Vet Center Enhancement Act of 2005

Mr. President, today I am introducing the Natural Gas Price Reduction Act of 2005 and the ``Tax Provisions for Natural Gas Price Reduction Act of 2005.'' I send to the desk two pieces of legislation. One is the substantive provisions of the bill and one is the tax provisions of the bill.

Mr. President, I offer the legislation on behalf of myself and the Senator from South Dakota, Mr. Johnson, who is the lead Democratic sponsor on the legislation. I do so with appreciation to the chairman of our Energy and Natural Resources Committee, Chairman Pete Domenici, and the staff of that committee who have worked very closely with us on the development of this comprehensive piece of legislation, and with thanks to my own staff, Sharon Segner, who has worked on it for several months.

This is a piece of legislation to address aggressively and comprehensively the rising cost of natural gas in the United States. This is legislation for the blue-collar worker, for the American farmer, and for the American homeowner.

Natural gas prices in the United States are at record levels. We have gone from having the lowest natural gas prices in the industrial world to the highest. These high prices are threatening millions of our jobs. Our farmers are getting a 10-percent pay cut. Homeowners are having a hard time paying their heating and cooling bills because of our contradictory policies.

Our policies boil down to this: We are restricting the supply of natural gas, and we are encouraging the use of natural gas. You do not have to go very far in an economics class at the University of Oklahoma or the University of Tennessee to know that if you restrict supply and encourage demand, the inevitable result is higher prices. And higher prices is a very serious problem for U.S. workers, U.S. homeowners, and U.S. farmers.

Only an ambitious and comprehensive approach that both increases supply and controls demand can lower the price of natural gas and keep our economy growing. This is not a question of tweaking our natural gas policy. It is time, aggressively, to revamp it. We need aggressive conservation. We need aggressive use of alternative fuels. We need aggressive research and development. We need aggressive production. And, for the time being, we need aggressive importation of liquefied natural gas from other parts of the world.

Here on this chart is an idea of where we are today. This is the United States of America: $7 per unit for natural gas--the highest in the industrialized world. Until recently, we had the lowest natural gas prices in the world.

What that means is large parts of our industries--the chemical industry, for example--were built on the idea of $1.50 or $2 for natural gas, but today it is $7.

A million Americans work in those blue-collar manufacturing jobs in every State in our country. Now, if they are paying $7 here, and it is $5.55 in Canada and $5.15 in the United Kingdom and $2.65 in Turkey and $1.70 in the Ukraine, where do you suppose,

though, a million blue-collar jobs are going to be 5 years from now, if we do not do something about the $7 price? They are not going to be in the United States. They are going to be moving out of the United States, to the United Kingdom, to Germany, to the Ukraine, to other parts of the world. And people are going to be writing their Congressmen and saying: Why didn't you do something?

So here is what we can do. By aggressive conservation, I mean setting stronger appliance and equipment standards for natural gas efficiency so that a commercial air conditioner will cool the same while using less natural gas doing it. Those standards have been generally agreed upon by environmental groups with the industry. If they were put in place, by a rough estimate, they might save the equivalent energy that could be produced by 30 or 35 powerplants.

By aggressive use of alternative fuels, I mean, for example, fully commercializing coal gasification. Coal gasification is taking this abundant supply of coal we have in the United States--we are the ``OPEC,'' the ``Saudi Arabia'' of coal; we have a 400- or 500-year supply--and finding a clean way to use it instead of importing oil from a part of the world where people are blowing each other up.

That means starting with support so we can have six coal gasification plants in this country by the year 2013. Coal gasification means, you burn the coal to create gas, and then you burn the gas to create power. If we can do that commercially, we will not only be passing a clean energy bill, we will be passing a clean air bill, because if you do that, you remove most of the mercury, most of the nitrogen, most of the sulfur. And by additional research, we may be able to find a way to recapture the carbon that is produced and put that in the ground and solve the carbon problems that a lot of people are talking about around the world.

In addition to helping ourselves, we would help ourselves by helping others. China and India and other parts of the world are building hundreds of coal plants. We would much rather them build a coal gasification plant, one that is clean and does not contribute to air pollution. Because if China and India and Brazil build dirty coal plants, that air blows around the world, and it blows into Tennessee and it blows into South Carolina. It blows into Oklahoma.

So aggressive alternative fuels is a part of a natural gas supply. Aggressive research and development includes investment and research in gas hydrates. Gas hydrates is gas that is in the ground. Methane hydrates hold tremendous potential to provide abundant supplies of natural gas. Hydrates are like ice solid structures, consisting of water and gases, mainly methane, compressed to greater than normal densities.

Coastal U.S. areas are rich in this resource. The United States is estimated to contain one-fourth of the world's supply. We need to find a way to use that gas so we do not have $7 per unit natural gas prices. That sends millions of jobs overseas. That cuts the income of farmers. And that raises home heating prices and cooling prices for residential Americans.

Aggressive production means, among other things, allowing States to selectively waive the Federal moratoria on offshore production of gas and collect significant revenues from such production. Let me give you an example. Within the last few weeks, the legislature of Virginia decided it might like to explore the idea of drilling for gas offshore. Now, why would Virginia want to do that? Because there is probably a lot of gas offshore. What would that mean for Virginia? Well, they could put a gas rig out in the ocean, beyond 20 miles, so nobody in Virginia or North Carolina could see it, run a pipeline underground to Virginia, and take their share of the revenues. And they can lower taxes in Virginia and put the rest of the money in a trust fund to build the best colleges and universities in America. That is what they could do in Virginia.

If Tennessee had a coastline, and I were Governor of Tennessee, that is what I would be asking the Congress to let me do.

I think as other Governors and other legislatures and other people look at Texas and Louisiana and Alabama and see what they are doing and decide that they can in an environmentally sensitive way exercise a State option to drill for gas in Federal waters so far out you can't see it, that they will find that a good option because it will help lower the price of gas. It can build up the schools and keep taxes down, and it can avoid other worse forms of energy.

For example, you would have to have 46 square miles of windmills, these things that are 100 yards tall, in order to equal one gas rig that you couldn't see out in the ocean. This is a State option. Aggressive importation of liquefied natural gas starts with giving the Federal Energy Regulatory Commission exclusive authority for siting and regulating what we call LNG terminals. This means importing liquefied natural gas from other parts of the world. There is a lot of it around the world. They freeze it and put it in tankers, and they bring it here and put it in our pipelines, and then we have it.

That seems like a pretty big waste of effort when we have plenty of natural gas here in the United States that we don't have access to. But if we want an adequate supply of natural gas, we are going to have to import some from around the world, and that means we are going to need terminals to which to bring it. Some of them may be offshore. They might be 10, 12, 14 miles offshore. Some of them, like the four we have today, may need to be onshore. There is no silver bullet. There is no single answer. That is why we need aggressive conservation. If, for example, the United States adopted the conservation attitudes towards natural gas that California did a few years ago, it might equal what 50 powerplants could produce in the United States. If that is so, we ought to do it today. That would begin to bring this $7 figure down.

Aggressive use of alternative fuels such as coal gasification. I also would say nuclear power is the most obvious alternative fuel to natural gas. If we had more nuclear power, we would use less natural gas. In our country today, what do you suppose we are using to create electricity when we need more electricity even though the cost of it is $7 a unit, the highest in the world? Natural gas, because natural gas plants can be built for a few hundred million dollars, and we have created an environment where we can't use nuclear.

We haven't built a new nuclear plant since the 1970s, even though we invented the technology, even though France has 80 percent of its power now produced by nuclear power, even though Japan builds a new nuclear plant every year or so. We invented it. Our Navy has operated nuclear reactors since the 1950s without ever having a single accident. It is a clean, obvious alternative to $7 natural gas, and we haven't built a plant since the 1970s. So we need to think seriously about aggressive conservation, aggressive use of alternative fuels, aggressive research and development for solar, for methane hydrates, aggressive production, and that includes giving States the option of deciding whether they would like to drill offshore and take some of the revenues and put some of the revenues into a conservation fund, and aggressive importation of liquefied natural gas from overseas at least for the time being.

In March of 2002, the Secretary of Energy requested that the National Petroleum Council undertake an extensive study on the natural gas crisis. That advisory council produced a study. It talked about the results I have described. Our Senate Energy Committee, under the chairman, Senator Domenici, has paid a lot of attention to that report. Senator Domenici hosted what we called a natural gas roundtable that was well attended by Senators and went on for 3 or 4 hours. There were more than 100 proposals presented.

I am chairman of the subcommittee of that full committee, and so my purpose today is to take many of the ideas that we heard that made the most sense, some of which people haven't been willing to advocate, and put them into the discussion. Again, because I do not want to be a Senator who 10 years from now somebody comes up to and says: How did you let farmers get a 20-percent pay cut because of $7, $8, $9 natural gas; how did you let millions of jobs in the chemical industry, the auto industry go overseas because of $7, $8, and $9 natural gas; how did you let prices of natural gas for home heating

or cooling get so high that middle-income Americans can't even afford to heat their homes? I don't want to be that kind of Senator. So I am here today with a comprehensive proposal across the board even though some of the ideas will create that kind of controversy.

I have summarized in a few words the provisions of a 250-page piece of legislation.

We were ambushed in the United States on September 11, 2001. Even though you could argue that we might have known it was coming, terrorism wasn't new on September 11, 2001.

I remember being in a meeting with Prime Minister Rabin of Israel in 1994. At the end of a long day, I asked him: What is the greatest challenge threatening the world? And he said terrorism. That was many years before we were attacked. He was right. He was dead within a few months at the hands of terrorists within his own country. We didn't see the terrorism coming. We were ambushed, and we have paid a terrible price--in lives, in dollars. We have had to create whole new departments. We have had to interrupt the lives of thousand of national guardsmen and Army reservists and send them overseas, some to die and some to be wounded, because of terrorism. Maybe we couldn't have seen exactly that act coming, but we knew it was out there.

We are about to have another big surprise. That is to our standard of living. We are 5 to 6 percent of all the people in the world. Yet we produce a third of all the money in the world. We could wake up 10 years from now and that picture could be very changed. One way is if we lose our brainpower advantage. And we could lose it. Half of our new jobs have been created by science and technology since the end of World War II. And if we go through our budget balancing, deficit controlling exercise for the next 10 years and we don't double investments for the physical sciences and retake the lead in advanced computing, and if we don't see that we have plenty of graduate students in science and engineering, we are going to find most of the R&D will be done in other parts of the world. We are going to find most of the engineers who produce this brainpower that creates jobs in other parts of the world.

They are thinking in China, and they are thinking in India. There is no real good reason why the United States should make a third of all the money in the world every year with just 5 or 6 percent of the people, and we have so little. So they are keeping their bright people home. They are building up their universities. They are doing what we need to keep doing. That is one place we could get a big surprise.

But the other is in energy. We have taken energy for granted for a long time. I know I come from Tennessee. We have had the Tennessee Valley Authority. It has sat there since the 1930s, and it has produced reliable, low-cost electricity. Homes that have never been lit, barns that have never been lit, rural areas that have never been lit have enjoyed that. That is within my lifetime.

And then while I was Governor in the 1990s, I remember that one of the big attractions for Saturn and Nissan and the automobile industry coming into Tennessee was low-cost reliable power. But when I had a natural gas roundtable last fall in Tennessee, there was the president of Saturn, the president of Nissan, the head of the Tennessee Farm Bureau. There was the head of the University of Tennessee. They were all saying: We can't live in Tennessee on $7 natural gas. What do they do if they can't? It is very easy what they do. They don't have to have those jobs in Tennessee or South Carolina. They can move them to Germany, they can move them to Mexico, they can move them to Canada, and they are doing it every day.

And Tennessee Eastman in the upper part of east Tennessee, which we think is just like the great Smokey Mountains, has been there so long. There are 12,000 people there, real good incomes. What do they use to make chemicals there? They use natural gas.

How long are they going to be there? If we have $7 gas and they have $3 and $4 gas in other parts of the world, I am afraid they are not going to be there too long. And somebody is going to say to me: What did you do about it? At least my answer is I stood up on the floor of the Senate and said this is not the time to tweak our natural gas policy.

We do not need to sit around and wait for a big surprise on energy like we had a big surprise on September 11 on terrorism. We need an aggressive policy. We need a comprehensive policy. We need aggressive conservation. That is where we should start. We need aggressive alternative fuels. That means nuclear and that means coal gasification. We need aggressive research and development, whether it is hydrogen or whether it is solar, or whether it is methane gas hydrates. We need aggressive production. We have lots of gas in the United States. We should be using it if we have $7 gas.

For the time being, we need to create the terminals that will permit us to import enough liquefied natural gas to get that $7 price down to $6 or $5 or $4.

Mr. President, I thank Senator Johnson from South Dakota for joining me in this comprehensive aggressive approach. I thank Senator Domenici for taking the lead on an energy bill. I thank Senator Bingaman, who is the ranking Democrat on our committee, because I notice on our committee a greater sense of urgency, a greater sense of bipartisan cooperation on coming up with an energy bill this year. Our blue-collar workers, our farmers, our homeowners in Tennessee and across this country expect it from us.

Senator Johnson's and my contribution today is to introduce this comprehensive 250-page bill and to get on the table all the aggressive ideas we can think of that make sense about how to reduce the price of natural gas for workers, for farmers, and for homeowners. We hope it contributes to the discussion. We hope we find lots of these provisions in an ambitious energy bill.

I look forward to working with my colleagues, as I know Senator Johnson does, on a bipartisan basis to help lower the price of natural gas, keep our jobs, keep our homes cool and warm, and make it possible for farmers to make a living.

Natural gas prices are at record levels and the highest of any industrialized country. High natural gas prices are threatening our jobs, our farms, and hurting Americans who are trying to heat and cool their homes. Only an ambitious, comprehensive approach that both increases supply and controls demand can lower the price of natural gas and keep our growing economic recovery from becoming recent history.

This is not a question of tweaking our natural gas policy. It is time to aggressively revamp it. We need aggressive conservation, aggressive use of alternative fuels, aggressive research and development, aggressive production and for the time being, aggressive imports of liquefied natural gas.

Aggressive conservation, for example, means setting stronger appliance and equipment standards for natural gas efficiency so that a commercial air conditioner will cool the same while using less natural gas to do it.

Aggressive use of alternative fuels, for example, means fully commercializing coal gasification, starting with support for the deployment of six coal gasification plants by 2013. Coal gasification means that you burn coal to produce power but get the much lower pollution output of using natural gas.

Aggressive research and development includes investment in research of gas hydrates. Methane hydrates hold tremendous potential to provide abundant supplies of natural gas. Hydrates are ice-like solid structures consisting of water and gases, mainly methane, compressed to greater than normal densities. Coastal U.S. areas are rich in this resource. The U.S. is estimated to contain one-fourth of the world's supply.

Aggressive production means, among other changes, allowing states to selectively waive the federal moratoria on off-shore production and collect significant revenues from such production.

And aggressive importation of liquefied natural gas starts with giving the Federal Energy Regulatory Commission exclusive authority for siting and regulating LNG terminals, while still preserving states' authorities under the Coastal Zone Management Act and other acts.

In March 2002, Secretary of Energy Abraham requested that the National Petroleum Council undertake an extensive study on the natural gas crisis.

That council, a Federal advisory committee to the Secretary of Energy, produced in late 2003 one of the most extensive policy studies and recommendations on the natural gas crisis to date. Since that time, other prominent groups, such as the National Commission on Energy Policy, have also produced extensive studies on the natural gas crisis. In October 2004, I held a roundtable on the impact of soaring natural gas prices on Tennessee farmers and jobs. The Senate Energy Committee has held numerous hearings over the last 2 years and recently held an extensive natural gas roundtable on the subject on January 24, 2005. Over 100 proposals were submitted to the Senate Energy Committee on natural gas issues.

The conclusion of all of these forums has been clear.

High natural gas prices are threatening our country's economic competitiveness and costing us jobs. For example, high natural gas prices have been the equivalent of a 10 percent pay cut to American farmers.

The situation is urgent.

There are no silver bullets. We cannot conserve our way out of this problem, nor can we drill our way out of this problem. We will need to be aggressive on all fronts, in order to keep our industries competitive.

High natural gas costs are also tied to high oil prices. We need to address both natural gas and oil prices in order to lower natural gas costs.

Our country has contradictory policies on natural gas--on one hand, we encourage its use. On the other hand, we limit access to its supply. We need to amend our contradictory natural gas and environmental policies.

That's why I am introducing the ``Natural Gas Price Reduction Act.'' It is an aggressive, bold approach to tackle this issue. This 250-page legislation is an attempt to start a very difficult, but balanced, legislative discussion in the United States Senate on natural gas prices. I have taken the best ideas that I have heard in these roundtable discussions and from the various policy studies. I have met with hundreds of people in the past year discussing natural gas prices. This legislation is an attempt to be more aggressive on all areas impacting natural gas prices--energy efficiency and fuel diversity, natural gas supply, and improved infrastructure for importation of liquefied natural gas.

Half our Nation's increase in natural gas demand in the last decade has come from the power sector. So to conserve natural gas, one must not only reduce consumption of gas itself, but also of electricity. And, as I noted, since oil prices affect natural gas prices, conserving oil is also important. My bill addresses conservation in five ways.

The bill creates a 4-year national consumer education program on the urgent need for energy conservation. A statewide California effort to educate energy consumers resulted in savings of 10 percent at peak usage--the equivalent of five-and-a-half 1,000 Megawatt coal-powered power plants. My bill aims to take that effort to the entire nation.

The legislation sets higher appliance and equipment standards for natural gas efficiency. These standards have been negotiated between consumer and industry representatives and are codified in the bill. For example, the standards would require a new kitchen oven to produce the same heat while using less natural gas to do it. The American Council for an Energy-Efficient Economy estimates that these standards will reduce natural gas use by about 125 BCF in 2010 and 525 BCF in 2020. In addition these standards will reduce peak electric demand by about 33,500 MW in 2020, equivalent to 34 coal power plants of 1000 MW each, and will save consumers and businesses more than $60 billion.

The bill creates tax incentives and provides regulatory relief to enable manufacturing facilities to more easily produce their own power and steam from a single source--a process called cogeneration or CHP which saves money and energy while also reducing pollutants. A CHP system can produce the same electrical and thermal output at 75 percent fuel conversion efficiency as compared to 49 percent separate steam and power. This is a 50 percent gain in overall efficiency, resulting in a 35 percent fuel savings. Large industrial plants, such as International Paper, Alcoa and Eastman in my home State of Tennessee all use cogeneration in their manufacturing processes. More companies could do the same, and the bill particularly focuses on providing incentive for smaller cogeneration projects.

The Alexander bill provides incentive for public utilities to utilize their natural gas plants based on efficiency. The process of activating different power plants to meet demand during a given day is called ``dispatching.'' For example, on a hot summer day in Tennessee, the demand for electricity, for air conditioning, might be highest in the early afternoon, so then a power company would have to dispatch the most power plants to provide the energy. But during the cooler night, they might dispatch less plants since less power is needed. If power companies dispatched their most efficient plants first, this would save us a significant amount of natural gas. As you can see, the highest saving will be in the medium-term--2010-2015--but real savings continue for many years.

Our reliance on foreign oil is the silent elephant in the room when it comes to high natural gas prices. My legislation includes a provision that requires the President report to Congress annually on efforts to reduce U.S. dependence on imported petroleum 1.75 million barrels a day from projected 2013 levels, almost 10 percent. As I noted earlier, oil and gas are usually produced together; and, typically, there is a 6:1 ratio between natural gas and oil prices. Reducing dependence on foreign oil will help bring natural gas prices down.

Conservation of natural gas and related energy sources is critical to lowering prices and keeping our manufacturing and farming jobs here in the United States. But conservation alone is not enough. The second focus must be to develop alternative sources of energy. The ``Keep Manufacturing and Farming Jobs in the United States Act'' encourages the use of three alternative fuels:

The bill initiates a national coal gasification strategy. Eastman Chemical in Kingsport, TN, has been using coal gasification with a 95% availability factor for the past 20 years. Tampa Electric has successfully demonstrated large-scale coal gasification. It is time for this process to be more widely used. Coal gasification is a process whereby gas derived from burning coal is used as a source of energy or a raw material. When used in a power plant, coal gasification means that you burn coal but get the much lower pollution output of using natural gas. My legislation provides up to $2 billion in tax or other incentives to support the construction of six new coal gasification power plants. Similarly, the legislation provides up to $2 billion in assistance for industrial gasification projects. The bill also provides streamlined permitting for coal gasification facilities. Coal is an abundant resource in the United States; we should use it to produce clean energy and raw material for industrial applications.

Solar energy is another clean, alternative fuel source that could be developed further. Solar energy can be used directly for heating as well as to create electricity. To push an aggressive solar energy strategy, the Alexander legislation provides tax incentives for investment in solar power generation. Specifically, it provides businesses a tax credit for investing in geothermal or solar heating and/or power generation--10 percent heating, 25 percent for generating or displacing electricity.

My bill also contains language to invest in new technologies to use hydrogen to power fuel cell vehicles. The language in this bill mirrors language I offered in the last session of Congress on the Energy Bill that would have enacted President Bush's Hydrogenl/Fuel Cell Initiative. When I visited Japan last year, I visited a hydrogen fuel station--that looked much like a gas station--and saw fuel cell vehicles that range from small cars to SUVs. These cars not only allow us to use an alternative fuel source but are also great for the environment--their only byproduct is water vapor. The bill invests in research and development of technologies and infrastructure for 2 hydrogen and fuel cell vehicles.

Methane hydrates hold tremendous potential to provide abundant supplies of natural gas. Hydrates are ice-like solid structures consisting of water and

gases--mainly methane--compressed to greater than normal densities. Coastal US areas are rich in this resource--the U.S. is estimated to contain one-fourth of the world's supply. My bill invests $200 million over the next 4 years in research for this promising new resource, a number consistent with recommendations from the National Commission on Energy Policy.

Conserving natural gas and using alternative fuels will take us a long way to reducing gas prices and keeping jobs here in the U.S., but we must also address the other side of the equation: supply. As Energy Committee members learned at our Natural Gas Roundtable, our current policy encourages consumption of natural gas while restricting the supply. We need to stop putting unnecessary restrictions on production and supply of natural gas, and my legislation does so by addressing production off-shore and in the Rocky Mountains as well as the importation of liquid natural gas from abroad.

We have plenty of natural gas here in the U.S., we just cannot get to it. There are large fields off the coasts, especially the Atlantic, and in the Rocky Mountains. There is no reason for natural gas prices here in the U.S. to be so high when we have so much available here--if only we would use it.

Today, there are two moratoria on our outer continental shelf, OCS--a congressional moratorium and a Presidential moratorium. The Atlantic Coast--40 miles off the coast is believed to be largely natural gas- prone. The Pacific Coast is believed--to be mainly oil-prone. The Gulf of Mexico is both. Today, when production is greater than 9 miles offshore, a State that has oil and gas production gets zero percent of the production revenues. This is radically different than onshore production; on Federal lands, States get 50 percent of the production revenues. Alaska gets 90 percent of the production revenues. In order to have a constructive dialogue on OCS production, the right framework needs to be established.

My legislation provides the Department of the Interior with the legal authority to issue natural gas only leases. Currently, Interior can only issue combination gas and oil leases. Since there is greater hesitation about the environmental impact of producing oil off-shore, issuing natural gas-only leases may alleviate some concerns.

It also instructs the Secretary of the Interior to draw the state boundary between Alabama and Florida regarding Lease 181--a disputed area off the coast of both states in the Gulf of Mexico in which Alabama may wish to permit production while Florida may not. The boundaries shall be drawn using established international law. Under my bill, portions of Lease 181, which are not in the state of Florida and greater than 30 miles off of the coast of Alabama, shall be leased by December 31, 2007. However, of those portions of Lease 181 that are in the State of Florida, the State of Florida may keep the moratoria. Leasing would not be allowed to interfere with U.S. military operations in the Gulf Coast.

Finally, under the bill, States will have the authority to request studies of natural gas resources off their coasts and be permitted to waive Federal moratoria on offshore production. The states shall not have the authority to lift the moratoria at National Marine Sanctuaries or National Wildlife Refuge Area. The State of Virginia recently engaged on this issue, and the state ought to have the ability to license off-shore production--especially if it is far enough off-shore that you cannot even see it from land. My bill also allows States to collect significant revenue from such production, and designates that a portion of revenues also go to a conservation royalty. The conservation royalty would be shared equally by the Federal land and water conservation fund, state land and water conservation fund and wildlife grants.

Importing liquefied natural gas--LNG--requires the infrastructure to receive it. LNG comes to the U.S. by ship, and terminals to receive these ships and unload LNG must be built and appropriate infrastructure developed to transport gas from those terminals to users across the country.

My bill streamlines the development of offshore liquefied natural gas terminals. The siting of LNG terminals has become a difficult issue since we all want cheaper natural gas, but no one seems to want an LNG terminal in ``their backyard.'' The Alexander legislation gives FERC clear authority for regulating liquid natural gas terminals, but, unlike a related House bill, still preserves States' authorities under the Coastal Zone Management Act and other acts. I hope this will provide some balance so that LNG terminals can be sited, but environmental concerns will play a significant role in choosing their sites. In an effort to speed the siting of pipelines that allow natural gas to reach all parts of the country, the bill also requires that FERC grant or deny a terminal or pipeline application within one year.

Our country is facing an energy crisis. We are consuming more and more electricity. Gasoline prices are poised to reach all time highs. The price of oil is up. And so, too, is the price of natural gas.

The bill I introduce today, the ``Natural Gas Price Reduction Act,'' addresses high natural gas prices. Natural gas is not just used for heating homes, a source of electricity, it is a raw material for industries, and it is an important component in fertilizers used by farmers. High natural gas prices have cost farmers a 10-percent pay cut and are shipping manufacturing and chemical jobs overseas. We can not afford to let this problem fester any longer.

Bold action is required, and that is what my legislation provides. This bill takes a comprehensive approach to addressing the problem by encouraging conservation, developing alternative fuel sources, and reducing roadblocks to the production and importation of natural gas. I urge my colleagues to support it.

Mr. President, I rise today to discuss the Senate energy bill that this body has passed today, on a resounding bipartisan vote of 85 to 12. For those of us on the Senate Energy and Natural Resources Committee, this day has been long in coming. Today is another milestone in the effort to craft a new energy plan for America; legislation that has been swirling around Capitol Hill in one form or another for at least the last 4 years.

I thank the chairman and ranking member of the Energy Committee for the skill and consideration they have shown in navigating a path forward for this legislation. It has taken a lot of work. But today's vote represents a concerted, bipartisan effort to find the compromises that can help move our nation forward on an energy strategy to meet the needs of a 21st century economy. The result has been a cleaner, more transparent process, and a cleaner energy plan for America.

I will not stand before this body today and suggest that this legislation is the solution to all of the challenges we are facing--and will continue to face for decades to come--when it comes to our national energy security. There are provisions contained in this lengthy and complicated bill that I do not agree with; and there are areas where this legislation does not go nearly far enough, particularly when it comes to curbing our dangerous overdependence on foreign oil imports, and tackling the emerging threat of global climate change. However, I am supporting this legislation because it represents a modest improvement on the status quo; and because I believe that this legislation is the beginning--rather than the end--of the Senate's consideration of these issues.

I have participated in this debate in the Energy Committee and on the Senate floor for the past 4 years, and I have listened intently to many of my colleagues and what they have had to say. I can tell you this: it seems to me that there is more agreement in this body today than at any other point in my memory as to the nature of the energy challenges we are facing as a nation, and the critical importance of addressing these problems if we want to ensure American competitiveness and economic security in the coming decades.

Four years ago, I do not believe many of us were discussing the impact of foreign, state-owned oil companies on our energy security. Few of us had recognized the emergence of China and India and what those countries' growing thirst for petroleum could mean to the dynamics of world energy markets and the American economy. Many Senators were skeptical about the potential market transformation that could occur with new hybrid vehicle technologies. Four years ago, there was far less consensus about the promise of new biofuel technologies using an array of different crops and materials. These technologies are capable of transforming the U.S. renewable fuels business from a boutique industry dominated by corn-growers to a real, national industry capable of displacing significant amounts of imported petroleum.

This Senate has come along way in four years--in thought, if not yet in deed. The fact the majority of Senators now recognize the need to address in a meaningful and binding way the threat of global climate change; and the fact that the majority of my colleagues now seem to recognize the perfect storm of economic and national security issues posed by our dependence on foreign oil are significant milestones. But I am disappointed that we do not yet have the same degree of unanimity on what to do about it.

That is why this legislation--and the debate about this legislation's successes and failings--is just the beginning. Our national energy security is an issue with which this country and its leaders absolutely must continue to grapple. When it comes to our Nation's oil dependence, America can and must make more progress. We must acknowledge the realities of geology and the international marketplace. Given that the U.S. sits on just 3 percent of the world's known oil reserves, we cannot drill our way to energy independence. And when any policymaker looks at the distribution of where the rest of those oil reserves lie-- two-thirds of them in the Middle East--it becomes painfully obvious that the U.S. must step up and tackle this challenge head-on. Anything less jeopardizes our economic future and our national security.

I fundamentally believe that securing our Nation's energy future is among the biggest challenge faced by our generation. It is a challenge by which future generations of Americans will measure us. We did not get the job done with this particular Energy bill when it comes to America's energy security and dependence on foreign oil. Nor did we finish the job when it comes to the issue of global climate change. So this year, next year and for the foreseeable future, this Senator will stand up and ask her colleagues to pay more than lip service to these issues. The spirited and thoughtful debate that has characterized our consideration of this bill must guide us as we move forward to tackle these challenges. I believe it can be done. It must be done. And this Senator stands ready to work with her colleagues on both sides of the aisle to reach meaningful

solutions to what are some of the most difficult economic security issues of our time.

But as I said at the outset, I do believe that this legislation will move our Nation forward in a number of other important ways. A comprehensive Energy bill touches every sector of our economy. The nature of our existing energy infrastructure is complex and interdependent, yet regionally diverse. Moreover, a maze of interlocking Federal and State regulatory authorities guide the production and sale of energy supplies in this country. For all of these reasons, the task of crafting a ``comprehensive'' energy policy is a massive undertaking. But even as this legislation has failed to address certain issues to this Senator's satisfaction, we have taken a number of important steps forward.

While we have not done nearly enough to address our economy's petroleum dependence--and hence, our dependence on foreign petroleum-- this bill does put in place the basics for creation of a robust, American biofuels industry that can someday displace significant portions of our energy imports. While agricultural producers across the U.S. have long touted the energy and economic security benefits of fostering a domestic biofuels production industry, this country has nevertheless lagged behind in developing the technologies that would make a national biofuels strategy a reality. For example, 90 percent of the ethanol production in the U.S. is derived from corn and is produced in just five Midwestern States. Meanwhile, other nations such as Brazil have taken the lead on producing biofuels from other crops, and in the process have diversified their economies and energy supplies, begun to minimize their dependence on foreign petroleum, and lowered prices for consumers.

The key to growing this industry for the U.S. is investing in the demonstration and commercialization of new technologies that will make it possible to produce biofuels from a more diverse array of crops, including wheat straw and other biomass readily available in places like Washington State.

The Senate Energy bill contains a number of provisions key to moving forward on a national biofuels strategy. Specifically, I was pleased to add a number of measures that will help spur biofuels production in the Pacific Northwest. Making ethanol and biodiesel from more diverse feedstocks--in more regions of the country--is essential to making biofuels a sustainable and cost-effective solution to our Nation's emerging energy needs.

The Senate Energy bill contains a provision I authored to establish an ``Advanced Biofuel Technologies Program.'' The new program provides $550 million over 5 years to demonstrate technologies for production of ethanol and biodiesel. The measure directs the Secretary of Energy to work toward developing and demonstrating no fewer than four different conversion technologies for producing cellulosic-based ethanol; and five technologies for coproducing biodiesel and value-added bioproducts. In other words, it would provide Federal support for universities, private sector researchers and entrepreneurs who are striving to invent the next generation of biofuels technology, and help demonstrate them in real-world applications. The program also directs the Secretary to prioritize the demonstration of proj- ects that will enhance the geographical diversity of alternative fuels production, and focus on developing technology related to feedstocks that represent 10 percent or less of our Nation's existing ethanol and biodiesel production--agricultural products like wheat straw, canola and mustard that are readily available in Washington State and throughout the Pacific Northwest.

But in addition to pioneering the next generation of technologies, the Senate Energy bill would provide important market-based incentives for the very first producers of new sources of biofuel. The Senate bill is more ambitious that previous energy bills, as well as this year's House-passed version, in setting a target to produce 8 billion gallons of renewable fuel by 2012. But in addition, it contains my provision to more than double the incentives for refiners to use ethanol made from cellulosic sources such as wheat straw, and to ensure that by 2013 the U.S. is producing at least 250,000 gallons of ethanol from these new sources. These provisions are designed to help build a market for the very first producers of ethanol from nontraditional, noncorn sources-- an important way to help move the technology toward broader commercialization.

The Senate Energy bill also recognizes that a national biofuels strategy is in the long-term energy security interests of the U.S., and provides Federal support for this emerging industry. First, the legislation authorizes Federal loan guarantees for the first cellulosic ethanol facilities that produce 15 million gallons of ethanol or more. Multiple sites in the Pacific Northwest are vying to be among the first in the U.S. to produce cellulosic ethanol. In addition, the bill would extend the biodiesel excise tax credit through 2010. Otherwise slated to expire in 2006, the tax credit is important to the very first refiners and distributors of biodiesel in Washington State, who are using this tax credit to lower costs to consumers at the pump. I believe all of these are valuable provisions that will contribute to our national energy security and put farmers across the country in the biofuels business.

In addition to the renewable fuels standard, this legislation will diversify our Nation's energy supplies with the inclusion of a renewable portfolio standard that would require 10 percent of our electricity to come from sources such as wind, solar and geothermal. This legislation also extends the renewable production tax credit and the renewable energy production incentive program to support the drive to diversify our sources of electricity.

I should also note that this legislation contains consensus reliability standards, to ensure mandatory rules are in place to govern operation of our electricity grid--an important provision that I have championed since I arrived in the Senate, and an effort that was initially begun by my predecessor, Senator Slade Gorton.

I was also pleased to have a role in crafting provisions to promote cutting-edge research and development in the area of ``smart grid'' technologies, which will build intelligence into our existing energy infrastructure in a way that improves both efficiency and reliability. This legislation also includes incentives for the adoption of existing technologies that can aid reliability such as ``smart meters,'' which give utilities and their customers real-time information about energy usage.

This legislation also takes an important step to ensure that we are meeting the workforce needs of the electric utility sector. The National Science Foundation and energy industry interests have noted that as the baby boom sector of our workforce retires, a lack of training capacity will lead to a growing shortage of qualified engineers and innovators. Language that I worked to add to the bill in committee will ensure that the Energy and Labor Secretaries are closely monitoring our energy workforce, including the availability of power and transmission engineers, and will authorize the Federal Government to provide grants for appropriate workforce training investments. All of these reliability-related provisions will help ensure the stability of the electricity grid, which powers every sector of the American economy.

While I am on the topic of electricity, I must mention some of what I believe are among the most notable achievements of this legislation. There are provisions of this bill that I have championed related to Enron and the market manipulation that occurred during the Western energy crisis, which I believe represent the first meaningful Congressional response to the massive public mugging that took place. Certainly, Congress enacted aggressive new accounting reforms in the wake of Enron's collapse. But we have not yet done the same when it comes to our Federal energy laws.

I spoke at the outset about how the Senate has at least turned the corner in recognizing the problems posed by climate change and foreign oil dependence. Similarly, some of my colleagues may recall that, 4 years ago, many at first didn't believe that any market manipulation had taken place in the West. But with the release of Enron's smoking gun memos outlining the manipulation schemes, additional audiotape evidence that has surfaced since

then, the guilty pleas of energy traders who executed these schemes four years later, this Senate has reevaluated its position, based on facts that are now a matter of public record.

I am optimistic about the notion that this Senate, in the foreseeable future, will get serious about addressing climate change and oil dependence because I have seen a sea change occur in the Senate on an energy issue before--in particular, on the issue of market manipulation and the need to protect our Nation's consumers against later-day Enrons. The Energy bill we passed today contained a number of important provisions to incorporate the lessons we learned from the Western energy crisis.

First, it puts in place a broad statutory ban on all forms of market manipulation in our Nation's electricity and natural gas markets. Second, it gives Federal authorities the ability to ban traders and executives implicated in energy market manipulation schemes from participating in the utility industry.

The Securities Exchange Commission has had this authority for decades and used it in some high-profile instances of individuals engaged in securities fraud. However, this authority does not currently exist in Federal energy law. Added unanimously as amendments during the Senate Energy Committee's markup of the bill, these provisions were inspired by recent court cases in which it is alleged that some of the same energy traders overheard on the now-infamous Enron audiotapes have been implicated in subsequent market manipulation schemes in other regions of the country.

Lastly, this legislation contains a provision of particular importance to my Washington State constituents. Section 1270 of this bill would prohibit a Federal bankruptcy court from forcing Washington State's Snohomish Public Utility District--PUD--and its customers to fork over another $122 million to Enron. Specifically, the provision prohibits the bankruptcy court from enforcing payments on power contracts that are unjust, unreasonable or contrary to the public interest. The provision was written to target manipulated power contracts between Enron and utilities in the West. The contracts were cancelled when the energy giant began its scandalous slide into bankruptcy. But once they were cancelled, Enron turned around and sued utilities for ``termination payments,'' seeking to collect profits on power that was never even delivered.

While the Federal Energy Regulatory Commission--FERC--has been conducting its proceedings to provide remedies for the consumers harmed by market manipulation, Enron has nevertheless continued pursuing collection of these ``termination payments'' in bankruptcy court. In fact, the court has already ruled that other Enron victims--Nevada Power Company and Sierra Pacific Power Company--should have to pay these fees, which come to more than $330 million for the two Nevada utilities. The court went so far as to enjoin FERC from proceeding with its own specific inquiry into whether Enron is owed the termination payments in those cases.

The provision included in this bill says very clearly to FERC, ``Do your job to protect consumers, and when you make a decision, that decision will stand.'' Interpreting our Nation's energy consumer protection laws is not the job of a bankruptcy judge. This responsibility lies with the Federal Energy Regulatory Commission.

I am aware that these provisions are in stark contrast to those included in the legislation passed by the House of Representatives. The House bill would ban only one type of manipulation scheme made infamous by Enron--roundtrip trading. It would do nothing to ban proven market manipulators from future employment in the energy business. And most inexplicably, it would actually give later-day Enrons a license to steal. It would lock in profits for would-be market manipulators under the guise of ``contract sanctity.'' I recognize that reconciling these issues with the House may be difficult. But when it comes to the deeds of Enron--and putting in place tough new laws to make sure such a wide- ranging fraud is never again perpetrated against our Nation's consumers--I believe the Senate will have the American people firmly on our side.

In addition to these very important provisions, I must also make a few comments on other matters of importance in this legislation's electricity title. I regret that during the course of the debate on this bill, there was not enough time to discuss more fully its treatment of the Public Utility Holding Company Act--PUHCA. It is important that this silence not be confused with disinterest. It is because of the consumer protections provisions included in the bill-- some that I have mentioned already--that this issue has not caused an uproar, as it has in the past.

It was crucial to me that, in PUHCA's stead, this bill include the refinements and enhancements of FERC's merger review authority that were worked out by Senators Bingaman and Domenici. I must still state my profound uneasiness with the notion that we are repealing one of our Nation's fundamental consumer protection laws at a time when many of us are concerned about mergers and consolidation within the utility industry. And I remain concerned that we have not done enough to address the issue of cross-subsidization of unregulated affiliates by utilities that are owned by the same holding company.

I ask my colleagues to remember: Enron was a company willing to turn a profit by any means necessary; but it was presented with a market and regulatory environment that presented innumerable opportunities for abuse. We have given FERC the tools in this bill to prevent those abuses; let's hope they take this responsibility seriously.

The bill's repeal of PUHCA is predicted by some to usher in a new wave of utility mergers. Consolidation can be beneficial, but it can also foreclose competition, frustrate effective regulation and create inefficiencies. Let us hope that Federal and State regulators both take their responsibilities to protect consumers seriously.

PUHCA repeal lifts diversification and investment bans that the leading financial rating agencies have determined were critical in protecting the financial health of utilities and preventing bad business investments. Let us hope that we don't regret this decision.

Again, this bill requires steps to prevent cross-subsidization when utilities merge, but is silent on the need to prevent cross- subsidization by those utilities that don't merge. Let us hope that consumers and independent competitors do not suffer from this decision.

I sincerely hope history will prove this Senator's instincts and skepticism wrong on the topic of utility cross-subsidization and PUHCA repeal--because otherwise, it is American ratepayers and investors who will be paying the price. But as I said, it is the consumer protections in this bill today that have led me to view this as a reasonable compromise. In addition to the provisions I mentioned before, this legislation also includes improved language on market transparency, accountability standards for the Nation's Regional Transmission Organizations--RTOs--and the protection of transmission rights needed to serve consumers, particularly in the Pacific Northwest.

Let me be perfectly clear: the provisions that I have mentioned, taken together, are the minimum needed in order to meet the needs of electric consumers. They were essential in earning the support of this Senator. Last Congress, one of the key factors that led to the defeat of the Energy bill was the failure of the conference report to protect electric consumers. While I believe we can and should do more, I commend both the Senators from New Mexico for their efforts. But their efforts will be wasted if the other body does not realize that these provisions are essential for final passage of an energy bill conference report.

It is also important to note that the Senate legislation we have passed today avoids the gratuitous special interest deals in the House bill--such as giving groundwater polluting MTBE manufacturers a free ride on clean up liability. It moves forward without the rollbacks of the Clean Water Act, Clean Air Act, National Environmental Policy Act, and Safe Drinking Water Act that are included in the House legislation. The Senate has spoken out against these bad environmental policies and we stuck to those principles in this bill.

We stuck to those principles and we worked across the aisle, in good faith at every turn. I hope the other body across the Capitol has paid some attention to this process. If leaders in the House are serious about delivering energy legislation to the President's desk for signature, then they will realize that a similar effort will be required during the conference on this legislation.

Make no mistake: the Senate Energy bill is far from perfect. There are missed opportunities. There are provisions that I outright oppose, such as surveying for oil and gas areas on the Outer Continental Shelf that are protected by drilling moratoria, originally established by President George H.W. Bush. But there are many, many more provisions in this legislation that I wholeheartedly support.

This bill positions the U.S. to make many of the right investments in energy research and development. It includes important measures to diversify both our domestic sources of biofuels and electricity. And it contains many important consumer protections for our Nation's energy ratepayers. In other words, the Senate Energy bill contains many of the basics necessary for our Nation to start moving in the right direction. It is a modest step. Yet I believe we should take this step, if we are committed to moving our country--even more aggressively in the coming years--toward an energy policy that will sustain American competitiveness in a rapidly-evolving global economy.

I thank my friends and colleagues who serve on the Senate Energy Committee, for the thoughtful and substantive consideration they gave a number of key aspects of this legislation. And again, my thanks to the chairman and ranking member for their leadership in navigating what were at times turbulent waters, with certain aspects of this bill. We will be counting on those navigational skills as this legislation moves toward conference with the House of Representatives.

Mr. President, H.R. 6, the Energy bill, is an effort to improve our Nation's energy supply and reliability, and for that it should be praised. Like any bill of its magnitude, the Energy bill includes a variety of good and bad provisions, and it has to be weighed for the relative good and bad it will do. I've come to the conclusion after careful study that the bad outweighs the good, particularly for the State of Arizona. And it is for that reason that I must vote no. This bill will likely raise the price of gasoline in Arizona, hurt our air quality, and raise the price of our electricity, all while increasing the Federal deficit with enormous subsidies, special projects, and tax breaks for everything from fish oil to luxury hybrid cars. I support the President in his efforts to reduce our dependence on foreign oil, and I wish this bill did more to accomplish that goal.

As I have said, some important provisions of this bill have much to recommend them. Unfortunately, the ethanol ``Renewable Energy'' title is not one of them. The ethanol provisions of the Energy bill are truly remarkable. They mandate that Americans use 8 billion gallons of ethanol annually by 2012. We use 3.4 billion gallons now. For what purpose, I ask, does Congress so egregiously manipulate the national market for vehicle fuel? No proof exists that the ethanol mandate will make our air cleaner. In fact, in Arizona, the State Department of Environmental Quality has found that ethanol use in the summer will degrade air quality, which will probably force areas in Arizona out of attainment with the Clean Air Act. Arizonans will suffer. California also expects that the summertime use of ethanol would harm air quality, but in the Senate bill, California is exempted from the summer mandate. If Arizona had the same exemption, then the ethanol mandate would still be expensive and unwarranted, but at least it would not actually cause physical harm.

An ethanol mandate is not needed to keep the ethanol industry alive. That industry already receives a hefty amount of Federal largesse. CRS estimates that the ethanol and corn industries have received more than $40 billion in subsidies and tax incentives since 1996. I repeat, $40 billion Yet, this bill not only mandates that we more than double our ethanol use, but provides even more subsidies for the industry. In the next 5 years, CBO estimates that the loan guarantee program by itself will cost $110 million, while CRS estimates that the tax incentives for ethanol will cost taxpayers $37.7 billion. Furthermore, according to the Energy Information Administration, a mandate of five billion gallons would cost between $6.7 and $8 billion a year--forcing Americans to pay more for gasoline. Not surprisingly, the 8 billion gallon mandate will cost even more.

Professor David Pimentel, of the College of Agriculture and Life Sciences at Cornell, has studied ethanol. He is a true expert on the ``corn-to-car'' fuel process. His verdict, in a recent study: ``Abusing our precious croplands to grow corn for an energy-inefficient process that yields low-grade automobile fuel amounts to unsustainable, subsidized food burning.'' It isn't efficient, and will impede the natural innovation in clean fuels that would occur with a competitive market, free of the government's manipulation.

Ethanol is not the only mandate in the bill. This Energy bill also ignores state law and mandates a national one-size-fits-all renewable portfolio standard (RPS) for electricity. Currently, 19 States, including Arizona, and the District of Columbia have their own renewable standards. In Arizona, a State that gets its electricity mainly from coal, natural gas, and hydro facilities, our Corporation Commission has tailored the State's renewable standard to our unique circumstance as a desert State that receives a lot of sunshine, little wind, and has few other renewable resources. The current Arizona standard is 1.1 percent, of which 60 percent must come from solar energy. While solar energy is abundant in Arizona, it costs 3-5 times more than conventional energy and 2-4 times more than other more cost effective renewable energy such as wind and geothermal--a fact that is reflected in the Arizona standard. The Arizona Corporation Commission has recently proposed raising the State's renewable standard and changing the mix of alternative sources that would be acceptable. This proposal, however, is part of an open, collaborative process. All stakeholders have had the chance to submit comments both supporting, opposing, and refining the change. The Corporation Commission will weigh the costs to Arizona ratepayers, and is more likely than the Congress to find a renewable standard that works for Arizona.

Unfortunately, the Senate RPS requirement does not have Arizona ratepayers in mind. Utilities in Arizona will be forced, under this bill, to comply with both the State mandate and the Senate's RPS mandate that has different requirements. To meet the Senate's mandate, the bill punishes States that lack reasonably priced renewable resources such as wind and geothermal, hydroelectricity cannot be used under the Senate bill, by forcing them to go buy credits from wind-rich parts of the country or to buy those credits from the Federal Government for $ .015/kwh, adjusted for inflation. That means that if a State cannot find a renewable source that costs less than the conventional price of energy plus $.015/kwh, then it is cheaper to buy the government credit. Arizona simply does not have renewable resources that can compete with the Senate bill's $0.015/kwh RPS penalty. Paying the penalty will be more cost effective than producing solar energy or acquiring other renewable resources. The effective result will be a transfer of wealth from Arizonans to renewable-rich states or to the Federal Government. For my home State of Arizona, electricity rates will rise.

A nationwide renewable portfolio standard is, therefore, not only duplicative in Arizona, it would raise consumers' electricity prices and create inequities among States. In simplest terms, an RPS mandate would require electric utilities to forego inexpensive conventional energy for more expensive renewable technologies or purchase renewable energy credits from the Federal Government. Either way, an RPS mandate will result in an expensive, hidden tax on electricity consumers.

Now for the tax title. My overarching concern is that Congress continues to try to use special interest tax subsidies to set an industrial policy--failed strategy of ``Government knows best''--on the strongest and most dynamic economy in the developed world.

I share the concerns of many of my colleagues that the budget deficit demonstrates a lack of wise stewardship of taxpayer dollars. The only way we will get the budget back into balance is to

enact policies that support economic growth and spend taxpayer dollars with care.

Almost exactly 2 years ago, Congress, working with President Bush, approved one of the most important and best-designed tax cuts in recent memory: the jobs and growth tax bill. Quite simply, it cut tax rates on income and on dividends and capital gains. We know from widely accepted economic studies--most recently from our 2004 Nobel-Prize winning economist, Dr. Prescott from Arizona State University--that high tax rates discourage work, savings and investment and that to encourage these favorable economic activities, the best thing we can do is keep tax rates low and get out of the way.

When our economy is growing and businesses and individuals are making money they pay more in taxes, meaning the Government collects more revenue, even at lower rates--indeed, because of the lower rates. So far this year, Federal tax revenues are up significantly. From October 1 through April 30, revenues climbed by $146 billion to a total of $1.216 trillion; an increase of 13.6 percent over a year earlier and four or five times the inflation rate. Income tax receipts are up $66 billion, or 16 percent, to $547 billion. Corporate income tax receipts are rising even faster, up 48 percent to $134 billion.

Capital gains tax revenue is set to exceed the Government forecasts by $14 billion this fiscal year and by $16 billion in fiscal year 06. Roughly $5 billion of the dividend tax cut has been recouped through higher than expected dividend payments. These are the kind of tax policies Congress ought to be pursuing. Instead, we are spending over $18 billion on tax subsidies for the energy industry--subsidies that will not generate economic growth and that will not make a dent in our dependence on foreign oil.

The tax subsidies in this bill are exactly the wrong approach. Government should not try to force taxpayers into one favored type of investment by providing tax subsidies for that investment. If an investment is not economically viable without a Government subsidy, then perhaps it is not an activity that ought to be encouraged with taxpayer dollars. And if a technology is already viable without a taxpayer-financed subsidy, then we should not devote scarce resources to encourage what is already happening in the free market.

My primary complaint has to do with the use of tax credits by the Government. The Federal Government uses tax credits to induce individuals or businesses to engage in favored activities. This can distort the market and cause individuals or businesses to undertake unproductive economic activity that they might not have done absent the inducement. Tax credits are really appropriations that are run through the Internal Revenue Code and are a way to give Federal subsidies, disguised as tax cuts, to favored constituencies. It is something we should do sparingly--very sparingly. While tax credits can be effective in encouraging activities we consider laudable for one reason or another, I believe that, as stewards of the taxpayers' money, we must only support those credits that provide broad benefit to all taxpayers and that are worth the revenue they will cost the Federal Treasury.

I do not believe that any of the tax credits in the bill meet these tests. The bill extends and expands the credit provided in section 45 of the Code. This credit is available on a per-kilowatt-hour basis for energy produced from wind, solar, closed-loop biomass, open-loop biomass, geothermal, small irrigation, and municipal solid waste. I believe that the credit for wind energy should have sunset several years ago. Wind energy has been provided this credit since 1992, and if it is not competitive after a decade of taxpayer subsidies, it will never be competitive. In 2001, the wind industry was in fact touting its great success and competitiveness with other forms of energy, but here we are extending the wind credit for 3 more years. I wager that we will still be paying for the ``temporary'' advantage being given to these new energy forms a decade from now.

At best, we don't know whether the existing tax subsidies that this legislation extends work at all because we have never subjected them to a comprehensive review. At worst, we are simply funneling taxpayer dollars that could be better used by private individuals in the free market to favored constituencies. During the markup of the tax title in the Finance Committee, many of my colleagues on the Committee expressed sympathy with my concern that Congress passes a myriad of credits and incentives to encourage favored activities, but we never go back to see if the subsidies are working as intended. I am hoping that I can work with my colleagues who expressed these concerns to ask for a Government Accountability Office study of the many subsidies and incentives included in this legislation to track their cost and effectiveness.

One subsidy we ought to watch closely is the alternative fuel vehicle subsidy. As much as we all support the goal of cleaner air, we must be careful not to create more problems than we solve. In my own State of Arizona, an alternative fuels subsidy program had to be repealed when its many scandalous deficiencies were exposed. Nor has there been any evidence that the vehicles to which the subsidy applies aren't simply priced higher by the amount of the subsidy. I have serious questions about whether the incentives are necessary and whether it is appropriate to use the tax code to persuade taxpayers to purchase one type of vehicle over another.

I know hybrid cars and alternative fuel cars are very popular, so Senators may hesitate to stand in the way of tax incentives for people to buy them. But I believe their very popularity argues that there is no need for the tax incentives. People are buying them today without being coaxed by the Federal Government. I hope we can agree to have the GAO study this new credit to determine how much the provision is really costing, how effective it is at encouraging the purchase of alternative fuel vehicles, and how long the credit will be needed.

I have spoken of the ``bad'' in the bill, now I want to discuss what is ``good''. I have been particularly interested in the provisions in the electricity title that are designed to restructure our electricity markets. Some of my colleagues have been tempted to move immediately to completely unregulated electricity markets; others favored imposing a more stringent regulatory regime as a result of problems in California.

Representing Arizona, I was well aware of the problems stemming from the California energy crisis but cannot agree with those who say the solution is to return to a command-and-control regulatory structure. I continue to believe that the most efficient way to allocate resources is through competitive markets. The bill encourages competitive markets while ensuring that safety and reliability are maintained. The reliability provisions of the electricity title will convert the current voluntary system of reliability procedures to a mandatory system that all utilities must follow, but that is sensitive to regional differences in the electricity grid. The electricity title also repeals the Public Utility Holding Company Act of 1935. As we all know, our energy markets have evolved significantly since the era of the Great Depression. State regulators are smarter, more well equipped, and able to protect consumers from the ills that gave rise to the Public Utility Holding Company Act of 1935 nearly 70 years ago.

On the downside, the electricity title also contains unfortunate provisions that would grant the Federal Energy Regulatory Commission (FERC) additional authority to regulate generation, natural gas utilities, and holding companies. Giving FERC new merger authority is going in the wrong direction. Utility mergers and acquisitions are already subject to multiple and overlapping reviews by FERC, SEC, DOJ, FTC, and the States. FERC uses exactly the same merger review guidelines as the antitrust agencies, DOJ and FTC--thus FERC performs essentially the same review those agencies already perform. There is no need to add new layers of review.

I have often expressed my concern with what some industry officials have termed a jurisdictional reach by FERC into the delivery of power to retail customers. The service obligation amendment that I worked on with the chairman has been included in this package, and I believe it provides a commonsense way to promote competitive markets while preserving the reliability

that retail electric consumers expect and deserve. In its actions governing access to transmission systems, FERC has not adequately ensured that the native load customers, for whom the system was constructed, can rely on the system to keep the lights on. The bill adds a new section 218 to the Federal Power Act to ensure that native load customers' rights to the system, including load growth, are protected.

It is also worth noting that the Energy bill expands jurisdiction over those stakeholders in electric markets that were previously unregulated by the FERC. The ``FERC-lite'' provision that addresses the Federal Energy Regulatory Commission's efforts to provide open access over all transmission facilities in the United States again, in my mind, strikes the right balance. It requires FERC to ensure that transmission owners--whether they are municipal utilities, power marketing administrations, or electric cooperatives--deliver power at terms that are not discriminatory or preferential. However, this provision is limited and does not give FERC the ability to begin regulating the rate-setting activities of these organizations. FERC- lite does not confer further authority to FERC over public power systems. FERC cannot order structural or organizational changes in an unregulated transmitting utility to comply with this section. For example, if an integrated utility providing a bundled retail service operates transmission distribution and retail sales out of a single operational office, the Commission cannot require functional separation of transmission operations from retail sales operations.

Gratifying, as well, is that the Senate bill has not pursued a command-and-control approach with respect to regional transmission organizations, or RTOs. I believe the best approach, which is captured in this bill, is for FERC to provide incentives to encourage membership in RTOs and independent system operators. As lawmakers, we need to be sensitive to the policy changes we propose and how the laws we draft will affect Wall Street and the markets, and we must make sure we promote the investments that are needed. This is a prime example of how the Energy bill has sought to advance policies to which the investment community can respond favorably.

So, in conclusion, while this bill includes several meritorious provisions, especially the electricity title, I must vote against it because of the $ 18.4 billion in tax subsidies and the bill's irresponsible manipulation of the energy markets through an ethanol mandate and a national renewable portfolio standard. I hope that the conference of the House and the Senate is able to address these issues so that I can support this bill in the future.

Mr. President, I am supporting the energy bill before us today because I feel that it is a step forward in establishing a sound energy policy for our Nation. With oil prices soaring to over $60 per barrel, consumer gasoline prices continuing to rise, and the impacts of global climate change increasingly apparent, we need to move toward diversity of our energy supply and reduction of our dependence on oil.

The bill before us today includes provisions that will increase the diversity of our Nation's fuel supply, encourage investment in infrastructure and alternative energy technologies, increase domestic energy production, take critical steps to improve the reliability of our electricity supply, and improve energy efficiency and conservation. This bill is not a perfect bill, but on balance it moves toward a sound energy policy that will lead the way to greater energy security and efficiency for the United States. It will increase our domestic energy supplies in a responsible manner, provide incentives to move toward more and diversified supply options, and provide consumers with affordable and reliable energy. When we consider energy policy, it is always a balance. Many factors must be taken into account--the environment, national security, our economy and jobs. Each and every vote on this bill required a balancing of these factors to determine what is best for Michigan and for our country.

Our policies have long ignored the problem of U.S. dependence on foreign oil, and we remain as vulnerable to oil supply disruptions today as we have been for decades. Taking the steps necessary to reduce our dependence on foreign oil is an important objective for this country. I have long supported a broad array of Federal efforts to meet that objective. I believe that we need a long-term, comprehensive energy plan, and I have long supported initiatives that will increase our domestic energy supplies in a responsible manner and provide consumers with affordable and reliable energy.

There are provisions included in this bill that will help take important steps in this direction--particularly those provisions of this bill that address energy efficiency and renewable energy and will lead us toward greater uses of alternative fuels such as ethanol and biodiesel. I have also long advocated Federal efforts that will lead to revolutionary breakthroughs in automotive technology that will help us reduce our oil consumption. We need a level of leadership similar to the effort of a previous generation to put a man on the moon. I believe we need our own ``moon shot'' in the area of automotive technology to develop alternatives to petroleum and to make more efficient use of all forms of energy.

I am pleased that the bill before us today is a bipartisan bill and, as such, it is a significant improvement over what the Senate has considered in previous years. This proves that when we work together in a bipartisan fashion, not only is the process better but so is the resulting policy.

The bill includes a wide range of energy efficiency provisions that will ensure that conservation and efficiency are a central component of our Nation's energy strategy. These provisions address Federal, State, and local energy efficiency programs, provide funding for important programs such as home weatherization, and establish efficiency standards for a wide variety of consumer and commercial products. Provisions of the bill will also ensure more efficient operation of Federal facilities, setting an important example by the Federal Government. The bill will also accelerate advances in energy-efficient appliance technologies by providing a tax credit for the production and sale of products such as super energy-efficient washing machines, refrigerators and dishwashers. Increasing the sale of these products will result in significant energy and water savings, thereby reducing dependency on foreign energy, reducing emissions and conserving water. Finally, because the tax credits apply only to U.S.-manufactured products, the bill can stabilize or increase American manufacturing jobs.

This legislation also takes critical steps to improve the reliability of our electrical grid and promote electricity transmission infrastructure development. Our economy depends upon electric power, and, in some cases, electric power literally saves lives. Failures in the electric system interrupt many crucial activities. Our current industry-developed, voluntary standards for the reliability of the electrical grid have long been in need of improvement. That need for improvement was underscored painfully by the August 2003 blackout. There were two key lessons from the blackout--the need for strong regional transmission organizations to ensure that reliability standards are carried out and enforced, and the need for additional transmission upgrades to maintain reliability. I regret that it has taken 2 years to get to a consensus on these issues. Nonetheless, I am pleased that the provisions of this bill authorize the creation of an electricity reliability organization to establish mandatory and enforceable reliability standards, which is a critical and necessary step forward.

The bill puts an increased emphasis on renewable energy technologies, such as wind and solar power. These technologies are becoming more economical every year. In fact, in some areas of the country these technologies are competitive with traditional fuels such as coal and natural gas. With this in mind, this bill includes a renewable portfolio standard, which requires sellers of electricity to obtain 10 percent of their electric supply from renewable energy sources by the year 2020. Existing hydroelectric pumped storage facilities--such as the Ludington pumped storage facility in Michigan--are included in the definition of hydroelectric facilities, which will ensure that these reliable existing sources of renewable power are calculated in a utility's base generation and can continue to be utilized to full potential. Finally, to promote the use of renewable fuels, the bill also includes a requirement for refiners to use 8 billion gallons of ethanol or biofuels by 2012. Overall, the increased use of renewable technologies will reduce our dependence on foreign oil and lead to the creation of tens of thousands of new jobs.

The bill also puts increased emphasis on diversity of supply and includes a broad range of provisions intended to encourage the use of new and cleaner technologies, particularly for power generation. Nearly 60 percent of electricity generation in Michigan is generated from coal, which will remain a vital resource well into the future. Programs authorizing research in clean coal-based gasification and combustion technologies will ensure that the most advanced technologies are developed for power generation. Other provisions of the bill also encourage the use of innovative technologies for both power generation and other end-uses.

Increased emphasis on diversity of fuel supply will help to take the pressure off of our tight natural gas supply, which is important for States such as Michigan with a large manufacturing base. Over the past 6 years, the tight natural gas supply and volatile domestic prices have had significant impacts on the U.S. manufacturing sector, which depends on natural gas as both a fuel source and a feedstock and raw material for everything from fertilizer to automobile components. As domestic production of natural gas has declined, demand for natural gas has increased dramatically, particularly in

the area of power generation. Today, U.S. natural gas prices are the highest in the industrialized world, and many companies have been forced to move their manufacturing operations offshore. More than two million manufacturing jobs have been lost to overseas operations in the 5 years since natural gas prices jumped from $2.00 per million Btu to more than $7.00 per million Btu.

I am pleased that the Senate bill includes a significant research, development, demonstration and commercialization effort in the area of hydrogen and fuel cells. I believe that this program will help us make critical strides toward realizing the goal of putting hydrogen fuel cell vehicles on the road over the next 10 to 15 years.

We need a significantly larger effort than anything on the drawing boards, and we need to put greater Federal resources into work on other breakthrough technologies--such as advanced hybrid technologies, advanced batteries, advanced clean diesel, and hybrid diesel technology. Federal Government investment is essential not only in research and development but also as a mechanism to push the market toward greater use and acceptance of advanced technologies. Expanding the requirements for the Federal Government to purchase advanced technology vehicles will help provide a market for advanced technologies.

We also must have far greater tax incentives for advanced technologies than have been proposed to date. To that end, I had hoped to offer an amendment to the bill--along with Senators Bayh and Alexander--to provide more generous consumer tax credits for purchase of advanced technology vehicles and to provide an investment tax credit to manufacturers to help defray the cost of re-equipping or expanding existing facilities to produce advanced technology vehicles. The Finance title of this energy bill includes laudable incentives, but I believe we need more generous consumer tax credits for a wider variety of vehicles--including advanced clean diesel, as well as hybrid and fuel cell vehicles--to encourage consumers to make the investment in these technologies. I also believe that an investment credit on the manufacturing side is necessary to offset the high capital costs of such an investment. I hope that more significant tax incentives for a wide range of advanced vehicle technologies will be considered during the House-Senate energy conference.

The Senate bill also includes an amendment I offered to have the National Academy of Sciences conduct a study and submit a budget roadmap to Congress on what level of effort and what types of actions will be required to transition to fuel cell vehicles and a hydrogen economy by 2020. If hydrogen is the right answer, we will need the equivalent of a moon shot to get there. We will need a significant Federal investment--well beyond anything we are doing today--in conjunction with private industry and academia to reach that goal. This study and roadmap will be an important step toward determining if that is the right path to follow.

I am also pleased to have cosponsored an amendment offered by Senator Voinovich to authorize $200 million annually for 5 years to fund Federal and State grant and loan programs that will help us to replace older diesel technology with newer, cleaner diesel technology. Our friends in Europe have taken advantage of the opportunities that diesel offers for improving fuel economy and reducing oil dependence. We have not been able to do so here in the U.S. because of our concerns about tailpipe emissions. Initiatives such as those included in this amendment will help the U.S. to develop advanced diesel technology that will be able to meet our emissions standards in a cost-effective manner.

Lastly, the Senate rejected resoundingly efforts to require significant and arbitrary increases in the corporate average fuel economy--CAFE--standards, adopting instead an amendment offered by Senator Bond and myself that offered a more balanced approach. Our approach requires an increase in both car and truck CAFE standards but it requires the Department of Transportation to set these standards looking at the maximum technological feasibility, taking into consideration a series of critical factors such as safety, the impact on manufacturing and jobs, and the lead-time required for developing new technologies. Other proposals offered in the Senate--but rejected-- would have hurt domestic manufacturers and the U.S. economy, without doing much for the environment.

Gasoline prices have been extremely volatile over the past few years and are likely to stay high. Our demand for oil continues to increase while our supplies have remained about the same. To reduce the impact of high gasoline prices over the long-term, we need to reduce our consumption of oil by continuing to develop advanced vehicle technologies such as hybrids, advanced clean diesels, and fuel cells. In the short-term, however, I continue to be concerned about price fluctuations because gasoline prices can have a dramatic effect on not only the average consumer's wallet, but also the economy as a whole. During consideration of the energy bill, I supported an amendment offered by Senator Byrd designed to provide some relief to high gas prices, specifically for people who live in rural areas. This provision allows employers to provide tax-free commuter benefits to employees who live in a rural area and drive to work in an area that is not accessible by a transit system.

I was also pleased to support an amendment to help small businesses and farmers deal with the high price of fuel. This amendment, offered by Senator Kerry, gives small farms and businesses access to low- interest credit through disaster loan programs. These programs, through the Small Business Administration and the U.S. Department of Agriculture, will give much needed relief to these small businesspeople and small farmers who have been hurt by the price spikes in heating oil, natural gas, propane, gasoline and kerosene.

Lastly, I supported an amendment offered by my colleague from Michigan, Senator Stabenow, requiring the Federal Trade Commission to conduct an investigation and provide a report to Congress on whether the increase in gasoline prices is the result of market manipulation or price gouging. In 2002, as chairman of the Permanent Subcommittee on Investigations, I lead an investigation into how gas prices are set. Since that time, gas prices have continued to rise, and I believe a new investigation and report is warranted to hopefully result in some protection for consumers.

I am pleased that this bill contains an amendment that I offered with Senator Collins to direct the U.S. Department of Energy to develop and use cost-effective procedures for filling the U.S. Strategic Petroleum Reserve. The amendment requires DOE to consider the price of oil and other market factors when buying oil for the SPR and to take steps to minimize the program's cost to the taxpayer while maximizing our energy security. Since early 2002, DOE has been acquiring oil for the SPR without regard to the price or supply of oil. During this period the price of oil has been very high--often over $30 per barrel--and the oil markets have been tight. Many experts have stated that filling the SPR during the tight oil markets over the past several years increased oil prices. With this amendment, the bill directs DOE to use some common sense when buying oil for the SPR.

Any successful businessperson knows the saying, `Buy low, sell high.' It makes sense for buying oil as well as pork bellies.

Finally, I want to mention an issue that was a source of strong debate in the Senate but which this bill does not adequately address: global warming. For years, almost all scientists have agreed that human actions are causing temperatures around the world to increase. Experts also agree that this global warming will lead to environmental problems and economic hardship, but there has been no consensus in the United States about what we should do to stop climate change.

The threat is real and growing, and the longer we wait to reach a reasonable consensus, the more painful the solutions will be. I believe two major policy changes are needed at the federal level: support for a new, binding international treaty that includes all countries, and a massive new federal investment in research, development and commercialization of new technologies. Both of these steps would provide real environmental and economic

benefits while being fair to American workers. The Senate considered several well-intentioned proposals on this issue, though I did not believe they would have taken us in a comprehensive direction. I supported a sense of the Senate resolution that acknowledges the problem and calls on the administration to work with the Congress to enact a comprehensive national program to address this issue.

The energy bills considered by the Senate over the last couple of years have been doomed by a heavy-handed, partisan approach and by a conference committee that added many objectionable provisions before the bill came back to the Senate. We lost valuable time in putting us on the course toward a sounder energy policy. It is my sincere hope that the majority will pursue a different approach this year and produce a bill that will have strong bipartisan support.

Mr. President, I intend to vote in favor of H.R. 6, as amended by the Senate, the Energy bill. I want to explain in detail my reasons for supporting this legislation and highlight my serious concerns regarding the House-passed version of H.R. 6. I strongly oppose many of the provisions in the House-passed bill, and the Senate conferees should hold strongly to the Senate-version of this bill and reject the House legislation.

Energy policy is an important issue for America and one my Vermont constituents take very seriously. The bill before us seeks to address important issues, such as the role of domestic production of energy resources versus foreign imports, the tradeoffs between the need for energy and the need to protect the quality of our environment, and the need for additional domestic efforts to support improvements in our energy efficiency, and the wisest use of our energy resources. Given the importance of energy policy, this bill is a very serious matter. I do not take a decision to support such a bill lightly. Although this bill is not exactly as I would have written it, it begins to move this Nation toward a more balanced approach to our energy needs.

During floor debate, the Senate modified the renewable fuels standard contained in the Energy Committee reported bill to more closely resemble legislation reported by the Environment and Public Works Committee, S. 606. Specifically, the bill would repeal the Clean Air Act requirement for oxygenated gasoline, and phase out the use of the additive methyl tertiary butyl ether, or MTBE, in 4 years. It would require refiners to use biofuels, presumably mostly ethanol, in volumes of 8 billion gallons by 2012. This is a much more aggressive goal than the 108th Congress Senate-passed bill that I supported, which included a 5 billion gallon by 2012 mandate. It is my hope that such a significant commitment will begin to reduce our dependence upon foreign oil.

I would like to share the history of the renewable fuels provisions included in this bill we are adopting today. I've long supported a more aggressive approach to replacing petroleum-based motor fuels with fuels made from domestic resources, including ethanol produced by farmers growing grains and fibers. I commend Senators Domenici and Bingaman on their leadership on this important matter.

Back in 1991, I introduced S. 716, the Replacement Fuels Act, to require gasoline refiners to replace increasing percentages of their product with domestically produced, nonpetroleum liquids. Many of us knew then that it was technologically possible, and now it seems that a majority has crossed that threshold of understanding.

When I first introduced my Replacement Fuels Act, many did not take it seriously. The oil industry certainly did not. But I made the rounds with several of my colleagues to convince them of the benefits of such a program, including the national security benefits of weaning ourselves from our dependency on foreign oil. At the time, I argued that the costs to our military, in terms of personnel and dollars, of protecting the shipping lanes of the Persian Gulf, and of attempting to quell the political unrest of the Middle East, were staggering then and only apt to grow larger.

I recall meeting with the distinguished Senator from New Mexico, now the chairman of the Energy Committee, in his office to discuss my bill. We agreed on the domestic benefits of moving in this direction--for our farmers; for our environment; for our national and domestic security. After considerable discussion, Senator Domenici agreed to cosponsor my bill.

I made the rounds to other members of the Energy Committee for their advice and support. Many of those committee members who cosponsored my bill are still here today--Senators Bingaman, Burns, Craig and Conrad, Shelby and Akaka. Four other committee members, since retired, also were cosponsors, making a majority of the committee and ensuring committee approval. Other Members who cosponsored my bill and who are here today include Senators Grassley, Reid, and Warner.

In the end, the bulk of the language of my Replacement Fuels Act was included as title V of Public Law 102-486 the Energy Policy Act of 1992. Before final passage of that act, however, in every instance that ``shall'' appeared in my bill, it was changed to ``may'' in the final law. In other words, it changed from a mandate to an option, and we've only made modest gains in the past dozen years, when we could have made bold progress.

So, again, I commend Senators Domenici and Bingaman for their leadership to move us more aggressively toward domestic production of transportation fuels and away from our growing foreign dependence.

I urge Senators and the public to take note of the Sense of the Senate on climate change successfully included in the bill due to the efforts of Senators Bingaman, Domenici, Specter, and many others. It says that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that, one, will not significantly harm the United States economy; and, two, will encourage comparable action by other nations that are major trading partners and key contributors to global emissions. Such a program regarding air pollution and environmental policy is clearly in the jurisdiction of the Environment and Public Works Committee, and I am strongly committed to holding hearings and reporting implementing and bipartisan legislation from that committee, on which I serve as the ranking member, as soon as possible.

During debate on the renewable fuels provisions, I agreed to modify the absolute deadline for EPA's long-awaited and long-delayed mobile source air toxics, MSAT, rule from July 2005 in Domenici amendment No. 779 to July 2007. EPA is widely expected to promulgate a final rule well before that later date, but this provision provides additional certainty and protection. In addition, the provision as amended and included by Senator Inhofe in the last manager's package, will allow EPA to regulate more stringently than the 2001-2002 toxics emissions reductions baseline in the final MSAT rule.

That more stringent rule will take the place of the baseline so long as it

will achieve and maintain greater overall reductions in emissions of air toxics. Such reductions must occur in the same timeframe and result in overall reductions of each and every one of the air toxics emitted in the combustion of gasoline, when compared to the 2001-2002 baseline. This provision should not be construed to permit EPA to count reductions of less toxic pollutants like aldehydes equal in effect or equivalent to reductions of more toxic pollutants like benzene. The intent of this provision is not to allow EPA to avoid toxics potency weighting or sensible risk analysis and exposure assessment in determining the meaning of ``overall reductions.'' This provision should also not be viewed as a vehicle for changes to the liability system for fuel additives. The Senate has spoken very strongly on this point, and the conferees should be aware that any new MTBE language addressing the issue of retroactive liability is likely to jeopardize passage of the conference report in the Senate.

I am also pleased that the Senate included a 10-percent renewable portfolio standard in this bill. I have worked for more than 20 years to boost the percentage of renewable sources used to generate our Nation's electricity. While I believe we could be taking a much more aggressive step, we need to take a serious first step, and the provisions in this bill do just that. Though I understand that the House has concerns with adding an RPS, it is my hope that the conferees will acknowledge that, for many States, renewable energy can and should be a bigger energy source.

I am pleased that the Senate has also chosen to promote renewable energy by accepting three amendments I offered to the bill during floor debate. It is my hope these modest provisions will be retained in conference. My first amendment will make significant reductions in energy use in the Capitol complex by requiring the Architect of the Capitol to review the possibility for energy savings in the Dirksen Building. The second two amendments expand the sources of grant financing available to utilities for projects involving renewables and efficiency. The Senate has agreed to add livestock methane, a promising source of energy in Vermont, as an energy source that is eligible to compete for grants under the Department of Energy's Renewable Energy Incentives Program. The Senate has also agreed to create a new $20- million-per-year grant program for upgrade of electric transmission.

As I mentioned, though, the bill is not perfect, and the conferees should carefully review several provisions. In title XIII there are a number of sections authorizing investigations that will recommend changes to environmental laws, such as the Clean Water Act, the Safe Drinking Water Act, the Clean Air Act, and the National Environmental Protection Act. Unfortunately, in a number of these areas the Environmental Protection Agency, whose responsibility it is to ensure the air we breath and the water we drink is safe, is not involved in developing or approving these recommendations.

While I proposed amendments to include the Environmental Protection Agency in these sections, not all of changes were adopted. The sections needing amending include: section 1306 Backup Fuel Capability Study; section 1309 Study of Feasibility and Effects of Reducing Use of Fuel for Automobiles; and section 1320, Natural Gas Supply Shortage Report. It is my belief that any studies that involve environmental compliance should include the involvement of the agency whose mission it is to oversee the implementation of these environmental laws.

I am pleased that my Recycling Investment Saves Energy, RISE, provisions were included as section 1545 of the final bill. The provisions will provide almost $100 million in tax incentives for recyclers over the next decade to preserve and expand our Nation's recycling infrastructure. The targeted 15 percent tax credit for equipment used in the processing and sorting of recyclable materials will increase quantity and quality of recyclable materials collected. This national investment is necessary to reverse the declining recycling rate of many consumer commodities, including aluminum, glass and plastic, which are near historic lows. It will also generate significant energy savings as increasing the U.S. recycling rate to 35 percent will result in annual energy savings of 903 trillion Btus, enough to meet the energy needs of an additional 2.4 million homes.

The Finance title includes an amendment that I authored to improve future Federal energy investment and policy decisions. It requires the Secretary of Treasury to contract with the National Academy of Sciences to complete a study and report to Congress on the health, environmental, security and infrastructure externalities associated with energy activities and how they may or may not be affecting revenues, the economy and trade. Such information will dramatically improve our ability to review the costs and benefits of energy legislation and tax policy changes.

I am pleased that my amendment to section 1305, the coal bed methane study, was adopted. My amendment requires that as it studies the issue the Department of Energy consult with States and the Environmental Protection Agency on the impacts of coal bed natural gas production on surface water and ground water resources. This consultation should occur, especially before making recommendations to Congress on changes to the Clean Water Act and the Safe Drinking Water Act.

This bill does a reasonable job in balancing support for traditional fossil fuels and nuclear power and renewable energy, but I am perplexed by provisions in the Energy bill that provide $1.82 billion in grants for oil, gas and coal industries. With oil hovering around $60 a barrel and gasoline prices at record highs, I question the wisdom of providing additional subsidies for oil and gas exploration and production. While Americans pay more at the pump, multinational oil companies continue to report record profits. The bill also waives royalty payments for oil companies drilling in Federal waters and rewards these already profitable companies while depleting the U.S. economy of $100 million over 10 years.

The bill gives $1.8 billion to the dirtiest powerplants to build new coal powerplants, thereby giving them an economic advantage over powerplants that installed pollution control technologies. I am also concerned about provisions in the coal title that unfairly benefits mining companies with current leases on federal lands by doubling the acreage, 162 to 320 acres, of coal-leased lands; removing the 40-year limitation for leases; and doubling the time (from 10 to 20 years) current leaseholders can pay advanced royalties. These provisions will have the most significant impact on the Powder River Basin where three mining companies dominate current production. I question the wisdom in subsidizing these fossil fuel industries that will only continue to encourage our Nation's dependence upon these polluting and expensive energy sources.

I also urge the conferees not to include the Leaking Underground Storage Tank, LUST, reform provisions in the final bill. The Senate Environment and Public Works Committee is actively considering these issues and has planned a hearing for July 2005. Our Committee's actions led the Senate to enact bipartisan comprehensive LUST reform legislation last Congress by unanimous consent. Adding LUST reform onto the Energy bill would needlessly bypass our legislative consideration and prevent this issue from getting the careful attention that it requires.

The LUST provisions of the Senate's Energy bill, section 210, are problematic. Most significantly, the section raids the LUST Trust Fund and diverts dollars from their intended purpose--cleaning up contamination from leaking USTs. Without increasing the amount of money to be appropriated to the States, the provision expands the eligible uses of the LUST Trust Fund to pay for cleanup of spills from non-UST sources, such as pipelines, cars, and above ground storage tanks. In a letter to Rep. W.J. ``Billy'' Tauzin on May 7, 2003, former EPA Administrator Christine Todd Whitman opposed these provisions because they ``would change the historical scope of the program, and could stress the Agency's ability to adequately address releases from USTs.''

I am concerned because this section will go to conference with the House-

passed LUST provisions that also contain significant flaws. The House provisions add a new periodic inspection requirement for USTs that is weaker than the 2-year minimum inspection frequency recommended by EPA and the 3-year minimum requirement recommended by the Government Accountability Office. For example, a tank last inspected in 1999 wouldn't need to be inspected again for over a decade. In addition, the House delivery prohibition provisions may preempt existing authority in 24 States. Finally, the provisions requiring secondary containment within 1,000 feet of existing community water systems includes an exemption that ignores prevention in favor of expensive cleanup.

So we have our work cut out for us. Today, the Senate is passing a good bill that needs some work in conference, but not a substantial overhaul or weakening. To retain my support the conferees need to prevent substantial modifications to this bill, resist the addition of controversial items added in the House-version of H.R. 6, avoid substantive modification to core titles of the bill, limit adjustments to the bill's fiscal scope and cost, and consider additions of provisions to provide energy security.

This is a good effort to develop energy legislation for America, which is a goal widely shared in both Houses of Congress. It is my hope that conferees seek this year to reach consensus on issues such as: national electricity reliability standards, the use of renewables, the phase out of methyl tertiary butyl ether, MTBE, and production of suitable oxygenate replacements, and the fiscally responsible extension of needed energy tax provisions. With this bill I am supporting today we send them a good template to achieve that goal.