Senate Considers Energy Bill, Opening Debate on Host of Environmental and Energy Issues

Faegre Drinker Biddle & Reath LLP

Earlier than expected, the Senate is considering a highly anticipated bipartisan energy bill this week. The first broad package of energy legislation in over a decade, the bill proposes many adjustments to current energy policy. The bill will be conducted with an open amendment process — which presents many opportunities for interested parties as any and all environmental- and energy-related amendments may be offered and voted on in the coming weeks as the bill is debated.

Possible Amendments to the Energy Bill

The open amendment process would allow the energy bill to address any number of recent issues that have come up, from reining in federal regulations to overturning decisions made over the last several years. Typically in open floor processes such as this, hundreds of amendments will be offered but only a fraction will receive floor votes. This promises to be a situation like last year’s open debate on the Keystone pipeline which saw over 247 amendments offered and votes on 42. In fact, many of the issues which surfaced during the Keystone debate will likely be reconsidered since the President vetoed that legislation. This time around the goal of Chairman Murkowski and Ranking Member Cantwell is to produce a bill they think the President will sign. Some possible issues include:

  • Keystone XL: Many in the gas industry were unhappy about the multiyear road to eventually preventing the Keystone XL Pipeline from moving forward. The energy bill may be a vehicle to attempt to bring the pipe back to life.
  • COP21: The United Nations’ climate treaty was completed in December, and ratification is slated to begin this April. The debate over whether these accords constitute a treaty or merely an international pact is ongoing, but it is possible that an amendment could come forth to declare the result an official treaty, thus requiring Senate approval for ratification.
  • Public Land Leasing: Just this month, the Department of Interior announced a moratorium on issuing licenses to mine coal on public land pending a three-year environmental impact study on the effects of utilizing the resource. Interior is expected to issue similar rules for oil and gas extraction on public lands later this month, although a full moratorium on issuing new license is not expected. Amendments preventing Interior from moving forward on this agenda are possible.
  • Renewable Fuel Standard (RFS): EPA’s rewrite of the RFS left many on both sides of the issue feeling that EPA got it wrong — this is an area where both sides may jockey for advancing their cause.
  • CRAs: Congress has issued, and the President vetoed, several orders under the Congressional Review Act regarding new rules from EPA. The Clean Power Plan, Waters of the U.S. rule and Ozone rules will all remain possible targets for further action throughout the amendment process. In particular, the Ozone rule was a compromise that left both industry and environmental groups feeling that it either went too far or didn’t go far enough — this could again be a point both sides attempt to rectify through amendment.

All of these issues will be considered – what remains unseen is which ones will receive floor votes and make it into the bill. Additionally, any amendment that is highly controversial or partisan would run the risk of derailing the bill or ensuring a presidential veto — particularly in areas that would significantly impact the President’s climate initiatives. Keeping a close eye on the amendments as the bill develops is a priority at FaegreBD Consulting, and we will work with our allies on Capitol Hill to stay ahead of the curve as new amendments are offered and new information becomes available.

Energy Bill Summary

The Energy Policy and Modernization Act of 2015 covers a wide range of topics and is designed to work in conjunction with the energy provisions passed in the 2015 Appropriations Omnibus. Among the important provisions included are measures to expedite the permitting of natural gas exports, enhance grid security to protect from cyberattacks, improve energy efficiency in the manufacturing process, provide funding for residential weatherization programs, provide funding for research in the Department of Energy on vehicle fuel efficiency and addresses next-generation nuclear technology. Outlined below are some of the key provisions featured in the bill:

  • Efficiency: End-use energy efficiency improvements are recognized as one of the simplest and most cost-effective ways to improve overall energy consumption. The bill includes measures to provide for longer-term utility service contracts that would help shield baseload providers from swings in energy markets, funding for the Department of Energy to study and issue new rules on efficiency of appliances and vehicles, and improve energy use within the home and other buildings by providing funding for state energy programs regarding weatherization improvement.
  • Infrastructure: Modernization of the electric grid is seen as one of the most important enhancements to improving efficient use of energy during transmission from power facilities to consumers. The bill includes provisions on enhancing transmission infrastructure, improving cybersecurity needs, maintaining the Strategic Petroleum Reserve, and streamlining the process for exporting our abundant natural gas resources to the world market.
  • Supply: The bill takes a broad stroke on energy supply to promote an “all of the above” approach that improves fuel diversity and reliability. The development of renewables and traditional/fossil resources alike are given attention.
  • Accountability: Because the energy economy is so vast, many government agencies play a role in its regulation. The bill includes provisions to enhance communication and coordination between the agencies on energy and water initiatives to improve certainty in regulation and reduce duplicative efforts. The bill also renews certain energy-related portions of the America COMPETES Act while removing outdated and redundant regulations elsewhere.
  • Conservation: The bill permanently reauthorizes the Land and Water Conservation Fund that was set to expire at the end of 2015 but was extended through the Appropriations Omnibus. The bill also authorizes funding for National Park maintenance and other preservation funds.

The streamlining of permitting for infrastructure related to natural gas exports would expand upon the Omnibus provision that lifted the moratorium on exporting oil and gas to improve upon the ability for natural gas producers to build the necessary infrastructure needed to reach foreign markets. The U.S. is now one of the largest natural gas producers in the world, and our excess supply and inability to export has pushed prices artificially low. The ability to begin the export process from Liquefied Natural Gas would help equalize domestic gas markets while allowing producers access to foreign markets where gas sells for a much higher rate. This would have the dual effect of relieving some of the commodity price pressure on baseload energy production at home while also opening an entirely new export market to the U.S. trade sheet.

At FaegreBD Consulting, we are closely monitoring the advancement of the Energy Bill. The bill is currently enjoying bipartisan support, and due to the broad scope of its content, anyone involved in energy or the environment should keep an eye on its progress.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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