The Administration strongly supports comprehensive energy legislation
that improves energy efficiency, fosters conservation, and increases
and diversifies domestic energy supply as called for in the
President's National Energy Policy (NEP) report. The NEP's legislative
recommendations would enable the Nation to improve energy security,
while protecting and enhancing the environment, creating jobs,
and promoting economic growth. Enactment of such comprehensive
legislation this year is critical to ensuring the Nation's energy
and economic security.
Comprehensive energy legislation must increase energy conservation
and efficiency. Nearly every dollar of the NEP's $9.2 billion
energy tax proposals for FYs 2003-2012 would be devoted to
increasing efficiency, conservation, and renewable energy.
The fiscal centerpiece of the NEP is a $3 billion consumer
tax credit for the purchase of hybrid and fuel cell vehicles.
Other fiscal incentives include extending and modifying the
tax credit for producing electricity from environmentally
friendly sources, such as biomass and wind; providing tax
credits for energy produced from landfill gas, residential
solar energy systems, and investment in combined heat and
power; and extending the ethanol tax exemption.
The cost of the Administration's energy tax proposals is balanced
within the President's priorities of economic, homeland, and
military security. The Administration is pleased that many
of the Administration's proposals were included in the bipartisan
measure reported by the Senate Finance Committee.
With regard to nuclear energy, the Administration strongly
believes that comprehensive energy legislation should include
reauthorization of the Price-Anderson Act nuclear liability
insurance. The Administration supports language in S. 517
that reauthorizes Price Anderson protection to DOE contractors,
but notes that this reauthorization does not extend to other
nuclear facility operators. The Administration will work with
the Senate to modify this provision in order to fully reauthorize
the Price-Anderson Act.
With regard to electricity, the Administration strongly believes
that comprehensive energy legislation should include provisions
to modernize our Nation's antiquated wholesale electricity
laws. The Administration strongly supports enactment of electricity
legislation that, as outlined in the NEP, promotes competition,
protects consumers from market power abuses, enhances investment
in and improves reliability of the transmission grid, improves
efficiency, and promotes the production and use of domestic
renewable energy. The electricity title in S. 517 is a step
in the right direction, and the Administration supports several
of its provisions including the repeal of the outdated 1930s-era
Public Utilities Holding Company Act and promotion of open
access to the transmission grid. The Administration will work
with the Senate to modify other provisions of the electricity
title of S. 517 in order to develop legislation that is consistent
with the Administration's objectives.
The Administration supports the expanded use of cost-effective
renewable fuels, including ethanol and other biomass, which
would promote energy security, farm economy, and clean air.
The Administration would welcome a proposal to expand the
use of renewable fuels in ways that are cost-effective and
The Administration, however, has serious concerns about S.
517 in its current form, and urges the Senate to modify the
bill to bring it more closely into conformance with the NEP.
Most significantly, S. 517 is not comprehensive energy
legislation. In order to be comprehensive, energy legislation
must increase domestic energy supply and promote conservation
and efficiency. S. 517 does very little to increase our Nation's
For example, S. 517 does not provide for the exploration and
development of the significant oil and gas resources contained
within the Arctic National Wildlife Refuge (ANWR). ANWR is
by far the largest untapped source of domestic petroleum potential
and would equal nearly 40 years of imports from Iraq. The
Administration strongly supports the exploration and development
of a very small portion (approximately 2,000 acres) of the
19 million acre ANWR using advanced technology that is protective
of the environment and migratory wildlife using the most stringent
natural resource protection standards ever enacted in law.
Increasing domestic petroleum supply, thereby reducing dependence
on foreign sources of oil, is a vital component of our Nation's
energy security. Environmentally sound exploration of ANWR
will also result in hundreds of thousands of jobs for American
Concerning fleet fuel economy, the Administration has consistently
supported improving fuel economy while protecting passenger
safety and jobs. The Administration wants to work closely
with Congress to achieve significant improvements to fleet
fuel economy through sound science by encouraging the development
and introduction of new technologies, rather than jeopardizing
passenger safety by making vehicles smaller and lighter. The
Administration has already shown its support for the FREEDOM
CAR initiative and other R&D and tax incentives in this area.
As one component to this effort, the Administration has asked
Congress for authority to reform the Corporate Average Fuel
Economy (CAFE) program, as recommended by the congressionally-requested
National Academy of Sciences (NAS) CAFE report, to include
possible reforms such as attribute-based standards and tradeable
fuel economy credits. Such reforms have the potential to enable
the Nation to simultaneously save fuel, lives, and jobs. The
NAS report clearly highlighted the additional traffic injuries
and fatalities caused by CAFE's current incentives for manufacturers
to produce and sell smaller and lighter vehicles. Moreover,
the NAS warned of the possibility of further fatalities and
injuries if current CAFE standards are arbitrarily increased.
For these reasons, the Administration strongly opposes the
CAFE provisions in S. 517. Based on the NAS report, the Administration
is deeply concerned that S. 517 would contribute to many thousands
of additional passenger fatalities and injuries. In the wake
of the report's findings about CAFE's safety implications,
protecting passenger safety should be explicitly incorporated
as a consideration in setting future fuel economy standards.
The Administration also notes with concern that a recent analysis
by the Energy Information Administration found that S. 517's
CAFE provision would (1) cause new vehicles to be several
hundred pounds lighter, which the NAS warned would increase
passenger fatalities and injuries; (2) lead to 200,000 total
job losses in 2010 and 450,000 job losses in 2015; (3) cost
$170 billion in lost economic output between 2003 and 2020.
Concerning global climate initiatives, the President recently
announced an aggressive plan to reduce the projected growth
in U.S. greenhouse gas emissions in the next decade, along
with a comprehensive set of domestic and international policy
initiatives. The Administration would support legislation
that is consistent with this plan, particularly to advance
the goal of reducing the "greenhouse gas intensity" of the
American economy and improving the existing Department of
Energy registry for reporting and crediting voluntary emissions
reductions. Improving the existing registry would be more
productive than imposing new expansive and burdensome mandatory
nation-wide emissions reporting requirements as contained
in S. 517.
In addition, the Administration has recently established a
new Committee on Climate Change Science and Technology Integration,
chaired by the Secretary of Commerce, to manage the Federal
climate science and technology research programs and report
to the ongoing cabinet-level global climate working group.
The Administration, therefore, has serious concerns about
S. 517's highly prescriptive provisions, which would create
an unwieldy new climate policy bureaucracy. The bill's requirements
would also interfere with the President's constitutional authority
to supervise the Executive Branch and unconstitutionally restrict
the President's powers under the Appointments Clause.
Finally, the Administration opposes provisions in the bill
authorizing Federal spending at unrealistically high levels
that significantly exceed the President's Budget request.
The Administration remains strongly committed to enactment
of energy legislation this year and will work with Congress
to pass comprehensive, environmentally sensitive, and economically
responsible energy legislation as called for by the NEP.
Any law that would reduce receipts or increase direct spending
is subject to the pay-as-you-go requirements of the Balanced
Budget and Emergency Deficit Control Act. Accordingly, S.
517, or any substitute amendment in lieu thereof that would
reduce revenues or increase direct spending, will be subject
to the pay-as-you-go requirement. OMB has not completed the
scoring of S. 517, but a preliminary scoring indicates that
S. 517 would have net budget costs. The Administration will
work with Congress to ensure that any unintended sequester
of spending does not occur under current law or through the
enactment of any other proposals that meet the President's