"Riley Factor"

This article was featured in the November 2007 issue of Business Matters, our monthly print newsletter.

Energy Legislation in the 110^th Congress

Earlier this year the US House and Senate passed their respective versions of comprehensive energy legislation.  The two proposals are not in sync with one another and it will take some significant work to reconcile the differences.

Senate Bill

Senate Energy Bill (H.R. 6): the “Renewable Fuels, Consumer Protection, and Energy

Efficiency Act of 2007” was introduced by Senate Majority Leader Harry Reid (D-NV) and was passed by the Senate on June 21, 2007.

Key provisions included in the bill:

• Renewable fuels: mandates an increase in the renewable fuels standard to 36 billion gallons by 2022.

• CAFE standards: Raises the corporate average fuel economy (CAFE) standards for passenger cars and light trucks to at least 35 mpg by 2020.

• Price-gouging: imposes price controls on gasoline during times of emergency, under the guise of “price gouging” safeguards; creates excessive civil and criminal penalties against violators of the price controls.

• NOPEC: makes price-setting by foreign oil-producing and exporting cartels illegal, and waives the defense of sovereign immunity for those nations in U.S. courts (i.e., OPEC could be sued for antitrust violations in the U.S.).

The Chamber’s Position: The Chamber does not support the bill on the grounds that it sets unrealistic renewable fuels targets, creates no new energy, threatens energy security and shuts down our country’s ability to stay competitive in domestic and global markets.

House Bill

House Energy Bill (H.R. 3221): the “Renewable Energy and Energy Conservation Tax

Act of 2007” was introduced by Speaker Nancy Pelosi (D-CA) July 30, 2007 and passed by the House on August 4, 2007.

Key provisions included in the bill:

• Energy tax title: creates a $16 billion tax package that unfairly and punitively singles out the oil and gas industry; amounts to a modern-day Windfall Profits Tax.

• EPAct rollbacks: repeals several provisions of the Energy Policy Act of 2005 that streamlined oil and gas exploration.

• Deep water leases: reneges on Clinton-era offshore deep water leases.

• RPS: mandates that 15 percent of every state’s electricity generation come from renewable energy sources.

The Chamber’s Position: The Chamber opposes the bill, on the grounds that it sets unrealistic renewable fuels targets, creates no new energy, threatens energy security and shuts down our country’s ability to stay competitive in domestic and global markets.

Legislation Status

As of the writing of this article, House Speaker Pelosi and Senate Majority Leader Harry Reid are holding informal talks.  In October, White House economic adviser Al Hubbard sent a letter to Congress outlining the substantive threshold any energy bill must pass to avoid a White House veto. The White House wants the bill to contain a renewable fuels mandate of 35 billion gallons by 2022, but makes clear that the resulting bill must not contain: (i) an RPS, (ii) NOPEC, (iii) price gouging, (iv) EPAct rollbacks, (v) punitive oil and gas taxes, (vi) a Davis-Bacon requirement, or (vii) the proposed 35-mpg combined CAFE standard in the Senate bill.

Chamber Action

We have looked at the pending legislation in both the House and Senate and are pleased that both bills place a strong emphasis on increased efficiency.

Unfortunately, the pending bills contain provisions that if adopted, would saddle our economy with costly and unworkable regulations, which will drive up the price of gas and electricity and jeopardize jobs in manufacturing and other sectors. Other provisions would make it more difficult to expand domestic energy supplies from all sources, at a time when we must do so to keep energy affordable, keep jobs in the United States, and reduce our dependency on foreign sources.

We will be working with our elected officials to urge them to pass energy legislation that would secure an affordable, diverse, efficient, clean, and growing supply of fuel and power to meet the needs of a growing population and a competitive American economy. We also recognize that we must do so while protecting national security and improving the environment.