[Congressional Record Volume 149, Number 116 (Thursday, July 31, 2003)]
[Senate]
[Pages S10569-S10574]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  ENERGY POLICY ACT OF 2003--Continued

  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. LOTT. Mr. President, what is the regular order?
  The PRESIDING OFFICER. There is an order to proceed to the House 
Energy bill and substitute last year's Senate language.
  Mr. LOTT. Mr. President, are we ready to proceed?
  The PRESIDING OFFICER. The Senate is ready to proceed.
  Mr. LOTT. Reluctantly and temporarily, 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. LOTT. 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the quorum call be rescinded.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. LOTT. Mr. President, I believe we are ready to proceed to the 
regular order.
  The PRESIDING OFFICER. The clerk will report H.R. 6.
  The legislative clerk read as follows:

       A bill (H.R. 6) to enhance energy conservation and research 
     and development, to provide for security and diversity in the 
     energy supply for the American people, and for other 
     purposes.

  The PRESIDING OFFICER. Under the previous order, the text of the 
Senate amendment to H.R. 4 from the 107th Congress is inserted in lieu 
of the House language.
  The amendment (No. 1537) is printed in today's Record under ``Text of 
Amendments.''
  The question is on the engrossment of the amendment and third reading 
of the bill.
  The amendment was ordered to be engrossed, and the bill to be read a 
third time.
  The bill was read a third time.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall the bill pass?
  Mr. CRAIG. Mr. President, have the yeas and nays been ordered?

[[Page S10570]]

  The PRESIDING OFFICER. They have not been ordered.
  Mr. CRAIG. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Massachusetts (Mr. Kerry) 
and the Senator from Connecticut (Mr. Lieberman) are necessarily 
absent.
  I further announce that if present and voting, the Senator from 
Massachusetts (Mr. Kerry), would vote ``nay.''
  The PRESIDING OFFICER (Mr. Talent). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 84, nays 14, as follows:

                      [Rollcall Vote No. 317 Leg.]

                                YEAS--84

     Akaka
     Alexander
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Carper
     Chafee
     Chambliss
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Durbin
     Edwards
     Ensign
     Enzi
     Fitzgerald
     Frist
     Graham (FL)
     Graham (SC)
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kohl
     Landrieu
     Leahy
     Levin
     Lincoln
     Lott
     Lugar
     McConnell
     Mikulski
     Miller
     Murkowski
     Nelson (FL)
     Nelson (NE)
     Nickles
     Pryor
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stabenow
     Stevens
     Talent
     Thomas
     Voinovich
     Warner

                                NAYS--14

     Boxer
     Cantwell
     Clinton
     Feingold
     Feinstein
     Kennedy
     Kyl
     Lautenberg
     McCain
     Murray
     Reed
     Schumer
     Sununu
     Wyden

                             NOT VOTING--2

     Kerry
     Lieberman
       
  The bill (H.R. 6), as amended, was passed.
  Mr. DASCHLE. Mr. President, I move to reconsider the vote.
  Mr. FRIST. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, the Senate insists 
on its amendment, requests a conference with the House on the 
disagreeing votes of the two Houses, and the Chair is authorized to 
appoint conferees on the part of the Senate in a ratio of 7 to 6.


                      colloquoy on Amendment 1473

  Mr. SMITH. Mr. President, today I have joined with my colleague from 
Alaska to sponsor an amendment to S.14, the Energy bill, which would 
strengthen the commitment of the United States to supply oil to Israel 
and other nations pursuant to the International Emergency Oil Sharing 
Plan of the International Energy Agency.
  The United States is currently party to two agreements to ensure that 
in the event Israel was unable to independently acquire its own supply 
of oil, the United States Government would procure the necessary oil to 
meet Israel's needs.
  Ms. MURKOWSKI. Mr. President, this amendment would make both 
agreements part of the United States law, rather than subject to 
continued renewal agreements. Further, the amendment also authorizes 
the President to export oil to, or secure oil for, Israel pursuant to 
these agreements, or to any country that is part of the International 
Emergency Oil Sharing Plan.
  This language also ensures that should legislation reinstating a ban 
on the exportation of domestic oil be implemented in the future, the 
United States would still be able to meet its obligations to Israel.
  Mr. SMITH. I believe it is important to ensure that the United States 
can fulfill its commitment to this vital ally. I want to clarify, 
however, that nothing in this language would authorize the President to 
permit oil exploration and drilling in areas currently not legally open 
to development. Is that also your understanding of the language?
  Ms. MURKOWSKI. That is correct. No areas where drilling is prohibited 
could be developed under this language.
  Mr. SMITH. I thank my colleague for that clarification.


                        landfill gas tax credits

  Mrs. LINCOLN. Mr. President, I want to congratulate Chairman Grassley 
and Ranking Member Baucus on this package of energy tax incentives. But 
also I would like to raise two concerns with the bill, which I request 
they address in the House-Senate conference on the energy bill.
  On February 11 of this year, I introduced S. 358, the Capturing 
Landfill Gas for Energy Act of 2003. My bill is cosponsored by Senators 
Santorum and Hatch and would provide a credit under either Section 29 
or 45 of the Tax Code for the production of energy from landfill gas, 
or LFG.
  In the past, Congress has recognized the importance of LFG for energy 
diversity and national security by providing a Section 29 credit in 
1980 and extending it for nearly two decades. However, the bill before 
us provides no Section 45 credit for LFG, and it severely limits the 
Section 29 credit by applying a volume cap of 200,000 cubic feet per 
day. In contrast, the President proposed a Section 29 credit for LFG 
with no volume cap, and the House has passed a Section 45 credit for 
LFG. Both of these proposals would provide meaningful tax incentives to 
encourage the collection and use of LFG. Thus, the Senate bill falls 
well short of recognizing the importance of dealing with LFG, and I 
urge the Chairman to address this shortfall in the House-Senate 
conference.
  My second concern deals with a provision included in the Senate 
energy tax bill which would clarify the definition of ``landfill gas 
facility'' for purposes of Section 29. I am grateful to have worked 
with the chairman and ranking member of this provision, but I am 
concerned that we have not yet found the proper solution.
  Typically, a landfill is comprised of a number of ``cells.'' A cell 
is filled with trash, closed up, and then a new cell is filled. Over 
time, cells within the landfill begin to generate methane gas as the 
garbage decomposes. So a landfill produces methane gas in stages as the 
individual cells produce LFG, and new ``wells, pipes, and related 
components'' are run from the landfill gas facility to collect the gas.
  The Tax Code is unclear whether the new components run to cells in 
the landfill over time are considered part of the landfill gas 
facility, and thus, the question is raised whether gas from these cells 
are eligible for the Section 29 tax credit. Under S. 358, a landfill 
gas facility would include additional ``wells, pipes, and related 
components'' used to collect landfill gas. Further, the new components 
of the expansion would share the facility's placed in service date for 
purposes of Section 29. For example, the wells, pipes, and related 
components added to an eligible facility placed in service in 1997 
would share the eligible facility's 1997 placed in service date and gas 
produced from the facility would receive the credit for the duration of 
the facility's credit pay out period.
  In contrast, the provision in the Senate Energy bill would include 
all wells, pipes, and related components added to the eligible 
facility, but for all expansions placed in service after date of 
enactment, the components would be treated as a new facility with a new 
placed in service date. The difference is critical since other 
provisions of the Senate Energy bill subject new LFG facilities to a 
new volume cap of 200,000 cubic feet per day. As I mentioned, this new 
volume cap will seriously curtail the use of Section 29 for LFG under 
the bill, and it was never my intention to deny payment of the full 
credit for gas produced from expansions of the original facility during 
the 10-year payout period.
  The potential energy and environmental benefits of future LFG 
projects are substantial, but they will be lost if we do not provide 
adequate provisions to support project development. I request that 
Chairman Grassley and Senator Baucus continue to work with me to make 
sure Americans garner all of these benefits.
  Mr. GRASSLEY. Mr. President, I want to assure Senator Lincoln that I 
will continue to work with her to make sure adequate incentives for LFG 
are included in any final package from the

[[Page S10571]]

upcoming House-Senate conference. Her concerns are my concerns as well. 
She has started them well and I will devote my best efforts to 
resolving them as we move forward on discussions and deliberations with 
the House of Representatives.


                           labor law colloquy

  Mr. NICKLES. Mr. President, I would like to ask my colleague from New 
Hampshire, the chairman of the Committee on Health, Education, Labor 
and Pensions, if he shares my understanding that the sense of Congress 
contained title 7, section 714, of the Energy bill, H.R. 6, dealing 
with project labor agreements, is exclusive to the natural gas 
transportation construction project in the State of Alaska under this 
title?
  Mr. GREGG. I would say to my colleague that he is correct. Further, 
the provision is neither legally binding nor should it be construed to 
undermine or conflict with Executive Order 13202.
  Mr. NICKLES. Mr. President, to further clarify, I ask my colleague, 
should the inclusion of this provision be seen as a break from the 
longstanding tradition of Federal Government neutrality in labor-
management relations?
  Mr. GREGG. No. The sense-of-Congress provision should not be 
interpreted to encourage the sponsors of the Alaska natural gas 
transportation project to engage in discriminatory hiring or 
contracting practices on the basis of a person's labor affiliation or 
lack of labor affiliation.
  Mr. NICKLES. Mr. President, I thank my colleague from New Hampshire 
for his view on this important labor law clarification.


                         energy tax incentives

  Mr. VOINOVICH. Mr. President, I would like to take this opportunity 
to express my support for States that provide tax incentives for 
ethanol or for electricity produced from clean coal technology or 
renewable in their State. For example, in my home State, the Ohio coal 
tax credit provides $3 per ton of Ohio coal burned using clean coal 
technology. This tax credit encourages use of clean coal technology and 
holds down electricity costs in Ohio. With Ohio's large manufacturing 
base, affordable energy costs keep costs down to these companies and 
keep jobs in the State.
  I believe that States should have the opportunity to provide tax 
incentives for energy production and am hopeful that this is something 
we can address in conference on this bill.
  Mr. INHOFE. I agree with my colleague. States should be able to 
provide incentives for energy production, much like the Federal 
Government does including incentives in this bill. I believe that this 
issue is something that should be addressed by the conference committee 
on this bill.
  Mr. DOMINCI. I understand the concerns raised by the Senators from 
Ohio and Oklahoma and would like to work with them to ensure that 
States maintain the right to provide these incentives.


            CREDIT FOR INSTALLATION OF QUALIFIED FUEL CELLS

  Mr. BAUCUS. The Energy Tax Incentives Act provides an incentive for 
new business installations of qualified fuel cells. For those in the 
future who might be interested in ascertaining the intent of the 
authors of this provision, the Finance Committee in drafting this 
language did so with the knowledge that there are various types of fuel 
cells that convert the chemical energy in fuels, such as hydrogen or 
methanol, into electrical energy by means of electrochemical reactions. 
Rechargeable fuel cells can convert electricity into chemical energy 
that can be stored, and then reconvert that chemical energy into 
electrical energy when it is needed. Rechargeable fuel cells can 
provide the capability for storing electricity during periods of low 
demand and releasing it at periods of high demand. This feature can 
help stabilize the output from renewable resources, including wind 
generation, electricity generated from swine and bovine waste 
nutrients, geothermal power, solar power, and biomass facilities. This 
language is intended to encourage the provision of electricity through 
non-polluting means, and to assist in the development of alternate, 
renewable resources. Our policy is to help develop these and other 
alternative, renewable resources.
  As the chairman of the Finance Committee who has worked diligently to 
develop appropriate incentives for renewable resources, is it also your 
view that the proposed credit for qualified fuel cells should include 
rechargeable fuel cells, such as those that store electricity generated 
from these renewable resources?
  Mr. GRASSLEY. As my friend from Montana pointed out, I am pleased 
that the tax title of the pending energy conference report includes 
several such incentives on which we have dedicated much effort and 
attention. Fuel cell power plants represent a promising means for 
providing electricity that is generated in environmentally friendly 
means and from nonconventional sources. They also provide important 
load-leveling capabilities that will reduce the stress and reliance on 
our Nation's electricity grid. I am pleased to assure my friend from 
Montana that I will work to make sure that rechargeable fuel cell power 
plants, such as those he described, would be eligible for this tax 
credit.
  Mr. BAUCUS. I thank my friend from Iowa for his cooperation on this 
issue, and I look forward to continue our efforts to enact this 
important energy security legislation.


                             nuclear waste

  Mr. REID. I want to confirm that acceptance of this still does not 
create any opportunity to discuss nuclear waste issues in conference.
  Mr. DOMENICI. I agree with the Senator's view. I will be a conferee 
on this bill. I assure the Senator that I will resist any attempt to 
open the conference to discussion of waste issues. I would also like to 
note that there are provisions in this bill that will allow the 
national labs to play a strong role. From our positions on the Energy 
and Water Development Subcommittee, let's work together to ensure their 
participation.


                           Criminal Liability

  Mr. INHOFE. I would like to engage the Senator in a colloquy and draw 
the Senate's attention to several statutes which have been, through 
litigation, expanded beyond what are believed was the intent of 
Congress.
  Mr. DOMENICI. Is the Senator referring to the criminal negligence 
provision of the Clean Water Act and the strict criminal liability 
provision of the Migratory Bird Act and the Refuse Act which can be 
triggered by a simple accident?
  Mr. INHOFE. Precisely. Now, I want to be clear that I do not want to 
suggest for a minute that we should make it easier for polluters to 
damage the environment or put the public at risk.
  Mr. DOMENICI. But the situation the Senator is talking about refers 
to clear accidents involving ordinary people, correct?
  Mr. INHOFE. Yes. Recent court decisions have made it clear that 
employees, at any level, who are involved in environmental accidents, 
can be prosecuted criminally, and potentially imprisoned. These are 
non-deliberate environmental accidents that do not threaten or harm 
others.
  Mr. BREAUX. I am also concerned about criminal liability as it 
applies to oil spills. In fact, during the 106th Congress, I introduced 
legislation to address a long-standing problem which adversely affects 
the safe and reliable maritime transport of oil products. The 
legislation was aimed at eliminating the application and use of strict 
criminal liability statutes, statutes that do not require a showing of 
criminal intent or even the slightest degree of negligence, for 
maritime transportation-related oil spill incidents.
  As stated in the Coast Guard's environmental enforcement directive of 
1997, a company, its officers, employees, and mariners, in the event of 
an oil spill ``could be convicted and sentenced to a criminal fine even 
where [they] took all reasonable precautions to avoid the discharge.'' 
Accordingly, responsible operators in my home State of Louisiana and 
elsewhere in the United States who transport oil are unavoidably 
exposed to potentially immeasurable criminal fines and, in the worst 
case scenario, jail time. Not only is this situation unfairly targeting 
an industry that plays an extremely important role in our national 
economy, but it also works contrary to the public welfare.
  To preserve the environment, safeguard the public welfare, and 
promote the safe transportation of oil, we need to eliminate 
inappropriate criminal liability that otherwise undermines spill 
prevention and response activities. I

[[Page S10572]]

pledge my support to work with my colleagues to address these 
environmental liability issues.
  Mr. INHOFE. The American Waterways Operators have devoted a great 
deal of time to training mariners and vessel operators. Clearly, the 
Coast Guard goes to great lengths to ensure its officers and staff are 
well trained. However, unfortunately, accidents--true accidents--
happen.
  Mr. DOMENICI. My colleagues are clearly describing a legal minefield 
where employees involved in an accident become less likely to cooperate 
with accident investigations because they are being advised by counsel 
not to potentially incriminate themselves.
  Mr. INHOFE. That is absolutely correct.
  Mr. DOMENICI. And as chairman of the Environment and Public Works 
Committee, is it the Senator from Oklahoma's position that this leads 
to less environmental safety instead of more?
  Mr. INHOFE. Indeed. I also wish to draw the Senator's attention to 
the Clean Air Act, which has a different, and I suggest, more 
appropriate provision of negligent endangerment.
  Mr. DOMENICI. I am familiar with the provisions--it requires risk of 
physical harm to the public for an accident to trigger criminal 
prosecution.
  Mr. INHOFE. Yes. That is the type of activity for which we should 
reserve criminal prosecution. I also remind my colleague that the Clean 
Water Act clearly allows prosecution for deceitful or purposeful 
environmental damage, or for fraudulent efforts to conceal such 
damage--a provision we would not change.
  Mr. DOMENICI. I agree with the Senators' assessment, share their 
concern, and look forward to working with them to address this 
important issue.


                           Cantwell Amendment

  Mr. DASCHLE. Mr. President, Senator Cantwell has a market 
manipulation amendment that she was seeking a vote on. It is my 
understanding that the agriculture appropriations bill or the energy 
water appropriations bill is where she would like to offer her 
amendment. I would inquire of the majority leader that should she offer 
her amendment to either of those bills would she be assured of a vote 
on, or in relation to, her amendment with no second degree amendments 
prior to such vote?
  Mr. FRIST. The Democratic leader is correct if Senator Cantwell 
offers her amendment to that bill she will get a vote on, or in 
relation, to it.


                           Feinstein Amendment

  Mr. DASCHLE. Mr. President, Senator Feinstein has a market 
manipulation amendment that she was seeking a vote on. It is my 
understanding that the Agriculture appropriations bill would be the 
appropriate bill for that amendment. I would inquire of the majority 
leader that should she offer her amendment to that bill would she be 
assured of a vote on, or in relation to, her amendment with no second 
degree amendments prior to such vote?
  Mr. FRIST. The Democratic leader is correct if Senator Feinstein 
offers her amendment to that bill she will get a vote on or in relation 
to it.
  Mr. FEINGOLD. Mr. President, energy policy is an important issue for 
America and one which my Wisconsin constituents take very seriously. 
The bill before us seeks to address important issues, such as the role 
of domestic production of energy resources versus foreign imports, the 
tradeoffs between the need for energy and the need to protect the 
quality of our environment, and the need for additional domestic 
efforts to support improvements in our energy efficiency, and the 
wisest use of our energy resources. Given the importance of energy 
policy, an Energy bill is a very serious matter and I do not take a 
decision to oppose such a bill lightly. In my view, this bill does not 
achieve the correct balance on several important issues, which is why I 
will oppose it. In addition, I am deeply troubled by the process that 
has led us to abandon efforts to develop meaningful energy legislation, 
and instead simply stop our work, take up last year's bill, and pass 
it.
  In my work on this legislation, I have heard from large numbers of my 
constituents. Of the many pieces of correspondence I received on the 
matter of a national energy policy was a detailed paper prepared by a 
group of students at Marquette University. The students wrote, as part 
of their interdisciplinary minor in environmental ethics, a 
comprehensive analysis and a series of recommendations regarding energy 
usage and efficiency. I commend and compliment these students on their 
hard work, and I am very pleased to see young people becoming so 
involved in our political process.
  In conducting their analysis and crafting their recommendations, the 
students underscored that it is imperative that our focus in developing 
energy policy remains resolutely long term. I share this belief, and I 
agree with the students' assessment that sensitivity is required in 
working to craft an energy policy because of its effect on consumers, 
on our society, and on the environment. During my time in the Senate I 
have consistently worked to ensure that energy policy is both 
environmentally and fiscally responsible. Unfortunately, I cannot 
assure these students, or any of my other constituents, that this bill 
meets those goals.
  This bill now contains a renewable portfolio standard requiring 
electric utilities to generate or purchase 10 percent of the 
electricity they sell from renewable sources by 2020. I supported an 
amendment offered by the Senator from Vermont, Mr. Jeffords, last year 
to increase this percentage to 20 percent, but it was watered down to 8 
percent. Additional exemptions in this bill make this target actually a 
target of 4-5 percent of new generation from renewable sources by 2010. 
We can and should do better on renewable energy sources. This bill 
should have set a serious target, and we should have had a floor debate 
on this issue.
  In addition, this bill repeals the pro-consumer Public Utility 
Holding Company Act, the Federal Government's most important mechanism 
to protect electricity consumers. The Senate failed to adopt my 
amendment to protect electricity consumers, investors, and small 
businesses from abusive transactions between utilities and affiliate 
companies within the same corporate family. It also failed to pass a 
proposal by my colleague from Washington, Ms. Cantwell, banning Enron-
like trading schemes. The bill should have given the Federal Government 
more oversight of utility mergers and tried to prevent utilities from 
passing on the costs of bad investments to consumers and from using 
affiliate companies to out-compete small businesses. Also, the 
electricity provisions of the bill do not provide additional oversight 
of energy markets. This would have been addressed by an amendment by 
the Senator from California, Mrs. Feinstein, that passed and which I 
supported, that would have fostered a more stable market with 
transparent transactions and helped to prevent another Enron.
  Finally, I am also concerned that we included $14 billion in tax 
breaks without paying for them on this bill. Our budget position has 
deteriorated significantly over the last year, in large part because of 
the massive tax cut that was enacted. We now face years of projected 
budget deficits. The only way we will climb out of this deficit hole is 
to return to some sense of fiscal responsibility, and first and 
foremost that means making sure the bills we pass are offset. Without 
offsetting the cost of the tax package, we are digging our deficit hole 
even deeper and adding to the massive debt already facing our children 
and grandchildren.
  The American people deserve better than this bill, and I cannot vote 
in favor of it. This measure will need to be greatly improved in 
conference to get my vote.
  Mr. COCHRAN. Mr. President, I am concerned about the recent efforts 
by the Federal Electric Regulatory Commission, commonly known as FERC, 
to make RTOs mandatory. Recently, FERC released a white paper 
describing their intentions to mandate Regional Transmission 
Organization participation by utility companies.
  A Regional Transmission Organization, or RTO, would act as a third 
party which sets the rules for power companies about pricing and 
delivering power in a given region. These RTOs are being formed around 
the country. There may eventually be one in the South. But, that should 
not give FERC the authority to strip State Public Utility Commissions 
of their right to decide whether their states enter into these types of 
arrangements.
  I understand that entering into an RTO may be a good choice for some

[[Page S10573]]

companies and Public Utility Commissions to make. I believe that is who 
should be deciding these issues--not the FERC.
  I have a letter from the Mississippi Public Service Commission which 
I would like to submit for the Record. It clearly states the problems 
which would beset my state if it were forced into an RTO.
  Currently, the FERC is attempting to force utilities to enter into 
RTOs. There was a federal court case in Atlantic City about this. Some 
groups point to that case and say that since the utility won its right 
to withdraw from the RTO, that every other utility can simply file a 
suit if they are mandated into an RTO. This is not a sensible way to 
make policy.
  We should not equate the right to file a lawsuit with the voluntary 
ability to join one of these organizations.
  I am pleased that an agreement has been reached to amend the Federal 
Power Act, not just this Energy Bill, to make it clear that FERC cannot 
mandate participation in an RTO. Unfortunately, this language expires 
on December 31, 2006. While I wish that there was no expiration to this 
provision, I am glad that the bill includes language to clarify that 
when this provision expires the FERC does not have authority to mandate 
participation into RTOs.
  I am hopeful that the FERC will follow Congressional intent and allow 
states and utilities to decide when and if they wish to enter into an 
RTO. I thank Senator Domenici and his staff for their work on this 
provision and I am glad to have a commitment that this provision will 
be included in the final bill during the energy bill conference.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:
                                        Mississippi Public Service


                                                   Commission,

                                                    July 28, 2003.
     Senator Thad Cochran,
     Washington, DC
       As a Mississippi State Utility Regulator, I appreciate the 
     opportunity to submit for the record my comments and 
     observations pertaining to the Federal Energy Regulatory 
     Commission (FERC) and its efforts to restructure the 
     electrical industry. Federalizing the delivery of electricity 
     for Mississippi consumers would have a negative impact on our 
     state.
       In April of this year, the FERC released its white paper on 
     Wholesale Power Markets and Standard Market Design. They 
     continue to insist that Regional Transmission Organizations 
     (RTO) will be mandatory and FERC will exert jurisdiction over 
     retail service. If FERC has the authority to exercise 
     jurisdiction over the Terms and Conditions of bundled retail 
     service, this clearly suggest they will have a direct 
     influence in the rates for such service. Bundled retail 
     transactions are subject to State jurisdiction and the Terms 
     and Conditions should not come under Federal control.
       I personally question the legal authority, based on 
     existing law, which would allow FERC to mandate Mississippi 
     public utilitiess to join an RTO and ISO. To do so would 
     require our electrical utility companies to turn over their 
     transmission assets to third parties.
       Even though our transmission facilities were built to serve 
     local retail customers and paid for in their rates, FERC now 
     claims everyone is entitled to the same priority and 
     emphasizes that Terms and Conditions of the RTO or ISO tariff 
     will apply equally to all users. If utilities are required to 
     take service under the Terms and Conditions of a wholesale 
     tariff, it is difficult to see how the transmission component 
     of retail rates will not become FERC jurisdictional.
       In May of 2000, we issued formal document to the 
     Legislature after three years of Public Hearings pertaining 
     to retail access transmission , in which we clearly indicated 
     that restructuring the electrical industry in our state would 
     not benefit all Mississippi consumers. The principle impact 
     of wholesale competition in our state is in providing an 
     additional option for meeting incremental generation needs 
     via competitive procurement under long-term contracts and 
     through short-term economic and reliability purchases. We do 
     not depend on the wholesale market to the same extent, or in 
     the same manner, as is the case with stats that have chosen a 
     different regulatory scheme.
       Our electric supplies are among the least costly and most 
     reliable in the nation. We have sufficient generation, for 
     the foreseeable future, and are aware of no major 
     transmission bottlenecks that are resulting in cost or 
     reliability problems for our consumers. We have an electric 
     system that is serving the consumers of Mississippi in 
     helping our state meet its economic development potential, 
     therefore, in my opinion, allowing FERC to mandate RTO's and 
     exert their jurisdiction over retail transmission is not only 
     not necessary but will be financially harmful to our 
     citizens.
       Senator Cochran, I appreciate this opportunity to provide 
     you and the Senate with my comments regarding this critical 
     issue and I strongly urge the Senate to preserve our 
     authority to manage and regulate our electrical industry in 
     Mississippi.
           Sincerely,
                                                  Nielsen Cochran,
                                                     Commissioner.

  Mr. LEAHY. Mr. President, while I recognize the Nation needs a sound 
and balanced national energy plan emphasizing a clean, reliable, 
sustainable, and affordable energy policy, unfortunately this bill 
fails to do that. In my home State of Vermont we are proud of an 
environmental ethic that supports the increased use of clean and 
sustainable energy. Vermonters have a long history of taking good care 
of our natural resources, which has served our economy and ecosystems 
well. It is important to strike a balance when working to resolve 
environmental and energy problems. That is why I will continue to 
strongly support programs such as Low-Income Home Energy Assistance 
Program.
  While the Senate has been debating the energy bill on-and-off for the 
past few months, the debate has been fairly limited compared with the 
debate on the energy bill during the 107th Congress. During the 107th 
Congress, when the Democrats were in the majority, we debated the bill 
for 24 days over an 11-week span. During that time, the Senate adopted 
126 amendments and rejected 18 others. At no time during the 
consideration of that bill, did the Senate try to limit debate by 
entering into a unanimous consent agreement to limit amendments. In 
comparison, we have had very limited debate on this bill and avoided 
critical issues.
  Many of my colleagues offered common sense amendments that would have 
greatly improved the bill. This includes conservation measures offered 
by Senate Durbin that would have required cars, SUVs, minivans and 
cross-over utility vehicles to achieve a new fuel standard of 40 mpg by 
2015 and would require pickup trucks and vans to achieve a CAFE 
standard of 27.5 mpg by 2015. Senators Cantwell and Bingaman offered 
several amendments to the electricity title to improve consumer 
protections. Senators Feinstein and Schumer offered amendments to 
reduce the impact of ethanol mandates on consumers in the Northeast. I 
am disappointed that all of these amendments failed.
  Further, it should be noted this bill is fiscally irresponsible. 
Senators Wyden and Sununu proposed an amendment that would have struck 
from the energy bill a provision to make available Federal subsidies 
for nuclear power plants. This amendment was not against nuclear power 
but an amendment for Congress to be fiscally responsible to the 
American taxpayer. Unfortunately, this amendment failed earlier in the 
summer. Now the American public will have to subsidize an estimated 
$14-$16 billion for a source of energy that leaves many citizens 
concerned over their safety. Lastly, many other amendments that 
attempted to hold the administration accountable to environmental laws 
were rejected by my colleagues that will result in further degradation 
to the American public's natural resources.
  If these amendments had passed, they would have reduced our 
dependence on foreign oil imports, maintain air quality protections, 
and conserve energy. Instead this bill forces the American people to 
pay for the construction of new nuclear power plants and increased oil 
and gas drilling.
  The Senate had a real opportunity to put together a sensible energy 
policy that shifted the focus from nuclear power and offshore drilling 
to a clean, renewable, and affordable energy plan. Unfortunately, we 
failed to so this, and that is why I cannot support S. 14.
  Ms. MURKOWSKI. Mr. President, I come to the floor at this late hour 
to express my strong support for Senate passage of a comprehensive 
energy bill. This bill is an important first step in increasing the 
energy security of the United States. It has been a long time in 
coming, but we welcome this action by the Senate tonight.
  From the jaws of defeat come some of the sweetest victories, and I 
want to commend our leadership for getting this done, really to the 
surprise of many pundits and experts around DC who said it could never 
get done this week, much less by the end of this year. We should also 
acknowledge the willingness of the other side to reach accommodation on 
this important bill.

[[Page S10574]]

  Every where I go people talk to me about natural gas--back home in 
Alaska, in Seattle, or here in Washington, DC. Everyone, from the 
President of the United States to Federal Reserve Chairman Alan 
Greenspan to the farmers of Iowa, know that we face serious problems in 
our natural gas supply.
  With passage of this bill the Senate is telling consumers, farmers 
and natural gas dependent industries that help is on the way. That is 
good for American jobs, good for our families and their pocket books 
and good for the economy. The provisions contained in this bill will 
truly help us get the all important Alaska natural gas pipeline moving 
forward.
  Experts predict that the U.S. will face a 20 billion cubic foot per 
day shortage of gas by the year 2020. In Alaska we have 35 trillion 
cubic feet of gas in Prudhoe Bay that has already been found, and we 
expect more than 100 trillion additional cubic feet to be found on the 
North Slope with relatively little effort. Alaska's natural gas can 
help close more than 25 percent of the expected 2020 gap, but we need 
to assure the markets that some of the risk associated with this 
project can be mitigated. If we can get it built it will be one of the 
largest privately financed projects in the history of the planet. It 
will employ over 400,000 people nationwide, with thousands of new jobs 
being created in my State of Alaska. Nationally the creation of 400,000 
new jobs could reduce our unemployment rate by a whopping \1/2\ of a 
percentage point. That is a huge shift from just one project. And it 
will mean a stable supply of gas for America for years to come. No 
other project I know can have that kind of positive impact on America--
from either a gas supply, energy security or job creation perspective. 
It is imperative that we get this project moving now.
  I would note that the Senate bill reported by the Energy Committee 
this year, and the accompanying tax provisions reported out of the 
Finance Committee this year, called for a marginal well credit that 
would have capped tax credits for the production of Alaska gas at 52 
cents per thousand cubic feet of gas, should the price fall below $1.35 
at the wellhead.
  It also contained a loan guarantee for up to $18 billion of the 
project's cost and an accelerated depreciation provision.
  The bill we are passing tonight reverts to last year's proposal that 
provides a gas line tax incentive to producers if the price of natural 
gas falls below $3.25 per thousand cubic feet delivered to the AECO hub 
in Canada. Producers, however, will have to pay the credit back in full 
whenever the price of gas exceeds $4.85 per unit.
  The provision accepted by the Senate also includes a loan guarantee 
where the government helps to underwrite some $8 billion of the first 
$10 billion of the cost of the line, in the event that unexpected 
energy price drops occur.
  It includes all the other provisions that passed the Senate last 
year, including: a prohibition against a northern route, guaranteeing 
the gas line will follow the Alaska Highway south through the Railbelt 
and Yukon to reach the Lower 48 States; a streamlined permitting and 
expedited court review process to speed construction; Provisions that 
allow Alaska to control gas to facilitate use for heating or 
construction of petrochemical plants in State; a guarantee that the gas 
line will accommodate an LNG plant to be developed at tidewater in 
Alaska whenever exports markets for the gas appear; provisions to 
guarantee that new gas producers in Alaska will be able to get their 
gas to market; and a provision that authorizes $20 million for worker 
job training and promotes Alaska-hire provisions in State.
  The bill also includes a proposal that will provide up to $120 
million in grant aid yearly for rural electric improvements in high-
cost areas. These grants can go for power plants or to reduce power 
demands by other utilities.
  The bill also includes a $35 million grant ($5 million per year for 
seven years) to Alaska to help fund its Rural Power Cost Equalization 
(PCE) program that subsidizes the high cost of electricity in rural 
Alaska.
  The bill authorizes the Department of Energy to make a loan of up to 
$125 million to retrofit the Healy clean coal plant with new technology 
so it can produce power economically without causing air pollution 
problems. The loan should make the plant economic, provide vitally 
needed power to the Fairbanks area at reasonable cost and aid the 
Usibelli coal mine and its workers.
  The bill includes a tax incentive equal to $3 per barrel to produce 
heavy oil from northern Alaska or to produce low-pollutant synthetic 
fuels from coal. The same provision also provides a tax credit to fuels 
produced before 2007 from biomass, tar sands, or brine. For heavy oil, 
Alaska's West Sak field contains 15 billion barrels of known heavy oil. 
The incentive should help make an additional 200 million barrels of 
production economic over the next decade.
  This legislation reauthorizes the Arctic Science Research Act of 1984 
and expands its power to make grants for scientific research.
  Thankfully the bill also makes it a federal crime to damage any 
intra-state energy pipeline. The amendment specifically provides extra 
legal protection to the trans-Alaska oil pipeline.
  This package contains language originally proposed by Senator Ted 
Stevens with Senator Byrd for the Barrow Arctic Research Center to 
support climate change research and scientific activities. The 
amendment includes $35 million for planning, design, support and 
construction of the Barrow facility. The goal is to develop 
technologies needed to reduce greenhouse gas emissions.
  I am pleased the bill also contains the following important 
provisions: Tax credits for hybrid and fuel-cell vehicles; tax credits 
for alternative and renewable fuels use and development; tax credits 
for marginal oil producers to protect oil production from stripper 
wells; extra funding for the Low Income Home Heating Program (LIHEAP) 
and for low-income weatherization grants; funding for an Advanced Clean 
Coal Technology program; funding for a hydrogen energy act; provisions 
to increase the use of ethanol in clean burning gasoline; 
reauthorization of hydroelectric dam licensing provisions; 
reauthorization of the Price Anderson Act to permit nuclear power to 
continue; provisions on electricity restructuring; and provisions to 
require a sensible increase in automobile fuel efficiency standards.
  Using last year's bill was the quickest way to get the bill off the 
Senate floor so that details of a final package could be worked out in 
a conference committee with the House. Without this action today it was 
unlikely we would have seen positive movement until the late fall. Now 
we can move forward quickly for America and Alaska.
  I want to assure Alaskans that I will work to include in the 
conference report on this bill the provisions I secured during this 
year's debate in the Energy Committee. With those changes this bill 
will help us to address our energy problems even more.
  I thank the fine Chairman of the Energy Committee for his effort and 
leadership and I applaud the work of both Leaders to get this bill done 
before the August recess.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.

                          ____________________