[Congressional Record Volume 149, Number 66 (Tuesday, May 6, 2003)]
[Senate]
[Pages S5747-S5753]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       ENERGY POLICY ACT OF 2003

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
proceed to the consideration of S. 14, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 14) to enhance the energy security of the United 
     States, and for other purposes.

  Mr. DOMENICI. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Mr. President, parliamentary inquiry: What is the 
subject matter before the Senate?
  The PRESIDING OFFICER. The bill S. 14 is the pending business.
  Mr. DOMENICI. Mr. President, S. 14 is the comprehensive energy bill 
produced by the Energy and Natural Resources Committee. It is 
accompanied by a report as contemplated by the rules of the Senate.
  For those who are interested in the bill, there is a report and it 
will be available tomorrow. The 1-day delay is because of printing 
problems. Under the rule, there would be no amendments that can be 
offered today, in any event. It will be a day for discussion. Those who 
are looking toward the text in terms of what they might want to do to 
the bill and for the bill, the report will be in their hands before 
amendments are allowed.
  I will start with some opening remarks and then yield to my friend, 
Senator Bingaman, for remarks on his side, and any other Senators on 
either side who desire to comment.
  I might ask again a parliamentary inquiry: How much time has been set 
aside for this bill today pursuant to previous order?
  The PRESIDING OFFICER. There is no time limit.
  Mr. DOMENICI. Mr. President, our citizens need to know that they can, 
with some reasonable level of assurance, budget what their annual 
heating and cooling costs will be. This is not an area in which we can 
have much tolerance for those who propound politically correct 
policies.
  Let me be blunt. I am a strong supporter of solar and renewable 
energy, and as chairman of the Appropriations Subcommittee on Energy 
and Water Development, which appropriates the money for the research 
and development in those areas, I have supported millions, indeed 
billions, of dollars for research to develop less expensive solar and 
renewable energy technologies. However, they only represent a niche 
market, and they are not capable of providing a baseload power to our 
cities, our hospitals, and our factories.
  The bill before the Senate today is comprehensive. It encourages the 
conservation of energy through efficiency programs. But it also takes 
steps to ensure reliable and cleaner production of electricity from 
coal, and provides adequate--in fact extremely significant--research 
and development programs to make coal burning cleaner; it ensures 
nuclear power and gas, and decreases our reliance on imported energy 
sources by increasing production of energy here at home.

  The bill, in my opinion, is pragmatic. I am a strong supporter of 
opening ANWR. I believe oil and gas can be produced from ANWR with a 
minimal impact on the environment and a substantial positive impact on 
the U.S. energy security and ultimately on prices since it would cause 
a very substantial amount of new oil to be put into the

[[Page S5748]]

pool from which the world purchases its oil.
  Those who say we should do without ANWR production, in my humble 
opinion, are cavalier about our energy needs. ANWR holds estimated 
reserves equal to three times as much oil as in the entire State of 
Texas, and I know of no one who proposes we close all the production in 
Texas on behalf of the environment, nor do I know anyone who thinks the 
production of oil in Texas is insignificant to the energy needs of 
America.
  The impact on our economy is too easy to predict, but somehow they 
get away with arguing against ANWR--and they have in this body to date. 
However, I have not included ANWR in this bill, even though I 
understand there were votes to do so on the Energy Committee the 
committee I chair, because I know the 60 votes are not here on the 
floor to break a filibuster. I think that is a shame. But I also am not 
about to sacrifice a broader energy policy over that single, though 
important, issue.
  In this committee, we have deferred to the floor in debate over 
climate change. I know the debate is coming. I saw no reason for 
consuming the time of the committee on a matter sure to be considered 
on the floor and a matter which is technically not within the 
jurisdiction of the Committee on Energy and Natural Resources which 
produced this bill.
  Recognizing that we agreed to defer some controversial issues to the 
floor, it is important that the Senate recognize the bill before it is 
the product of several years of work by the Energy Committee. It is 
very much, in that context, a bipartisan measure.
  Earlier this year, I instructed the staff of the committee to 
circulate a staff draft of legislation that would incorporate the 
provisions and ideas that had been considered by the Senate and the 
conference held last year on H.R. 4. We then worked with our minority 
and all members of the committee to refine that text. Members on both 
sides of the aisle had constructive comments and recommendations. While 
we could not always agree, I do not think there is any Member of the 
body who can say that I and the committee staff were not open to 
suggestions or willing to work to clear potential amendments that might 
have been appropriate for this committee.
  The end result of the process I have just described was a series of 
chairman's marks on the various titles of the legislation before us. 
While the media only comments on the matters where we could not reach 
agreement, I think it is accurate to say that every member of the 
committee had provisions that are very important to them included in 
the chairman's mark and cleared on a bipartisan basis. An enormous 
amount of work and careful perfecting of language was done on a 
bipartisan basis before the chairman's mark was circulated.
  I also think my colleagues will agree that we followed an open 
process. While we moved things along at a rapid pace, I insisted that 
the chairman's mark of each title be circulated at least 48 hours in 
advance. That was followed, to the best of my knowledge, uniformly.

  The most contentious issue clearly was electricity, and in that case 
I circulated a chairman's mark a full week in advance. Achieving a 
consensus on that title proved more than elusive. In the end, 
Republican members of the committee reached an agreement on an 
electricity title that is included in the legislation before the 
Senate. I sincerely hope this important legislation does not become 
wrapped up in partisan delaying tactics.
  I know there has been speculation in the media that some want to deny 
President Bush his energy bill. This is not President Bush's energy 
bill. This is not Pete Domenici's energy bill. At the moment, what you 
have before you is a recommendation of your Committee on Energy and 
Natural Resources, and I am proud to bring it before you. Yes, many of 
the provisions and suggestions come from the President's task force, 
which took many days and many weeks to put together their 
recommendations. Yes, many of the suggestions come from past energy 
bills put together by this committee when it was controlled by the 
other side of the aisle.
  This bill contains numerous provisions that had bipartisan support. 
Many were initiatives offered by my colleagues on the other side of the 
aisle that I was happy to support. Senator Akaka, for example, made 
major contributions to the hydrogen title, as did Senator Dorgan and 
others. While the President has provided important support for the 
hydrogen section, for which I congratulate him, I want to make it clear 
that the Senate has before it a comprehensive hydrogen title crafted 
over many weeks on a bipartisan basis by your committee.
  The same can be said for all of the titles. Not one title is the same 
as the original staff discussion draft. In every case, I included 
amendments in the chairman's mark that were suggested by my colleagues, 
both Democrat and Republican. The extent of that bipartisan consensus 
was not evident in our business meetings where attention obviously was 
on provisions where we could not come together. But, in fact, this 
legislation is bipartisan in its substance. I expect to fully support 
other amendments here in the Chamber that will have bipartisan support, 
such as a carbon sequestration provision that Senators Wyden and Craig 
have been working on for a long time.
  Let me summarize the 12 titles of this bill.
  The oil and gas title: This permanently reauthorizes the Strategic 
Petroleum Reserve and provides production incentives for marginal wells 
so that those sources will continue to be produced. It provides royalty 
relief for production in extremely deep waters of the Gulf of Mexico 
and for natural gas production in those areas of the gulf that are 
beyond 15,000 feet deep.
  It creates a pilot program in five regional Bureau of Land Management 
offices to coordinate all the Federal permitting necessary to produce 
oil or gas on Federal lands.
  It authorizes the construction of the Alaskan natural gas pipeline. 
This will bring gas to the United States in large quantities--not next 
week or next month, but without this provision it may never come to 
this part of the United States from Alaska. With the provisions in this 
bill, which essentially are indemnification provisions for those who 
will construct this pipeline, which is extremely fragile--fragile both 
in construction nature and fragile as to financing, we have provided 
underpinning for it to become a reality.

  The coal title is a major part of this bill because coal is a major 
resource of the United States as we look to our future with reference 
to energy. The coal title authorizes approximately $2 billion for clean 
coal technology. The program is a major one. It is not the result of 
any one Senator's thinking. A number of Senators on the committee and a 
number of Senators not on the committee with general interest in the 
subject of coal and coal development are interested in this section. My 
thanks go out to all of them.
  There isn't any separate section on Indian energy. The Indian people 
of the United States are the proprietors of large amounts of property. 
On this property and in this property lie various assets and resources. 
This section authorizes the Indian tribes of this country to enter into 
agreements with the Secretary of the Interior to develop their energy 
resources. Once agreements between the Indian people and the Secretary 
of the Interior are entered into, the tribe can then enter into leases 
or production on their tribal lands with the same rights as if they 
were private landowners. This last section of the Indian lands title 
will be the subject matter of significant debate, and I welcome and 
look forward to that debate.
  In the end, however, the purpose of this bill will be to say to our 
Indian people, if you want to develop resources in the field of energy 
that lie within your lands, we are giving you the authority to do so 
and hopefully in a streamlined manner so that it will not be forever 
bogged down in the redtape and bureaucracy of Indian lands being 
subject to the Federal Government's fiduciary relationships.
  There is a title on nuclear energy. We call it the nuclear energy 
title. This permanently reauthorizes the Price-Anderson law of the 
land. Price-Anderson has taken on a name and a meaning all of its own. 
It stands for the proposition that a law adopted by Representative 
Price and Senator Anderson which makes it possible for nuclear power to 
exist will remain the law of the land indefinitely.

[[Page S5749]]

  Second, we authorize funds for an advanced fuel cycle initiative to 
develop ways to reduce the volume and the toxicity of spent nuclear 
fuel. It authorizes the Secretary of Energy, subject to appropriations, 
to enter into loan guarantees to assist in the construction of 8,400 
megawatts of new nuclear power if the Secretary determines that the 
plants are necessary for energy diversity, security, or clean air 
attainment.
  Last, it directs that an advanced reactor will be built in Idaho to 
demonstrate new safety, efficiency, and proliferation resistance to 
produce hydrogen and prove to the world that a new generation of 
nuclear powerplants substantially different--if not completely 
different--from the plants we have today can be built.
  This entire nuclear section is of great concern for some. For others, 
it is an exciting challenge for a new future for the United States and 
the world, and indeed for more energy for more people with less air 
pollution.
  The next title is called renewable energy. This mandates that the 
Federal Government purchase 7 \1/5\ percent of its energy requirements 
from renewable resources by 2011, thus saying that the U.S. Government 
has a weighted portion--that 7 \1/5\ percent of the energy that it 
needs will be from renewable resource acquisition. It will become the 
market, so to speak, the driving force for the purchase of renewable 
energy.
  Under renewable energy, a second provision will authorize renewable 
energy production incentives. These will be discussed in more detail, 
and obviously from this Senator's standpoint they are exciting and 
necessary. Perhaps for others, they are insufficient and unnecessary. 
We will see which view prevails.
  We streamline the licensing of hydroelectric facilities. This issue 
is long overdue. Hydroelectric facilities clearly must be relicensed. 
It is contended that currently the process is far too difficult, 
cumbersome, onerous, and in many respects unnecessary. We have 
streamlined it. That will be debated, and one way or another we will 
streamline the processes for hydroelectric facility licensing.
  We encourage the exploration and development of geothermal resources, 
and we provide grants for turning forest materials from the areas of 
high-risk fire or disease into biomass energy--something that is long 
overdue and something that may, indeed, accomplish at least two goals 
at one time. It may, indeed, produce energy which will be clean, and at 
the same time it may clean up our forests, which many of us from the 
West have been anxiously wondering and waiting patiently to see happen.
  In addition, there is an energy efficiency title in this bill. It 
requires a 20-percent improvement in the Federal Government's 
efficiency over the next 10 years. It authorizes grants for energy 
efficiency projects in low-income and rural areas. It sets several new 
standards for items such as transformers, compact fluorescent lamps, 
ceiling fans, and commercial refrigerators and freezers.
  The transportation title is another section of this bill which stands 
out. It encourages the use of alternative fuel vehicles, and it 
requires Federal agencies to increase the fuel efficiency of their 
fleets by 3 miles per gallon by 2005. It improves the efficiency of 
locomotives and expands the authority of the National Highway 
Transportation Safety Administration to set fuel economy standards for 
cars and light trucks, taking into account passenger safety and the 
impact on U.S. employment.
  Incidentally, that provision is similar to a provision adopted in the 
Senate last year by a bipartisan vote of two Senators who said that is 
the way they want it, to direct further modification of CAFE standards 
for the United States.

  We then have a new and exciting title, driven, to some extent, by a 
rather late pronouncement of our President regarding hydrogen and the 
American automobile engine. This hydrogen title authorizes $1.8 billion 
for the President's hydrogen fuel cell initiative to develop clean, 
renewable hydrogen cars.
  It reauthorizes and increases funding for existing hydrogen research 
programs. It amends the Energy Policy Act of 1992 to require agencies 
to purchase 5 percent of new vehicles as hydrogen-powered vehicles in 
2005 and 2007, increasing to 20 percent in subsequent years.
  The research and development title addresses research and development 
needs to energy efficiency, distributed energy and electric energy 
systems, renewable energy, nuclear energy, fossil energy, science and 
energy and environment and management.
  There is funding for research in many areas, such as nanotechnology, 
high-temperature superconductivity, and Genomes to Life.
  A new Under Secretary position for energy and science is provided. 
Two new Assistant Secretary positions--one for science and one for 
nuclear energy--are provided.
  The personnel and training title contains a number of programs to 
ensure that we have an adequate energy workforce in the decades to 
come.
  Then we have, last but not least, a very difficult title, the 
electricity title. This title remands proposed rulemaking on Standard 
Marketing Design, SMD, and prohibits FERC from issuing a final order 
until July 1, 2005.
  Second, it provides a sense of the Congress that membership in 
regional transmission organizations is voluntary. It amends the Federal 
Power Act to protect access to transmission lines, repeals PURPA's 
mandatory purchase requirement, repeals the Public Utility Holding 
Company Act, makes the electricity market more transparent and 
resistant to manipulation, and increases the penalty for violations of 
the Federal Power Act and the Natural Gas Act.
  Mr. President, I understand there is an agreement that no amendments 
will be offered until Thursday. On Thursday, I expect an ethanol 
amendment to be offered, and I understand there are discussions 
underway as to who will offer that amendment and when.
  For my part, I support the agreement reached last year on ethanol 
that was reported out of the Environment and Public Works Committee 
last month. The reason I raise this subject is, this is another 
provision that is really not within the jurisdiction of this committee, 
as are three or four others that will become contentious and will be 
very deliberate and take much time. But there is no question, we cannot 
leave the floor without the subject matter of ethanol being considered, 
debated, and voted upon. That is why I have just stated what I believe 
the protocol will be.
  Again, for my part, I do not do this in an effort to usurp the 
jurisdiction of the Public Works Committee but to face up to the 
reality and to urge that they consider this and offer to work with them 
in an effort to get what they have passed incorporated in this bill or 
at least put before the Senate as their effort with an opportunity for 
it to be passed and then, if necessary, amended.
  I know there are some who oppose that proposal, and there will be 
amendments offered. Clearly, if history is revealing, there will be 
such occurring once that amendment is before the Senate.
  I look forward to the debate and encourage my colleagues who support 
the ethanol proposal to offer their amendments as early as possible on 
Thursday.
  My staff and Senator Bingaman's staff is on the floor and available, 
as I gather, now to begin the process of reviewing and clearing 
amendments where possible. I hope Members will take advantage of that 
and bring their amendments to the floor as soon as possible.
  The leader has indicated he will give us sufficient time, with some 
intervening work obviously, to complete this bill as soon as the Senate 
deems practicable.
  I yield the floor for my colleague, Senator Bingaman.
  The PRESIDING OFFICER (Mr. Enzi). The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I thank my colleague for his statement 
and for yielding the floor.
  Mr. President, today we are beginning a second attempt on the Senate 
floor--in the last Congress and this Congress--to craft a comprehensive 
national energy policy. Last year, as colleagues will remember, we 
passed an energy bill with an 81-to-11 vote. It was bipartisan. It was, 
in my view, a balanced approach to energy supply, energy efficiency, 
and many other important issues centrally related to energy, such as 
climate change.

[[Page S5750]]

  This year, I first begin by congratulating Senator Domenici on the 
process he has followed and his success in getting an energy bill to 
the floor. We have had disagreements, and continue to have 
disagreements, on particular issues dealt with in the bill, but I 
appreciate very much the courtesy he has afforded to me and to my staff 
in the process he has followed in developing the bill.
  In spite of the process that has been followed, I fear we are 
beginning with a bill that does not, at this point at least, command 
the same broad level of support perhaps that we were able to finally 
arrive at last year.
  I voted against the bill as it came out of committee because I did 
not think it was a sufficiently balanced and comprehensive package. I 
hope by the time we are finished with floor consideration of the bill, 
the reservations that I and nearly every other Democratic member of the 
committee had can be addressed and that we can support the final 
product.
  There can be no doubt that America needs a comprehensive and balanced 
energy policy for the 21st century. President Bush, when he ran for 
office in 2000, spoke of the need for such a comprehensive energy 
policy. Within 3 weeks of taking office in 2001, he had commissioned 
Vice President Cheney to lead a task force to develop and improve 
national energy policy.
  The President was right in stating the need for such a policy. During 
the 1990s, energy prices had remained relatively stable due to at least 
three factors.
  First, there was increased productivity which we benefited from 
substantially in the 1990s. Second, there was lower energy use per 
dollar of gross domestic product. Third, there was the introduction of 
market competition in sectors such as electricity.

  All of these factors acted to hold down prices in spite of the very 
robust economic growth and increased demand for energy we saw in the 
1990s.
  Before the introduction of competition into energy markets in the 
1980s and 1990s, we had national policies that required large excess 
capacity margins. Consumers paid a great deal for this excess capacity, 
but they also benefited from the buffer that capacity provided. It kept 
the system functioning as markets restructured. As the economic growth 
of the past decade has used up that excess capacity in the fuels and 
the power and the natural gas sectors, the frictions and imperfections 
in those markets became more apparent.
  One obvious illustration of that development was the California 
electricity crisis. When electricity was in plentiful supply in the 
West, the flaws in the design of the California electricity system--
specifically the discouragement of long-term contracts and the near 
total reliance on the spot market to set electricity prices--were not 
so apparent. But when electricity suddenly became more scarce in 2000, 
due to unusually dry weather and increased demand in other Western 
States, those market flaws came to the fore. The result was very high 
prices for electricity and extraordinary financial stress on both 
California's regulated utilities and their consumers.
  These market flaws were exacerbated by the unscrupulous behavior of a 
number of energy marketers and the inadequate initial responses by 
regulators. Even so, we should not lose sight of the overall lesson to 
be derived from that California electricity crisis. That is, the loss 
of our energy infrastructure cushion means future events will more 
easily highlight whatever energy market or regulatory flaws do exist. 
That makes it more important than ever for us to have a comprehensive 
national energy policy that proactively deals with market flaws before 
they result in a crisis.
  In the energy policy plan issued by President Bush in May of 2001, 
his administration laid out a series of goals and objectives that 
generally made sense in terms of a proactive energy policy. Some of the 
themes he had were very similar to conclusions reached by a number of 
individual States that have formulated and adopted their own energy 
policies over the past several years. The President's proposal, though, 
came to Congress in a very generic fashion, without any legislative 
specifics. At no time during the last Congress or during this Congress 
so far have we ever received an actual legislative proposal on energy 
from the administration.
  The task of taking the President's general statements and fashioning 
them into specifics has fallen to both the House of Representatives and 
the Senate. Of course, the two bodies of the Congress have interpreted 
those general principles in some very different ways. That proved to be 
a decisive factor in our inability to come to closure on energy 
legislation last Congress.
  The approach I pursued in crafting an energy bill in the last 
Congress, and which was supported in the end by a substantial majority 
of Senators, was based on a number of basic principles. I believe these 
basic principles are crucial to any energy legislation we might 
consider, and the bill now before us deals with those principles only 
in part. Let me elaborate what those are.
  First, and perhaps most important, we need an energy policy and an 
energy bill that strike a balance between measures to increase energy 
supplies and measures to encourage additional energy efficiency. To say 
we only need to increase energy production or we only need to increase 
conservation is to propose a fairly false choice. The reality is the 
country needs both kinds of measures.
  On the supply side, perhaps one of the most important national goals 
is to meet our ever-growing demand for natural gas. Natural gas is the 
fuel of choice for most electric generation that is now being planned. 
It will play an important role in any new distributed generation that 
is planned in the future. It is favored by alternative fueled vehicle 
programs in both the Government and in the private sector. It is the 
most likely feedstock to produce hydrogen when and if we come to use 
hydrogen as a major fuel source. And apart from its energy uses, 
natural gas is also a critical feedstock in the petrochemical industry 
and in the fertilizer industry.
  Because natural gas consumption is outstripping the amounts produced 
in the lower 48 States, we are in the early stages, as a Nation, of 
developing a national dependence on imported natural gas, particularly 
liquefied natural gas from countries with unstable politics. So just as 
we have for several decades now become more and more dependent upon 
imported oil to meet our energy needs, we now face the prospect of 
perhaps a growing dependence on imported natural gas as well.
  At the same time this dependence on imported natural gas is growing, 
we have at least 33 trillion cubic feet of natural gas that is stranded 
on the North Slope of Alaska at Prudhoe Bay. That gas has been 
produced, along with the oil we are now producing from that location. 
But the gas is currently being pumped back into the ground because 
there is no way to transport it to the lower 48 States where it is 
needed. We need to provide effective incentives to the private sector 
to build a pipeline that can bring this gas to the lower 48 States. 
Such a project would be a boon not only to our national energy security 
but also to our domestic steel and construction industries.
  On this topic, the bill now before us does a fairly good job. It has 
retained from last year's bill many of the regulatory streamlining 
measures on which I worked with Senator Frank Murkowski and that were 
included in last year's bill. There is a critical part of the problem 
we have not yet solved. That is to provide effective fiscal incentives 
for the pipeline to accompany what is now in the bill on the regulatory 
side. I hope we can add those effective fiscal incentives as we 
consider this bill in the Senate.
  Along with providing more robust domestic supplies of natural gas, we 
obviously need to look for ways to diversify our energy generation away 
from such a strong reliance on gas in the coming years. Here I fear we 
have been less successful in the bill.
  One important arena in which we can diversify our energy generation 
away from overreliance on gas is in electricity generation. Part of 
what must be done is to find new technology for existing sources of 
electricity supply. This means research and development on ultra clean 
ways to burn coal and research and development on new generation from 
safe nuclear powerplants. This bill, similar to last year's bill, does 
have very strong R&D programs on both topics, and Chairman Domenici 
deserves credit for those provisions.

[[Page S5751]]

  Another key piece of the solution would be to tap into opportunities 
for distributed generation such as combined heat and power at 
industrial facilities. Here the bill begins to fall short, as it does 
not really address the barriers that have been erected to uniform 
interconnection of distributed generation to the grid.
  It is not enough to have the technology. We need to rid ourselves of 
the redtape that is keeping this technology from being used, and this 
bill does not do that.
  Along with these steps, though, we need to make a greater push to 
introduce renewable energy technologies for electricity generation. 
Some of these technologies--wind power in particular--are already cost 
competitive. But in order to see widespread exploitation of these 
opportunities, both financial and regulatory incentives will be needed. 
That means both a meaningful production tax credit for renewable 
energy, which I hope will be added as part of the package of tax 
provisions coming out of the Finance Committee, and also a flexible 
renewable portfolio standard for electric utilities. Both measures are 
essential, in my view, in order to give enough certainty to the 
fledgling market to allow economies of scale to drive down costs and 
improve the manufacturing capacity for renewable energy equipment in 
the United States.
  The lack of an effective renewable portfolio as this bill comes to 
the floor is a major flaw. There are those who may argue that we should 
leave everything to the hypothetical free market. My problem with that 
is that electricity markets are not free markets, and renewable energy 
will not get a fair shake unless there is some pressure from us for 
that to happen. If the Senate does nothing in this bill to push forward 
on increasing the use of renewables in our electric system, then we 
will be making a choice in favor of the existing trends toward an 
overreliance on natural gas for future electricity generation. That 
choice will leave our citizens with future natural gas and electricity 
bills that are more volatile, resulting in more frequent price spikes.
  Renewable energy technologies can help with another energy supply 
issue that we face, and that relates to transportation fuels. We 
already use renewable fuels, such as ethanol, to some extent as 
oxygenates in the winter formula for gasoline. But ethanol can make a 
greater contribution than this. A phased introduction of up to 5 
billion gallons per year into our gasoline supply by 2012 is not, in my 
view, unreasonable. What we need to do, though, as we attempt such a 
transition, is to ensure that we do not wind up with a highly 
balkanized and inflexible system of fuel specifications around the 
country.
  We already have a problem with so-called boutique fuel specifications 
in several parts of the country. These mandates for boutique fuels 
cause local price spikes to consumers when the specific formula for a 
specific area suddenly is in short supply. That can easily happen, for 
example, due to unexpected demand or shutdown problems at a refinery or 
at a pipeline.
  Our national energy policy should be to use the transition to greater 
use of renewable fuels as a means of making sure we have a more 
rational national fuels system. This issue was not dealt with during 
the consideration of the bill in the Energy Committee and, as the 
chairman has indicated, we expect to be dealing with that on the floor 
perhaps as early as this week.
  Even with the greater use of renewable fuels in cars, we will still 
be very dependent upon oil in the transportation sector. It is in our 
national interest to support the domestic production of oil. Many of 
our oil resources are not as economical to produce as those in the 
Middle East and elsewhere. This is largely because the U.S. has been 
producing oil longer than other places around the world. We have 
exhausted the easiest geologic formations.
  When oil prices fall, our domestic producers lose their shirts faster 
than do their overseas competitors. Accordingly, our producers, in many 
cases, are forced to stop production. When prices start back up, 
though, their wells are not able to be restarted as easily as foreign 
wells.

  An important policy to put in place, at both the Federal and State 
levels, would be to reduce taxes on oil production during times of low 
world prices, and restore those taxes when prices rebound. That sort of 
a countercyclical measure would help us to retain a significant amount 
of our domestic production that otherwise would be at risk.
  In the Finance Committee, such incentives are part of the bipartisan 
package of tax provisions that we adopted which I expect will be added 
to this bill later in the Senate's consideration of the overall bill.
  We also need to look to increase oil production in areas where it is 
generally agreed to move ahead. There are places, such as the Alaska 
National Wildlife Refuge, that are seen as having special environmental 
values that make oil production very controversial. Last year and this 
year, a solid bipartisan majority voted against opening the Arctic 
Refuge to oil development. I hope we do not spend a great deal of time 
on the Senate floor debating and reopening this issue. We spent a 
tremendous amount of time on it in the bill last year.
  The proposal to open the Arctic Refuge is a dead end precisely 
because there are many areas with significant amounts of oil and gas 
that are not considered environmentally exceptional. We need to look to 
those areas.
  For example, Alaska is also home to a Federal Reserve called the 
National Petroleum Reserve Alaska, NPRA. No less an environmentalist 
than Bruce Babbitt, a former Secretary of the Interior, strongly pushed 
for leasing of the NPRA for oil production when he was the Secretary of 
the Interior. He found strong industry interest, and there have been 
significant finds in that region. We should continue to support further 
leasing of NPRA as part of our national energy policy.
  As another example, energy resources on Indian land in the U.S. have 
not been as extensively developed as they might be. According to the 
Bureau of Indian Affairs, over 90 Indian reservations have significant 
untapped energy resource potential. That includes oil and gas, coal, 
coalbed methane, wind, and geothermal resources. In last year's energy 
bill, I worked to see that we assisted these tribes in developing those 
resources.
  Early this year I reintroduced many of those same provisions in a new 
bill, parts of which are incorporated into the bill that is now on the 
Senate floor. Unfortunately, in my view, the provisions have been 
marred by a proposal to make energy leasing on Indian lands both exempt 
from environmental analysis under NEPA, and exempt from the normal 
trust protections afforded Indian tribes. I fear this is a substantial 
flaw that needs to be addressed if the bill is to keep its balance 
among energy, environment, and the public interest.
  Even with strong efforts to support domestic oil production, we are 
in a losing race with rising domestic oil consumption. We have gone 
from less than 25-percent dependence upon foreign oil at the time of 
the Arab oil embargo to over 50 percent today, with projections of well 
over 60-percent dependence a decade from now.
  That brings us to the other important part of a national energy 
policy, and that is energy efficiency. If we are serious about reducing 
our dependence upon foreign oil, we have to address our ever-increasing 
national consumption of oil in the transportation sector. Greater 
vehicle fuel efficiency is clearly in the national interest.
  According to a study Congress commissioned from the National Academy 
of Sciences, we now have the technology to realize significant gains in 
fuel efficiency without sacrificing either safety or passenger comfort. 
All we lack is the national will to make this a priority. That will was 
not on display in the last Congress when the Senate and House took only 
minimal steps to set higher standards for fuel efficiency. Similarly, 
it has not been on display in the bill that has now come before us. In 
fact, this bill contains a provision that will increase gasoline demand 
over current law by 11 billion gallons by 2020. I don't know how we can 
justify passing a bill that takes us in the wrong direction relative to 
what our national energy security requires.
  Greater fuel efficiency is an answer to another energy problem that 
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brewing. We are pretty close to the capacity limits of our present 
system of refineries and gasoline pipelines.
  Refineries and pipelines are notoriously hard to site. We have not 
built a new petroleum refinery in this country in decades, and there 
are real limits to how much further we can add to the existing 
refineries. Unless we want to greatly add to the siting pressures we 
already have related to energy infrastructure, or unless we want to 
start importing much more refined gasoline than we now import, we need 
to push for more efficient use of the gasoline we already consume.
  Energy efficiency is also a key element in maintaining a reliable and 
affordable system of electricity generation and transmission. New 
electricity infrastructure is also very difficult to site. President 
Bush's call for Federal eminent domain authority for new electricity 
transmission has not found many supporters in Congress.
  We can reduce the pressure on our electric power grid and natural gas 
infrastructure by taking commonsense steps to improve the efficiency of 
end use of energy in buildings and appliances, and industry. Energy-
efficient lighting, energy-efficient appliances, and energy-efficient 
buildings also generate benefits in terms of emission reductions and 
human health improvements, making them even more attractive as part of 
a comprehensive energy policy.
  One of the unheralded success stories of last year's energy bill was 
a set of new standards and programs for energy efficiency that was 
developed cooperatively with the affected industries. These provisions 
survived intact. They have been expanded somewhat in this bill, and 
they have been reported as part of the bill now before us.
  Last year's energy bill also reauthorized important Federal grant 
programs that helped low-income families pay their energy bills and 
reduce their energy costs, including LIHEAP, the Low-Income Home Energy 
Assistance Program, and State weatherization grants. Those programs 
continue to be a high priority in any new energy legislation. I hope we 
can add an effective measure along these lines early in our 
deliberations on this bill.
  Our national commitment to increasing energy supply and increasing 
energy efficiency must involve a long-term commitment to the 
development of new energy technologies. Last year's energy bill 
established a framework for a comprehensive research and development 
program that would have addressed a variety of challenges on both the 
supply and demand sides of the energy equation. A robust commitment to 
a coordinated, comprehensive research and development program is 
essential if we are to meet the challenges that lie before us.
  One of the biggest disappointments of the Bush administration to date 
is its lack of attention to the importance of science and technology in 
general and of energy research and development in particular. With the 
exception of the President's recent enthusiasm for hydrogen and fuel 
cells, an enthusiasm on which I certainly compliment him, the Bush 
administration has consistently proposed underfunding Department of 
Energy energy technology programs relative to their importance to our 
national security.
  Federal energy technology R&D today is equivalent, in constant 
dollars, to what it was in 1966. Yet our economy is three times larger 
today than it was in 1966. It is hard to see how we can build a 21st 
century energy system on 1960s level-of-effort research and development 
budgets.
  Fortunately, Congress has seen things somewhat differently than the 
administration. Last year and this year, energy bills in both the House 
and the Senate have attempted to rebuild energy R&D budgets in a 
rational way to levels that, by 2007 or 2008, would give us a robust 
energy R&D effort to support our national energy policy.

  A final imperative for national energy policy and legislation has 
been to recognize the ways in which energy use and energy policy are 
intertwined with the topic of climate change.
  Climate change is so closely related to energy policy because the two 
most prominent greenhouse gases--that is, carbon dioxide and methane--
are largely released due to energy production and use. In the United 
States, 98 percent of the CO2 emissions are energy related. Every study 
of how to mitigate the possibility of global change, climate change 
comes up with a list of policy measures that relies heavily on 
increased energy efficiency and new energy production technologies with 
lower greenhouse gas emissions.
  Because of this intimate connection between energy and climate 
change, much of energy policy and much of climate change policy have to 
be discussed together. To do one, by implication, is to do the other; 
to ignore one while doing the other is to risk unfortunate and 
unintended consequences.
  For this reason, last year the Senate was able to pass a bill with 
numerous provisions to ensure we integrate climate change strategy with 
energy policy, that we develop better climate change science, that we 
focus on breakthrough technologies with better environmental 
performance, and that the United States take the lead in exporting the 
clean energy technologies we develop.
  These provisions were not propounded by fringe elements in the 
Senate. The bulk of them came from a bill that was introduced by 
Senator Byrd of West Virginia and Senator Stevens of Alaska. That bill 
was reported unanimously by the Senate Governmental Affairs Committee. 
Unfortunately, these provisions were resisted by the administration and 
were opposed by the Republican leadership in the House, which did not 
propose to address climate change in any way in the House energy bill. 
These provisions were also opposed in the Energy Committee by certain 
of the Senators. I regret that their views carried the day and that we 
were not able to move ahead at that time. But the opportunity still is 
ahead of us. I think leaving climate change out of an energy bill by 
the time we complete action on an energy bill would be a very 
shortsighted approach, both in terms of energy policy and in terms of 
our overall relations with others in the world.
  Climate change proposals that I plan to propose and advance on the 
Senate floor will focus on programs which will protect the environment 
while being highly beneficial to U.S. industry. We need to make sure 
that our energy choices do not lead to inefficient or wasted energy 
investments that have to be written off prematurely because we did not 
consider their climate consequences. Industry needs to have certainty 
about rules of the road linking energy and climate.
  In terms of our long-term economic prosperity, there are jobs to be 
created, worldwide markets to be captured in climate-friendly energy 
technologies of the future. So far, the energy bill we are considering 
does not measure up in this regard. I believe many in this body will 
share my view that addressing global warming is a major element 
required for any balanced energy policy.
  Before I close, let me discuss what the chairman referred to as the 
most difficult and contentious issue we tried to deal with and have 
dealt with as we have worked on this bill; that is, the problem of how 
to regulate electricity markets in the future.
  Our system for generating and transmitting electricity has been 
undergoing a profound transformation over the last decade as 
electricity markets become increasingly regional. That increases the 
degree to which consumers are affected by interstate commerce in 
electricity and, thereby, by factors that may be beyond the effective 
reach of State regulatory utility commissions.
  During the California electricity crisis, we saw how decisions made 
in or for California affected consumers across the entire West. Well-
functioning and well-regulated markets are in everyone's interests, 
although the way to get there was a matter of intense debate during 
consideration of the energy bill and is being strongly debated now in 
the context of FERC's so-called standard market design rulemaking, or 
SMD.
  During last year's energy bill, I favored attempts to update the 
statutes governing electricity markets, including the repeal of the 
Public Utility Holding Company Act, PUHCA. I did so only if those 
provisions were accompanied by provisions to ensure that any resulting 
mergers or acquisitions would be overseen to be sure they were in the 
public interest and that the ability of State public utility 
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to protect consumers against cross-subsidization and other abuses would 
be ensured.
  There were others in the debate who wanted to remove all fetters from 
the merger and acquisition process, particularly any oversight that 
might be exercised by FERC or State commissions. That latter view of 
untrammeled mergers is what is now in the bill before us. I think that 
is a bad deal for consumers in the future, and I hope we can address 
that as we consider the bill on the Senate floor.
  The bill also overreaches, in my view, in its response to the 
Standard Market Design rulemaking. There are a lot of important issues 
that need to be examined carefully before that rulemaking moves 
forward, and like many of my colleagues in the Senate, I am carefully 
examining the extent to which FERC is responding to the many comments 
and criticisms leveled at its proposed rule.
  But amid the furor over SMD, I think it is important not to be 
distracted from the big picture of whether consumers are going to be 
adequately protected in the electricity markets of the future. How the 
grid is operated, how new transmission is paid for and by whom, how we 
will ensure that there is a reasonable mix of short-term spot markets 
and long-term contracts; all these factors require careful 
consideration and regulatory clarity, if consumers are to be protected 
and if utilities and other entities are to make sound decisions that 
can be sustained over the long term.
  It is unfortunate, in my view, that the electricity provision in the 
bill we considered and adopted in the committee had not been adequately 
reviewed by all Senators. I do not think that was a good way of 
proceeding on a topic as important, controversial, and complex as this 
one. As a result, the electricity title contains numerous flaws that I 
think will result in increased divisions in the Senate, instead of 
pointing the way toward bringing us together.
  Energy does not need to be a partisan issue. As was demonstrated by 
the strong bipartisan vote we had on the Senate energy bill in the last 
Congress, it is clear that Democrats and Republicans can agree on the 
broad aspects of an energy policy and move ahead.
  I do not believe we have reached that point of bipartisan agreement 
yet in this bill. We will have an opportunity to do better now that the 
bill is on the floor. I look forward to the amendment process to see if 
some of the flaws in this bill can be remedied. I hope that the result 
will be a strong and balanced package for the Nation that I and other 
Members of my caucus can support.
  There will be many other opportunities for us to talk about 
particular provisions of the bill as amendments are proposed, but for 
an opening statement I will stop with that.
  I yield the floor.
  The PRESIDING OFFICER. The senior Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I thank my distinguished colleague for 
his remarks and do hope some of the matters he has raised wherein we 
disagree can be worked out. As to others, we will remain in a state of 
disagreement and hopefully the Senate will be the referee and we will 
see where we end up.

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