obtain independent third-party verification; and
(B) present the results of the third-party verification to
each appropriate designated agency.
(7) Availability of data.--
(A) In general.--The designated agencies shall ensure, to
the maximum extent practicable, that information in the
database is--
(i) published;
(ii) accessible to the public; and
(iii) made available in electronic format on the Internet.
(B) Exception.--Subparagraph (A) shall not apply in any
case in which the designated agencies determine that
publishing or otherwise making available information
described in that subparagraph poses a risk to national
security.
(8) Data infrastructure.--The designated agencies shall
ensure, to the maximum extent practicable, that the database
uses, and is integrated with, Federal, State, and regional
greenhouse gas data collection and reporting systems in
effect as of the date of enactment of this Act.
(9) Additional issues to be considered.--In promulgating
the regulations under section 1104(c)(1) and implementing the
database, the designated agencies shall take into
consideration a broad range of issues involved in
establishing an effective database, including--
(A) the appropriate units for reporting each greenhouse
gas;
(B) the data and information systems and measures necessary
to identify, track, and verify greenhouse gas emission
reductions in a manner that will encourage the development of
private sector trading and exchanges;
(C) the greenhouse gas reduction and sequestration methods
and standards applied in other countries, as applicable or
relevant;
(D) the extent to which available fossil fuels, greenhouse
gas emissions, and greenhouse gas production and importation
data are adequate to implement the database;
(E) the differences in, and potential uniqueness of, the
facilities, operations, and business and other relevant
practices of persons and entities in the private and public
sectors that may be expected to participate in the registry;
and
(F) the need of the registry to maintain valid and reliable
information on baselines of entities so that, in the event of
any future action by Congress to require entities,
individually or collectively, to reduce greenhouse gas
emissions, Congress will be able--
(i) to take into account that information; and
(ii) to avoid enacting legislation that penalizes entities
for achieving and reporting reductions.
(d) Annual Report.--The designated agencies shall jointly
publish an annual report that--
(1) describes the total greenhouse gas emissions and
emission reductions reported to the database during the year
covered by the report;
(2) provides entity-by-entity and sector-by-sector analyses
of the emissions and emission reductions reported;
(3) describes the atmospheric concentrations of greenhouse
gases; and
(4) provides a comparison of current and past atmospheric
concentrations of greenhouse gases.
SEC. 1106. MEASUREMENT AND VERIFICATION.
(a) Standards.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the designated agencies shall jointly
develop comprehensive measurement and verification methods
and standards to ensure a consistent and technically accurate
record of greenhouse gas emissions, emission reductions,
sequestration, and atmospheric concentrations for use in the
registry.
(2) Requirements.--The methods and standards developed
under paragraph (1) shall address the need for--
(A) standardized measurement and verification practices for
reports made by all entities participating in the registry,
taking into account--
(i) protocols and standards in use by entities desiring to
participate in the registry as of the date of development of
the methods and standards under paragraph (1);
(ii) boundary issues, such as leakage and shifted use;
(iii) avoidance of double counting of greenhouse gas
emissions and emission reductions; and
(iv) such other factors as the designated agencies
determine to be appropriate;
(B) measurement and verification of actions taken to
reduce, avoid, or sequester greenhouse gas emissions;
[[Page S3357]]
(C) in coordination with the Secretary of Agriculture,
measurement of the results of the use of carbon sequestration
and carbon recapture technologies, including--
(i) organic soil carbon sequestration practices; and
(ii) forest preservation and reforestation activities that
adequately address the issues of permanence, leakage, and
verification;
(D) such other measurement and verification standards as
the Secretary of Commerce, the Secretary of Agriculture, the
Administrator, and the Secretary of Energy determine to be
appropriate; and
(E) other factors that, as determined by the designated
agencies, will allow entities to adequately establish a fair
and reliable measurement and reporting system.
(b) Review and Revision.--The designated agencies shall
periodically review, and revise as necessary, the methods and
standards developed under subsection (a).
(c) Public Participation.--The Secretary of Commerce
shall--
(1) make available to the public for comment, in draft form
and for a period of at least 90 days, the methods and
standards developed under subsection (a); and
(2) after the 90-day period referred to in paragraph (1),
in coordination with the Secretary of Energy, the Secretary
of Agriculture, and the Administrator, adopt the methods and
standards developed under subsection (a) for use in
implementing the database.
(d) Experts and Consultants.--
(1) In general.--The designated agencies may obtain the
services of experts and consultants in the private and
nonprofit sectors in accordance with section 3109 of title 5,
United States Code, in the areas of greenhouse gas
measurement, certification, and emission trading.
(2) Available arrangements.--In obtaining any service
described in paragraph (1), the designated agencies may use
any available grant, contract, cooperative agreement, or
other arrangement authorized by law.
SEC. 1107. INDEPENDENT REVIEWS.
(a) In General.--Not later than 5 years after the date of
enactment of this Act, and every 3 years thereafter, the
Comptroller General of the United States shall submit to
Congress a report that--
(1) describes the efficacy of the implementation and
operation of the database; and
(2) includes any recommendations for improvements to this
title and programs carried out under this title--
(A) to achieve a consistent and technically accurate record
of greenhouse gas emissions, emission reductions, and
atmospheric concentrations; and
(B) to achieve the purposes of this title.
(b) Review of Scientific Methods.--The designated agencies
shall enter into an agreement with the National Academy of
Sciences under which the National Academy of Sciences shall--
(1) review the scientific methods, assumptions, and
standards used by the designated agencies in implementing
this title;
(2) not later than 4 years after the date of enactment of
this Act, submit to Congress a report that describes any
recommendations for improving--
(A) those methods and standards; and
(B) related elements of the programs, and structure of the
database, established by this title; and
(3) regularly review and update as appropriate the list of
anthropogenic climate-forcing emissions with significant
global warming potential described in section 1102(8)(G).
SEC. 1108. REVIEW OF PARTICIPATION.
(a) In General.--Not later than 5 years after the date of
enactment of this Act, the Director of the Office of National
Climate Change Policy shall determine whether the reports
submitted to the registry under section 1105(c)(1) represent
less than 60 percent of the national aggregate anthropogenic
greenhouse gas emissions.
(b) Increased Applicability of Requirements.--If the
Director of the Office of National Climate Change Policy
determines under subsection (a) that less than 60 percent of
the aggregate national anthropogenic greenhouse gas emissions
are being reported to the registry--
(1) the reporting requirements under section 1105(c)(1)
shall apply to all entities (except entities exempted under
section 1105(c)(3)), regardless of any participation or
nonparticipation by the entities in the registry; and
(2) each entity shall submit a report described in section
1105(c)(1)--
(A) not later than the earlier of--
(i) April 30 of the calendar year immediately following the
year in which the Director of the Office of National Climate
Change Policy makes the determination under subsection (a);
or
(ii) the date that is 1 year after the date on which the
Director of the Office of National Climate Change Policy
makes the determination under subsection (a); and
(B) annually thereafter.
(c) Resolution of Disapproval.--For the purposes of this
section, the determination of the Director of the Office of
National Climate Change Policy under subsection (a) shall be
considered to be a major rule (as defined in section 804(2)
of title 5, United States Code) subject to the congressional
disapproval procedure under section 802 of title 5, United
States Code.
SEC. 1109. ENFORCEMENT.
If an entity that is required to report greenhouse gas
emissions under section 1105(c)(1) or 1108 fails to comply
with that requirement, the Attorney General may, at the
request of the designated agencies, bring a civil action in
United States district court against the entity to impose on
the entity a civil penalty of not more than $25,000 for each
day for which the entity fails to comply with that
requirement.
SEC. 1110. REPORT ON STATUTORY CHANGES AND HARMONIZATION.
Not later than 3 years after the date of enactment of this
Act, the President shall submit to Congress a report that
describes any modifications to this title or any other
provision of law that are necessary to improve the accuracy
or operation of the database and related programs under this
title.
SEC. 1111. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as are
necessary to carry out this title.
____
Amendment No. 3146, As Further Modified
(Purpose: To establish a national registry for accurate and reliable
reports of greenhouse gas emissions, and to further encourage voluntary
reductions in such emissions)
Strike Title XI and insert the following:
TITLE XI--NATIONAL GREENHOUSE GAS REGISTRY
SEC. 1101. SHORT TITLE.
This title may be cited as the ``National Climate Registry
Initiative of 2002''.
SEC. 1102. PURPOSE.
The purpose of this title is to establish a new national
greenhouse gas registry--
(1) to further encourage voluntary efforts, by persons and
entities conducting business and other operations in the
United States, to implement actions, projects and measures
that reduce greenhouse gas emissions;
(2) to encourage such persons and entities to monitor and
voluntarily report greenhouse gas emissions, direct or
indirect, from their facilities, and to the extent
practicable, from other types of sources;
(3) to adopt a procedure and uniform format for such
persons and entities to establish and report voluntarily
greenhouse gas emission baselines in connection with, and
furtherance of, such reductions;
(4) to provide verification mechanisms to ensure for
participants and the public a high level of confidence in
accuracy and verifiability of reports made to the national
registry;
(5) to encourage persons and entities, through voluntary
agreement with the Secretary, to report annually greenhouse
gas emissions from their facilities;
(6) to provide to persons or entities that engage in such
voluntary agreements and reduce their emissions transferable
credits which, inter alia, shall be available for use by such
persons or entities for any incentive, market-based, or
regulatory programs determined by the Congress in a future
enactment to be necessary and feasible to reduce the risk of
climate change and its impacts; and
(7) to provide for the registration, transfer and tracking
of the ownership or holding of such credits for purposes of
facilitating voluntary trading among persons and entities.
SEC. 1103. DEFINITIONS.
In this title--
(1) ``person'' means an individual, corporation,
association, joint venture, cooperative, or partnership;
(2) ``entity'' means a public person, a Federal,
interstate, State, or local governmental agency, department,
corporation, or other publicly owned organization;
(3) ``facility'' means those buildings, structures,
installations, or plants (including units thereof) that are
on contiguous or adjacent land, are under common control of
the same person or entity and are a source of emissions of
greenhouse gases in excess for emission purposes of a
threshold as recognized by the guidelines issued under this
title;
(4) ``reductions'' means actions, projects or measures
taken, whether in the United States or internationally, by a
person or entity to reduce, avoid or sequester, directly or
indirectly, emissions of one or more greenhouse gases;
(5) ``greenhouse gas'' means--
(A) an anthropogenic gaseous constituent of the atmosphere
(including carbon dioxide, methane, nitrous oxide,
chlorofluorocarbons, hydrofluorocarbons, perfluorocarbons,
sulfur hexafluoride, and tropospheric ozone) that absorbs and
re-emits infrared radiation and influences climate; and
(B) an anthropogenic aerosol (such a black soot) that
absorbs solar radiation and influences climate;
(6) ``Secretary'' means the Secretary of Energy;
(7) ``Administrator'' means the Administrator of the Energy
Information Administration; and
(8) ``Interagency Task Force'' means the Interagency Task
Force established under title X of this Act.
SEC. 1104. ESTABLISHMENT.
(a) In General.--Not later than 1 year after the enactment
of this title, the President shall, in consultation with the
Interagency Task Force, establish a National Greenhouse Gas
Registry to be administered by the Secretary through the
Administrator in accordance with the applicable provisions of
this title, section 205 of the Department of Energy Act (42
U.S.C. 7135) and other applicable provisions of that Act (42
U.S.C. 7101, et seq.).
(b) Designation.--Upon establishment of the registry and
issuance of the guidelines
[[Page S3358]]
pursuant to this title, such registry shall thereafter be the
depository for the United States of data on greenhouse gas
emissions and emissions reductions collected from and
reported by persons or entities with facilities or operations
in the United States, pursuant to the guidelines issued under
this title.
(c) Participation.--Any person or entity conducting
business or activities in the United States may, in
accordance with the guidelines established pursuant to this
title, voluntarily report its total emissions levels and
register its certified emissions reductions with such
registry, provided that such reports--
(1) represent a complete and accurate inventory of
emissions from facilities and operations within the United
States and any domestic or international reduction
activities; and
(2) have been verified as accurate by an independent person
certified pursuant to guidelines developed pursuant to this
title, or other means.
SEC. 1105. IMPLEMENTATION.
(a) Guidelines.--Not later than 1 year after the date of
establishment of the registry pursuant to this title, the
Secretary shall, in consultation with the Interagency Task
Force, issue guidelines establishing procedures for the
administration of the national registry. Such guidelines
shall include--
(1) means and methods for persons or entities to determine,
quantify, and report by appropriate and credible means their
baseline emissions levels on an annual basis, taking into
consideration any reports made by such participants under
past Federal programs;
(2) procedures for the use of an independent third-party or
other effective verification process for reports on emissions
levels and emissions reductions, using the authorities
available to the Secretary under this and other provisions of
law and taking into account, to the extent possible, costs,
risks, the voluntary nature of the registry, and other
relevant factors;
(3) a range of reference cases for reporting of project-
based reductions in various sectors, and the inclusion of
benchmark and default methodologies and practices for use as
reference cases for eligible projects;
(4) safeguards to prevent and address reporting,
inadvertently or otherwise, of some or all of the same
greenhouse gas emissions or reductions by more than one
reporting person or entity and to make corrections and
adjustments in data where necessary;
(5) procedures and criteria for the review and registration
of ownership or holding of all or part of any reported and
independently verified emission reduction projects, actions
and measures relative to such reported baseline emissions
level;
(6) measures or a process for providing to such persons or
entities transferable credits with unique serial numbers for
such verified emission reductions; and
(7) accounting provisions needed to allow for changes in
registration and transfer of ownership of such credits
resulting from a voluntary private transaction between
persons or entities, provided that the Secretary is notified
of any such transfer within 30 days of the transfer having
been effected either by private contract or market mechanism.
(b) Consideration.--In developing such guidelines, the
Secretary shall take into consideration--
(1) the existing guidelines for voluntary emissions
reporting issued under section 1605(b) of the Energy Policy
Act of 1992 (42 U.S.C. 13385(b)), experience in applying such
guidelines, and any revisions thereof initiated by the
Secretary pursuant to direction of the President issued prior
to the enactment of this title;
(2) protocols and guidelines developed under any Federal,
State, local, or private voluntary greenhouse gas emissions
reporting or reduction programs;
(3) the various differences and potential uniqueness of the
facilities, operations and business and other relevant
practices of persons and entities in the private and public
sectors that may be expected to participate in the registry;
(4) issues, such as comparability, that are associated with
the reporting of both emissions baselines and reductions from
activities and projects; and
(5) the appropriate level or threshold emissions applicable
to a facility or activity of a person or entity that may be
reasonably and cost effectively identified, measured and
reported voluntarily, taking into consideration different
types of facilities and activities and the de minimis nature
of some emissions and their sources; and
(6) any other consideration the Secretary may deem
appropriate.
(c) Experts and Consultants.--The Secretary, and any member
of the Interagency Task Force, may secure the services of
experts and consultants in the private and non-profit sectors
in accordance with the provisions of section 3109 of title 5,
United States Code, in the areas of greenhouse gas
measurement, certification, and emissions trading. In
securing such services, any grant, contract, cooperative
agreement, or other arrangement authorized by law and already
available to the Secretary or the member of the Interagency
Task Force securing such services may be used.
(d) Transferability of Prior Reports.--Emission reports and
reductions that have been made by a person or entity pursuant
to section 1605(b) of the Energy Policy Act of 1992 (42
U.S.C. 13385(b)) or under other Federal or State voluntary
greenhouse gas reduction programs may be independently
verified and registered with the registry using the same
guidelines developed by the Secretary pursuant to this
section.
(e) Public Comment.--The Secretary shall make such
guidelines available in draft form for public notice and
opportunity for comments for a period of at least 90 days,
and thereafter shall adopt them for use in implementation of
the registry established pursuant to this title.
(f) Review and Revision.--The Secretary, through the
Interagency Task Force, shall periodically thereafter review
the guidelines and, as needed, revise them in the same manner
as provided for in this section.
SEC. 1106. VOLUNTARY AGREEMENTS.
(a) In General.--In furtherance of the purposes of this
title, any person or entity, and the Secretary, may
voluntarily enter into an agreement to provide that--
(1) such person or entity (and successors thereto) shall
report annually to the registry on emissions and sources of
greenhouse gases from applicable facilities and operations
which generate net emissions above any de minimis thresholds
specified in the guidelines issued by the Secretary pursuant
to this title;
(2) such person or entity (and successors thereto) shall
commit to report and participate in the registry for a period
of at least 5 calendar years, provided that such agreements
may be renewed by mutual consent;
(3) for purposes of measuring performance under the
agreement, such person or entity (and successors thereto)
shall determine, by mutual agreement with the Secretary--
(A) pursuant to the guidelines issued under this title, a
baseline emissions level for a representative period
preceding the effective date of the agreement; and
(B) emissions reduction goals, taking into consideration
the baseline emissions level determined under subparagraph
(A) and any relevant economic and operational factors that
may affect such baseline emissions level over the duration of
the agreement; and
(4) for certified emissions reductions made relative to the
baseline emissions level, the Secretary shall provide, at the
request of the person or entity, transferable credits (with
unique assigned serial numbers) to the person or entity (and
successors thereto) which, inter alia,--
(A) can be used by such person or entity towards meeting
emissions reductions goals set forth under the agreement;
(B) can be transferred to other persons or entities through
a voluntary private transaction between persons or entities;
or
(C) may be applicable towards any incentive, market-based,
or regulatory programs determined by the Congress in a future
enactment to be necessary and feasible to reduce the risk of
climate change and its impacts.
(b) Public Notice and Comment.--At least 30 days before any
agreement is final, the Secretary shall give notice thereof
in the Federal Register and provide an opportunity for public
written comment. After reviewing such comments, the Secretary
may withdraw the agreement or the parties thereto may
mutually agree to revise it or finalize it without
substantive change. Such agreement shall be retained in the
national registry and be available to the public.
(c) Emissions in Excess.--In the event that a person or
entity fails to certify that emissions from applicable
facilities and operations are less than the emissions
reduction goals contained in the agreement, such person or
entity shall take actions as necessary to reduce such excess
emissions, including--
(1) redemption of transferable credits acquired in previous
years if owned by the person or entity;
(2) acquisition of transferable credits from other persons
or entities participating in the registry through their own
agreements; or
(3) the undertaking of additional emissions reductions
activities in subsequent years as may be determined by
agreement with the Secretary.
(d) No New Authority.--This section shall not be construed
as providing any regulatory or mandate authority regarding
reporting of such emissions or reductions.
SEC. 1107. MEASUREMENT AND VERIFICATION.
(a) In General.--The Secretary of Commerce, through the
National Institute of Standards and Technology and in
consultation with the Secretary of Energy, shall develop and
propose standards and practices for accurate measurement and
verification of greenhouse gas emissions reductions. Such
standards and best practices shall address the need for--
(1) standardized measurement and verification practices for
reports made by all persons or entities participating in the
registry, taking into account--
(A) existing protocols and standards already in use by
persons or entities desiring to participate in the registry;
(B) boundary issues such as leakage and shifted
utilization;
(C) avoidance of double-counting of greenhouse gas
emissions and emissions reductions; and
(D) such other factors as the panel determines to be
appropriate;
(2) measurement and verification of actions taken to
reduce, avoid or sequester greenhouse gas emissions;
(3) in coordination with the Secretary of Agriculture,
measurement of the results of
[[Page S3359]]
the use of carbon sequestration and carbon recapture
technologies, including--
(A) organic soil carbon sequestration practices;
(B) forest preservation and re-forestation activities which
adequately address the issues of permanence, leadage, and
verification; and
(4) such other measurement and verification standards as
the Secretary of Commerce, the Secretary of Agriculture and
the Secretary of Energy shall determine to be appropriate.
(b) Public Comment.--The Secretary of Commerce shall make
such standards and practices available in draft form for
public notice and opportunity for comment for a period of at
least 90 days, and thereafter shall adopt them, in
coordination with the Secretary of Energy, for use in the
guidelines for implementation of the registry as issued
pursuant to this title.
SEC. 1108. CERTIFIED INDEPENDENT THIRD PARTIES.
(a) Certification.--The Secretary of Commerce shall,
through the Director of the National Institute of Standards
and Technology and the Administer, develop standards for
certification of independent persons to act as certified
parties to be employed in verifying the accuracy and
reliability of reports made under this title, including
standards that--
(1) prohibit a certified party from themselves
participating in the registry through the ownership or
transition of transferable credits recorded in the registry;
(2) prohibit the receipt by a certified party of
compensation in the form of a commission where such party
receives payment based on the amount of emissions reductions;
verified; and
(3) authorize such certified parties to enter into
agreements with persons engaged in trading of transferable
credits recorded in the registry.
(b) List of Certified Parties.--The Secretary shall
maintain and make available to persons or entities making
reports under this title and to the public upon request a
list of such certified parties and their clients making
reports under this title.
SEC. 1109. REPORT TO CONGRESS.
Not later than 1 year after guidelines are issued for the
registry pursuant to this title, and biennially thereafter,
the President, through the Interagency Task Force, shall
report to the Congress on the status of the registry
established by this title. The report shall include--
(a) an assessment of the level of participation in the
registry (both by sector and in terms of total national
emissions represented);
(b) effectiveness of voluntary reporting agreements in
enhancing participation the registry;
(c) use of the registry for emissions trading and other
purposes;
(d) assessment of progress towards individual and national
emissions reduction goals; and
(e) an inventory of administrative actions taken or planned
to improve the national registry or the guidelines, or both,
and such recommendations for legislative changes to this
title or section 1604 of the Energy Policy Act of 1992 (42
U.S.C. 13385) as the President believes necessary to better
carry out the purposes of this title.
SEC. 1110. REVIEW OF PARTICIPATION.
(a) In General.--Not later than 5 years after the date of
enactment of this title, the Director of the Office of
National Climate Change Policy shall determine whether the
reports submitted to the registry represents less than 60
percent of the national aggregate greenhouse gas emissions as
inventoried in the official U.S. Inventory of Greenhouse Gas
Emissions and Sinks published by the Environmental Protection
Agency for the previous calendar year.
(b) Mandatory Reporting.--If the Director of the Office of
National Climate Change Policy determines under subsection
(a) that less than 60 percent of such aggregate greenhouse
gas emissions are being reported to the registry--
(1) all persons or entities, regardless of their
participation in the registry, shall submit to the Secretary
a report that describes, for the preceding calendar year, a
complete inventory of greenhouse gas emissions (as reported
at the facility level), including--
(A) the total quantity of each greenhouse gas emitted by
such person or entity, expressed in terms of mass and in
terms of the quantity of carbon dioxide equivalent;
(B) an estimate of the emissions from products manufactured
and sold by such person or entity in the previous calendar
year, determined over the average lifetime of those products;
and
(C) such other categories of emissions as the Secretary
determines by regulation to be practicable and useful for the
purposes of this title, such as--
(i) direct emissions from statutory sources;
(ii) indirect emissions from imported electricity, heat,
and stream;
(iii) process and fugitive emissions; and
(iv) production or importation of greenhouse gases; and
(2) each person or entity shall submit a report described
in this section--
(A) not later than the earlier of--
(i) April 30 of the calendar year immediately following the
year in which the Director of the Office of National Climate
Change Policy makes the determination under subsection (a);
or
(ii) the date that is 1 year after the date on which the
Director of the Office of National Climate Change Policy
makes determination under subsection (a); and
(B) annually thereafter.
(c) Exemptions From Reporting.--
(1) In general.--A person or entity shall be required to
submit reports under subsection (b) only if, in calendar year
after the date of enactment of this title--
(A) the total greenhouse gas emissions of at least 1
facility owned by the person or entity exceeds 10,000 metric
tons of carbon dioxide equivalent greenhouse gas (or such
greater quantity as may be established by a designated agency
by regulation);
(B) the total quantity of greenhouse gas produced,
distributed, or imported by the person or entity exceeds
10,000 metric tons of carbon dioxide equivalent greenhouse
gas (or such greater quantity as may be established by a
designated agency by regulation); or
(C) the person or entity is not a feedlot or other farming
operation (as defined in section 101 of title 11, United
States Code).
(2) Entities already reporting.--A person or entity that,
as of the date of enactment of this title, is required to
report carbon dioxide emissions data to a Federal agency
shall not be required to report that data again for the
purposes of this title. Such emissions data shall be
considered to be reported by the entity to the registry for
the purpose of this title and included in the determination
of the Director of the Office of National Climate Change
Policy made under subsection (a).
(d) Enforcement.--If a person or entity that is required to
report greenhouse gas emissions under this section fails to
comply with that requirement, the Attorney General may, at
the request of the Secretary, bring a civil action in the
United States district court against the person or entity to
impose on the person or entity a civil penalty of not more
than $25,000 for each day for which the entity fails to
comply with that requirement.
(e) Resolution of Disapproval.--If made, the determination
of the Director of the Office of National Climate Change
Policy made under subsection (a) shall be considered to be a
major rule (as defined in section 804(2) of title 5, United
States Code) subject to the congressional disapproval
procedure under section 802 of title 5, United States Code.
SEC. 1111. NATIONAL ACADEMY REVIEW.
Not later than 1 year after guidelines are issued for the
registry pursuant to this title, the Secretary, in
consultation with the Interagency Task Force, shall enter
into an agreement with the National Academy of Sciences to
review the scientific and technological methods, assumptions,
and standards used by the Secretary and the Secretary of
Commerce for such guidelines and report to the President and
the Congress on the results of that review, together with
such recommendations as may be appropriate within 6 months
after the effective date of that agreement.
____
amendment no. 3082
(Purpose: To provide that certain gasoline and diesel fuel be treated
as entered into the customs territory of the United States)
At the appropriate place, insert the following:
SEC. ____. SALE OF GASOLINE AND DIESEL FUEL AT DUTY-FREE
SALES ENTERPRISES.
(a) Prohibition.--Section 555(b) of the Tariff Act of 1930
(19 U.S.C. 1555(b)) is amended--
(1) by redesignating paragraphs (6) through (8) as
paragraphs (7) through (9), respectively; and
(2) by inserting after paragraph (5) the following:
``(6) Any gasoline or diesel fuel sold at a duty-free sales
enterprise shall be considered to be entered for consumption
into the customs territory of the United States.''.
(b) Construction.--The amendments made by this section
shall not be construed to create any inference with respect
to the interpretation of any provision of law as such
provision was in effect on the day before the date of
enactment of this Act.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this Act.
____
amendment no. 3355
(Purpose: To amend the Internal Revenue Code of 1986 to extend the
energy credit to stationary microturbine power plants)
In Division H, beginning on page 103, line 1, strike all
through page 105, line 12, and insert the following:
SEC. 2104. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL
CELLS AND STATIONARY MICROTURBINE POWER PLANTS.
(a) In General.--Subparagraph (A) of section 48(a)(3)
(defining energy property) is amended by striking ``or'' at
the end of clause (i), by adding ``or'' at the end of clause
(ii), and by inserting after clause (ii) the following new
clause:
``(iii) qualified fuel cell property or qualified
microturbine property,''.
(b) Qualified Fuel Cell Property; Qualified Microturbine
Property.--Subsection (a) of section 48 is amended by
redesignating paragraphs (4) and (5) as paragraphs (5) and
(6), respectively, and by inserting after paragraph (3) the
following new paragraph:
``(4) Qualified fuel cell property; qualified microturbine
property.--For purposes of this subsection--
``(A) Qualified fuel cell property.--
``(i) In general.--The term `qualified fuel cell property'
means a fuel cell power plant that--
[[Page S3360]]
``(I) generates at least 1 kilowatt of electricity using an
electrochemical process, and
``(II) has an electricity-only generation efficiency
greater than 30 percent.
``(ii) Limitation.--In the case of qualified fuel cell
property placed in service during the taxable year, the
credit determined under paragraph (1) for such year with
respect to such property shall not exceed an amount equal to
the lesser of--
``(I) 30 percent of the basis of such property, or
``(II) $1,000 for each kilowatt of capacity of such
property.
``(iii) Fuel cell power plant.--The term `fuel cell power
plant' means an integrated system comprised of a fuel cell
stack assembly and associated balance of plant components
that converts a fuel into electricity using electrochemical
means.
``(iv) Termination.--Such term shall not include any
property placed in service after December 31, 2007.
``(B) Qualified microturbine property.--
``(i) In general.--The term ``qualified microturbine
property' means a stationary microturbine power plant which
has an electricity-only generation efficiency not less than
26 percent at International Standard Organization conditions.
``(ii) Limitation.--In the case of qualified microturbine
property placed in service during the taxable year, the
credit determined under paragraph (1) for such year with
respect to such property shall not exceed an amount equal to
the lesser of--
``(I) 10 percent of the basis of such property, or
``(II) $200 for each kilowatt of capacity of such property.
``(iii) Stationary microturbine power plant.--The term
`stationary microturbine power plant means a system
comprising of a rotary engine which is actuated by the
aerodynamic reaction or impulse or both on radial or axial
curved full-circumferential-admission airfoils on a central
axial rotating spindle. Such system--
``(I) commonly includes an air compressor, combustor, gas
pathways which lead compressed air to the combustor and which
lead hot combusted gases from the combustor to 1 or more
rotating turbine spools, which in turn drive the compressor
and power output shaft,
``(II) includes a fuel compressor, recuperator/regenerator,
generator or alternator, integrated combined cycle equipment,
cooling-heating-and-power equipment, sound attenuation
apparatus, and power conditioning equipment, and
``(III) includes all secondary components located between
the existing infrastructure for fuel delivery and the
existing infrastructure for power distribution, including
equipment and controls for meeting relevant power standards,
such as voltage, frequency, and power factors.
``(iv) Termination.--Such term shall not include any
property placed in service after December 31, 2006.''.
(c) Limitation.--Section 48(a)(2)(A) (relating to energy
percentage) is amended to read as follows:
``(A) In general.--The energy percentage is--
``(i) in the case of qualified fuel cell property, 30
percent, and
``(ii) in the case of any other energy property, 10
percent.''.
(d) Conforming Amendments.--
(A) Section 29(b)(3)(A)(i)(III) is amended by striking
``section 48(a)(4)(C)'' and inserting ``section
48(a)(5)(C)''.
(B) Section 48(a)(1) is amended by inserting ``except as
provided in subparagraph (A)(ii) or (B)(ii) of paragraph
(4),'' before ``the energy''.
(e) Effective Date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2002, under rules similar to the rules of section 48(m) of
the Internal Revenue Code of 1986 (as in effect on the day
before the date of the enactment of the Revenue
Reconciliation Act of 1990).
____
amendment no. 3335
(Purpose: To amend the Internal Revenue Code of 1986 to extend the
credit for the production of fuel from non-conventional sources with
respect to certain existing facilities)
In Division H, on page 202, between lines 22 and 23, insert
the following:
(b) Extension for Certain Fuel Produced at Existing
Facilities.--Paragraph (2) of section 29(f) (relating to
application of section) is amended by inserting ``(January 1,
2005, in the case of any coke or coke gas produced in a
facility described in paragraph (1)(B))'' after ``January 1,
2003''.
Amendments Nos. 3258 And 3170
Mr. BINGAMAN. Madam President, I ask unanimous consent that,
notwithstanding rule XXII, it now be in order for the Senate to
consider, en bloc, amendment No. 3258 and amendment No. 3170; that the
latter be modified with the changes that are at the desk; that the
foregoing amendments be agreed to en bloc, and that the motions to
reconsider be laid upon the table.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 3258 and 3170, as modified), en bloc, were
agreed to, as follows:
AMENDMENT NO. 3258
(Purpose: To strike the provision authorizing loan guarantees for an
Alaska natural gas transportation project)
Strike section 708.
____
amendment no. 317
Beginning on page 195, strike line 19 and all that follows
through page 196, line 4, and insert the following:
``(B) Petitions for waivers.--The Administrator in
consultation with the Secretary of Agriculture and the
Secretary of Energy, shall approve or disapprove a State
petition for a waiver of the requirement of paragraph (2)
within 90 days after the date on which the petition is
received by the Administrator.
Amendments Nos. 3082, 3130, 3331, 3336, 3338, 3349, 3350, 3351, 3352,
3353, 3356, And 3359
Mr. BINGAMAN. Madam President, I ask unanimous consent that,
notwithstanding rule XXII, it now be in order for the Senate to
consider, en bloc, amendments No. 3082, No. 3130, No. 3331, No. 3336,
No. 3338, No. 3349, No. 3350, No. 3351, No. 3352, No. 3353, No. 3356,
and No. 3359; that the foregoing amendments be agreed to en bloc, and
that the motions to reconsider be laid on the table.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 3082, 3130, 3331, 3336, 3338, 3349, 3350, 3351,
3352, 3353, 3356 and 3359) were agreed to, as follows:
amendment no. 3082
(Purpose: To provide that certain gasoline and diesel fuel be treated
as entered into the customs territory of the United States)
At the appropriate place, insert the following:
SEC. ____. SALE OF GASOLINE AND DIESEL FUEL AT DUTY-FREE
SALES ENTERPRISES.
(a) Prohibition.--Section 555(b) of the Tariff Act of 1930
(19 U.S.C. 1555(b)) is amended--
(1) by redesignating paragraphs (6) through (8) as
paragraphs (7) through (9), respectively; and
(2) by inserting after paragraph (5) the following:
``(6) Any gasoline or diesel fuel sold at a duty-free sales
enterprise shall be considered to be entered for consumption
into the customs territory of the United States.''.
(b) Construction.--The amendments made by this section
shall not be construed to create any inference with respect
to the interpretation of any provision of law as such
provision was in effect on the day before the date of
enactment of this Act.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of enactment of this Act.
____
amendment no. 3130
(Purpose: To amend the Internal Revenue Code of 1986 to allow a credit
against income tax for taxpayers owning certain commercial power
takeoff vehicles)
On page 73, between lines 2 and 3, insert the following:
SEC. ____. CREDIT FOR TAXPAYERS OWNING COMMERCIAL POWER
TAKEOFF VEHICLES.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business-related credits), as amended
by this Act, is amended by adding at the end the following
new section:
``SEC. 45K. COMMERCIAL POWER TAKEOFF VEHICLES CREDIT.
``(a) General Rule.--For purposes of section 38, the amount
of the commercial power takeoff vehicles credit determined
under this section for the taxable year is $250 for each
qualified commercial power takeoff vehicle owned by the
taxpayer as of the close of the calendar year in which or
with which the taxable year of the taxpayer ends.
``(b) Definitions.--For purposes of this section--
``(1) Qualified commercial power takeoff vehicle.--The term
`qualified commercial power takeoff vehicle' means any
highway vehicle described in paragraph (2) which is propelled
by any fuel subject to tax under section 4041 or 4081 if such
vehicle is used in a trade or business or for the production
of income (and is licensed and insured for such use).
``(2) Highway vehicle described.--A highway vehicle is
described in this paragraph if such vehicle is--
``(A) designed to engage in the daily collection of refuse
or recyclables from homes or businesses and is equipped with
a mechanism under which the vehicle's propulsion engine
provides the power to operate a load compactor, or
``(B) designed to deliver ready mixed concrete on a daily
basis and is equipped with a mechanism under which the
vehicle's propulsion engine provides the power to operate a
mixer drum to agitate and mix the product en route to the
delivery site.
``(c) Exception for Vehicles Used by Governments, Etc.--No
credit shall be allowed under this section for any vehicle
owned by any person at the close of a calendar year if such
vehicle is used at any time during such year by--
``(1) the United States or an agency or instrumentality
thereof, a State, a political subdivision of a State, or an
agency or instrumentality of one or more States or political
subdivisions, or
``(2) an organization exempt from tax under section 501(a).
[[Page S3361]]
``(d) Denial of Double Benefit.--The amount of any
deduction under this subtitle for any tax imposed by
subchapter B of chapter 31 or part III of subchapter A of
chapter 32 for any taxable year shall be reduced (but not
below zero) by the amount of the credit determined under this
subsection for such taxable year.
``(e) Termination.--This section shall not apply with
respect to any calendar year after 2004.''.
(b) Credit Made Part of General Business Credit.--
Subsection (b) of section 38 (relating to general business
credit), as amended by this Act, is amended by striking
``plus'' at the end of paragraph (22), by striking the period
at the end of paragraph (23) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(24) the commercial power takeoff vehicles credit under
section 45K(a).''.
(c) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45K. Commercial power takeoff vehicles credit.''.
(d) Regulations.--Not later than January 1, 2005, the
Secretary of the Treasury, in consultation with the Secretary
of Energy, shall by regulation provide for the method of
determining the exemption from any excise tax imposed under
section 4041 or 4081 of the Internal Revenue Code of 1986 on
fuel used through a mechanism to power equipment attached to
a highway vehicle as described in section 45K(b)(2) of such
Code, as added by subsection (a).
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
____
amendment no. 3331
(Purpose: To further encourage development of hydrogen refueling
infrastructure)
In Division H, on page 50, strike lines 23 and 24, and
insert the following:
``(l) Termination.--This section shall not apply to any
property placed in service--
``(1) in the case of property relating to hydrogen, after
December 31, 2011, and
``(2) in the case of any other property, after December 31,
2006.''.
(b) Incentive for Production of Hydrogen at Qualified
Clean-Fuel Vehicle Refueling Property.--Section 179A(d)
(defining qualified clean-fuel vehicle refueling property) is
amended by adding at the end the following new flush
sentence:
``In the case of clean-burning fuel which is hydrogen
produced from another clean-burning fuel, paragraph (3)(A)
shall be applied by substituting `production, storage, or
dispensing' for `storage or dispensing' both places it
appears.''.
____
amendment no. 3336
(Purpose: To amend the Internal Revenue Code of 1986 to provide for
nonrecognition of grain on dispositions of dairy property which is
certified by the Secretary of Agriculture as having been the subject of
an agreement under the bovine tuberculosis eradication program, and for
other purposes)
In Division H, on page 216, after line 21, add the
following:
SEC. ____. TREATMENT OF DAIRY PROPERTY.
(a) Qualified Disposition of Dairy Property Treated as
Involuntary Conversion.--
(1) In general.--Section 1033 (relating to involuntary
conversions) is amended by designating subsection (k) as
subsection (l) and inserting after subsection (j) the
following new subsection:
``(k) Qualified Disposition To Implement Bovine
Tuberculosis Eradication Program.--
``(1) In general.--For purposes of this subtitle, if a
taxpayer elects the application of this subsection to a
qualified disposition:
``(A) Treatment as involuntary conversion.--Such
disposition shall be treated as an involuntary conversion to
which this section applies.
``(B) Modification of similar property requirement.--
Property to be held by the taxpayer either for productive use
in a trade or business or for investment shall be treated as
property similar or related in service or use to the property
disposed of.
``(C) Extension of period for replacing property.--
Subsection (a)(2)(B)(i) shall be applied by substituting `4
years' for `2 years'.
``(D) Waiver of unrelated person requirement.--Subsection
(i) (relating to replacement property must be acquired from
unrelated person in certain cases) shall not apply.
``(E) Expanded capital gain for cattle and horses.--Section
1231(b)(3)(A) shall be applied by substituting `1 month' for
`24 months'.
``(2) Qualified disposition.--
``(A) In general.--For purposes of this subsection, the
term `qualified disposition' means the disposition of dairy
property which is certified by the Secretary of Agriculture
as having been the subject of an agreement under the bovine
tuberculosis eradication program, as implemented pursuant to
the Declaration of Emergency Because of Bovine Tuberculosis
(65 Federal Register 63,227 (2000)).
``(B) Payments received in connection with the bovine
tuberculosis eradication program.--For purposes of this
subsection, any amount received by a taxpayer in connection
with an agreement under such bovine tuberculosis eradication
program shall be treated as received in a qualified
disposition.
``(C) Transmittal of certifications.--The Secretary of
Agriculture shall transmit copies of certifications under
this paragraph to the Secretary.
``(3) Allowance of the adjusted basis of certified dairy
property as a depreciation deduction.--The adjusted basis of
any property certified under paragraph (2)(A) shall be
allowed as a depreciation deduction under section 167 for the
taxable year which includes the date of the certification
described in paragraph (2)(A).
``(4) Dairy property.--For purposes of this subsection, the
term `dairy property' means all tangible or intangible
property used in connection with a dairy business or a dairy
processing plant.
``(5) Special rules for certain business organizations.--
``(A) S corporations.--In the case of an S corporation,
gain on a qualified disposition shall not be treated as
recognized for the purposes of section 1374 (relating to tax
imposed on certain built-in gains).
``(B) Partnerships.--In the case of a partnership which
dissolves in anticipation of a qualified disposition
(including in anticipation of receiving the amount described
in paragraph (2)(B)), the dairy property owned by the
partners of such partnership at the time of such disposition
shall be treated, for the purposes of this section and
notwithstanding any regulation or rule of law, as owned by
such partners at the time of such disposition.
``(6) Termination.--This subsection shall not apply to
dispositions made after December 31, 2006.''.
(2) Effective date.--The amendment made by this subsection
shall apply to dispositions made and amounts received in
taxable years ending after May 22, 2001.
(b) Deduction of Qualified Reclamation Expenditures.--
(1) In general.--Part VI of subchapter B of chapter 1
(relating to itemized deductions for individuals and
corporations), as amended by this Act, is amended by adding
at the end the following new section:
``SEC. 199B. EXPENSING OF DAIRY PROPERTY RECLAMATION COSTS.
``(a) In General.--Notwithstanding section 280B (relating
to demolition of structures), a taxpayer may elect to treat
any qualified reclamation expenditure which is paid or
incurred by the taxpayer as an expense which is not
chargeable to capital account. Any expenditure which is so
treated shall be allowed as a deduction for the taxable year
in which it is paid or incurred.
``(b) Qualified Reclamation Expenditure.--
``(1) In general.--For purposes of this subparagraph, the
term `qualified reclamation expenditure' means amounts
otherwise chargeable to capital account and paid or incurred
to convert any real property certified under section
1033(k)(2) (relating to qualified disposition) into
unimproved land.
``(2) Special rule for expenditures for depreciable
property.--A rule similar to the rule of section 198(b)(2)
(relating to special rule for expenditures for depreciable
property) shall apply for purposes of paragraph (1).
``(c) Deduction Recaptured as Ordinary Income.--Rules
similar to the rules of section 198(e) (relating to deduction
recaptured as ordinary income on sale, etc.) shall apply with
respect to any qualified reclamation expenditure.
``(d) Termination.--This section shall not apply to
expenditures paid or incurred after December 31, 2006.''.
(2) Clerical amendment.--The table of sections for part VI
of subchapter B of chapter 1, as amended by this Act, is
amended by adding at the end the following new item:
``Sec. 199B. Expensing of dairy property reclamation costs.''.
(3) Effective date.--The amendments made by this subsection
shall apply to expenditures paid or incurred in taxable years
ending after May 22, 2001.
____
AMENDMENT NO. 3338
(Purpose: To amend the Internal Revenue Code of 1986 to modify energy
credit for combined heat and power system property)
In Division H, on page 123, after line 25, add the
following:
``(v) Nonapplication of certain rules.--For purposes of
determining if the term `combined heat and power system
property' includes technologies which generate electricity or
mechanical power using back-pressure steam turbines in place
of existing pressure-reducing valves or which make the use of
waste heat from industrial processes such as by using organic
rankin, stirling, or kalina heat engine systems, subparagraph
(A) shall be applied without regard to clauses (iii) and (iv)
thereof.
____
AMENDMENT NO. 3349
(Purpose: To modify the credit for the production of fuel from
nonconventional sources regarding refined coal)
In Division H, on page 199, lines 5 through 7, strike ``at
least 20 percent of the emissions of sulfur dioxide and
nitrogen oxide'' and insert ``at least 20 percent of the
emissions of nitrogen oxide and either sulfur dioxide or
mercury.''
[[Page S3362]]
amendment no. 3350
(Purpose: To modify the credit for the production of electricity to
include small irrigation power)
In Division H, on page 17, between lines 8 and 9, insert
the following:
SEC. 1905. CREDIT FOR ELECTRICITY PRODUCED FROM SMALL
IRRIGATION POWER.
(a) In General.--Section 45(c)(1) (defining qualified
energy resources), as amended by this Act, is amended by
striking ``and'' at the end of subparagraph (F), by striking
the period at the end of subparagraph (G) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(H) small irrigation power.''.
(b) Qualified Facility.--Section 45(c)(3) (relating to
qualified facility), as amended by this Act, is amended by
adding at the end the following new subparagraph:
``(G) Small irrigation power facility.--In the case of a
facility using small irrigation power to produce electricity,
the term `qualified facility' means any facility owned by the
taxpayer which is originally placed in service after date of
the enactment of this subparagraph and before January 1,
2007.''.
(c) Definition.--Section 45(c), as amended by this Act, is
amended by redesignating paragraph (8) as paragraph (9) and
by inserting after paragraph (7) the following new paragraph:
``(8) Small irrigation power.--The term `small irrigation
power' means power--
``(A) generated without any dam or impoundment of water
through an irrigation system canal or ditch, and
``(B) the installed capacity of which is less than 5
megawatts.''.
(d) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
____
amendment no. 3351
(Purpose: To modify the credit for residential energy efficient
property by substituting natural gas furnances for naturla gas heat
pumps)
In Division H, beginning on page 91, line 15, strike all
through page 95, line 17, and insert the following:
``(iii) $250 for each advanced natural gas furnace,
``(iv) $250 for each central air conditioner,
``(v) $75 for each natural gas water heater, and
``(vi) $250 for each geothermal heat pump.
``(2) Safety certifications.--No credit shall be allowed
under this section for an item of property unless--
``(A) in the case of solar water heating property, such
property is certified for performance and safety by the non-
profit Solar Rating Certification Corporation or a comparable
entity endorsed by the government of the State in which such
property is installed,
``(B) in the case of a photovoltaic property, a fuel cell
property, or a wind energy property, such property meets
appropriate fire and electric code requirements, and
``(C) in the case of property described in subsection
(d)(6), such property meets the performance and quality
standards, and the certification requirements (if any),
which--
``(i) have been prescribed by the Secretary by regulations
(after consultation with the Secretary of Energy or the
Administrator of the Environmental Protection Agency, as
appropriate),
``(ii) in the case of the energy efficiency ratio (EER)--
``(I) require measurements to be based on published data
which is tested by manufacturers at 95 degrees Fahrenheit,
and
``(II) do not require ratings to be based on certified data
of the Air Conditioning and Refrigeration Institute, and
``(iii) are in effect at the time of the acquisition of the
property.
``(c) Carryforward of Unused Credit.--If the credit
allowable under subsection (a) exceeds the limitation imposed
by section 26(a) for such taxable year reduced by the sum of
the credits allowable under this subpart (other than this
section and section 25D), such excess shall be carried to the
succeeding taxable year and added to the credit allowable
under subsection (a) for such succeeding taxable year.
``(d) Definitions.--For purposes of this section--
``(1) Qualified solar water heating property expenditure.--
The term `qualified solar water heating property expenditure'
means an expenditure for property to heat water for use in a
dwelling unit located in the United States and used as a
residence by the taxpayer if at least half of the energy used
by such property for such purpose is derived from the sun.
``(2) Qualified photovoltaic property expenditure.--The
term `qualified photovoltaic property expenditure' means an
expenditure for property that uses solar energy to generate
electricity for use in such a dwelling unit.
``(3) Solar panels.--No expenditure relating to a solar
panel or other property installed as a roof (or portion
thereof) shall fail to be treated as property described in
paragraph (1) or (2) solely because it constitutes a
structural component of the structure on which it is
installed.
``(4) Qualified fuel cell property expenditure.--The term
`qualified fuel cell property expenditure' means an
expenditure for qualified fuel cell property (as defined in
section 48(a)(4)) installed on or in connection with such a
dwelling unit.
``(5) Qualified wind energy property expenditure.--The term
`qualified wind energy property expenditure' means an
expenditure for property which uses wind energy to generate
electricity for use in such a dwelling unit.
``(6) Qualified tier 2 energy efficient building property
expenditure.--
``(A) In general.--The term `qualified Tier 2 energy
efficient building property expenditure' means an expenditure
for any Tier 2 energy efficient building property.
``(B) Tier 2 energy efficient building property.--The term
`Tier 2 energy efficient building property' means--
``(i) an electric heat pump water heater which yields an
energy factor of at least 1.7 in the standard Department of
Energy test procedure,
``(ii) an electric heat pump which has a heating seasonal
performance factor (HSPF) of at least 9, a seasonal energy
efficiency ratio (SEER) of at least 15, and an energy
efficiency ratio (EER) of at least 12.5,
``(iii) an advanced natural gas furnace which achieves at
least 95 percent annual fuel utilization efficiency
(AFUE),''.
____
amendment no. 3352
(Purpose: To modify the incentives for biodiesel)
In Division H, beginning on page 64, line 1, strike all
through page 73, line 2, and insert the following:
SEC. 2008. INCENTIVES FOR BIODIESEL.
(a) Credit for Biodiesel Used as a Fuel.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by inserting after section 40A the
following new section:
``SEC. 40B. BIODIESEL USED AS FUEL.
``(a) General Rule.--For purposes of section 38, the
biodiesel fuels credit determined under this section for the
taxable year is an amount equal to the biodiesel mixture
credit.
``(b) Definition of Biodiesel Mixture Credit.--For purposes
of this section--
``(1) Biodiesel mixture credit.--
``(A) In general.--The biodiesel mixture credit of any
taxpayer for any taxable year is the sum of the products of
the biodiesel mixture rate for each qualified biodiesel
mixture and the number of gallons of such mixture of the
taxpayer for the taxable year.
``(B) Biodiesel mixture rate.--For purposes of subparagraph
(A), the biodiesel mixture rate for each qualified biodiesel
mixture shall be--
``(i) in the case of a mixture with only biodiesel V, 1
cent for each whole percentage point (not exceeding 20
percentage points) of biodiesel V in such mixture, and
``(ii) in the case of a mixture with biodiesel NV, or a
combination of biodiesel V and biodiesel NV, 0.5 cent for
each whole percentage point (not exceeding 20 percentage
points) of such biodiesel in such mixture.
``(2) Qualified biodiesel mixture.--
``(A) In general.--The term `qualified biodiesel mixture'
means a mixture of diesel and biodiesel V or biodiesel NV
which--
``(i) is sold by the taxpayer producing such mixture to any
person for use as a fuel, or
``(ii) is used as a fuel by the taxpayer producing such
mixture.
``(B) Sale or use must be in trade or business, etc.--
``(i) In general.--Biodiesel V or biodiesel NV used in the
production of a qualified biodiesel mixture shall be taken
into account--
``(I) only if the sale or use described in subparagraph (A)
is in a trade or business of the taxpayer, and
``(II) for the taxable year in which such sale or use
occurs.
``(ii) Certification for biodiesel v.--Biodiesel V used in
the production of a qualified biodiesel mixture shall be
taken into account only if the taxpayer described in
subparagraph (A) obtains a certification from the producer of
the biodiesel V which identifies the product produced.
``(C) Casual off-farm production not eligible.--No credit
shall be allowed under this section with respect to any
casual off-farm production of a qualified biodiesel mixture.
``(c) Coordination With Exemption From Excise Tax.--The
amount of the credit determined under this section with
respect to any biodiesel V shall, under regulations
prescribed by the Secretary, be properly reduced to take into
account any benefit provided with respect to such biodiesel V
solely by reason of the application of section 4041(n) or
section 4081(f).
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Biodiesel v defined.--The term `biodiesel V' means
the monoalkyl esters of long chain fatty acids derived solely
from virgin vegetable oils for use in compressional-ignition
(diesel) engines. Such term shall include esters derived from
vegetable oils from corn, soybeans, sunflower seeds,
cottonseeds, canola, crambe, rapeseeds, safflowers,
flaxseeds, rice bran, and mustard seeds.
``(2) Biodiesel nv defined.--The term `biodiesel nv' means
the monoalkyl esters of long chain fatty acids derived from
nonvirgin vegetable oils or animal fats for use in
compressional-ignition (diesel) engines.
``(3) Registration requirements.--The terms `biodiesel V'
and `biodiesel NV' shall only include a biodiesel which
meets--
[[Page S3363]]
``(i) the registration requirements for fuels and fuel
additives established by the Environmental Protection Agency
under section 211 of the Clean Air Act (42 U.S.C. 7545), and
``(ii) the requirements of the American Society of Testing
and Materials D6751.
``(2) Biodiesel mixture not used as a fuel, etc.--
``(A) Imposition of tax.--If--
``(i) any credit was determined under this section with
respect to biodiesel V or biodiesel NV used in the production
of any qualified biodiesel mixture, and
``(ii) any person--
``(I) separates such biodiesel from the mixture, or
``(II) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to
the product of the biodiesel mixture rate applicable under
subsection (b)(1)(B) and the number of gallons of the
mixture.
``(B) Applicable laws.--All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
subparagraph (A) as if such tax were imposed by section 4081
and not by this chapter.
``(3) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(e) Election To Have Biodiesel Fuels Credit Not Apply.--
``(1) In general.--A taxpayer may elect to have this
section not apply for any taxable year.
``(2) Time for making election.--An election under
paragraph (1) for any taxable year may be made (or revoked)
at any time before the expiration of the 3-year period
beginning on the last date prescribed by law for filing the
return for such taxable year (determined without regard to
extensions).
``(3) Manner of making election.--An election under
paragraph (1) (or revocation thereof) shall be made in such
manner as the Secretary may by regulations prescribe.''.
``(f) Termination.--This section shall not apply to any
fuel sold after December 31, 2005.''.
(2) Credit treated as part of general business credit.--
Section 38(b), as amended by this Act, is amended by striking
``plus'' at the end of paragraph (15), by striking the period
at the end of paragraph (16) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(17) the biodiesel fuels credit determined under section
40B(a).''.
(3) Conforming amendments.--
(A) Section 39(d), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(12) No carryback of biodiesel fuels credit before
january 1, 2003.--No portion of the unused business credit
for any taxable year which is attributable to the biodiesel
fuels credit determined under section 40B may be carried back
to a taxable year beginning before January 1, 2003.''.
(B) Section 196(c) is amended by striking ``and'' at the
end of paragraph (9), by striking the period at the end of
paragraph (10), and by adding at the end the following new
paragraph:
``(11) the biodiesel fuels credit determined under section
40B(a).''.
(C) Section 6501(m), as amended by this Act, is amended by
inserting ``40B(e),'' after ``40(f),''.
(D) The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by adding after the item relating to section 40A the
following new item:
``Sec. 40B. Biodiesel used as fuel.''.
(4) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2002.
(b) Reduction of Motor Fuel Excise Taxes on Biodiesel V
Mixtures.--
(1) In general.--Section 4081 (relating to manufacturers
tax on petroleum products) is amended by adding at the end
the following new subsection:
``(f) Biodiesel V Mixtures.--Under regulations prescribed
by the Secretary--
``(1) In general.--In the case of the removal or entry of a
qualified biodiesel mixture with biodiesel V, the rate of tax
under subsection (a) shall be the otherwise applicable rate
reduced by the biodiesel mixture rate (if any) applicable to
the mixture.
``(2) Tax prior to mixing.--
``(A) In general.--In the case of the removal or entry of
diesel fuel for use in producing at the time of such removal
or entry a qualified biodiesel mixture with biodiesel V, the
rate of tax under subsection (a) shall be the rate determined
under subparagraph (B).
``(B) Determination of rate.--For purposes of subparagraph
(A), the rate determined under this subparagraph is the rate
determined under paragraph (1), divided by a percentage equal
to 100 percent minus the percentage of biodiesel V which will
be in the mixture.
``(3) Definitions.--For purposes of this subsection, any
term used in this subsection which is also used in section
40B shall have the meaning given such term by section 40B.
``(4) Certain rules to apply.--Rules similar to the rules
of paragraphs (6) and (7) of subsection (c) shall apply for
purposes of this subsection.''.
(2) Conforming amendments.--
(A) Section 4041 is amended by adding at the end the
following new subsection:
``(n) Biodiesel V Mixtures.--Under regulations prescribed
by the Secretary, in the case of the sale or use of a
qualified biodiesel mixture (as defined in section 40B(b)(2))
with biodiesel V, the rates under paragraphs (1) and (2) of
subsection (a) shall be the otherwise applicable rates,
reduced by any applicable biodiesel mixture rate (as defined
in section 40B(b)(1)(B)).''.
(B) Section 6427 is amended by redesignating subsection (p)
as subsection (q) and by inserting after subsection (o) the
following new subsection:
``(p) Biodiesel V Mixtures.--Except as provided in
subsection (k), if any diesel fuel on which tax was imposed
by section 4081 at a rate not determined under section
4081(f) is used by any person in producing a qualified
biodiesel mixture (as defined in section 40B(b)(2)) with
biodiesel V which is sold or used in such person's trade or
business, the Secretary shall pay (without interest) to such
person an amount equal to the per gallon applicable biodiesel
mixture rate (as defined in section 40B(b)(1)(B)) with
respect to such fuel.''.
(3) Effective date.--The amendments made by this subsection
shall apply to any fuel sold after December 31, 2002, and
before January 1, 2006.
(c) Highway Trust Fund Held Harmless.--There are hereby
transferred (from time to time) from the funds of the
Commodity Credit Corporation amounts determined by the
Secretary of the Treasury to be equivalent to the reductions
that would occur (but for this subsection) in the receipts of
the Highway Trust Fund by reason of the amendments made by
this section.
____
amendment no. 3353
(Purpose: To amend the Internal Revenue Code of 1986 to provide for the
treatment of sales or dispositions to implement Federal Energy
Regulatory Commission or State electric restructuring policy)
In Division H, on page 215, between lines 10 and 11, insert
the following:
SEC. 2404. SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY
REGULATORY COMMISSION OR STATE ELECTRIC
RESTRUCTURING POLICY.
(a) In General.--Section 451 (relating to general rule for
taxable year of inclusion) is amended by adding at the end
the following new subsection:
``(i) Special Rule for Sales or Dispositions To Implement
Federal Energy Regulatory Commission or State Electric
Restructuring Policy.--
``(1) In general.--For purposes of this subtitle, if a
taxpayer elects the application of this subsection to a
qualifying electric transmission transaction in any taxable
year--
``(A) any ordinary income derived from such transaction
which would be required to be recognized under section 1245
or 1250 for such taxable year (determined without regard to
this subsection), and
``(B) any income derived from such transaction in excess of
such ordinary income which is required to be included in
gross income for such taxable year,
shall be so recognized and included ratably over the 8-
taxable year period beginning with such taxable year.
``(2) Qualifying electric transmission transaction.--For
purposes of this subsection, the term `qualifying electric
transmission transaction' means any sale or other disposition
before January 1, 2007, of--
``(A) property used by the taxpayer in the trade or
business of providing electric transmission services, or
``(B) any stock or partnership interest in a corporation or
partnership, as the case may be, whose principal trade or
business consists of providing electric transmission
services,
but only if such sale or disposition is to an independent
transmission company.
``(3) Independent transmission company.--For purposes of
this subsection, the term `independent transmission company'
means--
``(A) a regional transmission organization approved by the
Federal Energy Regulatory Commission,
``(B) a person--
``(i) who the Federal Energy Regulatory Commission
determines in its authorization of the transaction under
section 203 of the Federal Power Act (16 U.S.C. 824b) is not
a market participant within the meaning of such Commission's
rules applicable to regional transmission organizations, and
``(ii) whose transmission facilities to which the election
under this subsection applies are under the operational
control of a Federal Energy Regulatory Commission-approved
regional transmission organization before the close of the
period specified in such authorization, but not later than
the close of the period applicable under paragraph (1), or
``(C) in the case of facilities subject to the exclusive
jurisdiction of the Public Utility Commission of Texas, a
person which is approved by that Commission as consistent
with Texas State law regarding an independent transmission
organization.
``(4) Election.--An election under paragraph (1), once
made, shall be irrevocable.
``(5) Nonapplication of installment sales treatment.--
Section 453 shall not apply to any qualifying electric
transmission transaction with respect to which an election to
apply this subsection is made.''.
[[Page S3364]]
(b) Effective Date.--The amendment made by this section
shall apply to transactions occurring after the date of the
enactment of this Act.
____
amendment no. 3356
(Purpose: To apply temporary regulations to certain output contracts)
In Division H, on page 215, between lines 10 and 11, insert
the following:
SEC. 2405. APPLICATION OF TEMPORARY REGULATIONS TO CERTAIN
OUTPUT CONTRACTS.
In the application of section 1-141-7(c)(4) of the Treasury
Temporary Regulations to output contracts entered into after
February 22, 1998, with respect to an issuer participating in
open access with respect to the issuer's transmission
facilities, an output contract in existence on or before such
date that is amended after such date shall be treated as a
contract entered into after such date only if the amendment
increases the amount of output sold under such contract by
extending the term of the contract or increasing the amount
of output sold, but such treatment as a contract entered into
after such date shall begin on the effective date of the
amendment and shall apply only with respect to the increased
output to be provided under such contract.
____
Amendment No. 3359
(Purpose: To modify the credit for new energy efficient homes by
treating a manufactured home which meets the energy star standard as a
30 percent home)
In Division H, on page 74, line 16, strike ``Code'' and
insert ``Code, or a qualifying new home which is a
manufactured home which meets the applicable standards of the
Energy Star program managed jointly by the Environmental
Protection Agency and the Department of Energy''.
Mr. REID. Madam President, pursuant to the previous order, I now move
to table the Boxer amendment No. 3139, and I ask for the yeas and nays
on behalf of the majority leader.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The question is on agreeing to the motion. The clerk will call the
roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from North Carolina (Mr.
Helms) is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 59, nays 40, as follows:
[Rollcall Vote No. 87 Leg.]
YEAS--57
Allard
Allen
Baucus
Bayh
Bennett
Bond
Breaux
Brownback
Bunning
Burns
Byrd
Campbell
Carnahan
Chafee
Cleland
Cochran
Conrad
Craig
Crapo
Daschle
DeWine
Domenici
Dorgan
Edwards
Enzi
Frist
Grassley
Gregg
Hagel
Harkin
Hatch
Hutchinson
Hutchison
Inhofe
Jeffords
Johnson
Kohl
Landrieu
Lincoln
Lott
Lugar
McConnell
Miller
Murkowski
Nelson (NE)
Nickles
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Stabenow
Stevens
Thomas
Thompson
Thurmond
Voinovich
NAYS--42
Akaka
Biden
Bingaman
Boxer
Cantwell
Carper
Clinton
Collins
Corzine
Dayton
Dodd
Durbin
Ensign
Feingold
Feinstein
Fitzgerald
Graham
Gramm
Hollings
Inouye
Kennedy
Kerry
Kyl
Leahy
Levin
Lieberman
McCain
Mikulski
Murray
Nelson (FL)
Reed
Reid
Rockefeller
Sarbanes
Schumer
Smith (OR)
Snowe
Specter
Torricelli
Warner
Wellstone
Wyden
NOT VOTING--1
Helms
The motion was agreed to.
Mr. BINGAMAN. Madam President, I move to reconsider the vote, and I
move to lay that motion on the table.
The motion to lay on the table was agreed to.
Vote on Amendment No. 3225
The PRESIDING OFFICER. Under the previous order, the question is on
agreeing to the Feinstein amendment No. 3225.
The Senator from Nevada.
Mr. REID. Madam President, I move to table the amendment, and I ask
for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The question is on agreeing to the motion to table amendment No.
3225. The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from North Carolina (Mr.
Helms) is necessarily absent.
The PRESIDING OFFICER (Mr. Edwards). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 60, nays 39, as follows:
[Rollcall Vote No. 88 Leg.]
YEAS--60
Baucus
Bayh
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Carnahan
Carper
Chafee
Cochran
Conrad
Craig
Crapo
Daschle
Dayton
DeWine
Dodd
Domenici
Dorgan
Durbin
Edwards
Feingold
Fitzgerald
Frist
Graham
Grassley
Gregg
Hagel
Harkin
Hollings
Hutchinson
Inhofe
Inouye
Jeffords
Johnson
Kerry
Kohl
Landrieu
Levin
Lincoln
Lott
Lugar
McConnell
Mikulski
Miller
Murkowski
Nelson (FL)
Nelson (NE)
Roberts
Sarbanes
Sessions
Smith (NH)
Stabenow
Stevens
Thurmond
Torricelli
Voinovich
Wellstone
NAYS--39
Akaka
Allard
Allen
Bennett
Biden
Bingaman
Boxer
Byrd
Cantwell
Cleland
Clinton
Collins
Corzine
Ensign
Enzi
Feinstein
Gramm
Hatch
Hutchison
Kennedy
Kyl
Leahy
Lieberman
McCain
Murray
Nickles
Reed
Reid
Rockefeller
Santorum
Schumer
Shelby
Smith (OR)
Snowe
Specter
Thomas
Thompson
Warner
Wyden
NOT VOTING--1
Helms
The motion to table was agreed to.
The PRESIDING OFFICER. The Senator from Kentucky.
Change of Vote
Mr. McCONNELL. Mr. President, on rollcall vote No. 88, I voted no. It
was my intention to vote aye. Therefore, I ask unanimous consent that I
be permitted to change my vote since it would not affect the outcome.
(The foregoing tally has been changed to reflect the above order.)
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Mr. President, we have approximately 2 hours until all time
runs out on this legislation as a result of the postcloture rules. The
following amendments are about all we are going to have time to work on
before 3:30. I ask unanimous consent that Senator Durbin be allowed to
offer amendment No. 3342, with 10 minutes equally divided; Senator
Harkin, amendment No. 3195, 20 minutes equally divided, and that
Senator Dorgan be granted 10 minutes of that 20 in opposition; Carper
amendment No. 3198, with 40 minutes equally divided; amendment No.
3326, the Murray amendment, 10 minutes equally divided; Kyl amendments
Nos. 3332 and 3333, 20 minutes total for the two amendments equally
divided.
I ask unanimous consent that following the completion of the debate
on these amendments there be a series of votes in stacked sequence with
no intervening second-degree amendments.
The votes would be on or in relation to the amendments.
The PRESIDING OFFICER. Is there objection?
Mr. LEVIN. Mr. President, reserving the right to object.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. This does not waive points of order on the amendments?
Mr. REID. It waives no points of order.
Mr. LEVIN. One other issue. There are other amendments at the desk,
including one in which I am interested.
Mr. REID. Yes. I will work on that.
The PRESIDING OFFICER. The Senator from Kansas.
Mr. BROWNBACK. Reserving the right to object, and I will probably not
object, but we have an amendment on climate change issues that I did
not hear made mention of. I inquire of the assistant majority leader
with regard to that amendment.
Mr. REID. I say to my friend from Kansas, we have taken these
amendments in the sequence they are now listed. Sadly, is the best way
I can say it, there are eight amendments to which we are simply not
going to have time to get. The reason I have asked these people to take
less time than they are entitled is so we can get to as many of them as
possible.
[[Page S3365]]
I say to my friend, if we are able to complete this unanimous consent
agreement, what we are going to do is ask unanimous consent as to all
amendments that are in order, that are on this list, Senators would
have 2 minutes for and 2 minutes against each amendment. Other than
that, that is the best we can do because that is 4 minutes more than
the amendments are entitled to under the rule.
Mr. BROWNBACK. If I could inquire, does that include, then, the
amendment we have put forward?
Mr. REID. It will include that.
The PRESIDING OFFICER. Is there objection?
Mr. CRAIG. Mr. President, reserving the right to object.
The PRESIDING OFFICER. The Senator from Idaho.
Mr. CRAIG. It is my understanding we do not need a vote on the Durbin
amendment, that a voice vote would be adequate, if that is all right
with the author of the amendment.
Mr. REID. We hope that is the case. That is my understanding.
Mr. CRAIG. Fine. That is what we believe can be done over on this
side.
Mr. REID. I say to my friend from Idaho, if we get lucky, there may
be one or two others that may not require a vote. If that is the case,
I say to my friend from Kansas, we will try to move down the list a
little more. But 3:30 is the drop dead time under the rule.
Mr. CRAIG. That is correct. I thank the Senator.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The Senator from Nevada.
Amendment No. 3336 To Amendment No. 2917
Mr. REID. Mr. President, I ask unanimous consent that the pending
amendments be set aside temporarily in order to call up amendment No.
3336 for Senator Levin. This has been cleared on the other side.
Mr. LEVIN. Mr. President, I do not know that it has been cleared on
the other side.
Mr. REID. Yes, it has been. It has not been cleared for acceptance.
This unanimous consent agreement has been cleared.
Mr. CRAIG. The unanimous consent agreement?
Mr. REID. To allow the amendment to be listed.
Mr. CRAIG. To have it listed, is that the unanimous consent request?
The PRESIDING OFFICER. Is there objection?
Mr. CRAIG. Reserving the right to object.
The PRESIDING OFFICER. The Senator from Idaho.
Mr. CRAIG. I withdraw.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The legislative clerk read as follows:
The Senator from Nevada [Mr. Reid], for Mr. Levin, proposes
an amendment numbered 3366 to amendment No. 2917.
Mr. REID. Mr. President, I ask unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To modify the incentives for alternative fuel motor vehicles
and refueling properties)
In Division H, on page 73, between lines 2 and 3, insert
the following:
SEC. ____. MODIFICATIONS TO THE INCENTIVES FOR ALTERNATIVE
VEHICLES AND FUELS.
(a) Modification to New Qualified Hybrid Motor Vehicle
Credit.--The table in section 30B(c)(2)(A) of the Internal
Revenue Code of 1986, as added by this Act, is amended by
striking ``5 percent'' and inserting ``4 percent''.
(b) Modifications to Extension of Deduction for Certain
Refueling Property.--
(1) In general.--Subsection (f) of section 179A of the
Internal Revenue Code of 1986 is amended to read as follows:
``(f) Termination.--This section shall not apply to any
property placed in service--
``(1) in the case of property relating to hydrogen, after
December 31, 2011, and
``(2) in the case of any other property, after December 31,
2007.''.
(2) Extension of phaseout.--Section 179A(b)(1)(B) of such
Code, as amended by section 606(a) of the Job Creation and
Worker Assistance Act of 2002, is amended--
(A) by striking ``calendar year 2004'' in clause (i) and
inserting ``calendar years 2004 and 2005 (calendar years 2004
through 2009 in the case of property relating to hydrogen)
'',
(B) by striking ``2005'' in clause (ii) and inserting
``2006 (calendar year 2010 in the case of property relating
to hydrogen)'', and
(C) by striking ``2006'' in clause (iii) and inserting
``2007 (calendar year 2011 in the case of property relating
to hydrogen)''.
(3) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2003, in taxable years ending after such date.
(c) Modification to Credit for Installation of Alternative
Fueling Stations.--Subsection (l) of section 30C of the
Internal Revenue Code of 1986, as added by this Act, is
amended to read as follows:
``(l) Termination.--This section shall not apply to any
property placed in service--
``(1) in the case of property relating to hydrogen, after
December 31, 2011, and
``(2) in the case of any other property, after December 31,
2007.''.
(d) Effective Date.--Except as provided in subsection
(b)(3), the amendments made by this section shall apply to
property placed in service after September 30, 2002, in
taxable years ending after such date.
Mr. REID. I call for regular order.
The PRESIDING OFFICER. The Senator from Illinois.
Amendment No. 3342
Mr. DURBIN. Mr. President, yesterday I had reported by the clerk
amendment No. 3342 and it was laid aside. I do not know if it is
necessary for the clerk to report it again. I will speak briefly to the
amendment. Is it necessary for the clerk to report?
The PRESIDING OFFICER. The amendment is pending.
Mr. DURBIN. Mr. President, I will be brief because I believe this
amendment is going to be agreed to by a voice vote. I thank all those
who are involved in that: Senator Bingaman, Senator Murkowski, as well
as Senator Nickles, Senator Grassley, Senator Baucus, and others who
have followed this matter.
We clearly need to reduce our dependence on fossil fuels,
particularly on imported oil. We should focus on sources of energy that
are clean, free, and literally limitless. One of those sources is wind.
Wind power is now creating opportunity for the generation of
electricity across the United States. I introduced legislation last
year to create a tax credit to help defray the cost of installing a
small wind energy system to generate electricity for homes, farms, and
businesses. I hope this legislation will ultimately become the law of
the land.
Today, with this amendment, we take an important step forward in
providing for equal treatment of wind energy used in business and
nonbusiness applications. It certainly would apply to our quest to
reduce our dependence on foreign oil. This is extremely important.
A recent USA Today poll showed 91 percent of the public favors
incentives for wind, solar, and fuel cells. We think this amendment is
one that will give us an opportunity to use wind power across America,
to generate electricity, particularly in applications for farms and
ranches and businesses.
This map I have illustrates the areas of the United States where
there are wind resources that could generate electricity. I am
surprised, in looking at the map, that there is no indication that
Washington, DC, is a source of wind, but those who visit Capitol Hill
might argue otherwise.
I think if we take a look at this map, though, we can see we have
ample opportunities across the United States for a clean, literally
limitless, source of electricity.
I urge adoption of my amendment.
The PRESIDING OFFICER. The question is on agreeing to the amendment
of the Senator from Illinois.
The amendment (No. 3342) was agreed to.
Mr. REID. I move to reconsider the vote.
Mr. MURKOWSKI. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3195
Mr. REID. Mr. President, I ask unanimous consent that the time on the
Harkin amendment, the next in order as I understand it, start running
against that amendment.
[[Page S3366]]
Mr. COCHRAN. Reserving the right to object, I didn't understand the
request.
Mr. REID. The Harkin amendment has 20 minutes evenly divided, and I
think the time should start running against that.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. COCHRAN. Mr. President, I am a cosponsor of the Harkin amendment,
along with Senator Grassley and Senator Lincoln. This amendment was
offered last night. We had a discussion of the amendment at that time.
The issue presented by this amendment is whether the bill, as taken up
on the floor of the Senate as it relates to energy-efficient ratios of
air-conditioning units, should be adopted by the Senate or another
ratio that would provide virtually the same amount of efficiency but at
a lower ratio and leave in place production plants that are producing
coils for air-conditioning units on the market today and the entire
air-conditioning units to continue to function.
Let me give a parochial example of the implications of this issue for
my State of Mississippi. There are over 7,000 workers employed in
facilities that produce either components for or total air-conditioning
units. One plant employs 2,500 people in Grenada, MS. Our amendment
allows the use, sale, manufacture, and use by citizens of air-
conditioning units with an energy efficiency ratio of 12. These are
numeric. The bill before the Senate requires a ratio of 13. If the
committee bill is adopted, or the bill before the Senate--the committee
didn't have a whole lot to do with writing this bill, incidentally--if
the bill before the Senate is adopted without amendment to this
section, that plant at Grenada, MS, will shut down and those 2,500
workers will be out of work. This will be replicated not only
throughout my State and other manufacturing facilities but throughout
the country.
So you need to check to see what the results will be in your State
before you vote on this amendment.
The other side of the story is, the cost of air-conditioning units is
going to skyrocket. I mean that seriously. An additional $700 per air-
conditioning unit is going to be added to the cost to those who want to
buy an air-conditioning unit. Think about that. If you have a State
where people work for the minimum wage or low salaries, they can forget
about buying an air-conditioning unit. They are not going to be able to
afford air-conditioning.
One of the main purposes of this legislation is to improve energy
efficiency. We are for that. The current energy efficiency ratio for
air-conditioning units is at the level of 10. This amendment raises
that by 20 percent to 12. We are suggesting--the Senators from Iowa,
the Senator from Arkansas and I--with this amendment, that the ratio of
12 is the correct level.
We are not a regulatory body. Think about this. This bill is
requiring the Senate to choose a regulatory standard. A rulemaking was
in process at the Department of Energy. This legislation preempts that
process and arbitrarily sets a limit that is going to unreasonably
raise costs of air-conditioning units and put a lot of people out of
work for no really good, justifiable reason.
I urge the Senate to think carefully about the implications of this
amendment and its consequences. We urge Members to vote for the level
that is more appropriate, that we think the Department of Energy would
move toward and establish by its rulemaking power--which it should have
been allowed to do. This bill preempts that process, stops the
rulemaking in its tracks, and imposes a new energy efficiency standard.
It is too high. It is too high for the reasons I stated.
I urge the Senate to adopt the Harkin-Cochran-Grassley-Lincoln
amendment.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. How much time is available?
The PRESIDING OFFICER. The Senator has 10 minutes.
Mr. DORGAN. Mr. President, I was not available when Senator Harkin
introduced the amendment last evening, but I want to come to the floor
to support the standard that exists in the energy bill we are now
considering.
This issue is in many ways complicated, but it is also the issue that
deals with energy efficiency. We are talking about increased
production, conservation, efficiency, as well as the promotion of
limitless, renewable sources of energy. This issue is called the
Seasonal Energy Efficiency Ratio. Almost no one knows what it is. It is
called the SEER standard. The standard in the bill is established at 13
SEER, which is a standard that was published in the Federal Register
almost a year and a half ago, January 2001. It would increase
residential air-conditioner efficiency by 30 percent over the prior 10
SEER standard.
The Goodman Manufacturing Company, for example, said in testimony
they have given at hearings: There have been claims that the 13 SEER
standard would cost consumers substantially more money than the
proposed rollback to a 12 SEER standard. According to the Department of
Energy, the average difference in cost between a 13 SEER unit and a 12
SEER unit is approximately $122. That is what I am told the Department
of Energy says is the difference.
The Department of Energy also indicates that cost will be recovered
in a very short period of time, because of the added efficiency in a 13
SEER standard. According to the Goodman Company, which is the second-
largest manufacture of air-conditioners in the country, and who
supports the 13 SEER standard in the bill, the incremental cost to the
manufacturer to produce a 13 SEER unit is about $100. They say: We
believe the most efficient technology should be available to people of
all income levels at an affordable price. Not all manufacturers may
have this same marketing philosophy. Some may seek a protection of
higher profit margins on their more efficient equipment. A 13 SEER
standard would force all manufacturers to be truly competitive and
provide all consumers with the most affordable energy-efficient
technology for air-conditioners that is available today.
This issue deals with a mix of things we have to do in a successful
energy policy. We are talking about production, conservation,
efficiency, and limitless, renewable sources of energy. This is the
efficiency piece that deals with air-conditioners.
Most of us understand that at peak loads at certain times of the
year, the use of air-conditioners consumes a substantial amount of the
energy in our country. Much has been said about it. Let me show a
couple of charts that describe a couple of other alternatives.
Pat Wood, former chairman of the Texas Public Utility Commission
said:
Such a significantly strengthened standard to SEER 13 would
have the triple benefits of improving electric system
reliability, reducing air pollution, and cutting cooling
costs for our customers.
The National Association of Regulatory Utility Commissioners--of the
various States--say:
Keeping the SEER 13 standard for residential air-
conditioners is a crucial component for curbing future demand
growth while retaining consumer needs for affordable cooling.
And the EPA says:
A 13 SEER standard will do more to stimulate energy savings
that benefit the consumer, reduce fossil fuel consumption and
limit emissions of air pollutants.
All of those represent the benefits of the 13 SEER standard as
opposed to the 12 SEER standard.
History has shown us, on virtually all of these areas of technology,
that once a standard is implemented, the markets drive prices down and
make the more efficient equipment even more affordable for all
consumers. The incremental cost to the manufacturer to produce the 13
SEER standard, according to the Goodman Manufacturing Company, the
second largest air-conditioning manufacturing company in the country--
and, incidentally, a supporter of the 13 SEER standard--is about $100.
The Goodman Manufacturing company, the EPA, and others say that will be
recouped in lower electricity costs by a more efficient air-conditioner
in a very short period of time.
I mentioned Pat Wood from Texas in a chart. The Texas electric rates
were 27th in the Nation compared to other States. One of the primary
uses of electricity in Texas is air-conditioning. Approximately 90
percent of the homes in Texas have air-conditioning, and Texans spend
more on air-conditioning than on space heating.
If the 13 SEER standard is implemented, for example, Texas electric
[[Page S3367]]
companies will save $241 million by the year 2010. It is estimated in
2020 they will have saved $785 million in electric costs.
Consumer organizations and low-income advocacy organizations support
the 13 SEER standard.
It seems to me, at a time when we want to ensure energy security,
increasing the efficiency of our appliances makes good sense. We have
testimony not only from one of the large air-conditioning
manufacturers, but also from smaller air-conditioning manufacturers,
that they support this. This can be done and can be done in a manner
that is helpful to all Americans.
Goodman Manufacturing, the second largest manufacturer, a couple of
small manufacturers--Goettl of Arizona and Aaon, Inc. of Tulsa,
Oklahoma--also support the 30-percent increase in efficiency.
I know there is not the time to adequately discuss a number of these
issues in the energy bill. As I indicated when I began, these are
complicated issues. I know there are disagreements about them within
the manufacturing sector on air-conditioning units. But with respect to
legislation that deals with a range of issues in a comprehensive energy
policy, on the efficiency side, the 13 SEER standard makes sense.
The 13 SEER standard will save energy. It will promote a substantial
movement by the manufacturing base to produce these at an affordable
cost. It will save money and also be friendly to our environment. All
of this make sense as part of an energy policy.
Mr. President, how much time is remaining?
The PRESIDING OFFICER. The Senator has 2 minutes 20 seconds.
Mr. DORGAN. I reserve the remainder of my time.
Mr. MURKOWSKI. Mr. President, how much time remains on our side?
The PRESIDING OFFICER. There remains 4 minutes 18 seconds.
Mr. MURKOWSKI. Mr. President, I was going to speak on behalf of the
amendment, but I will defer to Senator Harkin. He controls the time.
Mr. HARKIN. I am sorry, how much time remains?
The PRESIDING OFFICER. The Chair corrects the time. There remain 5
minutes 32 seconds.
Mr. MURKOWSKI. Will my colleague proceed now. I am going to take 2
minutes.
Mr. HARKIN. Whatever the Senator wants.
Mr. MURKOWSKI. I will yield to the Senator the remaining time.
Mr. HARKIN. I thank my colleague.
Mr. MURKOWSKI. Mr. President, this amendment strikes the mandate for
a 13 SEER standard for residential air-conditioners and heat pumps. As
we know, the DOE would be required to issue a new 12 SEER efficiency
standard within 90 days. This would result in the same standard as
recommended by the DOE staff during the previous administration, and
constitute a 20-percent increase in efficiency, which is not a rollback
by any means, as some would indicate.
Here we are again in the situation, just as in the CAFE debate, where
certain Senators want you to believe they know better. Instead of
letting the agency, in this case the DOE, act on a reasonable
efficiency and cost standard, the number 13 was picked out of the air
even though it meant higher costs and fewer choices for consumers.
To give some idea, the nonpartisan Energy Administration estimates
the 12 SEER standard saves consumers money. The 13 SEER standard is a
net cost, that is, about $600 million over 10 years. To give some idea,
the 12 SEER saves $2.3 billion over the 10-year period.
During the last rulemaking in 2000, DOE staff considered a wide range
of possible efficiency standards. Based on a review of all factors, DOE
staff proposed a new 12 SEER standard--a 20 percent increase in energy
efficiency. However, Secretary Richardson arbitrarily decided--without
any further study--to issue a new 13 SEER rule in the final days of the
Clinton Administration. This rule was placed under further review.
This higher level was not supported by the rulemaking--and it
certainly is not economically justifiable. To justify the last minute
13 SEER standard, DOE in the prior Administration disregarded the
industry data that it had used throughout the entire rulemaking. The
cost of an air conditioner will increase by $712--nearly 30 percent--if
a 13 SEER standard is imposed. For most consumers in the Midwest and
northern regions of the country the ``payback'' time for recovery of
the additional costs is well over 10 years. For these consumers--the
extra cost of the more efficient unit just simply isn't worth it over
the life of the equipment.
This dramatic increase in the cost of a new air conditioner under a
13 SEER standard will make air conditioning unaffordable for many
seniors, working families, and low-income consumers, many of whom own
single family homes and many of whom rely on air conditioning for their
health and well being.
For small and manufactured homes, the expense is even greater. The
size of an air conditioner under a 13 SEER standard is substantially
larger than under a 10 or 12 SEER standard. This creates enormous
retrofitting problems and much higher cost, particularly in
manufactured housing. The larger cooling coils simply cannot fit in the
space made for the smaller unit.
Because of the substantial increase in cost, many consumers will
choose to fix older units that are less energy efficient instead of
make a new purchase. This would defeat the purpose of higher
standards--to save energy and reduce heating and cooling expenses.
A 13 SEER standard would have tremendously negative impacts on
industry competition and small businesses: 84 percent of all central
air conditioning models would be suddenly obsolete; as would 86 percent
of all heat pump models; redesign and retooling of manufacturing
facilities would cost the industry $350 million--reducing profits and
jobs.
Nearly half of the original equipment manufacturers selling air
conditioners in the U.S. today do not offer 13 SEER products. The
Department of Justice and the Small Business Administration have both
expressed concerns over the loss of competition and the closure of many
small manufacturers.
But most of all--the 13 SEER standard is not economically justifiable
as is required under existing law. Industry figures show that both the
12 and the 13 SEER standards will cost consumers billions after
electricity savings are factored in, and the non-partisan Energy
Information Administration estimates that the 12 SEER standard saves
consumers money; while the 13 SEER standard is a net cost.
These are the reasons DOE staff initially recommended the 12 SEER
standard as the ``economically justifiable'' level of efficiency, and
this is why the DOE has proposed a 12 SEER standard as a final rule
after its further review of the record. We should respect the expertise
of the DOE--and let them carry out their duties under existing law.
A 13 SEER standard would have a devastating effect on the industry,
eliminate competition, and cost thousands of jobs. By contrast, a 12
SEER standard will benefit consumers, preserve jobs and competition,
and truly save energy. I support the amendment to strike the 13 SEER
standard, and I encourage my colleagues to do the same.
I yield the remaining time to the Senator from Iowa.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. HARKIN. Mr. President, I thank the distinguished Senator from
Alaska for his comments. I support him in favor of a 12 SEER standard
instead of a 13. I join with my friend from Mississippi. I thank him
for his strong support of this amendment.
It always sounds nice. You do a 13, you are going to save a lot of
energy and can quote from EPA and that stuff. But the fact remains, No.
1, the Department of Justice in the last Administration had real
concerns about a 13 standard and this administration said this would be
harmful to small businesses, this would not be competitive.
No. 2, the professionals in the Department of Energy in both the past
administration and in this one have said a 12 standard is the best
standard.
What happens if you go to a 13? The cost of these air-conditioners
will be higher. The elderly, modest-income people, people who live in
manufactured homes, will be less able to afford them.
[[Page S3368]]
What they will do is they will keep their old air-conditioners, and
those are less energy efficient. They will not move to the new ones.
The cost of going from 10 to 13 will be more than $700 per air-
conditioner. To go to a 12, it is about $407.
Keep in mind, under the rules the Department of Energy has to abide
by, they have to look not just at the energy use, they have to look at
the impact it has on certain subgroups, such as those of modest means.
Under the 13 that is in this bill, it will mean a lot of low-income
people in this country are going to be harmed. It will mean the elderly
who need air-conditioning, when it really gets hot, their health and
their well-being, will be unable to have the air-conditioning they
need. Is this what we want to do around here?
When Senators come to vote on this issue, I hope this is not some
kind of a knee-jerk reaction: 13 is higher than 12 and we want to have
a higher energy efficiency standard, so we will vote for 13, without
thinking about what the implications will mean, what it will mean to
consumers, the elderly, the low-income people all over this country.
Last, what is it going to mean to jobs? We have thousands of jobs in
my State of Iowa that are in jeopardy, dire jeopardy if the standard of
13 stays in this bill. These are companies that produce good quality
equipment. You have all heard of Lennox. It is a great company. But I
can tell you right now, if it goes to 13, Lennox will be squeezed and
jobs will be lost in my state of Iowa.
Any way you cut it, the 13 standard that is in the substitute
amendment now before this body is not going to achieve the goals of
lower electric energy use people hope for. Instead, it is going to hurt
our elderly, our low income, and especially the jobs of the people who
work in these industries today.
I reserve the remainder of my time, however much it might be.
The PRESIDING OFFICER. The time of the Senator has expired.
Ms. CANTWELL. Mr. President, I rise today in opposition to this
amendment, which would leave it to the Secretary of Energy to decide
what efficiency standard should be applied to residential air
conditioners and heat pumps. This is an attempt to reduce by at least
10 percent the energy efficiency requirement proposed in this bill,
which reflects the standard promulgated by the Department of Energy in
January 2001--the result of a comprehensive rulemaking effort and
multiple years of hearings and analysis.
The new standard, called SEER 13, seasonal energy efficiency ratio,
was supposed to take effect last February, but it was delayed by the
Bush administration's suspension of a long list of Clinton era
environmental rules in what's come to be known as the ``Card Memo''--
the legality of which is still subject to litigation.
My colleagues may be aware of a number of other rules that came under
the Bush administration's scrutiny as a result of this freeze on
environmental protections. The list is long and includes: the attempt
to roll back the arsenic standard for drinking water; suspension of the
roadless rule, designed to protect more than 60 million acres of
untouched national forests from road building and logging; and even the
Clinton administration's New Source Review policy, restricting harmful
emissions from power plants.
Given this laundry list of environmental reversals, it should
probably not surprise us that the Bush administration also took steps
to undermine the air conditioning efficiency standard. After merely 2
months of review--compared to the 8-year rulemaking process of the
Clinton administration--the Department of Energy last April proposed
lowering the air conditioning efficiency standard to SEER 12, or by at
least 10 percent relative to the Clinton rule. What is more, the Bush
standard wouldn't even go into effect until 2006.
And so, the fix is in. If we leave this important standard to the
discretion of this administration's Department of Energy, we will
needlessly lower the bar for the efficiency of appliances that use as
much as 28 percent of all the electricity consumed in this nation on
hot summer days. Thus, this amendment would adversely impact our
environment, the reliability of our transmission grid and our Nation's
consumers.
I also think it's interesting to note that the Bush administration's
proposed standard has been vigorously challenged--not just by consumer
groups, environmental and energy efficiency organizations, but also by
utilities themselves, State utility regulators, some of the same large
and small appliance manufacturers that this amendment purports to help,
and even the Bush administration's own Environmental Protection Agency.
Indeed, in comments on the Department of Energy's rulemaking, the
Deputy Administrator of the EPA wrote that ``the EPA believes there is
a strong rationale to support a 13 SEER standard,'' put in place by the
Clinton rule, and further alleged that several DOE's arguments in
justifying its proposed rollback contained ``overestimates,''
``underestimates,'' and ``misinformation.''
Now, why this fight over a seemingly obscure requirement? What is the
difference between a 12 SEER and 13 SEER standard?
By 2020, the Bush administration's proposal--which this amendment
would render a foregone conclusion--would increase by nearly 14,500
Megawatts the peak electricity demand across this country. That is
roughly the same as the output from 48 new power plants.
It would, every year, add 2.5 million metric tons of carbon emissions
into our air;
It would cost American consumers $1 billion dollars on their
electricity bills.
And it would degrade the reliability of our already strained
transmission grid.
I believe these alone are compelling facts. But I also want to talk
about a benefit of the 13 SEER standard--the standard that is now in
this bill--that became obvious to us in Washington State during the
height of the Western energy crisis.
Now, in my State, we don't have a lot of air-conditioning load during
the summer because our major population centers are located in a
temperate climate where temperatures eclipse 80 for only a few days a
year. In fact, our peak energy usage occurs during the winter--for
heating purposes. But this is an important issue for ratepayers in my
State nonetheless, because we are upstream from--and interconnected,
through Oregon, to--California. And in California, air conditioners
account for as much as 30 percent of peak energy demand on hot summer
days. That is, during the business hours when our economy requires the
most energy to function--during the day, when temperatures are also at
their height--air conditioning alone uses almost a third of all the
energy consumed in that State.
Now, a very painful lesson was driven home up and down the west coast
last year. That is, when supply is tightest--during periods of peak
demand--the grid is also the most constrained and wholesale power
prices are the most volatile. When supply is tight, utilities switch on
their so-called ``peaker'' plants--plants that are usually the most
obsolete, least efficient, environmentally damaging and run for only a
few hours a year. And as my colleagues are aware--because of the unique
nature of electricity as a commodity that cannot be stored--that very
last megawatt of electricity needed to meet demand is by far the most
expensive. It can have an almost exponential effect on power supply
costs across a market. And it's a primary driver in price spikes and
volatility.
So by increasing the efficiency of air conditioners--by 30 percent
under the Clinton administration standard that this bill contains--we
would essentially be helping to drive down peak demand in a way that
will also lessen volatility in electricity markets, enhance the
reliability of the grid and spare our environment emissions from these
peaker plants.
I believe the efficiency standard contained in this bill is right for
consumers and it is right for the environment. Contrary to what some of
my colleagues may assert, it is also imminently achievable for
industry. All manufacturers already make air conditioning models that
comply with the 30 percent savings standard contained in this bill--so
clearly, the technology already exists. And the Department of
[[Page S3369]]
Energy concluded in its 8-year rulemaking that the standard would
actually increase--not reduce--manufacturing jobs in this sector.
So I think the choice is clear. The evidence supports the standard
contained in this bill. This is an opportunity for this body to resist
yet another Bush administration environmental rollback. So I ask my
colleagues to oppose this amendment.
Mr. BINGAMAN. How much time remains for the opponents?
The PRESIDING OFFICER. There remain 2 minutes 17 seconds.
The Senator from New Mexico.
Mr. BINGAMAN. Mr. President, to just put this in perspective, this is
another one of these amendments that we have seen a few of during this
debate over the last several weeks--the sky is falling, don't try
requiring anything that is onerous.
The truth is the provision in the bill says that by the year 2006 we
believe the air-conditioners sold in the country ought to meet this
SEER standard. Lennox, the manufacturer which is the one the Senator
from Iowa referred to today, has over 19 models of air-conditioners,
and 130 of those models already meet the standard in 2002. We are
saying that 4 years from now we would like for the others to meet the
standards as well.
Carrier lists 1,000 models that they make available. Of those, fewer
than 100 have a SEER standard of less than 13. They don't have any air-
conditioners on the market with a SEER standard of less than 12.25. So
we are saying, 4 years from now let's move to the higher standard.
The EPA--not just the EPA of the prior administration but the EPA of
this administration--agrees with our position.
I ask unanimous consent that following my remarks, we have printed in
the Record a letter dated October 19 from Linda Fisher, Deputy
Administrator of EPA, saying that EPA believes there is a strong
rationale for the 13 SEER standard we have in this bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1.)
Mr. BINGAMAN. Mr. President, it is clear to me there are a great many
benefits to be achieved for our country, for consumers, and for the
environment, in lower electricity bills, by going ahead and maintaining
the provision we have in the bill, the 13 SEER standard. My colleague
from Iowa says it is going to cost a tremendous number of jobs. The
Department of Energy itself--this Department of Energy--says this will
create jobs and it will not lose jobs. It requires a few more workers
to produce these air-conditioners with this higher standard. Instead of
losing jobs in 2006 when this new mandate will be effective, we will be
creating jobs.
If this is an effort to protect jobs for manufacturers in this
industry, it is a misguided effort. I believe strongly that the
provision we have in the bill is the right provision.
I urge my colleagues not to support the amendment that is offered by
the Senator from Iowa.
Exhibit 1
United States Environmental
Protection Agency,
Washington, DC, October 19, 2001.
Ms. Brenda Edwards-Jones,
U.S. Department of Energy, Office of Energy Efficiency and
Renewable Energy, Energy Conservation Program for
Consumer Products: Central Air Conditioners and Heat
Pumps, Docket No. EE-RM/STD-98-440, Washington, DC.
Dear Ms. Edwards-Jones: On behalf of the U.S. Environmental
Protection Agency, I am pleased to submit the attached
comments to Docket No: EE-RM-98-440, the Department of
Energy's Proposed Rule: Energy Conservation Program for
Consumer Products; Central Air Conditioners and Heat Pumps
Energy Conservation Standards.
DOE has proposed a change to its previously issued standard
that decreases energy efficiency requirements for residential
air conditioners and heat pumps. DOE proposes to withdraw its
previously issued 13 SEER standard and replace it with a 12
SEER standard. These comments affirm EPA's support for DOE's
original 13 SEER standard.
EPA believes there is a strong rationale to support a 13
SEER standard. A 13 SEER standard represents a 30% increase
in the minimum efficiency requirements for central air
conditioners and air source heat pumps. In contrast, a 12
SEER standard represents only a 20% increase. The
Administration's National Energy Policy stresses the
important role that energy efficiency plays in our energy
future. A 13 SEER DOE standard will do more to stimulate
energy savings that benefit the consumer. DOE has quantified
these savings at approximately 4.2 quads of energy over the
2006-2030 period, equivalent to the annual energy use of 26
million households and resulting in net benefits to the
consumer of approximately $1 billion by 2020. In comparison,
DOE projects that only 3 quads of energy would be saved over
that same period with a 12 SEER standard.
A 13 SEER standard will also do more to reduce fossil fuel
consumption and more to limit emissions of air pollutants.
For example, by avoiding the construction of 39 400 megawatt
power plants, a 13 SEER standard will reduce nitrous oxides
(NOx) emissions by up to 85 thousand metric tons
versus up to 73 thousand metric tons that would be reduced
with a 12 SEER standard. A 13 SEER standard will also result
in cumulative greenhouse gas emission reductions of up to 33
million metric tons (Mt) of carbon. This is in contrast to a
12 SEER rule which will reduce up to 24 Mt of carbon
equivalent by avoiding the construction of 27 400 megawatt
power plants. At a time when many areas across the nation are
struggling to improve their air quality, the additional
emissions reductions achieved by a 13 SEER standard are
especially important.
Thank you for the opportunity to provide these written
comments. Should you have any questions, please contact Dave
Godwin in EPA's Office of Air and Radiation at 202-564-3517
or via e-mail at [email protected].
Sincerely,
Linda J. Fisher,
Deputy Administrator.
____
Comments of the U.S. Environmental Protection Agency on the Proposed
Rule, Energy Conservation Program for Consumer Products, Central Air
Conditioners and Heat Pumps Energy Conservation Standards, Docket No.
EE-RM-98-440, October 10, 2001
Overview of EPA Comments
The Environmental Protection Agency welcomes the
opportunity to comment on the Department of Energy's Proposed
Rule setting forth energy conservation standards for
residential central air conditioners and central air
conditioning heat pumps. EPA recognizes that the new proposed
DOE rule represents a 20% increase in minimum efficiency
standards for central air conditioning and heat pumps.
However, we instead support the previous final rule of a 30%
increase.
EPA has issue with several of the arguments DOE used to
justify the withdrawal of the previous final rule as outlined
within the Federal Register Notice of July 25, 2001 and the
Technical Support Document. In summary, EPA believes that the
information in the Federal Register Notice of July 25, 2001:
overstates the regulatory burden on manufacturers due to
HCFC phase-out and concludes that the industry is under
greater financial pressure from a 13 SEER standard than it
is,
understates the savings benefits of the 13 SEER standard,
over and underestimates certain distributional
inequalities,
mischaracterizes the number of manufacturers that already
produce at the 13 SEER level or could produce at the 13 SEER
level through modest changes to the products, and thereby
mischaracterizes the availability of 13 SEER product.
EPA believes there is a strong rationale to support a 13
SEER standard. EPA also believes that the more stringent
standard will be more representative of the long term goals
of the administration's energy policy and will do more to
reduce both the number of new power plants that need to be
constructed, as well as the emissions resulting from these
plants. EPA's more detailed comments are provided below.
overstated regulatory burden due to hcfc phaseout
EPA analysis indicates that the Department of Energy's
(DOE) projected cost for manufacturers to transition from
HCFT-22 to a substitute for residential central air
conditioners and heat pumps is likely to be a significant
overestimate. Both EPA's own analyses, and estimates from at
least one large manufacturer indicate that the DOE estimates
in their Technical Support Document (TSD) are at least twice
as high as warranted based on prior industry transitions and
more recent trends.
The attached analysis from EPA's contractor, ICF
Consulting, suggests a more reasonable estimate of the cost
to be around $20 to $30 million per company, rather than the
$50 million estimated by DOE, for the following reasons (see
Exhibit 1):
The costs to retool a facility to accept new compressors is
estimated at only $2 million.
The capital cost for converting from CFC-12 to HFC-134a for
the entire U.S. refrigerator industry was estimated to range
from $7 million to $23 million.
Projects approved under the Multilateral Fund of the
Montreal Protocol for conversion of refrigerator
manufacturing plants from use of CFCs to both HFC-134a
refrigerant, and HCFC or hydrocarbon foam processes, show
incremental cost estimates of $200,000 to $1 million.
These estimates are based on the expectation that the
industry will transition to one or both of the two
refrigerant HFC blends
[[Page S3370]]
that have emerged as likely replacements for HCFC-22 (as
cited in the TSD), R-407C and R-410A, and appear to provide
roughly equivalent or better energy efficiency.
Furthermore, many manufacturers can produce 13 SEER units
with only minor modifications to their facilities. DOE
already acknowledges in the TSD that using ``407C lowers the
efficiency of unmodified R-22 systems by 5-10 percent under
the SEER test conditions.'' (TSD, page 4-49). Thus, an
unmodified R-22 system of 13.7 to 14.4 SEER, charged with R-
407C, would achieve a 13 SEER. Of the seven manufacturers
listed in the TSD, six (Carrier, Goodman, Rheem, Lennox,
Trane and York) currently offer certified products with a
SEER of 14.4 or greater, Nordyne makes units up to 14 SEER.
Furthermore, it can only be assumed that minor design changes
accounting for the use of R-407C would lower or eliminate the
5-10% efficiency loss.
With respect to R-410A, the TSD states that ``manufacturers
can preserve system capacity by reducing tube diameter (and
tube costs). Furthermore, 410A can provide a slight
efficiency boost at the SEER testing points.'' (TSD, page 4-
49). Thus, the use of R-410A, while likely requiring more
redesign of equipment, may actually increase efficiencies.
This increase would eliminate the need to take some of the
steps outlined in the TSD necessary to comply with a 13
SEER rule while using HCFC-22 refrigerant. The TSD
necessary to comply with a 13 SEER rule while using HCFC-
22 refrigerant. The TSD notes that ``Carrier introduced a
line of products based on 410A in 1998 and most other
major manufacturers have since followed suit.'' (TSD page
4-50).
Carrier, the manufacturer with the largest (31%) share of
the residential central air conditioner market (TSD, page 8-
60), already offers efficient R-410A units. ARI lists over
1000 models manufactured by Carrier that use R-410A, ranging
in cooling capacity from 23,200 Btuh (less than 2 tons) to
60,000 Btuh (5 tons). Of these, only a few dozen have a SEER
of less than 13, and all have a SEER of at least 12.25. The
maximum SEER listed is 18. While these models do not
represent all of Carrier's products, it is apparent that
switching to R-410A and achieving SEER ratings of 13 is very
much possible. Carrier may now be in a position to increase
its manufacturing capacity of these R-410A lines by the 2006
DOE deadline, thus meeting a 13 SEER standard with little or
no additional regulatory burden. To the extent that Carrier
cannot increase its production of R-410A by 2006 to meet
demand, it can supplement production with high-efficiency
HCFC-22 units until 2010.
Goodman, the manufacturer with the second largest share
(19%) of the market, had already expressed support for the 13
SEER. Goodman has analyzed the costs associated with
switching refrigerants and meeting a 13 SEER standard and
expects the combined cost for both will be on the order of
half of DOE's $50 million estimate for just the refrigerant
transition. They feel that this $25 million per company is
representative of the vast majority of the industry.
Many other companies offer or are well into the development
of equipment using alternatives to HCFC-22. For instance,
Lennox offers products with R-410A, ranging from 11.35 to 15.
15 SEER. Of 199 models listed, with capacities ranging from
23,600 to 61,000 Btuh, 130 models meet or exceed 13 SEER.
As we look forward over the next decade, there are a number
of paths that companies can take to keep these costs low as
they work to comply with the EPA regulations banning the
shipping of new equipment charged with HCFC-22 starting
January 1, 2010 and work to comply with the DOE efficiency
rule (whether 12 SEER or 13 SEER) by 2006. One example would
be:
Step up current production of high efficiency HCFC-22
equipment;
Meanwhile, phase out production of lower efficiency HCFC-22
units by 2006;
By 2010, switch these high-efficiency production lines to a
new refrigerant while ensuring the efficiency standards are
still met.
Another example would be:
Move directly to producing R-407C and/or R-410A units that
meet the new DOE efficiency regulations;
Increase the production of these units to meet customer
demand by 2006;
Meanwhile, phase out all HCFC-22 units by 2006.
Of course, some combination of these strategies is more
likely to be taken and seems to offer the most opportunity
for manufacturers to reduce regulatory burden.
The TSD states ``To the extent that manufacturers can
introduce new products utilizing the new refrigerant and
meeting the new efficiency standard, the cumulative burden
will be reduced.'' (TSD page 8-62). EPA believes that there
is ample opportunity to meet both a 13 SEER efficiency
standard and a ban on HCFC-22 in new equipment with limited
regulatory burden.
underestimates of savings in the cost benefit analysis
DOE's analysis of the benefits of the withdrawn 13 SEER
rule are significantly underestimated. DOE's analysis is
based on summer 1996 electricity prices, adjusted downward
based on EIA projections of future annual electricity prices.
Changes in the electricity market due to utility deregulation
has resulted in increased electricity prices overall. DOE did
not consider this trend in its analysis.
According to Synapse Energy Economics' wholesale
electricity price data, DOE analysis underestimates the cost
of electricity for residential air conditioning by an average
of approximately $0.02/kWh. In addition, the California
Public Utilities Commission raised some residential rates by
as much as 37%, affecting more than 10% of the U.S.
electricity market and thereby, raising the national average
electricity prices above DOE's projections. Adjusting DOE's
analysis to include more recent electricity prices will
definitely and drastically alter the results indicating that
a DOE minimum standard of 13 SEER represents the better
decision for the nation.
over and under estimates of distributional inequities
EPA sees distributional inequalities that DOE has not
adequately considered. One results from the fact that the
residential price of electricity does not capture the
complete cost for running systems that largely run at peak
times. That is, except in select circumstances, residential
customers purchase electricity based upon averages rates, not
``time-of-use'' rates. The actual costs of electricity at
peak times are dramatically more and therefore, higher peak
rates drive up the average costs. Less efficient equipment
operating at peak times drives up the cost of electricity
for all customers, including those of low income, who are
less likely to have central air conditioning. According to
1997 Residential Energy Consumption Survey (RECS)
microdata (the same data set used by DOE in their
analysis), of the total 101 million households
represented, approximately 46% have central air
conditioning, but among poor households, only 25% have
central air conditioning; just half the rate of presence
among non-poor households (See Exhibit 2).
Also related to distributional equities and according to
the RECS data, among households below the poverty level,
about 60% rent their housing units. This is in contrast to
27% of above poverty level households that rent (See Exhibit
2). Therefore, low-income consumers, or those defined as
``poor'' in TSD Table 10.1, are not the ones to buy a central
A/C or heat pump product, but they would be the one to pay
the utility bill (or likely face increased rents if utilities
were included in their rent) for the use of that product.
Instituting a higher minimum efficiency standard will
actually ensure that low-income consumers have lower utility
bills, providing a benefit to this population.
misinformation on product availability
DOE justifies a lower SEER rule because the higher
efficiency levels would put manufacturers out of business.
However, according to the Air Conditioning and Refrigeration
Institute (ARI) database of model combinations, many
manufacturers already produce models that meet the 13 SEER
requirements. This technology has been available for many
years to large and small manufacturers alike. Although
confidential ARI shipment information may not reflect large
sales of high efficiency equipment, the publicly accessible
ARI database of models shows extensive product availability.
Over 7,000 air source heat pump model combinations and over
14,000 central air conditioner model combinations currently
meet or exceed the 13 SEER level as listed by ARI.
The TSD (TSD page 8-2) describes a group of manufacturers
that ``offer more substantial customer and dealer support and
more advance products. To cover these higher operating
expenses, this group attempts to ``sell-up'' to more
efficient products or products with features that consumers
and dealers value.'' With a higher standard, these
manufacturers would not go out of business, but would rather
continue to sell-up, to even higher efficiency levels or
additional valued features.
Furthermore, results and upcoming plans for utility
programs around the country also document the availability of
13 SEER and above products, as well as the demand for such
products. Austin Energy's Residential Efficiency Program
2000-2001 gave rebates to single family existing homes for
installation of split systems and heat pumps with
efficiencies of 12 SEER and above. Rebates were staged: $150
for 12.0-12.9 SEER; $250 for 13.0-13.9 SEER; $400 for 14.0-
14.9 SEER; and $500 for 15.0 and above. In total, 4,000
rebates averaging $312 were given to consumers. These numbers
illustrate that a significant portion of the rebates given
were for 13 SEER and above units.
In New Jersey, a 3-year rebate structure began in 2000 with
a $370 rebate given for the installation of 13.0 SEER
equipment and a $550 rebate given for 14.0 SEER equipment. A
total of 14,000 rebates were given in the year 2000. As of
August 2001, 8000 rebates were given out with approximately
6,000 of these units at the 14.0 SEER level. Overall results
in New Jersey show that 27% of the market (1998-2000) are 13
SEER or higher with 60% of those being at the 14 SEER or
higher levels.
The Long Island Power Authority (LIPA) instituted a program
similar to the one in New Jersey offering rebates for
installation of 13.0 and 14.0 SEER equipment. Results to date
show that LIPA is on target to reach their goal of
approximately 3,500 rebates for 13 SEER equipment.
Approximately 80% of these rebates are for SEER 14 equipment.
LIPA is expecting to ramp up to 5000 rebates in 2002.
Overall, 17% of LIPA's market in 2000 is at 13 SEER or
higher, with the market share for existing homes even higher
at 22%.
Program plans for 2002 in Texas and California are geared
toward equipment at 13 SEER and above. Reliant Energy in
Southeast Texas is planning an incentive program
[[Page S3371]]
to target 13 SEER and above matched systems. California's two
large municipal utilities (Sacramento Municipal Utility
District and Los Angeles Department of Water and Power) and
four investor owned utilities (San Diego Gas and Electric,
Southern California Gas, Southern California Edison, and
Pacific Gas and Electric), serving over 30,000,000 consumers,
are planning rebate programs to assure California residents
receive energy efficient equipment, measures, and practices
that provide maximum benefit for the cost. These programs all
revolve around 13 SEER equipment or higher. Actual incentive
amounts are not yet available.
____
Oral Statement for Doug Marty, Executive Vice President, on behalf of
Goodman Global Holdings Company, U.S. Department of Energy, Office of
Energy Efficiency and Renewable Energy
public hearing regarding energy efficiency standards for central air
conditioners and heat pumps--september 13, 2001
Assistant Secretary David Garman, and other members of the
Department of Energy Staff . . . thank you for the
opportunity to speak here today.
My name is Doug Marty and I am the Executive Vice President
of Goodman Global Holdings out of Houston, Texas. Let me
start by giving you a brief background of our company:
Goodman is the second largest residential air conditioning
and heating manufacturer in the United States. Founded in
1975 by the late Harold Goodman, Goodman remains entirely
family-owned. We produce a complete line of residential and
light commercial air conditioning and heating equipment with
facilities in Houston, Texas as well as Dayton and
Fayetteville, Tennessee. Name brands sold by Goodman include
Amana, Goodman, GmC, and
Janitrol.
As the nation's second largest manufacturer, my goal here
today is to provide you with accurate information regarding
the continuing debate to rollback the energy efficiency
standard for air conditioners and heat pumps from a level of
13 SEER to 12 SEER. This debate has been fueled by
inaccuracies and in some cases outright wrong information.
Stronger energy efficiency standards do not place a major
burden on manufacturers or limit consumer choice. They do not
cause enormous increases in the size of the equipment.
Finally, they do not impose unreasonable costs on consumers
or hurt the elderly and low-income families. Let me explain.
Given recent events and for purposes of national security,
we now face a time when it is imperative to explore
alternatives that help to improve the efficiency of our
energy use and build our domestic energy infrastructure. As
we seek alternatives, it is important to consider options
that strike a balance between both environmental and energy
needs. One simple option is energy efficiency and
conservation; specifically, energy efficiency standards for
air conditioners should be strengthened to a level that
provides consumers the most efficient technology available
today at an affordable price and helps to strengthen our
domestic resources. That level is 13 SEER.
Many opponents of the 13 SEER standard have argued that
moving to the higher level would be a hardship on small
manufacturers and that not all manufacturers have the
capability to produce the more efficient equipment, thus
limiting consumer choice. In fact, the 13 SEER technology has
been available to both large and small manufacturers for
approximately 15 years. The Air Conditioning and
Refrigeration Institutes' own data shows that virtually all
manufacturers produce 13 SEER equipment today. In reality,
the only difference between a 10 SEER unit, a 12 SEER unit
and a 13 SEER unit is a little more copper and aluminum used
in manufacturing different sized coils. Given the fact that
the units have equivalent technologies, at Goodman we run
all of our equipment through the same facilities and
assembly lines. Since Goodman and most other manufacturers
currently produce the 13 SEER air conditioner, moving to
the higher SEER will simply mean producing a higher
volume. This will also mean more jobs at the industry
level, thus improving the economy.
There has also been some confusion about the size of the 13
SEER equipment versus the 12 SEER equipment. It has been said
that there is an enormous difference in the size of the units
and with that a tremendously higher related cost for
installation. It is clear that an increased efficiency
standard will be established at least at a level of 12 over
the current 10 SEER standard. If the decision is made to
adopt the 12 SEER standard, the unit size will be slightly
bigger and will require some structural modifications to
install the indoor portion of the system including ductwork
during installation of the unit. Once we acknowledge that
there will be a standard that will likely require some
structural modification, one must compare the 12 SEER unit to
the 13 SEER unit. The difference between our 13 SEER and 12
SEER external equipment is only 3-5 inches in height. The
internal equipment size for the 12 and 13 are similar, and
there is almost no difference in the installation costs
associated with a 13 SEER unit and a 12 SEER unit.
There have also been claims that the 13 SEER standard would
cost consumers substantially more money than the proposed
rollback to a 12 SEER standard. According to the DOE, the
average difference in cost between a 13 SEER unit and a 12
SEER unit today is approximately $122. The difference in
costs for Goodman units is comparable to this estimate. Since
a 13 SEER unit is 8 percent more efficient that a 12 SEER
unit, consumers will save more on their electric bills each
and every month for the life of the unit. Thus, over an
average life of a home cooling unit, the savings will easily
cover the increase in cost, between a 12 SEER and a 13 SEER
unit.
Moreover, history has shown us time and time again that
once a standard is implemented, the market will drive prices
down and make the more efficient equipment even more
affordable for all consumers. How do we know this? From
experience. In 1992, when the government implemented the
efficiency standard at 10 SEER, the cost of the 10 SEER air
conditioning unit dropped dramatically across the nation. The
reason for the change in price is simple. Once the standard
is set, more sales of that type of unit will occur and more
volume is manufactured, thereby allowing the manufacturers to
run their plant more efficiently and pass the savings on to
the consumer. Since most consumers purchase units that
perform at the minimum standard, it makes it that much more
important to establish the standard at the correct level, 13
SEER.
Finally, in our opinion, Goodman has a marketing philosophy
of selling in volume. The incremental cost to the
manufacturer to produce a 13 SEER unit is only about $100 and
we feel that the most efficient technology should be
available to people of all income levels at an affordable
price. Unfortunately, all manufacturers may not have this
same marketing philosophy. Instead some manufacturers may be
seeking protection of higher profit margins on their more
efficient equipment. A 13 SEER standard would force all
energy manufacturers to be truly competitive and provide all
consumers with the most affordable energy efficient
technology for air conditioners that is available today.
Just as the Administration has been supportive of energy
efficiency and conservation measures, Goodman too supports
the use of more energy-efficient appliances, specifically air
conditioners and heat pumps. However, rather than rolling the
energy efficiency standard back to 12 SEER, a 20 percent
increase in efficiency, we support a 13 SEER standard, a 30
percent increase in efficiency.
A 13 SEER standard is achievable today and will certainly
be achievable in 2006. A 13 SEER standard will significantly
reduce energy consumption, cut utility costs for consumers
and improve air quality by reducing the amount of air
pollutants and greenhouse gases emitted from fossil-fueled
electric power generating facilities.
In closing, Goodman strongly urges you to consider
establishing a 13 SEER standard for residential air
conditioners and heap pumps beginning in 2006. Again, it is
the right thing to do for both the consumer and the
environment.
The PRESIDING OFFICER. All time on the amendment has expired.
Amendment No. 3198
Mr. REID. Mr. President, it is my understanding we are now going to
move to the debate on the Carper amendment. Is that a valid statement?
The PRESIDING OFFICER. The Senator is correct.
Mr. REID. Mr. President, I ask my two colleagues--the Senator from
Delaware and the Senator from Michigan--if there is any way to pare
that time down. We are very close to being able to include another
amendment in the order prior to the votes. We are now scheduling 40
minutes. Is there any way we can do that in 30, 35, or 25?
Mr. LEVIN. Mr. President, I would be willing to accept whatever
Senator Carper is willing to make.
Mr. CARPER. Mr. President, if the Senator will yield, I am willing to
go with 20 or 15.
Mr. REID. Mr. President, I ask unanimous consent that the time for
the Carper amendment be taken from 40 minutes to 30 minutes evenly
divided.
Mr. SPECTER. Mr. President, reserving the right to object, this is a
very brief period of time, 40 minutes.
Mr. REID. Mr. President, I withdraw my request.
The PRESIDING OFFICER. The request is withdrawn.
The Senator from Delaware.
Mr. CARPER. Mr. President, amendment No. 3198, which is at the desk,
I believe is now in order under the previous order.
The PRESIDING OFFICER. The Senator is correct.
Mr. CARPER. Mr. President, I yield myself 5 minutes.
Today, the United States of America will consume some 7.8 million
barrels of oil to power our cars, trucks, and vans. Between now and the
year 2015, we are told by the Secretary of Energy that 7.8 million
barrels of oil per day consumption for our cars, trucks, and vans will
rise by some 36 percent to
[[Page S3372]]
over 10\1/2\ million barrels of oil per day. My own view is that it
would be better for our country if we had no increase.
The amendment Senator Specter and I offer today is one that seeks to
reduce by one-third--1 million barrels of oil per day--the amount of
oil we are going to consume in 2015 to power our cars, trucks, and
vans.
There are a variety of ways to achieve those savings. Earlier in this
debate on the energy bill, Senator Levin and Senator Bond offered an
amendment that sought to conserve oil with respect to our cars, trucks,
and vans. I voted for it, as did Senator Specter. I voted for that
amendment because I like a number of aspects of it. I will mention a
few of those aspects.
No. 1, it has been said that we should use the Government's
purchasing power to commercialize new technologies and provide tax
credits to consumers to buy more fuel-efficient vehicles, and that the
auto industry be given a reasonable lead time. There were a number of
very positive aspects to the Levin-Bond amendment.
One thing that was missing in the Levin-Bond amendment was a
measurable objective. During the time I served as Governor of Delaware
for 8 years, we worked often with measurable objectives--job creation,
improving credit rating, getting people off welfare, and reducing the
rate of teen pregnancies. In setting the objectives, we tried not to
micromanage the process. We set a measurable objective and tried to
hold ourselves accountable to that measurable objective.
Today, in offering this amendment, we set a measurable objective. We
don't change the Levin-Bond amendment. It is all there in place. We
don't change the amendment offered earlier by the Senator from Georgia,
Mr. Miller, with respect to pickup trucks; that remains where it is.
But we say that in 2015 we want the consumption of oil for our cars,
trucks, and vans consuming at that time 1 million barrels less than
what it otherwise would be without this amendment.
Senator Specter, in joining me in this amendment, I thought offered a
very constructive change. He suggested that in order to meet these
savings, rather than just having the Secretary of Transportation issue
a regulation to change the CAFE standard, why don't we ask the
Secretary of Transportation to take into consideration a number of
other factors, including the use of alternative forms of fuel.
The amendment, as amended by Senator Specter, does just that. The
Secretary of Transportation, in issuing his regulations in the future,
can require so much savings from CAFE changes, so much savings from
alternative fuels, including biodiesel, soydiesel, ethanol, even diesel
fuel derived from coal waste.
I think our obligation here is to set the objective. The
responsibility of the Congress and the President is to say--and we now
rely for almost 60 percent of our oil from abroad. We have a $400
billion trade deficit, and it is growing, and one-third of that is
attributable to oil, which is troublesome, and the notion that we have
global warming, and one-quarter of the carbon dioxide that goes up into
the air which comes from cars, trucks, and vans--we have an obligation
to set measurable objectives in terms of slowing growth and reserving
oil.
This amendment does so in a flexible way. It says to the Secretary of
Transportation very clearly: We expect you to rely on working with the
auto industry on issuing a regulation that may involve CAFE changes. We
also want to make sure we rely on alternative fuels.
For a State such as Delaware, we have a heavy reliance on the raising
of soybeans. We like the idea of encouraging soydiesel.
For those who come from States where there is a lot of corn, there is
the notion that the Secretary of Transportation can issue regulations
to encourage the consumption of ethanol to help power our cars, trucks,
and vans in the future.
For those who come from States with a fair amount of coal and coal
waste, there is the notion that you can use that waste product to
actually create a cleaner diesel fuel that can be used for reducing our
reliance on oil, and particularly foreign oil.
I reserve the remainder of my time.
Mr. President, how much time have I consumed?
The PRESIDING OFFICER. The Senator has consumed 4 minutes 45 seconds.
Mr. CARPER. Thank you.
Mr. President, I yield 5 minutes to the Senator from Pennsylvania.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. I thank my colleague from Delaware.
Mr. President, I support the Carper amendment because I think it is
vitally important that the United States take affirmative steps to free
ourselves from dependence upon OPEC oil. This amendment is a modest
step in that direction.
While we are using 7.8 million barrels of oil a day to drive our
vehicles--the estimate by the Department of Energy is that it will grow
to 10.6 million barrels by the year 2015--the Carper-Specter amendment
proposes to limit that growth to 9.6 million barrels. We are still
going to use about 2 million barrels more. But this amendment makes the
modest step of slowing the rate of increase by 1 million barrels of
oil.
It is an intolerable situation, for us to be dependent upon OPEC oil.
Today's New York Times carries a report about Crown Prince Abdullah of
Saudi Arabia's proposed statement to the President concerning using
Saudi oil as an ``oil weapon'' against the United States to demand that
the United States change our policy in the Mideast. That is blackmail,
pure and simple. And the United States ought not to put up with it and
ought not to be in the position to have to put up with it.
Then the New York Times article goes on to point out that the Saudi
position is that they are prepared to ``move to the right of bin
Laden'' if necessary to make the United States capitulate on our
policy.
Now, how much more arrogant and inflammatory can a comment be? Saudi
Arabia produced bin Laden. Fifteen of the nineteen terrorists who
attacked the United States on 9-11 were from Saudi Arabia. Now the
Saudis are telling us they are not only embracing bin Laden but are
prepared to move to the right of him if the United States does not
yield to their demands on changing our policy in the Mideast.
In 1973, we faced lines at the gas station, and I think it would have
been a blessing--perhaps a blessing in disguise--if we had not had
relief from the oil embargo at that time, so that the United States, in
1973, would have been compelled to find alternative sources of energy.
But we went back to our old ways, and the old ways were the easy ways
and the ways of consuming vast quantities of OPEC oil.
I have opposed the CAFE standards; that is, for Congress to set a
mandatory limit of so many miles per gallon, and earlier in this debate
I voted against those CAFE standards.
I recall, about a decade ago, being asked to oppose CAFE standards
for 1 year. Well, that year turned into another year, and yet another
year. And, finally, it has been a decade or more, and we are still
avoiding the imposition of CAFE standards, which is right because
Congress ought not to micro-manage how much gasoline is used.
But where you have a broad policy consideration, as the Carper-
Specter amendment proposes, modestly, to reduce the rate of increase--
and bear in mind, again, the statistics are that we use a little over 7
million barrels a day, and we will go to more than 10 million barrels a
day by 2015--this amendment simply requires the Department of Energy
and the Department of Transportation to find a formula to limit it to
9.6 million barrels a day.
American ingenuity can find the solution to the alternative fuel
issue if we are put to the test we always have. After all, we put a man
on the Moon. We invented and placed predators--robots--on the
battlefield in defense of our troops. We have plans for a strategic
defense initiative. The opportunities for scientific advances that will
reduce our dependence on foreign oil are virtually limitless in our
inventive society.
Back in 1973, when we had the long gas lines, there was blame
attached to Israel and there was the undercurrent of anti-Semitism in
the United States. Today, we see the outburst of anti-Semitism in
Europe and in many parts of the world as a result of the Israeli policy
and as a result of the United States backing Israeli policy.
[[Page S3373]]
The PRESIDING OFFICER (Mrs. Carnahan). The Senator has used 5
minutes.
Mr. SPECTER. Madam President, I ask for 1 more minute.
Mr. CARPER. Madam President, I yield another minute to the Senator.
Mr. SPECTER. And this issue I raise with some reluctance. But there
is no doubt that if we face an embargo and if we face the Saudis
joining Iraq in using oil as a weapon, Israel will be blamed and anti-
Semitism, which now bubbles just a little below the surface in many
parts of the world, will rise to the surface and exceed it.
I think it is vital that the Congress establish a policy to be
independent of OPEC oil. Today, in Pottsville, Pennsylvania, there is a
plant which converts sludge into diesel fuel. If we set our minds to
it, we can use the billions of tons of coal to find an alternative
source of oil and not put up with the arrogance and the chutzpah of the
Saudis telling us to change our policy in response to their blackmail.
A strong statement to follow, Madam President.
The PRESIDING OFFICER. Who yields time?
The Senator from Michigan.
Mr. LEVIN. Madam President, I yield myself 5 minutes.
Madam President, in March, the Levin-Bond amendment regarding
increased fuel standards for cars and trucks was adopted by the Senate
with a strong bipartisan vote of 62 to 38. The purpose of the Levin-
Bond amendment was explicit. No. 1, we said we want to increase fuel
economy. It was specified that way. As a matter of fact, we directed
the Department of Transportation, in its rulemaking, to increase fuel
economy. It is very explicit.
The other provisions of the bill that we adopted were aimed at
protecting the environment, reducing our dependence on foreign oil, but
to do this in a way which would not harm the domestic manufacturing
industry.
We believe, those 62 of us who voted for it, you could accomplish all
of these goals: You could reduce our dependence on foreign oil, you
could reduce the amount of oil we use, you could increase fuel economy,
you could protect the environment, and you could do that without
undermining our economy. That was the purpose of the amendment, and
that is the way we explicitly stated it.
The way we accomplish those goals becomes vitally important. That is
what gets to the heart of the debate this afternoon. The amendment we
adopted did it in two essential ways: First, we included some positive
incentives. We provided that there would be joint research and
development to a greater extent among Government, industry, and
academia than there had been previously or than was proposed by the
administration. And we provided for Government purchases of hybrids,
requiring those purchases. Just the way we had previously done for the
Defense Department in the Defense authorization bill, we did for the
general Government in the Levin-Bond amendment.
We also indicated an interest in trying to provide greater tax
incentives. And there will be an effort later on this afternoon to do
exactly that: To increase the tax incentives that would be available to
lead us to the advanced technologies, the advanced hybrids, and the
fuel cells.
But then we also did it in a second way. We said there also should be
increased CAFE requirements but--and this was central to the Levin-Bond
amendment--those requirements should be set after an analysis by the
Department of Transportation of all of the factors which should go into
that decision--not just what is theoretically, technologically capable
regardless of cost, but what are the technological capabilities, what
are the costs, what are the impacts on safety, because we had the
National Academy of Sciences say there is an impact on safety, that you
lose lives when you reduce the weight of the vehicle.
We had additional factors. If I could just read through some of these
factors: Economic practicability, the need of the United States to
conserve energy, the desirability to reduce U.S. dependence on imported
oil, the effects of average fuel economy on other standards, such as
relative to passenger safety and air quality. These are all
interrelated criteria. And then: What are the adverse effects on the
competitiveness of domestic manufacturers? What are the effects on the
level of employment in the United States, the costs and lead time? What
is the potential of advanced technologies, such as hybrids and fuel
cells, to contribute to the achievement of significant reductions in
fuel consumption? And a very important one, No. 12: The extent to which
the necessity for vehicle manufacturers to incur near-term costs to
comply with average fuel economy standards adversely affects the
availability of resources for the development of advanced technology in
the future, for leap-ahead technologies.
We listed 12 factors that we said should be considered by the
Department of Transportation prior to concluding what the new standard
should be. We said: You have to increase it, but we want you to look at
12 factors.
What the Carper amendment does is it wipes out, it eliminates all of
those factors. It sets a mandatory amount. You must reduce by 1 million
barrels per day above what is the predicted use of gasoline for those
years--by another agency, by the way--and that is what it does. It cuts
the heart out of the Levin-Bond amendment.
The PRESIDING OFFICER. The Senator has used 5 minutes.
Mr. LEVIN. I yield myself 2 additional minutes.
The PRESIDING OFFICER. The Senator has that right.
Mr. LEVIN. When the Senator from Delaware says it doesn't change
Levin-Bond, I am afraid he is mistaken. He fundamentally changes the
Levin-Bond amendment, which we adopted a month ago. The change he makes
is that he says, forget the consideration of all those other factors.
You have to reduce it by 1 million barrels a day regardless of the
impact on safety, regardless of the effect on long-term investments by
these short-term investments for near-term advances, forget economic
practical ability, forget cost, forget all the other factors that we
directed the National Highway Transportation Safety Administration to
consider. Even though he leaves them--he does not strike them
technically; he doesn't go out and cancel them; the words still
remain--the heart of the matter is gone because the heart of the
regulatory matter in Levin-Bond is that we say to the Department of
Transportation, you have 15 months. You adopt standards increasing fuel
economy. If you don't do it in 15 months, we are going to have an
expedited procedure in the Senate and in the House to consider
different proposals. If you do adopt standards, they, of course, would
be subject to legislative review under a generic statute. Either way,
we will have an expedited process to look at the recommended number of
the Department of Transportation after they go through a regulatory
process, not before.
This amendment prejudges the outcome of the very regulatory process
which Levin-Bond put into law, if this law is ever signed.
I hope we will defeat this amendment for all those reasons.
I yield the floor.
Mr. BIDEN. Mr. President, I rise to comment on the vote in relation
to amendment number 3198, which was offered by my friend and colleague
from the State of Delaware, Senator Carper. The vote by the Senate is
on a motion to table the amendment. I believe that Senator Carper
should be given a straight up-or-down vote on his amendment, and for
that reason, I shall vote against the motion to table.
Mr. FEINGOLD. Mr. President, I rise to oppose the amendment offered
by the Senator from Delaware, Mr. Carper. This amendment would add a
new section to the conclusion of the fuel economy provisions previously
adopted by the Senate, which I supported, and which were offered by my
colleague from Michigan, Mr. Levin. The new section would require the
Secretary of Transportation to issue, within 15 months, regulations to
reduce the amount of oil consumed in passenger cars and light trucks in
2015 by 1,000,000 barrels per day compared to consumption without such
regulations in place.
I understand and support the desire to reduce the use of oil in the
transportation sector. Proponents of this amendment have argued that
this amendment is flexible and would allow the Department of
Transportation to take other actions, not necessarily through
adjustments in the fuel economy program, to achieve oil savings. In
[[Page S3374]]
floor debate on this amendment, however, proponents have failed to
clearly identify any other means of achieving oil savings other than
fuel economy standards. I think there is broad consensus that new fuel
economy standards would be the principle tool to achieve oil savings.
I have supported a new rulemaking on fuel economy with my vote in
support of the Levin amendment. But the Senate has also passed an
amendment on this bill, sponsored by the Senator from Georgia, Mr.
Miller, which I opposed. The Miller amendment weakens current law and
exempt pickup trucks from any future increases in fuel economy
standards. I feel that a new rulemaking on fuel economy should examine
the possibility of fuel economy improvements in all motor vehicles,
rather than exempt certain types of vehicles.
I considered the Carper amendment in light of the amendments we have
already passes. Had the Carper amendment been included as part of the
original Levin amendment, I might have felt differently on this matter.
But now that the Senate has already passed the Levin amendment and the
Miller amendment, supporting the Carper amendment is no longer a sound
policy decision. To include an oil savings requirement, while excluding
a whole category of vehicles from making fuel economy improvements,
would be a poor policy decision and inconsistent. Certain vehicles
should not have to achieve greater fuel efficiency because we chose to
exempt a particular category of vehicles.
Fuel efficiency is a critically important issue for our country, and
for Wisconsin. I am committed to achieving significant improvements in
automobile and light truck fuel efficiency. I look forward to having
many of those efficient vehicles built in Wisconsin. I will look
forward to a bill in conference that strongly encourages the Department
of Transportation to make those improvements.
The PRESIDING OFFICER. Who yields time on the amendment?
Mr. LEVIN. How much time remains on our side?
The PRESIDING OFFICER. Twelve and a half minutes.
Mr. LEVIN. Madam President, I yield 4 minutes to the Senator from
Alaska.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. MURKOWSKI. What we have here is an amendment that would reverse
the decision on CAFE. Make no mistake about it. While I am sympathetic
with the appeal, particularly from my friend from Pennsylvania,
relative to how history is repeating itself as far as our increased
dependence on imported oil, I can't help but look back at what we did
in 1973. In 1973, we had the Yom Kippur War. We had a situation where
our supply from the Mideast was interrupted. We had gas lines around
the block. We were blaming each other. We set up the Strategic
Petroleum Reserve to ensure that we would never, ever have a situation
where we would became so vulnerable.
We thought at the time that, good heavens, if we ever increased 50
percent imports, that would be beyond the consideration of this country
from the standpoint of national defense.
The problem with the Carper amendment specifically is it has no teeth
in it. We are looking at a situation in the Mideast today where clearly
oil is a weapon. We have seen statements suggesting they are going to
stand behind bin Laden's theory. They are going to stand behind brother
Saddam Hussein.
We had an opportunity a few days ago to debate this issue about
reducing our dependence on foreign oil. It was called ANWR. It was
substantial. It was defeated. Now we are talking about a smoke-and-
mirrors issue where we have no enforcement mechanism.
As a consequence, the Carper amendment would have the same negative
impacts on consumer safety, on vehicle costs, auto jobs, as the Kerry-
McCain amendment. It would increase the cost of cars. Consumers choice
is gone, thousands of jobs, reductions in the rate of growth and
several thousand additional deaths and tens of thousands of injuries.
Make no mistake about one thing: We made a decision on CAFE. It was
based on consideration of lives being saved by heavier automobiles. You
can increase CAFE dramatically by smaller automobiles, but you pay the
price. The decision that was made in this body on that issue was very
clear. It was an overwhelming vote to reject Kerry-McCain based on
consideration for the loss of human lives and injuries.
We are in the same position today. Make no mistake about it. Our
vulnerability continues. It has been over a month since we voted 62 to
38 to adopt the Levin-Bond amendment on fuel economy standards. We
chose at that time to leave the decisions on fuel economy to the
experts.
This group is not an expert group. We choose to let the experts
balance the need for increased fuel economy with safety and the needs
of the American driving public. The Senate was right once not to pick a
fuel economy number out of thin air. Let's not make that mistake now.
I urge my colleagues to reject the Carper amendment. Let's preserve
American jobs and save lives on the Nations's highways. That was the
basis for our last decision when we visited this issue.
I yield back my time.
The PRESIDING OFFICER. Who yields time?
Mr. LEVIN. Madam President, how much time on both sides remains?
The PRESIDING OFFICER. Eight and a half to the sponsors and 9 to the
opponents.
Mr. LEVIN. I yield 4 minutes to the Senator from Michigan.
The PRESIDING OFFICER. The Senator from Michigan.
Ms. STABENOW. Madam President, I rise today to oppose the Carper-
Specter amendment. I join with my colleagues in opposition. I note this
issue is of great importance to my colleague from Delaware. We have had
a lot of conversations about the best approach to increasing fuel
efficiency and decreasing our dependence on foreign oil. While I
appreciate his effort and the amendment he is bringing forward, I
believe the Carper-Specter approach has the same major flaws as the
Kerry-Hollings amendment and sets, in fact, an arbitrary CAFE number.
It just does it in a different way. It is not called CAFE, but it has
the same effect.
The Carper-Specter amendment sets, in fact, an arbitrary number which
is exactly what we were debating before. We wanted a process; we wanted
NHTSA to have the opportunity to have a number of months to take into
consideration all of the factors and not set an arbitrary number.
Our opponents, the makers of the amendment, say this is, in fact, not
a CAFE number and that the amendment creates a modest and measurable
objective for reducing vehicle gasoline consumption. Unfortunately, it
is a mandate. It is a fuel economy mandate in the form of millions of
barrels saved that is no less arbitrary than the Kerry-Hollings
provision that was replaced in this bill.
Currently, the only regulatory authority that is available to the
Department of Transportation to pursue such regulations through
passenger and light truck fleets is the CAFE program. No matter what we
call it, it is still CAFE. In essence, the amendment would impose this
arbitrary oil reduction number as an additional requirement to the
Department of Transportation as it sets the CAFE levels, thereby
undermining and distorting the rulemaking considerations and the
process that we put together through the Levin-Bond proposal.
I am particularly concerned because now that we have essentially
eliminated pickup trucks from the equation, it puts even more pressure
on the other light trucks and SUVs that are made in the United States,
which involve the employment of literally hundreds of thousands of
American workers. So it is even more distorted, given the amendment
that passed in the prior discussion.
Unfortunately, this amendment undermines the Levin-Bond proposal, and
I urge us to maintain our position of supporting the process set up in
the Levin-Bond amendment, which passed by such a wide margin, because
this sets up a positive, new set of rules and guidance from Congress
and requires us to address CAFE's impact on a wide variety of issues in
order to increase our fuel efficiency standards.
We have to look at safety, jobs, the environment, which is very
important to all of us--particularly those of us in Michigan. It makes
sure we don't have a discriminatory impact on the U.S.
[[Page S3375]]
automakers--I know that is of concern to all of us--so that we set the
standard given all of these criteria.
By requiring an overriding oil reduction number, the amendment sets a
hard target, on top of the other considerations, that the rulemaking
would otherwise try to balance.
So I believe this amendment puts the cart before the horse. We have
an excellent approach in front of us--I believe the best approach. We
are not arguing that we should continue the freeze on CAFE. In fact, we
are saying let's put in process the way to get to the new technologies.
We have a combination of market incentives and investments in new
technologies and tax incentives. We have in place the package of
incentives, a requirement by NHTSA of deadlines in terms of numbered
months and the criteria to look at. We direct them in a very specific
way.
I urge my colleagues to oppose this amendment and leave in place our
commitment to the process for raising fuel efficiency standards that
have already been established in this bill through the Levin-Bond
amendment.
The PRESIDING OFFICER. Who yields time?
Mr. CARPER. Madam President, I yield to the Senator from Connecticut
3 minutes.
Mr. LIEBERMAN. Madam President, I rise to support the Carper-Specter
amendment.
We come today to offer America a clear path away from foreign oil
dependency and toward a newly energized economic future, and that is a
new goal for fuel efficiency of cars and trucks.
America can start engineering itself out of its oil dependency if we
make it a priority. This amendment would do just that by setting a bold
but realistic goal of reducing our projected dependence on oil by one
million barrels a day by 2015, thereby reducing our reliance on
imported oil.
There's no debate that we must change the status quo. According to
the Energy Information Administration, in 2001, the U.S. consumed 18
million barrels of oil per day. Automobiles and light trucks used 68
percent of the total, or 12.25 million barrels per day. The EIA
estimates total U.S. consumption of between 25 and 28 million barrels
per day by 2020.
The majority of that oil comes from other nations. In 2001, the U.S.
imported 9.1 million barrels of oil per day. Approximately 1.65 million
barrels per day came from Saudi Arabia and 0.82 million barrels per day
came from Iraq.
The question before us today is, Do we keep our blinders on and
barrel along doing business as usual, knowing full well that we're
headed in the wrong direction, or do we have the foresight to change
course?
President Bush and my colleagues on the other side of the aisle know
we have no choice but to change course. On February 25 of this year,
the President said, ``It's important for Americans to remember . . .
that America imports more than 50 percent of its oil--more than 10
million barrels a day. And the figure is rising . . . This dependence
is a challenge to our economic security, because dependence can lead to
price shocks and fuel shortages. And this dependence on foreign oil is
a matter of national security. To put it bluntly, sometimes we rely
upon energy sources from countries that don't particularly like us.''
We consume a quarter of the world's oil and have about three percent
of its reserves--so even if we allowed drilling in the Arctic Refuge,
the Rockies, and right here beneath the Capitol dome, the nations from
which we import oil would still have us over a barrel. Please indulge
my oil-dependent puns; in the spirit of this amendment, I am trying to
get as much mileage out of them as possible.
In contrast, Mr. President, the fuel efficiency gains we're proposing
today cannot be exhausted, they cannot run dry, and they will begin to
shift our economy away from its usage of oil. These steps are the best
way to substantially reduce our reliance on foreign oil.
To quote again from the President, ``It's also important to realize
that the transportation sector consumes more than two-thirds of all the
petroleum used in the United States, so that any effort to reduce
consumption must include ways to safely make cars and trucks more fuel
efficient.''
I couldn't agree more. Compared to proposals to open precious places
to oil exploration, this measure would achieve more at a monumentally
smaller price to America. In fact, the entrepreneurship, creativity and
ingenuity that would be unleashed when companies strive to hit this
target would create jobs. They would spur economic growth. And, of
course, they would help repair the environment in the process--rather
than continue to contribute to air pollution, global warming, and the
degradation that often goes along with drilling for oil in natural
places.
These proposals, Mr. President, are also more than feasible. Earlier
this year, the National Academies of Science concluded that current
technology was available to achieve efficiency gains that far exceed
those required in this amendment, and that was even excluding
consideration of the hybrid technology that is on the market right now.
We must put our faith in the innovative genius of American industry to
meet the challenge that this amendment poses.
Mr. President, this amendment also provides the lead-time and
flexibility our industry needs to achieve these goals. It does not
micromanage where or how these savings should occur, but rather would
provide maximum flexibility to the appropriate agencies in achieving
the objective of using, and therefore importing, less oil. It leaves
intact all of the provisions that are now included in the underlying
bill.
In short, this proposal has been carefully crafted to address the
concerns raised by Senators in both parties regarding the previous CAFE
amendment. I hope that the Senate finds this to be a much-improved
amendment that can be broadly embraced.
Mr. President, the importance of reducing our reliance on foreign oil
has been echoed throughout this chamber again and again over the last
few weeks. I could quote from scores of my colleagues on both sides of
the aisle who have decried the problem and put the highest priority on
finding a solution.
But when it comes down to it, we have failed to prove that we're
willing to lead America to a better way. This must end. We must re-
energize our commitment to reach bi-partisan consensus on weaning our
economy off of fossil fuels. The process will by definition be a
gradual one--so we must start now.
Mr. President, there are 99 barrels of oil on the wall, 99 barrels of
oil. Most of them, no matter how much we explore, come from overseas.
If just one of those barrels should happen to fall, we'll still need
all 99 barrels of oil on the wall, and they'll still mostly come from
overseas. But if we as a nation can change our craving for that oil--
get on the efficiency wagon, so to speak--so that we only need 90 or 80
or 70 and shrinking barrels of oil, we can alter that repetitive
refrain.
The question is: Do we have the drive to get there? Do we have the
will? If we have the will, American ingenuity can and will find the
way. No one should have any doubt about that. But it takes leadership
from Washington, and that is what I hope we in the Congress are willing
to provide, beginning with this amendment.
Madam President, again, I think we all agree on the problem. The
problem is that America is dangerously dependent on foreign oil. No
matter how great our military might is, how strong our economy is, that
dependence upon foreign oil makes us vulnerable.
The only way to break our dependence on foreign oil is to diminish
our dependence on oil. We just don't have enough of it in reserve. One
of the most tried and true American ways to deal with problems of this
kind is through thrift, efficiency, conservation, and a better use of
resources.
I grew up with a slogan, as I bet a lot of Members did, which is
``waste not, want not.'' We are using fuel in a wasteful way.
This amendment is, in my opinion, not in contradiction to the Levin-
Bond amendment. Nothing in the Levin-Bond amendment would be undermined
or distorted by the rulemaking considerations that are effected by this
Carper-Specter amendment. The language is respectful of Levin-Bond and
simply adds the oil-saving target of reducing America's use of oil by 1
million barrels a day by 2015. You remember the movie ``Field of
Dreams,'' where it was
[[Page S3376]]
said, ``if you build it, they will come.'' We are saying affirmatively,
if we set a standard America will meet that standard, and probably go
beyond it.
If we do not, we will continue to make ourselves vulnerable by being
dependent on a source of fuel that we do not control. We consume a
quarter of the world's oil. We have about 3 percent of its reserves. So
even if we allowed drilling in the Arctic Refuge, the Rockies, and
perhaps right here beneath the Capitol dome, the nations from which we
import oil would still have us--if you will allow an oil-dependent
pun--over a barrel.
In contrast, the fuel efficiency gains proposed in this amendment
cannot be exhausted, cannot run dry, and will begin to shift our
economy away from its dependency on oil. We have the technological
capacity to do it if law drives that technology.
Earlier this year, the National Academy of Sciences concluded that
current technology was available to achieve the efficiency gains that
far exceed those required in this amendment. That even excluded
consideration of the hybrid technology on the market right now, which
the automakers cannot produce fast enough for the consumers who want to
buy them.
We have to put our faith in the innovative genius of American
industry to meet the challenge that this amendment poses, and I am sure
they will not only meet it, they will surpass it.
I yield the floor.
The PRESIDING OFFICER. Five minutes remain on each side.
Who yields time? If neither side yields time, time will be charged
equally.
Mr. CARPER. Madam President, I yield 2 minutes to the Senator from
Pennsylvania, Mr. Specter.
The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
Mr. SPECTER. Madam President, I voted for the Levin-Bond amendment on
that 68-to-32 vote. But the Carper-Specter amendment is not
inconsistent with that at all. We simply establish a consistent
standard. We are not establishing a CAFE standard. We are just asking
that there be a national policy to limit U.S. dependence on foreign
oil.
Today, this week, this month is not the first time that I have
expressed my concern about our undue dependence on foreign oil. I ask
unanimous consent that my letter to President Clinton, dated April 11,
2000, and my letter to President Bush, dated April 25, 2001, be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, April 11, 2000.
President William Jefferson Clinton,
The White House,
Washington, DC.
Dear Mr. President: In light of the very serious problems
caused by the recent increase in oil prices, we know you will
share our view that we should explore every possible
alternative to stop OPEC and other oil-producing states from
entering into agreements to restrict oil production in order
to drive up the price of oil.
This conduct is nothing more than an old-fashioned
conspiracy in restraint of trade which has long been
condemned under U.S. law, and which should be condemned under
international law.
After some considerable research, we suggest that serious
consideration be given to two potential lawsuits against OPEC
and the nations conspiring with it:
(1) A suit in Federal district court under U.S. antitrust
law.
(2) A suit in the International Court of Justice at the
Hague based, perhaps, upon an advisory opinion under ``the
general principles of law recognized by civilized nations,''
which includes prohibiting oil cartels from conspiring to
limit production and raise prices.
(1) A suit in Federal district court under U.S. antitrust
law. A case can be made that your Administration can sue OPEC
in Federal district court under U.S. antitrust law. OPEC is
clearly engaging in a ``conspiracy in restraint of trade'' in
violation of the Sherman Act (15 U.S.C. Sec. 1). The
Administration has the power to sue under 15 U.S.C. Sec. 4
for injunctive relief to prevent such collusion.
In addition, the Administration should consider suing OPEC
for treble damages under the Clayton Act (15 U.S.C. Sec.
15a), since OPEC's behavior has caused an ``injury'' to U.S.
``property.'' After all, the U.S. government is a major
consumer of petroleum products and must now pay higher prices
for these products. In Reiter v. Sonotone Corp., 442 U.S. 330
(1979), the Supreme Court held that he consumers who were
direct purchasers of certain hearing aides who alleged that
collusion among manufacturers had led to an increase in
prices had standing to sue those manufacturers under the
Clayton Act since ``a consumer deprived of money by reason of
allegedly anticompetitive conduct is injured in `property'
within the meaning of [the Clayton Act].'' Indirect
purchasers would appear to be precluded from suit, even in a
class action, under Illinois Brick v. Illinois, 431 U.S. 720
(1977), but this would not bar the United Sates Government,
as a direct purchaser, from having the requisite standing.
One potential obstacle to such a suit is whether the
Foreign Sovereign Immunities Act (``FSIA'') provides OPEC, a
group of sovereign foreign nations, with immunity from suit
in U.S. courts. To date, there has been a ruling on this
issue in only one case. In International Association of
Machinists v. OPEC, 477 F. Supp. 553 (1979), the District
Court for the Central District of California held that the
nations which comprise OPEC were immune from suit in the
United States under the FSIA. We believe that this opinion
was wrongly decided and that other district courts, including
the D.C. District, can and should revisit the issue.
This decision in Int. Assoc. of Machinists turned on the
technical issue of whether or not the nations which comprise
OPEC are engaging in ``commercial activity'' or
``governmental activity'' when they cooperate to sell their
oil. If they are engaging in ``governmental activity,'' then
the FSIA shields them from suit in U.S. courts. If, however,
these nations are engaging in ``commercial activity,'' then
they are subject to suit in the U.S. The California District
Court held that OPEC activity is ``governmental activity.''
We disagree. It is certainly a governmental activity for a
nation to regulate the extraction of petroleum from its
territory by ensuring compliance with zoning, environmental
and other regulatory regimes. It is clearly a commercial
activity, however, for these nations to sit together and
collude to limit their oil production for the sole purpose of
increasing prices.
The 9th Circuit affirmed the District Court's ruling in
Int. Assoc. of Machinists in 1981 (649 F.2d 1354), but on the
basis of an entirely different legal principle. The 9th
Circuit held that the Court could not hear this case because
of the ``act of state'' doctrine, which holds that a U.S.
court will not adjudicate a politically sensitive dispute
which would require the court to judge the legality of the
sovereign act of a foreign state.
The 9th Circuit itself acknowledged in its Int. Assoc. of
Machinists opinion that ``The [act of state] doctrine does
not suggest a rigid rule of application,'' but rather
application of the rule will depend on the circumstances for
each case. The Court also noted that, ``A further
consideration is the availability of internationally-accepted
legal principles which would render the issues appropriate
for judicial disposition.'' The Court then quotes from the
Supreme Court's opinion in Banco Nacional de Cuba v.
Sabbatino, 376 U.S. 398 (1964).
``It should be apparent that the greater of codification or
consensus concerning a particular area of international law,
the more appropriate it is for the judiciary to render
decisions regarding it, since the courts can then focus on
the application of an agreed principle to circumstances of
fact rather than on the sensitive task of establishing a
principle not inconsistent with the national interest or with
international justice.''
Since the 9th Circuit issued its opinion in 1981, there
have been major developments in international law that impact
directly on the subject matter at issue. As we discuss in
greater detail below, the 1990's have witnessed a significant
increase in efforts to seek compliance with basic
international norms of behavior through international
courts and tribunals. In addition, there is strong
evidence of an emerging consensus in international law
that price fixing by cartels violates such international
norms. Accordingly, a court choosing to apply the act of
state doctrine to a dispute with OPEC today may very well
reach a different conclusion than the 9th Circuit reached
almost twenty years ago.
You should also examine whether the anticompetitive conduct
of the international oil cartel is being effectuated by
private companies who are subject to the enforcement of U.S.
antitrust laws (for example, former state oil companies that
have now been privatized) rather than sovereign foreign
states. If such private oil companies are determined to in
fact be participating in the anticompetitive conduct of the
oil cartel, then we would urge that these companies be named
as defendants in an antitrust lawsuit in addition to the OPEC
members.
(2) A suit in the International Court of Justice at the
Hague based upon ``the general principles of law recognized
by civilized nations,'' which includes prohibiting oil
cartels from conspiring to limit production and raise prices.
In addition to such domestic antitrust actions, we believe
you should give serious consideration to bringing a case
against OPEC before the International Court of Justice (the
``ICJ'') at the Hague. You should consider both a direct suit
against the conspiring nations as well as a request for an
advisory opinion from the Court through the auspices of the
U.N. Security Council. The actions of OPEC in restraint of
trade violate ``the general principles of law recognized by
civilized nations.'' Under Article 38 of the Statute of the
ICJ, the Court is required to apply these ``general
principles'' when deciding cases before it.
This would clearly be a cutting-edge lawsuit, making new
law at the international
[[Page S3377]]
level. But there have been exciting developments in recent
years which suggest that the ICJ would be willing to move in
this direction. In a number of contexts, we have seen a
greater respect for and adherence to fundamental
international principles and norms by the world community.
For example, we have seen the establishment of the
International Criminal Court in 1998, the International
Criminal Tribunal for Rwanda in 1994, and the International
Criminal Tribunal for the former Yugoslavia in 1993. Each of
these bodies has been active, handing down numerous
indictments and convictions against individuals who have
violated fundamental principles of human rights. For example,
as of December 1, 1999 the Yugoslavia tribunal alone had
handed down 91 public indictments.
Today, adherence to international principles has spread
from the tribunals in the Hague to individual nations around
the world. Recently, the exiled former dictator of Chad,
Hissene Habre, was indicted in Senegal on charges or torture
and barbarity stemming from his reign, where he allegedly
killed and tortured thousands. This case is similar to the
case brought against former Chilean dictator Augusto Pinochet
by Spain on the basis of his alleged atrocities in Chile. At
the request of the Spanish government, Pinochet was detained
in London for months until an English court determined that
he was too ill to stand trial.
The emerging scope of international law was demonstrated in
an advisory opinion sought by the U.N. General Assembly in
1996 to declare illegal the use or threat to use nuclear
weapons. Such an issue would ordinarily be thought beyond the
scope of a judicial determination given the doctrines of
national sovereignty and the importance of nuclear weapons to
the defense of many nations. The ICJ ultimately ruled eight
to seven, however, that the use or threat to use nuclear
weapons ``would generally be contrary to the rules of
international law applicable in armed conflict, and in
particular the principles and rules of humanitarian law.''
The fact that this issue was subject to a decision by the
ICJ, shows the rapidly expanding horizons of international
law.
While these emerging norms of international behavior have
tended to focus more on human rights than on economic
principles, there is one economic issue on which an
international consensus has emerged in recent years--the
illegitimacy of price fixing by cartels. For example, on
April 27, 1998, the Organization for Economic Cooperation and
Development issued an official ``Recommendation'' that all
twenty-nine members nations ``ensure that their competition
laws effectively halt and deter hard core cartels.'' The
recommendation defines ``hard core cartels'' as those which,
among other things, fix prices or establish output
restriction quotas. The Recommendation further instructs
member countries ``to cooperate with each other in enforcing
their laws against such cartels.''
On October 9, 1998, eleven Western Hemisphere countries
held the first ``Antitrust Summit of the Americas'' in Panama
City, Panama. At the close of the summit, all eleven
participants issued a joint communique in which they
expressed their intention ``to affirm their commitment to
effective enforcement of sound competition laws, particularly
in combating illegal price-fixing, bid-rigging, and market
allocations.'' The communique further expresses the intention
of these countries to ``cooperate with one another . . . to
maximize the efficacy and efficiency of the enforcement of
each country's competition laws.'' One of the countries
participating in this communique, Venezuela, is a member of
OPEC.
The behavior of OPEC and other oil-producing nations in
restraint of trade violates U.S. antitrust law and basic
international norms, and it is injuring the United States and
its citizens in a very real way. Consideration of such legal
action could provide an inducement to OPEC and other oil-
producing countries to raise production to head off such
litigation.
We hope that you will seriously consider judicial action to
put an end to such behavior.
Arlen Specter,
Herb Kohl
Charles Schumer,
Mike DeWine,
Strom Thurmond,
Joe Biden
____
U.S. Senate,
Washington, DC, April 25, 2001.
President George Walker Bush,
The White House,
Washington, DC.
Dear Mr. President: In light of the energy crisis and the
high prices of OPEC oil, we know you will share our view that
we must explore every possible alternative to stop OPEC and
other oil-producing states from entering into agreements to
restrict oil production in order to drive up the price of
oil.
This conduct is nothing more than an old-fashioned
conspiracy in restraint of trade which has long been
condemned under U.S. law, and which should be condemned under
international law.
After some research, we suggest that serious consideration
be given to two potential lawsuits against OPEC and the
nations conspiring with it:
(1) A suit in Federal district court under U.S. antitrust
law.
(2) A suit in the International Court of Justice at the
Hague based upon ``the general principles of law recognized
by civilized nations.''
(1) A suit in Federal district court under U.S. antitrust
law. A strong case can be made that your Administration can
sue OPEC in Federal district court under U.S. antitrust law.
OPEC is clearly engaging in a ``conspiracy in restraint of
trade'' in violation of the Sherman Act (15 U.S.C. Sec. 1).
The Administration has the power to sue under 15 U.S.C. Sec.
4 for injunctive relief to prevent such collusion.
In addition, the Administration has the power to sue OPEC
for treble damages under the Clayton Act (15 U.S.C. Sec.
15a), since OPEC's behavior has caused an ``injury'' to U.S.
``property.'' After all, the U.S. government is a consumer of
petroleum products and must now pay higher prices for these
products. In Reiter v. Sonotone Corp, 442 U.S. 330 (1979),
the Supreme Court held that the consumers of certain hearing
aids who alleged that collusion among manufacturers had led
to an increase in prices had standing to sue those
manufacturers under the Clayton Act since ``a consumer
deprived of money by reason of allegedly anticompetitive
conduct is injured in `property' within the meaning of [the
Clayton Act].''
One issue that would be raised by such a suit is whether
the foreign Sovereign Immunities Act (``FSIA'') provides
OPEC, a group of sovereign foreign nations, with immunity
from suit in U.S. courts. To date, only one Federal court,
the District Court for the Central District of California,
has reviewed this issue. In International Association of
Machinists v. OPEC, 477 F. Supp. 553 (1979), the Court held
that the nations which comprise OPEC were immune from suit in
the United Stats under the FSIA. We believe that this opinion
was wrongly decided and that other District courts, including
the D.C. District, can and should revisit the issue.
This decision in Int. Assoc. of Machinists turned on the
technical issue of whether or not the nations which comprise
OPEC are engaging in ``commercial activity'' or
``governmental activity'' when they cooperate to sell their
oil. If they are engaging in ``governmental activity,'' then
the FSIA shields them from suit in U.S. courts. If, however,
these nations are engaging in ``commercial activity,'' then
they are subject to suit in the U.S. The California District
court held that OPEC activity is ``governmental activity.''
We disagree. It is certainly a governmental activity for a
nation to regulate the extraction of petroleum from its
territory by ensuring compliance with zoning, environmental
and other regulatory regimes. It is clearly a commercial
activity, however, for these nations to sit together and
collude to limit their oil production for the sole purpose of
increasing prices.
The 9th Circuit affirmed the District Court's ruling in
Int. Assoc. of Machinists in 1981 (649 F.2d 1354), but on the
basis of an entirely different legal principle. The 9th
Circuit held that the Court could not hear this case because
of the ``act of state'' doctrine, which holds that a U.S.
court will not adjudicate a politically sensitive dispute
which would require the court to judge the legality of the
sovereign act of a foreign state.
The 9th Circuit itself acknowledged in its Int. Assoc. of
Machinists opinion that ``The [act of state] doctrine does
not suggest a rigid rule of application,'' but rather
application of the rule will depend on the circumstances of
each case. The Court also noted that, ``A further
consideration is the availability of internationally-accepted
legal principles which would render the issues appropriate
for judicial disposition.'' The court then quotes from the
Supreme Court's opinion in Banco Nacional de Cuba v.
Sabbatino, 376 U.S. 398 (1964):
``It should be apparent that the greater the degree of
codification or consensus concerning a particular area of
international law, the more appropriate it is for the
judiciary to render decision regarding it, since the courts
can then focus on the application of an agreed principle to
circumstances of fact rather than on the sensitive take of
establishing a principle not inconsistent with the national
interest or with international justice.''
Since the 9th circuit issued its opinion in 1981, there
have been major developments in international law that impact
directly on the subject matter at issue. As we discuss in
greater detail below, the 1990's have witnessed a significant
increase in efforts to seek compliance with basic
international norms of behavior through international courts
and tribunals. In addition, there is strong evidence of an
emerging consensus in international law that price fixing by
cartels violates such international norms. Accordingly, a
court choosing to apply the act of state doctrine to a
dispute with OPEC today may very well reach a different
conclusion than the 9th Circuit reached almost twenty
years ago.
(2) A suit in the International Court of Justice at The
Hague based upon ``the general principles of law recognized
by civilized nations.'' In addition to such domestic
antitrust actions, we believe you should give serious
consideration to bringing a case against OPEC before the
International Court of Justice (the ``ICJ'') at The Hague.
You should consider both a direct suit against the conspiring
nations as well as a request for an advisory opinion from the
Court through the auspices of the U.N. Security Council. The
actions of OPEC in restraint of trade violate ``the general
principles of law recognized by civilized nations.'' Under
Article 38 of the Statute of the ICJ, the Court is
[[Page S3378]]
required to apply these ``general principles'' when deciding
cases before it.
This would clearly be a cutting-edge lawsuit, making new
law at the international level. But there have been exciting
developments in recent years which suggest that the ICJ would
be willing to move in this direction. In a number of
contexts, we have seen a greater respect for and adherence to
fundamental international principles and norms by the world
community. For example, we have seen the establishment of the
International Criminal Court in 1998, the International
Criminal Tribunal for Rwanda in 1994, and the International
Criminal Tribunal for the former Yugoslavia in 1993. Each of
these bodies has been active, handing down numerous
indictments and convictions against individuals who have
violated fundamental principles of human rights.
Today, adherence to international principles has spread
from the tribunals in The Hague to individual nations around
the world. The exiled former dictator of Chad, Hissene Habre,
was indicted in Senegal on charges of torture and barbarity
stemming from his reign, where he allegedly killed and
tortured thousands. This case is similar to the case brought
against former Chilean dictator Augusto Pinochet by Spain on
the basis of his alleged atrocities in Chili. At the request
of the Spanish government, Pinochet was detained in London
for months until an English court determined that he was too
ill to stand trial.
While these emerging norms of international behavior have
tended to focus more on human rights than on economic
principles, there is one economic issue on which an
international consensus has emerged in recent years--the
illegitimacy of price fixing by cartels. For example, on
April 27, 1998, the Organization for Economic Cooperation and
Development issued an official ``Recommendation'' that all
twenty-nine member nations ``ensure that their competition
laws effectively halt and deter hard core cartels.'' The
Recommendation defines ``hard core cartels'' as those which,
among other things, fix prices or establish output
restriction quotas. The Recommendation further instructs
member countries ``to cooperate with each other in enforcing
their laws against such cartels.''
On October 9, 1998, eleven Western Hemisphere countries
held the first ``Antitrust Summit of the Americas'' in Panama
City, Panama. At the close of the summit, all eleven
participants issued a joint communique in which they express
their intention ``to affirm their commitment to effective
enforcement of sound competition laws, particularly in
combating illegal price-fixing, bid-rigging, and market
allocation.'' The communique further expresses the intention
of these countries to ``cooperate with one another . . . to
maximize the efficacy and efficiency of the enforcement of
each country's competition laws.''
The behavior of OPEC and other oil-producing nations in
restraint of trade violates U.S. antitrust law and basic
international norms, and it is injuring the United States and
its citizens in a very real way.
We hope that you will seriously consider judicial action to
put an end to such behavior.
Arlen Specter,
Charles Schumer,
Herb Kohl,
Strom Thurmond,
Mike DeWine
____
Mr. SPECTER. The Federal lawsuit, Prewitt v. OPEC, establishes an
antitrust violation by OPEC, and my letters to Presidents Clinton and
Bush set forth legal mechanisms for dealing with OPEC where they engage
in a conspiracy in restraint of trade and conspiracy to limit
production and raise prices.
I ask unanimous consent that an article from the Harrisburg Patriot
be printed in the Record. It sets out in some detail a way that the
sludge can be turned into fuel to reduce our dependence on foreign oil.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Patriot-News, Jan. 4, 2002]
Coal-to-Diesel Idea Promising
Whatever else it has meant for America, the Sept. 11
terrorism underscored the folly of U.S. dependence on Middle
Eastern oil.
And while some people believe it mandates drilling for
petroleum in the Arctic National Wildlife Refuge and other
environmentally sensitive areas, others see the logic in
developing legitimate alternative fuels, utilizing the kind
of ingenuity and entrepreneurial skills on which America was
built.
Unfortunately, expanded oil drilling and alternative fuel
development are tied together in the energy package that
remains bottled up in the U.S. Senate, where drilling in ANWR
is a key item of debate. Majority Leader Tom Daschle, D-S.D.,
who sets the agenda, opposes ANWR drilling, which is
supported by the president and included in the energy bill
approved by the House last summer.
What that means for Pennsylvania in particular is that
construction of a $450 million plant in Schuylkill County to
convert coal waste into diesel fuel is on hold.
John W. Rich, Jr., scion of a family that made its fortune
in mining coal, wants to apply proven South African
technology to produce 5,000 barrels a day of sulfur-free
diesel fuel and eliminate 1 million tons a year of
environmentally damaging coal waste from Pennsylvania's coal
regions.
Rich's proposal has won political support and tax credits
from the state and a $7.8 million startup grant from the
federal government. He hopes that the energy bill, if it ever
passes, will provide up to $100 million more, completing a
financial package that includes investments from Chevron-
Texaco and a Bechtel affiliate.
America's oil resources are so limited and difficult to tap
that some foreign oil will always be required here. On the
other hand, coal-waste conversion to diesel, a proven
technology, would make use of a ready supply of coal and coal
waste in Pennsylvania that, in oil equivalent, exceeds the
known petroleum reserves of Iraq.
Not only would this technology cut into the need for
foreign oil, but its cost, in comparison to the expense of
drilling in ANWR and piping the crude oil south to the Lower
48, quite likely would underscore the folly of that proposal.
The Senate needs to settle on a compromise and pass an
energy bill to make practical alternatives to Middle Eastern
oil a reality.
Mr. SPECTER. Madam President, I think if every one of our colleagues
read the story on the front page of the New York Times today, there
would be no doubt about the insistence of this body to reduce our
dependence on OPEC oil. To have Crown Prince Abdullah of Saudi Arabia
release through a spokesman what he intends to say to the President of
the United States--that Saudi Arabia will use oil as an oil weapon, as
Saddam Hussein has done is outrageous. The spokesman is quoted as
saying that Saudi Arabia is prepared to go to the right of bin Laden,
and that Saudi Arabia is prepared to fly to Baghdad and embrace Saddam
Hussein like a brother.
I ask unanimous consent that the New York Times article ``Saudi To
Warn Bush of Rupture Over Israel Policy'' be printed in the Record.
There being no objection the article was ordered to be printed in the
Record, as follows:
[From The New York Times, Apr. 25, 2002]
Saudi To Warn Bush of Rupture Over Israel Policy
(By Patrick E. Tyler)
Houston, Apr. 24.--Crown Prince Abdullah of Saudi Arabia is
expected to tell President Bush in stark terms at their
meeting on Thursday that the strategic relationship between
their two countries will be threatened if Mr. Bush does not
moderate his support for Israel's military policies, a person
familiar with the Saudi's thinking said today.
In a bleak assessment, he said there was talk within the
Saudi royal family and in Arab capitals of using the ``oil
weapon'' against the United States, and demanding that the
United States leave strategic military bases in the region.
Such measures, he said, would be a ``strategic debacle for
the United States.''
He also warned of a general drift by Arab leaders toward
the radical politics that have been building in the Arab
street.
The Saudi message contained undeniable brinkmanship
intended to put pressure on Mr. Bush to take a much larger
political gamble by imposing a peace settlement on Israeli
and Palestinians.
But the Saudi delegation also brought a strong sense of the
alarm and crisis that have been heard in Arab capitals.
``It is a mistake to think that our people will not do what
is necessary to survive,'' the person close to the crown
prince said, ``and if that means we move to the right of bin
Laden, so be it; to the left of Qaddafi, so be it; or fly to
Baghdad and embrace Saddam like a brother, so be it. It's
damned lonely in our part of the world, and we can no longer
defend our relationship to our people.''
Whatever the possibility of bluster, it is also clear that
Abdullah represents not just Saudi Arabia but also the
broader voice of the Arab world, symbolized by the peace plan
he submitted and that was endorsed at an Arab summit meeting
in March.
Those familiar with the prince's ``talking points'' said he
would deliver a blunt message that Mr. Bush is perceived to
have endorsed--despite his protests to the contrary--Prime
Minister Ariel Sharon's military incursion into the West
Bank.
Abdullah believes Mr. Bush has lost credibility by failing
to follow through on his demand two weeks ago that Mr. Sharon
withdraw Israeli troops from the West Bank and end the sieges
of Yasir's compound in Ramallah and of the Church of the
Nativity in Bethlehem.
If those events occur and Mr. Bush makes a commitment ``to
go for peace'' by convening an international conference, as
his father did after the Persian Gulf war, to press for a
final settlement and a Palestinian state, the Saudi view
would change dramatically.
But those close to the Saudi delegation said there was no
expectation that Mr. Bush is prepared to apply the pressure
necessary to force such an outcome.
``The perception in the Middle East, from the far left to
the far right, is that America
[[Page S3379]]
is totally sponsoring Sharon--not Israel's policies but
Sharon's policies--and anyone who tells you less is insulting
your intelligence,'' the person familiar with Abdullah's
thinking said.
Western analysts see the prince as a blunt Bedouin leader
whose initiative is regarded by many Arabs as a gesture
worthy of the late Egyptian leader Anwar el-Sadat, who flew
to Jerusalem in 1973 to sue for peace with Menachem Begin.
Abdullah's offer, now the Arab world's offer, calls for
recognition of Israel and ``normal relations'' in return for
a Palestinian state on lands Israel occupied in 1967.
The Saudi assessment was apparently being conveyed through
several private channels.
On Tuesday President Bush's father had lunch with the Saudi
foreign minister, Saud al-Faisal, and the kingdom's longtime
ambassador to Washington, Prince Bandar bin Sultan. Their
specific message could not be learned, but in the familial
setting, where Barbara Bush was also the hostess for Princess
Haifa, Prince Bandar's wife, the strong strategic and
personal ties of the Persian Gulf war that characterized
Saudi-American relations a decade ago was a message in
itself.
Abdullah, in a luncheon today with Vice President Dick
Cheney, was to convey the seriousness with which he regards
the Thursday meeting with President Bush as a ``last chance''
for constructive relations with the Arab world.
Secretary of Defense Donald H. Rumsfeld and Gen. Richard B.
Myers, chairman of the joint chiefs of staff, also flew to
Houston to join in last-minute discussions before the summit
meeting. A senior official in Washington said Mr. Rumsfeld
and General Myers were dispatched to brief the prince
personally on the American accomplishments in Afghanistan and
in the broader war on terrorism.
``The idea was, if he thought we were strong in Desert
Storm, we're 10 times as strong today,'' one official said.
``This was to give him some idea what Afghanistan
demonstrated about our capabilities.''
United States military commanders in the Persian Gulf
region have been building up command centers and equipment
depots in Qatar and Kuwait in recent months in anticipation
of a possible breach with Riyadh.
Saudi officials assert that American presidents since
Richard M. Nixon have been willing to speak more forcefully
to Israeli leaders than the current president when American
interests were at stake.
``If Bush freed Arafat and cleared Bethlehem, it would be a
big victory, show a stiffening of spine,'' the person close
to Abdullah said. ``But incremental steps are no longer valid
in these circumstances,'' meaning that Mr. Bush would have to
follow up with a major push to fulfill the longstanding
expectation of the Palestinians for statehood.
The mood in the Saudi camp was that of gloom and anxiety in
private even as Saudi and American officials went ahead with
preparations for a warm public encounter with the Bush
family.
On Friday, after his meeting with President Bush at his
home in Crawford, Abdullah is to take a long train ride to
College Station, the central Texas town where the former
President Bush will be host at his presidential library. On
Saturday, Saudi's Arabia's state oil company is gathering the
luminaries of the international energy industry to dine with
Abdullah and his party.
But the person close to the prince said that if the summit
talks went badly, Abdullah might not complete his stay in
Texas. Instead, he might return directly to Riyadh and call
for a summit meeting of the Organization of the Islamic
Conference, to report to its 44 leaders, who represent 1.2
billion Muslims.
``He wants to say, `I looked the president of the U.S. in
the eye and have to report that I failed,'' this person said.
His message to the Arabs will be, ``Take the responsibility
in your own hands, my conscience is clear, before history,
God, religion, country and friends.''
The person close to Abdullah pointed out that Saudi
Arabia's recent assurances that it would use its surplus oil-
producing capacity to blunt the effects of Saddam Hussein's
30-day suspension of Iraqi oil exports could quickly change.
That Saudi pledge ``was based on a certain set of
assumptions, but if you change the assumptions, all bets are
off,'' he said. ``We would no longer say what Saddam said was
an empty threat, because there come desperate times when you
give the unthinkable a chance.''
Abdullah is reported to be bitter over the White House's
assertion that the president is taking a balanced approach to
the Israeli-Palestinian conflict, and he wants to evaluate in
person whether Mr. Bush understands how his actions are being
perceived in the Arab world.
``This is not a mistake or a policy gaffe,'' the person
close to Abdullah said, referring to Mr. Bush's approach.
``He made a strategic, conscious decision to go with Sharon,
so your national interest is no longer our national interest;
now we don't have joint national interests. What it means is
that you go your way and we will go ours, economically,
militarily and politically--and the antiterror coalition
would collapse in the process.''
Mr. SPECTER. We are heading for a cataclysm. We are headed for a
cataclysmic, destructive process. When the oil industry in Iran was
nationalized in the early 1950s and the Anglo-Iranian Oil Company was
evicted by an act of the Iranian parliament, Great Britain decided
against the use of force and submitted the dispute to the International
Court, which decided it had no jurisdiction. But if we are starved from
oil, we should attempt to figure out some way to denationalize what the
OPEC countries have done, in taking the property of the seven sisters,
the oil companies--BP and others--without compensation, or without
adequate compensation.
But the demands and the blackmail and the extortion that is contained
on the front page of the New York Times today concerning what OPEC has
in mind for us should drive the U.S. toward independence from OPEC oil,
not only as a matter of self-respect, but as a matter of national
defense and continuing economic development in this country.
I thank the Chair and yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. LEVIN. How much time remains, Madam President?
The PRESIDING OFFICER. Four minutes 54 seconds.
Mr. LEVIN. I yield 4 minutes to Senator Bond.
Mr. BOND. Madam President, I rise in opposition to the amendment by
my colleague from Delaware, Mr. Carper. This amendment to the energy
bill would substantially raise Corporate Average Fuel Economy, CAFE,
standards with negative impacts on jobs, safety and the health of our
domestic economy.
On March 13, the Senate overwhelmingly passed a bipartisan amendment
I wrote with my colleague from Michigan, Senator Levin. The Levin-Bond
amendment mandates that the National Highway Traffic Safety
Administration, NHTSA, increase CAFE standards for cars and light
trucks to the maximum feasible levels. The Bond-Levin amendment
replaced a provision in the original energy bill which called for
significant increases in CAFE based only on a political number, not
science. The Senate wisely rejected that underlying provision as being
bad for American jobs, bad for highway safety and bad for consumer
choice.
Unfortunately, the Carper-Specter amendment on oil consumption would
result in CAFE increases similar to the Kerry provision. It must be
defeated. While Senator Carper's goal may be to reduce American
dependence on foreign oil, the effect of his amendment would be lost
factory jobs, more highway fatalities and reduced vehicle choice. Don't
be fooled by arguments that Senator Carper's proposal is not a CAFE
increase. The only way to meet the target under the amendment is for
NHTSA to increase fuel economy standards beyond the maximum feasible
level. And why would NHTSA only look at the CAFE program? Because it is
the only regulatory authority currently available to pursue the
mandated oil reductions under the Carper amendment!
The debate on the Levin-Bond amendment was only a few short weeks ago
but let me refresh your memories as to the details of this proposal
which passed on a 62-38 vote. Specifically, the Levin-Bond amendment
directs the Department of Transportation to increase fuel economy
standards for cars and light trucks based on consideration of a number
of factors including the desirability of reducing U.S. dependence on
foreign oil. I agree with the sponsor of the amendment that a goal of
our national energy policy should be a reduction in the amount of
imported oil. That is why I included language in my amendment last
month requiring NHTSA to include it in the regulatory process to set
new CAFE standards.
Other factors that NHTSA must consider include: technological
feasibility; economic practicability; the effect of other government
motor vehicle standards on fuel economy; the need to conserve energy;
the effect on motor vehicle safety; the effects of increased fuel
economy on air quality; the adverse effects of increased fuel economy
standards on the relative competitiveness of manufacturers; the effect
on U.S. employment; the cost and lead-time required for introduction of
new technologies; the potential for advanced
[[Page S3380]]
technology vehicles--such as hybrid and fuel cell vehicles--to
contribute to significant fuel usage savings; and the effect of near-
term expenditures required to meet increased fuel economy standards on
the resources available to develop advanced technology.
The Department of Transportation shall complete the rulemaking for
light trucks within 15 months of enactment and shall give automobile
manufacturers sufficient lead-time to comply with the new standards.
The rulemaking for passenger cars shall be initiated within 6 months of
enactment and shall be completed within 24 months. Each rulemaking
shall be multiyear for a period not to exceed 15 model years. If DOT
fails to act within the required time frame, it will be in order for
Congress to consider, under expedited procedures, legislation mandating
an increase in fuel economy standards, consistent with the
considerations set forth above.
These are the details of what the Senate adopted last month on a
bipartisan vote. It is a carefully balanced proposal with firm
deadlines and clear criteria. Unfortunately, the Carper amendment
before us today would undermine and distort the rulemaking
considerations by NHTSA. The Carper amendment returns to the notion of
setting an arbitrary target--in this case, to reduce the amount of oil
that can be consumed in our passenger car and light trucks in 2015. Not
only would this lead to CAFE increases similar to those proposed in the
original bill, but it would also force the Department of Transportation
to disregard the careful balancing of criteria in its rulemakings.
Indeed, DOT would have to impose a overriding element (saving a
specific amount of oil) on top of the considerations that the
rulemaking would otherwise try to balance.
If you get nothing else out of my statement today, please simply
remember that this proposed amendment will absolutely hurt consumers
who choose to drive minivans and SUVs. Because the Senate adopted a
measure excluding pick-up trucks from the CAFE increases, the burden on
the rest of that light truck category is increased dramatically. This
effect would be magnified with the adoption of the Carper-Specter
amendment today.
Oh, and has anyone besides me taken the time to ask NHTSA or the
Department of Transportation if this amendment is even feasible? I
talked to Secretary Mineta yesterday, and 2 days ago I spoke with Dr.
Runge, the NHTSA Administrator. Both indicated to me that it is not
feasible to guarantee specific fuel savings through CAFE standards.
There are simply too many variables and assumptions preventing any
guarantee of this sort.
Many of the Senators who supported the Bond-Levin amendment agreed
that the CAFE program is complex with many tradeoffs. That's why the
experts at NTHSA are best qualified to determine future CAFE levels
based on sound science and dependable data. Rather that CAFE increases
based on nothing more than a political number which would have negative
consequences for American jobs, highway safety and economic growth,
NHTSA can determine the appropriate standard after extensive review and
study.
Given the complexities of the issues, there are great advantages to
allowing a rulemaking process to resolve these issues rather than pre-
selecting an arbitrary outcome as the Carper oil consumption amendment
would do.
One of the most useful reports in the entire fuel economy debate is
the National Academy of Sciences study on the Effectiveness of CAFE. As
I did last month, let me share with you a key finding about the safety
and higher standards:
In summary, the majority of the committee finds that the
downsizing and weight reduction that occurred in the late
1980s most likely produced between 1,300 and 2,600 crash
fatalities and 13,000 and 26,000 serious injuries in 1993.
If an increase in fuel economy is effected by a system that
encourages either downweighting or the production and sale of
more small cars, some additional traffic fatalities would be
expected.
I believe that NAS report offers all of us in the Senate clear
guidance and expert, scientific analysis as we debate fuel economy
levels. I also point out that the NAS panel was extremely careful to
caution its readers that its fuel economy targets were not recommended
CAFE goals, because they did not weigh other considerations such as
employment, affordability, and safety.
I urge you to join me, along with numerous business and labor groups,
in opposing the Carper amendment which only complicates NHTSA's effort
to set appropriate CAFE standards under the mandates of the Bond-Levin
amendment.
If you want appropriate CAFE standards for cars and light trucks that
won't harm jobs, highway safety and vehicle choice, vote ``no'' on the
Carper amendment.
Madam President, we have been here before. We have had this debate.
We have done the bill. We got the T-shirt. Unfortunately, we are back
on the floor with this again.
Let me be clear: This amendment totally negates the careful direction
that we put in law in the Levin-Bond amendment that the National
Highway Transportation Safety Administration must use the best science
and technology available to increase standards to get more fuel-
efficient cars, vans, and trucks on the road.
Setting an arbitrary standard which comes out of somebody's hip
pocket does nothing for sound science. I have talked to NHTSA. They say
there is no way we can guarantee it. There would have to be a wild
estimate that would come out somewhere around where the original
proposal in the underlying bill was.
Do my colleagues know what we found out when we took a look at that?
We have the National Academy of Sciences saying the mandated fuel
efficiency previously done has resulted when we could not meet those
goals through technology in cars that weighed roughly 1,000 pounds
less. What happens? Thousands and thousands of people have been killed
in unsafe cars.
Despite what some of my friends on the other side of this issue say,
you cannot mandate by law that technology will come out of thin air. We
have asked the experts at NHTSA to use the National Academy of Sciences
and find out what technology is available. If we can make diesel out of
sludge in Pennsylvania, great, we will do it. That will be available to
the National Academy of Sciences.
We are changing in Missouri and Arkansas. We are using poultry waste
and turning it into power. Good. Let's use all those things we can, but
let us not go back on the carefully agreed upon construct that was
developed in the Levin-Bond amendment and overwhelmingly supported
which says: Yes, we need more fuel-efficient minivans and cars, and it
is going to be based on how much science can move forward, not how much
an arbitrary limitation--in terms of saving gallons which cannot be
controlled solely by fuel efficiency standards--would do.
There is technology. There will be increases, but it should not be
arbitrary. We do not want to deprive people of the opportunity to buy
the cars and minivans they need. We have talked in the past about
forcing people into purple-people eaters and golf carts. Frankly, that
is where you go when you have an unrealistically high CAFE standard.
We need to give people the choices of vehicles that fit their needs
that incorporate the new technology which is designed to save as much
fuel as possible. We need to keep the jobs in the United States. We
need to keep our economy going. We need not compromise safety, as would
be done by this amendment.
This amendment is not merely a refinement. This amendment is simply a
bad shot at setting a standard that is not based on science but is
based on an arbitrary figure that is infeasible, unworkable, destroys
consumer choice, costs us jobs in the United States, and risks more
lives on highways. I urge my colleagues not to support the Carper-
Specter amendment.
I reserve the remainder of my time and yield the floor.
Mr. CARPER. Madam President, how much time remains on either side?
The PRESIDING OFFICER. The sponsors have 1 minute 41 seconds
remaining.
Mr. CARPER. And the other side?
The PRESIDING OFFICER. The opposition has 48 seconds.
Mr. CARPER. I would like to have the opportunity to close, if I can.
Will the Senator be willing to accommodate me?
[[Page S3381]]
Mr. LEVIN. Madam President, I will be happy to accommodate my friend
from Delaware.
Madam President, let us be real clear. The Levin-Bond amendment had
positive incentives. We need tax incentives, joint research and
development money, Government purchasing, to a much larger extent than
the administration proposed. They are in the Levin-Bond amendment.
Also in the Levin-Bond amendment, which this would totally, in
effect, abrogate, is a regulatory process: 15 months for the Department
of Transportation to look at 12 different criteria in upping the CAFE
standard. This does not wait. This prejudges the outcome of that
process and says 1 million barrels a day. That is the mandate. This is
not some objective, this is a mandatory amount specifically in this
amendment, and it is not the way we should be legislating.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. CARPER. Madam President, in listening to the comments against the
Carper-Specter amendment, I am not sure they have fully read the Levin-
Bond amendment. I know they have not read the amendment we offer today.
Senator Specter and I both voted for the Levin-Bond amendment. It is a
good amendment. It has a number of positive features that make common
sense for our country.
In a moment or two, a budget point of order will be brought against
our amendment. None was brought against the Levin-Bond amendment. The
reason is because in the Carper-Specter amendment, we are looking for a
real reduction in oil consumption. We do not vitiate the Levin-Bond
amendment. The whole language stays in the bill.
The Levin-Bond amendment directs the Secretary of Transportation to
promulgate regulations, essentially CAFE regulations, in order to meet
high fuel efficiencies. We do not change that, but we do say in order
to reduce the consumption of oil for our cars, trucks, and vans by
2015, not only should the Secretary of Transportation have the
opportunity to consider changes in CAFE, but they should also consider
how it can reduce oil consumption through alternative fuels.
Alternative fuels could be biodiesel or soy diesel. It could include
ethanol, diesel created from coal waste in Pennsylvania, West Virginia,
Ohio, or other States.
Four things are different than when we voted a month ago on the
Levin-Bond amendment. The Middle East today is in turmoil. Venezuela is
in turmoil. We voted last week not to drill in ANWR, and we voted last
week to cut off oil imports entirely from Iraq. That is 1 million
barrels a day. Those things are different.
We need to put into this legislation meaningful objectives,
measurable objectives. This amendment would do that.
The PRESIDING OFFICER. All time has expired on this amendment. The
Senator from Michigan.
Mr. LEVIN. Madam President, is it in order at this time to move to
table the Carper amendment?
The PRESIDING OFFICER. The motion is in order, but the vote will
occur later.
Mr. LEVIN. I move to table the Carper amendment and ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The Senator from Washington.
Amendment No. 3326
Mrs. MURRAY. Madam President, I call up amendment No. 3326.
The PRESIDING OFFICER. The amendment is pending pursuant to the
order.
Mrs. MURRAY. Madam President, the amendment that is now before us is
a minor tax amendment that has been cosponsored by my colleague from
Washington, Senator Cantwell. I know debate on this bill is limited, so
I will be very brief.
The tax provisions in this bill provide important tax credits to
encourage the use of energy-efficient fuel cells that are 1 kilowatt or
greater. I note that the tax credit applies only to fuel cells of 1
kilowatt or greater because there are a number of important fuel cell
applications that are less than 1 kilowatt. It is important that we
support the development of fuel cells that are less than 1 kilowatt.
This amendment would expand the tax credit to include fuel cells that
are greater than a half a kilowatt, but would keep the per kilowatt
amount of the tax credit the same. Fuel cells that are between a half
and 1 kilowatt are used as emission-free power supplies for a number of
noteworthy applications, including cellular phone tower repeaters, home
dialysis machines, railroad signaling and switching equipment, and
recreational vehicle and camping powering equipment.
Fuel cells are an emerging technology that hold the promise of
helping to dramatically reduce world pollution. This promising
technology could eventually shift our dependence from fuels like
gasoline and diesel fuel to hydrogen. This important tax credit is
intended to provide an incentive for research, develop, design, and use
fuel cell technologies.
We need to encourage the use of all types of fuel cells because as we
gain more experience in the design and construction of fuel cells, it
will allow the technology to advance to the point where it is
competitive with other power sources.
Some may say this amendment is too costly, but the current market for
fuel cells is very small. We have estimated the cost of this amendment,
over the period of the tax credit, is less than $3 million. That is a
small price to pay for encouraging the development of this promising
new technology.
I urge my colleagues to support the development of a broader scope of
fuel cell technology by supporting this amendment.
I know Senator Cantwell from my State wanted to be present as well,
but she is unavailable at this time. I understand this amendment has
been accepted on both sides and would be willing to move quickly to a
vote.
The PRESIDING OFFICER. Who yields time?
Mr. BAUCUS. Madam President, I ask that the Senator from Washington
yield.
Mrs. MURRAY. I yield to the Senator from Montana.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. The Finance Committee has examined this amendment, and we
approve it. I think it is a good idea to encourage greater research
into fuel cell development. It is clearly a technology of the future.
The sooner we begin, the better. This is a very modest amendment, but
it is an important amendment, and I urge the Senate to adopt it.
I yield the floor.
Ms. CANTWELL. Madam President, I rise today as a cosponsor of this
amendment, and ask my colleagues to vote in its favor. I also want to
thank my friend, Senator Murray, for her work on this amendment.
I think there is broad bipartisan support for further development of
the fuel cell as one of the solutions to our Nation's 21st century
energy needs. The number of potential applications for the fuel cell is
almost limitless. In this regard, I was pleased to join with Senator
Dorgan in sponsoring an amendment to this energy bill that will require
the Secretary of Energy to develop a program to ensure 100,000 hydrogen
fuel-cell vehicles will be available for sale by 2010, and 2.5 million
vehicles will be available by 2020. Fuel cell vehicles are three times
more efficient than internal combustion engines, and they produce none
of the harmful emissions associated with fossil fuels.
The fuel cell vehicle is a concept that has recently been embraced by
the President, and I believe the broad bipartisan support for this
technology is already reflected in the tax credit included in this bill
for other, stationary fuel cell applications. Currently, this credit is
available for fuel cells of one kilowatt or more. What this amendment
would do is simply lower the floor to half a kilowatt, or 500 watts.
I believe this is an important change, because we should also extend
this credit to fuel cells that can be used in numerous business
applications. Fuel cells smaller than one kilowatt are already
providing power for remote cell phone towers, backup power for certain
medical technologies, and even used to light some types of railroad and
traffic
[[Page S3382]]
signals. Expanding the tax credit already in this bill will help
further demonstrate the commercial applicability of this technology.
This is an important component of any 21st century energy policy, and
I ask my colleagues to support this amendment.
The PRESIDING OFFICER. All time is yielded?
Mrs. MURRAY. All time is yielded back.
The PRESIDING OFFICER. The question is on agreeing to amendment No.
3326.
The amendment (No. 3326) was agreed to.
Mr. REID. Madam President, I move to reconsider the vote.
Mr. MURKOWSKI. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Madam President, we have been able to save a little bit of
time. I ask unanimous consent that we move down the amendment list and,
prior to the votathon starting, we allow Senator Graham of Florida to
bring up amendment No. 3370. He has agreed there would be 15 minutes
equally divided on this amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. This would be under the same rules as the prior unanimous
consent agreement: No seconds, and the vote would take place at the end
of the votes on other amendments.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Arizona.
Mr. KYL. As I understand it, it is now in order for me to bring up
amendment No. 3333. Is that correct?
The PRESIDING OFFICER. The Senator may consider amendments Nos. 3333
and 3332 concurrently.
Amendment No. 3333
Mr. KYL. Madam President, I will first discuss amendment No. 3333.
As a member of the Senate Finance and Energy Committees, I have had
the opportunity to witness first-hand the contradictions in Federal
energy and tax policy, specifically policy for the electricity
industry. One glaring example is the Energy Policy Act of 1992 and the
private use rules of the Internal Revenue Code, which pre-date the
Energy Policy Act and are applicable, as you know, to public power
utilities.
While our Federal energy policy since 1992 has been to open electric
markets to wholesale and even retail competition, our Tax Code contains
restrictions dating back to the Tax Reform Act of 1986 that make it
difficult, and in some cases impossible, for publicly-owned utilities
to comply with that deregulation policy.
In an attempt to remove the tax-code impediments to participation in
the newly restructured electric industry, the publicly-owned and
investor-owned utilities labored for several years to develop a package
of tax-law changes that would provide the necessary flexibility to
comply with the new energy policies being implemented by the Federal
and State governments while, at the same time, not fundamentally
changing the competitive balance between the private and public sectors
of the energy industry.
The fruit of those efforts was S. 972, introduced last year by
Senators Murkowski, Thompson, Breaux, and Jeffords. I joined as a
cosponsor of this bipartisan bill. In the House, H.R. 1459 was
introduced by Congressman J.D. Hayworth and was cosponsored by 16 other
members of the Ways and Means Committee. These bills were successful in
accommodating widely divergent views of public-power and investor-owned
utilities on a whole score of Federal tax issues. They represent years
of negotiations between the private and public sectors of the industry,
and as such, reflect a delicate, equitable balancing of interests.
There are four provisions in these companion bills that are designed
to help modernize our Tax Code for investor-owned utilities. I want to
address these provisions in light of the subsequent House-passed bill,
H.R. 4, and the bill marked out of the Senate Finance Committee that we
are now considering. Both of these latest incarnations represent a
significant departure from the original texts of H.R. 1459 and S. 972.
The first provision addresses the transmission tax problem that has
occurred as the result of FERC Order 2000. This order strongly
encourages, some would say ``directs,'' all transmission-owning
electric companies, subject to FERC jurisdiction, to join a regional
transmission organization, RTO. However, many proposals to form RTOs
would force these utilities to sell or spin off their transmission
assets to form independent transmission companies, Transcos, resulting
in a substantial Federal income-tax liability.
The solution to this problem, as stated in S. 972 and H.R. 1459, is
to amend section 1033 of the Tax Code to permit sales of transmission
assets on a tax-deferred basis if these sales occur in conformity with
Order 2000, and the proceeds of the sale are reinvested in certain
utility assets. Section 355(e) would also be amended to permit a non-
taxable spin-off of transmission assets even if they are combined with
neighboring transmission assets in conformity with Order 2000. Amending
the Federal Tax Code to allow formation of Transcos will further
diminish tax barriers to wholesale and retail competition by creating
truly independent transmission organizations.
H.R. 4 includes this provision, but unfortunately, the bill reported
out of the Senate Finance Committee does not. Before this bill is
signed by the President, I hope that the transmission-relief provision
will be included in the legislation.
The second provision concerns the equitable tax treatment of nuclear
decommissioning funds, and it is the only provision of the four that is
addressed in all of the aforementioned bills. Under current law, owners
of nuclear power plants must make mandatory contributions to external
trust funds to ensure that monies are available to decommission plants
when they are retired. Congress added section 468A to the tax code in
1984 to permit owners of nuclear plants to deduct a portion of the
contributions made to these external funds. Section 468A, when enacted,
was designed to operate within the existing structure of regulated
rates. The ability to deduct the contributions as permitted in section
468A is currently dependent on the local public service commission's
formal approval of the decommissioning expenses that an electric
utility can charge its customers. Both the House and the Finance
Committee have adopted changes to section 468A to adapt to the
structure of competitive markets while preserving the Section's
original intent. These changes will facilitate the transfer of nuclear
facilities to new owners in compliance with State and Federal
directives.
A third provision, included in S. 972, H.R., 1459, and H.R. 4, but
not in the Finance Committee bill, has to do with the reimbursement of
utilities for construction costs. Under current law, the costs of
building new transmission and distribution lines for new generating
plants, homes, commercial properties, and industrial sites, indeed, any
kind of property where construction costs are paid by a developer or
interconnecting party to a utility, are treated as contributions in aid
of construction--CIACs--and are considered as taxable income to the
utility. The result is that developers or interconnecting third parties
must reimburse a utility for construction costs plus a Federal tax of
over 30 percent. The proposed solution is to treat the reimbursement of
these costs as non-taxable, therefore facilitating new generation,
transmission, and distribution facilities by making it less costly to
provide these services. This would certainly help increase the supply
of power and improve electric reliability, and I am hopeful that
Congress will resolve this issue in conference.
The fourth provision concerns the public power utilities only. This
provision effectively relaxes the private use restrictions on existing
bonds if the issuing municipal or State utility elected to terminate
permanently its ability to issue tax-exempt debt to build new
generation facilities. Publicly-owned utilities, as entities of State
and local governments, have used tax-exempt debt to finance their
utility infrastructure in much the same way as cities finance schools,
roads, and bridges. Without this provision, public power systems cannot
issue stock to raise capital and have no alternative source of
financing for these large capital projects other than municipal bonds.
[[Page S3383]]
In exchange for the use of tax-exempt debt, public power systems are
required to adhere to a strict set of Federal tax rules and regulations
designed to limit the amount of power they can sell to private
entities. These rules limit a public power entity's ability to
negotiate contracts with exiting customers, to resell excess power
resulting from competition, ``lost load'', and to discourage the
opening of transmission lines that were financed with tax-exempt debt.
The truth is, the current private use laws and regulations are no
longer suitable for today's energy market. S. 972 and H.R. 1459
successfully incorporated what both the investor-owned and the
publicly-owned utilities agree would constitute an effective
modernization of the current Tax Code. The Finance Committee bill did
not meet that test, and H.R. 4, although it attempted to do so, failed
that test as well.
What happened was that H.R. 1459 sustained damage during the process
of House passage. The bill, as approved by the Committee on Ways and
Means--H.R. 2511, ``The Energy Policy Act of 2001''--and as
subsequently passed by the House--H.R. 4, ``Securing America's Future
Energy Act of 2001''--contains substantial, material modifications to
the original legislation that make it impossible to vote for. In fact,
certain modifications are even more restrictive than existing law and
IRS regulations. As a result, H.R. 4, overall, works absolutely counter
to national energy policy and the efficient operation of our country's
electric infrastructure. The various conditions set forth in the bill
will unfortunately discourage utilities from taking the necessary steps
to advance open access. Examples of the most problematic provisions:
Provisions that eliminate public power's ability to elect to forego
issuance of future tax-exempt bonds for generation from refunding
outstanding tax-exempt generation bonds, even though this can result in
savings to the utilities' customers and the U.S. Treasury. The bill
also prohibits these electing utilities from utilizing tax-exempt
financing to fund limited repairs and environmental improvements,
including those which may be government-mandated.
In the context of sales of energy, there are provisions that restrict
or eliminate public power's ability to use long-standing statutory and
regulatory exceptions to the private use rules, and provisions that
constrain new rules designed to enable public power to participate in a
deregulated environment. As an example, language in the bill
effectively precludes sales to rural electric cooperatives that were
one of the exceptions to the private use rules. The bill seems to
provide that the expansion of an existing generation facility can
result in loss of eligibility of the entire facility for permitted
exception treatment for long-term take or pay requirement contracts,
even if the cost of the expansion was financed with taxable debt or
equity. Furthermore, a public power company that owns no transmission
will qualify for the bill's clarifications to the private use rules
only if all transmission providers who provide transmission to that
municipal utility's customers provide open access to all of their
transmission facilities. These types of restrictions reduce or
eliminate many of the benefits intended in the bill.
There are new restrictions on tax exempt bonds for transmission
facilities that will prevent municipal utilities from using tax-exempt
bonds to finance new transmission facilities to connect new power
plants to their service areas. In addition, new restrictions in the
bill require that, to qualify for private use relief, public power
transmission facilities must be owned, directly connected to customers,
and necessary to serve those customers. Thus, the bill ignores the need
for investment in new transmission for maintenance of grid reliability,
the multiple legal forms of ownership and use of transmission
(including the different forms of RTOs and related organizations,
leasehold and operational arrangements), and the fundamental physics
involved in transmission network operation.
The new exception to the private use rules for sales of certain lost
load is revised so as to require proof that the load loss was
``attributable to open access'' in order to take advantage of this
exception, which was designed to ensure that our nation's energy
capacity is fully utilized.
I had hoped that these problems could have been resolved in the
Finance Committee by my colleagues and myself, but the revenue
constraints imposed on us have prevented us from rectifying these
problems. So the Finance Committee, rather than correcting the errors
as reported in the final version of H.R. 4, chose not to provide any
private use relief at all. Instead, we directed the Treasury to conduct
a study to examine the problem and propose a solution.
That said, I think more immediate assistance can and should be
provided by the Treasury Department.
During the Finance Committee's mark-up of the tax title of the
pending energy bill, I asked the Treasury Department to look into an
allocation proposal related to the private use restrictions of the
Internal Revenue Code. The proposal would provide a limited safe harbor
under which issuers of tax-exempt bonds could allocate private use
first and foremost to the portion of an output facility that is not
financed with outstanding tax-exempt bonds. For certain bonds, the
proposal would permit issuers to use reasonable methods to allocate
various funding sources among their assets.
The Treasury Department has examined this proposal and believes that
many of the issues raised therein could be addressed under current law.
Treasury officials say we could, under a different time frame than the
pending energy bill, issue regulations to that effect. In the meantime,
however, I would strongly support a provision in the tax title of the
bill incorporating this proposal.
In addition, various members of the Finance Committee, including the
chairman of the Energy and Natural Resources Committee, have asked that
the Treasury Department finalize various temporary output regulations
that relate to the use of tax-exempt financing by public power as
quickly as possible. I expect that the Treasury Department will make
finalizing these regulations a top priority and will endeavor to be
responsive to the many public comments that it has received. I look
forward to their findings.
I ask unanimous consent to have printed in the Record letters dated
March 8, 2002 and March 20, 2002.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, March 8, 2002.
Hon. Mark A. Weinberger,
Assistant Secretary, Tax Policy, Department of the Treasury,
Washington, DC.
Dear Mr. Secretary: I am following up with you directly on
certain items that were raised during the Senate Finance
Committee's consideration of the tax title to the pending
Senate energy bill. Although I continue to believe that a
broader, more expansive solution is necessary to more fully
address the tax issues presented by the restructuring of the
electric utility industry, I raised question at the mark-up
with respect to two narrower items.
The first item concerns our discussion during the mark-up
about an allocation proposal related to the private use
restrictions of the Internal Revenue Code. You will recall
that I asked if you would examine this proposal. The proposal
generally would provide a limited safe harbor under which
issuers of tax-exempt bonds could allocate private business
use first to the portion of an output facility that is not
financed with outstanding tax-exempt bonds. For certain
bonds, the proposal would permit issuers to use reasonable
methods to allocate various funding sources among their
assets.
The second item is the temporary output regulations. As you
know, the Finance Committee, as part of its report, asked
that the Treasury Department finalize the temporary and
proposed output regulation as quickly as possible, providing
flexibility in those regulations, to foster participation of
public power in a rapidly changing electric industry, without
adversely affecting public power investors and customers.
I look forward to a letter from the Treasury Department on
both of these issues. I am hopeful that you will find that
many of the issues raised by the allocation proposal could be
addressed under present law, and that, under a different
timeframe than the pending energy bill, you would issue
administrative guidance to that effect. It would be helpful,
in the meantime, however, if you would also indicate your
support for a provision in the tax title of the Senate bill
incorporating this proposal.
With respect to the temporary and proposed regulations, I
hope that you will be able to state in that letter that you
will make the finalization of these regulations a
[[Page S3384]]
top priority and will endeavor to use your regulatory
authority to the greatest extent possible to be responsive to
the numerous public comments you have received and to further
public power's participation in the restructuring of the
industry.
Naturally, I do not expect you to take any action that
would be inappropriate or contravene normal agency rules and
regulations. Thank you for your attention to this matter.
Sincerely,
Jon Kyl,
U.S. Senator.
____
Department of the Treasury,
Washington, DC, March 20, 2002.
Hon. Jon Kyl,
U.S. Senate,
Washington, DC.
Dear Senator Kyl: Thank you for your letter dated March 8,
2002 concerning certain items that were raised during the
Senate Finance Committee's consideration of the tax title to
the pending Senate energy bill. In particular, your letter
refers to two matters relating to electric facilities
financed with tax-exempt bonds: (1) temporary and proposed
Treasury regulations that define private use of output
facilities, including generation, transmission and
distribution facilities (temporary regulations; and (2) a
proposal that, in general, would allow issuers to allocate
private use first to the portion of an output facility that
is not financed with tax-exempt bonds.
Your letter requests that the Treasury Department finalize
the temporary regulations expeditiously, in a manner that
fosters participation by public power systems in electric
industry restructuring. We understand that providing
certainty in this area is necessary for the industry to
evolve. Thus, we are making the finalization of these
regulations a top priority. We intend to craft regulations
that take into account the current dynamic environment in the
electricity industry and the policy objective of facilitating
public power's participation in the restructuring of the
industry. In finalizing the regulations, we will, of course,
carefully consider all of the public comments we have
received.
Treasury is examining your proposal regarding the proper
allocation of private use of an output facility. We believe
that the issues raised by your proposal can be addressed
under present law. The proposal raises policy and
administrative questions that require careful consideration.
As we work to finalize the temporary regulations, we intend
to address the issues raised by your proposal. In doing so,
we must craft an administrable set of rules that are
consistent with the policy objective of a competitive
electricity market.
We hope this information is helpful to you. Please contact
me if you have any additional questions.
Sincerely,
Mark A. Weinberger,
Assistant Secretary
(Tax Policy).
Mr. KYL. Madam President, this first amendment is a very simple
amendment that would save a little over a billion dollars, according to
the calculations of the committee, but probably would save closer to $3
billion by striking that section of the Finance Committee portion of
the bill that is called the clear act provisions; more specifically,
those provisions that provide tax credits for Americans who purchase
four specific kinds of motor vehicles; specifically, a new qualified
alternative fuel motor vehicle, a new qualified fuel cell motor
vehicle, a new hybrid motor vehicle, and then it extends the present
law which provides a credit for electric vehicles.
I know this provision was inserted in the Finance Committee with the
best of intentions, but for the reason I will point out, I think this
has not been as carefully thought out and prepared as it should be.
Based on the experience of my home State of Arizona trying to do the
same thing, it would be premature for us to move forward with this
particular program at this time. I will illustrate specifically what is
involved and then get to the Arizona experience.
Under the bill pending before us, there would be provided a maximum
income tax credit of $40,000 per taxpayer for the purchase of these
kinds of motor vehicles, the fuel cells, the alternative fuel, and the
electric vehicles. The fact is that is for a very large vehicle; the
average for the usual passenger car type of vehicle would be in the
neighborhood of from $3,500 to $6,000.
The part I am particularly interested in is the alternative fuel
vehicle. According to the committee staff, the average tax credit in
this case would be about $5,000. It is determined by a very complicated
formula based upon the weight of the vehicle and some other factors,
but it is about a $5,000 subsidy per taxpayer buying this particular
kind of vehicle.
I am concerned about this because Arizona decided to try to do this
same thing, provide a taxpayer subsidy for the purchase of these
alternative fuel vehicles as a way of trying to clean up our
environment and to reduce reliance upon pure oil or gasoline. It
provided a subsidy, calculated a little bit differently, for the
purchase of these vehicles; in fact, for the retrofitting of the
alternative fuel system for a vehicle that had already been
manufactured.
I will read some headlines, or excerpts, from some of the Arizona
newspapers after this program was put into effect. I might begin by
saying this has been a fiasco in Arizona. The program has since been
terminated. Politicians' careers have been destroyed because of it.
They did not think it through carefully enough before they implemented
it. It was about to bankrupt the State, so the State decided to
terminate the program prematurely before it ended up costing them as
much as it was going to cost.
These are a few quotations:
The rebate program was originally projected to cost the
State about $3 million but has since spiraled to a dizzying
$483 million.
That is from the Arizona Daily Star.
Bad legislation, bad policy and no benefit to air quality.
That is a quotation from the Arizona Republic. That is October 30,
2000.
From that same editorial:
There has been no environmental study of the alternative-
fuel program by any State agency, just as no one ever
completed an incisive cost analysis of the legislation.
Another quotation from the Arizona Republic:
The law allowed thousands of people to buy expensive sport-
utility vehicles with the State picking up nearly half the
costs of the trucks and their bifuel conversions to either
propane or compressed natural gas.
One final quotation from the Arizona Daily Star says:
The Arizona Republic shows that 13 percent of the
applications for cleaner-running vehicles came from rural
areas without a pollution problem.
I ask unanimous consent that the remainder of these statements be
printed in the Record at this point.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Arizona's Experience With Alternative Fuels and Tax Credits.
``The law in question . . . provided tax incentives and
rebates for up to 50 percent of the cost of a car equipped to
burn alternative fuels. One of the startling loopholes in
this poorly written law was a failure to require any
accountability from consumers. Vehicles equipped to run on an
alternative fuel are also equipped with regular gas tanks. A
person could buy a new vehicle, have half of it paid for by
the state, and never use an ounce of the cleaner burning fuel
system.'' (AZ Daily Star, Editorial, Oct. 31, 2000)
``The rebate program was originally projects to cost the
state of about $3 million but has since spiraled to a
dizzying $483 million. (AZ Daily Star, Editorial, Oct. 30,
2000)
``Bad legislation, bad policy and no benefit to air
quality.'' (AZ Republic, Oct. 30, 2000)
``There has been no environmental study of the alternative-
fuel program by an state agency, just as no one ever
completed an incisive cost analysis of the legislation'' (AZ
Repub, Oct. 30)
``House Speaker Jeff Groscost boasted in Washington three
weeks after a new tax credit law took effect here that
Arizona auto dealers had at least 1,800 orders for
alternative fuel vehicles. . . . The state budget had been
built on the assumption that only about 300 people would buy
these cars and trucks and apply for the generous tax
credits.'' (AZ Daily Star, Oct. 30, 2000)
``The law allowed thousands of people to buy expensive
sport-utility vehicles with the state picking up nearly half
of the costs of the trucks and their bifuel conversions to
either propane or compressed natural gas.''(AZ Republic, Oct.
30
``Just 12 days after it was implemented, the state's
alternative-fuels rebate program has already blown its worst
cost estimate by 13 percent.''(AZ Repub, Nov. 2, 2000)
``The Arizona Republic shows that 13 percent of the
applications for cleaner-running vehicles came from rural
areas without a pollution problems.''(AZ Daily Star, Oct. 30,
2000)
``The Republic's analysis of the state's rebate program to
convert gasoline-powered cars and trucks to alternative fuel,
mainly propane and natural gas, is based on preliminary data
obtained from the Commerce Department, the administrator of
the program.
``The analysis included only the 5,512 applications in
which a rebate amount was contained in the computer database
obtained this week from the Commerce Department. The database
contained more than 12,000 applications for rebates and is
anticipated to grow to 22,000 when all the applications are
processed. Few rebates have been paid to the buyers of new
vehicles being converted to an alternative fuel.
[[Page S3385]]
``The alternative-fuel vehicle rebate legislation passed on
April 18 didn't contain funding limits. The estimated cost of
$3 million to $10 million for the program was unofficial.
Under the alternative-fuels program, the entire cost of
converting a vehicle to propane or compressed natural gas
would be paid by the state, along with 30 percent of the
purchase price of a new vehicle. For example, if a sport-
utility vehicle originally cost $25,000 plus $7,000 to
convert it to also run on compressed natural gas, its owner
would be reimbursed the entire conversion cost plus $9,600--
30 percent of the total vehicle cost of $32,000.'' (AZ Repub,
Nov 2, 2000).
``It sounded irresistible: buy a car that burns something
other than gasoline and the state pays up to 50 percent of
the cost; convert an existing gas-burner to alternative fuels
and the state pays 100 percent of the cost of the conversion.
No alternative fuel depot at home? Not to worry. The state
will cover that $7,000 as well, or up to $400,000 for a
commercial alternative-fuels depot. It is all courtesy of a
measure proposed and adopted in Arizona at the last minute of
a legislative session in April. Sound too good to be true?
More than 22,000 Arizonans did not think so, and since July
they have filed applications for an average of $21,966 each,
which would cost the state nearly $500 million from a program
that was supposed to cost less than $5 million a year. State
officials now say the eventual costs could reach $800 million
once applications being processed are counted.
``The premise of the program was simple. According to a
state-issued summary, the law allows the users of
alternative-fuel vehicles bought or converted after Jan. 1,
2000, to qualify for cash rebates or tax credits worth 30
percent of the vehicle's cost. Eligible vehicles can use an
alternative fuel solely or, as with `bifuel' vehicles, run on
either gasoline or some other fuel, such as natural gas. If a
$25,000 vehicle cost $7,000 to convert to propane, for
example, a program participant would be reimbursed the
conversion cost plus $9,600, 30 percent of the total $32,000
cost.
``Some found the legislation laughable from the beginning.
`The legislation had so many loopholes you could drive a Ford
Excursion through it,' said Sandy Bahr, outreach director for
the Phoenix-based Grand Canyon chapter of the Sierra Club.
Ms. Bahr said that, because the bill does not require owners
to actually use alternative fuels, many are using the bifuel-
vehicle incentives to take advantage of the program. `You've
got people putting little four-gallon propane tanks in sports
utility vehicles and getting 50 percent back on a $40,000
car.'' Ms. Bahr said. `Four gallons of propane goes less far
than four gallons of gasoline, so all they do is use their
regular engines because propane is hard to find. That
actually creates more emissions because they're driving a
bigger car than they would ordinarily buy.'
``Moreover, there are only six refueling stations for
alternative fuels in the Phoenix area, and none in the rest
of the state.'' (NY Times, Nov. 2, 2000)
Mr. KYL. What we can see is, like the system that is being proposed
by the Senate, there was no cost-benefit analysis. There was not a very
clear idea of what the ultimate costs were going to be, and the
experience with the program not only showed fraud or potential fraud
but runaway expenses.
Under the program that has come out of the committee, one of the
concerns is that nonprofits will be able to utilize credits by selling
them, which, of course, opens up the possibility that there could be a
secondary market or abuses could occur in selling these large tax
credits.
There has been very little evaluation of whether or not the vehicles
could be altered after their purchase, after the tax credit has been
received, so that they could run in fact on gasoline or diesel. There
is no data whatsoever to show that we would have a better environment
as a result. In fact, there has been no cost-benefit analysis.
Pursuant to an amendment I offered in the committee, there will be a
study after the fact that will tell us how successful the program has
been, but there has been no study in advance of that. In fact, the
committee report language does not cite a single study or report
justifying the credits under the reason for change.
The report says, and I am quoting:
The committee believes further investments in alternative
fuel and advanced technology vehicles are necessary to
transform automotive transportation in the United States to
be cleaner, more efficient and less reliant on petroleum
fuels.
The committee language also prognosticates, and I am quoting again:
That it expects hybrid motor vehicles and dedicated
alternative fuel vehicles are the near-term technological
advancement that will replace gasoline- and diesel-burning
engines with alternative powered engines.
The revenue estimates are $1.1 billion, but since many of the credits
expire after 2006, I think it vastly understates the true cost. I
suspect this will be extended before they expire, so that the cost is
more likely going to be maybe $3 billion or so over a 10-year period.
Obviously, the automobile industry is the primary beneficiary of these
credits since they can simply increase the cost of the vehicles, and
then the credits obviously go to the taxpayer to offset that increase
in cost.
I make this point--and I don't expect members of the committee are
going to agree with this proposition--I wish we could go a little
slower. I advised the committee of the experience in Arizona. To the
credit of the committee and the chairman of the committee, his staff
was very careful to talk to people in Arizona and do their best to
remove the kinds of problems we experienced in Arizona. I commend the
chairman of the Finance Committee for that effort. It was a useful
effort.
I am concerned we are going to find a lot of problems in this program
after it begins. It will be too late then. We will find it will cost a
whole lot more than we predicted and the benefits will not pan out in
terms of cost-benefit analysis.
I reserve the remainder of my time on this amendment. If anyone
wishes to respond, I will briefly discuss the other amendment.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Madam President, on the face of it, everyone would agree,
this is to give a stimulus, a boost, to alternative fuels, alternative
fuel vehicles, and alternative fuel vehicle infrastructure. About two-
thirds of the petroleum we consume today in America is consumed in the
transportation sector--cars, trucks, railroads, and so forth.
Clearly, we are trying as Americans to wean ourselves a bit from our
overreliance on OPEC. That is the whole point of this energy bill. We
will not make ourselves completely self-reliant. No one claims that. At
least on the margin, we are making a step or two difference to become
more energy self-sufficient. Clearly, helping alternative fuel
development and alternative fuel vehicle development, alternative fuel
vehicle infrastructure development--pumps and so forth--will help.
It is also important we not act precipitously, that we act
measurably, thoughtfully. Through the very able assistance of my good
friend from Arizona, we have worked closely with the Arizona Department
of Transportation. Unfortunately, in the State of Arizona, which
attempted something similar a year or two ago, there were people who
took advantage of the situation to such a degree that it became a bit
of an outrage. We don't want to repeat those mistakes. I don't think
anyone in this body wants to repeat those mistakes.
As the Senator said, our staff spent quite a bit of time talking with
the Arizona Department over what problems and recommendations they have
so the problems do not recur in the provisions enacted here. As a
consequence of those discussions, we have dramatically tightened up
this bill regarding credits. They cannot be used in the aftermarket by
people who alter vehicles. They cannot be used for vehicles that use
conventional fuels. This credit is only available to vehicles dedicated
to alternative fuels. We made that clear.
I add the primary sponsors of this amendment are Senators who worked
hard: Senators Hatch, Rockefeller, Kerry, and Snowe. They are the
primary sponsors of this provision. It has the support of both the auto
manufacturing industry and the conservation community, the
Environmental Defense Fund, the Union of Concerned Scientists support
this amendment, NRDC, Ford Motor Company, Lance Auto Manufacturing, and
others too numerous to name.
The main point is, we are trying to wean ourselves from OPEC. This
provision is a step, a start. It helps. We have tailored the amendment
based upon the experience in Arizona to help assure this works. It will
probably not work as well as many think, and it may work better than
some Members think, but we are undertaking a good effort to make this
right. I appreciate the concerns of my friend from Arizona. They are
legitimate concerns and concerns we all have. We have attempted to
address these concerns. I thank the good State of Arizona for helping
address these matters.
I urge not adopting the amendment that strikes, but to work together
to
[[Page S3386]]
see what works and what doesn't work and change or modify or delete as
the case in Arizona. I thank my good friend for helping draw out what
is going on in this debate.
Mr. HATCH. Madam President, I rise today in opposition to the
amendment of the Senator from Arizona. As I understand it, this
amendment would strike the portions of the energy tax provisions that
would provide tax incentives for the purchase of alternative fuels and
advanced technology vehicles such as hybrid electric and fuel cell
automobiles.
The provisions that this amendment would strike are almost identical
to the provisions in the bipartisan CLEAR ACT, which stands for Clean
Efficient Automobiles Resulting from Advanced Car Technology, which I
introduced last year along with Senators Jeffords, Rockefeller, Chafee,
Kerry, Collins, Gordon Smith, Crapo, and Lieberman.
The CLEAR ACT is the product of a carefully crafted, delicately
balanced, and politically unusual alliance between auto manufacturers,
truck engine manufacturers, environmental groups, fuel suppliers, and
other stakeholders. I might add that these provisions, which provide
strong incentives for energy conservation, are an integral part of the
President's energy plan. The CLEAR ACT provisions create a fair and
balanced playing field for all the advanced technologies and
alternative fuel vehicles that offer the promise of both clean air and
less dependency on foreign fuel.
Transportation accounts for about two-thirds of the oil consumption
in the United States, and we are 97 percent dependent on oil for our
transportation needs. When we consider the role transportation plays in
our economy and our way of life, it is hard to believe that we rely on
foreign sources for more than one-half of our oil supply. If our nation
is going to have a strategy for energy security, that strategy must
begin with transportation fuels. The Kyl amendment would take away our
best opportunity to provide a balanced approach to achieve this
strategy.
Advances in alternative fuels and new vehicle technologies have been
significant in recent years. However, three basic obstacles stand in
the way of a broad shift toward their adoption. These are the higher
cost of the vehicles, the higher cost of alternative fuels, and the
lack of an infrastructure of alternative fueling stations.
The CLEAR ACT provisions that this amendment would strike would lower
the barriers that stand in the way of widespread consumer acceptance of
these advanced technology and alternative fuel vehicles by providing
tax credits to consumers who purchase hybrid electric, fuel cell,
battery electric, and dedicated alternative fuel vehicles. They would
also provide incentives for the purchase of alternative fuels and the
development of an alternative fuel infrastructure.
Without imposing any new mandates, the CLEAR ACT provisions in this
energy bill focus on the very best emerging technologies to help our
citizens to enjoy the health benefits of cleaner air sooner, to help
our communities to enjoy the economic benefits of attaining clean air
standards sooner, and to help us reduce our consumption of foreign oil
sooner than would otherwise be possible.
With the clear benefits of these provisions to less dependency on
foreign oil and to cleaner air, which I might add come at a very
reasonable cost in terms of revenue loss to the Treasury, it is hard to
see why anyone in this body would want to strike them. Moreover, the
tax credits the CLEAR ACT offers are performance based, which is to say
that they are based on the principle that every dollar of tax
expenditure should produce substantive air quality and energy security
benefits. The greater the benefits a particular vehicle achieves, the
larger the tax incentive for purchasing it.
While I do not want to assume I know the motivations of the Senator
from Arizona for offering this amendment, part of it might be based on
an unfortunate experience in his home state. Not long ago, a well-
intentioned program to promote alternative fuel vehicles by the Arizona
legislature experienced extreme cost overruns and failed to provide the
promised energy and environmental benefits. I want to assure the
members of this body that we have studied the Arizona experience, we
have identified the inherent weaknesses of that model, and we have been
careful to avoid each one of them in this legislation.
With the CLEAR ACT provisions, until a new advanced vehicle is
purchased, until new infrastructure has been installed, or until
alternative fuel is placed in the tank of a dedicated alternative fuel
vehicle, there will be no cost to the Treasury. And when a cost is
incurred, it will be a small cost relative to the resulting
environmental benefits and energy savings.
To me it is inconceivable that this Senate would pass an energy
policy bill without addressing the issue of how to increase the
public's adoption of alternative fuel and advanced technology vehicles.
Although gasoline vehicles are 90 percent cleaner today than thirty
years ago, the significant increase in the total number of vehicles on
the road and the miles traveled per year by each vehicle means that
little progress has been made in reducing the contribution of motor
vehicle emissions to air pollution.
Similarly, despite improvements in fuel economy compared to thirty
years ago, more petroleum than ever is used in motor vehicles and U.S.
dependence on imported oil is at a record high and increasing.
Alternative fuel vehicles and advanced technology vehicles, such as
hybrids and fuel cells, significantly reduce the use of gasoline and
diesel and have dramatically reduced emissions. Each dedicated natural
gas vehicle displaces 100 percent of the gasoline or diesel that
otherwise would be used in that vehicle.
Conventional gasoline and diesel motor vehicle technology has come
about as far as it can in terms of fuel economy and emissions. The
further gains that are needed to allow the U.S. to achieve energy
security and clean air require nonpetroleum vehicles and hybrid and
fuel cell vehicles. The nation simply cannot achieve its goals in these
areas with these conventional vehicles. Striking these provisions would
be a big mistake, and I urge my colleagues to vote against the Kyl
amendment.
Mr. GRASSLEY. Madam President, I oppose Senator Kyl's amendment to
strike the wind energy tax credit extension provisions in this bill. It
is unwise from an energy policy standpoint and would be harmful to
American agriculture. Therefore, I oppose it vigorously.
Mr. FEINGOLD. Madam President, I supported the amendment offered by
the junior Senator from Arizona, Mr. Kyl. I did so even though I
support the underlying policy that amendment sought to strike from the
bill, namely the alternative fuels vehicle tax credit. I regret,
though, that this provision, along with many other tax provisions in
the bill, were included without adequate offsetting savings. The result
is a measure that will make our budget deficits even larger.
We must return to the fiscally responsible budgeting that was so
beneficial to the economy, and which brought our budget, however
briefly, to balance, and even a slight surplus. If Congress does not
pay for additional tax cuts, we will only make matters worse.
Mr. KYL. How much time remains for me?
The PRESIDING OFFICER. The Senator has 2 minutes.
Amendment No. 3332
Mr. KYL. It is my intention to use the remainder of the time on the
second amendment, numbered 3332, after which I presume a Member on the
other side will move to table amendment No. 3333, to get the yeas and
nays, and I would be happy to accept a voice vote on 3332, which I will
describe at this point.
This is an amendment that eliminates the credits for wind energy.
According to the industry itself, they are now competitive and they no
longer need the subsidy we provide to them. As a matter of fact,
quoting from their own material from the American Wind Energy
Association: The state-of-the-art wind power plants are generating
electricity at costs as low as 4 cents per kilowatt hour, a price
competitive with many conventional energy technologies. This is without
the production tax credit that would be extended under this
legislation.
The AWEA further projects by the year 2005 the costs will be in the
area
[[Page S3387]]
of 2.5 to 3.5 cents per kilowatt hour, just about exactly the range of
the cost of production by coal or nuclear or other generation, or
natural gas. This is a tax credit that is simply no longer needed.
Since the Department of Energy Information Administration has
analyzed that the RPS mandate in this legislation will only be
fulfilled through additional wind energy capacity, we are just
basically giving a huge gift to the producers of wind energy that would
have essentially a monopoly on this new renewable power we are
mandating.
I will not name the particular companies, but the companies that are
going to benefit from this are some of the largest production companies
in the country, all good companies, but certainly companies that are
multibillion-dollar companies and hardly need this particular kind of a
credit.
I ask unanimous consent to have printed in the Record brochures from
the industry itself.
There being no objection, the material was ordered to be printed in
the Record, as follows:
What Are the Factors in the Cost of Electricity From Wind Turbines?
The cost of electricity from utility-scale wind systems has
dropped by more than 80% over the last 20 years.
In the early 1980's, when the first utility-scale wind
turbines were installed, wind-generated electricity cost as
much as 30 cents per kilowatt-hour. Now, state-of-the-art
wind power plants are generating electricity at costs as low
as 4 cents/kWh, a price that is competitive with many
conventional energy technologies. Costs are continuing to
decline as more and larger plants are built and advanced
technology is introduced.
Aside from actual cost, wind energy offers other economic
benefits which make it even more competitive in the long
term:
Greater fuel diversity and less dependence on fossil fuels,
which are often subject to rapid price fluctuations and
supply problems. This is a significant issue around the world
today, with many countries rushing to install gas-fired
electric generating capacity because of its low capital cost.
As world gas demand increases, the prospect of supply
interruptions and fluctuations will grow, making further
reliance on it unwise and increasing the value of diversity.
Greatly reduced environmental impacts per unit of energy
produced, compared with conventional power plants.
Environmental costs are becoming an increasingly important
factor in utility resource planning decisions.
More jobs per unit of energy produced than other forms of
energy.
____
New Corporate Players Could Power Stronger Growth in Wind Energy
As the U.S. Senate continues consideration of national
energy legislation, the American wind energy industry is
poised to continue building on 2001--its most successful year
in history--and is the focus of growing interest by major
players in the energy field, according to the American Wind
Energy Association (AWEA).
The industry is receiving a boost not only from the recent
two-year extension of the federal wind energy production tax
credit (PTC), which was signed into law March 9, but from a
series of announcements by utilities, oil companies, and
other firms that they see wind energy in their future. Wind
energy supporters are hopeful that with a further three-year
extension of the PTC included in the Senate energy bill, the
industry will at last have a stable financial environment and
the serious corporate participation needed to put it on the
road to steady long-term growth.
Among recent industry developments, AWEA said, are the
following:
American Electric Power (AEP), one of the nation's largest
utilities, spent $175 million in late December to buy the
160-megawatt (MW) Indian Mesa wind plant in West Texas.
Previously, AEP had invested $160 million to build its own
150-MW wind farm at Trent Mesa, also in West Texas. Dwayne L.
Hart, senior vice president of business development for AEP
subsidiary AEP Energy Services, commented, ``The addition of
Indian Mesa furthers our goal of enhancing the renewable
portion of our overall generation portfolio.'' Ward Marshall
of AEP Energy Services is President-Elect of AWEA.
BP and ChevronTexaco announced in mid-January that they
will build and operate a 22.5-MW wind plant at their jointly-
owned Nerefco oil refinery near Rotterdam in The Netherlands.
Bob Dudley, BP's group vice president, Gas and Power and
Renewables, said, ``This project is an excellent opportunity
in line with BP's strategy to add value to our business,
lower emissions, and demonstrate our commitment to clean
energy,'' while James Houck, ChrevronTexaco President Power
and Gasification, said, ``Wind power is an increasingly
viable source of power generation and this project fits with
our objectives to manage carbon emissions and invest in new
technologies that minimize environmental impact.''
Entergy, a major utility based in New Orleans, La.,
purchased a majority interest in the 80-MW Top of Iowa wind
farm from Houston, Tex.-based Zilkha Renewable Energy and its
partner, Midwest Renewable Energy Corp. Geoff Roberts,
president and CEO of Entergy's independent power development
business unit, commented on the transaction, ``This project
provides Entergy with an attractive entry vehicle into
the wind energy business.''
FPL Energy, a subsidiary of FPL Corp., which also owns the
large utility Florida Power & Light, announced January 7 that
it had added 844 MW of wind power to its power generation
portfolio during 2001. The company, America's largest wind
plant operator, now operates 1,830 MW of wind, of which it
owns 1,439 MW. Dean Gosselin, FPL Energy vice president of
wind development, said, ``We know there are many more
opportunities for wind energy throughout the country and
great support in many regions for new wind power
facilities.''
GE Power Systems said in late February that it has signed
an agreement to purchase the manufacturing capability of
Enron Wind Corp., the largest U.S.-based utility-scale wind
turbine manufacturer. ``The acquisition of Enron Wind
represents GE Power Systems'' initial investment into
renewable wind power, one of the fastest growing energy
sectors,'' said John Rice, president and CEO of GE Power
Systems. GE Power Systems said it expects the wind industry
to grow at an annual rate of about 20%, with principal
markets in Europe, the U.S., and Latin America.
Pacificorp Power Marketing (PPM), affiliated with
Pacificorp, a large utility based in Portland, Ore., is
playing a major role in building the market for wind in the
Northwest. The company is purchasing and marketing power from
three wind plants in the West, including the 261-MW Stateline
Project, and has said it plans to add substantial wind
capacity to its portfolio over the next few years. ``This is
wind power on a grand scale,'' said PPM president Terry
Hudgens of Stateline, adding, ``Stateline is a watershed
event for our company and for the region. With Stateline,
wind is no longer just a small niche in our supply, but has
taken a position as a very real and significant part of the
new electric resources the region badly needs.''
Shell Subsidiary Shell WindEnergy, Inc., announced in late
January that it had purchased an 80-MW wind plant near
Amarillo, Tex. ``We are delighted to have moved so quickly in
making a second major investment in the U.S. wind power
market,'' said David Jones, Director of Shell WindEnergy,
Inc. ``Wind energy is not only the fastest-growing area of
power generation worldwide but it is also one of the cleanest
sources of energy.'' Shell WindEnergy also owns a 50-MW wind
project in Wyoming, and Shell is developing or operating more
than 1,000 MW of wind in the U.S. and Europe.
TXU, a large utility based in Dallas, Tex., announced in
early January that it plans to purchase a 40% equity stake in
two wind farms under construction in central Spain. TXU is
already one of the largest U.S. purchasers of wind-generated
electricity, buying the output of several Texas wind plants.
Utilicorp United, based in Kansas City, Mo., commissioned a
110-MW wind plant near Montezuma, Kans., in December.
Commented Keith Stamm, president and chief operating officer
of UtiliCorp's Global Networks Group, ``This wind farm
demonstrates UtiliCorp's commitment to providing its
customers with renewable and reliable energy supplies . . .
While this is the first major wind power project in Kansas,
the state has the potential to be a U.S. leader in wind
energy.''
``This string of announcements by major energy corporations
is rapidly changing the face of the wind energy business,''
said Randall Swisher, AWEA executive director. ``Coming on
the heels of the industry's most successful year, in the U.S.
and worldwide, it signals that wind energy is moving into the
big leagues. AWEA estimates that with continued government
encouragement and broad utility support, wind energy will
provide at least six percent of the nation's electricity by
2020.
____
FPL Energy Places Order for 175 Vestas Wind Turbines, With Option for
650 Additional Units
FPL Energy, LLC, the independent power production
subsidiary of FPL Group Inc. (NYSE: FPL), today announced an
agreement with Vestas Wind Systems A/S of Denmark for
delivery of approximately 175 wind turbines and an option for
an additional 650 turbines.
Delivery of the 660-kilowatt turbines will begin in 2002
and will support the planned expansion of wind-driven
electricity generation projects underway at FPL Energy.
``Wind projects will be a major element of our expansion
activity in 2002 and 2003,'' said Ron Green, president of FPL
Energy. ``We expect to add 1,000 to 2,000 megawatts of wind
power to our portfolio by the end of next year.''
FPL Energy is the largest generator of electricity form
wind turbines in the United States. It currently owns and
operates wind farms in eight states with more than 1,400
megawatts of capacity.
``As the leading U.S. developer of wind power, it is
important for FPL Energy to secure a reliable source of wind
turbines for use in projects we are developing today and into
the future,'' said Mr. Green.
Approximately 80 percent of FPL Energy's electric
generation is fueled by renewable
[[Page S3388]]
sources or clean-burning natural gas. Wind power represents
nearly 28 percent of the company's 5,063-megawatt portfolio.
Last month, Congress extended the production tax credit for
operating wind projects. Projects that become operational by
the end of 2003 will receive a 1.7-cent per kilowatt-hour tax
credit, adjusted for inflation, for a ten-year period.
``We continued our wind project development activities
during the first part of this year, and the extension of the
production tax credit in March gave us the green light to
quickly advance these important projects to construction.
``Wind power is an important component of our nation's move
toward energy independence as we harness our natural
resources for production of electricity. It is a clean,
renewable source of energy that can be sited, built and in
operation much more rapidly than conventional fossil fuel
facilities,'' Mr. Green said.
``Typically, wind farms can be constructed in six to nine
months, and they are profitable from the first day of
operation,'' said Mr. Green. Last year, FPL Energy built
nearly 850 megawatts of wind-powered generating facilities,
approximately half of what was built in the United States.
``A large percentage of our current wind facilities are
equipped with Vestas turbines,'' said Mr. Green. ``We are
pleased to move forward with such a reliable supplier for our
future expansion.''
FPL Energy is the nation's leader in wind energy
generation, with 24 wind farms in Iowa, Kansas, Texas,
Minnesota, Wisconsin, Washington, Oregon and California. The
company is a leading independent producer of clean energy
from natural gas, wind, solar and hydroelectric. Its
portfolio includes 73 facilities in operation, under
construction, or in advanced stages of development in 17
states.
FPL Group, with annual revenues of more than $8 billion, is
nationally known as a high quality, efficient, and customer-
driven organization focused on energy-related products and
services. With a growing presence in more than 17 states, it
is widely recognized as one of the country's premier power
companies. Its principal subsidiary, Florida Power & Light
Company, serves approximately 4 million customer accounts in
Florida. FPL Energy, LLC, an FPL Group energy-generating
subsidiary, is a leader in producing electricity from clean
and renewable fuels. FPL FiberNet, LLC is a leading provider
of fiber-optic networks in Florida. Additional information is
available on the Internet at www.fplgroup.com, www.fpl.com,
www.fplenergy.com and www.fplfibernet.com.
Mr. KYL. I close by advising my colleagues I would be pleased to have
a vote by voice.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. BINGAMAN. I think we are ready to vote on amendment No. 3332.
The PRESIDING OFFICER. The question is on agreeing to the amendment
of the Senator from Arizona.
The amendment (No. 3332) was rejected.
Mr. REID. I move to reconsider the vote.
Mr. BINGAMAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. BINGAMAN. I move to table the other Kyl amendment, numbered 3333,
and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
Amendment No. 3370
Mr. REID. Madam President, it is my understanding the next amendment
in order by virtue of the unanimous consent agreement is Graham
amendment No. 3370.
The PRESIDING OFFICER. The Senator is correct.
Mr. REID. I ask unanimous consent the 15 minutes granted on this
amendment start running.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. I suggest the absence of a quorum with the time counting
against the Graham amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Madam President, I ask unanimous consent the order for the
quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. The Senator from Florida is on the floor. I ask unanimous
consent the amendment now pending be temporarily laid aside for
purposes of calling up this amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 3346
Mr. REID. I call up amendment No. 3346.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Nevada [Mr. Reid], for Mr. Kohl, proposes
an amendment numbered 3346.
Mr. REID. I ask unanimous consent the reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To modify the credit for the production of electricity to
include municipal biosolids and recycled sludge)
In Division H, on page 17, between lines 8 and 9, insert
the following:
SEC. ____. CREDIT FOR ELECTRICITY PRODUCED FROM MUNICIPAL
BIOSOLIDS AND RECYCLED SLUDGE.
(a) In General.--Section 45(c)(1) (defining qualified
energy resources), as amended by this Act, is amended by
striking ``and'' at the end of subparagraph (G), by striking
the period at the end of subparagraph (H), and by adding at
the end the following new subparagraphs:
``(I) municipal biosolids, and
``(J) recycled sludge.''.
(b) Qualified Facilities.--Section 45(c)(3) (relating to
qualified facility), as amended by this Act, is amended by
adding at the end the following new subparagraphs:
``(H) Municipal biosolids facility.--In the case of a
facility using municipal biosolids to produce electricity,
the term `qualified facility' means any facility owned by the
taxpayer which is originally placed in service after December
31, 2001, and before January 1, 2007.
``(I) Recycled sludge facility.--
``(i) In general.--In the case of a facility using recycled
sludge to produce electricity, the term `qualified facility'
means any facility owned by the taxpayer which is originally
placed in service before January 1, 2007.
``(ii) Special rule.--In the case of a qualified facility
described in clause (i), the 10-year period referred to in
subsection (a) shall be treated as beginning no earlier than
the date of the enactment of this subparagraph.''.
(c) Definitions.--Section 45(c), as amended by this Act, is
amended by redesignating paragraph (9) as paragraph (11) and
by inserting after paragraph (8) the following new
paragraphs:
``(9) Municipal biosolids.--The term `municipal biosolids'
means the residue or solids removed by a municipal wastewater
treatment facility.
``(10) Recycled sludge.--
``(A) In general.--The term `recycled sludge' means the
recycled residue byproduct created in the treatment of
commercial, industrial, municipal, or navigational
wastewater.
``(B) Recycled.--The term `recycled' means the processing
of residue into a marketable product, but does not include
incineration for the purpose of volume reduction.''.
(d) Exemption From Credit Reduction.--The last sentence of
section 45(b)(3), as added by this Act, is amended by
inserting ``, (c)(3)(H), or (c)(3)(I)'' after
``(c)(3)(B)(i)(II)''.
(e) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
Amendment No. 3370
The PRESIDING OFFICER. Who yields time?
The Senator from Florida.
Mr. GRAHAM. Madam President, what is the parliamentary situation at
this time?
The PRESIDING OFFICER. Amendment No. 3370 is the business before the
Senate. The Senator's amendment is before the Senate.
Mr. GRAHAM. Madam President, I would like to take up first amendment
No. 3372.
Mr. REID. Madam President, if I could reserve my right to object, the
Senator has two amendments. We do not care which one he brings up, but
he cannot bring up both.
Mr. GRAHAM. I would like to bring up No. 3372.
Mr. REID. I ask the unanimous consent agreement that is now standing
be modified.
The PRESIDING OFFICER. Is there objection?
Mr. NICKLES. Madam President, parliamentary inquiry: Is that
amendment germane postcloture?
The PRESIDING OFFICER. No, it is not.
Mr. NICKLES. Is the amendment out of order?
The PRESIDING OFFICER. A point of order would lie at the appropriate
time.
Mr. NICKLES. Madam President, for the information of my colleague, I
am happy for him to discuss it, but I will make a point of order at the
appropriate time.
[[Page S3389]]
Mr. GRAHAM. Madam President, I will object to the unanimous consent
request by the Senator from Nevada, and we will proceed on the
amendment that was the original subject of the unanimous consent.
The PRESIDING OFFICER. Objection has been heard.
The Senator from Florida.
Mr. GRAHAM. Madam President, in February the Finance Committee
reported out legislation which has become the tax provisions for the
energy bill. This set of provisions includes a number of incentives
provided to traditional energy production, conservation, and the use of
alternative fuels.
In reporting this set of proposals, the Finance Committee made the
decision to defer the inclusion of an appropriate offset for the cost
of these tax incentives until the bill was considered on the floor. We
of course are now at that point.
The committee did not make the decision that such an offset was
unnecessary. In fact, the budget which was adopted by the Congress last
year for the 1st session of the 107th Congress, as well as the one
which is currently under consideration by the Senate Budget Committee,
requires that this legislation be budget neutral.
The amendment I had hoped to offer, and to which our friend and
colleague from Oklahoma has just indicated his intent to offer a point
of order that it was not germane, and therefore was not available,
would have met that obligation. It would have said, simply, that before
these tax provisions went into effect either through spending or
through revenue from other sources, it would be our obligation to make
this a budget-neutral program.
I am personally very disappointed that we are proceeding with these
tax provisions, which as of now have a 10-year cost estimate of
approximately $13 billion, without any effort to offset.
I strike the word ``any.'' We did, in fact, adopt a package of
proposals earlier today which were stated to be a partial offset. But
when you look at the cumulative number of those provisions, the total
amount of additional revenue over 10 years would be $37 million, as
against $13 billion of revenue loss in this program.
The President of the United States outlined very clearly in his State
of the Union Message that there were three priorities for this Nation,
all of which have strong bipartisan support. These three priorities
were what he said could be considered without the fiscal discipline
requiring that there be a method of paying for these. Those three were:
Winning the war on terrorism, defending our homeland, and reviving our
economy.
Congress has in fact followed the President's direction. In March we
passed the Job Creation Worker Assistance Act, which included several
tax incentives designed to stimulate the economy. That legislation was
enacted without an offset. In a few weeks, Congress is likely to
consider a supplemental appropriation to provide $37 billion for the
war in Afghanistan, and that will be without an offset.
But wherever we go outside these three areas of the war, homeland
security, or stimulating the economy, the effect of not providing an
offset is to ask our children and grandchildren, by the reduction in
the Social Security trust fund, upon which their security in retirement
depends, that trust fund now becomes the means by which we pay for our
current appetite.
Therefore, the amendment that is before us is an amendment which will
strike one of the provisions in the tax measure. It is division H,
relating to energy tax incentives, striking section 2308.
Frankly, that is an arbitrary selection and a strike. In a world in
which we were prepared to pay for these various energy tax measures, I
might well be prepared to support them. But in a world in which we are
saying it is not important enough for us to pay for these measures, we
are going to ask the next generations to pay by reducing the security
upon which their retirement depends. I think that is an immoral act. I
believe it is another step on the slippery slope down the mountain from
fiscal discipline which this Congress worked so hard over the last
decade to achieve.
We already have converted an almost $6 trillion projected 10-year
surplus into a series of deficits. We have acted at a level of fiscal
irresponsibility almost unknown in the history of this country. I wish
we had been able to adopt the amendment that I wanted to offer, which
would have said let's put aside all of these tax measures until we have
developed--as a Finance Committee indicated it was the intention--a
means of paying for them before they go into effect. That is not
available.
Therefore, I am taking a second option to propose that we strike this
and other of the provisions that have gone into the bill so we will not
be in the position of having to find an offset because we have made the
decision that we are going to be fiscally responsible.
I urge my colleagues to take this opportunity to say enough is
enough. We are already committed to paying without offsets for the war,
for homeland security, and for economic stimulation. But beyond those
priorities, I think on a broad, bipartisan consensus we should ask is
this issue important enough for us to do and important enough for our
generation of Americans to pay for it.
Mr. BINGAMAN. Mr. President, let me first say that the general
sentiment that the Senator from Florida has expressed is one I agree
with--which is that I am disappointed that we have not come up with a
proposal to offset the cost of the various tax provisions in this bill.
I hoped we could do that in the Finance Committee.
I think that clearly would be the better course to follow, and
perhaps, if we could get the support from the administration, we could
move in that direction. But that has not been possible.
I am constrained to oppose the amendment of the Senator from Florida.
This amendment would simply pick out the tax provisions in the bill,
and the particular provision that he finds objectionable, which is
intended to maintain domestic production when world oil prices are
lower. We have several provisions in the bill which are so-called
countercyclical provisions, which basically say that when the oil price
goes down below certain levels, there is a tax incentive for companies
to stay in the business and not to shut down production in this
country.
This is one of several provisions intended to maintain reasonable
cashflows to keep the service sector in the oil economy working. The
provision would stimulate the economy and producing areas in our
country.
For that reason, I urge my colleagues to oppose the Graham amendment
that has been presented to the Senate at this time.
I yield the floor.
Mr. NICKLES. Mr. President, I want to inform my friend from Florida
that I will make a couple of comments and then move to table. But if he
wishes to speak before the tabling motion, I would be happy to let him
do so.
Mr. GRAHAM. Mr. President, I was going to close on the amendment
before we take up the tabling motion.
The PRESIDING OFFICER. The Senator from Florida.
Mr. GRAHAM. Mr. President, it had not been my intention to dwell on
specifics of a particular tax measure because, as I indicated, if we
had provided the offset for this, I would have voted for it.
The issue for our colleagues and for the American people is that this
provision would further deplete the Social Security trust fund. That is
where it is coming from. This is not revenue eligible.
As desirable as this may be, I do not believe it meets that test. It
does not meet the President's test. It does not justify going into the
Social Security trust fund.
I share his position and urge that our colleagues use this as a line
in the sand for fiscal discipline.
Mr. NICKLES. Mr. President, my colleague and good friend is on the
Finance Committee, as am I. We had an opportunity to offset it if we
wanted to in committee. We didn't do it.
I don't know why this particular amendment is picked out. But I think
it is a mistake to try to strike this language. This language says you
can't expense over 2 years' payments that are made to keep a lease
ongoing. Sometimes a person or a company may have a lease to drill or
to explore. For whatever reason, they can't initiate exploration. It
may be because of political problems. Maybe they can't get a particular
permit. Maybe the price has
[[Page S3390]]
dropped so low that it is not feasible. But they want to keep the lease
open. So they make payments.
Under the provision in the bill, we say those payments are expensed
over 2 years. Frankly, they should be expensed in the year made.
I might note we passed countless amendments that said let us give a
tax credit for this. We will reduce taxes substantially; in other
words, have the taxpayers subsidize it. In this case, we are not
looking for subsidies. If somebody writes a check, we are asking that
they be able to expense that check.
Frankly, the provision in the Senate bill is over 2 years. It should
be 1 year. When you write the check ``for lease payment,'' you could
have an example where somebody has a lease to drill someplace, and a
political obstruction has arisen--maybe State, maybe Federal, maybe
whatever--and they are not able to commence exploration. But if they
don't make payments, they would lose the lease. They should be able to
expense those payments in the year made.
The bill before us says they should be able to expense it in 2 years.
That is more than defensible.
I urge my colleagues to vote in favor of the motion to table the
Graham amendment.
I move to table the Graham amendment, and I ask for the yeas and
nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
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