By Debra DeHaney-Howard
August 8, 2005

Before adjourning for the August recess, Congress passed the nation’s first comprehensive energy policy in over ten years. The Energy Policy Act of 2005 (H. R. 6) covers every aspect of energy, from promoting energy efficiency and conservation to modernizing the nation’s energy infrastructure to the increased production of traditional fuels to tax credits for buying gas-electric hybrid vehicles.

Notably absent from the more than 1700 page bill – which the United States Senate approved July 29 by a vote of 74-26 and which succeeded a vote of 275-156 by the United States House of Representatives – is a provision that would have shielded the manufactures of the gasoline additive methyl tertiary butyl ether (MTBE) from product liability lawsuits. In 2003, the Senate filibustered an energy bill that contained language to protect the producers of MTBE.

For the past two years, the Conference of Mayors and its coalition partners worked to defeat the MTBE liability provision. “This is a huge victory for America’s cities and the nation as a whole. Through the Conference’s successful action, Congress stripped the MTBE liability provision from the energy bill, thus shielding our nation’s cities from unfair tax burdens and protecting the health and well-being of our citizens. We applaud Congress for doing the right thing,” said Conference President Long Beach Mayor Beverly O’Neill.

Senate conferees rejected a proposed MTBE compromise offered jointly by House Energy and Commerce Committee Chairman Joe Barton (TX) and Congressman Charles Bass (NH) on July 24. The Barton-Bass compromise, among other things, would have created a public/private trust-fund to clean up contaminated MTBE sites over the next twelve years. Under the Barton-Bass compromise, industry would have contributed only $2 billion in to the fund, with federal, state and local governments contributing the lion’s share of $9 billion. In addition, the proposed compromise would have eliminated lawsuits filed against the industry since September 5, 2003, with an exception for lawsuits filed by a state’s attorney general. To date, however, the New Hampshire Attorney General is the only known state to have filed such a case.

Commenting on the exclusion of the MTBE liability waiver, Piscataway (NJ) Mayor Brian Wahler said, “This is a very big win for our cities. Because of Congress’s action cities will not be saddled with cleanup costs for water supplies contaminated by MTBE. Had the provision been enacted, local taxpayers would have seen a multi-billion dollar cost shifted to them from the feds.”

While MTBE has been known to help improve air quality from auto emissions, it has also been known to contaminate large quantities of surface and ground water through leaking underground storage tanks and pipelines to ground and surface water. This causes drinking water to be foul-tasting and renders it undrinkable. At least 500 public drinking-water wells and 45,000 private wells across the country are contaminated, in addition to the approximately 140,000 underground storage tanks currently leaking gasoline containing the additive. Recent projections estimate the cost to remove MTBE contamination from the nation’s water supply at approximately $80 billion.

Conference of Mayors Executive Director Tom Cochran the called the MTBE liability waiver defeat “a major win for cities – we effectively stopped Congress from passing down and sticking local taxpayers with one of the largest, if not the largest, unfunded mandate.”

The 1990 Amendments to the federal Clean Air Act required urban areas in nonattainment for ozone — a key element of smog — begin selling reformulated gasoline in 1995 to reduce harmful emissions. In states without ready ethanol supplies, MTBE initially appeared to be an effective means of supplying the oxygen content necessary to gasoline to reduce ozone formation. As evidence of its threat began to accumulate, several states banned MTBE’s use as fuel additive, citing its harmful environmental effects – namely, its potential carcinogenic properties and negative impacts on water’s taste and odor. Many other states are in the process of phasing out use of the additive.

Final language in the energy legislation allows either party in future MTBE lawsuits to have the case moved to federal court, at which point a federal judge would decide whether to accept the case. It is believed that the federal courts would be less friendly to plaintiffs in such cases.

Energy Bill Minus ANWR/ Renewable Portfolio Standards

Drilling in Alaska’s Arctic National Wildlife Refuge (ANWR) – a major priority for the Administration – was notably absent from the energy bill. In the earlier House version of the bill, a provision was adopted to authorize drilling for oil and gas in ANWR in Alaska. However, energy bill conferees abandoned the House provision because it will now be considered during the budget reconciliation process, which will begin this fall.

Also absent from the legislation is a amendment offered by Senator Jeff Bingaman (NM) to require electric utilities to use at least ten percent renewable energy, such as solar, wind, geothermal by the year 2020.

Major Provisions of the Energy Policy Act of 2005 (H. R. 6) include:

Taxes - Provides more than $14 billion in tax breaks and incentives over ten years for the energy industry. This $14 billion includes $9 billion for energy infrastructure projects, $2.7 billion for renewable electricity production credit, $1.3 billion for energy efficiency and conservation, $2.8 billion for fossil fuels and $1.3 billion for alternative motor vehicles and fuels.

Liquefied Natural Gas (LNG) Facilities – Preempts state and local governments by giving the Federal Energy Regulatory Commission (FERC) the authority to site Liquefied Natural Gas facilities.

Ethanol - Doubles the use of ethanol – a corn based fuel additive that is mixed directly with gasoline, so it to burns more cleanly – to 7.5 billion gallons by 2012.

Energy Efficiency – Establishes new mandatory efficiency requirements for federal buildings and appliances, such as refrigerators, air conditioners, batteries, and other household appliances.

Electricity – Gives FERC new siting authority to issue permits for facilities in areas deemed to be “essential” transmission corridors if a state takes longer than one year to review the application, or if a state places certain conditions on the permit for approval. Repeals the 1935 Public Utility Holding Company Act (PUCHA), a law intended to prevent monopolies, but that utilities say unfairly limits business activities. It also requires the nation’s utilities to meet federal reliability standards for the electric transmission grid.

Daylight-Saving Time – Extends daylight'saving time by four weeks. It will start on the second Sunday in March and extends it through the first Sunday in November.

Low Income Home Energy Assistantance Program – Authorizes $5.1 billion annually for LIHEAP.

Corporate Average Fuel Economy - Directs the National Highway Traffic Safety Administration to conduct a study of “feasibility and effects” of reducing the amount of gasoline used by automobiles by 2012.

Clean Air Act – Allows state and local areas that do not meet EPA’s current standard for air quality testing to receive an extension of their compliance deadlines.