CONGRESSIONAL RESEARCH ' ‘ SERV|CE Universi of Missouri - o|umbia' ||I||||||I|||||\W||| !|||l|||||||| ||||||||I|||||| CONGRESS O10-103861670 ENERGY AND THE 96TH CONGRESS: OVERVIES ISSUE BRIEF NUMBER IB79062 AUTHOR: Jinison, John Environment anti Natural Resources Policy Division THE LIBRARY OF CENGRESS CONGRESSIONAL RESEACH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED ggzggag DATE UPDATED _q'_IL21;_8__q FOR ADDITIONAL INFORMATION CALL 287-5700 0721 CRS- 1 IE79062 UPDATE-07/21/30 £§§Q§-2£§l!lIl9! iith President Carter's signing on June 30, 1980, of the Energy Security Act (creating a synthetic fuels corporation and expanding other energy supply incentives) the second major energy enactment of the 96th Congress became law. The windfall profits tax had been enacted in April. The third major bill, the Energy Hobilization Board, has mow been rejected by the House by a large margin and has been returned to ‘the conference committee, probably killing the measure. The proposal to mandate coal conversion in certain powerplants now burning oil has been passed in the Senate, with the affected units reduced from 107 to B0, and is pending in the House. Remaining legislative concerns are nuclear waste, the .market power of major oil companies, electric utility rates, coal slurry pipelines, Department of Energy funding and managemenaa the role of State and local governments, conservation, and oil import limitations. The short time remaining in the 96th Congress makes it unlikely that major initiatives in these areas will be passed. The Congress has already passed low-income energy cost assistance legislation, emergency energy conservation and gasoline rationing authority, assistance to Energy Expo '82, pipeline safety amendments, and various appropriation and authorization laws. The House has failed to create a new standing Committee on Energy. §é§§§§QQE2_é!2-2QLl-!.£!éLX§l§S GENERAL ISSUES The major legislative proposals confronting the 96th Congress have been those which emerged from President Carter's energy messages of 1979. Among other programs the President proposed an Energy Mobilization Board to expedite energy projects, a synthetic fuels corporation to give birth to a new energy industry, and a windfall profit tax to capture for the public the largest part of the increase in domestic oil prices that will occur as other prices are decontrolled and rise to OPEC price levels. A conference committee of Hembers of the House and the Senate reached agreement Hay 1 on conflicting versions of S. 1308, giving energy projects a "fast track‘ by means of an Energy mobilization Board. The House has probably killed the EHB proposal with a stunning vote (232-131) recommitting the bill to conference without instructions. Environmentalists, as well as those concerned with state and local rights, saw the EMS as a serious threat. In addition, a concern about its effectiveness, expressed in lapel buttons reading "Even Bore Bureaucracy,“ may have had a major effect on the vote. The Energy Hobilization Board, consistingint three members located in the Executive Office of the President, would expedite decision-making for non-nuclear facilities. Hhen necessary, it would preempt national, State, nd local governmental bodies, applying the relevant laws and regulations. nee IB79126 -- EHB: comparing 3. 1308 and H.R. 4985 and Sumaarizing Conference Agreements. Congress debated and passed bills (5. 932 and H.R. 3930) to expedite production of synthetic fuels such as.shale oil and coal gas. The bills differed greatly. A conference began mating and finally reached agreement cns- 2 137 9052 UPDATE-07/21/8&0 on may 21, 1980. The senate accepted the conference report on June 1“ (78-12) and the House followed shortly thereafter, enabling the President ; sign the measure into law on June 30, 1980. The bill both authorizes the purchase of synthetic fuels under the authority of the Defense Production Act (the central thrust of the House bill) and creates the U.S. Synthetic Fuels Corporation (the central thrust of President Carter's proposal and the Senate bill). In scale the synthetic Fuels Corporation would be comparable to General Hotors, Exxon, or TVA. According to the conference report, it would have a 12-year initial life and financial Iesources of $20 billion initially and $68 billion in addition for later years» It would have a broad range of devices at its disposal encouraging synfuel development, including loans, grants, purchase agreements, and direct ownership and operation. Called the Energy Security Act, the bill has a number of other provisions dealing with alcohol fuels, biomass, urban waste fuel, residential energy conservation, geothermal energy, and acid rain. In addition, the conference agreement takes the step of ordering the filling of the strategic petroleum reserve at the rate of 100,000 barrels per day, despite current reluctance on the part of the Administration to anger Saudi Arabia. See IB79090 -- Energy: The synthetic Fuels Corporation (Proposed). The conference on H.R. 3919 agreed to a figure of $227.7 billion for revenue from a tax on “windfall profits" the oil companies earn between now and 1990, if OPEC oil prices rise only 2% a year faster than prices generally. Among its major actions, the conference set a much higher tax rate for already—discovered oil produced by" conventional methods than for newly discovered and difficult-to-produce oil, determined how the burden would be divided between major and independent oil producers, and allocate’ 25% of the revenue total to low—income families to help them cope wit soaring energy prices. The conference report was passed by both Houses and was signed by President Carter on April 21 See IB80®10 -- Oil Windfall Profits Tax hills. An important new Administration proposal concerns the phasing out of oil use in electric utility generators. Proposed in S. 2070, the so—called oil bacxout proposal is an attempt to achieve full conversion in largely the same powerplants which did not convert from oil in response to the Energy Supply and Environmental coordination Act of 1974 and the Powerplant and Industrial Fuel use Act of 1978. The bill would commit substantial Federal funds to the program and is calculated to reduce oil consumption by 400,000 barrels per day. The Senate passed the measure on June 24 (86-7) after it was modified in committee to eliminate some borderline utility powerplants, and amended to remove a a requirement that powerplants.stop using natural gas by 1990. See IB750u6 b- Power Plants: Converting to Coal. The 1981 budget requests authority for $10.2 billion for DOE. This includes $3.4 billion for defense activities (nuclear weapons) and $0.4 billion for science and research. The budget has been assigned to the following committees: House Appropriations, Commerce, Science and Technology, Interior and Foreign Affairs, and senate Appropriationsw and Energy and Eatural Resources. Renewed attempts to cut the budget deficit in order to fight-inflation may require major cuts in some DOE programs, and may provide congressional debate. State and local governments would have enhanced duties under the Energy management Partnership Act (EHPA), S. 1280 and H.R. 0382. EHPA would consolidate DOE grants for conservation, the energy extension service, weatherization, building codes and many other programs. The Local Energy management Act (5. 1537) would set up an \information clearinghouse outside CBS- 3 IB79062 UPDATE-07/21/80 JOE. See IB79064 —- Energy Hanagenent at the State and Local Level. Impact assistance is the subject of several bills. This legislation would mitigate social and economic disruption due to energy development such as the large coal mines opening in Wyoming and Hontana. See IB79022 -- Energy Impact Assistance Legislation. On Jan. 30 the House Select Committee on Committees recommended establishing an Energy Committee combining the energy jurisdiction of the Interstate and Foreign Commerce Committee (Subcommittee on Energy and Power) along with some energy jurisdiction of the Interior and Public Works Committees. Proponents argued that this would focus most energy jurisdiction in a single committee and would enhance the authority and its effectiveness by having it be a full committee, not a subcomnittee. Critics argued that the Connerce Subcommittee on Energy and Power already provides a focus and that establishing an Energy Committee ‘would be a symbolic action since jurisdiction finr najor aspects of energy will not be shifted to the new committee. The House voted to change the name of the Interstate and Foreign Commerce Committee to the Committee on Energy and Commerce, and to expand the committee's jurisdiction to include questions of general energy policy. OIL ISSUES In March 1979, the Administration transmitted a proposed standby gasoline rationing plan to Congress pursuant to provisions in the Energy Policy and :onservation Act (P.L. 9H-163) enacted in late 1975. The plan, which could be rejected by a one-House veto, was approved in the Senate but disapproved by the House on may 10. The Emergency Energy Conservation Act (P.L. 96-102), enacted into law on Nov. 5, _1979, requires the Administration to submit another rationing plan and amends the process by which Congress would review the proposed plan. A‘ final version of the revised rationing plan was transmitted to Congress on June 12, 1980. Congress has 30 days in which to review the plan. On July 1, 1980, the House Subcommittee on Energy and Power effectively approved the plan by defeating a motion of disapproval, 12-8. other measures that were submitted to Congress for approval in spring 1979 included plans to restrict weekend gasoline sales, to establish aandatory thermostat and hot water temperature settings in non-residential buildings, and to restrict lighting of outdoor advertising. only the building temperature restriction plan was approved and enacted. It was scheduled to expire on Apr. 15, 1980, but has been extended by the President through January 1981. 4 The Emergency Energy Conservation Act also provided authority for the President to declare national energy emergencies and to establish conservation targets for specific fuels for individual States. The States may develop their own conservation plans for neeting designated targets; however, the legislation provides for <fi1position of a standby Federal emergency energy conservation plan if States fail to develop suitable conservation plans or if their plans prove ineirective to meet the designated ‘argets. The standby Federal plan was released early in February 1980. See -B79001 - Gasoline Rationing and other Standby Conservation Authorities. On mar. 14, 1980, President Carter announced his intention to iapose a fee on oil imports which would be passed on to consumers entirely through a 10-cent-per-gallon fee on gasoline. The President relied on authorities in the Trade Expansion Act and the Emergency Petroleum Allocation Act to impose CRS- 4 IB79062 UPDATE—01/21/30 the fee, but his action was overturned in U.S. District Court fa tn, District of Columbia. An appeal is pending, but has now been rendered moot by congressional action. The House and Senate passed and sustained over Eresident Carter's veto a repeal of his authority to impose the fee, effective June 6, 1980. nany bills aimed at reducing, controlling, or channeling oil company market power have been submitted; most would "divest" oil companies of many of their chief means of influencing their markets. 5. 12fl6, introducd by Senator Kennedy, would channel major oil company profits to investment in energy rather than in non-energy, has cleared the Senate Judiciary Committee, and has thus progressed one step further than most other bills of this kind. However, the full Senate has not yet considered it, nor has the House Judiciary Committee. see IB79066 - Energy: Oil Imports. Also see IB79023 -- Crude Oil Price Controls: Background and Policy Alternatives. NUCLEAR POIBR ISSUES In late October the Kemeny Commission released its report on the Three nile Island nuclear accident. The Bar. 28, 1979, malfunction near Harrisburg, Pennsylvania, caused schools to» close and pregnant women and small children to flee. Had conditions deteriorated further, 200-300 thousand residents would have evacuated. As the events unfolded, the Nuclear Regulatory Commission entered management of the crisis, eventually takir charge of the situation. Three nile Island raised several issues fa- Congress. How safe is nuclear power? were NRC safety standards stringent enough? What is the NRC's role in direct crisis management? Is the Price-Anderson Act an adequate way to handle liability? What is the Federal Government role under provisions of the Disaster Assistance Act of 197a? For details, see IB79035 -- Nuclear Power: frhe Three Hile Island Accident and Its Investigation. Nuclear plant licensing is discmssed in IB77035 - Buclear Power Plants: State vs. Federal Control. Nuclear waste management remains controversial. DOE's WIPP project has run into political difficulties. Originally conceived as a repository for military THU wastes, its conceptual role was expanded to RGD on disposal of high-level reprocessed wastes, and of a limited number of commercial spent fuel elements. It was also thought that HIPP could be used, in the IRG's phrase, to “exercise the licensing system.“ This approach drew criticism from the House Armed Services Committee, which refused to fund the project if DOE insisted on licensing it and if State concurrence in the project were made a requirement. The project was revived in a compromise between the House and Senate Armed Services Committees that provides for an “agreement for cooperation“ on WIPP construction between the Federal Government and the State of New Mexico. However, opposition to this proposal from the White House is expected. See IB75012 —- Nuclear Waste Hanagement. COLL The major legislation concerning coal in the 96th Congress is the attempt to increase utility coal use by means of the "oil backout“ legislation referred to above, under GENERAL ISSUES. On the coal production side, the cns- 5 1379052 xupoarz-07/21/so hsenate has passed anendments to the Surface Mining Control Act or 1977 which would give the States greater flexibility in adninistering the Act, but the legislation has not been acted on in the House. See IB7n074 - Surface Mining: Federal Regulation. NATURAL GAS After the great struggle during the 9Sth.Congress on natural gas pricing legislation, Congress expected a respite concerning this fuel. An issue has cone up, however, concerning Title II of the Natural Gas Policy Act of 1978. The title provides for natural gas companies to pass through to industrial customers the higher cost of more expensive natural gas the Act allowed, in order to protect residential customers from gas price increases and to provide proper price signals to the naturai.gas market. Heasures to repeal the Title have been introduced and widely cosponsored in both Houses (S. 2393, H.R. 5862) based on the additional cost of natural gas to industry and the likelihood that companies leaving natural gas would switch to oil. Instead of repealing Title II of the NGPA, the House voted may 20 by a vote of 369‘3u to reject the Federal Energy Regulatory Commission's proposed regulations under Phase II of incremental pricing. ’ ELECTRICITY AND OTHER ISSUES The Congress is considering a number of issues in relation to the electric utility industry. The issues are both reqjonal.and national in scope and involve the areas of electric power supply, energy conservation, and electric utility rate structures. 1 L§§l.5.$.-A!.I.9.1! GENERAL ISSUES P.L. 96-102 (5. 1030) ‘ Energency Energy Conservation Act of 1979. Authorizes the President to create an emergency program to conserve energy whenever the President finds that a severe energy supply interruption exists or is imminent or that action to restrain domestic energy demand is requfired. Introduced Apr. 26, 1979; referred to connittee on Energy and Natural Resources. Reported (S.Rept. 96-117) with amendment Bay 4. .Passed Senate, amended, June 5. Passed House, amended, August- Conference held September 12. Signed into law Nov. 5, 1979. 4 P.L. 96-290 (5. 932) Energy Security Act. Introduced as Defense Production Act Extension Amendments of 1979. Anends the Defense Pnbduction Act of 1950 to exten the authority granted by such Act. Reported from Committee on Banking, Housing and Urban Affairs (S.Rept. 96-166) may 15. Passed Senate June 20. Passed ’ouse, amended, in lieu of H~R. 3930 June 26. Reported jointly from conmittees on Energy and Natural Resources and on Banking, Housing, and Urban Aifiairs, with amendment (S.Rept. 96-387). Conference began Dec. 11. Conference report filed in House June 18, 1980 (H.Rept. 96~11ou).n Conference .report (S.Repts 96-820) filed and approved in Senate June 19. Enacted into law June 30, 1980. 025- 6 I IB79062 UPDATE-07/21/80 S. 1030 (Johnston et al-) See P-L. 96-102. H.R. 3930 (uoorhead, B. et al.) Amends the Defense Production Act of 1950 to allow the Department of Energy and the Tennessee Valley Authority to guarantee loans to expedite national defense contracts under such Act. Authorizes the President to provide loans to private business enterprises for the production of energy. Directs the President to attempt to achieve a specified national production goal for synthetic fuels and synthetic chegical feedstocks within 5 years. Introduced day 3, 1979. Reported May 15 (H.Rept. 96-165) by Committee on Banking, Finance, and Urban Affairs. Beasure laid on table June 26; S. 932 passed in lieu. H.R. 4985 (Udall et al.) Provides for a coordinated, simplified, and prompt process for Federal approval of non—nuclear energy facilities which are determined to be in the national interest. Establishes an Energy Mobilization Board to be appointed by the President to designate priority energy projects, based on specified criteria, and to publish a project decision schedule containing deadlines for all Federal actions relating to such projects. Reported from Committee on Interior and Insular Affairs (HaRept. 96-H10, part I) August 2. Reported from committee on Interstate and Foreign Commerce (H.Rept. 96-410, part II) September 21. House passed 5. 1308 in lieu. S- 971 (Hart et al.) A A . Energy-Related Economic Development Act of 1979. Amends the Public Works and Economic Development Act to provide economic development assistance to regions suffering from increases in eneagy-related employment. Introduc« Apr. 10, 1979; referred to Committee on Environment and Public Works. 5. 1230 (Jackson (by reg.)) Energy management Partnership Act. Amends the Energy Policy and Conservation Act to establish a State Basic:Energy Program and to provide financial assistance for special energy projects to be conducted by units of local government and Indian tribes. [Also see H.R. 0382.] Introduced June 5, 1979; referred to Committee on Energy and natural Resources. Reported, with amendment, June 9, 1980 ($_Rept. 96-799). 5. 1308 (Jackson et al.) Energy supply Act. Provides for an expedited decision-making process by establishing a strategy for identifying and advancing non-nuclear energy projects. Establishes a 5-year program for leasing onshore Federal lands for oil and gas exploration and development. Sets mandatory production levels; for alcohol-blended fuels. Requires short-term conversion from oil to natural gas or coal and wheeling oi non-oil fired electricity to systems dependent on oil. Establishes incentives to advance the commercialization and use of solar energy, vind, urban vamme, and other reneuable_ energy sources. Introduced June 11, 1979; referred to Committee on Energy and Natural Resources. Passed Senate Oct. 9. Passed House in lieu of H.R. #985 on Nov. 1. Conference began Dec. 10, 1979. conference report filed in House June 21, 1980 (H.ReptL 96-1119). 5. 1537 (Percy et al.) , Local Energy uanagement Act of 1979. Provides specific encouragement 1 localities for the development of energy management programs directed toward the implementation of energy conservadion strategies and renewable resource-based technologies. Introduced July 18, 1979; referred to Committee on Government Affairs. CR5‘ 7 IB79062 UPDATE-07/21/80 S. 1720 (iilliams, H., et al.) - , Home Energy Assistance Act. Authorizes the Secretary of Health, Education, and Welfare to make grants to States to assist eligible lov-income households to meet increasing home energy costs. stipulates that such grants may be used for aaking payments to households in specified cases. Requires States to comply Bith uniform data collection standards established by the Secretary as necessary to carry out this Act. Introduced Sept. 7, 1979; referred to Committee on Labor and Human Resources. Reported with amendment (S.Rept. 96-378) Oct. 25, 1979. Returned to the calendar in the Senate Nov. 15, 1979. S. 2470 (Ford, i.H., et al-) . Amends the Poverplant and Industrial Fuel use Act of 1978 to prohibit the use of petroleumtor natural gas as a primary energy source in electric poverplants without express exemption by the Secretary of Energy. Authorizes the Secretary to make grants: (1) for the conversion of such plants to the use of coal or another alternate fuel as a primary energy source; (2) for the design and installation of sulfur removal systems in coal-using pouerplants; (3) for the capital costs of constructing Eacilities for reducing the sulfur content of coal; and (a) for the achievement of fuel displacement targets. Introduced Bar. 20, 1980; referred to Committee on Energy and Natural Resources. Reported with amendment.(S.Repm. 96-802) June 16. Passed Senate, amended, June 2n, 1980. OIL ISSUES P.L. 96-223.4H.R. 3919) Aaends the internal revenue code to impose upon producers of domestic crude oil an excise tax on the windfall profits from the production and sale of petroleum products. Establishes an Energy Trust Fund funded by revenues from the windfall profits tax. States that amounts in the trust fund shall be available for purposes as may hereafter be specified by law. Introduced may 3, 1979. Reported June 22 (H.kept. 96~304) by Committee on Rays and Means, with amendment. Heasure passed House, amended, June 28- Sent July 10 to Senate Committee on Finance; Reported to Senate Nov. 1 (S.Rept. 96-394). Conference began Dec. 19, 1979. Conferencezreport filed in House nar. 7, 1980 (H.Rept. 96-817). House agreed to report Mar. 13, 1980. Senate agreed to conference report har. 27, 1980. measure enacted into law Apr. 2, 1980. P.L. 96-26H (Hid. 7n23) Extends the temporary increase of the public debt limit. Amended June 4 to terminate the oil