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State-Federal Relations

Agriculture, Environment & Energy Committee

Agriculture, Energy & Environment Federal Update:  2007 Energy Bill

H.R. 6 - Energy Independence and Security Act of 2007
Signed by the President on December 19, 2007 (P.L No 110-140)

Legislative Recap
The year-long conversation on comprehensive energy legislation came to a close during the final weeks of Congress as compromise legislation emerged from months of informal leadership negotiations.  Procedural matters had prevented the convening of a traditional conference committee to work out the differences between legislation passed by the House and Senate.  In early December a compromise was agreed to by Speaker Nancy Pelosi (California) and Chairman of the House Committee on Energy and Commerce John Dingell (Michigan) on language to increase the Corporate Average Fuel Economy standard (CAFE), which had not been included in the original bill passed by the House.  This agreement cleared a path for the House to take up the compromise legislation, which included major provisions from both the House and Senate legislation covering an expansion of the renewable fuel standard, the establishment of a 15% renewable electricity requirement (RPS), the CAFE increase, and an extensive tax package.  The House easily passed this legislation by a vote of 235 - 181 on December 6^th, moving the negotiations back to the Senate where the legislation still faced numerous hurdles.  The inclusion of the 15% RPS and the tax package remained controversial and the bill stalled when a cloture motion (requiring 60 votes) to end debate on the bill failed by a vote of 53-42 on December 7^th.  Majority Leader Harry Reid (Nevada) brought a revised package back to the floor which jettisoned the RPS provision and modified the tax provisions, hoping to pick up enough support to move forward on the legislation.  This package also was unable to overcome opposition and failed to garner the necessary support in a 59-40 cloture vote on December 13^th.  The final package passed the Senate that same day when additional revisions removed the tax package and RPS proposal from the bill, opening the door for an 86-8 Senate vote on the bill.  Elimination of these provisions also cleared the way for the Administration, which had threatened to veto the legislation if either provision was in the bill when it got to the President's desk.  The House took up the Senate's amendments on December 18^th and passed the bill 314-100, sending it to the President who signed it into law on December 19^th (P.L. No 110-140). 

Summary
On December 21, the Congressional Research Service (CRS) released a summary of the major provisions of the legislation, which can be found as a link at the end of this brief.  Of particular interest to state and local government is the establishment of a new Energy Efficiency and Conservation Block Grant (Title V, Subtitle E, Section 541-548).  Under this new block grant, state and local governments would receive funds to reduce energy use and emissions levels at the local and regional level.  Allowable uses for funds provided under this new program include strategic planning, consultant services, and energy audits.  Eligible local communities include counties with a population of 200,000 and above and/or are one of the 10 most populated counties per state, or cities with a population of 35,000 and above and/or are one of the 10 most populated cities per state.  Grants provided to eligible communities by the Secretary will be determined by a formula based on census population data and daytime populations.  States are required to pass through 60 percent of the state allocation to communities that do not receive direct funding.

Authorization for this new program is set at $2 billion annually over five years with additional money authorized to cover administrative costs of the program.  However, the authorization level does not guarantee $2 billion will be available each year for grants, as the annual funding level for the program will be determined by the Congressional appropriations process.  Addressing concerns raised by states, the legislative language emphasizes that these funds are intended to supplement and not replace funding provided through the Department of Energy for the Weatherization and State Energy Programs.  It is important to note that cities and counties eligible for the grant will not be able to apply until FY 2009 at the earliest.  There were no funds appropriated for the new program in the FY 2008 omnibus appropriations package and the Secretary of Energy will also have to issue regulations governing the program before any grants can be distributed.

The bill also includes language that requires states to proportionally cut all core surface transportation programs when faced with federally directed rescissions, effectively removing state flexibility and curbing state discretion when trimming budgets.  Other major provisions of the legislation include:

• Raising the CAFE standards for cars and light trucks, including SUVs, to an average of 35 miles per gallon by 2020.  The Department of Transportation will begin to increase the standard annually in 2011.  Grants and loan guarantees will be provided for the manufacture of efficient vehicles and their parts;
• Enhancing research into carbon capture and storage;
• Creating Federal Trade Commission penalties for oil market manipulation
• Including incentives for energy efficient windows, equipment and design;
• Increasing appliance efficiency;
• Increasing the efficiency of federal buildings and requiring new federal buildings to eliminate any fossil fuel-generated electricity by 2030;
• Establishing a phase-out of the most inefficient incandescent light bulbs by 2012-2014; and
• Creating training programs for “green jobs” in the renewable energy and energy efficiency sector.

Holdover Issues
In order to secure final passage of the legislation, certain provisions were struck during consideration in the Senate.  These provisions are expected to be revisited during 2008 as either stand alone proposals or as a part of the larger energy security and climate change conversation.  Each of these provisions were listed by the Administration as reasons to veto the energy bill if they remained in the final legislation as presented to the President.  At issue were a $22 billion tax package that funded expanded and new incentives for renewable energy, efficiency measures and other technologies and the creation of a federal renewable electricity standard, requiring investor-owned utilities to supply 15 percent of their power from renewable sources by 2020, allowing for up to 4 percent of the requirement to be met through increases in energy efficiency.  Included in the tax proposal were some provisions with broad support, such as the multi-year extension of the IRS Section 45 production tax credit for electricity produced from renewable sources, which expires at the end of 2008.

Please view the CRS Report on the Energy Independence and Security Act of 2007 at http://assets.opencrs.com/rpts/RL34294_20071221.pdf.

For further information, please contact:
Tamra Spielvogel (tamra.spielvogel@ncsl.org) or Amanda Naughton (amanda.naughton@ncsl.org)
202.624.5400