[Congressional Record Volume 149, Number 68 (Thursday, May 8, 2003)]
[Senate]
[Pages S5888-S5899]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY POLICY ACT OF 2003
The PRESIDING OFFICER. The clerk will state the bill by title.
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. Mr. President, I will proceed to discuss a proposed
ethanol amendment that will be offered to this pending bill later in
the proceedings when it is in order. When I am finished within a few
moments, I will yield to the minority leader who will speak, and
thereafter we will rotate back and forth for as long a time as we have
this morning to discuss this measure.
Today the Senate will consider what will soon be offered as an
amendment to S. 14, which I hope will become the renewable fuel
standards portion of the comprehensive energy bill. The amendment
offered today by the majority leader and the minority leader, and
Senators Inhofe, Dorgan, Lugar, Johnson, Grassley, Harkin, Hagel,
[[Page S5889]]
Durbin, Voinovich, Nelson of Nebraska, Talent, Dayton, Coleman,
Edwards, Crapo, and DeWine--and if there are any others who desire to
join in the amendment, it is obviously open for submitting their names
as additional cosponsors.
This represents the culmination of a long and difficult debate about
the U.S. transportation fuels policy. The amendment is the product of
more than 4 years of work by the stakeholders and Members of this body
and represents a solid compromise between disparate groups.
The amendment establishes a renewable fuels standard providing that a
portion of the U.S. fuel supply will be provided by renewable domestic
fuels, primarily ethanol, growing to 5 billion gallons a year by the
year 2012. In addition to full support from the affected parties, the
amendment also enjoys the administration's full support.
The Frist-Daschle amendment will promote increased domestic energy
development, reduce oil imports, protect the environment, bolster our
economy, and stimulate rural economic development by increasing
production and use of domestic renewable fuels. I know there are a
number of Senators who strongly opposed a similar amendment when it was
offered and adopted last year. I expect them to offer a number of
second-degree amendments this year again. This is their right, but I do
expect--as the Senate did last year--the Senate to adopt the language
of the Frist-Daschle amendment.
In view of the significant amount of work that has been put into this
amendment and the consensus it represents among the affected parties, I
urge my colleagues to adopt the amendment as offered, without
amendments.
I yield the floor at this point.
The PRESIDING OFFICER. The Democratic leader is recognized.
Mr. DASCHLE. Mr. President, I first want to commend the chairman of
the Energy Committee for his strong statement in support and for his
leadership on this and on so many of the issues pertaining to energy. I
look forward to continuing to work with him as we proceed in
consideration of this legislation.
I am also delighted to join with the distinguished majority leader in
introducing the first amendment to the Energy Policy Act of 2003.
The fact that this is the first amendment reflects the importance of
the subject that we will be discussing. It is my hope that the majority
leader's endorsement will help assure enactment of this proposal at the
earliest possible date.
It was 1990 when a number of us joined together, Republicans and
Democrats, including then-Senate minority leader, Bob Dole, and Tom
Harkin, and we introduced the reformulated gasoline, or RFG,
legislation as a provision of the 1990 Clean Air Act amendments.
The RFG provision, with its minimum oxygen standard, was adopted in
the Senate by an overwhelming vote of 69-30. Eventually, it was signed
into law by President George H.W. Bush.
I am proud to say that this program resulted in substantial
improvement of air quality all over the country. It stimulated
increased production of renewable ethanol and other oxygenates needed
to meet the minimum oxygen standard.
In fact, between the onset of RFG in January of 1995 and January of
2003, production of ethanol has increased from 1 billion gallons per
year to nearly 2.5 billion gallons.
This increased farm economy by hundreds of millions of dollars
annually and reduced our dependence upon foreign oil by more than
100,000 barrels per day. Unfortunately, the detection of MTBE in ground
water in the late 1990s required us to find a way to get MTBE out of
gasoline without sacrificing the air quality and public health benefits
of the RFG program.
The answer that my good friend, Dick Lugar, and I conceived several
years ago was the renewable fuels standard, which would eliminate the
minimum oxygen requirement that some of our colleagues find problematic
for urban centers and replace it with a nationwide renewable fuels
standard.
This standard increases ethanol production and protects consumers by
creating a credit trading system that provides an economic incentive to
use the type of fuel that is most cost effective in the various regions
of the country.
On May 4, 2000, I was proud to introduce, along with Senator Lugar,
the first iteration of the amendment that is before us today.
That proposal--similar to the one we are considering today--
reconciled historically competitive interests in a manner that promoted
a broad range of national policies.
It would protect ground water, enhance our national energy security,
reduce greenhouse gas emissions, and promote investment and job
creation in rural communities by tripling production of ethanol over
the course of the next 10 years.
The essence of that proposal was incorporated into legislation
reported by the Senate Environment and Public Works Committee in
September 2000. Unfortunately, time ran out in the 106th Congress
before final action could be taken on that Committee bill.
In the 107th Congress, Senator Lugar and I again joined to introduce
the Renewable Fuels Act. This legislation was incorporated into last
year's Senate-passed energy bill as part of the fuels agreement with
the support of 69 Senators. Unfortunately, time again ran out before
the energy bill could be enacted into law.
This February, Senator Lugar and I, Senator Hagel, one of the real
movers on this legislation early on, along with a growing number of our
colleagues, re-introduced this latest iteration of the renewable fuels
standard that we have now incorporated in this amendment. I am pleased
that the Senate Environment and Public Works Committee has once again
embraced it and reported it out of committee. That proposal, S. 791, is
currently on the Senate calendar.
This chronology underscores the point that the time to pass this
important legislation is now. The groundwork has been laid, and the
case for the bill is established. The benefits of the renewable fuels
standard for agriculture, the rural economy, energy and the environment
are dramatic.
The legislation benefits agriculture. Next year, one in every three
rows of corn grown in South Dakota will go into ethanol production.
There are currently nine ethanol plants operating in South Dakota with
two more under construction. Local corn prices have increased 10 cents
per bushel near these plants, and USDA estimates that corn prices will
increase 50 cents per bushel under the RFS. As a result, USDA has
estimated that the RFS will raise farm income by $1.3 billion annually.
Taxpayer outlays would drop dramatically because of resulting farm
program savings.
This legislation benefits the rural economy. Over 5,000 South
Dakotans have invested in these plants, and over 500 people are
directly employed by the ethanol industry in the state. USDA estimates
that for every 100-million-gallon ethanol plant built, 2,250 local jobs
can be created throughout a community.
This legislation also enhances our energy security. Look at America's
energy situation today: gasoline prices are high and America is
importing close to 60 percent of the oil we use. At the same time, our
substantial appetite for energy continues to grow. Over the next 10
years, the United States is expected to consume roughly 1.5 trillion
gallons of gasoline. At the same time, we hold only 3 percent of the
known world oil reserves.
The Renewable Fuels Standard will save the U.S. $4 billion in
imported oil each year because we triple the use of renewable fuels
over the next 10 years.
As for the environment, this legislation ensures that the clean air
benefits that we have achieved because of the oxygenate standard are
maintained through strong anti-backsliding language and addresses the
serious problems of MTBE contamination.
Specifically, the amendment bans MTBE in 4 years, authorizes funding
to clean up MTBE contamination and fix leaking underground tanks,
allows the most polluted states to opt into the reformulated gasoline
program, and provides all States with additional authority under the
Clean Air Act to address air quality concerns.
The amendment also eliminates the oxygen requirement from the RFG
program, a change that is very important to the efforts of States such
as California and New York that are planning
[[Page S5890]]
to eliminate MTBE from their gasoline supplies in the near future.
To preserve the hard-fought air-quality gains that have resulted from
the implementation of that requirement, the bill creates a renewable
fuels standard that will nearly triple the use of renewable fuels like
ethanol and biodiesel over the next 10 years.
Finally, the bill provides special encouragement to biomass-based
ethanol, which holds great promise for converting a variety of organic
materials into useful fuel, while substantially reducing greenhouse gas
emissions.
This will have substantial benefits for the environment and for rural
economies, while helping to lower our dangerous dependence on foreign
oil.
Some of my colleagues from large coastal states have expressed
concern that this amendment treats their constituents unfairly and seek
a carve-out from its requirements. I respectfully suggest that their
concerns are not supported by the facts.
Governors Gray Davis and George Pataki, one a Democrat and one a
Republican, leaders of the two most populous States in the country,
have stated publicly that their States are better off under the
Renewable Fuels Act than they are under current law.
Their first priority by far is to get out from under the minimum
oxygen standard that will force them to use ethanol when MTBE is
eliminated from the gasoline supply. The amendment before us allows
them that flexibility which they so desperately seek. Moreover, my
colleagues from California and New York worry that even though their
States will no longer be required to purchase ethanol as a result of
the oxygen standard, the cost of gasoline will rise precipitously as a
result of the RFS.
That is simply not the case. Last April the Energy Information Agency
issued a report stating that the cost of establishing a renewable fuels
standard is less than 1 cent per gallon for reformulated gasoline and
less than 0.5 cent per gallon for all gasoline.
Just last month, the California Energy Commission issued a report
stating that the recent increase in California's gasoline prices cannot
be attributable to availability or cost of ethanol which is consistent
with the EIA projections.
What is even more compelling is that California is using nearly twice
the amount of ethanol this year than they would be required to under
the RFS.
I understand that my colleagues are fighting for what they believe is
in the best interests of their constituents, and I respect that. But my
goal in promoting the renewable fuels standard is to solve a nationwide
problem with a nationwide solution. My constituents would prefer not to
give up the oxygen standard, which has played such an important role
historically in expanding the production of ethanol. But I understand
that states like California need greater flexibility in their gasoline
supply. That is why I am willing to look for new prescriptions that
allow States to use alternatives to ethanol and continue to promote the
development of the domestic ethanol industry, which I believe is in the
national interest.
The renewable fuels amendment meets that test. This legislation is a
careful balance of often disparate and competing interests--and a
compromise in the finest tradition of the U.S. Senate. Meeting our
energy challenges is a difficult problem, but is also a great
opportunity to demonstrate American strength and ingenuity.
This amendment takes advantage of both, and I look forward to its
passage.
I thank the Chair for his support and effort, and I yield the floor.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, I failed to indicate at the outset what
has been mentioned by the distinguished minority leader at the outset.
This is a jobs-producing measure. The entire energy bill, as we
consider it, is a measure that will produce literally thousands of jobs
for the American people. Right at the outset, the very first amendment
is a clear indication of how in this bill we intend to produce, in this
instance, agricultural jobs but not pure agriculture--industrial, as it
relates to agriculture with the construction of ethanol plants in and
out and around and about agricultural America.
Having said that, I know there are a number of Senators who want to
speak. It was not for me to say that we have no consent agreement as to
how we will proceed, but I saw the distinguished Senator, Senator
Talent, standing first. I might suggest, just for some orderliness, he
proceed next, and the distinguished Senator from Nebraska follow that.
Then, if other Senators are here, and they seek recognition--
Mr. BOND. Mr. President, may I ask my good friend if he would mention
my name in that list?
Mr. DOMENICI. I wonder, considering the condition of the
distinguished Senator, if he might proceed first.
Mr. TALENT. I was going to suggest that to the Senator from New
Mexico and the Chair.
Mr. DOMENICI. Might we amend that, then, and have Senator Bond go
first, Senator Talent, and then the Senator from Nebraska? Is that all
right? We will proceed in that manner.
I yield the floor.
Mr. BOND. Mr. President, I thank my friend from New Mexico and I
appreciate his kindness, and also my colleagues from Missouri and
Nebraska.
I rise today in support of the renewable fuels standard, as passed by
the Senate Environment and Public Works Committee on which I have the
privilege of sitting.
This package provides a means for significant reductions in our
dependence on foreign oil while we pursue cheaper energy for consumers
that is produced in rural America by our hard-working farmers and
ranchers.
I have spent a lot of years in the Senate Chamber talking about these
issues. Recently a friend complained to me that he was tired of me
talking about biodiesel. We first started talking about it a long time
ago. But I am pleased to have the burr under the saddle to point out
that biodiesel and ethanol are vitally important elements for our
energy program.
I am pleased to see so many of our colleagues joining in the fight
today. My good friend Senator Jim Talent from Missouri has been a
leader on the Energy Committee. I know my colleague Senator Hagel from
Nebraska has long been a champion of ethanol. I add my thanks and my
appreciation to the distinguished chairman of the Environment and
Public Works Committee, Senator Inhofe of Oklahoma, for taking the
leadership position on this issue.
Increasing the use of renewable fuels such as ethanol and biodiesel
diversifies our energy infrastructure, making it less vulnerable to
acts of terrorism while increasing the number of available fuel
options, enhancing competition, and potentially reducing consumer costs
of fuel.
Speaking of decreased fuel costs, I am reminded of some of the
comments of my colleagues during consideration of this package in the
Environment and Public Works Committee. At that time, it was suggested
that ethanol as an oxygenate was the cause of high fuel prices in
California and other areas. I bet we will hear that argument again.
Just as a marker, note this fact. I refer my colleagues to the recent
California Energy Commission report promulgated by Gov. Gray Davis. In
discussing the report's findings, California Energy Commission chairman
William Keese indicated that ``Ethanol, the ingredient, did not have an
impact that we can see on prices. . . .''
Frankly, that ought to answer the questions and concerns that
undoubtedly will be raised on the floor. In fact, I would argue that
ethanol and biodiesel actually reduced the consumer cost of fuel by
extending supplies, offering alternatives to more costly imported oil,
and providing leverage for independent fuel marketers to compete
against the larger, more powerful integrated oil companies.
The renewable standard will more than double the amount of renewable
fuel we use. I am told that renewable fuel use will increase to about 3
percent of our total transportation fuel supply, replacing roughly 66
billion gallons; that is, 1.6 billion barrels of foreign crude oil by
2012.
Of course, the environmental benefits of transitioning from petroleum
fuels to clean, domestically produced renewable ethanol and biodiesel
is clear. Not only can we reduce our dependence on foreign oil but with
the renewable standard our environmental goals of
[[Page S5891]]
reducing hydrocarbon, particulate sulfur, and other polluting emissions
would be pursued.
This RFS will also have a positive impact on the economy,
particularly in rural areas which have been hardest hit in the economic
slowdown.
According to studies, the renewable standard would create as many as
300,000 American jobs, increase net farm income by $6.6 billion a year,
and reduce farm program payments by $7.8 billion. In other words, we
can reduce farm program payments and increase net farm income by a
combined total of $14.4 billion. Not many programs give you that much
bang for the buck.
One farm analyst said that as many as 13.1 million acres of corn can
be used to supply ethanol by 2012. That is almost 19 percent of last
year's corn production. Today, only 6 percent of the crop goes into
ethanol.
In our home State, Missouri corn farmers could see an average
increase of about 12 cents per bushel over the next 10 years.
Similarly, our soybean farmers will see increased benefits as biodiesel
use will increase dramatically.
I encourage and invite my colleagues to come out to the heartland to
see what we have. Come out and visit Nebraska, Missouri, and Iowa and
see what this industry is all about. We could all learn the benefits of
ethanol, soy diesel, and biodiesel. We will see how the homegrown
renewable fuel benefits the environment, the economy, and our
communities. Come out to my State and see what farm leaders have done
to provide value-added opportunities for Missouri farmers.
In 1994, Golden Triangle Energy of Craig, MO, and Northeast Missouri
Grain Processors of Macon, MO, organized as new generation
cooperatives. Northeast Missouri Grain Processors opened their plant on
April 29, 2000. I was pleased to be there. It had been producing 22
million gallons of ethanol per year. They have just flipped the switch
on an additional capacity to make over 40 million gallons a year.
Come to Missouri and visit the communities and areas where ethanol
production is underway and see the impact of the expanding usage of
fuel through this renewable standard on Main Street, U.S.A.
I now defer to my colleagues. I thank them for their kind
accommodation. I express my thanks also to the distinguished manager of
this bill, who is doing an outstanding job. We look forward to seeing a
good energy bill passed. But a good energy bill must have a good
renewable fuel standard.
I thank the Chair.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. TALENT. Mr. President, I thank my colleague from Missouri for his
kind comments.
It is a great pleasure to be here today to talk on behalf of such an
important amendment and to recognize that we certainly have come a long
way.
For many years, our Nation has needed a sound and balanced energy
policy that includes a renewable fuels standard. For many years, we
have all talked and talked about alternative energy, about renewable
energy, and today with the first bipartisan leadership amendment of
this Congress, the Republican and Democratic leaders have introduced
the renewable fuels standard legislation as an amendment to S. 14.
I believe what has happened today stands on the shoulders of the work
by many of the most distinguished Members of this body in the last
decade. We heard from the senior Senator from Missouri. We are going to
hear from the Senator from Nebraska and the compromise, if you will, in
the last Congress.
The renewable fuels standard is the biggest single reason I sought to
get on the Energy Committee. I am proud to be one of the cosponsors of
the amendment and to be associated with what is going to happen today.
I know there are going to be many chances to come to the floor and fend
off various second-degree amendments from opponents of renewable fuels.
So I will keep my initial comments brief today. I look forward to
future opportunities to discuss other aspects of the amendment.
I note also at the outset that this legislation is supported by a
historic coalition. When you get a coalition that ranges from the Farm
Bureau to the American Petroleum Institute, it tells you the consensus
that has been created finally on behalf of this idea. It is because it
is a good idea. It is because it is the right thing to do. It is at the
crux of so much we all want for Americans. It is at the crux of
economic growth in jobs. It is at the crux of energy security. It is at
the crux of environmental quality and value-added agriculture and
family farming.
An article ran on April 23 in the Daily Statesman, which is the daily
paper in Dexer, MO. The headline was ``Missouri Job Loss Rate Number
One in the Nation.'' Last year, Missouri lost 77,000 jobs. The
enactment of the renewable fuels standard will, first and foremost--and
right away--bring thousands of jobs to Missouri, and tens and tens of
thousands of jobs--hundreds of thousands of jobs--to the country.
We are talking about long-term good jobs in agriculture, in trade, in
transportation, in energy, and in food processing. We are talking about
jobs on the farm. We are talking about construction jobs to build these
plants and maintain them. We are talking about jobs for the suppliers
of these ethanol plants. We are talking about jobs for those who buy
the ethanol and the by-products. We are talking about transportation
jobs in shipping the ethanol. We are talking about trade opportunities
for the United States. It will happen as a result of what I believe the
Senate is going to do today.
A recent study found that increasing ethanol production to 5 billion
gallons annually would create 214,000 jobs in the country, $5.3 billion
in new investment, and increase household income by $51 billion. I want
those benefits for this country, and I want those benefits for
Missouri.
These increasingly modern ethanol plants are equipped to produce 40
million gallons of ethanol a year. I have visited the plants, as has my
colleague, Senator Bond, in Missouri, plants we already have in Craig
and Macon. The economic benefits of one of those plants are
significant. They include an increase of household income for the
community, the county in which these plants are operated; many of these
counties have been struggling economically. It includes an increased
household income of $20 million for these counties annually. Additional
farmer cooperatives around the State of Missouri are organizing funding
in an effort to produce even more ethanol in Missouri. I know this is
happening in Nebraska. It is happening all over the Midwest. It is
going to continue happening.
Ethanol is also at the crux of energy security for America. Ethanol,
biodiesel, and other renewable fuels are going to be playing an
increasing role in reducing the need for imported oil. This is an area
where I have to respectfully disagree with the opponents of the
renewable fuels standard.
I am very strongly in support of providing incentives for increased
exploration and recovery of oil reserves in this country. And we have a
progrowth, proenergy energy bill, largely because of the efforts of the
distinguished chairman of the Energy Committee. I have supported every
effort to increase the amount of oil reserves we have in the United
States and that we can practically explore and recover.
But it is clear that we cannot just drill our way out of our
dangerous oil dependency. We have to have other alternatives, and
ethanol and biodiesel are the alternatives we have now--not 5 years,
not 10 years, not 15 years from now, but now--to reduce our dependence
on oil imports. I do not ever want to be in a situation again where we
are sending $4 billion a year to somebody like Saddam Hussein to buy
oil, and depending on regimes like that one for the health of our
national economy.
Ethanol is a key to energy independence for the United States. The
United States is increasingly dependent on imported energy to meet our
personal, transportation, and industrial needs. As a domestic,
renewable source of energy, ethanol can reduce our dependence on
foreign oil and increase the United States' ability to control its own
security and economic future. Our energy policy should first and
foremost promote domestic, renewable fuels, not foreign oil imports.
This is an area where I respectfully disagree with the opponents of
renewable fuels standard. It is clear that we cannot drill our way out
of our dangerous oil dependency--especially
[[Page S5892]]
without access to the oil in Alaska's ANWR. America's national, energy,
and economic security are vulnerable due to our dangerous dependence on
oil imports.
In 1999, America was importing over 55 percent of its oil and
petroleum products. Just 2 years later, our dependency increased to
over 59 percent. By 2025, the Energy Information Administration
projects the U.S. will import nearly 70 percent of its petroleum.
Something must be done.
It is absolutely necessary that we take steps to reduce our
dependence on foreign oil. Over the next decade the RFS will reduce
crude oil imports by an estimated 1.6 billion barrels.
In addition to the establishment of a national ethanol standard, the
amendment has other important provisions that include an orderly phase-
down of MTBE use and removal of the oxygen content requirement for
reformulated gasoline. That is very important, and it is very important
to the environment.
I am sure that over the coming weeks we are going to have a lot of
opportunities to debate things such as climate change and CAFE
standards. I remind opponents of this amendment that ethanol is one of
the best tools we have to fight air pollution from vehicles. I
encourage all proenvironment organizations to score this amendment as a
vote in favor of America's air quality.
The use of ethanol-blended fuels reduces greenhouse gas emissions by
12 to 19 percent compared with conventional gasoline. The American Lung
Association of Chicago credits ethanol-blended reformulated gasoline
with reducing smog-forming emissions by 25 percent since 1990. Again,
this is an alternative which we have today to protect the environment.
The chairman's energy bill contains many exciting opportunities for
the development of clean hydrogen vehicles. I support that. But those
technologies are a long way off.
My children may drive hydrogen cars. Today I can drive a car fueled
by ethanol. A couple weeks ago, I visited a Break Time convenience
store in Columbia, MO, that is selling ethanol at the same price that
it is selling regular gasoline.
Renewable fuels such as ethanol and biodiesel provide a solution to
our air quality problems that we can use now. Today you could fill your
car with an ethanol blend or a biodiesel blend--without any changes to
your vehicle. The chairman's energy bill contains many exciting
opportunities for the development of a clean, hydrogen vehicle, but we
all know these technologies are a long way off. My children may be
driving these hydrogen cars, but today I can drive a car fueled by
ethanol. Fleet vehicles in Missouri can run on ethanol or biodiesel
without any costly engine upgrades--today.
The use of these renewable fuels will bring environmental benefits in
the short term while we continue to explore long-term opportunities
such as hydrogen cars and other technologies.
As I said, I recently toured both of the ethanol plants in Missouri
and visited an ethanol fueling station during the April recess. I have
to tell you, this is an exciting and innovative way to add value to
traditional commodities. The use of grain for ethanol production adds
up to 30 cents to every bushel of corn. Not only do farmers benefit
from the higher price but also by joining cooperative and building
ethanol production facilities. They are able to directly take advantage
of the value-added market through ownership of the plant. They continue
to make money during times of price volatility.
There is no question that the renewable fuels standard will reduce
our dependence on foreign oil. It will slow the deterioration of the
environment through the reduction of fossil fuel emissions, enhance
national, energy and economic security, create a new industrial base
with tens of thousands of new, high quality jobs, and add value to
traditional commodities.
I am happy to join Senate Leadership in offering this amendment. It
is time that we make the RFS a part of our national energy policy.
Mr. President, I want to say how pleased and proud I am to be a part,
in a small way, of this effort. I am especially pleased that this is
the first bipartisan amendment that is being offered on the Senate
floor. It will strengthen this energy bill we put together under the
leadership of Senator Domenici. It is something we can all stand up and
support.
I hope we will get a thumping, bipartisan majority in support of this
amendment. Again, it is a key to jobs. It is a key to energy
independence. It is a key to environmental quality. And it is a key to
value-added agriculture and the family producers in Missouri and around
the country. I am pleased to speak in favor of it.
I yield the floor.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, we are going to hear now from one of the
early proponents of ethanol and of this bill and of this composite that
ultimately got such broad bipartisan support. It is my privilege to
have as a supporter of this amendment and of the energy bill the
distinguished Senator from Nebraska, Mr. Hagel.
I thank the Senator for all the work he has done in this area and for
all the help he has given me by way of advice on the energy bill, which
is pending before the Senate, of which this will become an integral and
vital part. Thank you so much.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. HAGEL. Mr. President, I first want to recognize the comments of
the distinguished chairman of the Energy Committee. He is far too
generous, but that is usually his nature. And I appreciate very much
his thoughtful words.
I appreciate the comments of my friend from Missouri. I think they
cut to the essence of what this issue is about, as well as the comments
of our dear friend, the senior Senator from Missouri.
(Mr. DOMENICI assumed the chair.)
Mr. HAGEL. Mr. President, I am privileged to be part of this effort
because I do not believe there is anything more important for the
future of this country than to establish an energy policy that we can
build upon; that does, in fact, move right to the core of our national
security, our economic growth, and all of the elements that are
interconnected for the future of this country.
So I come to the floor this morning to address briefly some of the
elements of this amendment that will be offered and to, once again,
register my strong support of the renewable fuels standard amendment to
the energy bill.
I, like my colleagues who have spoken prior to me, wish to recognize
and thank the leadership of Majority Leader Frist and Minority Leader
Daschle for getting this amendment to the floor, and, of course, the
distinguished chairman of the Energy Committee, Senator Domenici, for
allowing us to have what many of us believe is a very important
amendment to be the first amendment up on the energy bill, of which I
am a strong proponent and supporter.
This amendment, as we have heard, would enhance air and water
quality, reduce supply and distribution challenges in the gasoline
market, and increase energy security by expanding the use of clean,
domestically produced renewable fuels.
Specifically, this amendment follows the advice of the EPA's Blue
Ribbon Panel on Oxygenates by repealing the Federal oxygenate mandate
and phasing out the use of MTBE nationwide. It also contains a
reasonable renewable fuels standard, which would gradually increase the
Nation's use of renewable fuel to 5 billion gallons a year by 2012--all
of this while protecting the environmental gains already made by the
reformulated gasoline program.
This legislation mirrors the bipartisan fuels agreement in last
year's Senate energy bill, of which it has been stated here this
morning gained the votes of 69 Senators. This year, we have worked to
build an even broader bipartisan coalition of cosponsors. Much has
happened since the Senate passed its energy bill last year. The
renewable fuels industry has expanded considerably to meet growing
demand.
The ethanol industry opened 12 new plants last year, with 10
additional plants now under construction. Sixteen of these new plants
are farmer owned--farmer owned--individually owned cooperatives.
By the end of 2003, annual ethanol production capacity is expected to
exceed 3 billion gallons. In December, the ethanol industry wrapped up
a record year--2.13 billion gallons in 2002, up by more than 20 percent
over 2001.
[[Page S5893]]
Also, Chevron Texaco announced earlier this year it will switch from
blending MTBE to blending ethanol in the southern California market,
making Chevron the last of the large California refiners to make the
switch to ethanol. This means that this year approximately 80 percent
of California's federally reformulated gasoline will be blended with
ethanol.
We should not forget that biodiesel, made primarily from soybeans,
and still a developing fuel technology, has grown enough that it is now
used in more than 200 State and Federal automobile fleets, using a 20-
percent blend or higher.
Today, 16 States have already banned or are in the process of banning
MTBE. With State MTBE bans will come increased challenges to fuel
distribution and supply.
The national phase-down of MTBE proposed in this bill will help us
meet these challenges. And a national renewable fuels standard with a
credit and trading program--that makes sense, which is relevant, which
has common sense--will ensure that renewable fuels are used where they
make the most sense--not a mandate, where they make the most sense.
In fact, according to a recent analysis by the Department of Energy,
enacting this fuels bill would even reduce refiner costs at least by .2
percent per gallon compared to current law.
The standard in this amendment is a fair and workable compromise we
crafted over a year ago. My friend from Missouri, Senator Talent,
referenced the compromise, referenced the organizations that came
together over a long period of time to fashion a very workable
alternative, built upon the good work of many you have heard referenced
this morning: Senator Daschle, Senator Lugar, so many who have worked
so hard for so many years, Senator Dole. It has not just come from corn
and soybean-producing States. It has come from the leadership of
individual Senators with a wider lens of understanding of national
security issues, environmental issues, and economic issues, because
they are all interconnected.
This effort was bolted together by many people who deserve much
credit: The American Petroleum Institute, National Farm Bureau, the
environmental community, Northeast air directors, agriculture groups
from all over the country, DOE, EPA, and many others. Senator Daschle
and I helped facilitate those talks last year, as well as a number of
our colleagues who are here today and will most likely speak today.
Contrary to the opponents of this amendment, this is not a per-gallon
mandate. It will not force a specific level of compliance in places
where compliance may be difficult. In fact, the credit trading
provision in this amendment will give flexibility to refiners who
utilize ethanol or biodiesel where it is most economically attractive.
Our Nation needs a broader, deeper, and more diverse energy
portfolio. Today less than 1 percent of America's transportation fuel
comes from renewable sources. Under this amendment, renewable fuel
would increase to approximately 3 percent of our total transportation
fuel supply, tripling the amount of renewable fuel we now use. Today
America imports nearly 60 percent of the crude oil it consumes. The
Senator from Missouri defined in some detail the numbers. We continue
to hold our economy, our national security, hostage to foreign oil.
This country consumes more than 300 billion gallons of crude oil a
year. Of that, 165 billion gallons is refined into gasoline and diesel.
This amendment says that by 2012, not less than 5 billion gallons of
that 165 billion gallons shall come from renewable sources.
By enacting this legislation, we would replace 66 billion gallons of
foreign crude oil by 2012, reduce foreign oil purchases by $34 billion,
create more than 250,000 jobs nationwide, and boost U.S. farm income by
more than $6 billion a year.
I join my other colleagues who have spoken this morning--and others
who will speak today--to enthusiastically encourage all our colleagues
to pay attention to the amendment, to be aware of its consequences,
have some sense of why this is just not another renewable fuels
amendment. It has dramatic implications for the future of the economy,
for our national security, and our independence. It also helps America
address the additional and important environmental challenges that lie
ahead. This is an amendment about America's future.
I thank the Chair and yield the floor.
The PRESIDING OFFICER (Mr. Burns). The Senator from Minnesota.
Mr. COLEMAN. Mr. President, I want to add my voice in support of the
renewable fuels standard amendment that has been offered by the
majority leader and the Democratic leader.
This may be a bit unconventional for a place like the Senate floor,
but I want to begin my remarks by talking about duct tape. I am not
talking about it in connection to homeland security, or even the fact
that one of the largest producers, 3M Corporation, is in my home city
of Saint Paul.
Duct tape is probably in every garage in Minnesota and on most work
benches. Why? Because you can do so many things with it. For those of
us who are mechanically challenged it is essential. It is cheap. It is
simple. You can use it for temporary car repair, plumbing, picture
hanging . . . I even heard of a guy who used it on a duct! The point is
that it is valuable because it can do many things well.
The renewable fuels standard we are talking about today is a duct
tape kind of proposal. It will decrease our dependence on foreign oil.
It will help keep America's air and water cleaner. It will increase the
income of our hard working farm families. And it will provide economic
development and jobs for rural Minnesota. I am not sure if there is one
other thing we could do as a national government that would do more
good, for more people, at less expense and with no down side than set a
renewable fuels standard. Allow me to explain in further detail.
Today 56 percent of our oil comes from foreign sources. As
frightening as that statistic is, we are heading in the wrong
direction: becoming more dependent as the years go by. When George
Washington gave his Farewell Address, he warned us solemnly to ``avoid
entangling alliances.'' We compromise the sovereignty of our Nation by
giving other nations that powerful leverage on our people.
This reasonable renewable fuels standard would reduce our dependence
on foreign oil by 1.6 billion barrels over the next 10 years. That
would make us an even stronger nation because we would be winning back
the power to determine our own destiny.
In Minnesota, we put a high value on clean air and clean water.
Carbon monoxide, hydrocarbons, Nitric Oxide, and other toxins and
particulates are responsible for countless environmental and health
problems. As a matter of compassion, we must act to reduce these
pollutants to avoid the suffering they cause. As a matter of health
policy, the best way to contain costs is to prevent people from
becoming sick in the first place.
Studies have shown that ethanol can reduce emissions of hydrocarbons
by 20 percent and particulates by 40 percent. I believe biodiesel holds
out the same promise. Right down the road from Minnesota in Chicago,
ethanol use helped bring that huge city under the federal standard for
ozone. Phasing out MBTE will have a dramatic impact all by itself.
As I spend time with Minnesota's farm families, they don't beat
around the bush--whom they support, I might add, in large numbers. They
don't care to listen to a lot of fancy speeches. They say, ``Senator
you can help us if you do two things: lower our costs and raise our
prices. We'll do the rest.'' The great folks who feed the world and
undergird our economy--at great personal risk and sacrific--deserve to
be heard and listened to.
Pure and simple: it is better to send corn and soybeans to ethanol
and biodiesel plants to create energy then it is to send too much to
the elevators and depress prices.
The Department of Agriculture estimates that ethanol adds 30 to 50
cents of additional value to every bushel of corn produced in the
United States. That is a difference consumers of corn flakes will never
notice, but it is a huge change at the margin for hundreds of thousands
of hard working American farmers.
And make no mistake: farmers need help right now. In recent years,
those who provide us with the safest, most abundant, most affordable
food supply
[[Page S5894]]
in the world have been struggling with the lowest real net cash income
since the Great Depression, record low prices, record high costs of
production, and foreign tariffs and subsidies some 5 and 6 times higher
than our own.
President Kennedy once said that ``the farmer is the only man in our
economy who buys everything he buys at retail, sells everything he
sells at wholesale, and pays the freight both ways.'' The RFS is an
opportunity to turn things around for our farm families: to give them a
chance to earn a living off the market while yielding huge economic,
environmental and energy dividends.
As every Senator should know, farm policy and rural development go
hand in glove. The key to so many rural communities is for them to reap
a greater economic benefit from the things they produce. If they just
harvest the crops or raise the cattle and watch them roll over the hill
for someone else to process and profit from, that is not going to
maximize economic development and job growth potential in the area.
They need to add value to those products.
There are no better examples of this than ethanol and biodiesel. Let
me talk for a moment about what many call the ``Minnesota Miracle.'' I
hold it out to Members of other States as an incentive for what
approving an RFS could mean to your communities.
The State of Minnesota leads the Nation in promoting the production
and use of ethanol. Nearly all of Minnesota's 2.6 billion gallons of
gasoline are blended with 10 percent ethanol, reducing fuel imports by
10 percent. Today, Minnesota boasts 14 ethanol plants--13 of which are
owned by Minnesota farmers. And, what these 14 plants have produced--
besides ethanol--is truly phenomenal: 40,000 jobs, over a half billion
a year in economic activity, and $15 million in tax revenues.
Now, on a national scale, studies suggest that the RFS will, over the
next decade, reduce our Nation's trade deficit by more than $34
billion, increase our gross domestic product by $156 billion, create
more than 214,000 new jobs, expand households income by some $51
billion, increase net farm income by nearly $6 billion per year, while
cleaning our air and water and displacing 1.6 billion barrels of
foreign oil. In short, the RFS will allow Minnesotans to build on our
State's success while creating new opportunity and promise throughout
the country.
Mr. President, I am proud to stand here today in the shadow of the
work Senator Hagel has done, the work the chairman of the Energy
Committee has done, and stand in support of the amendment offered by
the majority leader and Democratic leader, an amendment that will
promote energy independence, cleaner air and water, stronger farm
prices, and viable rural communities. Renewable fuel standards will do
all these things. That does duct tape one better.
I yield the floor.
The PRESIDING OFFICER. The Senator from Indiana is recognized.
Mr. LUGAR. Mr. President, I compliment the distinguished Senator from
Minnesota not only on his remarkable statement, but likewise on the
Minnesota miracle. The work in his State is truly a manifestation of
all that can come from the legislation we are discussing today in terms
of jobs, income for farmers and, most important, greater energy
independence and cleaner air for our country.
I am delighted to join my colleague from Minnesota in presenting and
sponsoring and commending the majority leader and the minority leader
for presenting this legislation to us today.
I am a strong advocate of this initiative to establish a nationwide
renewable fuels standard as a part of America's national energy policy.
Moving from a hydrocarbon to a carbohydrate economy will increase
energy independence, reduce oil imports, protect air and water, reduce
greenhouse gas emissions, and stimulate rural economies. The renewable
fuels amendment we are considering today does all of these things,
which is why I regard it as an essential component of the Energy Policy
Act of 2003.
The renewable fuels amendment is the culmination of years of effort.
As a result of the hard work, today's amendment enjoys strong support
from both parties and a broad array of interest groups.
Several years ago, Senator Daschle and I first introduced a bill
creating a renewable fuels standard. It has been my privilege to speak
with Senator Daschle for many years on behalf of this concept, in front
of various groups in our country, as well as with our colleagues in the
Senate. I have treasured my friendship with Senator Daschle on the
Agriculture Committee of the Senate. There we have had many hearings
and productive discussions. The Renewable Fuels Act of 2001, the bill
Senator Daschle and I introduced, represented an important step toward
reducing our dependence on foreign oil and improving our Nation's
energy security. At the same time, this proposal went far toward
protecting the environment, supporting rural economic development, and
increasing the flexibility of the national fuel supply to reduce the
impact of future price spikes. Last year Senator Daschle and I
incorporated that legislation into the Senate Energy bill. I am hopeful
this year my colleagues will again demonstrate that they appreciate the
importance of the renewable fuels standard to our country, and I am
confident we will do so.
When reflecting back on recent history, one trend that should disturb
every American is our growing dependence on oil imports. Set that trend
against the many political crises erupting in oil-rich regions around
the world, and it is clear our addiction to oil must be curtailed. I
believe part of the answer lies with the development of cheap,
plentiful, renewable sources of energy. The current tax incentive for
ethanol has helped foster creation of a strong domestic renewable fuels
industry. But more needs to be done to reduce the cost of ethanol
production and to make the commodity more competitive with fossil
fuels. It is time for a nationwide renewable fuels standard.
Recent and prospective breakthroughs in genetic engineering and
processing are radically changing the viability of ethanol as a
transportation fuel. It is now possible to use biomass, meaning
virtually any plant or plant product, to produce renewable fuels. So-
called cellulosic ethanol may decisively reduce the cost of ethanol, to
the point where petroleum products may soon face vigorous competition.
In 1999, James Woolsey, former director of the CIA, and a consultant
on many important issues, and I coauthored an article in Foreign
Affairs magazine that talked about our strategic need for energy
independence--at least outlined how a biomass strategy, which included
ethanol from many sources, was a critical part of that strategy.
In 1999, following publication of that article in Foreign Affairs, I
introduced a bill that now drives many of these scientific
breakthroughs. The Biomass Research and Development Act accelerated and
coordinated the biomass research and development activities of Federal
agencies. Soon after this bill was enacted into law as Title III of the
Agricultural Risk Protection Act of 2000, a bill that came out of the
Senate Agriculture Committee, its competitive research and development
program began accelerating production of biofuels, biochemicals, and
biopower. Today's amendment will build on that initiative in a very
large way by offering an incentive to producers of cellulosic ethanol.
I am proud of the significant progress we have already made to
support renewable fuels. We have made great strides toward
strengthening our national security, improving our rural communities,
and protecting our natural environment.
With today's amendment, we will move still closer to a safer and more
prosperous tomorrow for our country and for the world. I strongly
encourage my colleagues to support this important initiative.
I thank the Chair, and I yield the floor.
Mr. DOMENICI. Mr. President, 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. 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, I say to fellow Senators, we are on this
bill
[[Page S5895]]
until 11:30 a.m. for purposes of discussing the pending amendment. So I
say to anybody who wishes to discuss it, we have this additional time
now. There may be time in the future, but this is assured time now for
anybody who wishes to speak.
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. KYL. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. FEINSTEIN. Mr. President, I want to take this opportunity to
make a few comments as a member of the Energy Committee on the energy
bill that is on the floor and which will be subject to amendment
tomorrow morning. I believe the ethanol amendment will be taken up.
There is an overarching possibility in this energy bill. It can
provide the opportunity to properly fix the badly broken energy market,
to reduce our consumption of oil, and to increase energy production
while protecting our environment and addressing climate change. But at
this point, the Energy Policy Act of 2003 is missing much of what is
needed for a balanced, comprehensive energy policy for this Nation.
I voted against the bill in the Energy Committee because of what is
missing. I look forward to the opportunity to amend this legislation.
First, I believe the bill needs stronger consumer protection to fix
our broken energy market and to prevent another energy crisis like the
one we experienced in the West.
Second, we must increase the fuel efficiency of our vehicles to
reduce the amount of oil we consume, to lessen the amount of carbon
dioxide, the No. 1 greenhouse gas released into our atmosphere, and to
save families and businesses money at the pump.
Third, we must increase our energy production while protecting our
environment. This means not infringing on environmentally sensitive
areas such as the Alaska National Wildlife Refuge or the water off the
California and Florida coasts.
Fourth, we should address global warming and establish plans to
combat climate change.
Fifth, we must encourage the development of new renewable power from
solar, from wind, and from geothermal resources instead of continuing
to subsidize traditional production from nuclear power, for example.
Three years ago this month, California's energy market began to
spiral out of control. In May of 2000, families and businesses in San
Diego saw their energy bill soar. The Western energy crisis forced
every family and business to pay for more energy. The crisis forced the
State of California into a severe budget shortfall. It forced the
State's largest utility into bankruptcy and nearly bankrupted the
second largest utility. Now, 3 years and $45 billion in cost later, we
have learned how the energy market in California was gamed and abused.
In March, the Federal Energy Regulatory Commission issued the ``Final
Report on Price Manipulation in Western Markets which confirmed that
there was widespread and pervasive fraud and manipulation during the
Western energy crisis. The abuse of our energy market was so pervasive
and unlawful. Yet this energy bill does not go far enough to prevent
another Western energy crisis and to curb illegal Enron-type
manipulation.
Remember, this type of fraud and abuse was not limited to just Enron.
There was fraud and abuse across the board, according to the Federal
Energy Regulatory Commission. One of the best examples of this illegal
behavior is demonstrated by the transcript from Reliant Energy that
revealed how their traders intentionally withheld power from the
California market in an attempt to increase prices. This is one of the
most egregious examples of manipulation, and it is clear and convincing
evidence of coordinated schemes to defraud consumers.
Let me read one part of the transcript to demonstrate the greed
behind the market abuse by Reliant and its traders.
On June 20, 2000, two Reliant employees had the following
conversation that revealed the company withheld power from the
California market to drive prices up.
Reliant Operations Manager 1: I don't necessarily foresee
those units being run the remainder of this week. In fact you
will probably see, in fact I know, tomorrow we have all the
units at Coolwater off.
The Coolwater plant is a 526 megawatt plant.
Reliant Plant Operator 2: Really?
Reliant Operations Manager 1: Potentially. Even number
four. More due to some market manipulation attempts on our
part. And so, on number four it probably wouldn't last long.
It would probably be back on the next day, if not the day
after that. Trying to uh. . .
Reliant Plant Operator 2: Trying to shorten supply, uh?
That way the price on demand goes up.
Reliant Operations Manager 1: Well, we'll see.
Reliant Plant Operator 2: I can understand. That's cool.
Reliant Operations Manager 1: We've got some term positions
that, you know, that would benefit.
Six months after this incident, as the Senate Energy Committee was
attempting to get to the bottom of why energy prices were soaring in
the West, the president and CEO of Reliant testified before Congress
that the State of California ``has focused on an inaccurate perception
of market manipulation.''
Reliant's president and CEO went on to say, ``We are proud of our
contributions to keep generation running to try to meet the demand for
power in California. Reliant Energy's plant and technical staffs have
worked hard to maximize the performance of our generation.''
These transcripts prove otherwise and reveal the truth about market
manipulation in the energy sector.
Yet FERC refused to find and consider all evidence of fraud and
manipulation and the State of California was forced to take the
commission to court to ensure FERC would carry out its public duty to
fully investigate the western energy crisis and punish wrongdoing. Only
when the Ninth Circuit Court of Appeals ruled FERC had to allow the
California parties to collect and submit evidence did we find more
instances of pervasive illegal behavior.
After a 100-day discovery period that ended March 3, 2003, the State
of California, the California attorney general's office, and the
state's largest utilities filed over 3,000 pages of evidence at the
Federal Energy Regulatory Commission to show how fraud and manipulation
was pervasive throughout the western energy crisis of 2000-2001. The
market abuse was not limited to a few rogue traders at one firm, but
was a widespread series of schemes perpetuated by many employees across
most companies that supplied and traded in the West.
During their discovery period, the ``California parties'' found the
following information:
Details on new specific incidents when energy companies intentionally
held their plants offline to drive prices up during 2000 and 2001; new
transcripts of conversations between energy company employees revealing
an intent to defraud and manipulate the California market; new evidence
of document destruction by energy companies to hide details of their
behavior in the western energy market; and new evidence laying out
possible anti-trust violations by energy companies.
I ask unaminous consent that a copy of the report my office issued
when the ``Protective Order'' was lifted by the Federal Energy
Regulatory Commission be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
New Evidence That Energy Companies Besides Enron Manipulated the
Western Energy Market
[Unofficial Report--Office of Senator Dianne Feinstein]
After a 100-day discovery period that ended March 3, 2003,
the State of California, the California Attorney General's
Office, and the state's largest utilities filed over 3,000
pages of evidence at the Federal Energy Regulatory Commission
to show how fraud and manipulation was pervasive throughout
the Western Energy Crisis of 2000-2001. The market abuse was
not limited to a few rogue traders at one firm, but was a
widespread series of schemes perpetuated by many employees
across most companies that supplied and traded in the West.
highlights of the information filed by the California parties
(This information from the California Parties was under a
``Protective Order'' at FERC.)
Details on new specific incidents when energy companies
intentionally held their
[[Page S5896]]
plants offline to drive prices up during 2000 and 2001.
New transcripts of conversations between energy company
employees revealing an intent to defraud and manipulate the
California market.
Reliant knew about transcripts proving their employees held
power offline, but the company sat on the evidence for over a
year before turning them over to FERC. (CA Parties brief,
p122, footnote 375/Exhibit CA-218).
New evidence of document destruction by energy companies to
hide details of their behavior in the Western Energy Market.
New evidence laying out possible anti-trust violations by
energy companies.
The filing by the California parties shows that there was
an extensive and coordinated attempt by energy companies to
game the Western market to drive prices up by engaging in the
following:
(1) Withholding of Power--driving up prices by creating
false shortages.
New evidence of Withholding of Power according to the
California parties: (CA Parties brief, p28-31/Exhibit CA-9).
On August 15, 2000 Williams reported that its plant in Long
Beach called Alamitos 7 was unavailable due to NOX
limitations, but AES's real-time logs from that day show the
plant was shut down because Williams directed it to be.
Reliant failed to return its Etiwanda Unit 2 in Rancho
Cucamonga to service for two days after repairs were
completed on January 26, 2001, even though the ISO system was
experiencing continuous Stage 3 emergencies in California.
Redondo Beach Unit 6 power plant was shut down by Williams
and AES April 3-April 6, 2000. Although the ISO was told the
plant was offline due to a boiler tube leak, the plant
records indicate this was a planned shutdown and the leak was
an excuse concocted two days later.
Dynegy shut down its El Segundo Unit 1 plant August 30-
September 3, 2000 for repairs, but the repairs had been done
and the plant was shut down to force prices up.
Mirant held its Pittsburgh Unit 1 plant offline until
October 22, 2000 even though an external tube leak ended
October 20, 2000.
Duke delayed returning Oakland Unit 1 to service after
repairs to a lube oil cooler and a cooling fan in November,
2000 despite ISO-declared emergencies.
During an ISO-declared emergency December 19 and 20, 2000,
Williams declared Redondo Unit 5 a forced outage due to a
boiler tube leak. However, the control operator logs
uncharacteristically put quotation marks around the outage
reason, ``Blr. Tube Leak'' and later, after tests were done,
the logs indicate that no leaks were found.
Reliant delayed reporting the end of an outage at its
Ellwood Unit in Goleta for more than twelve hours during peak
demand in early April 2001.
Between November 19 and December 5, 2000 Dynegy reported
that its El Segundo 1 and 2 units (with a capacity of about
350 MW) were on ``forced outage,'' but these units were
actually shutdown because Dynegy claimed its operating staff
was on vacation. Forced outages should not include vacation
days--especially during ISO emergencies, which occurred on
November 19 and 20.
(2) Bidding to Exercise Market Power--suppliers bid higher
after the California ISO declared emergencies, knowing the
State would need power and be willing to pay any price to get
it.
New evidence of Bidding to Exercise Market Power according
to the California parties:
A Mirant email to eleven traders in July of 2000 reveals
this strategy: ``load is avg above 40 thousand during peak.
So, submit revised supp. Bids and `stick-it to `em!!' '' (CA
Parties brief, p42-43/Exhibit CA-141).
(3) Scheduling of Bogus Load (aka ``Fat Boy'' or ``Inc-
ing'')--suppliers submitted false load schedules to increase
prices.
New evidence of Scheduling Bogus Load according to the
California parties:
A Dynegy trader confirms that Dynegy's load deviation in
August 2000 is ``probably because [the traders] are just
doing some dummy load scheduling.'' (CA Parties brief, p48/
Exhibit CA-202).
A conversation between a Mirant trader and a trader from
Public Service of Colorado reveal a joint effort to engage in
``Fat Boy.''
The trader from Public Service of Colorado states, ``Why
don't we just do something where we overschedule,
overschedule load and share an upside, dude.''
The Mirant trader responds, ``That's fine.'' (CA Parties
brief, p49/Exhibit CA-204)
A Sempra trader states Sempra should submit ``fake load''
to the day ahead market. (CA Parties brief, p49/Exhibit CA-
71)
A Williams trading strategy is identified as ``scheduling
bogus load.'' (CA Parties brief, p49/Exhibit CA-22).
An internal Powerex memo documents that Powerex entered
into a contract with the explicit purpose of
``overscheduling'' and ``underscheduling'' and for congestion
manipulation. (CA Parties brief, p49).
(4) Export-Import Games (aka ``Ricochet'' or ``Megawatt
Laundering'')--suppliers exported power out of California and
imported it back into the State in an attempt to sell power
at inflated prices.
New evidence of Export-Import Games according to the
California parties:
Powerex's head trader congratulated its daily traders on
their successful use of strategies to buy-ahead and sell back
real-time. (CA Parties brief, p53/Exhibit CA-40).
Reliant had ``camouflage transactions'' where the company
sold power out of California day-ahead to Arizona and New
Mexico utilities, and bought it back for sale in the real-
time market. (CA Parties brief, p55/Exhibit CA-56).
(5) Congestion Games (aka ``Death Star'')--suppliers
created false congestion and were then paid for relieving
congestion without moving any power.
New evidence of Congestion Games according to the
California parties:
Other names like ``Death Star'' were given to these
schemes: EPMI^Star, CISO^Death, Curious and George, Red and
Green, Hungry and Hippo, James and Dean or Chinook and
Atlantic and SCEM^Loopy. (CA Parties brief, p59/Exhibit CA-
1).
These congestion games were called ``free money.'' (CA
Parties brief, p59/Exhibit CA-145).
A Mirant trader summed up the scheme, ``I mean its just
kind of loop-t-looping but it's making money . . . [laugh].''
(CA Parties brief, p48/Exhibit CA-204).
(6) Double-Selling--suppliers sold reserves, but then
failed to keep those reserves available for the ISO.
(7) Selling of Non-Existent Ancillary Services (aka ``Get
Shorty'')--suppliers sold resources that were either already
committed to other sales or incapable of being provided.
(8) Sharing of Non-Public Generation Outage Information--
the largest suppliers in California shared information from a
company called Industrial Information Resources that provided
sellers detailed, non-public information on daily plant
outages. A one-year subscription to Industrial Information
Resources cost $70,000. Providing multiple competitors the
same, non-public, outage information signals all competitors
to act in a parallel manner.
New evidence of Sharing of Non-Public Information according
to the California parties:
Duke energy traders called Industrial Information Resources
``the mole.''
For example, Duke trader James Stebbins emailed: ``I just
heard back from the mole. He is reporting that the PV3 will
be coming back on line 6 days earlier than expected. The new
return date is March 3. Good luck and happy selling.'' (CA
Parties brief, p70/Exhibit CA-95 and Exhibit CA-253).
(9) Collusion Among Sellers--sellers were jointly
implementing or facilitating Enron-type trading strategies.
New evidence of Collusion Among Sellers according to the
California parties:
Glendale traders learned manipulation from Enron and Coral
traders. (CA Parties brief, p77/Exhibit CA-105 and Exhibit
CA-1).
Sempra provided Coral with advance information regarding
the status of a plant. (CA Parties brief, p78/Exhibit CA-1).
Transcripts of calls show traders from Public Service of
Colorado and Mirant discussing ``sharing'' or ``splitting''
``the upside. (CA Parties brief, p79/Exhibit CA-204).
(10) Manipulation of NONOX Emission Market--
sellers manipulated the market for NONOX emissions
in the South Coast Air Quality Management District through a
series of wash trades that created the appearance of a
dramatic price increase that may have been fabricated.
For example, Dynegy, together with AES and others, entered
into a series of trades of NONOX credits in July
and August 2000 by which Dynegy would sell a large quality of
credits and then simultaneously buy back a smaller quantity
of credits at a higher per credit price. (CA Parties brief,
p90-93/Exhibit CA-11).
(11) Wanton Document Destruction--sellers (not just Enron)
flagrantly destroyed documents detailing behavior in the
Western Energy Market.
New evidence of Wanton Document Destruction according to
the California parties:
Mirant--an ex-Mirant employee disclosed that he was
instructed to delete certain files relating to the California
markets from hard drives and that key Mirant executives were
instructed to turn in their laptops so that Mirant could
clear their hard drives. (CA Parties, brief, p129/Exhibit CA-
178).
City of Glendale, California--A Glendale employee, Jack
Dolan, told an ex-Glendale employee, Carl Edginton, that Mr.
Edginton could destroy one of the documents that contained
information about Enron's gaming strategies. (CA Parties
brief, p129-130/Exhibit CA-213).
(12) Negligent Document Destruction--sellers failed to
retain documents detailing behavior in the Western Energy
Market in accordance with FERC rules and the Federal Power
Act.
According to the California parties, new evidence of
Negligent Document Destruction by: Power, Portland General
Electric, Reliant, Bonneville Power Administration, City of
Glendale, Northern California Power Agency. (CA Parties
brief, p130-132).
(13) Traders Did Not Care How High Prices Went--sellers
said that it did not matter how high prices went, as long as
Californians paid and generators made money.
New evidence Traders Did Not Care How High Prices Went in
the filing:
Conversation between two Reliant employees on May 22, 2000:
Kevin: ``Hey, guys, you know when we might follow rules? If
there's some sort of penalty.''
Walter: ``That's right.''
Kevin: ``I would never suggest it, but it seems like the
writing would be on the wall.''
Walter: ``Well, I mean, there's--you know, our position is
if it's a reliability issue, then the reliability comes over
the economics.
[[Page S5897]]
Kevin: ``Right.''
Walter: ``So we don't have a problem with that. But it
needs to be a reliability issue. If it's economics, and by
God, that's what rules.''
Kevin: ``You'll let the California rate payers pay.''
Walter: ``That's right. I don't have a problem with that. I
have no guilty conscience about that.''
Kevin: ``All right, man.'' (CA Parties brief, p110-111/
Exhibit CA-239).
Mrs. FEINSTEIN. Mr. President, the evidence of fraud and abuse
submitted is really quite extraordinary.
Yet this energy bill doesn't prevent the type of gaming that went on
during the energy crisis. The bill only bans one type of specific
manipulation--wash trades in the electricity market--but it does not
address the natural gas market, nor does it prevent other forms of
fraud and manipulation that took place in California and were detailed
in memos released by Enron--``Fat Boy,'' ``Ricochet,'' ``Death Star,''
and ``Get Shorty.''
Furthermore, I am concerned that at this time of great crisis in the
energy industry, this energy legislation rolls back the Public Utility
Holding Company Act--PUCHA--without giving FERC the ability to review
mergers and acquisitions in the energy sector. I will support an
amendment to be offered by Senator Bingaman on this issue to ensure the
consumer protections granted by PUCHA are not repealed.
I am also disappointed that this bill does not increased automobile
fuel efficiency to reduce our consumption of oil. The single most
effective way to reduce our dependence on foreign oil is to equalize
the fuel economy of SUVs and light trucks with that of passenger cars.
Senator Olympia Snowe and I introduced bipartisan legislation in
January to close the SUV Loophole and since that time 16 other Senators
have signed onto our bill. Closing the SUV loophole would: Save the
U.S. 1 million barrels of oil a day and reduce our dependence on
foreign oil imports by 10 percent; prevent about 240 million tons of
carbon dioxide--the top greenhouse gas and biggest single cause of
global warming--from entering the atmosphere each year; and save SUV
and light duty truck owners hundreds of dollars each year in gasoline
costs.
Corporate Average Fuel Economy--CAFE--standards were first
established in 1975. At that time, light trucks made up only a small
percentage of the vehicles on the road--they were used mostly for
agriculture and commerce, not as passenger cars.
Today, our roads look much different--SUVs and light duty trucks
comprise more than half of the new car sales in the United States.
As a result, the overall fuel economy of our nation's fleet is the
lowest it has been in two decades--because fuel economy standards for
these vehicles are so much lower than they are for other passenger
vehicles.
Rather than increasing fuel economy, however, this energy bill makes
it more difficult for the Department of Transportation to increase CAFE
standards in the future by including a new list of criteria the
Department must consider when revising standards.
We need to be responsible and increase fuel efficiency, not create
more barriers to increase CAFE standards.
I believe a comprehensive energy policy can promote the development
of new energy supplies while protecting our most precious natural
areas.
Yet this energy bill requires an inventory of all oil and gas
resources under the Outer Continental Shelf. This inventory is a thinly
veiled attempt to undermine long-standing and bipartisan moratorium
protection. Areas off the West and East Coasts are currently off limits
to drilling, and we do not want that to change.
Even if we ignore the implications of this study on moratorium areas,
the inventory itself threatens precious coastal resources with invasive
technologies. The coastal states have made it clear that they oppose
oil development in these areas, and I believe the States' views should
be respected.
I strongly believe that a comprehensive energy bill cannot ignore
global climate change, yet this bill does nothing to decrease global
warming.
The International Panel on Climate Change estimates that the Earth's
average temperature could rise by as much as 10 degrees in the next 100
years--the most rapid change in 10,000 years.
This would have a major effect on our way of life. It would melt the
polar ice caps, decimate our coastal cities, and cause global climate
change.
We are already seeing the effects of warming.
In November, the Los Angeles Times published an article about the
vanishing glaciers of Glacier National Park in Montana. Over a century
ago, 150 of these magnificent glaciers could be seen on the high cliffs
and jagged peaks of the surrounding mountains of the park. Today, there
are only 35. And these 35 glaciers that remain today are disintegrating
so quickly that scientists estimate the park will have no glaciers in
30 years.
This melting seen in Glacier National Park can also be seen around
the world, from the snows of Mt. Kilimanjaro in Tanzania to the ice
fields beneath Mt. Everest in the Himalayas. Experts also predict that
glaciers in the high Andes, the Swiss Alps, and even Iceland could
disappear in coming decades as well. These dwindling glaciers offer the
clearest and most visible sign of climate change in America and the
rest of the world.
Yet the administration has walked away from the negotiating table for
the Kyoto Protocol. This is a big mistake. The United States is now the
largest energy consumer in the world, with 4 percent of the world's
population using 25 percent of the planet's energy. We should be a
leader when it comes to combating global warming.
I strongly believe that we can do more to encourage the development
of renewable power. Solar, wind, geothermal, and biomass are generating
electricity for homes and businesses nationwide and we need an energy
policy that not only provides tax incentives for their continued
development, but also requires their use. I strongly believe it is in
the public interest for our nation to stop subsidizing costly nuclear
plants and require greater development of renewable resources.
However, this energy bill does not include a Renewable Portfolio
Standard to require the use of a certain percentage of energy to be
generated from renewable resources. I support such a standard and
believe it should be part of our energy policy. Unfortunately the
energy bill currently has an over-reliance on promoting traditional
energy resources.
Take the nuclear power section of the bill for example. The energy
bill provides a new subsidy program to provide loans, loan guarantees,
and other forms of financial assistance to subsidize the construction
of new nuclear plants. These subsidies will be allowed to cover up to
half the cost of developing and constructing a nuclear power plant,
including any costs resulting from licensing and regulatory delays.
Since nuclear power plants cost approximately $6 billion to build,
these subsidies could inflict a tremendous burden on the taxpayer.
For these reasons I voted against this energy bill in the Senate
Energy Committee. I look forward to the opportunity to improve it on
the Floor.
I strongly believe our nation needs an energy policy that will
protect consumers, reduce our dependence on foreign oil, and promote
new energy development while protecting our environment. If our energy
legislation cannot accomplish these objectives it will be an unbalanced
and incomplete energy policy.
Thank you and I yield the floor.
Mr. INHOFE. Mr. President, over the next few days, the Senate will
consider legislation that will become the fuels title of comprehensive
energy legislation to be enacted by the Congress later this year. As I
have stated on other occasions, I firmly believe that the Nation needs
comprehensive energy legislation and needs it quickly. One of our
largest national security problems is our current energy dependence on
foreign countries. I strongly agree with Deputy Secretary of Defense
Paul Wolfowitz, who has called our energy dependence ``a serious
strategic issue.''
I think that most Members of the Senate would agree that expeditious
action is needed to address our energy dependence concerns. There is
much less agreement, however, on the specific fuels provisions that are
best suited to respond to those concerns. As chairman of the
Environment and Public Works Committee, I have worked
[[Page S5898]]
closely with the issue surrounding this amendment and the impact they
will have on our environment, as well as the economy. I understand the
valid concerns on all sides of the debate.
This amendment represents a compromise on a number of contentious
issues. I want to thank the members and their staffs for their
respective roles in shaping this compromise, particularly the majority
and minority leaders, and Senator Voinovich, the Chairman of the Clean
Air Subcommittee, which has jurisdiction over this amendment.
This amendment has numerous environmental protection provisions, and,
with the repeal of the oxygenate mandate, positive steps in removing
barriers to allow refineries to make clean burning and affordable
gasoline.
As with all compromises, there are provisions in the document that
are opposed by various committee members, including myself. Despite
that, I hope we can move the proposal out of the Senate with a minimum
of controversy. To that end, I intend to support the proposal against
amendments even in circumstances where I might agree with the substance
of the amendment. I urge others to do the same.
This is something that has been of great concern for this country. I
became involved with this issue of our energy dependence way back in
the early 1980s when then-Secretary of Interior, Don Hodel, and I
traveled and talked about the national security ramifications of our
dependence on foreign countries for our ability to fight a war.
Certainly, I felt after the 1991 war and after the most recent conflict
in Iraq that people would be sensitive to that. I think the amendment
that we are offering is one that is going to be of great help in
getting us to lessen our reliance on foreign countries for our ability
to fight a war.
I look at this provision of the energy bill as a very significant
provision. As I said, there are parts of it and provisions that, as
chairman of the Environment and Public Works Committee, I do not agree
with. However, I strongly urge the support of this provision to the
energy bill and hope we can do it with minimum or with no amendments.
I thank the Chair. I yield the floor.
Mr. CAMPBELL. Mr. President, I rise today in support of S. 14, the
comprehensive energy bill.
The chairman and all the members of the Energy and Natural Resources
Committee worked hard to produce a comprehensive energy bill. While no
legislation is perfect, S. 14 is the product of careful debate and was
subject to tough scrutiny through the committee process.
Where the committee was uncertain or where significant consensus on
particular issues proved difficult, deference was given to Senators so
those issues could be addressed before the full Senate.
The Committee-reported energy bill represents a careful balance of
diverse and complex issues, and I am proud to have had a role in the
process.
No matter one's political leanings or personal opinions, two
irrefutable facts are abundantly clear. First, energy is needed to fuel
the economy. Second, America needs more energy.
Between 1991 and 2000, Americans used 17 percent more energy than in
the previous decade, while during that same period, domestic energy
production rose by only 2.3 percent.
Further, our Nation's energy consumption is projected to increase 32
percent by 2020.
Our projected demand increase translates to projected price
increases. The Energy Information Administration estimates that oil
prices will increase 20 percent and natural gas prices will increase
more than 50 percent in the next 25 years. Price increases like these
emphasize our need to embrace policies that consider our Nation's
diverse fuel mix. This bill correctly encourages the consideration of
all of our energy sources.
Some in Congress would pursue policies choosing certain energy
sources over others, resulting in fuel switching. I oppose such
policies for several reasons. Principally, however, I oppose policies
that would significantly reduce our Nation's fuel options because such
policies would have catastrophic effects on our economy. It should be
noted that the EIA projections cited earlier all assume a diverse
portfolio of energy sources. We can only imagine the cost to ratepayers
and the Nation if an energy source, such as coal, were no longer a
viable option.
To consider all of our energy options requires more than just lip
service. It means taking action based upon stated positions.
The Indian Energy Title of the bill moves beyond lip service. It
incorporates several key reforms based on fundamental principles of
American liberty and Indian self-determination.
I imagine that many, if not all of the members of this body believe--
or at least say they believe--in the right to self-determination. Many
of my colleagues celebrate and support the rights of indigenous peoples
in the context of international law. In the case of Iraq, all agree
that the Iraqi Government must be comprised of and run by Iraqis, for
Iraqis, without U.S. interference.
Unfortunately, if we are to ask the very same members to apply those
recognized principles at home to our Nation's own indigenous peoples,
their resolve and belief in self-governance seems to disintegrate.
The Indian Energy Title in the bill before the Senate is not merely a
reiteration of touchy-feely concepts. Concepts without action do not
help people. And despite what many Americans, and many in this Chamber
believe about Indian gaming and a few rich tribes, the truth is that
Indians are still the poorest people in America; still have the worst
health care; still have the fewest educational opportunities; and
Indian children still suffer from sniffing glue, using ``canned heat,''
and committing suicide.
The truth is often uncomfortable. The truth is undeniable.
The Indian provisions in S. 14 are designed not only to respect
tribes' right to self-determination, but to unshackle them from a
regulatory and bureaucratic system that doesn't care whether an energy
project goes forward; doesn't care whether a tribe's energy partner
decides the bureaucratic hurdles are too high; and doesn't care whether
jobs will be created to benefit Indians.
Title III provides financial assistance, loan guarantees, hydro and
wind power and wind power studies, and most importantly a
liberalization of the Indian land leasing process.
These provisions are wholly voluntary, allowing participating tribes
greater flexibility in exercising their right to self-determination.
Title III contains no NEPA exemptions and the Indian Energy Title
does not circumvent environmental protections. What it does do,
however, is empower Indian tribes with long-overdue authority to manage
their land while, ``ensuring compliance with all applicable
environmental laws.''
The Indian energy provisions in S. 14 accepts that unfortunate
reality and provides critical economic development opportunities to
participating tribes.
The chairman has a difficult task--to produce a balanced
comprehensive energy bill during a Presidential election cycle.
Politics and rhetoric run highest at times like these.
Although it has happened since the days of the frontier, the powerful
and wealthy should not manipulate the disenfranchised for political
gain.
I sincerely hope that my colleagues in the Senate regard the Indian
energy provisions as what they are--a tool to exercise self-
determination.
If it is good enough for Iraqis, shouldn't it be good enough for
Americans?
Mr. NELSON of Nebraska. Mr. President, this important renewable fuels
legislation is one of the pillars for economic development for rural
America--one segment of the population that has lagged behind during
the economic surge of the 1990s and is suffering under the combined
effects of the current economic slowdown and a 2-year devastating
drought--Drought David.
This legislation is important for rural America. Last year, we
completed the farm bill--the first part of the economic revitalization
plan for rural America. And while the Midwest has been blessed with
rain over the past month, we continue to struggle with the ongoing
effects of drought. Economic stimulus can come in many forms, and
renewable fuels is certainly one of the viable options for increased
economic stimulus in rural America, especially in my home State of
Nebraska.
[[Page S5899]]
We need to be working hard to craft a comprehensive rural development
plan that will spur investment in agribusiness and promote economic
activity in the agriculture center. This bill, the Fuels Security Act
of 2003, is an important part of such a rural development plan.
It is clear that use of ethanol, as part of a renewable fuels
standard is a win-win-win situation: a win for farmers, a win for
consumers, and a win for the environment. That is why I rise as an
original cosponsor and strong supporter this renewable fuels
legislation.
If passed, the Fuels Security Act will establish a 2.3-billion-gallon
renewable fuels standard in 2004, growing every year until it reaches 5
billion gallons by 2012. There are many benefits to this legislation.
It will dispute 1.6 billion barrels of oil over the next decade;
reduce our trade deficit by $34.1 billion; increase new investment in
rural communities by more than $5.3 billion; boost the demand for feed
grains and soybeans by more than 1.5 billion bushels over the next
decade; create more than 214,000 new jobs throughout the U.S. economy;
and expand household income by an additional $51.7 billion over the
next decade.
It is quite apparent that increased use of ethanol will do much to
boost a struggling U.S. agriculture economy and will help establish a
more sound national energy policy.
The greater production of ethanol will also be beneficial to the
environment. Studies show ethanol reduces emissions of carbon monoxide
and hydrocarbons by 20 percent and particulates by 40 percent in 1990
and newer vehicles. In 2001 ethanol reduced greenhouse gas emissions by
3.6 million tons, the equivalent of removing more than 520,000 vehicles
from the road.
A choice for ethanol is a choice for America, and its energy
consumers, its farmers and its environment.
Enactment of the Fuel Security Act--along with other provisions in
this bill that emphasize new sources of energy production from
renewables like wind power, as well as conservation to further reduce
our dependence upon foreign sources of energy--will help us to reverse
our 100-year-old reliance on fossil fuels a more pressing concern than
ever given the possibility of military conflict in the Mideast and the
continuing economic turmoil in Venezuela.
I am unabashedly proud of what my home State has accomplished in this
area. Within the State of Nebraska, during the period from 1991 to
2001, seven ethanol plants were constructed and several of these
facilities were expanded more than once during the decade. Specific
benefits of the ethanol program in Nebraska include: $11.15 billion in
new capital investment in ethanol processing plants; 1,005 permanent
jobs at the ethanol facilities and 5,115 induced jobs directly related
to plant construction, operation, and maintenance--the permanent jobs
alone generate an annual payroll of $44 million----and more than 210
million bushels of corn and grain sorghum is processed at the plants
annually. These economic benefits and others have increased each year
during the past decade due to plant expansion, employment increases,
and additional capital investment.
If each State produces 10 percent of its own domestic, renewable
fuel, as Nebraska does, America will have turned the corner away from
dependence on foreign sources of energy.
When you take a hard look at the facts, you will see that this
legislation is nothing but beneficial for America. The Fuels Security
Act is balanced, comprehensive, and is the result of the dedication of
so many, especially Senator Daschle and Senator Lugar.
Now I ask my colleagues to join me in promoting new opportunities for
the technologies that will put our Nation and the world's
transportation fuels on solid, sustainable, and environmentally
enhancing ground. We owe it to our country now--and to future
generations-in pass this legislation.
____________________