By Conference Staff
August 13, 2007

Before adjourning for its August recess, the U.S. House of Representatives on August 4 passed a broad energy package, 241-172, that includes authorization for a $10 billion energy block grant program for cities, counties and states, a top legislative priority of the Conference of Mayors 10-Point Plan.

The new block grant program was part of The New Direction for Energy Independence, National Security, and Consumer Protection Act (H.R. 3221), which establishes a wide range of programs and activities to promote energy efficiency and energy independence. A companion tax measure, Renewable Energy and Energy Conservation Tax Act of 2007 (H.R. 2776), which also includes new energy initiatives for cities, was adopted 221-189.

Under H.R. 3221, a new Energy Efficiency Block Grant Program (EEBG) would be established at the U.S. Department of Energy that would provide grants for communities to develop energy efficiency strategies to help reduce greenhouse gas emissions.

“The nation’s mayors applaud House leaders for demonstrating their commitment to local communities by passing landmark legislation that stimulates energy independence starting from the grassroots level,” said Conference President Trenton Mayor Douglas H. Palmer. “We thank the leadership of House Speaker Nancy Pelosi (CA), Chairman John Dingell (MI), Representatives Rick Boucher (VA) and Albert Wynn (MD), and other House leaders who have embraced this block grant approach. We will continue to support Congressional leaders to ensure that this landmark legislation reaches the President by the end of the year.”

Pelosi said, “Congress has created this bill with four principles in mind. We must strengthen our national security by reducing our dependence on foreign oil; lower energy costs with greater efficiency, cleaner energy, and smarter technology; create new and good-paying American jobs; and reduce global warming.”

Wynn, the lead sponsor of the EEBG program, said, “During hearings in the Energy and Commerce Committee, on which I serve, The U.S. Conference of Mayors pointed out that if we are to achieve our energy and emissions goals, we need a partnership between the federal, state, city and county governments to address energy issues. This funding will help local governments develop and implement comprehensive energy efficiency strategies to help the nation meet its energy and climate protection goals. I was pleased to work on this issue with the Conference of Mayors, and win authorization for $10 billion in Energy Efficiency Block Grants included in this bill.”

The legislation creates a new block grant program that will support community-based energy efficiency and conservation efforts by authorizing a total of $2 billion per year from 2008-2012. Activities eligible under the program would include: encouraging energy efficiency and conservation programs in commercial, residential and municipal buildings; as well as provide energy audits and energy technical assistance. Funds would be allocated to participating communities on a population formula basis. This new block grant is modeled after the successful federal Community Development Block Grant (CDBG) program, which also gives money directly to cities, counties, and states for economic development and housing programs.

“This legislation and its energy efficiency block grant program will help accelerate efforts by mayors to protect our climate,” said Conference of Mayors Executive Director Tom Cochran. “Mayors are on the front lines on climate protection and this new legislation will help cities to do more and empower them to reduce their community’s energy use and increase overall energy efficiency,” he added.

Cities nationwide are implementing innovative practices on energy efficiency, conservation, and ways to reduce global warming. So far, more than 648 U.S. mayors have pledged support for The U.S. Conference of Mayors’ Climate Protection Agreement, committing to reduce greenhouse gas emissions by seven percent from their 1990 levels. However, much more could be done with additional national resources to help launch and/or replicate these programs.

In the House-passed tax provisions (H.R. 2776), new tax incentives would encourage the use and production of renewable energy sources and energy conservation. Specifically, these new tax provisions seek to accelerate the use of clean domestic renewable energy sources and alternative fuels, promote the use of energy-efficient products, practices and conservation, and increase research, development and deployment of clean renewable energy and efficiency technologies.

H.R. 2776 also authorizes a total of $8 billion in bond financing that would be allocated to state and local governments to fund energy conservation projects, support grants or low-interest loans for residential energy-efficiency projects, and help public power companies and cooperatives pay for renewable energy projects. These bonds would be allocated as follows:

• $3.6 billion in Qualified Energy Conservation Bonds to states with sub-allocations to local governments with a population of 100,000 or more, to promote green community programs and initiatives designed to reduce greenhouse gas emissions;

• $2.4 billion in Qualified Energy Efficiency Assistant Bonds to states to provide low-interest loans and grants for energy-efficient property and energy improvements to existing homes; and

• $2 billion for Clean Renewable Energy Bonds (CREBs) for public power providers and electric cooperatives. (Sixty percent of the authorization must be used for qualifying projects of public power providers and forty percent must be used for qualifying projects of electric cooperatives. State and local governments may issue CREBs as an alternative to traditional tax-exempt bonds. Unlike tax-exempt bonds, CREBs are not interest bearing obligations. Instead, taxpayers holding CREBs are entitled to tax credit.)

To offset the cost of these tax incentives, the House bill includes $16 billion in revenue-raisers, which would be generated mostly by repealing previously-approved tax breaks for oil and gas companies. These revenue-raisers are not in the Senate version of the energy bill.

H.R. 3221 amends the Workforce Investment Act of 1998 to establish an energy efficiency and renewable energy worker training program. Among other activities, the legislation would link research and development in the green industry to job standards and training curricula.

Under the proposed Green Jobs program, the Secretary of Labor, in consultation with the Secretary of Energy, would establish an energy efficiency and renewable energy worker training program by awarding National Energy Training Partnership Grants on a competitive basis to eligible entities. Eligible entities would be non-profit partnerships with the equal participation of industry, including public or private employers, and labor organizations, including joint labor-management training program, as well as workforce investment boards, community-based organizations, educational institutions, small businesses, cooperatives, state and local veterans agencies, and veterans service organizations.

In addition, the Secretary of Labor would award competitive grants to eligible State Energy Sector Partnerships to coordinate with existing apprenticeship and labor management training programs to implement training programs. These State Energy Sector Partnerships would similarly be comprised of non-profit organizations that include equal participation from industry and labor organizations; and may include representatives from local governments, the workforce investment system – including One'stop Career Centers – community based organizations, community colleges and other post'secondary institutions, and small business cooperatives, state and local veterans agencies, and veterans service organizations.

The new job training programs would create jobs to put workers on a path to financial self'sufficiency. Funding for the programs could be used to pay for occupational training, as well as for support services for workers entering the training program, such as child care. Priority for these training programs would be given to veterans, displaced workers, and at-risk youth.

H.R. 3221 also provides new funding to make public transit services more affordable and/or available, waives existing federal matching requirements for clean fuel and alternative fuel buses and facilities in non-attainment and maintenance areas, eliminates matching requirements for all projects funded under the Congestion Mitigation and Air Quality Improvement (CMAQ) program, and supports new commitments to rail transit, freight rail improvements and marine transportation under other provisions.

To assist local public transit efforts, $750 million annually in supplemental formula grants to transit providers in urbanized areas (i.e., Federal Transit Administration’s Urbanized Formula Grant Program) is authorized, providing 100 percent federal grants for reducing transit fares and/or for paying new operating/capital costs for the expansion of transit services. (Notably, existing law does not allow transit providers in urbanized areas of 200,000 or more to use federal transit funds for operating assistance.) For other transit providers not receiving formula funds directly, the bill also provides $100 million annually for these same purposes.

Transit providers in non-attainment or maintenance areas would also be allowed to use their Federal Transit Administration (FTA) funds to pay all costs for acquiring clean fuel or alternative fuel-related equipment or facilities, including retrofitting existing engines. This means that purchasing and/or retrofitting bus engines or necessary fueling or other facilities could be done with 100 percent federal funding.

Another change supporting local clean air compliance efforts is a provision that makes CMAQ-funded projects eligible for 100 percent federal funding. This is particularly important for cities and regions where funds for matching CMAQ-eligible projects have been difficult to assemble, particularly in states that limit the use of state transportation revenues to only the construction and maintenance of highways. CMAQ projects target reductions in air emissions from the transportation sector through solutions (e.g., expanded transit services, transportation demand management strategies, vanpooling/carpooling and deployment of new technologies) where state transportation tax revenues often can’t be used for the federal match.

The legislation also includes a Conference-backed policy reform requiring states to treat all highway program accounts fairly when Congress orders states to “rescind” unobligated program balances; the legislation directs states to withdraw any unused highway program funds in a manner that is proportional to how SAFETEA-LU law allocates program funds to the states. In recent rescission actions, many states have targeted disproportionately the Bridge program, especially funds reserved for local bridge repairs, the CMAQ program and the Transportation Enhancements program, which are intended to benefit local transportation priorities.

The bill’s emphasis on the CMAQ program reflects the view that this is the one highway program account that has been shown to be effective in reducing energy use in the transportation sector, while supporting local climate protection efforts. In this fiscal year, about $2.1 billion has been allocated to the states for CMAQ-eligible projects in non-attainment and maintenance areas.

Finally, the legislation authorizes an advanced technology locomotive grant program, makes certain freight rail improvements eligible for federal funding, establishes a new program to use waterways to shift freight away from congested ports, and allows transit providers to access an existing, non-binding mediation process at the Surface Transportation Board to help resolve requests by transit providers to freight railroads for use of rights-of-way and trackage.

As one of the more controversial amendments considered during debate, the House did approve a new federal renewable electricity standard, requiring investor-owned utilities to secure 15 percent of their electricity from renewable energy sources such as wind, solar, ocean, tidal, geothermal biomass and efficiency by 2020. The amendment, which was offered by Representative Tom Udall (NM), passed 220-190.

Utilities are allowed to satisfy a portion (i.e., four percent) of the 15 percent requirement through energy efficiency and conservation measures. Rural electric cooperatives and municipal utilities are exempted from the standard.

Other provisions in the bill include: establishing new energy efficiency standards for appliances, light bulbs, and buildings; expanding the use of alternative fuels such as ethanol and biodiesel; developing new technologies to modernize the national power grid; researching and developing technologies for carbon sequestration; and providing tax incentives for plug-in hybrids.

The House energy legislation now goes to a House'senate Conference Committee where differences between the House and Senate energy bills will be reconciled. In June, the full Senate approved its energy package, which also includes an energy and environmental block grant program for cities, counties and states. After Labor Day when Congress reconvenes, the first order of business for Congressional leaders will be the selection of House and Senate conferees. Once conferees are appointed, House'senate negotiations to hammer out an agreement can begin.